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Actuant's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: ATU

Finally, the combination of solid margin improvement and our asset light business model is driving huge cash flow, up significantly from last year. The strong cash flow has reduced our net leverage down to 1.6x pro forma EBITDA, giving us ample financial flexibility to fund our future growth.

With that overview, I'll turn it over to Andy to go through some specifics for the quarter and then I'll come back and go into a couple of other topics in detail. Andy?

Andrew G. Lampereur

Thank you, Bob, and good morning, everyone. We're really happy, as Bob mentioned, with the strong second quarter results from our businesses, and we're pleased to have momentum in our favor as we move into the second half of the fiscal year. Sales of $378 million were above our guidance range despite currency headwind. Three of our 4 segments generated double-digit core growth, each slightly better than forecasted. Our operating profit grew 33% year-over-year which is faster than sales, meaning we once again had profit margin expansion. Importantly, our 2 highest margin segments, Industrial and Energy, continued to generate year-over-year margin expansion.

Now similar to the last several quarters, the combination of the top line growth and the margin expansion resulted in strong EPS growth. We generated second quarter earnings per share of $0.43 a share compared to $0.30 a year ago from continuing operations, which was a 43% improvement.

So let's get a little bit more granular now on the income statement, starting first with the sales line. Our second quarter sales, in total, were up 14%, which included 8% core and 7% from acquisitions as well as a 1% headwind from currency. Our 8% core growth was a modest acceleration from the first quarter. Overall sales were ahead of our forecast, with favorable core variances from Industrial, Energy and Electrical.

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