Ingersoll Beats on Q2 Earnings, Revenues Up - Analyst Blog

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Ingersoll-Rand Plc ( IR ) reported second quarter 2014 net income of $306.0 million or $1.12 per share compared with $317.2 million or $1.05 per share in the year-earlier quarter. Although net income decreased significantly year over year, earnings increased marginally on a per share basis due to lower number of outstanding shares in the reported quarter.

Excluding non-recurring items, adjusted earnings from continuing operations for the reported quarter were $1.13 per share compared with 93 cents in the year-ago quarter. Adjusted earnings from continuing operations matched the higher end of the company's guidance and exceeded the Zacks Consensus Estimate by a couple of cents.


Ingersoll-Rand Company - Earnings Surprise | FindTheBest

Quarterly revenues of $3,542.9 million slightly lagged the Zacks Consensus Estimate of $3,559 million and rose 4.3% year over year. Revenues from the U.S. and the International segment were up 4% and 5%, respectively, compared with the year-ago period.

Segment Performance

Climate delivered sales of approximately $2,748.9 million in second quarter 2014 compared with $2,635.5 million in the year-ago quarter. The year-over-year increase was driven by low single-digit increase in commercial HVAC (heating, ventilation, and air conditioning) revenues and mid single-digit improvement in revenues from parts, services and solutions. Revenues from the Thermo King sub-segment also increased by a high single digit percentage.

Industrial segment posted revenues of $794.0 million in the second quarter, up from $762.9 million in the prior-year period. Air compressors and industrial products revenues increased by a mid-single digit percentage in the reported quarter, while Club Car revenues declined by a low single digit percentage due to adverse impact by the North American golf market.

Margins

Operating margin for the second quarter of 2014 was 13.1% compared with 11.4% in the year-ago quarter. The operating margin for Climate segment was 14.2% for the reported quarter and improved from 12.5% in the year-earlier quarter due to higher volumes, pricing, lower restructuring costs and productivity actions, partially offset by inflation. The operating margin for Industrial segment was 16.4%, up from 15.8% in the year-ago quarter driven by higher volumes, pricing, lower restructuring costs and productivity actions, partially offset by inflation.

Balance Sheet and Cash Flow

At quarter end, cash and cash equivalents aggregated $929.8 million, while long-term debt stood at $2,646.5 million. Net cash from operating activities during the first half of the year was $120.1 million compared with $428.8 million in the prior year. Capital expenditure for the first six months of 2014 declined to $92.6 million from $131.6 million in the year-ago period. Working capital was 4.0% of revenues at the end of the reported quarter compared with 3.1% in the prior-year period.

Share Repurchase

The company repurchased approximately 4 million shares for approximately $200 million in the reported quarter as part of its $1.5 billion share repurchase program. During 2014, Ingersoll aims to repurchase a total of $1,375 to $1,475 million of shares under its share repurchase program.

Outlook

For full year 2014, management continues to expect revenues to increase by 4% year over year due to moderate growth in global industrial and construction markets. Ingersoll increased its annual guidance for adjusted earnings from continuing operations from $3.05-$3.20 per share to $3.18-$3.26. Reported earnings from continuing operations for 2014 are also expected to be up from the earlier range of $2.95-$3.10 per share to $3.13 to $3.21. Free cash flow for the year is expected to be $900 million.

For third quarter 2014, Ingersoll projects revenues to increase by 4% year over year. Reported earnings from continuing operations are expected to be in the range of $1.00 to $1.04 per share.

Ingersoll currently carries a Zacks Rank #2 (Buy). Other stocks that are worth a look in the industry with a similar rank include Dover Corporation ( DOV ), Twin Disc, Incorporated ( TWIN ) and Nordson Corporation ( NDSN ).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: DOV , IR , NDSN , TWIN

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