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Applied Industrial Technologies, Inc. (AIT - Free Report) , on Feb 1, announced that it has completed the acquisition of FCX Performance, Inc. Concurrently, the company lowered its earnings projection for fiscal 2018.
Since the announcement of the buyout deal on Jan 9, the company’s share price has increased 5.1% while has slipped 1.2% from the date when the closure news surfaced.
Columbus, OH-based FCX Performance primarily engages in the distribution of products related to process flow control — like engineered valves, pumps and instruments — and also provides related services. Operating in 68 locations, the company caters to the needs of Original Equipment Manufacturer and Maintenance, Repair and Operation customers in process and industrial end-markets. It employs more than 1,000 people.
Details of the Buyout
As noted, the buyout consideration, after adjusting for contractual working capital, was approximately $784 million. It was financed with $250 million revolving credit and $780 million of Term Loan A.
The deal buyout is expected to strengthen Applied Industrial’s foothold in the industrial market. The combined business will have enhanced resources and technological expertise to leverage benefits from future growth opportunities.
In the first 12 months, the acquired assets are anticipated to boost Applied Industrial’s sales by $555-$560 million and earnings before interest, taxes, depreciation and amortization (EBITDA) by $67-$69 million. These predicted increments do not include the impact of one-time charges related to the buyout. Gross margins are estimates to be roughly 34-35%. Free cash flow will be 0.95 to one times of EBITDA.
For fiscal 2018 (ending June 2018), the buyout is expected to generate revenues of $235-$245 million while will dilute earnings by 11-21 cents per share. The bottom-line projection includes impact of 12-13 cents of one-time charges.
For fiscal 2019, revenues of $575-$595 million and earnings accretion of 10-20 cents per share are anticipated from the buyout. The bottom-line projection includes non-cash charge of 68-77 cents related to intangible amortization expenses.
Fiscal 2018 Guidance Revised
Including the impact of earnings dilution from the buyout, Applied Industrial lowered its earnings per share projection for fiscal 2018 to $3.19-$3.39 from the earlier estimate of $3.40-$3.50. Sales are now projected to grow 15-16% year over year, higher than 6-7% predicted earlier.
Inorganic Growth Initiatives
Over time, Applied Industrial has acquired meaningful businesses to improve its business portfolio and for easy penetration into explored markets. In March 2017, the company acquired Sentinel Fluid Controls — a specialist in distribution of lubrication and hydraulic solutions, systems and components. This buyout has strengthened the company’s Fluid Power business.
In the last three months, Applied Industrial’s shares have yielded 18.9% return, outperforming 8% gain of the industry it belongs to.
Zacks Rank & Other Stocks to Consider
With a market capitalization of nearly $2.9 billion, Applied Industrial sports a Zacks Rank #1 (Strong Buy). The stock’s earnings estimates both for fiscal 2018 and fiscal 2019 were revised upward by three brokerage firms in the last 30 days. Currently, the Zacks Consensus Estimate is pegged at $3.45 for fiscal 2018 and $4.13 for fiscal 2019, representing growth of 7.8% and 19.7% from their respective tallies 30 days ago.
Applied Industrial Technologies, Inc. Price and Consensus
Other stocks worth considering in the industry are Colfax Corporation , Sun Hydraulics Corporation and EnPro Industries, Inc. (NPO - Free Report) . While both Colfax and Sun Hydraulics sport a Zacks Rank #1 (Strong Buy), EnPro Industries carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Colfax’s earnings estimates for 2018 improved in the last 60 days. The company pulled off an average positive earnings surprise of 5.31% in the last four quarters.
Sun Hydraulics’ financial performance was impressive, with an average positive earnings surprise of 9.58% for the last four quarters. Also, earnings estimates for 2018 were revised upward over the last 60 days.
EnPro Industries’ earnings estimates for 2018 were revised upward in the last 60 days.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Applied Industrial Closes FCX Performance Deal, Lowers View
Applied Industrial Technologies, Inc. (AIT - Free Report) , on Feb 1, announced that it has completed the acquisition of FCX Performance, Inc. Concurrently, the company lowered its earnings projection for fiscal 2018.
Since the announcement of the buyout deal on Jan 9, the company’s share price has increased 5.1% while has slipped 1.2% from the date when the closure news surfaced.
Columbus, OH-based FCX Performance primarily engages in the distribution of products related to process flow control — like engineered valves, pumps and instruments — and also provides related services. Operating in 68 locations, the company caters to the needs of Original Equipment Manufacturer and Maintenance, Repair and Operation customers in process and industrial end-markets. It employs more than 1,000 people.
Details of the Buyout
As noted, the buyout consideration, after adjusting for contractual working capital, was approximately $784 million. It was financed with $250 million revolving credit and $780 million of Term Loan A.
The deal buyout is expected to strengthen Applied Industrial’s foothold in the industrial market. The combined business will have enhanced resources and technological expertise to leverage benefits from future growth opportunities.
In the first 12 months, the acquired assets are anticipated to boost Applied Industrial’s sales by $555-$560 million and earnings before interest, taxes, depreciation and amortization (EBITDA) by $67-$69 million. These predicted increments do not include the impact of one-time charges related to the buyout. Gross margins are estimates to be roughly 34-35%. Free cash flow will be 0.95 to one times of EBITDA.
For fiscal 2018 (ending June 2018), the buyout is expected to generate revenues of $235-$245 million while will dilute earnings by 11-21 cents per share. The bottom-line projection includes impact of 12-13 cents of one-time charges.
For fiscal 2019, revenues of $575-$595 million and earnings accretion of 10-20 cents per share are anticipated from the buyout. The bottom-line projection includes non-cash charge of 68-77 cents related to intangible amortization expenses.
Fiscal 2018 Guidance Revised
Including the impact of earnings dilution from the buyout, Applied Industrial lowered its earnings per share projection for fiscal 2018 to $3.19-$3.39 from the earlier estimate of $3.40-$3.50. Sales are now projected to grow 15-16% year over year, higher than 6-7% predicted earlier.
Inorganic Growth Initiatives
Over time, Applied Industrial has acquired meaningful businesses to improve its business portfolio and for easy penetration into explored markets. In March 2017, the company acquired Sentinel Fluid Controls — a specialist in distribution of lubrication and hydraulic solutions, systems and components. This buyout has strengthened the company’s Fluid Power business.
In the last three months, Applied Industrial’s shares have yielded 18.9% return, outperforming 8% gain of the industry it belongs to.
Zacks Rank & Other Stocks to Consider
With a market capitalization of nearly $2.9 billion, Applied Industrial sports a Zacks Rank #1 (Strong Buy). The stock’s earnings estimates both for fiscal 2018 and fiscal 2019 were revised upward by three brokerage firms in the last 30 days. Currently, the Zacks Consensus Estimate is pegged at $3.45 for fiscal 2018 and $4.13 for fiscal 2019, representing growth of 7.8% and 19.7% from their respective tallies 30 days ago.
Applied Industrial Technologies, Inc. Price and Consensus
Applied Industrial Technologies, Inc. Price and Consensus | Applied Industrial Technologies, Inc. Quote
Other stocks worth considering in the industry are Colfax Corporation , Sun Hydraulics Corporation and EnPro Industries, Inc. (NPO - Free Report) . While both Colfax and Sun Hydraulics sport a Zacks Rank #1 (Strong Buy), EnPro Industries carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Colfax’s earnings estimates for 2018 improved in the last 60 days. The company pulled off an average positive earnings surprise of 5.31% in the last four quarters.
Sun Hydraulics’ financial performance was impressive, with an average positive earnings surprise of 9.58% for the last four quarters. Also, earnings estimates for 2018 were revised upward over the last 60 days.
EnPro Industries’ earnings estimates for 2018 were revised upward in the last 60 days.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>