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Ingersoll-Rand (IR) 4Q Earnings Decline 6 Pct; Guidance Misses

 February 01, 2013 09:04 AM

(By Balaseshan) Ingersoll-Rand Plc (NYSE: IR) reported a 5.9% decline in earnings for the fourth quarter due to higher expenses and lower revenue as well as declining activity in Europe. The manufacturer of industrial and commercial products guided first quarter profit below consensus.

Earnings per share (EPS) from continuing operations on an adjusted basis were $0.76 per share, unchanged from last year. Reported EPS were $0.77 versus $0.79 in the year-ago period, which included a penny from tax benefits related to the sale of Hussmann refrigeration business.

Revenue declined 1% to $3.470 billion. Total revenues, excluding the results of Hussmann, were flat from last year. U.S. revenues excluding Hussmann were flat, while international revenue were also flat (up 1% excluding currency).

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Analysts, on average, polled by Thomson Reuters had expected earnings of $0.70 per share on revenue of $3.46 billion for the fourth quarter.

Operating margin improved to 10.6% from 9.7% (9.6% when adjusted for impairment and Hussmann) in the year-ago quarter, on higher prices and productivity.

Looking ahead into the first quarter, IR forecasts adjusted EPS from continuing operations in the range of $0.35 to $0.40 and revenue of $3.1 billion to $3.2 billion. Analysts expect EPS of $0.47 on revenue of $3.18 billion.

For the full year 2013, the company expects adjusted EPS from continuing operations of $3.45 to $3.65 and revenue of $14.2 billion to $14.6 billion, while Street analysts predict EPS of $3.59 on revenue of $14.59 billion.

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"Our management team is focused on investing in multiple growth platforms identified in our planning process, as well as accelerating restructuring and cost reduction actions to generate sustained profitable growth in what we expect to be a slow growth economy in 2013," said Michael Lamach, chairman and chief executive officer.

On December 10, 2012, the company said its board unanimously approved a plan to spin off its commercial and residential security businesses. The company expects the spin-off, which is intended to be tax free to shareholders, to be completed prior to year-end 2013.

Upon completion of the spin-off, Ingersoll-Rand will cease to have any ownership interest in the new security company, and the new security company will become an independent publicly traded company. The new security company is projected to be an Irish plc.

IR shares, which have been trading in the 52-week range between $34.96 and $51.75, ended Thursday's regular session down 0.45% at $51.39.

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