Actuant Reports Improved First Quarter Results; Increases Fiscal 2012 Earnings Guidance

Actuant Corporation (NYSE: ATU) today announced results for its first quarter ended November 30, 2011.

Highlights

  • 39% year-over-year increase in diluted earnings per share from continuing operations (“EPS”) to $0.50.
  • Core sales growth of 7% (total sales less the impact of acquisitions, divestitures and foreign currency rate changes) with double digit core sales growth in both the Industrial and Energy segments.
  • Year-over-year operating profit margin expansion of 150 basis points.
  • Purchased approximately one million shares of common stock under the previously announced share repurchase program.
  • Increased full year guidance to reflect strong first quarter results and completed share repurchases.

Robert C. Arzbaecher, Chairman and CEO of Actuant commented, “Actuant delivered another strong quarter with sales, EPS and cash flow solidly above expectations. In particular, we were pleased with the first quarter’s double digit core sales growth in both the Industrial and Energy segments. Our execution was outstanding as we generated year-over-year EBITDA margin improvement in all four segments while continuing to invest in our Growth + Innovation initiatives. Finally, we completed the repurchase of nearly one million common shares, deploying approximately $20 million of the first quarter’s free cash flow on what we believe is an attractive investment. I want to thank our employees for their efforts in delivering a great start to the year.”

Consolidated Results

Consolidated sales for the first quarter were $393 million, 23% higher than the comparable prior year quarter. Core sales increased 7% with acquisitions contributing an additional 15% and the weaker U.S. dollar +1%. Fiscal 2012 first quarter net earnings from continuing operations were $37.2 million compared to $26.7 million in the comparable prior year quarter. EPS of $0.50 in the first quarter of fiscal 2012 was 39% higher than the $0.36 in the comparable prior year quarter.

Segment Results

Industrial Segment

(US $ in millions)

Three Months Ended
November 30,

2011 2010
Sales $100.3 $87.4
Operating Profit $27.9 $20.2
Operating Profit % 27.9% 23.1%

First quarter fiscal 2012 Industrial segment sales were $100 million, 15% higher than the prior year. Excluding foreign currency rate changes (+2%), core sales increased 13% reflecting higher demand across nearly all geographies and served markets. Notably, the segment’s vertical market penetration strategies and new products continue to gain traction. Year-over-year operating profit margins improved 480 basis points due primarily to the higher volumes as well as favorable mix.

Energy Segment

(US $ in millions)

Three Months Ended
November 30,

2011 2010
Sales $80.4 $70.7
Operating Profit $13.2 $11.9
Operating Profit % 16.4% 16.8%

Fiscal 2012 first quarter year-over-year Energy segment sales increased 14% to $80 million. Excluding the 2% favorable foreign currency impact, core sales increased 12% due primarily to higher activity levels in both maintenance and capital spending within the oil & gas and power generation markets. Continued penetration into emerging markets and energy service adjacencies also contributed to the sales growth. Current year first quarter operating profit margin was 16.4%, a modest decline from the prior year due to unfavorable mix.

Electrical Segment

(US $ in millions)

Three Months Ended
November 30,

2011 2010
Sales $82.8 $55.4
Operating Profit $5.0 $3.8
Operating Profit % 6.0% 6.8%

Electrical segment fiscal 2012 first quarter sales were $83 million, 50% higher than the comparable prior year quarter. Excluding the 1% favorable foreign currency impact and 42% contribution from the Mastervolt acquisition, core sales increased 7%. This core sales improvement reflected higher volumes in the retail, industrial and utility markets as well as the impact of price increases. Mastervolt solar sales benefitted from aggressive sales promotions and higher shipments in the UK. First quarter operating profit margin declined 80 basis points from the prior year due to unfavorable acquisition mix and plant closure costs.

Engineered Solutions Segment

(US $ in millions)

Three Months Ended
November 30,

2011 2010
Sales $129.3 $104.9
Operating Profit $19.0 $13.8
Operating Profit % 14.7% 13.2%

First quarter fiscal 2012 Engineered Solutions segment sales increased 23% from the prior year to $129 million. Excluding the impact of the weaker U.S. dollar (+1%), and the Weasler acquisition (+22%), year-over-year core sales were unchanged. First quarter sales reflected increased heavy-duty truck production in North America and Europe which was more than offset by year-over-year declines in automotive sales. Demand for products in the agriculture and construction equipment markets remained strong. First quarter operating margins increased 150 basis points year-over-year due to underlying sales growth in the segment’s most profitable end markets.

Corporate

Corporate expenses for the first quarter of fiscal 2012 were $7.8 million, in line with the comparable prior year period. Higher spending on increased staffing and Growth + Innovation activities was offset by lower acquisition and incentive compensation costs.

Financial Position

Net debt at November 30, 2011 was $482 million (total debt of $530 million less $48 million of cash), essentially unchanged from fiscal year end. Actuant’s first quarter cash flow was significantly stronger than the prior year quarter. The Company used approximately $20 million of cash flow to repurchase nearly one million common shares during the quarter. At November 30, 2011, the Company had net debt to EBITDA leverage of 1.8 times and over $525 million of revolver availability.

Outlook

Commenting on Actuant’s outlook, Arzbaecher stated, “We are off to a strong start to the year with first quarter sales, net earnings and cash flow ahead of plan. We believe we will achieve record highs for these financial metrics in fiscal 2012. The current economic environment creates uncertainty for Actuant and its customers. Therefore, despite the robust year-over-year growth we have enjoyed over the past quarters, we anticipate that economic conditions in some of our served geographies, most notably Europe, could provide for more challenging business conditions going forward.

“Taking these factors into account, as well as our recent stock repurchases and solid growth in our most profitable segments, we are raising our full year EPS and cash flow guidance. We now expect full year EPS to be in the $1.85-2.05 range, a $0.05 per share increase from our prior expectations. Since the current strong US dollar creates currency translation headwinds, we are maintaining our $1.60-1.65 billion sales guidance. We are expecting fiscal 2012 full year free cash flow to be in the $160-170 million range, a $5 million increase above our prior guidance range.

“We expect second quarter sales to be in the $360-370 million range, with EPS of $0.35-0.40, a 25% year-over-year improvement at the mid-point of the range. The second quarter outlook incorporates the normal seasonal slowdown experienced across nearly all of our underlying businesses. Consistent with past practice, all guidance excludes the impact of potential future acquisitions and additional share repurchases.

“We continue to benefit from our diversity with solid demand across the majority of our end markets and geographies. At the same time, we are successfully executing on our continuous improvement initiatives focused on both growth and margin expansion. These factors have contributed to our strong performance and provide us with optimism that we’ll be able to deliver continued growth in earnings and cash flow."

Conference Call Information

An investor conference call is scheduled for 10am CT today, December 21, 2011. 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)
November 30,August 31,
20112011
ASSETS
Current assets
Cash and cash equivalents $ 48,119 $ 44,221
Accounts receivable, net 227,131 223,760
Inventories, net 219,392 223,235
Deferred income taxes 32,186 32,461
Other current assets 22,711 22,807
Total current assets 549,539 546,484
Property, plant and equipment, net 118,582 128,649
Goodwill 871,856 888,466
Other intangible assets, net 464,438 479,406
Other long-term assets 13,139 13,676
Total assets $ 2,017,554 $ 2,056,681
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 163,286 $ 170,084
Accrued compensation and benefits 43,906 71,639
Short term borrowings and current maturities of debt 4,036 2,690
Income taxes payable 19,158 19,342
Other current liabilities 67,666 66,548
Total current liabilities 298,052 330,303
Long-term debt 525,997 522,727
Deferred income taxes 164,401 165,945
Pension and postretirement benefit accruals 18,706 18,864
Other long-term liabilities 95,105 99,829
Shareholders' equity
Capital stock 13,830 13,731
Additional paid-in capital (142,428 ) (154,231 )
Treasury stock (20,410 ) -
Retained earnings 1,114,366 1,077,192
Accumulated other comprehensive loss (50,065 ) (17,679 )
Stock held in trust (2,580 ) (2,137 )
Deferred compensation liability 2,580 2,137
Total shareholders' equity 915,293 919,013
Total liabilities and shareholders' equity $ 2,017,554 $ 2,056,681

Actuant Corporation
Condensed Consolidated Statements of Earnings
(Dollars in thousands except per share amounts)
(Unaudited)
Three Months Ended
November 30,November 30,
20112010
Net sales $ 392,799 $ 318,412
Cost of products sold 240,191 196,559
Gross profit 152,608 121,853
Selling, administrative and engineering expenses 88,109 74,192
Amortization of intangible assets 7,218 6,089
Operating profit 57,281 41,572
Financing costs, net 8,222 7,552
Other expense, net 657 448
Earnings from continuing operations before income
tax expense 48,402 33,572
Income tax expense 11,228 6,911
Earnings from continuing operations 37,174 26,661
Loss from discontinued operations, net of income taxes - (771 )
Net earnings $ 37,174 $ 25,890
Earnings from continuing operations per share
Basic $ 0.54 $ 0.39
Diluted 0.50 0.36
Earnings per share
Basic $ 0.54 $ 0.38
Diluted 0.50 0.35
Weighted average common shares outstanding
Basic 68,421 68,000
Diluted 75,142 74,876

Actuant Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
November 30,November 30,
20112010
Operating Activities
Net earnings $ 37,174 $ 25,890
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 13,540 12,301
Stock-based compensation expense 3,543 2,414
Benefit for deferred income taxes (950 ) (674 )
Amortization of debt discount and debt issuance costs 497 941
Other non-cash adjustments 58 261
Changes in components of working capital and other:
Accounts receivable (9,597 ) (10,760 )
Inventories (2,595 ) (8,710 )
Prepaid expenses and other assets (825 ) 185
Trade accounts payable (2,886 ) 285
Income taxes payable 1,216 2,039
Accrued compensation and benefits (19,169 ) (14,940 )
Other accrued liabilities 469 (2,746 )
Net cash provided by operating activities 20,475 6,486
Investing Activities
Proceeds from sale of property, plant and equipment 5,918 59
Capital expenditures (5,595 ) (4,077 )
Business acquisitions, net of cash acquired (290 ) (326 )
Net cash provided by (used in) investing activities 33 (4,344 )
Financing Activities
Net borrowings on revolving credit facilities and other debt 4,809 14
Repurchases of 2% Convertible Notes - (34 )
Purchase of treasury shares (20,410 ) -
Stock option exercises and related tax benefits 2,782 3,553
Cash dividend (2,748 ) (2,716 )
Net cash provided by (used in) financing activities (15,567 ) 817
Effect of exchange rate changes on cash (1,043 ) 1,029
Net increase in cash and cash equivalents 3,898 3,988
Cash and cash equivalents - beginning of period 44,221 40,222
Cash and cash equivalents - end of period $ 48,119 $ 44,210

ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA FROM CONTINUING OPERATIONS
(Dollars in thousands)
FISCAL 2011FISCAL 2012
Q1Q2Q3Q4TOTALQ1Q2Q3Q4TOTAL
SALES
INDUSTRIAL SEGMENT $ 87,392 $ 88,935 $ 107,759 $ 108,927 $ 393,013 $ 100,253 $ 100,253
ENERGY SEGMENT 70,743 61,587 78,002 82,728 293,060 80,421 80,421
ELECTRICAL SEGMENT 55,396 70,176 80,329 80,112 286,013 82,833 82,833
ENGINEERED SOLUTIONS SEGMENT 104,881 110,000 126,687 131,669 473,237 129,292 129,292
TOTAL $ 318,412 $ 330,698 $ 392,777 $ 403,436 $ 1,445,323 $ 392,799 $ 392,799
% SALES GROWTH
INDUSTRIAL SEGMENT 34 % 28 % 35 % 27 % 31 % 15 % 15 %
ENERGY SEGMENT 10 % 14 % 38 % 35 % 24 % 14 % 14 %
ELECTRICAL SEGMENT 2 % 28 % 30 % 28 % 22 % 50 % 50 %
ENGINEERED SOLUTIONS SEGMENT 18 % 23 % 13 % 31 % 21 % 23 % 23 %
TOTAL 17 % 24 % 27 % 30 % 25 % 23 % 23 %
OPERATING PROFIT (LOSS)
INDUSTRIAL SEGMENT $ 20,187 $ 20,149 $ 29,517 $ 28,562 $ 98,415 $ 27,933 $ 27,933
ENERGY SEGMENT 11,858 6,792 13,545 17,150 49,345 13,217 13,217
ELECTRICAL SEGMENT 3,760 4,945 5,462 6,516 20,683 4,977 4,977
ENGINEERED SOLUTIONS SEGMENT 13,802 13,425 19,977 16,408 63,612 18,999 18,999
CORPORATE / GENERAL (8,035 ) (8,265 ) (10,500 ) (11,685 ) (38,485 ) (7,845 ) (7,845 )
TOTAL $ 41,572 $ 37,046 $ 58,001 $ 56,951 $ 193,570 $ 57,281 $ 57,281
OPERATING PROFIT %
INDUSTRIAL SEGMENT 23.1 % 22.7 % 27.4 % 26.2 % 25.0 % 27.9 % 27.9 %
ENERGY SEGMENT 16.8 % 11.0 % 17.4 % 20.7 % 16.8 % 16.4 % 16.4 %
ELECTRICAL SEGMENT 6.8 % 7.0 % 6.8 % 8.1 % 7.2 % 6.0 % 6.0 %
ENGINEERED SOLUTIONS SEGMENT 13.2 % 12.2 % 15.8 % 12.5 % 13.4 % 14.7 % 14.7 %
TOTAL (INCLUDING CORPORATE) 13.1 % 11.2 % 14.8 % 14.1 % 13.4 % 14.6 % 14.6 %
EBITDA
INDUSTRIAL SEGMENT $ 22,449 $ 22,245 $ 31,227 $ 30,680 $ 106,601 $ 29,220 $ 29,220
ENERGY SEGMENT 15,745 10,475 16,778 21,488 64,486 18,243 18,243
ELECTRICAL SEGMENT 5,067 8,075 8,208 9,390 30,740 7,705 7,705
ENGINEERED SOLUTIONS SEGMENT 17,184 16,346 23,878 20,046 77,454 22,213 22,213
CORPORATE / GENERAL (7,161 ) (7,709 ) (9,462 ) (10,769 ) (35,101 ) (7,217 ) (7,217 )
TOTAL $ 53,284 $ 49,432 $ 70,629 $ 70,835 $ 244,180 $ 70,164 $ 70,164
EBITDA %
INDUSTRIAL SEGMENT 25.7 % 25.0 % 29.0 % 28.2 % 27.1 % 29.1 % 29.1 %
ENERGY SEGMENT 22.3 % 17.0 % 21.5 % 26.0 % 22.0 % 22.7 % 22.7 %
ELECTRICAL SEGMENT 9.1 % 11.5 % 10.2 % 11.7 % 10.7 % 9.3 % 9.3 %
ENGINEERED SOLUTIONS SEGMENT 16.4 % 14.9 % 18.8 % 15.2 % 16.4 % 17.2 % 17.2 %
TOTAL (INCLUDING CORPORATE) 16.7 % 14.9 % 18.0 % 17.6 % 16.9 % 17.9 % 17.9 %

ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA FROM CONTINUING OPERATIONS
(Dollars in thousands, except for per share amounts)
FISCAL 2011FISCAL 2012
Q1Q2Q3Q4TOTALQ1Q2Q3Q4TOTAL
EARNINGS FROM CONTINUING OPERATIONS
NET EARNINGS $ 25,890 $ 7,929 $ 36,358 $ 41,382 $ 111,559 $ 37,174 $ 37,174
DISCONTINUED OPERATIONS, NET OF INCOME TAX 771 14,213 2,002 (4,049 ) 12,937 - -
TOTAL $ 26,661 $ 22,142 $ 38,360 $ 37,333 $ 124,496 $ 37,174 $ 37,174

DILUTED EARNINGS PER SHARE, FROM CONTINUING OPERATIONS

NET EARNINGS $ 0.35 $ 0.11 $ 0.49 $ 0.55 $ 1.50 $ 0.50 $ 0.50
DISCONTINUED OPERATIONS, NET OF INCOME TAX 0.01 0.19 0.02 (0.05 ) 0.18 - -
TOTAL $ 0.36 $ 0.30 $ 0.51 $ 0.50 $ 1.68 $ 0.50 $ 0.50
RECONCILIATION OF GAAP MEASURE TO NON-GAAP MEASURES
EBITDA (1)
NET EARNINGS (GAAP MEASURE) $ 25,890 $ 7,929 $ 36,358 $ 41,382 $ 111,559 $ 37,174 $ 37,174
FINANCING COSTS, NET 7,552 8,238 7,850 8,479 32,119 8,222 8,222
INCOME TAX EXPENSE 6,911 6,169 11,460 10,171 34,711 11,228 11,228
DEPRECIATION & AMORTIZATION 12,160 12,883 12,959 14,852 52,854 13,540 13,540
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 $ 70,164
FOOTNOTES
NOTE: The total of the individual quarters may not equal the annual total due to rounding.
(1) 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.

Contacts:

Actuant Corporation
Karen Bauer
Communications & Investor Relations Leader
262-293-1562
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