Colfax reported good Q1 2014 results!
After completing the Victor Technologies Holding acquisition Colfax Corp. (NYSE: CFX) released the Q1 2014 Earnings and hold the Conference Call. Seeking Alpha published the transcript.
Even if adjusted earnings came in 1 ct. short of expectations the results are remarkable!
Sales were up 11% in total reflecting the impact of the acquisitions for gas and fluid handling closed in the fourth quarter of 2013.
Adjusted operating income was $94.1 million representing an adjusted operating margin of 9.8%. Fabrication technologies’ adjusted operating margins were 11.2%. Gas and fluid handling’s adjusted margins were 9.8%
Total orders in the quarter were $583.4 million, up 16.2% year over year, while backlog at the end of the quarter was $1,592.0 million, compared with $1,438.5 million at the end of first-quarter 2013.
Applying its CBS tools Colfax was able to reduce its long-term debt built up to finance the acquisitions to $1.1 billion down from $1.5 billion at the end of 2013.
As a summary CEO Steve Simms pointed out at the conference call, that Colfax „improved operating margins despite a sluggish economic environment and remains confident in achieving both the 2014 targets and the longer term operating profit goals of 13% for ESAB, 17% for fluid handling, and 15% for Howden business including the acquired entities“.
Colfax increased its earnings guidance from $2.40 – $2.65 up to an adjusted earnings per share of $2.45−$2.70 .
This puts the share at a p/e ratio of 27-28.
This is not cheap but Colfax stock never really was cheap up on its way to ten-bagger status for readers of this blog!
The market simply expects Colfax to continue to grow by acquisitions and to improve operational results sometimes dramatically in order to achieve an above average earnings growth rate.
If you are new to CFX and want to build up a position in CFX perhaps the best is to do it „by thirds“ in order to profit from tempory dips in the market!