Enters Into Agreement to Sell EC&S to One
Rock Capital Partners
Continues to Execute Strategic Plan to Become
Premier Pure Play Industrial Tools & Services Company
Actuant Corporation (NYSE: ATU) today announced that it has
taken a significant step in its previously announced plan to focus
on its Enerpac Industrial Tools & Services (”IT&S”)
business and implement its strategy to be a global leader in
industrial tools and services.
The Company entered into a Securities Purchase Agreement (“SPA”)
with an affiliate of One Rock Capital Partners, LLC (“One Rock”),
pursuant to which the affiliate of One Rock will acquire the
Engineered Components & Systems (“EC&S”) segment (excluding
Actuant’s Cortland U.S. business) at a purchase price of
approximately $214.5 million (with approximately $3.0 million to be
paid in four quarterly installments after closing). The businesses
included in this segment and SPA are Power-Packer, Elliott
Manufacturing, Weasler Engineering, CrossControl, Maximatecc, and
Gits Manufacturing.
One Rock is a private equity firm located in New York and Los
Angeles that makes controlling investments in companies with
potential for growth and operational improvement. Managing
approximately $1.4 billion in capital, One Rock focuses on
investments in industries including specialty manufacturing,
healthcare products, chemicals and process industries, food
manufacturing and distribution, and business and environmental
services.
Randy Baker, President and Chief Executive Officer of Actuant,
said, “The agreement to sell the EC&S business represents an
important milestone toward our objective of becoming a premier pure
play industrial tools and services company. This agreement has been
approved by our Board of Directors and is the result of a
comprehensive sale process that our management team and external
advisors ran over the last several months to enhance long-term
value for our shareholders. This is an exciting outcome for our
EC&S employees and we thank them for their continued support
during the sale process.”
Tony W. Lee, Managing Partner of One Rock, commented,
“EC&S’s innovative solutions are relied upon by diverse
end-users across the globe and we intend to build upon the
Company’s strong foundation by creating a standalone business
positioned for growth.” Managing Partner R. Scott Spielvogel added,
“In drawing upon One Rock’s significant corporate carve out
experience, our goal is to expand EC&S’s service offerings and
bolster its valued customer relationships. We look forward to
working together with management and our Operating Partners to
advance operational best practices and maximize the Company’s
potential.”
Mr. Baker continued, “We are excited about the future of the
Enerpac business. Enerpac and its leading brands are global leaders
in high-force hydraulic tools and equipment for diverse industrial
and infrastructure applications. With the ongoing integration of
the Hydratight business, Enerpac is able to offer a full line of
products and services focused on joint-integrity solutions and
custom machining services through its expansive global network,
adding even more value to our customers. Our recent financial
results, including for this past quarter, reflect Enerpac’s
positive fundamentals and strong end-markets. We are confident that
we are well-positioned for future growth and shareholder value
creation.”
Use of Proceeds, Approvals and Timing to Close
Consistent with Actuant’s capital allocation priorities,
proceeds from the sale will be used to continue driving organic
growth in its existing Enerpac Tools and Services platform, reduce
debt, pursue complementary strategic tools acquisitions, and return
excess capital to shareholders through opportunistic share
repurchases. The order of these priorities may vary based on share
price, market conditions, the existence of attractive acquisition
opportunities, available capital, and other factors. Acquisitions
will be pursued in a disciplined manner and in all cases evaluated
against the value creation from deploying similar capital to our
shareholders through share repurchases.
Completion of the transaction is subject to customary regulatory
and other approvals and is expected to close in the fourth quarter
of calendar 2019. Employee representative consultations are to be
conducted in certain jurisdictions prior to the final sale.
Baird is serving as Actuant’s financial advisor on the proposed
disposition and Latham & Watkins LLP as its legal counsel.
Discontinued Operations and Updated Q4 2019 Outlook for
Continuing Operations
As a result of the agreement with One Rock Capital, the Company
will begin reporting the results of the EC&S segment (other
than the Cortland U.S. business) as discontinued operations
beginning with its fiscal fourth quarter of 2019. Financial
information for fiscal year 2018 and fiscal 2019 through the third
quarter, restated to reflect the EC&S segment (other than the
Cortland US business) as discontinued operations, is attached to
this release.
The Company is maintaining its outlook provided on June 26ᵗʰ,
2019 but updated its guidance for the fourth quarter and fiscal
year 2019 to reflect its continuing operations as follows:
Full year
- Sales: $664 to $669 million, with annual core sales growth
between 4% and 8%;
- Adjusted EPS of between $0.71 and $0.75;
- Adjusted EBITDA of $99 to $102 million; and,
- Free cash flow: $62 to $70 million;
Fourth quarter
- Sales: $167 to $173 million;
- Adjusted EBITDA of $26 to $30 million; and
- Adjusted EPS of between $0.16 and $0.20.
Impairment Charge
In connection with the execution of the SPA, the Company
concluded that a material charge related to the net assets held for
sale and the cumulative effect of foreign currency rate changes
since acquisition(s) of the EC&S business to be sold is
required and anticipates recording a non-cash impairment &
divestiture charge of approximately $300 million in the fourth
quarter of fiscal 2019. The final amount of the charge may be
impacted by cash flows of the divested business prior to the
consummation of the disposition, changes in foreign exchange rates,
and working capital amounts at disposition.
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 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.
About One Rock Capital Partners, LLC
One Rock makes controlling investments in companies with
potential for growth and operational improvement using a rigorous
approach that utilizes highly experienced Operating Partners to
identify, acquire and enhance businesses in select industries. The
involvement of these Operating Partners affords One Rock the
ability to conduct due diligence and consummate acquisitions and
investments in all types of situations, regardless of complexity.
One Rock works collaboratively with company management and its
Operating Partners to develop a comprehensive business plan focused
on growing the enterprise and its profitability to enhance
long-term value. For more information, visit
www.onerockcapital.com.
Non-GAAP Financial Information
This press release contains financial measures that are not
measures presented in conformity with GAAP. They include Adjusted
EBITDA, Adjusted EPS and Free Cash Flow. This press release
includes reconciliations of these non-GAAP measures to the most
comparable GAAP measure, including in the tables attached to this
press release. Management believes these non-GAAP measures are
commonly used financial measures for investors to evaluate
Actuant’s anticipated operating performance and provide investors
with metrics they can use to evaluate aspects of the Company’s
performance from period to period. In addition, these are some of
the factors management uses in internal evaluations of the overall
performance of the Company’s business. Management acknowledges that
there are many items that impact a company’s reported results and
the adjustments reflected in these non-GAAP measures are not
intended to present all items that may have impacted these results.
In addition, these non-GAAP measures are not necessarily comparable
to similarly-titled measures used by other companies.
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.
Among other risks and factors, Actuant’s results are 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,
uncertainties with respect to the timing and terms of any
disposition (including the timing of the proposed disposition of
the EC&S segment (other than the Cortland US business), 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 for the fiscal year ended August 31, 2018 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.
Actuant Corporation Condensed Consolidated Statements of
Operations (Dollars in thousands, except per share
amounts) (Unaudited)
Three Months Ended
Twelve Months Ended
Three Months Ended
Nine Months Ended
November 30,
February 28,
May 31,
August 31,
August 31,
November 30,
February 28,
May 31,
May 31,
2017
2018
2018
2018
2018
2018
2019
2019
2019
Net sales
$
155,767
$
148,601
$
170,466
$
166,468
$
641,303
$
158,551
$
159,788
$
178,095
$
496,435
Cost of products sold
87,063
86,385
91,463
93,108
358,019
88,239
88,473
96,141
272,853
Gross profit
68,704
62,216
79,003
73,360
283,284
70,312
71,315
81,954
223,582
Selling, administrative and engineering expenses
54,479
48,618
56,277
50,881
210,256
53,121
53,433
52,810
159,364
Amortization of intangible assets
2,292
2,302
2,342
2,343
9,280
2,297
1,854
2,838
6,989
Restructuring charges
6,331
2,693
789
742
10,555
(29
)
46
1,115
1,132
Impairment & divestiture charges
-
2,987
-
-
2,987
23,477
6,112
(12,988
)
16,600
Operating profit (loss) from continuing operations
5,602
5,616
19,595
19,394
50,206
(8,554
)
9,870
38,179
39,497
Financing costs, net
7,356
7,462
7,636
8,417
30,872
7,298
7,157
7,146
21,601
Other expense (income), net
323
766
(698
)
(252
)
138
505
515
(787
)
234
(Loss) income from continuing operations, before income tax expense
(benefit)
(2,077
)
(2,612
)
12,657
11,229
19,196
(16,357
)
2,198
31,820
17,662
Income tax expense (benefit)
763
18,956
(5,170
)
(99
)
14,450
66
4,002
4,962
9,030
(Loss) earnings from continuing operations
(2,840
)
(21,568
)
17,827
11,328
4,746
(16,423
)
(1,804
)
26,858
8,632
Earnings (loss) from discontinued operations, net of income
taxes
8,066
3,347
11,185
(48,992
)
(26,394
)
(1,029
)
4,557
5,560
9,087
Net income (loss)
$
5,226
$
(18,221
)
$
29,012
$
(37,664
)
$
(21,648
)
$
(17,452
)
$
2,753
$
32,418
$
17,719
(Loss) earnings from continuing operations per share
Basic
$
(0.05
)
$
(0.36
)
$
0.29
$
0.19
$
0.08
$
(0.27
)
$
(0.03
)
$
0.44
$
0.14
Diluted
(0.05
)
(0.36
)
0.29
0.18
0.08
(0.27
)
(0.03
)
0.43
0.14
Earnings (loss) from discontinued operations per
share Basic
$
0.13
$
0.06
$
0.18
$
(0.80
)
$
(0.44
)
$
(0.02
)
$
0.07
$
0.09
$
0.15
Diluted
0.13
0.06
0.18
(0.80
)
(0.43
)
(0.02
)
0.07
0.09
0.15
Earnings (loss) per share Basic
$
0.09
$
(0.30
)
$
0.48
$
(0.62
)
$
(0.36
)
$
(0.29
)
$
0.04
$
0.53
$
0.29
Diluted
0.09
(0.30
)
0.48
(0.61
)
(0.35
)
(0.29
)
0.04
0.52
0.29
Weighted average common shares outstanding Basic
59,871
60,318
60,683
60,893
60,441
61,031
61,243
61,422
61,232
Diluted
59,871
60,318
61,064
61,561
61,028
61,031
61,243
61,840
61,701
Note: The total of the individual quarters may not equal the
annual or year-to-date total due to rounding. The continuing
operations and discontinued operations earning (loss) per share may
not equal total earning (loss) per share due to rounding
ACTUANT
CORPORATION
SUPPLEMENTAL UNAUDITED
DATA
(Dollars in thousands)
FISCAL 2018
FISCAL 2019
Q1
Q2
Q3
Q4
TOTAL
Q1
Q2
Q3
Q4
TOTAL
SALES INDUSTRIAL TOOLS & SERVICES SEGMENT
$
141,991
$
136,986
$
158,735
$
153,373
$
591,085
$
148,655
$
149,521
$
166,732
$
-
$
464,908
OTHER
13,776
11,615
11,731
13,095
50,218
9,896
10,267
11,363
-
31,527
TOTAL
$
155,767
$
148,601
$
170,466
$
166,468
$
641,303
$
158,551
$
159,788
$
178,095
$
-
$
496,435
% SALES GROWTH INDUSTRIAL TOOLS & SERVICES
SEGMENT
2
%
5
%
8
%
12
%
7
%
5
%
9
%
5
%
-
6
%
OTHER
-12
%
-30
%
-27
%
-17
%
-22
%
-28
%
-12
%
-3
%
-
-15
%
TOTAL
1
%
1
%
4
%
9
%
4
%
2
%
8
%
4
%
-
5
%
OPERATING PROFIT (LOSS) INDUSTRIAL TOOLS &
SERVICES SEGMENT
$
22,218
$
20,510
$
32,206
$
28,783
$
103,718
$
26,345
$
26,596
$
35,992
$
-
$
88,933
OTHER
(864
)
123
189
443
(109
)
(484
)
1,091
1,787
-
2,394
CORPORATE / GENERAL
(9,421
)
(8,503
)
(11,995
)
(9,090
)
(39,012
)
(10,967
)
(11,659
)
(9,481
)
-
(32,106
)
ADJUSTED OPERATING PROFIT
$
11,933
$
12,130
$
20,400
$
20,136
$
64,597
$
14,894
$
16,028
$
28,298
$
-
$
59,221
IMPAIRMENT & DIVESTITURE CHARGES
-
(2,987
)
-
-
(2,987
)
(23,477
)
(6,112
)
12,988
-
(16,600
)
RESTRUCTURING CHARGES (1)
(6,331
)
(3,527
)
(805
)
(742
)
(11,404
)
29
(46
)
(1,115
)
-
(1,132
)
DEBT MODIFICATION COSTS
-
-
-
-
-
-
-
(288
)
-
(288
)
DEPRECIATION & AMORTIZATION TRUE UP (2)
-
-
-
-
-
-
-
(1,704
)
-
(1,704
)
OPERATING PROFIT (LOSS)
$
5,602
$
5,616
$
19,595
$
19,394
$
50,206
$
(8,554
)
$
9,870
$
38,179
$
-
$
39,497
ADJUSTED OPERATING PROFIT % INDUSTRIAL TOOLS &
SERVICES SEGMENT
15.6
%
15.0
%
20.3
%
18.8
%
17.5
%
17.7
%
17.8
%
21.6
%
-
19.1
%
OTHER
-6.3
%
1.1
%
1.6
%
3.4
%
-0.2
%
-4.9
%
10.6
%
15.7
%
-
7.6
%
ADJUSTED OPERATING PROFIT %
7.7
%
8.2
%
12.0
%
12.1
%
10.1
%
9.4
%
10.0
%
15.9
%
-
11.9
%
EBITDA INDUSTRIAL TOOLS & SERVICES SEGMENT
$
25,567
$
24,594
$
36,394
$
32,763
$
119,318
$
30,038
$
30,153
$
40,015
$
-
$
100,206
OTHER
(111
)
826
985
1,250
2,951
337
1,087
1,786
-
3,209
CORPORATE / GENERAL
(8,906
)
(8,964
)
(11,067
)
(8,466
)
(37,405
)
(10,930
)
(11,422
)
(8,311
)
-
(30,661
)
ADJUSTED EBITDA
$
16,550
$
16,456
$
26,312
$
25,547
$
84,864
$
19,445
$
19,818
$
33,490
$
-
$
72,754
IMPAIRMENT & DIVESTITURE CHARGES
-
(2,987
)
-
-
(2,987
)
(23,477
)
(6,112
)
12,988
-
(16,600
)
RESTRUCTURING CHARGES (1)
(6,331
)
(3,527
)
(805
)
(742
)
(11,404
)
29
(46
)
(1,115
)
-
(1,132
)
DEBT MODIFICATION COSTS
-
-
-
-
-
-
-
(288
)
-
(288
)
EBITDA
$
10,219
$
9,942
$
25,507
$
24,805
$
70,473
$
(4,003
)
$
13,660
$
45,075
$
-
$
54,734
ADJUSTED EBITDA % INDUSTRIAL TOOLS & SERVICES
SEGMENT
18.0
%
18.0
%
22.9
%
21.4
%
20.2
%
20.2
%
20.2
%
24.0
%
-
21.6
%
OTHER
-0.8
%
7.1
%
8.4
%
9.5
%
5.9
%
3.4
%
10.6
%
15.7
%
-
10.2
%
ADJUSTED EBITDA %
10.6
%
11.1
%
15.4
%
15.3
%
13.2
%
12.3
%
12.4
%
18.8
%
-
14.7
%
Notes: (1) Approximately $0.8 million of the Q2 fiscal 2018
restructuring charges were recorded in cost of products sold. De
minimis restructuring charges were also recorded in cost of
products sold in Q3 fiscal 2018. (2) Represents the depreciation
and amortization expense true up for the Cortland business assets
that were reclassified out of held for sale in Q3 fiscal 2019, as
though the assets had never been classified as held for sale.
ACTUANT CORPORATION
SUPPLEMENTAL UNAUDITED
DATA
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except
for per share amounts)
FISCAL 2018
FISCAL 2019
Q1
Q2
Q3
Q4
TOTAL
Q1
Q2
Q3
Q4
TOTAL
ADJUSTED EARNINGS (1) NET EARNINGS (LOSS) (GAAP MEASURE)
$
5,226
$
(18,221
)
$
29,012
$
(37,664
)
$
(21,648
)
$
(17,452
)
$
2,753
$
32,418
$
-
$
17,719
DISCONTINUED OPERATIONS, NET OF INCOME TAX
8,066
3,347
11,185
(48,992
)
(26,394
)
(1,029
)
4,557
5,560
-
9,087
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
$
(2,840
)
$
(21,568
)
$
17,827
$
11,328
$
4,746
$
(16,423
)
$
(1,804
)
$
26,858
$
-
$
8,632
IMPAIRMENT & DIVESTITURE CHARGES, NET OF TAX EFFECT
-
12,385
-
-
12,385
23,477
6,112
(13,001
)
-
16,587
RESTRUCTURING CHARGES, NET OF TAX EFFECT
6,443
3,284
(850
)
237
9,113
(90
)
(148
)
(766
)
-
(1,004
)
ACCELERATED DEBT ISSUANCES & MODIFICATION COSTS,
-
-
-
601
601
-
-
358
-
358
NET OF TAX EFFECT DEPRECIATION & AMORTIZATION TRUE UP, NET OF
TAX EFFECT
-
-
-
-
-
-
-
1,302
-
1,302
OTHER INCOME TAX EXPENSE (BENEFIT)
-
9,297
(6,719
)
564
3,142
-
3,160
3,076
-
6,236
ADJUSTED EARNINGS FROM CONTINUING OPERATIONS
$
3,603
$
3,398
$
10,258
$
12,730
$
29,987
$
6,964
$
7,320
$
17,827
$
-
$
32,111
ADJUSTED DILUTED EARNINGS PER SHARE (1) NET EARNINGS
(LOSS) (GAAP MEASURE)
$
0.09
$
(0.30
)
$
0.48
$
(0.61
)
$
(0.35
)
$
(0.29
)
$
0.04
$
0.52
$
-
$
0.29
DISCONTINUED OPERATIONS, NET OF INCOME TAX
0.13
0.06
0.18
(0.80
)
(0.43
)
(0.02
)
0.07
0.09
-
0.15
EARNINGS FROM CONTINUING OPERATIONS
$
(0.05
)
$
(0.36
)
$
0.29
$
0.18
$
0.08
$
(0.27
)
$
(0.03
)
$
0.43
$
-
$
0.14
IMPAIRMENT & DIVESTITURE CHARGES, NET OF TAX EFFECT
-
0.21
-
-
0.20
0.38
0.10
(0.21
)
-
0.27
RESTRUCTURING CHARGES, NET OF TAX EFFECT
0.11
0.06
(0.01
)
0.01
0.15
-
-
(0.01
)
-
(0.01
)
ACCELERATED DEBT ISSUANCES & MODIFICATION COSTS,
-
-
-
0.01
0.01
-
-
0.01
-
0.01
NET OF TAX EFFECT DEPRECIATION & AMORTIZATION TRUE UP, NET OF
TAX EFFECT
-
-
-
-
-
-
-
0.02
-
0.02
OTHER INCOME TAX EXPENSE (BENEFIT)
-
0.15
(0.11
)
0.01
0.05
-
0.05
0.05
-
0.09
ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
$
0.06
$
0.06
$
0.17
$
0.21
$
0.49
$
0.11
$
0.12
$
0.29
$
-
$
0.52
ADJUSTED EBITDA CONTINUING OPERATIONS (2) EARNINGS
(LOSS) FROM CONTINUING OPERATIONS
$
(2,840
)
$
(21,568
)
$
17,827
$
11,328
$
4,746
$
(16,423
)
$
(1,804
)
$
26,858
$
-
$
8,632
FINANCING COSTS, NET
7,356
7,462
7,636
8,417
30,872
7,298
7,157
7,146
-
21,601
INCOME TAX EXPENSE (BENEFIT)
763
18,956
(5,170
)
(99
)
14,450
66
4,002
4,962
-
9,030
DEPRECIATION & AMORTIZATION
4,940
5,092
5,214
5,159
20,405
5,056
4,305
6,109
-
15,471
EBITDA
$
10,219
$
9,942
$
25,507
$
24,805
$
70,473
$
(4,003
)
$
13,660
$
45,075
$
-
$
54,734
IMPAIRMENT & OTHER DIVESTITURE CHARGES
-
2,987
-
-
2,987
23,477
6,112
(12,988
)
-
16,600
RESTRUCTURING CHARGES
6,331
3,527
805
742
11,404
(29
)
46
1,115
-
1,132
DEBT MODIFICATION COSTS
-
-
-
-
-
-
-
288
-
288
ADJUSTED EBITDA
$
16,550
$
16,456
$
26,312
$
25,547
$
84,864
$
19,445
$
19,818
$
33,490
$
-
$
72,754
FOOTNOTES Note: The total of the individual quarters
may not equal the annual or year-to-date total due to rounding. The
continuing operations and discontinued operations earning (loss)
per share may not equal total earning (loss) per share due to
rounding
(1)
Adjusted earnings from continuing operations and adjusted diluted
earnings per share represent net earnings (loss) and diluted
earnings (loss) per share per the Condensed Consolidated Statements
of Operations net of charges or credits for items to be highlighted
for comparability purposes. These measures are not calculated based
upon generally accepted accounting principles (GAAP) and should not
be considered as an alternative to net earnings (loss) or diluted
earnings (loss) per share or as an indicator of the Company's
operating performance. However, this presentation is important to
investors for understanding the operating results of the current
portfolio of Actuant companies. The total of the individual
components may not equal due to rounding.
(2)
EBITDA represents net earnings (loss) from continuing operations
before financing costs, net, income tax (benefit) expense, and
depreciation & amortization. EBITDA is not a calculation based
upon GAAP. The amounts included in the EBITDA and Adjusted EBITDA
calculation, however, are derived from amounts included in the
Condensed Consolidated Statements of Operations. EBITDA should not
be considered as an alternative to net earnings (loss), operating
profit (loss) or operating cash flows. Actuant has presented EBITDA
because it regularly reviews this performance measure. In addition,
EBITDA is used by many of our investors and lenders, and is
presented as a convenience to them. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190709005275/en/
For Actuant – Investors Barb Bolens VP Corporate Strategy
& Investor Relations 262-293-1562 For Actuant – Media
Joele Frank, Wilkinson Brimmer Katcher Matthew Sherman / Nick
Lamplough / Aaron Palash 212-355-4449 For One Rock Alex
Jeffrey/Sam Fisher Gasthalter & Co. (212) 257-4170
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