Actuant Corp (ATU) SEC Filing 8-K Material Event for the period ending Wednesday, June 20, 2018

Exhibit 99.1

Actuant Reports Third Quarter Results; Updates Fiscal 2018 Guidance

MILWAUKEE--(BUSINESS WIRE)--June 20, 2018--Actuant Corporation (NYSE: ATU) today announced results for its third quarter ended May 31, 2018.

Highlights

• Consolidated sales increased 7% over the comparable prior year quarter with a 4% benefit from foreign currency rate changes and a 1% reduction associated with net acquisitions and divestitures. Third quarter core sales (total sales excluding the impact of acquisitions, divestitures and foreign currency rate changes) increased 4% on a year-over-year basis with strong volumes in both the Engineered Solutions and Industrial segments.
• GAAP diluted earnings per share (“EPS”) was $0.48 in the third quarter of fiscal 2018 versus $0.37 in the prior year. Excluding third quarter fiscal 2018 one-time items, adjusted EPS was $0.39 (see Consolidated Results below, along with the attached reconciliation of earnings).
• Strong operating cash flow generation and reduction in net leverage improves capital allocation liquidity.
• Acquired Equalizer, a small tool product line tuck-in to expand pipe and flange alignment capabilities.
• Full year fiscal 2018 sales and adjusted EPS guidance updated to $1.17-1.18 billion and $1.03-1.08 (excluding one-time items), respectively.

Randy Baker, President and CEO of Actuant commented, “I’m pleased with Actuant’s performance in the third quarter, delivering both solid sales and earnings growth. We continue to see strong momentum in the industrial tools and OEM component businesses, and global Energy maintenance activity appears to have stabilized. While we continue to experience some pressures from inflation along with commercial and engineering investments to support high service levels and growth, we are realizing the incremental margin benefits of higher volumes and restructuring actions. In summary, I am encouraged by this quarter’s performance and our team’s ability to capitalize on the broad based strong economic backdrop. I want to thank our employees across the globe for their continued commitment and execution.”

Consolidated Results

Consolidated sales for the third quarter were $317 million, 7% higher than the $295 million in the comparable prior year quarter. Core sales improved 4% year-over-year while foreign currency rate changes increased sales 4% and the net impact from the Mirage acquisition net of the Viking divestiture reduced sales by 1%. Fiscal 2018 third quarter net earnings and EPS were $29.0 million, or $0.48, compared to $22.5 million, or $0.37, respectively, in the comparable prior year quarter. Fiscal 2018 third quarter earnings included restructuring charges of $1.2 million (benefit of $0.2 million and zero EPS, after tax) and a $4.9 million ($0.09 per share) benefit related to an adjustment to the original provision for U.S. tax reform based on further IRS clarification. (Note that impacts from tax reform remain provisional and subject to further adjustment.) Third quarter 2017 results included $0.4 million ($0.2 million and zero EPS, after tax) of restructuring charges and a $3.2 million income tax benefit ($0.05 per share). Excluding these items, adjusted EPS for the third quarter of fiscal 2018 was $0.39 compared to $0.32 in the comparable prior year period (see attached reconciliation of earnings).

Consolidated sales for the nine months ended May 31, 2018 were $881 million, 7% higher than the $820 million in the comparable prior year period. Core sales improved 5% year-over-year while foreign currency rate changes increased sales 3%, and the net impact of acquisitions and divestitures reduced sales by 1%. Fiscal 2018’s year-to-date net earnings and EPS were $16.0 million, or $0.26, compared to earnings and EPS of $32.6 million, and $0.54, respectively, in the comparable prior year period. Fiscal 2018 year-to-date results include restructuring charges of $12.1 million ($9.8 million or $0.16 per share, after tax) along with impairment & divestiture, tax reform and equity compensation items. Fiscal 2017 comparable results included $5.4 million ($4.0 million or $0.07 per share, after tax) of restructuring charges along with director and officer transition charges and an income tax benefit. Excluding these items, adjusted EPS for the first nine months of fiscal 2018 was $0.71 compared to $0.64 in the comparable prior year period (see attached reconciliation of earnings).

Segment Results

⁽¹⁾ 2018 excludes $(0.2) and $2.8 of restructuring charges in the third quarter and nine months, respectively. 2017 excludes $0.3 and $1.7 of restructuring charges in the third quarter and nine months, respectively.

Third quarter fiscal 2018 Industrial segment sales were $108 million, or 8% higher than the prior year. The impact of foreign currency exchange rates was a 4% benefit resulting in a 4% year-over-year core sales increase. Sales of standard industrial tools remained strong, growing double digits on a global basis with broad demand across the diverse set of end markets served despite tougher comparables. The segment’s overall core sales growth rate includes significantly lower heavy lifting technology sales and a modest decline in concrete tensioning volumes. Third quarter adjusted operating profit margin was level with the prior year and improved 520 basis points sequentially. Strong incremental profits within the industrial tool channel were partially offset by continued costs associated with heavy lifting specialty projects and concrete tensioning production inefficiencies, although less severe than prior quarters.

⁽²⁾ 2018 excludes $0.8 and $4.0 of restructuring charges in the third quarter and nine months, respectively. 2018 nine month results also exclude $3.0 in impairment & divestiture charges.

Fiscal 2018 third quarter Energy segment sales were approximately level with the prior year at $84 million. The 3% favorable impact of the weaker US dollar was offset by the 2% headwind from the net of the Viking divestiture and Mirage acquisition, while core sales declined 1%. Hydratight’s global maintenance activity levels stabilized, with improvements in the Middle East and North Sea offset by declines in certain other regions. Cortland sales grew slightly on higher medical product demand along with improving offshore oil & gas seismic and cable activity. Energy segment adjusted operating profit margin improved substantially both year-over-year and sequentially due to the benefits of restructuring and service excellence actions, favorable sales mix, and the absence of Viking losses.

⁽³⁾ 2018 excludes $0.5 of restructuring charges for the nine months. 2017 excludes $0.1 and $3.6 of restructuring charges in the third quarter and nine months, respectively.

Third quarter fiscal 2018 Engineered Solutions segment sales were $125 million or 12% above the prior year. Excluding the 5% benefit of the weaker US dollar, year-over-year core sales increased 7%. Strong sales growth continued across the agriculture and other off-highway equipment markets globally, while truck sales were modestly higher as growth in Europe production was partially offset by anticipated lower China volumes. Third quarter adjusted operating profit margin was about level with the comparable prior year quarter as the higher volumes were offset by higher engineering expenses to support growth, material and labor inflation and unfavorable mix.

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

Corporate expenses for the third quarter of fiscal 2018 were $8.1 million, or $2.7 million greater than the comparable prior year period due primarily to higher incentive compensation and outside services costs. The effective income tax rate of approximately 9% was modestly above expectations and higher than the prior year’s -4% rate.

Financial Position

Net debt at May 31, 2018 was approximately $351 million (total debt of $540 million less $189 million of cash) which declined approximately $43 million from the prior quarter end. Strong cash flow was used to reduce net debt and the Company deployed approximately $6 million on a small tool product line acquisition. The net debt to proforma EBITDA leverage ratio declined to 2.6 times.

Outlook

Baker continued, "I believe our third quarter results demonstrate that we are on the path toward higher structural sales and margin performance, and we expect to further build on these solid results. This underlying performance, combined with anticipated improvement in energy maintenance activity levels, effectively managing the inflationary environment and our expected continued progress in new product launches, we believe positions us well to deliver on our 2018 full year guidance.

With one quarter to go in the fiscal year, we are increasing our full year sales guidance and narrowing our adjusted EPS guidance range to reflect our performance to date and the latest outlook for the remainder of the year. For the fourth quarter, we anticipate sales will be in the $290-300 million range reflecting normal seasonal moderation from the third quarter. Fourth quarter adjusted EPS is expected to be in the range of $0.32-0.37. This includes core sales growth of approximately 3-5% and a mid-single digit effective income tax rate. This would bring our full year sales and adjusted EPS guidance to a range of $1.17-1.18 billion and $1.03-1.08, respectively. Free cash flow is expected to be in the $70-75 million range and would represent greater than 100% earnings conversion.”

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

Baker concluded, “The global economy and our markets continue to show strength, and our growth initiatives are taking hold. By working to improve our commercial effectiveness and speed to market, enhance our lean execution and complete critical portfolio management actions, we believe we will be well positioned to drive significant long-term value for our customers, employees and shareholders.”

Conference Call Information

An investor conference call is scheduled for 10am CT today, June 20, 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. 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, 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.

(tables follow)

CONTACT:
Actuant Corporation
Karen Bauer
Communications & Investor Relations Leader
262-293-1562