Actuant Class A Earnings Call Nuggets: Incentive Compensation and Innovation Incentives

Actuant Corp Class A (NYSE:ATU) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.

Incentive Compensation

Allison Poliniak – Wells Fargo: On the Industrial segment, obviously, margins impressive as always. When I look at ’14, I know one other thing you said that was, I guess, causing to be a little bit higher was lower incentive compensation. Should I assume that that comes back a bit more in ’14?

Andy Lampereur – EVP and CFO: Yeah, definitely Allison. I think we’ve got just a couple of million dollars built in there for ’13 and a normal year if we hit our target than what now would be closer to $40 million. This is for all of Actuant; yeah, not just Industrial. So…

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Allison Poliniak – Wells Fargo: Not Industrial, okay.

Andy Lampereur – EVP and CFO: Yeah, that’s clearly impacting each of the four segments, yeah.

Allison Poliniak – Wells Fargo: And then, if I think about restructuring – I’m sorry, the (quiet) restructuring you talked about, is that mainly Engineered Solutions that the margins might not materialize as significantly as we would expect just with that (quiet) restructuring?

Andy Lampereur – EVP and CFO: Yeah, in the quarter in particularly we probably had 150 basis points to 200 basis points impact from restructuring in ES in the quarter. Some of that will continue on into next year as well as. That’s where the majority of this is as we move some manufacturing out of high-cost areas into low-cost areas. So, that’s what’s going on. I think if you peel that out, we’re encouraged by the trend we’re starting to see in Engineered Solutions.

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