Exhibit 99.1
Actuant Announces Record Third Quarter Sales and Earnings
MILWAUKEE--(BUSINESS WIRE)--June 20, 2006--Actuant Corporation
(NYSE:ATU) today announced record sales and earnings for its third
quarter ended May 31, 2006. Third quarter fiscal 2006 net earnings and
diluted earnings per share ("EPS") were $26.8 million and $0.86,
respectively, compared to net earnings and EPS of $20.0 million and
$0.66, respectively, for the third quarter of fiscal 2005. Third
quarter 2005 and 2006 EPS includes $0.02 and $0.08 per diluted share
of favorable tax reserve adjustments, respectively. Excluding these
tax adjustments, third quarter EPS increased 22% year-over-year. Net
earnings for the nine months ended May 31, 2006 were $67.4 million, or
$2.19 per diluted share, compared to $52.1 million, or $1.79 per
diluted share for the comparable prior year period, representing
increases of 29% and 22%, respectively.
Third quarter sales increased approximately 17% to $316.7 million
compared to $271.7 million in the prior year, driven by strong base
business growth and revenues from acquired businesses. Excluding
foreign currency exchange rate changes and sales from acquired
businesses, third quarter sales increased approximately 11% from the
comparable prior year period. Sales for the nine-months ended May 31,
2006 were $876.6 million, approximately 24% higher than the $706.7
million in the comparable prior year period, reflecting sales volume
added through business acquisitions and strong base business growth.
Excluding the impact of foreign currency rate changes and sales from
acquired businesses, sales increased 7% for the nine-month period.
Net debt at May 31, 2006 was approximately $460 million (gross
debt of $479 million less approximately $19 million of cash), compared
to $417 million at the beginning of the quarter. The increase in debt
during the quarter was attributable to the $95 million of borrowings
to fund the D.L. Ricci and Precision Sure-Lock acquisitions, partially
offset by approximately $52 million of third quarter cash flow.
Availability under the Company's revolving credit facility remained
strong at approximately $171 million as of May 31, 2006.
Third quarter Tools & Supplies segment sales were $193 million, an
approximate 22% increase over fiscal 2005. Excluding foreign currency
exchange rate changes and sales from acquired businesses, segment
sales increased approximately 10% from the comparable prior year
period, driven by continued growth in shipments to the industrial
tools and electrical markets. Fiscal 2006 third quarter Engineered
Solutions segment sales increased approximately 9% year-over-year to
$124 million. Excluding foreign currency exchange rate changes,
Engineered Solutions sales increased 11%, a significant improvement
from the -1% year-over-year sales change in the second quarter, driven
primarily by the substantial increase in automotive convertible top
system sales.
Robert C. Arzbaecher, President and CEO of Actuant, commented, "We
are pleased with third quarter results, especially the 11% sales
growth (excluding currency and acquisitions) and the $52 million of
cash flow. We continued to see strong demand from a number of our end
markets during the quarter, including industrial tools and electrical
products, as well as the acceleration in automotive convertible top
sales growth. The acquisitions of D.L. Ricci and Precision Sure-Lock
in April also added a combined $5.3 million to third quarter revenues.
These two businesses complement our existing industrial tools
platforms by providing us new products and services that can be
combined with our existing offerings to deliver more value to
customers."
"Actuant's third quarter operating profit margins improved
approximately 100 basis points year-over-year, the combined result of
favorable sales and acquisition mix, increased fixed cost absorption,
cost reductions and increased low cost country sourcing. While we were
pleased with these improvements, certain of our businesses are not
meeting our margin expectations. This includes automotive due to
start-up inefficiencies, European electrical due to a high cost
structure, and recreational vehicle due to current industry shipment
levels. In addition, a number of businesses experienced sharp
increases in the cost of commodities such as electrical steel, plastic
resins and copper during the quarter. While we are working hard to
manage all of these issues, we expect them to reduce the
year-over-year margin growth in the fourth quarter and into 2007."
"We made progress during the quarter on restructuring plans for
the European electrical business, and expect to begin a multi-faceted
program in the next quarter to reduce costs and streamline the
business, including shifting labor intensive work out of high-cost
regions, outsourcing certain functions to third parties, reducing or
eliminating low-margin product lines, and consolidating facilities.
While the details of all actions have yet to be finalized, we expect
the aggregate pre-tax restructuring costs to be in the range of $17-20
million (approximately $0.49-0.58 per diluted share), to be recognized
starting in the fourth quarter and continuing through the end of
fiscal 2007. We anticipate annual pre-tax savings from the
restructuring of approximately $7-8 million when fully completed,
which we expect in the beginning of fiscal 2008."
Arzbaecher concluded, "This brings us to our outlook for the final
quarter of fiscal 2006 and our initial view on fiscal 2007. We are
expecting fourth quarter results to be similar to those generated in
the third quarter (excluding the third quarter tax adjustments), with
sales in the range of $310-320 million and EPS of $0.73-0.78 per
share, excluding European electrical restructuring costs. Fourth
quarter year-over-year sales and EPS growth are forecasted to be in
the 15-19% and 16-24% ranges, respectively. Based on these estimates,
our fiscal 2006 full year outlook for sales is $1.187-1.196 billion
and EPS is $2.92-2.97, again excluding European electrical
restructuring costs. Based on an assessment of our markets and the
broader economy, as well as a full year's benefit of this year's
acquisitions, we anticipate continued sales and EPS growth in 2007. We
anticipate fiscal 2007 sales in the range of $1.29-1.31 billion and
EPS of $3.15-3.35 per diluted share, excluding European electrical
restructuring costs and future acquisitions. We are optimistic about
Actuant's future and believe the ongoing execution of our business
model will continue to reward shareholders."
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 registration statements filed
with the Securities and Exchange Commission for further information
regarding risk factors.
An investor conference call is scheduled for 11am ET today, June
20, and may be listened to via web cast on Actuant's website at
www.actuant.com.
About Actuant
Actuant, headquartered in Glendale, Wisconsin, is a diversified
industrial company with operations in more than 30 countries. The
Actuant businesses are market leaders in highly engineered position
and motion control systems and branded hydraulic and electrical tools
and supplies. Since its creation through a spin-off in 2000, Actuant
has grown its sales from $482 million to over $1 billion and its
market capitalization from $113 million to over $1.5 billion. The
Company employs a workforce of more than 6,000 worldwide. Actuant
Corporation trades on the NYSE under the symbol ATU. For further
information on Actuant and its business units, visit the Company's
website at www.actuant.com.
(tables follow)
Actuant Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
May 31, August 31,
2006 2005
------------ ------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $19,212 $10,356
Accounts receivable, net 164,835 131,185
Inventories, net 151,571 135,960
Deferred income taxes 15,428 14,974
Other current assets 8,830 6,838
------------ ------------
Total current assets 359,876 299,313
Property, plant and equipment, net 95,595 83,879
Goodwill 491,886 428,285
Other intangible assets, net 203,802 175,001
Other long-term assets 13,114 9,857
------------ ------------
Total assets $1,164,273 $996,335
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $66 $21
Trade accounts payable 113,502 89,506
Accrued compensation and benefits 41,436 32,663
Income taxes payable 19,111 15,049
Current maturities of long-term debt 9,523 136
Other current liabilities 50,658 51,360
------------ ------------
Total current liabilities 234,296 188,735
Long-term debt, less current maturities 469,649 442,661
Deferred income taxes 68,009 58,783
Pension and postretirement benefit accruals 42,344 41,192
Other long-term liabilities 17,305 20,131
Shareholders' equity
Capital stock 5,456 5,410
Additional paid-in capital (359,299) (370,875)
Accumulated other comprehensive income
(loss) (10,173) (20,282)
Restricted stock awards (2,699) (1,452)
Stock held in trust (1,314) (1,166)
Deferred compensation liability 1,314 1,166
Retained earnings 699,385 632,032
------------ ------------
Total shareholders' equity 332,670 244,833
------------ ------------
Total liabilities and shareholders' equity $1,164,273 $996,335
============ ============
Actuant Corporation
Condensed Consolidated Statements of Earnings
(Dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended
May 31, May 31,
---------------------- ----------------------
2006 2005 2006 2005
---------------------- ----------------------
(Unaudited) (Unaudited)
Net sales $316,662 $271,733 $876,557 $706,677
Cost of products sold 210,767 185,071 580,123 481,824
---------------------- ----------------------
Gross profit 105,895 86,662 296,434 224,853
Selling, administrative
and engineering
expenses 61,171 51,174 175,086 134,151
Amortization of
intangible assets 1,884 1,610 5,443 3,476
---------------------- ----------------------
Operating profit 42,840 33,878 115,905 87,226
Financing costs, net 6,785 4,936 18,936 10,781
Other (income) expense,
net 659 435 1,682 (744)
---------------------- ----------------------
Earnings from
operations before
income tax expense
and minority
interest 35,396 28,507 95,287 77,189
Income tax expense 8,636 8,744 28,015 25,572
Minority interest, net
of income taxes (27) (234) (81) (519)
---------------------- ----------------------
Net earnings $26,787 $19,997 $67,353 $52,136
====================== ======================
Earnings per share
Basic $0.99 $0.74 $2.49 $2.03
Diluted 0.86 0.66 2.19 1.79
Weighted average common
shares outstanding
Basic 27,150 26,956 27,091 25,663
Diluted 31,717 31,438 31,591 30,165
Actuant Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
May 31, May 31,
----------------------------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Operating Activities
Net earnings $26,787 $19,997 $67,353 $52,136
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and
amortization 6,681 6,448 19,923 16,245
Amortization of debt
discount and debt issuance
costs 368 359 1,089 936
Stock-based compensation
expense 1,476 1,228 3,648 3,168
Provision for deferred
income taxes (1,305) 316 (802) (475)
Loss/(gain) on disposal of
assets (345) 145 (275) (151)
Changes in operating assets
and liabilities, excluding
the effects of the business
acquisitions:
Accounts receivable (5,724) (4,509) (22,375) (11,753)
Increase in AR
securitization program 3,808 1,790 4,250 21,070
Inventories (2,885) 4,525 (8,198) (5,513)
Prepaid expenses and
other assets (497) 349 (1,727) 3,085
Trade accounts payable 15,509 4,304 18,022 (1,548)
Income taxes payable 4,181 (3,321) 5,831 (448)
Reimbursement of tax
refund to former
subsidiary - - - (15,837)
Other accrued
liabilities 6,822 (2,395) 3,138 (8,889)
--------- --------- --------- ---------
Net cash provided by operating
activities 54,876 29,236 89,877 52,026
Investing Activities
Proceeds from sale of
property, plant and equipment 474 - 589 2,839
Capital expenditures (5,566) (3,558) (15,465) (11,505)
Cash paid for business
acquisitions, net of cash
acquired (95,539) (94,808) (104,876) (381,955)
--------- --------- --------- ---------
Net cash used in investing
activities (100,631) (98,366) (119,752) (390,621)
Financing Activities
Net borrowings (repayments) on
revolving credit facilities
and short-term borrowings 51,566 72,077 36,481 17,881
Proceeds from issuance of term
loans - - - 250,000
Proceeds from euro-denominated
acquisition loan - - - 19,602
Principal payments on term
loans - (827) - (3,045)
Retirement of KCI 10.5% bonds - - - (82,800)
Debt issuance costs - - - (2,300)
Net proceeds from Class A
common stock offering - - - 134,360
Payment of Cash Dividend - - (2,165) -
Tax benefit from stock-based
compensation 1,489 401 2,149 3,548
Stock option exercises and
other 514 500 1,991 2,056
--------- --------- --------- ---------
Net cash provided by financing
activities 53,569 72,151 38,456 339,302
Effect of exchange rate
changes on cash 419 (206) 275 144
--------- --------- --------- ---------
Net increase in cash and cash
equivalents 8,233 2,815 8,856 851
Cash and cash equivalents -
beginning of period 10,979 4,069 10,356 6,033
--------- --------- --------- ---------
Cash and cash equivalents -
end of period $19,212 $6,884 $19,212 $6,884
========= ========= ========= =========
ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED DATA
(Dollars in thousands)
FISCAL 2005
--------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
--------------------------------------------------
SALES
TOOLS & SUPPLIES
SEGMENT $112,537 $138,546 $158,211 $174,250 $583,544
ENGINEERED
SOLUTIONS
SEGMENT 87,140 96,721 113,522 95,139 392,522
--------------------------------------------------
TOTAL $199,677 $235,267 $271,733 $269,389 $976,066
==================================================
% SALES GROWTH
TOOLS & SUPPLIES
SEGMENT 16.8% 33.8% 43.9% 63.9% 40.2%
ENGINEERED
SOLUTIONS
SEGMENT 24.0% 33.5% 31.2% 16.8% 26.3%
TOTAL 19.9% 33.7% 38.3% 43.5% 34.3%
OPERATING PROFIT
TOOLS & SUPPLIES
SEGMENT $17,493 $19,621 $21,924 $28,537 $87,575
ENGINEERED
SOLUTIONS
SEGMENT 12,080 10,803 16,091 10,792 49,766
CORPORATE /
GENERAL (3,163) (3,486) (4,137) (4,064) (14,850)
--------------------------------------------------
TOTAL $26,410 $26,938 $33,878 $35,265 $122,491
==================================================
OPERATING PROFIT %
TOOLS & SUPPLIES
SEGMENT 15.5% 14.2% 13.9% 16.4% 15.0%
ENGINEERED
SOLUTIONS
SEGMENT 13.9% 11.2% 14.2% 11.3% 12.7%
TOTAL
(INCLUDING
CORPORATE) 13.2% 11.4% 12.5% 13.1% 12.5%
EBITDA
TOOLS & SUPPLIES
SEGMENT $19,262 $22,560 $25,619 $31,877 $99,318
ENGINEERED
SOLUTIONS
SEGMENT 13,384 13,345 18,143 13,150 58,022
CORPORATE /
GENERAL (919) (3,308) (3,871) (4,186) (12,284)
--------------------------------------------------
TOTAL $31,727 $32,597 $39,891 $40,841 $145,056
==================================================
EBITDA %
TOOLS & SUPPLIES
SEGMENT 17.1% 16.3% 16.2% 18.3% 17.0%
ENGINEERED
SOLUTIONS
SEGMENT 15.4% 13.8% 16.0% 13.8% 14.8%
TOTAL
(INCLUDING
CORPORATE) 15.9% 13.9% 14.7% 15.2% 14.9%
FISCAL 2006
--------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
--------------------------------------------------
SALES
TOOLS & SUPPLIES
SEGMENT $181,306 $174,577 $192,580 $548,463
ENGINEERED
SOLUTIONS
SEGMENT 102,570 101,442 124,082 328,094
--------------------------------------------------
TOTAL $283,876 $276,019 $316,662 $ - $876,557
==================================================
% SALES GROWTH
TOOLS & SUPPLIES
SEGMENT 61.1% 26.0% 21.7% 34.0%
ENGINEERED
SOLUTIONS
SEGMENT 17.7% 4.9% 9.3% 10.3%
TOTAL 42.2% 17.3% 16.5% 24.0%
OPERATING PROFIT
TOOLS & SUPPLIES
SEGMENT $30,416 $27,355 $32,479 $90,250
ENGINEERED
SOLUTIONS
SEGMENT 11,762 11,131 14,342 37,235
CORPORATE /
GENERAL (3,967) (3,632) (3,981) (11,580)
--------------------------------------------------
TOTAL $38,211 $34,854 $42,840 $ - $115,905
==================================================
OPERATING PROFIT %
TOOLS & SUPPLIES
SEGMENT 16.8% 15.7% 16.9% 16.5%
ENGINEERED
SOLUTIONS
SEGMENT 11.5% 11.0% 11.6% 11.3%
TOTAL
(INCLUDING
CORPORATE) 13.5% 12.6% 13.5% 13.2%
EBITDA
TOOLS & SUPPLIES
SEGMENT $33,530 $30,868 $35,395 $99,793
ENGINEERED
SOLUTIONS
SEGMENT 14,105 13,968 17,348 45,421
CORPORATE /
GENERAL (3,601) (3,586) (3,881) (11,068)
--------------------------------------------------
TOTAL $44,034 $41,250 $48,862 $ - $134,146
==================================================
EBITDA %
TOOLS & SUPPLIES
SEGMENT 18.5% 17.7% 18.4% 18.2%
ENGINEERED
SOLUTIONS
SEGMENT 13.8% 13.8% 14.0% 13.8%
TOTAL
(INCLUDING
CORPORATE) 15.5% 14.9% 15.4% 15.3%
ACTUANT CORPORATION
Reconciliation of GAAP measures to non-GAAP measures
(Dollars in thousands)
FISCAL 2005
---------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------------
EBITDA (1)
NET EARNINGS $16,941 $15,198 $19,997 $19,115 $71,251
FINANCING COSTS,
NET 1,938 3,907 4,936 6,146 16,927
INCOME TAX EXPENSE 8,806 8,022 8,744 9,440 35,012
DEPRECIATION &
AMORTIZATION 4,098 5,699 6,448 6,176 22,421
MINORITY INTEREST,
NET OF INCOME TAX (56) (229) (234) (36) (555)
---------------------------------------------
EBITDA (NON-GAAP
MEASURE) $31,727 $32,597 $39,891 $40,841 $145,056
=============================================
FISCAL 2006
---------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------------------------------------------
EBITDA (1)
NET EARNINGS $21,268 19,298 26,787 $67,353
FINANCING COSTS,
NET 6,067 6,084 6,785 18,936
INCOME TAX EXPENSE 10,220 9,159 8,636 28,015
DEPRECIATION &
AMORTIZATION 6,521 6,721 6,681 19,923
MINORITY INTEREST,
NET OF INCOME TAX (42) (12) (27) (81)
---------------------------------------------
EBITDA (NON-GAAP
MEASURE) $44,034 $41,250 $48,862 $ - $134,146
=============================================
(1) EBITDA represents net earnings before financing costs, net, income
tax expense, depreciation & amortization and minority interest.
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
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.
CONTACT: Actuant Corporation
Andrew Lampereur, 414-352-4160