Manufacturer indicates it will continue to pursue acquisitions
Diversified manufacturer Actuant Corp. has reported core revenue growth of 16 percent in the 3rd quarter ended May 31st. The company reported sales growth of 20 percent in its industrial segment and 43 per cent in its engineered solutions segment.
Actuant, headquartered in Milwaukee, Wisc., also said in an earnings call report with analysts that it will continue to pursue acquisitions in the $10 million to $15 million range. “We are predominantly focused on Energy and Industrial segments, but there are also some smaller attractive niches within Electrical and Engineered Solutions segments that are logical places for tuck-ins as well,” said Bob Arzbaecher, Actuant’s CEO.
Consolidated sales for the quarter of $335 million were the highest Actuant has seen since the first quarter of 2009. With the exception of the Energy segment, all segments posted core sales gains led by a 43% increase in Engineered Solutions due to a sharp rebound in OEM demand in vehicle markets, as well as a 20% increase in the Industrial segment, according to a transcript of the call reported by www.seekingalpha.com
The 26% third quarter industrial operating profit margin was the highest the company has seen in the last six quarters. The Energy segment posted an 11% core sales decline in the quarter.
Arzbaecher also commented on the BP accident in the Gulf of Mexico and its potential impact on Actuant. “Our deepwater exposure in the Gulf of Mexico today is pretty small, less than $5 million a year,” he said. “ Our deepwater exposure is more heavily weighted towards places like the North Sea, Brazil and Southeast Asia.
“While the ongoing spill is devastating on a number of fronts, we believe deepwater oil extraction will continue given the simple fact that existing oil reserves are depleting at the same time global energy demand is increasing. Alternative energy while exciting and beneficial to Actuant does not create enough supply now. So the deepwater reserves must be developed and utilized.
“While the incident creates a lot of uncertainty in the short term, we believe that in the long term, both Hydratight and Cortland will benefit from a likely increase in maintenance, inspection and regulation,” he said.
The company expects fourth quarter sales to be lower than the third quarter on account of about $10 million headwind from the stronger U.S. dollar as well as about $15 million of impact from European summer plant shutdowns.