What led to Actuant Corporation (NYSE: ATU) stock crash

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Actuant Corporation (NYSE: ATU) stock lot over 14.7% on 26th September, 2019 (As of 12:42 pm GMT-4; Source: Google finance) after the company posted disappointing results for the fourth quarter of FY 19. The fourth quarter of fiscal 2019 includes a $265 million non-cash, after-tax impairment charge on the back of both the write-down of the net assets held for sale to their net realizable value and the reserve of the accumulation of currency translation losses associated with the EC&S businesses being divested. ATU’s Net debt at August 31, 2019 was approximately $249, which had decreased approximately $33 million from the end of fiscal 2018. Net Debt to Adjusted EBITDA was 1.7x at August 31, 2019.

ATU in the fourth quarter of FY 19 has reported the adjusted earnings per share of 21 cents, beating the analysts’ estimates for the adjusted earnings per share of 18 cents, as per Zacks Consensus Estimate. The company had reported 3 percent fall in the adjusted revenue to $158.3 million in the fourth quarter of FY 19, missing the analysts’ estimates for revenue of $168.7 million.

For the first quarter ending in December, Actuant expects its per-share earnings to be in the range of 8 cents to 12 cents. The company expects revenue to be in the range of $135 million to $144 million for the fiscal first quarter.

Actuant expects full-year 2020 earnings to be in the range of 68 cents to 81 cents per share, full year free cash flow to be in the range of $50 to $75 million and revenue is expected to range from $575 million to $600 million.

For fiscal 2020, the strategic exits (including product line divestitures and service restructuring) is expected to be of approximately $55 million, Foreign currency impact from stronger dollar to be of approximately $7 million and New product development and other commercial actions will partially offset by a subdued market environment.

EBITDA for fiscal 2020 is expected to be in the range of $94 to $104 million, which is an approximate 17% EBITDA margin and greater than a 200bp improvement from fiscal year 2019. The company expects the benefit from strategic exits and about $9 million reduction of corporate overhead costs previously allocated to the EC&S segment which will be partially offset by certain expenses to be incurred in the year as well as the impact of the stronger dollar.

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