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Actuant Corp. Reports Operating Results (10-Q)

January 08, 2010 | About:
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10qk

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Actuant Corp. (ATU) filed Quarterly Report for the period ended 2009-11-30.

Actuant Corp. has a market cap of $1.31 billion; its shares were traded at around $19.37 with a P/E ratio of 28.9 and P/S ratio of 1. The dividend yield of Actuant Corp. stocks is 0.2%. Actuant Corp. had an annual average earning growth of 21.9% over the past 5 years.ATU is in the portfolios of First Pacific Advisors of First Pacific Advisors, LLC, Ron Baron of Baron Funds.

Highlight of Business Operations:

Results of operations for the three months ended November 30, 2009 include positive sales trends (including sequential year-over-year core sales improvements in the Industrial, Electrical and Engineered Solutions Segments and stabilization in the core sales rate of change in the Energy Segment), as well as robust cash flow generation. Sales for the first quarter of fiscal 2010 were $305 million, which represented a 5% increase from the fourth quarter of fiscal 2009 and the highest quarterly sales level in the trailing four quarters. Most businesses and end markets we serve were not yet significantly impacted by the weakening global economic environment in the first quarter of fiscal 2009, and therefore, fiscal first quarter year-over-year comparisons are unfavorable. Reduced sales volumes, temporary inefficiencies associated with facility consolidations and increased incentive compensation in the first quarter of fiscal 2010, as well as the $27 million non-cash asset impairment charge related to the RV business recognized in the first quarter of fiscal 2009, also impact operating margin comparisons. Results for the three months ended November 30, 2009 include $4 million of restructuring charges (compared to $1 million in the prior year period) as we continued to execute on facility consolidation and headcount reductions in order to reduce our cost structure. Cash flows generated from operations, excluding the $37 million increase in accounts receivable due to the expiration of the securitization program, were $44 million, reflecting the benefits of multiple asset management activities. Our priorities during the remainder of fiscal 2010 include the execution of restructuring activities, continued working capital management and investments in growth initiatives.

Consolidated net sales decreased by $66 million, or 18% from $371 million for the three months ended November 30, 2008 to $305 million for the three months ended November 30, 2009. Excluding the $2 million year-over-year change in sales from acquired businesses and the $11 million favorable impact of foreign currency exchange rate changes, fiscal 2010 first quarter consolidated core sales decreased 20% as compared to the first quarter of fiscal 2009.

Electrical segment net sales decreased by $16 million, or 16%, from $103 million for the three months ended November 30, 2008 to $87 million for the three months ended November 30, 2009. Excluding the $3 million favorable impact of foreign currency rate changes, core sales declined 18% for the three months ended November 30, 2009, the result of lower demand across all end markets, especially in European retail, commercial construction and utility markets (due to weak economic conditions).

Electrical segment operating profit decreased by $5 million from $6 million for the three months ended November 30, 2008 to $1 million for the three months ended November 30, 2009. This decline resulted from lower sales volumes and profit margins, $3 million of incremental restructuring charges compared to the same period last year, increased incentive compensation costs and temporary inefficiencies associated with several restructuring projects.

During 2009, we committed to various restructuring initiatives including workforce reductions, plant consolidations, the continued movement of production and product sourcing to low cost countries and the centralization of certain selling and administrative functions. The total restructuring charges for these activities were $4 million and $1 million for the three months ended November 30, 2009 and 2008, respectively. We expect to incur approximately $10- $12 million of restructuring charges throughout fiscal 2010, resulting in a cumulative pre-tax restructuring charge of approximately $35 million. These restructuring initiatives are expected to generate annual pre-tax savings of approximately $35 million. We believe these restructuring actions will better align our resources with strategic growth opportunities, optimize existing manufacturing capabilities, improve our overall cost structure and deliver increased free cash flow and profitability. See Note 4, Restructuring in the Notes to the Condensed Consolidated Financial Statements for further discussion.

First quarter fiscal 2009 cash provided by operations was $13 million, driven by net earnings of $12 million, which included non-cash expenses (principally the RV impairment charge and related tax benefit and depreciation and amortization expense) of $31 million. These net earnings were offset by additional working capital requirements of $30 million, primarily related to the payment of fiscal 2008 accrued incentive compensation and a reduction in trade accounts payable. During the first quarter of fiscal 2009, the Company invested $8 million in capital expenditures and $231 million in the Cortland acquisition. Total cash provided from financing activities for the first quarter of fiscal 2009 was $143 million (Cortland acquisition funding).

Read the The complete Report

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