Actuant Corporation Q4 Conference Call Highlights

Actuant Corporation ATU reported its fourth quarter earnings on Thursday. Shares of the company are up 3 percent.

• Our full year fiscal 2014 sales grew 9%

• Core growth of 3% which I believe reflects the general economic malaise and uncertainty leading to varying results depending on the end market.

• We bought back the remaining 1.8 million shares under our prior authorization since fiscal yearend.

• Fourth quarter results for both fiscal 2014 and 2013 included some items that's SKU comparability.

• We completed the sale of the RV business in June for $36 million

• Our effective tax rate was about 20%

• Non-recurring $10 million non-cash tax gain, which drove a 2% effective tax rate in the fourth quarter of last year.

• Added $0.14 a share to last year's EPS.

• Our consolidated fourth quarter sales were up 8% year-over-year.

• Now, turning to cash flow and capitalization, we had a good cash flow in the quarter with $71 million of free cash flow and receipts of $36 million from the RV divestiture.

• We used these funds to repurchase 3 million shares of stock for about $100 million during the quarter.

• Our capacity and availability remain in great shape despite the fact that we deploy $284 million of cash during the fiscal year on 8.2 million shares of Actuant's stock and about $35 million in acquisitions.

• Good accretive acquisitions that strengthened our existing businesses and portfolio are clearly our top priority

Five key points:

• The first is portfolio management between the divestiture of the electrical segment.
• RV business and the Viking people business product line, we generated nearly $300 million of proceeds from portfolio streamlining.
• While these actions resulted in the loss of over $300 million in revenue, Actuant's remaining businesses are more tightly linked to our segment strategies
• The next major accomplishment is our continued progress on growth and innovation.
• Our high-growth market sales, mainly China, Brazil and India, increased 19% in fiscal 2014.
• The third highlight is leadership changes.
• Speaking of operating company, we made solid progress on the various standardization and simplification aspects of that transition during the year.

Financials:

• If you combined divided and buybacks in fiscal 2014, we returned over 10% of our market cap back to shareholders.
• Net M&A activity is another $0.03 per share headwind.
• Our consolidated 3% to 5% core growth forecast for fiscal 2015 leads to sales guidance of $1.425 billion to $1.475 billion.
• We are anticipating an approximate 21% effective tax rate in fiscal 2015
• Drive earnings per share to $2.05 to $2.15 per share.
• We're anticipating sales to be between $335 million and $345 million and earnings per share between $0.40 and $0.45 compared to $0.44 a year ago.
• Energy is expected to have the highest fiscal 2015 core sales growth at 4% to 6% with Viking now being factored into the calculation.
• The biggest non-operational increase in fiscal 2015 EPS is the $0.18 per share carryover benefit of the buybacks completed during fiscal 2014
• At the guidance midpoint, we are anticipating a strong year for Actuant, 4% core growth, 9% operating profit growth and 17% earnings per share growth.

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