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Colfax Corporation reported better-than-expected results for the first quarter of 2020, with earnings surpassing estimates by 2.7%. This was the company’s 18th consecutive quarter of impressive results. Also, the quarter’s sales beat the consensus estimate by 3.1%.
The machinery company’s adjusted earnings in the reported quarter were 38 cents per share, surpassing the Zacks Consensus Estimate of 37 cents. Moreover, the bottom line gained 2.7% from the year-ago figure of 37 cents.
Revenue Details
In the quarter under review, Colfax’s pro forma revenues were $816.4 million, reflecting a year-over-year decline of 4.3%. The result suffered from a 1.4% decline in the existing businesses (due to the pandemic impact on demand) and a 2.9% impact from forex woes.
However, the company’s revenues surpassed the Zacks Consensus Estimate of $792.2 million.
Further, its sales from continuing operations increased 19.4%, including gains from the DJO Global acquisition.
The company currently reports under two business segments — Fabrication Technology and Medical Technology. The segmental information is briefly discussed below:
Revenues from Fabrication Technology totaled $525.5 million, declining 6.2% year over year. Fall in the existing businesses had an adverse impact of 2.2%, while forex woes negatively influenced by 4%.
Revenues from Medical Technology totaled $290.8 million, reflecting a year-over-year decline of 0.6%. The existing businesses contributed 0.3%, offset by a 0.9% adverse impact of forex woes.
Margin Profile
In the quarter under review, Colfax’s cost of sales grew 10.7% year over year to $468.1 million. Selling, general and administrative expenses increased 17.5% year over year to $291.3 million. It represented 35.7% of revenues.
Adjusted earnings before interest, tax and amortization (EBITA) in the quarter under review increased 5.9% year over year to $95.5 million. Also, adjusted EBITA margin decreased 150 bps to 11.7%. Interest expenses in the quarter grew 13.6% year over year to $24.8 million.
Balance Sheet and Cash Flow
Exiting the first quarter, Colfax had cash and cash equivalents of $365.6 million, surging 233.5% from $109.6 million at the end of the last reported quarter. Long-term debt balance increased 10% sequentially to $2,513 million.
Notably, the company repaid borrowings of $364.4 million under its revolving credit facilities and other. Further, it raised $608.7 million in cash through the same means.
In the first quarter, Colfax generated net cash of $56.2 million from operating activities as compared with $72.3 million net cash used in the year-ago quarter. Capital used for purchasing property, plant and equipment was $31.1 million, reflecting a year-over-year rise of 27.7%.
Outlook
The company noted that necessary actions are being taken to ensure workers’ safety, continue serving customers and maintaining healthy liquidity position. Also, cost-management actions (reduction of more than $100 million targeted in the second quarter) have been considered to mitigate some financial stress caused by the pandemic.
The company expects demand to be lowest in the second quarter, while anticipates improvements thereof. Further, it suspended the previously provided projections for 2020.
Colfax Corporation Price, Consensus and EPS Surprise
In the past 30 days, earnings estimates for these companies improved for the current year. Further, earnings surprise for the last reported quarter was 16.33% for Silgan Holdings, 117.86% for Proto Labs and 24% for Graphic Packaging.
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Colfax (CFX) Beats Q1 Earnings Estimates, Withdraws View
Colfax Corporation reported better-than-expected results for the first quarter of 2020, with earnings surpassing estimates by 2.7%. This was the company’s 18th consecutive quarter of impressive results. Also, the quarter’s sales beat the consensus estimate by 3.1%.
The machinery company’s adjusted earnings in the reported quarter were 38 cents per share, surpassing the Zacks Consensus Estimate of 37 cents. Moreover, the bottom line gained 2.7% from the year-ago figure of 37 cents.
Revenue Details
In the quarter under review, Colfax’s pro forma revenues were $816.4 million, reflecting a year-over-year decline of 4.3%. The result suffered from a 1.4% decline in the existing businesses (due to the pandemic impact on demand) and a 2.9% impact from forex woes.
However, the company’s revenues surpassed the Zacks Consensus Estimate of $792.2 million.
Further, its sales from continuing operations increased 19.4%, including gains from the DJO Global acquisition.
The company currently reports under two business segments — Fabrication Technology and Medical Technology. The segmental information is briefly discussed below:
Revenues from Fabrication Technology totaled $525.5 million, declining 6.2% year over year. Fall in the existing businesses had an adverse impact of 2.2%, while forex woes negatively influenced by 4%.
Revenues from Medical Technology totaled $290.8 million, reflecting a year-over-year decline of 0.6%. The existing businesses contributed 0.3%, offset by a 0.9% adverse impact of forex woes.
Margin Profile
In the quarter under review, Colfax’s cost of sales grew 10.7% year over year to $468.1 million. Selling, general and administrative expenses increased 17.5% year over year to $291.3 million. It represented 35.7% of revenues.
Adjusted earnings before interest, tax and amortization (EBITA) in the quarter under review increased 5.9% year over year to $95.5 million. Also, adjusted EBITA margin decreased 150 bps to 11.7%. Interest expenses in the quarter grew 13.6% year over year to $24.8 million.
Balance Sheet and Cash Flow
Exiting the first quarter, Colfax had cash and cash equivalents of $365.6 million, surging 233.5% from $109.6 million at the end of the last reported quarter. Long-term debt balance increased 10% sequentially to $2,513 million.
Notably, the company repaid borrowings of $364.4 million under its revolving credit facilities and other. Further, it raised $608.7 million in cash through the same means.
In the first quarter, Colfax generated net cash of $56.2 million from operating activities as compared with $72.3 million net cash used in the year-ago quarter. Capital used for purchasing property, plant and equipment was $31.1 million, reflecting a year-over-year rise of 27.7%.
Outlook
The company noted that necessary actions are being taken to ensure workers’ safety, continue serving customers and maintaining healthy liquidity position. Also, cost-management actions (reduction of more than $100 million targeted in the second quarter) have been considered to mitigate some financial stress caused by the pandemic.
The company expects demand to be lowest in the second quarter, while anticipates improvements thereof. Further, it suspended the previously provided projections for 2020.
Colfax Corporation Price, Consensus and EPS Surprise
Colfax Corporation price-consensus-eps-surprise-chart | Colfax Corporation Quote
Zacks Rank & Stock to Consider
With a market capitalization of $2.8 billion, Colfax currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Industrial Products sector are Silgan Holdings Inc. (SLGN - Free Report) , Proto Labs, Inc. (PRLB - Free Report) and Graphic Packaging Holding Company (GPK - Free Report) . While Silgan currently sports a Zacks Rank #1 (Strong Buy), both Proto Labs and Graphic Packaging carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for these companies improved for the current year. Further, earnings surprise for the last reported quarter was 16.33% for Silgan Holdings, 117.86% for Proto Labs and 24% for Graphic Packaging.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>