New Actuant Corp. chief executive officer Randy Baker said the company has “clear priorities” and an “attractive future,” despite a $170 million write-off announced just after he joined the company and numerous headwinds in its various end markets.
Baker said he likes much of the company’s strategy. While he will be spending the next few months getting to understand the Menomonee Falls-based industrial company, he expects any changes in the short-term will be more “tweaks” than wholesale changes.
He also said he likes what he has seen in the company’s efforts to develop new products.
“We’re going to press hard to find differentiated product that quite honestly the competition has no answer to, because that will gain you share,” Baker said during the company’s second quarter earnings call.
Actuant, which has operations in more than 30 countries and provides branded hydraulic tools, specialized energy market products and highly engineered position and motion control systems, has been particularly hit by downturns in the oil and gas market and other industrial areas. The company announced a $170 million net impairment charge for the second quarter last week and indicated it would miss expectations.
On Wednesday, the company reported a $159.2 million loss for the second quarter, compared with a $64.8 million loss for the same quarter in 2015. The loss amounted to $2.70 per diluted share, compared with a loss of $1.05 per share the previous year. Actuant indicated its adjusted earnings, accounting for the impairment charge and other restructure activities was 21 cents per share, down from 28 cents per share the previous year.
The company’s revenue fell 13 percent to $263.3 million. The core sales were down 8 percent while foreign currency exchange rates reduced sales 5 percent. The company’s industrial segment was hit particularly hard with sales down 16 percent to $81.2 million, including a 14 percent drop in core sales. The energy segment was off 14 percent to $86 million, with an 8 percent drop in core sales. The engineered solutions segment was down 8 percent to $96 million, including a 4 percent drop in core sales.
Chief financial officer Andy Lampereur said the decreases were generally felt throughout the company’s global footprint with “particularly soft” performance in the Americas and emerging markets.
Baker said the performance didn’t really deteriorate during the quarter and was weak throughout.
“It really started slow and ended slow,” he said.
The company reduced guidance for the full year to a drop of between 4 and 6 percent. The previous range was a drop between 1 and 4 percent. The company actually increased guidance for the energy segment, moving the lower end of its range from a 3 percent drop to a 1 percent drop. The company expects the industrial segment to be down 10 to 12 percent for the year, compared with a 3 to 6 percent drop in previous guidance.
“Despite the challenges we face, our priorities are clear – balancing our cost structure with demand, driving organic growth and generating free cash flow to strategically grow the business,” Baker said.