Colfax continues to make solid progress in a difficult environment
Seeking Alpha published the conference call transcript of Colfax Q2 2013 Conference Call.
Colfax revenue grew to $ 1.07 billion, a little less than analysts had expected, but diluted EPS came in at $ 0.53 ahead of expectations.
Operating margin improved strongly from 5.8% in Q2 2012 to 10.4% in this year`s second quarter. Net margin improved even more from a not adjusted 1.8% to 6.2% this quarter!
So what’s behind these numbers?
This quarter was all about operational improvements applying the „Colfax Business System (CBS)“!
The economic climate remains difficult as revenue growth of just 2.7% clearly demonstrates. And this will not change as the company anticipates, even if there is significant variation across sectors: „subdued activity in mining and the continued deferral of oil and gas projects are expected to offset the strong order growth we anticipate in the Power Generation end market.“
Other financial key numbers were strong either as CFO C. Scott Brannan pointed out: Operating cash flow was strong for the second quarter at $86 million. Inventory balances decreased $37 million and working capital, as a percentage of sales, decreased to 17% at quarter end.
But perhaps the most interesting hint CEO Steven E. Simms gave on the call was that there is a reasonable possibility that some acquisitions may close in the second half of 2013!
Don’t forget, they issued 7.5 million new shares of common stock on May 10 and they want to deploy that money rather sooner than later.
The company’s guidance is for adjusted EPS of $1.95 to $2.10 for 2013 without the effect of any acqusitions.
This translates into a p/e ratio of 26. Not cheap certainly, but don’t forget, this company is able to surprise us even if the economic climate remains difficult!