Actuant (ATU) Tops Q2 EPS by 1c, Revenues Miss; Offers Q3 & FY19 EPS/Revenue Guidance

Actuant (NYSE: ATU) reported Q2 EPS of $0.19, $0.01 better than the analyst estimate of $0.18. Revenue for the quarter came in at $271.9 million versus the consensus estimate of $273.83 million.

• Completed sale of Precision-Hayes International business on December 31, 2018.
• Announced intent to divest EC&S segment on January 24, 2019.
• Total net sales were $272 million for the quarter. Core sales increased 7% on a year-over-year basis net of the impact of foreign currency and divestitures, each of which decreased net sales by 4%.
• The Industrial Tools & Services (“IT&S”) segment achieved second quarter revenues of $150 million and delivered a core sales increase of 12% year-over-year.
• The Engineered Components & Systems (“EC&S”) segment achieved revenues of $122 million with flat core sales, net of divestitures.
• GAAP Operating Margin was 6.0% versus 3.6% in second quarter 2018 (see Consolidated Results below, along with the attached reconciliation of earnings). Adjusted Operating Margin expanded 240bps over second quarter 2018, to 8.6% from 6.2%.
• Adjusted EBITDA Margin increased by 140bps with significant improvement in operating leverage over the second quarter of 2018 resulting in incremental margins in line with our expectations.
• GAAP diluted earnings per share (“EPS”) was $0.04 in the second quarter of fiscal 2019, versus a diluted loss per share of $0.30 in the comparable period in 2018. Adjusted EPS was $0.19, a 46% improvement over second quarter 2018 adjusted EPS of $0.13.
• Significant year-over-year reduction of leverage (Net Debt to Adjusted EBITDA) from 3.0x at the end of second quarter 2018 to 2.1x at the end of second quarter 2019.

“We continued to execute successfully against our strategic plan, as demonstrated by the strong 12% core growth in our IT&S segment despite weather related challenges in the quarter,” said Randy Baker, President and CEO. “The investments we have made in our commercial processes are yielding results, and we believe IT&S is well positioned for continued growth. Additionally, the restructuring actions we took in 2018, along with the decision to focus solely on standard product in our Heavy Lifting product offering, have provided improved profitability in the current fiscal year. EC&S had a solid quarter as well, driven by solid execution of their plan, core sales growth in the Americas and strong profit improvement.”

Mr. Baker continued, “As we plan for our future as a pure-play industrial tool company, we are focused on delivering world class operating margins aligned with our strategy. To further that objective, we are initiating a restructuring program centered on achieving savings both from the integration of the Enerpac and Hydratight businesses and in our corporate structure by better leveraging and consolidating certain global support functions, facilities and spend. We expect to achieve $12-$15 million of annual savings and anticipate completing these actions within 18-24 months. The one-time total cost of these actions is projected to be $15-$20 million. Additionally, during the quarter, we made significant progress toward optimizing our portfolio of businesses with the announcement of our intent to divest the EC&S segment and closing the sale of Precision-Hayes International and Cortland Fibron. We are confident that focusing on growing our high quality and high margin IT&S business and pursuing this sale is the best way to maximize value for Actuant’s shareholders while securing a positive future for EC&S and its talented employees around the world.”

GUIDANCE:

Actuant sees FY2019 EPS of $1.09-$1.20, versus the consensus of $1.16. Actuant sees FY2019 revenue of $1.15-1.19 billion, versus the consensus of $1.19 billion.

Actuant sees Q3 2019 EPS of $0.40-$0.45, versus the consensus of $0.37. Actuant sees Q3 2019 revenue of $295-305 million, versus the consensus of $318.58 million.

For earnings history and earnings-related data on Actuant (ATU) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• Vivos Therapeutics posts 35% revenue gain but widens net loss
• Reading (RDI) Tops Q2 EPS by 4c