Actuant slips to loss in Q1 but beats estimates

Industrial products and systems manufacturer Actuant Corporation (ATU) slipped to a loss in the first quarter from a profit last year, due to impairment and divestiture charges related to the expected sale of the Cortland US and Precision-Hayes International businesses as well as restructuring charges. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates.

Net loss was $17.5 million or $0.29 per share compared to a profit of $5.23 million or $0.09 per share in the previous year quarter. Excluding impairment, divestiture and restructuring charges, adjusted earnings jumped 42% to $0.27 per share.

Net sales rose 1.2% to $292.5 million. Core sales increased 3% year-over-year while foreign currency rate changes lowered net sales by 2%. The net impact from the Mirage and Equalizer acquisitions, net of the Viking divestiture, was negligible.

Looking ahead into the second quarter, the company expects adjusted earnings in the range of $0.15 to $0.20 per share and sales in the range of $268 million to $278 million. Actuant continues to expect sales in the back half of its fiscal year to be even stronger.

For the fiscal year 2019, Actuant now predicts adjusted EPS in the range of $1.09 to $1.20 per share and sales in the range of $1.15 billion to $1.19 billion, which reflects the strengthening of the US dollar and the sale of the Cortland, Fibron business. Free cash flow is anticipated to be $80 million to $85 million for the full year.

Actuant crashes as outlook misses expectations despite results beat

For the first quarter, sales from industrial tools & services segment increased 5% year-over-year helped by the continued strength of its end markets and investments in commercial effectiveness. The impact of foreign currency exchange rates reduced sales by 1% and the Equalizer and Mirage acquisitions added 2%, resulting in a 4% core sales increase.

Sales from engineered components & systems segment declined 2% due to a stronger US dollar and the prior year divestiture of the Viking business. Core sales rose 2% on increased demand in the automotive, off-highway vehicle and concrete tensioning markets, new platform wins starting production and price realization.

On December 19, the company completed the sale of Cortland Fibron (upstream oil & gas). Actuant has initiated the process to divest Cortland US and Precision-Hayes International businesses, which have been moved to assets and liabilities held for sale.

Shares of Actuant ended Wednesday’s regular session down 0.34% at $23.16 on the NYSE. The stock has fallen over 8% in the year so far and over 23% in the past three months. Following the earnings release, the stock fell over 10% in the pre-market session.

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