Milwaukee, WI - Rexnord Corporation release Third Quarter Fiscal 2014 Results.
Net sales increased 4% (+4% core sales) to $489 million. Income from operations increased 13% to $68 million year-over-year resulting in a 120 basis point increase in operating margin to 14%. Adjusted earnings per share increased 79% from the prior year to $0.34. Adjusted EBITDA of $98 million resulting in an adjusted EBITDA margin of 20%. The company also completed acquisition of Precision Gear Holdings, LLC.
Todd A. Adams, President and Chief Executive Officer, commented, "We are pleased with our third quarter results and overall levels of core growth, profitability and free cash flow. As it relates to each of our platforms, the 12 percent core growth and 160 basis point adjusted operating margin improvement in our Water Management platform aligns with our expectations of accelerating growth and margin improvement within the platform while the outlook in our served markets continues to improve. In Process & Motion Control, we are encouraged by the very strong margin performance amidst, in aggregate, a stable set of industrial end markets that we expect to improve over the next several quarters. Finally, our strong free cash flow in the quarter allowed us to both de-lever and acquire Precision Gear Holdings, which expands our exposure to the energy and aerospace end markets."
Fourth Quarter and Fiscal 2014 Outlook and Guidance
Mr. Adams continued, "We are raising our full year adjusted earnings per share guidance to $1.35 to $1.39 reflecting our third quarter results, latest outlook, benefit of the recently completed Precision Gear Holdings acquisition as well as the inclusion of incremental expenses we will incur related to acquisition opportunities that we are currently pursuing."
Third Quarter Fiscal 2014 Segment Highlights
Process & Motion Control
Process & Motion Control ("PMC") net sales were $301 million in the third quarter of fiscal 2014 and $303 million in the third quarter of fiscal 2013. Core net sales decreased 1% year-over-year as low single digit sales growth in the majority of our end-markets was offset by a decline in sales to our bulk material handling markets.
PMC Adjusted EBITDA in the third quarter was $76 million and Adjusted EBITDA as a percentage of net sales increased 60 basis points from the prior year period to 25.3% of net sales.
Water Management net and core sales increased 12% from the prior year to $188 million in the third quarter of fiscal 2014. The growth in sales was primarily driven by market share gains in the majority of our served markets, as well as increased alternative market sales in our non-residential construction end-markets.
Water Management Adjusted EBITDA in the third quarter was $28 million and Adjusted EBITDA as a percentage of net sales increased 100 basis points from the prior year period to 15.0% of net sales.