Modest Q4 Earnings for Pall Corp - Analyst Blog
30 Août 2013 - 3:00PM
Zacks
Pall Corporation
(PLL) reported fourth quarter fiscal 2013 pro
forma earnings of 90 cents a share, 2.3% above the Zacks Consensus
Estimate of 88 cents. Earnings for the quarter also surpassed the
prior-year quarter’s earnings of 86 cents a share by 4.7%. The
reported EPS included a 3 cents negative impact from foreign
currency translation.
For fiscal 2013, Pall reported
earnings of $3.04 a share, a penny above the Zacks Consensus
Estimate. Fiscal 2013 earnings were also up 8.6% from fiscal
2012.
Despite economic headwinds in some
of Pall’s industrial end markets, the company reported profits
attributable primarily to improved operational execution and
favorable impact from the structural cost actions.
Revenues
Total revenue in the quarter
declined marginally by 0.8% year over year to $716.8 million, but
edged past the Zacks Consensus Estimate of $715 million. Decline in
the top line was primarily attributable to weak industrial sales
during the quarter. However, sales in local currency managed a
nominal gain from prior year.
Segment
Revenues
The Life Sciences
segment revenues climbed 6% in local currency to $354 million in
the reported quarter. This increase was driven by a 6% rise in
Biopharmaceuticals and a 5% improvement in Medical, driven by
strong growth in the Biotech sector and strong sales in Hospital
Critical care and blood Media, respectively. This was partially
offset by lower sales in the Food & Beverage division -
attributable to weakness in China and Europe.
Revenues for the quarter in the
Industrial segment dropped 5% year over year in
local currency to $363 million. The decline was attributable to
lower sales in two of its three sub-divisions. Process technologies
sales were up 1% in local currency driven by strength in Fuels
& Chemicals. During the quarter, Aerospace was the weak
performer and it reported a 10% decline in local currency year over
year. The decline was because of weakness in military aerospace,
which in turn was attributable to non-repetition of helicopter
orders. Aerospace segment of Pall in the fourth quarter of 2012
benefitted from the strong helicopter program. Similarly,
micro electronics segment sales declined 7% in local currency. The
decline was primarily due to the continuing weakness in display and
data storage end-markets.
Margins
Gross margin in the quarter
remained flat year on year at 51.5% of sales. The operating margin
contracted to 18.8% in the quarter from 19.3% in the prior-year
quarter. Decline in operating margin was attributable to higher
investments in R&D.
Cash Flow and Balance
Sheet
Exiting the year, cash and cash
equivalents were $936.9 million compared with $500.3 million in the
prior-year quarter. Pall had a long-term debt of $467.3 million as
on Jul 31, 2013 compared with $490.7 million as on Jul 31, 2012.
Further, the company’s debt to capitalization ratio declined from
24.5% in 2012 to 20.5% in fiscal 2013, which also indicates good
debt management.
Operating cash flow for fiscal 2013
was $384 million, down 19.2% from $475 million as on Jul 31, 2012.
The reduction primarily reflects income tax payments associated
with the settlement of several years of U.S. tax audits and gain
from the sale of the company’s Blood business.
Capital expenditure for the year
was $110 million, which was down 30.7% compared to fiscal 2012.
Also, Pall repaid $358 million to its shareholders during fiscal
2013, which was divided as $108 million for dividend payments and
$250 million of share repurchases.
Outlook
The company also provided its
guidance for fiscal 2014. Pro forma earnings for fiscal 2014 are
expected in the range of $3.30 to $3.50, while revenues for the
year are expected to grow in the low to mid-single digit range.
Pall has a Zacks Rank #4 (Sell),
which might not be a good option at the moment. However, other
stocks in the industry worth considering at the moment are
Progressive Waste Solutions Ltd. (BIN),
Sharps Compliance Corp. (SMED) and Pure
Cycle Corporation (PCYO). Progressive Waste Solutions
carries a Zacks Rank #1 (Strong Buy) while Pure Cycle Corporation
and Sharps Compliance carry a Zacks Rank #2 (Buy).
PROGRESSV WASTE (BIN): Free Stock Analysis Report
PURE CYCLE CORP (PCYO): Free Stock Analysis Report
PALL CORP (PLL): Free Stock Analysis Report
SHARPS COMPLIAN (SMED): Free Stock Analysis Report
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