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Colfax's 2Q Earnings Beats Est.

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Colfax Corporation (CFX - Free Report) , a manufacturing and engineering company, reported adjusted earnings per share of 54 cents for the second quarter 2013. This represents an increase of 60% over the year-ago quarter and a cent above the Zacks Consensus Estimate of 53 cents.

Earnings result for the quarter excludes 2 cents gain related to the resolution of a previous tax position, including which earnings in the quarter comes to 56 cents per share.


Colfax recorded net sales of $1,074.1 million in the second quarter, up 2.7% compared with the year-ago quarter. The increase can be attributed to 3.6% contribution from acquisitions, partially offset by 0.3% decline in organic businesses and 0.6% negative foreign currency translation impact.

Total orders in the quarter were $478.2 million, down 10.5% year over year while backlog at the end of the quarter stood at $1,388.4 million, compared with $1,375.9 million at the end of second quarter 2012.

Colfax generates revenue under two heads, which are briefly discussed below:

Revenue from the Gas and Fluid Handling segment came in at $516.8 million, up 4.1% year over year. Fabrication Technology revenue grew 1.5% year over year to $557.4 million.


Colfax’s cost of goods sold in the second quarter 2013 increased 0.8% year over year and as a percentage of revenue was 68.5%, down 140 basis points year over year. Gross margin in the quarter was 31.5%. SG&A expenses, as a percentage of revenue, was 20.6%, against 22.2% in the year-ago quarter. Colfax’s adjusted operating income margin expanded 160 basis points year over year to 10.9% in the quarter.

Balance Sheet/ Cash Flow

Exiting the second quarter of 2013, Colfax’s cash and cash equivalents stood at $587.9 million as against $234.8 million in the previous quarter. Long-term debt was stable at $1.4 billion.

Colfax’s cash flow from operating activities was $99.1 million, signifying a major improvement from cash use of $13.4 million in the first quarter 2013. Capital spending in the quarter was $17.6 million, roughly flat from the previous quarter and down compared with $22.1 million in the year-ago quarter.


For 2013, management of Colfax anticipates adjusted earnings per share to range within $1.95-$2.10 while GAAP earnings is expected to fall within $1.70-$1.85 per share range.

Colfax currently has a market capitalization of $4.9 billion. The stock currently holds Zacks Rank #4 (Sell). Other companies to look out for are Chart Industries Inc. (GTLS - Free Report) , Dover Corporation (DOV - Free Report) and Gardner Denver Inc. (GDI - Free Report) , each with Zacks Rank #2 (Buy).

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