Pall Corporation Tops Q4 Earnings on Operational Strength

Pall Corporation PLL reported healthy fourth-quarter fiscal 2014 results with pro forma earnings of $1.11 a share, surpassing the Zacks Consensus Estimate of $1.06 by 4.7%. Earnings per share EPS were 23.3% above the prior-year quarter figure of 90 cents. For fiscal 2014, the company reported pro forma earnings of $3.44 a share, increasing 13.2% year over year. The pro forma earnings also beat the Zacks Consensus Estimate of $3.39 by 1.5%.  

 

 

Despite prevalent economic volatility across the globe, the company reported modest profits, primarily attributable to improved execution of operational plans and favorable impact of structural cost actions.

Revenues

This Zacks Rank #3 (Hold) company reported revenue growth of 11.6% year over year to $800 million. Revenues were also ahead of the Zacks Consensus Estimate of $774 million.  For fiscal 2014, revenues climbed 5% year over year to $2,789.1 million. However, it lagged the Zacks Consensus Estimate of $2,763 million.

Segment Revenues

The Life Sciences segment revenues in the reported quarter rose 16.7% to $413 million. The upside was driven by a 24% rise in Biopharmaceuticals sales backed by improved market conditions and synergies from acquisitions; 9% growth in Food & Beverage sub-segment due to strong performance in all three geographic regions; and a 6% growth in Medical aided by higher OEM sales from acquisitions.

Revenues in the Industrial segment increased 6.6% year over year to $387 million. Growth was primarily driven by an 18% rise in Aerospace business, which gained from favorable shipment timings; a 15% rise in Process Technologies sales attributable to strong growth in end-markets and gains from the acquisition of Filter Specialists, Inc; and 10% growth in Microelectronics division, which benefited from the ongoing improvements in the end-markets along with increase in new orders.

Margins        

Gross margin in the quarter contracted 50 basis points (bps) to 51% of sales. However, the operating margin increased 100 bps to 19.8% in the quarter.    

Cash Flow and Balance Sheet

Pall Corporation ended fiscal 2014 with cash and cash equivalents of $964.1 million, long-term debt (net of current portion) of $375.8 million, and shareholders' equity of $1,895.4 million compared with respective fiscal 2013 tallies of $936.9 million, $467.3 million and $1,814 million.

The company's net cash from operating activities for fiscal 2014 came in at $503.9 million, up significantly by 31.1% from $384.5 million in fiscal 2013. The year-over-year improvement primarily reflects the company's efficient management of working capital in the reported fiscal.

Capital expenditure for fiscal 2014 was $74.7 million, while the company paid $118.8 million in dividends.

Pall's free cash flow for the fiscal was $429.2 million compared with $274.3 million at fiscal 2013-end.

Outlook

The company provided its initial guidance for fiscal 2015. Pro forma earnings are expected in the range of $3.75 to $3.95 per share, reflecting year-over-year growth of 9% to 15%. Revenues are likely to grow in mid-to-high single-digits in fiscal 2015.

The Zacks Consensus Estimate for 2015 is currently pegged at $3.88.

Performance of Other Stocks in the Same Industry

Tetra Tech Inc TTEK reported fiscal second-quarter 2014 earnings of 48 cents per share, beating the Zacks Consensus Estimate of 39 cents.

CECO Environmental Corp. CECE reported first-quarter fiscal 2014 adjusted earnings of 19 cents per share, 17.4% below the Zacks Consensus Estimate of 23 cents.

Calgon Carbon CCC reported second-quarter 2014 earnings of 28 cents per share, missing the Zacks Consensus Estimate by a penny.

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