Archive for July, 2015

Colfax names new CEO when headwinds are strong!

July 26th, 2015 Comments off

Colfax (NYSE: CFX) released its Q2 2015 earnings and at the same time announced a new CEO!
The edited transcript of the conference call was published by Thomson Reuters.

The second quarter of 2015 was a difficult one for Colfax!

Adjusted EPS was $0.50 per share, a 4% increase compared to last year.
The increase was driven by continued margin improvement in the gas and fluid handling segment, non-repeating one-time expenses experienced in the prior year and lower interest expense, which were largely offset by continued volume weakness in the markets.

Net sales were $1.025 billion for the second quarter, a decrease of 15% over the same period last year. This consists of 5% organic volume decline and a negative 12% impact from foreign exchange, partially offset by 2% growth from acquisitions, as explained the outgoing CEO Steve Simms.
Especially weak has been the fabrication technology business, which saw an 8% organic drop in sales. But fluid handling too was hit by a sharp fall off in commercial ship building activity.

As the company sees a continued weak market environment they lowered guidance for the rest of the year: they now expect revenue between $4.035 billion and $4.11 billion, and adjusted operating profit between $405 million and $423 million. Adjusted earnings per share should come in per between $1.83 and $1.93.

Given this situation Colfax is aggressively cutting costs, reducing capacity and implements other measures like p.e. increasing the aftermarket share.

As Steve Simms put it: „While we’ve not changed our perspective on the long-term growth of our serve markets, we expect the weakness we are seeing to continue for the near-term.“
And with regard to acquisitions he added:
„In line with our ongoing plan to strengthen each of our platforms, we’re deeply committed to our strategy of bolt-on acquisitions and remain confident in the strength of our M&A pipeline, especially in the gas and fluid handling space….We’re working on attractive deals that align with our financial discipline, match our organizational capacity to execute and could be announced later this year.“

The new CEO is Matt Trerotola. He spent most of his career at DuPont, Danaher and McKinsey.
Since 2007 he knows well the „Danaher Business System“ after which is modeled the „CBS – Colfax Business System“.

What does this all mean for shareholders?

After this earnings release and the lowered guidance Colfax stock hit a low of $39.50 not seen since the end of 2012!
Colfax works in industries like p.e. gas ond oil or equipment for commercial vessels which have other cycles than the economy in general. So shareholders clearly need a long term view here.

Colfax is still a high quality company with outstanding personnel but the new CEO has to demonstrate that he is able to really grow the company by excellent acquisitions which were already announced for a year or so but never materialized (except the small Roots Blowers & Compressors).

Colfax stock now trades at a p/e ratio of 21. The stock is a Hold until a significant acquisition will be announced.

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Colfax Q2 2015 Earnings are out

July 24th, 2015 Comments off

Colfax Corp. (NYSE: CFX) released its Q 2 2015 earnings:

Revenue came in at $ 1.03B and EPS at $ 0.50.

Both numbers surprised by beating estimates. Have a look!

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