Actuant (ATU) Beats On Q1 Earnings And Revenue Estimates

Actuant Corporation (NYSE:ATU) recently reported better-than-expected results for first-quarter fiscal 2018 (ended Nov 30, 2017).

Earnings and Revenues

Quarterly adjusted earnings came in at 19 cents per share, beating the Zacks Consensus Estimate by a penny. However, the figure came in a penny lower than the year-ago tally of 20 cents per share.

Net sales during the reported quarter came in at $289 million, outpacing the Zacks Consensus Estimate of $269 million. The top line also exceeded the prior-year tally of $265.8 million.

Core sales improved 6% year over year in the fiscal second quarter backed by solid volumes secured from the Engineered Solutions and Industrial segments.

Segmental Details

Revenues in the Industrial segment were up 11% year over year to $96.9 million. The upside primarily stemmed from sturdy sales of standard industrial tools across all end markets.

Net sales of the Engineered Solutions segment jumped 23.7% year over year to $116.2 million. Elevated sales secured from major end markets (like agriculture and heavy-duty truck markets) supported the year-over-year growth.

However, the Energy segment revenues dipped 10.4% to $75.8 million in the reported quarter. The downside resulted due to disappointing Hydratight and Viking business sales.

Costs and Margins

Cost of products sold in the reported quarter came in at $188 million, higher than $172.7 million recorded in the year-ago quarter. Gross profit margin in the fiscal second quarter came in at 34.9%, contracting 10 basis points (bps) year over year.

Selling, administrative and engineering expenses totaled $74.4 million, higher than $68.6 million incurred in the comparable quarter last fiscal. Quarterly operating margin expanded 20 bps to 7.4%.

Balance Sheet and Cash Flow

Exiting the fiscal second quarter, Actuant had cash and cash equivalents worth $165.1 million, lower than $229.6 million recorded at the end of fiscal 2017. Long-term debt totaled $524.6 million, down from $531.9 million recorded on Aug 31, 2017.

In the quarter under review, Actuant used cash worth $20.5 million from operating activities, as against $12.5 million cash provided in the year-ago period. Capital expenditure came in at $7.9 million compared to $5.1 million registered in the year-earlier quarter.

Outlook

Actuant stated that it has successfully accomplished its portfolio management efforts, in order to limit the company’s services in the offshore upstream energy market.

This Zacks Rank #2 (Buy) stock anticipates to report revenues in the range of $265-$275 million and earnings within 10-15 cents in second-quarter fiscal 2018.

However, Actuant reaffirmed its revenue and earnings guidance for fiscal 2018. Revenues for fiscal 2018 are projected to lie in the band of $1.10-$1.13 billion (estimating 1-3% rise in core sales). Adjusted earnings for fiscal 2018 are estimated to be in the range of $1.05-$1.15 per share.

Actuant also noted that it has adequate capital to finance several organic and inorganic growth programs in the near future.

Other Stocks to Consider

Some other top-ranked stocks in the industry are listed below:

ABB Ltd (NYSE:ABB) currently carries a Zacks Rank of 2. The company has pulled off an average earnings surprise of 11.67% in the last four quarters. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Acco Brands Corporation (NYSE:ACCO) has a Zacks Rank of 2. The company generated an average positive earnings surprise of 81.89% over the trailing four quarters.

Altra Industrial Motion Corp. (NASDAQ:AIMC) also holds a Zacks Rank of 2. The company recorded an average positive earnings surprise of 17.30% during the same time period.

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