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Actuant Reports Third Quarter Results; Provides Initial 2013 Outlook

Stocks in this article: ATU

Consistent with past practice, all guidance excludes the impact of potential future acquisitions and share repurchases. Our acquisition pipeline is robust and with our strong cash flow and borrowing capacity, we are well positioned financially to fund both growth investments and opportunistic share buy-backs.

We are optimistic about Actuant’s future as we continue to invest in growth initiatives, pursue opportunities to strengthen our portfolio and improve our market position. We believe these activities will enable us to continue to create long-term shareholder value.”

Conference Call Information

An investor conference call is scheduled for 10am CDT today, June 20, 2012. Webcast information and conference call materials will be made available on the Actuant company website ( www.actuant.com) prior to the start of the call.

Safe Harbor Statement

Certain of the above comments represent forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Management cautions that these statements are based on current estimates of future performance and are highly dependent upon a variety of factors, which could cause actual results to differ from these estimates. Actuant’s results are also subject to general economic conditions, variation in demand from customers, the impact of geopolitical activity on the economy, continued market acceptance of the Company’s new product introductions, the successful integration of acquisitions, restructuring, operating margin risk due to competitive pricing and operating efficiencies, supply chain risk, material and labor cost increases, foreign currency fluctuations and interest rate risk. See the Company’s Form 10-K filed with the Securities and Exchange Commission for further information regarding risk factors. Actuant disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason.

About Actuant Corporation

Actuant Corporation is a diversified industrial company with operations in more than 30 countries. The Actuant businesses are leaders in a broad array of niche markets including branded hydraulic and electrical tools and supplies; specialized products and services for energy markets and highly engineered position and motion control systems. The Company was founded in 1910 and is headquartered in Menomonee Falls, Wisconsin. Actuant trades on the NYSE under the symbol ATU. For further information on Actuant and its businesses, visit the Company's website at www.actuant.com.

(tables follow)

Actuant Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
     
May 31, August 31,
2012 2011
 
ASSETS
Current assets
Cash and cash equivalents $ 80,149 $ 44,221
Accounts receivable, net 237,438 223,760
Inventories, net 206,389 223,235
Deferred income taxes 32,206 32,461
Other current assets   19,109     22,807  
Total current assets 575,291 546,484
 
Property, plant and equipment, net 115,965 128,649
Goodwill 873,682 888,466
Other intangible assets, net 454,360 479,406
Other long-term assets   14,811     13,676  
 
Total assets $ 2,034,109   $ 2,056,681  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 167,632 $ 170,084
Accrued compensation and benefits 53,008 71,639
Short term borrowings and current maturities of debt 6,250 2,690
Income taxes payable 30,289 19,342
Other current liabilities   68,583     66,548  
Total current liabilities 325,762 330,303
 
Long-term debt 392,500 522,727
Deferred income taxes 133,619 165,945
Pension and postretirement benefit accruals 18,171 18,864
Other long-term liabilities 86,772 99,829
 
Shareholders' equity
Capital stock 15,054 13,731
Additional paid-in capital 382 (154,231 )
Treasury stock (39,282 ) -
Retained earnings 1,180,942 1,077,192
Accumulated other comprehensive loss (79,811 ) (17,679 )
Stock held in trust (2,661 ) (2,137 )
Deferred compensation liability   2,661     2,137  
Total shareholders' equity   1,077,285     919,013  
 
Total liabilities and shareholders' equity $ 2,034,109   $ 2,056,681  
 

Actuant Corporation
Condensed Consolidated Statements of Earnings
(Dollars in thousands except per share amounts)
(Unaudited)
         
 
Three Months Ended Nine Months Ended
May 31, May 31, May 31, May 31,
2012   2011 2012   2011
 
Net sales $ 429,215 $ 392,777 $ 1,200,038 $ 1,041,887
Cost of products sold   263,095     238,739     740,018     640,969  
Gross profit 166,120 154,038 460,020 400,918
 
Selling, administrative and engineering expenses 91,063 89,166 263,935 244,453
Amortization of intangible assets   7,393     6,871     21,684     19,846  
Operating profit 67,664 58,001 174,401 136,619
 
Financing costs, net 7,236 7,850 23,279 23,640
Debt refinancing charges 16,830 - 16,830 -
Other expense, net   2,604     331     3,090     1,276  
Earnings from continuing operations before income
tax expense 40,994 49,820 131,202 111,703
 
Income tax expense   6,593     11,460     27,452     24,540  
Earnings from continuing operations 34,401 38,360 103,750 87,163
Loss from discontinued operations, net of income taxes   -     (2,002 )   -     (16,986 )
Net earnings $ 34,401   $ 36,358   $ 103,750   $ 70,177  
 
Earnings from continuing operations per share
Basic $ 0.48 $ 0.56 $ 1.50 $ 1.28
Diluted 0.45 0.51 1.39 1.17
 
Earnings per share
Basic $ 0.48 $ 0.53 $ 1.50 $ 1.03
Diluted 0.45 0.49 1.39 0.95
 
Weighted average common shares outstanding
Basic 71,083 68,354 69,184 68,208
Diluted 75,371 75,571 75,201 75,314
 

Actuant Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
       
Three Months Ended Nine Months Ended
May 31, May 31, May 31, May 31,
2012 2011 2012 2011
 
Operating Activities
Net earnings $ 34,401 $ 36,358 $ 103,750 $ 70,177
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 13,582 12,959 40,192 38,143
Net loss on disposal of businesses - 2,002 - 15,744
Stock-based compensation expense 3,040 3,280 10,002 8,093
Provision (benefit) for deferred income taxes 117 (908 ) (2,137 ) (2,298 )
Amortization of debt discount and debt issuance costs 495 495 1,492 2,409
Non-cash debt refinance charge 2,254 - 2,254 -
Other non-cash adjustments 208 28 (138 ) (18 )
Changes in components of working capital and other:
Accounts receivable (4,585 ) (18,726 ) (21,692 ) (27,752 )
Inventories 10,231 (13,964 ) 9,171 (39,533 )
Prepaid expenses and other assets 3,208 1,939 1,071 5,989
Trade accounts payable 10,907 24,704 2,779 18,400
Income taxes payable (2,092 ) 1,634 (2,056 ) 6,904
Accrued compensation and benefits 5,332 10,065 (8,766 ) 646
Other accrued liabilities   215     14,936     (6,608 )   (1,806 )
Net cash provided by operating activities 77,313 74,802 129,314 95,098
 
Investing Activities
Proceeds from sale of property, plant and equipment 711 93 8,486 359
Proceeds from sale of businesses, net of transaction costs - - - 3,463
Capital expenditures (7,039 ) (6,552 ) (17,491 ) (14,843 )
Business acquisitions, net of cash acquired   (10,827 )   (1,514 )   (29,734 )   (160,047 )
Net cash used in investing activities (17,155 ) (7,973 ) (38,739 ) (171,068 )
 
Financing Activities
Net borrowings (repayments) on revolving credit facilities and other debt (58,000 ) (41,155 ) (58,167 ) 14
Issuance of term loan - - - 100,000
Principal repayments on term loan (1,250 ) - (1,250 ) -
Repurchases of 2% Convertible Notes (102 ) - (102 ) (34 )
Proceeds on 5.625% Senior Note issuance 300,000 - 300,000 -
Redemption of 6.875% Senior Notes (250,000 ) - (250,000 ) -
Debt issuance costs (5,340 ) - (5,340 ) (5,197 )
Purchase of treasury shares (18,872 ) - (39,282 ) -
Stock option exercises and related tax benefits 885 472 6,392 7,285
Cash dividend   -     -     (2,748 )   (2,716 )
Net cash provided by (used in) financing activities (32,679 ) (40,683 ) (50,497 ) 99,352
 
Effect of exchange rate changes on cash   (5,775 )   1,753     (4,150 )   4,695  
Net increase in cash and cash equivalents 21,704 27,899 35,928 28,077
Cash and cash equivalents - beginning of period   58,445     40,400     44,221     40,222  
Cash and cash equivalents - end of period $ 80,149   $ 68,299   $ 80,149   $ 68,299  
 

ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA FROM CONTINUING OPERATIONS
  (Dollars in thousands)
                       
FISCAL 2011 FISCAL 2012
Q1   Q2   Q3   Q4   TOTAL Q1   Q2   Q3     Q4     TOTAL
SALES
INDUSTRIAL SEGMENT $ 87,392 $ 88,935 $ 107,759 $ 108,927 $ 393,013 $ 100,253 $ 98,342 $ 110,102 $ 308,697
ENERGY SEGMENT 70,743 61,587 78,002 82,728 293,060 80,421 78,937 96,399 255,757
ELECTRICAL SEGMENT 55,396 70,176 80,329 80,112 286,013 82,833 77,105 85,947 245,885
ENGINEERED SOLUTIONS SEGMENT   104,881       110,000       126,687       131,669       473,237     129,292       123,640       136,767               389,699  
TOTAL $ 318,412     $ 330,698     $ 392,777     $ 403,436     $ 1,445,323   $ 392,799     $ 378,024     $ 429,215             $ 1,200,038  
 
% SALES GROWTH
INDUSTRIAL SEGMENT 34 % 28 % 35 % 27 % 31 % 15 % 11 % 2 % 9 %
ENERGY SEGMENT 10 % 14 % 38 % 35 % 24 % 14 % 28 % 24 % 22 %
ELECTRICAL SEGMENT 2 % 28 % 30 % 28 % 22 % 50 % 10 % 7 % 19 %
ENGINEERED SOLUTIONS SEGMENT 18 % 23 % 13 % 31 % 21 % 23 % 12 % 8 % 14 %
TOTAL 17 % 24 % 27 % 30 % 25 % 23 % 14 % 9 % 15 %
 
OPERATING PROFIT (LOSS)
INDUSTRIAL SEGMENT $ 20,187 $ 20,149 $ 29,517 $ 28,562 $ 98,415 $ 27,933 $ 26,690 $ 30,681 $ 85,304
ENERGY SEGMENT 11,858 6,792 13,545 17,150 49,345 13,217 11,632 18,515 43,364
ELECTRICAL SEGMENT 3,760 4,945 5,462 6,516 20,683 4,977 5,801 8,814 19,592
ENGINEERED SOLUTIONS SEGMENT 13,802 13,425 19,977 16,408 63,612 18,999 13,281 18,467 50,747
CORPORATE / GENERAL   (8,035 )     (8,265 )     (10,500 )     (11,685 )     (38,485 )   (7,845 )     (7,948 )     (8,813 )             (24,606 )
TOTAL $ 41,572     $ 37,046     $ 58,001     $ 56,951     $ 193,570   $ 57,281     $ 49,456     $ 67,664             $ 174,401  
 
OPERATING PROFIT %
INDUSTRIAL SEGMENT 23.1 % 22.7 % 27.4 % 26.2 % 25.0 % 27.9 % 27.1 % 27.9 % 27.6 %
ENERGY SEGMENT 16.8 % 11.0 % 17.4 % 20.7 % 16.8 % 16.4 % 14.7 % 19.2 % 17.0 %
ELECTRICAL SEGMENT 6.8 % 7.0 % 6.8 % 8.1 % 7.2 % 6.0 % 7.5 % 10.3 % 8.0 %
ENGINEERED SOLUTIONS SEGMENT 13.2 % 12.2 % 15.8 % 12.5 % 13.4 % 14.7 % 10.7 % 13.5 % 13.0 %
TOTAL (INCLUDING CORPORATE) 13.1 % 11.2 % 14.8 % 14.1 % 13.4 % 14.6 % 13.1 % 15.8 % 14.5 %
 
EBITDA
INDUSTRIAL SEGMENT $ 22,449 $ 22,245 $ 31,227 $ 30,680 $ 106,601 $ 29,220 $ 29,116 $ 32,070 $ 90,406
ENERGY SEGMENT 15,745 10,475 16,778 21,488 64,486 18,243 15,601 22,216 56,060
ELECTRICAL SEGMENT 5,067 8,075 8,208 9,390 30,740 7,705 8,697 11,444 27,846
ENGINEERED SOLUTIONS SEGMENT 17,184 16,346 23,878 20,046 77,454 22,213 16,762 21,418 60,393
CORPORATE / GENERAL   (7,161 )     (7,709 )     (9,462 )     (10,769 )     (35,101 )   (7,217 )     (7,479 )     (8,506 )             (23,202 )
TOTAL $ 53,284     $ 49,432     $ 70,629     $ 70,835     $ 244,180   $ 70,164     $ 62,697     $ 78,642             $ 211,503  
 
EBITDA %
INDUSTRIAL SEGMENT 25.7 % 25.0 % 29.0 % 28.2 % 27.1 % 29.1 % 29.6 % 29.1 % 29.3 %
ENERGY SEGMENT 22.3 % 17.0 % 21.5 % 26.0 % 22.0 % 22.7 % 19.8 % 23.0 % 21.9 %
ELECTRICAL SEGMENT 9.1 % 11.5 % 10.2 % 11.7 % 10.7 % 9.3 % 11.3 % 13.3 % 11.3 %
ENGINEERED SOLUTIONS SEGMENT 16.4 % 14.9 % 18.8 % 15.2 % 16.4 % 17.2 % 13.6 % 15.7 % 15.5 %
TOTAL (INCLUDING CORPORATE) 16.7 % 14.9 % 18.0 % 17.6 % 16.9 % 17.9 % 16.6 % 18.3 % 17.6 %
 

ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA FROM CONTINUING OPERATIONS
RECONCILIATION OF GAAP MEASURE TO NON-GAAP MEASURES
  (Dollars in thousands, except for per share amounts)
                         
 
FISCAL 2011 FISCAL 2012
Q1   Q2   Q3   Q4   TOTAL Q1   Q2   Q3     Q4     TOTAL
EARNINGS FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS (1)
NET EARNINGS $ 25,890 $ 7,929 $ 36,358 $ 41,382 $ 111,559 $ 37,174 $ 32,175 $ 34,401 $ 103,750
DISCONTINUED OPERATIONS, NET OF INCOME TAX 771 14,213 2,002 (4,049 ) 12,937 - - - -
DEBT REFINANCING CHARGES, NET OF INCOME TAX   -     -     -     -       -   -     -     10,482             10,482
TOTAL $ 26,661   $ 22,142   $ 38,360   $ 37,333     $ 124,496 $ 37,174   $ 32,175   $ 44,883           $ 114,232
 
DILUTED EARNINGS PER SHARE, FROM CONTINUING
OPERATIONS BEFORE SPECIAL ITEMS (1)
NET EARNINGS $ 0.35 $ 0.11 $ 0.49 $ 0.55 $ 1.50 $ 0.50 $ 0.43 $ 0.45 $ 1.39
DISCONTINUED OPERATIONS, NET OF INCOME TAX 0.01 0.19 0.02 (0.05 ) 0.18 - - - -
DEBT REFINANCING CHARGES, NET OF INCOME TAX   -     -     -     -       -   -     -     0.15             0.15
TOTAL $ 0.36   $ 0.30   $ 0.51   $ 0.50     $ 1.68 $ 0.50   $ 0.43   $ 0.60           $ 1.54
 
 
EBITDA (2)
NET EARNINGS (GAAP MEASURE) $ 25,890 $ 7,929 $ 36,358 $ 41,382 $ 111,559 $ 37,174 $ 32,175 $ 34,401 $ 103,750
FINANCING COSTS, NET 7,552 8,238 7,850 8,479 32,119 8,222 7,821 24,066 40,109
INCOME TAX EXPENSE 6,911 6,169 11,460 10,171 34,711 11,228 9,631 6,593 27,452
DEPRECIATION & AMORTIZATION 12,160 12,883 12,959 14,852 52,854 13,540 13,070 13,582 40,192
DISCONTINUED OPERATIONS, NET OF INCOME TAX   771     14,213     2,002     (4,049 )     12,937   -     -     -             -
EBITDA (NON-GAAP MEASURE) $ 53,284   $ 49,432   $ 70,629   $ 70,835     $ 244,180 $ 70,164   $ 62,697   $ 78,642           $ 211,503
 
FOOTNOTES
 
NOTE: The total of the individual quarters may not equal the annual total due to rounding.
 
(1) Earnings from continuing operations and diluted earnings per share, excluding special items (discontinued operations and debt refinancing charges), represent net earnings and diluted earnings per share per the Condensed Consolidated Statements of Earnings net of charges or credits for items to be highlighted for comparability purposes. These measures should not be considered as an alternative to net earnings or diluted earnings per share as an indicator of the Company's operating performance. However, this presentation is important to investors for understanding the operating results of the current portfolio of Actuant companies. The total of the individual components may not equal due to rounding.
 
(2) EBITDA represents net earnings before financing costs, net, income tax expense, depreciation & amortization and discontinued operations. 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 Condensed 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.




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