Actuant Corporation (NYSE: ATU) today announced it has closed the sale of Precision-Hayes International and Cortland Fibron as part of the ongoing restructuring efforts. The company also announced its intention to divest the Engineered Components & Systems (EC&S) division, which would help Actuant to focus on high-margin businesses.
For the second quarter, earnings surpassed street consensus, but revenue came in a tad lower than analysts’ estimates due to currency-related headwinds and divestitures. Sales came in at $271.9 million lower than $275.2 million reported last year. Excluding divestitures, core sales improved 7% in the Q2 period. Non-GAAP EPS jumped 46% to $0.19 over $0.13 in the prior year period.
Industrial Tools & Services Segment (IT&S) jumped 9% to $149.5 million aided by strong sales growth from the Americas and the Middle East. Operating margins improved 2.8% due to the focus of standard product within the Heavy Lifting product line. Core IT&S sales grew 12% despite weather-related headwinds.
Related: Actuant slips to loss in Q1 but beats estimates
EC&S division saw 11% dip in sales to $122.4 million due to the divestiture of Precision-Hayes International and Cortland Fibron. Operating margins came in at 4.5% over 0.9% last year helped by ongoing operational improvements and better price realizations.
As part of the restructuring efforts, Actuant plans to integrate the Enerpac and Hydratight businesses which are going to incur a one-time cost of $15 million to $20 million. The integration is expected to be completed within 2 years, which is expected to bring in annual savings of $12 million to $15 million.
Looking ahead, Actuant expects third-quarter revenue to be between $295 million and $305 million and adjusted earnings of $0.40 to $0.45 per share. Analysts are expecting the company to report EPS of $0.37 on sales of $318.5 million.
For the fiscal 2019 period, the top line is forecasted to come in the range of $1.15 billion to $1.19 billion with core sales growth of 3% to 5%. On an adjusted basis, EPS is projected to be $1.09 and $1.20. Meanwhile, the street expects the company to report sales of $1.19 billion with earnings of $1.16 per share. Actuant expects to end the fiscal period with free cash flow of $80 million to $85 million.
Actuant Corporation’s stock was down 1.5% at 11:45 am ET due to top-line miss and mixed outlook. The stock price has improved 21% this year and grew 11.3% in the last 12 months.