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Actuant Reports Fourth Quarter and Full Year 2018 Results; Initiated Fiscal 2019 Guidance

MILWAUKEE--(BUSINESS WIRE)--Sep. 26, 2018-- Actuant Corporation (NYSE: ATU) today announces results for its fourth quarter and fiscal year ended August 31, 2018.

Highlights

  • Consolidated sales of $301 million increased 9% over the comparable prior year quarter. Core sales increased 10% on a year-over-year basis, including a 1% decline on sales from foreign currency and a net negligible impact on sales from acquisitions and divestitures. Strong double-digit growth in the Industrial and Energy segments and solid growth in the Engineered Solutions segment all contributed.
  • GAAP diluted earnings per share (“EPS”) was a loss of $0.62 in the fourth quarter of fiscal 2018 versus a loss of $1.65 in the prior year. Excluding fourth quarter fiscal 2018 one-time items, adjusted EPS was $0.39 (see Consolidated Results below, along with the attached reconciliation of earnings).
  • Progress continues on portfolio management actions; Cortland Fibron (upstream oil & gas) was moved to Assets Held for Sale as the business is prepared for divestiture.
  • Very strong operating cash flow generation drove further reduction in net debt to proforma EBITDA leverage, ending the year at 1.9 times.
  • Full year fiscal 2019 sales and adjusted diluted EPS guidance of $1.21-1.24 billion and $1.09-1.20 (excluding one-time items), respectively, inclusive of significant headwinds from higher taxes related to Tax Reform.
  • Estimated headwinds of approximately $3-4 million from recently enacted Section 301 List 3 tariffs. Mitigation efforts to reduce these headwinds are currently being assessed.

Randy Baker, President and CEO of Actuant Corporation remarked, “Actuant performed exceptionally well in the quarter, where we saw 10% core sales growth and outstanding operating margin expansion over the prior year. Solid above-market growth in our Industrial segment and continued steady growth in our Engineered Solutions segment were coupled with double-digit core sales growth in our Energy segment, the first growth in the segment in more than a year. I also am very pleased with our progress on new product development, as that will allow us to continue to outpace the market growth as we go forward. In summary, we had a strong finish to our year. Our initiatives to enhance top-line growth, restructure certain businesses, drive operational efficiency and manage our business portfolio have laid the ground work to continue positive momentum into 2019. Thank you to all of our employees worldwide for their significant efforts this year and commitment to Actuant.”

Consolidated Results

Consolidated sales for the fourth quarter were $301 million, 9% higher than the $276 million recorded in the comparable prior year quarter. Core sales improved 10% year-over-year, while foreign currency rate changes reduced sales by 1% and the net impact from the Mirage and Equalizer acquisitions, net of the Viking divestiture, increased sales by less than 1%. Fiscal 2018 fourth quarter net loss and EPS were $(37.7) million and $(0.62), compared to $(98.8) million and $(1.65), respectively, in the comparable prior year quarter. Fiscal 2018 fourth quarter earnings included impairment & divestiture charges of $46.3 million ($45.0 million or $0.74 per share, after tax) related to the anticipated sale of the Cortland Fibron business and impairment charges of $23.7 million ($18.0 million or $0.29 per share, after tax) on our Precision-Hayes International business. Additionally, fourth quarter 2018 results included restructuring charges of $0.7 million (benefit of $0.3 million and $0.01 per share, after tax), a $1.8 million or $0.02 per share benefit related to impacts of US Tax Reform and benefits from the release of valuation allowances, and a $0.8 million charge ($0.6 million or $0.01 per share, after tax) associated with the acceleration of the amortization of debt issuance costs resulting from the intentional reduction in the borrowing capacity under our Credit Facility. Fiscal 2017 fourth quarter included restructuring charges of $1.8 million ($1.3 million or $0.02 per share, after tax), as well as $117.0 million ($108.9 million or $1.82 per share, after tax) in impairment & divestiture charges related to the then-pending sale of the Viking SeaTech business. Excluding these items, adjusted EPS for the fourth quarter of fiscal 2018 was $0.39, compared to $0.19 in the comparable prior year period (see attached reconciliation of earnings).

Consolidated sales for the twelve months ended August 31, 2018 were $1,183 million, 8% higher than the $1,096 million in the prior year. Foreign currency rate changes increased sales 3%, and the net impact of acquisitions and divestitures reduced sales by 1% year-over-year, resulting in 6% core sales growth. Fiscal year 2018 net loss and EPS were $(21.6) million and $(0.36), respectively, compared to a net loss and EPS of $(66.2) million and $(1.11), respectively, in the prior fiscal year. Fiscal year 2018 results include impairment & divestiture charges of $73.1 million ($75.3 million or $1.24 per share, after tax), restructuring charges of $12.8 million ($9.5 million or $0.15 per share, after tax), tax charges related to US Tax Reform, the release of valuation allowances and stock compensation of $3.0 million or $0.05 per share, and accelerated debt issuance amortization costs of $0.8 million ($0.6 million or $0.01 per share, after tax). Fiscal year 2017 net loss included impairment & divestiture charges related to the then-pending sale of the Viking SeaTech business of $117.0 million ($108.9 million or $1.82 per share, after tax), restructuring charges of $7.2 million ($5.3 million or $0.09 per share, after tax), director and officer transition charges of $7.8 million ($4.9 million or $0.08 per share, after tax) and one-time tax benefits of $3.2 million or $0.05 per share. Excluding these items, adjusted EPS for fiscal year 2018 was $1.09, compared to $0.83 in fiscal year 2017.

Segment Results

 

Industrial Segment

(US $ in millions)

    Three Months Ended August 31,     Twelve Months Ended August 31,
    2018   2017     2018   2017
Sales   $111.6   $100.3     $415.9   $379.8
Operating Profit   $2.8   $24.1     $63.8   $84.9
Adjusted Op Profit (1)   $26.6   $24.1     $90.4   $86.6
Adjusted Op Profit % (1)   23.8%   24.0%     21.7%   22.8%
                   

(1) 2018 excludes restructuring charges of $0.1 and $2.9 in the fourth quarter and twelve months, respectively, and $23.7 of impairment & divestiture charges in the fourth quarter and twelve months. 2017 excludes $1.7 of restructuring charges in the twelve months.

Fourth quarter fiscal 2018 Industrial segment sales were $111.6 million, 11% higher than the prior year. The impact of foreign currency exchange rates was a slight disadvantage year-over-year coupled with a 1% increase in sales due to the Equalizer acquisition, resulting in a 10% year-over-year core sales increase. Despite difficult comparisons, sales improved broadly across the industrial tools business in the quarter and heavy lifting technology sales improved by double-digits. Concrete tensioning products improved modestly. Fourth quarter adjusted operating profit margin was level with the prior year. Segment incremental profit flow-through from industrial tools was solid.

                 

Energy Segment

               

(US $ in millions)

               
    Three Months Ended August 31,     Twelve Months Ended August 31,
    2018   2017     2018   2017
Sales   $77.5   $68.6     $303.1   $309.6
Operating (Loss)   $(43.7)   $(122.6)     $(41.7)   $(119.0)
Adjusted Op Profit (Loss) (2)   $3.3   $(3.7)     $12.3   $(0.1)
Adjusted Op Profit (Loss) % (2)   4.3%   -5.4%     4.1%   0.0%
                                 

(2) 2018 excludes $0.7 and $4.7 of restructuring charges and $46.3 and $49.3 in impairment & divestiture charges in the fourth quarter and twelve months, respectively. 2017 excludes $1.9 and $117.0 of restructuring and impairment & divestiture charges, respectively, in the fourth quarter and for the twelve months.

Fiscal 2018 fourth quarter Energy segment sales of $77.5 million grew double digits over prior year sales of $68.6 million. Excluding a 2% negative impact from foreign currency exchange rates and a negligible net impact from the Viking divestiture and Mirage acquisition on sales, core sales grew by 15%. Hydratight grew in the quarter as maintenance activity continued to be solid in the North Sea and Middle East. Cortland experienced strong double-digit sales growth across oil & gas, medical and non-energy as market activity increased. Energy segment adjusted operating profit margin improvement resulted from incremental flow-through on higher sales, the benefit of restructuring actions, one-time items in 2017 that did not repeat in 2018 and the elimination of Viking losses.

 

Engineered Solutions Segment

(US $ in millions)

    Three Months Ended August 31,     Twelve Months Ended August 31,
    2018   2017     2018   2017
Sales   $112.3   $106.8     $463.6   $406.4
Operating Profit   $7.7   $6.2     $25.2   $16.9
Adjusted Op Profit (3)   $7.6   $6.1     $25.7   $20.4
Adjusted Op Profit % (3)   6.8%   5.7%     5.5%   5.0%
                   

(3) 2018 excludes $0.5 of restructuring charges for the twelve months. 2017 excludes $(0.1) and $3.5 of restructuring charges in the fourth quarter and twelve months, respectively.

Fourth quarter fiscal 2018 Engineered Solutions segment sales were $112.3 million, a 5% increase over the prior year. Excluding a 1% decline in sales due to a stronger US dollar, year-over-year core sales increased 6%. Sales growth was broad-based in off-highway markets, including agriculture, mining and forestry. Europe truck sales continued to be solid and were partially offset by an anticipated continued decline in China volumes. Fourth quarter adjusted operating profit margins improved significantly over the prior year due to favorable mix and pricing.

Corporate Expenses and Income Taxes (excluding impairment & divestiture charges, restructuring, transition, and one-time tax items)

Corporate expenses for the fourth quarter of fiscal 2018 were $5.4 million or $1.6 million less than the comparable prior year period, due primarily to lower insurance costs and compensation expense. The fourth quarter effective income tax rate of approximately 7% was in line with expectations but higher than the prior year’s -10% rate.

Financial Position

Net debt at August 31, 2018 was approximately $282 million (total debt of $533 million less $250 million of cash), which declined approximately $69 million from the prior quarter end. Strong cash flow was used to reduce net debt, and the ratio of net debt to proforma EBITDA leverage declined to 1.9 times.

Outlook

"We believe fiscal 2018 has been a turning point for Actuant. The strong momentum we have established over the last several quarters from a higher level of focus on our customers, improvements in operations, and commercializing new products has allowed us to grow our top line in excess of our markets and drive solid incremental profitability. We expect that momentum to continue into 2019, and our sales and EPS guidance reflect continued growth from our own actions and the global economy,” stated Baker.

He continued, “As we initiate our guidance for 2019, we anticipate sales growth of between 3% and 5%, resulting in expected annual sales of $1.21 to $1.24 billion. We anticipate first quarter sales between $295 and $305 million and expect to see normal seasonality, with our strongest quarters in the back half of our fiscal year. Full year adjusted EPS is projected between $1.09 and $1.20, which includes an expected tax rate increase to 20% from 10% in 2018 (a $0.12 per share impact). First quarter adjusted EPS is projected to be in the range of $0.20 to 0.25. Free cash flow is anticipated to be solid again and in the $80 to $85 million range.

We are confident the actions we have taken over the last several quarters are delivering sustainable results and position us well to continue to grow our top line greater than the markets we serve and deliver strong incremental profitability. Continued solid cash flow generation and the expected reduction in net debt should provide us greater flexibility to invest in profitable growth opportunities to drive superior returns to our shareholders.”

All guidance excludes restructuring, impairment & divestiture charges, one-time tax adjustments as well as the impact of potential future tariffs, acquisitions, dispositions and share repurchases.

Conference Call Information

An investor conference call is scheduled for 10am CT today, September 26, 2018. 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. Among other risks and factors, Actuant’s results are 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, tax reform, 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 serving customers from operations in more than 30 countries. The Actuant businesses are leaders in a broad array of niche markets including branded hydraulic tools and solutions; 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.

 
Actuant Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
                     
              August 31,     August 31,
              2018     2017
                     
ASSETS          
Current assets          
  Cash and cash equivalents   $ 250,490       $ 229,571  
  Accounts receivable, net     187,749         190,206  
  Inventories, net     156,356         143,651  
  Assets held for sale     23,573         21,835  
  Other current assets     42,732         61,663  
  Total current assets     660,900         646,926  
                     
Property, plant and equipment, net     90,220         94,521  
Goodwill     512,412         530,081  
Other intangible assets, net     181,037         220,489  
Other long-term assets     35,967         24,938  
                     
  Total assets   $ 1,480,536       $ 1,516,955  
                     
                     
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current liabilities            
  Trade accounts payable   $ 130,838       $ 133,387  
  Accrued compensation and benefits     54,508         50,939  
  Current maturities of debt and short-term borrowings     30,000         30,000  
  Income taxes payable     4,091         6,080  
  Liabilities held for sale     44,225         101,083  
  Other current liabilities     67,299         57,445  
  Total current liabilities     330,961         378,934  
                     
Long-term debt, net     502,695         531,940  
Deferred income taxes     21,933         29,859  
Pension and postretirement benefit liabilities     14,067         19,862  
Other long-term liabilities     52,168         55,821  
  Total liabilities     921,824         1,016,416  
                     
Shareholders' equity          
  Capital stock     16,285         16,040  
  Additional paid-in capital     167,448         138,449  
  Treasury stock     (617,731 )       (617,731 )
  Retained earnings     1,166,955         1,191,042  
  Accumulated other comprehensive loss     (174,245 )       (227,261 )
  Stock held in trust     (2,450 )       (2,696 )
  Deferred compensation liability     2,450         2,696  
  Total shareholders' equity     558,712         500,539  
                     
  Total liabilities and shareholders' equity   $ 1,480,536       $ 1,516,955  
                       

 

                   
Actuant Corporation
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
                   
                   
        Three Months Ended     Twelve Months Ended
        August 31, August 31,     August 31, August 31,
        2018 2017     2018 2017
                   
Net sales   $ 301,395   $ 275,695       $ 1,182,611   $ 1,095,784  
Cost of products sold     193,251     179,175         767,351     716,067  
Gross profit     108,144     96,520         415,260     379,717  
                   
Selling, administrative and engineering expenses     70,893     71,879         291,444     277,488  
Amortization of intangible assets     5,083     5,106         20,565     20,474  
Director & officer transition charges     -     -         -     7,784  
Restructuring charges     746     1,795         11,995     7,228  
Impairment & divestiture charges     70,071     116,979         73,058     116,979  
Operating (loss) profit     (38,649 )   (99,239 )       18,198     (50,236 )
                   
Financing costs, net     8,617     7,683         31,491     29,703  
Other (income) expense, net     (1,130 )   1,493         (621 )   2,752  
Loss before income tax (benefit) expense     (46,136 )   (108,415 )       (12,672 )   (82,691 )
                   
Income tax (benefit) expense     (8,472 )   (9,651 )       8,976     (16,478 )
Net loss   $ (37,664 ) $ (98,764 )     $ (21,648 ) $ (66,213 )
                   
Loss per share              
Basic   $ (0.62 ) $ (1.65 )     $ (0.36 ) $ (1.11 )
Diluted     (0.62 )   (1.65 )       (0.36 )   (1.11 )
                   
Weighted average common shares outstanding              
Basic     60,893     59,726         60,441     59,436  
Diluted     60,893     59,726         60,441     59,436  
               

 

     
Actuant Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                   
                   
    Three Months Ended     Twelve Months Ended
    August 31,   August 31,     August 31,   August 31,
      2018       2017         2018       2017  
                   
Operating Activities                  
Net loss   $ (37,664 )   $ (98,764 )     $ (21,648 )   $ (66,213 )
Adjustments to reconcile net loss to net cash provided by operating activities:              
Impairment & other divestiture charges, net of tax effect     62,949       108,860         75,334       108,860  
Depreciation and amortization     9,907       10,848         40,707       43,110  
Stock-based compensation expense     2,506       1,881         14,457       16,733  
Expense (benefit) for deferred income taxes     3,689       (10,320 )       (6,890 )     (8,956 )
Amortization of debt issuance costs     1,160       413         2,399       1,657  
Other non-cash adjustments     272       179         619       1,202  
Changes in components of working capital and other, excluding acquisitions and divestitures            
Accounts receivable     18,363       19,143         (3,093 )     (3,475 )
Inventories     3,886       (10,958 )       (18,704 )     (11,277 )
Trade accounts payable     (2,569 )     4,660         2,593       18,117  
Prepaid expenses and other assets     3,067       1,745         (10,625 )     (5,367 )
Income tax accounts     (9,204 )     8,627         16,785       (10,646 )
Accrued compensation and benefits     7,008       (17 )       4,827       3,752  
Other accrued liabilities     7,134       140         9,332       1,002  
Cash provided by operating activities     70,504       36,437         106,093       88,499  
                   
Investing Activities                  
Capital expenditures     (2,154 )     (5,276 )       (20,870 )     (28,195 )
Proceeds from sale of property, plant and equipment     5       326         153       570  
Rental asset buyout for Viking divestiture     -       -         (27,718 )     -  
Proceeds from sale of business, net of transaction costs     122       -         8,902       -  
Cash paid for business acquisitions, net of cash acquired     (892 )     -         (23,218 )     -  
Cash used in investing activities     (2,919 )     (4,950 )       (62,751 )     (27,625 )
                   
Financing Activities                  
Principal repayments on term loan     (7,500 )     (7,500 )       (30,000 )     (18,750 )
Stock option excercises & other     5,246       951         15,681       8,265  
Redemption of 5.625% senior notes     -       -         -       (500 )
Taxes paid related to the net share settlement of equity awards     (5 )     (66 )       (1,284 )     (1,065 )
Payment of deferred acquisition consideration     -       -         -       (742 )
Cash dividend     -       -         (2,390 )     (2,358 )
Cash used in financing activities     (2,259 )     (6,615 )       (17,993 )     (15,150 )
                   
Effect of exchange rate changes on cash     (4,326 )     5,745         (4,430 )     4,243  
Net increase in cash and cash equivalents     61,000       30,617         20,919       49,967  
Cash and cash equivalents - beginning of period     189,490       198,954         229,571       179,604  
Cash and cash equivalents - end of period   $ 250,490     $ 229,571       $ 250,490     $ 229,571  
                   

 

                           
ACTUANT CORPORATION                          
SUPPLEMENTAL UNAUDITED DATA                          
  (Dollars in thousands)                          
                               
        FISCAL 2017     FISCAL 2018
        Q1 Q2 Q3 Q4 TOTAL     Q1 Q2 Q3 Q4 TOTAL
SALES                          
  INDUSTRIAL SEGMENT   $ 87,290   $ 91,648   $ 100,503   $ 100,315   $ 379,756       $ 96,916   $ 99,081   $ 108,297   $ 111,603   $ 415,897  
  ENERGY SEGMENT     84,646     72,884     83,480     68,584     309,594         75,841     65,992     83,857     77,454     303,144  
  ENGINEERED SOLUTIONS SEGMENT     93,857     94,337     111,444     106,796     406,434         116,198     110,092     124,942     112,338     463,570  
  TOTAL   $ 265,793   $ 258,869   $ 295,427   $ 275,695   $ 1,095,784       $ 288,955   $ 275,165   $ 317,096   $ 301,395   $ 1,182,611  
                               
% SALES GROWTH                          
  INDUSTRIAL SEGMENT     -2 %   13 %   5 %   7 %   6 %       11 %   8 %   8 %   11 %   10 %
  ENERGY SEGMENT     -26 %   -15 %   -18 %   -25 %   -21 %       -10 %   -9 %   0 %   13 %   -2 %
  ENGINEERED SOLUTIONS SEGMENT     -8 %   -2 %   3 %   18 %   2 %       24 %   17 %   12 %   5 %   14 %
  TOTAL     -13 %   -2 %   -3 %   0 %   -5 %       9 %   6 %   7 %   9 %   8 %
                               
OPERATING PROFIT (LOSS)                          
  INDUSTRIAL SEGMENT   $ 19,491   $ 19,037   $ 24,019   $ 24,076   $ 86,623       $ 19,482   $ 18,493   $ 25,845   $ 26,576   $ 90,396  
  ENERGY SEGMENT     3,328     (647 )   895     (3,675 )   (99 )       1,224     747     7,033     3,336     12,340  
  ENGINEERED SOLUTIONS SEGMENT     2,834     3,282     8,174     6,069     20,359         6,618     2,409     9,038     7,633     25,698  
  CORPORATE / GENERAL     (6,450 )   (6,372 )   (5,372 )   (6,935 )   (25,128 )       (6,022 )   (4,789 )   (8,145 )   (5,377 )   (24,333 )
  ADJUSTED OPERATING PROFIT   $ 19,203   $ 15,300   $ 27,716   $ 19,535   $ 81,755       $ 21,302   $ 16,860   $ 33,771   $ 32,168   $ 104,101  
  IMPAIRMENT & DIVESTITURE CHARGES     -     -     -     (116,979 )   (116,979 )       -     (2,987 )   -     (70,071 )   (73,058 )
  RESTRUCTURING CHARGES (1)     (2,948 )   (2,101 )   (384 )   (1,795 )   (7,228 )       (6,629 )   (4,284 )   (1,186 )   (746 )   (12,845 )
  DIRECTOR & OFFICER TRANSITION CHARGES     (7,784 )   -     -     -     (7,784 )       -     -     -     -     -  
  OPERATING PROFIT (LOSS)   $ 8,471   $ 13,199   $ 27,332   $ (99,239 ) $ (50,236 )     $ 14,673   $ 9,589   $ 32,585   $ (38,649 ) $ 18,198  
                               
ADJUSTED OPERATING PROFIT %                          
  INDUSTRIAL SEGMENT     22.3 %   20.8 %   23.9 %   24.0 %   22.8 %       20.1 %   18.7 %   23.9 %   23.8 %   21.7 %
  ENERGY SEGMENT     3.9 %   -0.9 %   1.1 %   -5.4 %   0.0 %       1.6 %   1.1 %   8.4 %   4.3 %   4.1 %
  ENGINEERED SOLUTIONS SEGMENT     3.0 %   3.5 %   7.3 %   5.7 %   5.0 %       5.7 %   2.2 %   7.2 %   6.8 %   5.5 %
  ADJUSTED OPERATING PROFIT %     7.2 %   5.9 %   9.4 %   7.1 %   7.5 %       7.4 %   6.1 %   10.7 %   10.7 %   8.8 %
                               
EBITDA                          
  INDUSTRIAL SEGMENT   $ 21,217   $ 21,064   $ 25,575   $ 25,851   $ 93,707       $ 21,202   $ 21,034   $ 27,823   $ 28,312   $ 98,371  
  ENERGY SEGMENT     9,108     2,943     4,633     142     16,826         5,125     4,533     11,554     7,726     28,938  
  ENGINEERED SOLUTIONS SEGMENT     6,281     7,277     11,716     9,533     34,807         10,254     6,020     12,566     11,779     40,619  
  CORPORATE / GENERAL     (5,879 )   (5,846 )   (4,868 )   (6,637 )   (23,230 )       (5,518 )   (4,799 )   (7,569 )   (4,612 )   (22,498 )
  ADJUSTED EBITDA   $ 30,727   $ 25,438   $ 37,056   $ 28,889   $ 122,110       $ 31,063   $ 26,788   $ 44,374   $ 43,205   $ 145,430  
  IMPAIRMENT & DIVESTITURE CHARGES     -     -     -     (116,979 )   (116,979 )       -     (2,987 )   -     (70,071 )   (73,058 )
  RESTRUCTURING CHARGES (1)     (2,948 )   (2,101 )   (384 )   (1,795 )   (7,228 )       (6,629 )   (4,284 )   (1,186 )   (746 )   (12,845 )
  DIRECTOR & OFFICER TRANSITION CHARGES     (7,784 )   -     -     -     (7,784 )       -     -     -     -     -  
  EBITDA   $ 19,995   $ 23,337   $ 36,672   $ (89,885 ) $ (9,881 )     $ 24,434   $ 19,517   $ 43,188   $ (27,612 ) $ 59,527  
                               
ADJUSTED EBITDA %                          
  INDUSTRIAL SEGMENT     24.3 %   23.0 %   25.4 %   25.8 %   24.7 %       21.9 %   21.2 %   25.7 %   25.4 %   23.7 %
  ENERGY SEGMENT     10.8 %   4.0 %   5.5 %   0.2 %   5.4 %       6.8 %   6.9 %   13.8 %   10.0 %   9.5 %
  ENGINEERED SOLUTIONS SEGMENT     6.7 %   7.7 %   10.5 %   8.9 %   8.6 %       8.8 %   5.5 %   10.1 %   10.5 %   8.8 %
  ADJUSTED EBITDA %     11.6 %   9.8 %   12.5 %   10.5 %   11.1 %       10.8 %   9.7 %   14.0 %   14.3 %   12.3 %
                               
Note: (1) Approximately $0.8 million of the Q2 fiscal 2018 restructuring charges were recorded in cost of products sold. De minimis restructuring charges were also recorded in cost of products sold in Q3 fiscal 2018.
 

 

                           
ACTUANT CORPORATION                          
SUPPLEMENTAL UNAUDITED DATA                          
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES                    
  (Dollars in thousands, except for per share amounts)                          
                                 
                                 
          FISCAL 2017     FISCAL 2018
          Q1 Q2 Q3 Q4 TOTAL     Q1 Q2 Q3 Q4 TOTAL
ADJUSTED EARNINGS (1)                          
  NET EARNINGS (LOSS) (GAAP MEASURE)   $ 4,965   $ 5,074 $ 22,511   $ (98,764 ) $ (66,213 )     $ 5,226 $ (18,221 ) $ 29,012   $ (37,664 ) $ (21,648 )
  IMPAIRMENT & DIVESTITURE CHARGES, NET OF TAX EFFECT     -     -   -     108,860     108,860         -   12,385     -     62,949     75,334  
  DIRECTOR & OFFICER TRANSITION CHARGES, NET OF TAX EFFECT     4,904     -   -     -     4,904         -   -     -     -     -  
  RESTRUCTURING CHARGES, NET OF TAX EFFECT (1)     2,171     1,537   260     1,301     5,269         6,254   3,784     (249 )   (337 )   9,452  
  ACCELERATED DEBT ISSUANCES COSTS, NET OF TAX EFFECT     -     -   -     -     -         -   -     -     601     601  
  OTHER INCOME TAX (BENEFIT) EXPENSE     -     -   (3,193 )   -     (3,193 )       -   9,705     (4,891 )   (1,831 )   2,983  
  ADJUSTED EARNINGS   $ 12,040   $ 6,611 $ 19,578   $ 11,397   $ 49,627       $ 11,480 $ 7,653   $ 23,872   $ 23,718   $ 66,722  
                                 
ADJUSTED DILUTED EARNINGS PER SHARE (2)                          
  NET EARNINGS (LOSS) (GAAP MEASURE)   $ 0.08   $ 0.08 $ 0.37   $ (1.65 ) $ (1.11 )     $ 0.09 $ (0.30 ) $ 0.48   $ (0.62 ) $ (0.36 )
  IMPAIRMENT & DIVESTITURE CHARGES, NET OF TAX EFFECT     -     -   -     1.82     1.82         -   0.21     -     1.03     1.24  
  DIRECTOR & OFFICER TRANSITION CHARGES, NET OF TAX EFFECT     0.08     -   -     -     0.08         -   -     -     -     -  
  RESTRUCTURING CHARGES, NET OF TAX EFFECT (1)     0.04     0.03   -     0.02     0.09         0.10   0.06     -     (0.01 )   0.15  
  ACCELERATED DEBT ISSUANCES COSTS, NET OF TAX EFFECT     -     -   -     -     -         -   -     -     0.01     0.01  
  OTHER INCOME TAX (BENEFIT) EXPENSE     -     -   (0.05 )   -     (0.05 )       -   0.16     (0.09 )   (0.02 )   0.05  
  ADJUSTED DILUTED EARNINGS PER SHARE   $ 0.20   $ 0.11 $ 0.32   $ 0.19   $ 0.83       $ 0.19 $ 0.13   $ 0.39   $ 0.39   $ 1.09  
                                 
ADJUSTED EBITDA (3)                          
  NET EARNINGS (LOSS) (GAAP MEASURE)   $ 4,965   $ 5,074 $ 22,511   $ (98,764 ) $ (66,213 )     $ 5,226 $ (18,221 ) $ 29,012   $ (37,664 ) $ (21,648 )
  FINANCING COSTS, NET     7,132     7,334   7,553     7,683     29,703         7,514   7,604     7,756     8,617     31,491  
  INCOME TAX (BENEFIT) EXPENSE     (2,998 )   200   (4,029 )   (9,651 )   (16,478 )       1,604   19,839     (3,995 )   (8,472 )   8,976  
  DEPRECIATION & AMORTIZATION     10,896     10,729   10,637     10,847     43,108         10,090   10,295     10,415     9,907     40,708  
  EBITDA   $ 19,995   $ 23,337 $ 36,672   $ (89,885 ) $ (9,881 )     $ 24,434 $ 19,517   $ 43,188   $ (27,612 ) $ 59,527  
  IMPAIRMENT & OTHER DIVESTITURE CHARGES     -     -   -     116,979     116,979         -   2,987     -     70,071     73,058  
  DIRECTOR & OFFICER TRANSITION CHARGES     7,784     -   -     -     7,784         -   -     -     -     -  
  RESTRUCTURING CHARGES     2,948     2,101   384     1,795     7,228         6,629   4,284     1,186     746     12,845  
  ADJUSTED EBITDA   $ 30,727   $ 25,438 $ 37,056   $ 28,889   $ 122,110       $ 31,063 $ 26,788   $ 44,374   $ 43,205   $ 145,430  
 
FOOTNOTES
NOTE: The total of the individual quarters may not equal the annual total due to rounding.
       
(1)   Approximately $0.8 million of Q2 fiscal 2018 restructuring charges were recorded in cost of products sold. De minimis restructuring charges were also recorded in cost of products sold in Q3 fiscal 2018.
       
(2)   Adjusted earnings and adjusted diluted earnings per share represent net earnings (loss) and diluted earnings (loss) per share per the Condensed Consolidated Statements of Operations 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 (loss) or diluted earnings (loss) per share or 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.
       
(3)   EBITDA represents net earnings (loss) before financing costs, net, income tax (benefit) expense, and depreciation & amortization. EBITDA is not a calculation based upon generally accepted accounting principles (GAAP). The amounts included in the EBITDA and Adjusted EBITDA calculation, however, are derived from amounts included in the Condensed Consolidated Statements of Operations. EBITDA should not be considered as an alternative to net earnings (loss), operating profit (loss) or operating cash flows. Actuant has presented EBITDA because it regularly reviews this performance measure. In addition, EBITDA is used by many of our investors and lenders, and is presented as a convenience to them. 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.
     

 

                   
ACTUANT CORPORATION                  
SUPPLEMENTAL UNAUDITED DATA                  
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE                  
  (Dollars in millions, except for per share amounts)                  
                         
                         
          Q1 FISCAL 2019     FISCAL 2019
          LOW HIGH     LOW   HIGH
RECONCILIATION OF GAAP DILUTED EARNINGS PER SHARE TO ADJUSTED                  
  DILUTED EARNINGS PER SHARE GUIDANCE                  
  GAAP DILUTED EARNINGS PER SHARE   $ 0.20 $ 0.25     $ 1.09   $ 1.20  
  (GAIN)/LOSS ON PRODUCT LINE DIVESTITURE, NET OF TAX (1)   TBD TBD     TBD   TBD  
  ADJUSTED DILUTED EARNINGS PER SHARE GUIDANCE   $ 0.20 $ 0.25     $ 1.09   $ 1.20  
                         
                         
RECONCILIATION OF GAAP CASH FLOW FROM OPERATIONS TO FREE CASH FLOW                  
  CASH FLOW FROM OPERATIONS           $ 95   $ 105  
  CAPITAL EXPENDITURES             (25 )   (30 )
  OTHER             10     10  
  FREE CASH FLOW GUIDANCE           $ 80   $ 85  
                         
FOOTNOTES                    
NOTE: Management does not provide guidance on GAAP financial measures as we are unable to predict and estimate with certainty items such as potential impairments, refinancing costs, business divestiture gains/losses, discrete tax adjustments, or other items impacting GAAP financial metrics. As a result, we have included above only those items about which we are aware and are reasonably likely to occur during the guidance period covered.
         
(1) The gain/loss on product line divesiture associtated with closing of the Cortland Fibron business is subject to numerous uncertainties which makes an estimate not meaningful.

 

Source: Actuant Corporation

Actuant Corporation
Barb Bolens
VP Corporate Strategy & Investor Relations
262-293-1562