Fiscal 2013 Third Quarter Earnings June 19, 2013

Transcription

1 Fiscal 2013 Third Quarter Earnings June 19, 2013

2 Safe Harbor Statements in this presentation that are not historical are considered forward-looking statements and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. This includes statements pertaining to, among other things, the planned divestiture of the Electrical segment, the potential timing thereof, and the prospects and expected financial results of Actuant after the planned transaction. Those factors are contained in Actuant s Securities and Exchange Commission filings. All estimates of future performance are as of June 19, In this presentation certain non-gaap financial measures may be used. Please see the supplemental financial schedules at the end of this presentation, accompanying the Q3 Fiscal 2013 earnings press release, or refer to the Investors section of Actuant s website ( for a reconciliation to the appropriate GAAP measure. 2

3 Third Quarter Snapshot Announced intent to divest Electrical segment, reflected as discontinued operations for all periods Inflection in operating results with EPS from continuing operations up 22% year-over-year to $0.62 Consolidated core sales down 2%, sequentially improved from -5% in Q2 with Energy and Industrial reporting solid core sales growth EBITDA margin of 19.6%, level with the prior year despite core sales decline Repurchased 0.2 million shares of common stock for approximately $5 million 3

4 Third Quarter EPS Reconciliation F' 2012 F' 2013 GAAP Diluted EPS $0.45 ($1.24) Debt refinancing costs $ Non-cash Electrical writedown - $2.00 Adjusted EPS $0.60 $0.76 Electrical operating results $0.09 $0.14 Adjusted continuing EPS $0.51 $0.62 4

5 Income Taxes (1) Consolidated Effective Income Tax Rate Q1 Q2 Q3 Q4 Full Year Fiscal % 15.7% 7.7% Fiscal % 22.7% 22.0% 16.9% 20.8% Lower Actuant Effective Tax Rate on a Continuing Operations Basis Due to Changes in the Country of Origin Mix of Pre-Tax Earnings (1) Continuing operations, excluding refinancing costs 5

6 Core Sales Trend (1) Sales (US$ in millions) Year-over-Year Core Sales Rate of Change $400 20% 13% 15% $350 8% 6% 10% $300 3% 1% 5% 0% $250-5% -5% -2% -5% -10% $200 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q % Sequential Year-Over-Year Improvement with Solid Growth in Energy and Industrial (1) Continuing operations 6

7 Operating Profit Margin Trend (1) (basis points) (100) 30 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q (200) (300) Significant Improvement in Year-Over-Year Margin Trends (1) Continuing operations 7

8 Industrial Segment Core growth of 2% with demonstrated success with growth initiatives including strong Integrated Solutions and bolting sales. Europe and China still impacted by weak economic environment, although comparisons become easier. Profit margins highest in last two years on higher volumes, lower incentive compensation and other costs. Sales $120 Financial Snapshot (US$ in millions) 3rd Quarter y-o-y change Sales $111 $110 1% Op Income $32.4 $30.7 6% Op Margin 29.1% 27.9% 120 bps 19% Sales Trend Core Sales Change 20% $100 13% 11% 15% 10% $80 7% $60 5% 2% 1% 2% 5% 0% $40 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13-5% 8

9 Energy Segment Double digit growth in Cortland s deep water umbilical, ropes and cables. Financial Snapshot (US$ in millions) 3rd Quarter Non-energy markets (e.g. defense) continue to be weak Hydratight core sales up due to global oil & gas MRO activity despite tough comparisons to robust NA nuclear maintenance in prior year. Margins higher due primarily to volume. $110 Sales y-o-y h change Sales $99 $96 3% Op Income $19.7 $18.5 7% Op Margin 19.9% 19.2% 70 bps 28% Sales Trend Core Sales Change 30% $100 $90 27% 23% 20% $80 12% 14% 10% $70 4% 5% $60-1% 0% $50 $40 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q % 9

10 Engineered Solutions Segment Europe truck demand inflected with year-over-year sales growth. Financial Snapshot (US$ in millions) 3rd Quarter Difficult comparisons for NA truck, agriculture and global off-highway equipment Continued weak Europe auto. Lower volume, unfavorable mix and restructuring costs result in year-overyear margin decline. Sales y-o-y change change Sales $134 $137-2% Op Income $12.8 $ % Op Margin 9.5% 13.5% (400) bps Sales Trend Core Sales Change $150 10% $130 $110-2% 0% 5% 0% -5% $90-9% -11% -12% -10% -10% $70-14% -17% -15% -20% $50 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q % 10

11 Third Quarter Cash Flow / Net Debt (US$ in millions) Free Cash Flow (1) EBITDA $82 Capital Expenditures (7) Cash Interest (1) Cash Taxes (12) Working Capital/Other 15 Free Cash Flow $77 Net Debt Reconciliation Net Debt - Feb 28, 2013 $304 Share repurchases 5 FX/Other (1) Free Cash Flow (77) Net Debt - May 31, 2013 $231 Net Debt/EBITDA (2) 0.8X Net Debt/Capitalization 18% All Time Strongest Balance Sheet & Liquidity (1) Includes cash flow from Electrical segment (2) Includes pro-forma adjustment for full year impact of recent acquisitions, includes Electrical EBITDA as proceeds not yet received 11

12 Well Positioned within Secular Growth Markets Energy Demand Global Infrastructure Key Trends Food/Farm Productivity Natural Resources / Sustainability Global power generation Emerging market build-out Population growth and oil & gas maintenance Transportation Affluence / protein diets Mining / resources New installations ti Bridges, tunnels Biofuels Emission i reduction Demanding technology & solutions Rail Agriculture equipment methods (deep water, oil Alternative energy (wind) sands, natural gas) Construction equipment Efficient seeding technology Energy efficiency (power Alternative energy gen) (nuclear, wind) Joint Integrity solutions Nuclear maintenance tools Pipeline connectors Heavy lift rope / slings Seismic exploration cables Key Products / Technology Integrated solutions heavy lift technologies Hydraulic cylinders Concrete tensioning Truck cab-tilt & latch Instrumentation & controls PTO drivelines Seeding systems Flexible shafts EGR, turbocharger and other air flow values Mining safety & productivity MRO solutions 12

13 High Growth Market Opportunities Secular growth trends tie in well to the high growth markets including China, India, Brazil, Middle East and South Africa, among others. Energy, Industrial and Engineered Solutions have ample high growth market opportunities. Currently represents small portion of total sales sizable opportunity for expansion. NA 50% ROW 20% Europe 30% 13

14 Fiscal 2013 Guidance Update (1) (US$ in millions except EPS) Fourth Quarter Full Year Change Fiscal Change Q from PY 2013 from PY Sales $ % - 2% $1,275-1,285 flat Diluted EPS (1) $ %- 10% $ % - 4% Fourth Quarter Assumptions: Core sales growth of approximately -1% to +1% Margin expansion Tax rate approximately 25% Free cash flow of $75-$85 million Excludes future acquisitions, divestitures and stock repurchases (1) Continuing operations, excluding 2012 debt refinancing costs. Quarters may not add to full year due to rounding. 14

15 Fiscal 2014 Initial Outlook (1) (US$ in millions except EPS) Fiscal Fiscal Change Sales $1,275-1,285 $1,315-1,340 3% - 5% Diluted EPS $ $ % - 10% Assumptions: Excludes future acquisitions, divestitures and share repurchases Full year core sales growth of 3-5% Key FX rates approximately $1.30/1 and $1.55/1 Margin expansion of basis points ~19-20% effective tax rate Shares outstanding million Free cash flow ~$175 million; ~110% conversion of net earnings (1) Continuing operations 15

16 Factors Impacting 2014 Outlook + Continued low global GDP growth + Easier comparisons to 2013 destocking + G+I impact including new product launches + Ongoing operational excellence initiatives Continued quiet restructuring efforts Higher incentive compensation costs Continued investments t in best growth (G+I) opportunities Higher effective tax rate + Benefit of prior period restructuring efforts 5 10% Base Business Earnings Improvement 16

17 Capital Deployment Acquisition Capacity $600 million revolver availability Cash + $161 million at 5/31/ $75-85 million Q4 FCF + $175 million 2014 FCF = >$400 million total cash + $ Electrical Proceeds X target net debt/ebitda operating zone; 0.8X currently Could deploy at least $1 billion in acquisitions s at 8X EV/EBITDA and still be in targeted leverage zone one year out EPS Accretion $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 Theoretical Benefit of Stock Buybacks (Assumes $33/share buy back cost using balance sheet cash) $0.05 $0.10 Actuant Has Substantial Growth Capital $0.15 $ Shares Repurchased in Millions 17

18 Executing Longstanding Business Model Business Model Long-Term X Deploy BPS Metrics GDP FCF Base Margins >100% FCF Conversion Execution of Model Results In Doubling of Business Every Five Years 18

19 Q & A Future Key Dates: Fourth Quarter Fiscal 2013 Earnings October 1, 2013 Save the Date 2013 Investor Day October 7, 2013

20 Appendix

21 Reconciliation of Non-GAAP Measures (US$ in millions) EBITDA Free Cash Flow Q3 Q Net Earnings $34.4 ($93.0) Discontinued Operations, net of tax ($6.7) $139.1 Net Financing Costs $24.1 $6.2 Income Tax Expense $4.5 $3.8 Depreciation & Amortization $10.9 $11.4 EBITDA from Continuing Operations $67.2 $67.5 Q3 Q Cash From Operations $77.3 $76.0 Capital Expenditures ($7.0) ($7.2) Sale of PP&E $0.7 $0.1 Stock Option Exercises $0.9 $7.9 Debt Refinancing Call Premium $10.4 $0.0 Other ($0.5) $0.1 Free Cash Flow (1) $81.8 $76.9 (1) Total Actuant, including Electrical 21