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$AIT has agreed to acquire FCX Performance, Inc. for approx. $768MM. The deal is expected to close within 30 days. The acquisition is expected to contribute about $550MM in sales and $68MM in EBITDA in the first 12 months of applied ownership. The deal is expected to be accretive in FY19 after recognition of one-time transaction costs in FY18.
Earnings of $AIT, a provider of industrial equipment, more-than-doubled to $53MM in 4Q17, helped by a 7.5% rise in net sales and one-time tax benefit. Earnings climbed to $1.34 per share from $0.66 per share in 4Q16. The sales growth was supported by acquisition-related gains. Excluding special items, organic sales grew 7.9% during the quarter.
$AIT said Mark Eisele, VP, CFO & Treasurer, will retire at the end of August 2017 after 26 years of service to the company. Succeeding Eisele is David Wells, who is joining $AIT as VP, Finance. Wells will be elected VP, CFO & Treasurer following the filing of its FY17 annual report on Form 10-K at the end of August.
Longbow Research analyst Chris Dankert questions about cannibalization of parts, especially in oil field. $AIT says that on the amount of tilted rigs, cannibalization still exists, but to a lesser extent. $AIT sees rig counts moving up from April to Aug., so as they come back, some are refurbished with existing parts and some need demand coming up.
KeyBanc analyst Ryan Cieslak follows up asking about initiatives in place to give consistent GM improvement going forward. $AIT says that it's using pricing analytics; reducing variation around product groups and specific customer groups that will yield the improvement; and giving benefit in product mix around the maintenance supplies & solutions.
KeyBanc analyst Ryan Cieslak questions about the YoverY cadence for core sales in the first part of FY17. $AIT says that across FY17, it expects softer trends in 1Q17, some improvement in 2Q17, which has one less day, and then continued modest improvements through 2H17.
Stephens analyst William Meason questions about monthly trends through 4Q16 and the sales cadence in the last few months. $AIT says that its sales per day trends included declines in April and May, with improvement in June. July was somewhat as expected with seasonality softer than June. There was sequential improvements through early days of Aug.
For FY17, $AIT expects gross profit percentage to continue above 28% and to improve by 20-40 BP throughout the year. Prudent cost controls over SD&A will continue and $AIT expects SD&A to remain relatively flat YoverY. Cash provided from operating activities is expected to be in the same range as FY16, with CapEx is expected to be between $15-18MM.
$AIT said that it has captured approx. two-thirds of its annual estimated ongoing savings of $7.8MM from restructuring activities in FY16. The remaining benefits will flow through the income statement in July. 4Q16 effective income tax rate of 35.6% was a bit higher than projections due to lower foreign earnings negatively impacting the rate.
During 4Q16, $AIT's Service Center Based Distribution segment sales fell $31.6MM or 5.7% vs. 4Q15. Acquisitions added $9.5MM or 1.7% and negative foreign currency impact reduced sales by 1.2% for this segment. Core same-store operations fell 6.2% with the majority of this decrease relating to operations that sell to the upstream oil & gas industry.
$AIT said that its 4Q16 sales per day rate was $9.91MM, down 7.2% vs. 4Q15 and down 0.7% vs. 3Q16. The company said that acquisitions positively impacted sales by 2.4% and foreign currency impacts lowered sales by 1.2%. Excluding the effects of these items, core same-store operations saw a 7.6% decrease in sales vs. 4Q15.
Maker of fluid power components $AIT said that FY16 net sales were $2.52Bil vs. $2.75Bil in FY15. Net income was $29.6MM or $0.75 per share vs. $115.5MM or $2.80 per share in FY15. The company generated $160MM in cash from operations, while returning over $80MM to shareholders via dividends and share repurchases.
Industrial parts maker $AIT reported 4Q16 net income of $26.1MM or $0.66 per diluted share, down 6.4% versus $28.1MM or $0.70 per diluted share in 4Q15, hurt by lower net sales. Net sales fell 6.4% to $634MM in the quarter, reflecting a 7.6% dip in underlying operations and a negative 1.2% foreign currency translation impact.