Posts Tagged ‘economy improvement cost reduction’

Colfax: „The worst seems to be over, but the outlook is prudent“

November 9th, 2009 Comments off

This was Colfax CEO John Young’s  comment about the 2009 Q3 results!

… and the numbers clearly reflect that:

Net sales in the third quarter were $ 128.5 mil, 16.2% less compared to Q3 2008.

Net income was $ 1.8 mil including restructuring charges of $ 9.6 mil.

These results are preliminary 2009 Q3 results because they do not include the recent favorable asbestos ruling on October 14, 2009 for the company’s warren pump division.

Colfax still felt the crisis, there is no doubt!

But in this environment management quickly reacted, cut cost and reduced headcount by 15%. All cost reductions will translate into approximately $16 mil of savings in 2009.

The most impressive evidence of management’s action is the dramatic improvement of their cash flow statement:

They went from free cash flow negative one year ago to a free cash flow of $26.2 mil and a margin of 6.7% in the first 9 months of 2009!

Encouraging signs are coming from their order book:

On a sequential basis, their organic orders were up 15% driven by increases in the commercial marine, Navy, power generation and general industrial markets.

Backlog is also up slightly since the end of the second quarter.

Colfax still remains cautious and lowers their outlook for FY 2009:

They now expect adjusted earnings/share of $0.88 – $0.94 .

On Friday the stock closed at $ 12.04.

So for FY 2009 the P/E is 13  and the price/free cash flow ratio is about 17.

This seems to be a reasonable price for a high quality company.

Why not snap up some shares and wait until the economy further improves?

Future acquisitions on this way will certainly bring some upside potential too!