Actuant Announces Record First Quarter Sales and Earnings
MILWAUKEE--Dec. 2, 20051, 2005--Actuant Corporation today announced record results for its first quarter ended November 30, 2005. First quarter fiscal 2006 net earnings and diluted earnings per share ("EPS") were $21.3 million and $0.70, respectively. This compares favorably to net earnings and EPS of $16.9 million and $0.62, respectively, for the first quarter of fiscal 2005 which included a $2.0 million pre-tax gain ($1.3 million after tax or $0.05 per diluted share), for the favorable settlement of a liability to a former subsidiary.First quarter sales increased approximately 42% to $284 million compared to $200 million in the prior year. Current year results include those from Key Components, Inc., Hydratight Sweeney, Hedley Purvis Holdings Limited, and A.W. Sperry Instruments, Inc., which were acquired during the second and third quarters of fiscal 2005. Excluding the impact of foreign currency exchange rate changes, first quarter core sales (year-over-year sales in both existing and acquired businesses) increased approximately 1%. Sales from businesses owned at least twelve months were flat compared to the prior year, excluding foreign currency rate changes. The increase in core sales resulted from strong industrial and North American electrical sales, partially offset by declines in the recreational vehicle ("RV") and automotive convertible top markets.
Robert C. Arzbaecher, President and CEO of Actuant, commented, "I am pleased with the strong start to fiscal 2006 and better than forecasted first quarter results. Of particular note was the improvement in year-over-year sales growth excluding foreign currency exchange rate changes from businesses owned at least twelve months, which improved from -5% in the fourth quarter of fiscal 2005 to flat in the first quarter of fiscal 2006."
Arzbaecher continued, "Tools & Supplies performance exceeded our expectations, especially the industrial and electrical units, which more than offset the expected declines in the automotive convertible top and RV businesses. This favorable sales mix also benefited margins and earnings. Engineered Solutions segment results were in line with our expectations. We anticipate improvement in this segment as the year progresses, reflecting sales growth from new convertible top platform launches and improved RV market conditions. Late in the first quarter, we started actuation system production for two new retractable hard top convertibles, and are scheduled to start shipping systems for two additional new models in the next ninety days. Meanwhile, we believe RV market conditions will improve as production levels better match retail demand."
Actuant's operating profit in the first quarter of fiscal 2006 was $38.2 million, or 45% higher than the $26.4 million in the first quarter of last year, due to operating profit from companies acquired subsequent to the first quarter of fiscal 2005, and improvement in operating profit margins. Operating profit margins expanded to 13.5% in the first quarter of fiscal 2006 from 13.2% and 12.5% in the first and fourth quarters of fiscal 2005, respectively, reflecting favorable sales mix, increased low cost country sourcing, price increases and cost reductions.
Fiscal 2006 first quarter Tools & Supplies segment sales were $181 million, a 61% increase over last year. Excluding the impact of foreign currency rate changes, year-over-year first quarter Tools & Supplies segment core sales increased 9% and sales from businesses owned at least twelve months increased 11%. First quarter fiscal 2006 Engineered Solutions segment sales increased approximately 18% to $103 million, compared to $87 million in the previous year. Excluding the impact of foreign currency rate changes, first quarter Engineered Solutions core sales decreased 11% and sales from businesses owned at least twelve months decreased 14%, both the result of lower sales to automotive convertible top and RV motorhome original equipment manufacturers ("OEMs").
Total debt at November 30, 2005 was approximately $425 million. Net debt (total debt less approximately $7 million of cash) was $418 million, compared to $432 million at the beginning of the quarter. This $14 million reduction resulted from strong first quarter cash flow even after considering the seasonal working capital increases in the business.
The Company also announced sales and earnings guidance for the second quarter of fiscal 2006 and confirmed its full year guidance. Arzbaecher stated, "We expect second quarter sales and EPS to be lower than the first quarter due to normal seasonality, but expect year-over year core sales and earnings growth compared to the prior year period. We are projecting second quarter sales and EPS to be in the range of $270 - $275 million and $0.58 - $0.63 per share, respectively. Full year fiscal 2006 sales and earnings guidance remains unchanged from our previous ranges of $1.150 - $1.175 billion and $2.75 - $3.00 per share, respectively."
About Actuant
Actuant, headquartered in Glendale, Wisconsin, is a diversified industrial company with operations in 31 countries. The Actuant businesses are market leaders in highly engineered position and motion control systems and branded hydraulic and electrical tools and supplies. Formerly known as Applied Power Inc., Actuant was created in 2000 after the spin-off of Applied Power's electronics business segment into a separate public company. Since 2000, Actuant has grown its sales from $482 million to over $1 billion and its market capitalization from $113 million to over $1 billion. The Company employs a workforce of approximately 6,000 worldwide. Actuant Corporation trades on the New York Stock Exchange under the symbol ATU. For further information on Actuant and its business units, visit the Company's website at www.actuant.com.
Actuant Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
November 30, August 31,
2005 2005
------------ -------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $7,470 $10,356
Accounts receivable, net 146,642 131,185
Inventories, net 139,633 135,960
Deferred income taxes 14,786 14,974
Other current assets 7,732 6,838
------------ -------------
Total current assets 316,263 299,313
Property, plant and equipment, net 82,336 83,879
Goodwill 422,952 428,285
Other intangible assets, net 170,591 175,001
Other long-term assets 11,835 9,857
------------ -------------
Total assets $1,003,977 $996,335
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $3,492 $21
Trade accounts payable 94,416 89,506
Accrued compensation and benefits 30,648 32,663
Income taxes payable 20,338 15,049
Current maturities of long-term debt 130 136
Other current liabilities 49,945 51,360
------------ -------------
Total current liabilities 198,969 188,735
Long-term debt, less current maturities 421,996 442,661
Deferred income taxes 59,216 58,783
Pension and postretirement benefit accruals 40,519 41,192
Other long-term liabilities 21,255 20,131
Shareholders' equity
Capital stock 5,424 5,410
Additional paid-in capital (367,239) (370,875)
Accumulated other comprehensive income
(loss) (28,140) (20,282)
Restricted stock awards (1,323) (1,452)
Stock held in trust (1,302) (1,166)
Deferred compensation liability 1,302 1,166
Retained earnings 653,300 632,032
------------ -------------
Total shareholders' equity 262,022 244,833
------------ -------------
Total liabilities and shareholders' equity $1,003,977 $996,335
============ =============
Actuant Corporation
Condensed Consolidated Statements of
Earnings
(Dollars in thousands except per share amounts)
Three Months Ended
November 30,
--------------------------
2005 2004
------------ -------------
(Unaudited)
Net sales $283,876 $199,677
Cost of products sold 184,398 135,876
------------ -------------
Gross profit 99,478 63,801
Selling, administrative and engineering
expenses 59,482 36,800
Amortization of intangible assets 1,785 591
------------ -------------
Operating profit 38,211 26,410
Financing costs, net 6,067 1,938
Other (income) expense, net 698 (1,219)
------------ -------------
Earnings from operations before income
tax expense and minority interest 31,446 25,691
Income tax expense 10,220 8,806
Minority interest, net of income taxes (42) (56)
------------ -------------
Net earnings $21,268 $16,941
============ =============
Earnings per share
Basic $0.79 $0.71
Diluted 0.70 0.62
Weighted average common shares outstanding
Basic 27,037 23,877
Diluted 31,453 28,362
Actuant Corporation
Condensed Consolidated Statements of
Cash Flows
(Dollars in thousands)
Three Months Ended November 30,
-------------------------------
2005 2004
--------------- ---------------
(Unaudited)
Operating Activities
Net earnings $21,268 $16,941
Adjustments to reconcile net earnings
to net cash used in operating
activities:
Depreciation and amortization 6,521 4,098
Amortization of debt discount and
debt issuance costs 360 245
Stock-based compensation expense 1,066 915
Provision for deferred income taxes 57 245
Gain on disposal of assets (66) (179)
Changes in operating assets and
liabilities, excluding the effects
of the business acquisition:
Accounts receivable (18,446) (11,034)
Inventories (5,745) (5,327)
Prepaid expenses and other assets (1,184) 3,785
Trade accounts payable 6,707 (1,940)
Income taxes payable 5,493 1,827
Reimbursement of tax refund to
former subsidiary - (15,837)
Other accrued liabilities 4,992 (3,441)
--------------- ---------------
Net cash provided by (used in)
operating activities 21,023 (9,702)
Investing Activities
Proceeds from sale of property, plant
and equipment 115 357
Capital expenditures (5,075) (3,183)
Cash paid for business acquisition, net
of cash acquired - (8,952)
--------------- ---------------
Net cash used in investing activities (4,960) (11,778)
Financing Activities
Net borrowings (repayments) on
revolving credit facilities and
short-term borrowings (17,103) 17,625
Principal payments on term loans - (91)
Cash dividend (2,165) -
Tax benefit from stock-based
compensation 188 3,383
Stock option exercises and other 428 1,233
--------------- ---------------
Net cash provided by (used in)
financing activities (18,652) 22,150
Effect of exchange rate changes on cash (297) 385
--------------- ---------------
Net increase (decrease) in cash and
cash equivalents (2,886) 1,055
Cash and cash equivalents - beginning
of period 10,356 6,033
--------------- ---------------
Cash and cash equivalents - end of
period $7,470 $7,088
=============== ===============
ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA
(Dollars in thousands)
FISCAL 2005
---------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------------
SALES
TOOLS & SUPPLIES
SEGMENT $112,537 $138,546 $158,211 $174,250 $583,544
ENGINEERED SOLUTIONS
SEGMENT 87,140 96,721 113,522 95,139 392,522
---------------------------------------------
TOTAL $199,677 $235,267 $271,733 $269,389 $976,066
=============================================
% SALES GROWTH
TOOLS & SUPPLIES
SEGMENT 16.8% 33.8% 43.9% 63.9% 40.2%
ENGINEERED SOLUTIONS
SEGMENT 24.0% 33.5% 31.2% 16.8% 26.3%
TOTAL 19.9% 33.7% 38.3% 43.5% 34.3%
OPERATING PROFIT
TOOLS & SUPPLIES
SEGMENT $17,493 $19,621 $21,924 $28,537 $87,575
ENGINEERED SOLUTIONS
SEGMENT 12,080 10,803 16,091 10,792 49,766
CORPORATE / GENERAL (3,163) (3,486) (4,137) (4,064) (14,850)
---------------------------------------------
TOTAL $26,410 $26,938 $33,878 $35,265 $122,491
=============================================
OPERATING PROFIT %
TOOLS & SUPPLIES
SEGMENT 15.5% 14.2% 13.9% 16.4% 15.0%
ENGINEERED SOLUTIONS
SEGMENT 13.9% 11.2% 14.2% 11.3% 12.7%
TOTAL (INCLUDING
CORPORATE) 13.2% 11.4% 12.5% 13.1% 12.5%
EBITDA
TOOLS & SUPPLIES
SEGMENT $19,262 $22,560 $25,619 $31,877 $99,318
ENGINEERED SOLUTIONS
SEGMENT 13,384 13,345 18,143 13,150 58,022
CORPORATE / GENERAL (919) (3,308) (3,871) (4,186) (12,284)
---------------------------------------------
TOTAL $31,727 $32,597 $39,891 $40,841 $145,056
=============================================
EBITDA %
TOOLS & SUPPLIES
SEGMENT 17.1% 16.3% 16.2% 18.3% 17.0%
ENGINEERED SOLUTIONS
SEGMENT 15.4% 13.8% 16.0% 13.8% 14.8%
TOTAL (INCLUDING
CORPORATE) 15.9% 13.9% 14.7% 15.2% 14.9%
FISCAL 2006
---------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------------
SALES
TOOLS & SUPPLIES
SEGMENT $181,306 $181,306
ENGINEERED SOLUTIONS
SEGMENT 102,570 102,570
---------------------------------------------
TOTAL $283,876 $- $- $- $283,876
=============================================
% SALES GROWTH
TOOLS & SUPPLIES
SEGMENT 61.1% 61.1%
ENGINEERED SOLUTIONS
SEGMENT 17.7% 17.7%
TOTAL 42.2% 42.2%
OPERATING PROFIT
TOOLS & SUPPLIES
SEGMENT $30,416 $30,416
ENGINEERED SOLUTIONS
SEGMENT 11,762 11,762
CORPORATE / GENERAL (3,967) (3,967)
---------------------------------------------
TOTAL $38,211 $- $- $- $38,211
=============================================
OPERATING PROFIT %
TOOLS & SUPPLIES
SEGMENT 16.8% 16.8%
ENGINEERED SOLUTIONS
SEGMENT 11.5% 11.5%
TOTAL (INCLUDING
CORPORATE) 13.5% 13.5%
EBITDA
TOOLS & SUPPLIES
SEGMENT $33,530 $33,530
ENGINEERED SOLUTIONS
SEGMENT 14,105 14,105
CORPORATE / GENERAL (3,601) (3,601)
---------------------------------------------
TOTAL $44,034 $- $- $- $44,034
=============================================
EBITDA %
TOOLS & SUPPLIES
SEGMENT 18.5% 18.5%
ENGINEERED SOLUTIONS
SEGMENT 13.8% 13.8%
TOTAL (INCLUDING
CORPORATE) 15.5% 15.5%
ACTUANT CORPORATION
Reconciliation of GAAP measures to non-GAAP measures
(Dollars in thousands)
FISCAL 2005
---------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------------
EBITDA(1)
NET EARNINGS $16,941 $15,198 $19,997 $19,115 $71,251
FINANCING COSTS, NET 1,938 3,907 4,936 6,146 16,927
INCOME TAX EXPENSE 8,806 8,022 8,744 9,440 35,012
DEPRECIATION &
AMORTIZATION 4,098 5,699 6,448 6,176 22,421
MINORITY INTEREST,
NET OF INCOME TAXES (56) (229) (234) (36) (555)
---------------------------------------------
EBITDA (NON-GAAP
MEASURE) $31,727 $32,597 $39,891 $40,841 $145,056
=============================================
FISCAL 2006
---------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------------
EBITDA(1)
NET EARNINGS $21,268 $21,268
FINANCING COSTS, NET 6,067 6,067
INCOME TAX EXPENSE 10,220 10,220
DEPRECIATION &
AMORTIZATION 6,521 6,521
MINORITY INTEREST,
NET OF INCOME TAXES (42) (42)
---------------------------------------------
EBITDA (NON-GAAP
MEASURE) $44,034 $- $- $- $44,034
=============================================
(1) EBITDA represents net earnings before financing costs, income tax
expense, depreciation & amortization and minority interest. EBITDA
is not a calculation based upon generally accepted accounting
principles (GAAP). The amounts included in the EBITDA calculation,
however, are derived from amounts included in the Consolidated
Statements of Earnings data. EBITDA should not be considered as an
alternative to net earnings or operating profit as an indicator of
the company's operating performance, or as an alternative to
operating cash flows as a measure of liquidity. Actuant has
presented EBITDA because it regularly reviews this as a measure of
the company's ability to incur and service debt. In addition,
EBITDA is used by many of our investors and lenders, and is
presented as a convenience to them. However, the EBITDA measure
presented may not always be comparable to similarly titled
measures reported by other companies due to differences in the
components of the calculation.