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Actuant Management Discusses Q3 2012 Results - Earnings Call Transcript

Stocks in this article: ATU

We'll cover all these topics in more detail in the call, as well as add some color to our 2013 guidance we provided. At this point, I'll turn it over to Andy to go through the specifics for the quarter. Andy?

Andrew G. Lampereur

Thank you, Bob, and good morning, everyone. It was an all around good quarter with strong execution evidenced in our operating results, acquisitions, stock repurchases and refinancing activities. I'll first dissect our operating results. Sales of $429 million were at the high end of our guidance range and up 4% core above last year, excluding the impact of acquisitions and foreign currency headwinds. Operating profit grew 17% year-over-year, faster than the overall 9% increase in sales, meaning we once again had operating profit margin expansion this quarter. Our net income and earnings per share were both adversely impacted by the $17 million pretax refinancing charge in the quarter related to converting our former 2% convertible bonds into stock, retiring the old 6 7/8% senior notes and canceling an interest rate swap agreement in conjunction with the refinancing.

On an after-tax basis, this was a $10.5 million charge or $0.15 a share net reduction to EPS. I'll cover the details on the refinancing later in the call. Excluding these charges, EPS was $0.60 a share, up 18% over the comparable prior year period.

Now I'll provide more color on our results starting first with the sales line. Third quarter sales in total were up 9% consisting of 4% core growth and 8% from acquisitions. The combination of which was partially muted by 3% foreign currency rate headwinds. The 4% core growth was in line with our guidance and our internal expectations and a clear moderation from last quarter's strong 8% core growth. All 3 geographic regions being the Americas, Europe and Asia-Pac showed year-over-year growth, with the Americas, not surprisingly, leading the way. Growth did moderate in Europe as the quarter progressed, and we expect this to continue in the fourth quarter. From a segment level perspective, Energy was a clear leader with 23% core growth, followed by Electrical with 10%, Industrial 5% and Engineered Solutions down 11%. I'll provide more color later on the call by segment.

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