) reported first quarter 2014 net income of $79.0 million or 28
cents per share compared with $88.0 million or 29 cents per share
in the year-earlier quarter. Although net income decreased
significantly year over year, earnings declined marginally on a
per share basis due to lower number of outstanding shares in the
Excluding non-recurring items, adjusted earnings from continuing
operations for the reported quarter were 29 cents per share
compared with 22 cents in the year-ago quarter. Adjusted earnings
from continuing operations were on the higher end of the
company's guidance and well exceeded the Zacks Consensus Estimate
of 25 cents.
Quarterly revenues of $2,722.9 million were ahead of the Zacks
Consensus Estimate of $2,697 million and rose 3% year over year.
Revenues from both the U.S. and the International segment were up
3% each compared with the year-ago period.
delivered sales of approximately $2,040.8 million in first
quarter 2014 compared with $1,958.7 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 low-teen percentage.
segment posted revenues of $682.1 million in the first quarter,
up marginally year over year. Air compressors and industrial
products revenues increased slightly in the reported quarter,
while Club Car revenues declined by a high-single digit
percentage due to adverse impact by weather-related issues which
caused production and shipment delays.
Operating margin for the first quarter of 2014 was 5.7% compared
with 4.5% in the year-ago quarter. Consolidated adjusted
operating margin stood at 6.0% compared with 5.4% in the
prior-year period. Adjusted operating margin for Climate segment
was 6.6% for the reported quarter and improved by 2.1 percentage
points year over year due to higher volumes, pricing, lower
restructuring costs and productivity actions, partially offset by
inflation. Adjusted operating margin for Industrial segment was
12.1% and declined from 15.2% in the year-ago quarter due to
negative product mix, inflation, higher investments and
weather-related production and shipment delays.
Balance Sheet and Cash Flows
At quarter end, cash and cash equivalents aggregated $897.9
million, while long-term debt stood at $3,152.3 million. Net cash
utilized in operating activities during the quarter was $126
million compared with $8 million cash utilization in the prior
year. Capital expenditure for the quarter declined to $50.5
million from $67.1 million in the year-earlier quarter. Working
capital was 4.4% of revenues at the end of the reported quarter
compared with 3.7% in the year-ago period.
The company repurchased approximately 13 million shares for
approximately $800 million in the reported quarter as part of its
$2 billion share repurchase program. Ingersoll has approved a new
$1.5 billion share repurchase program that will commence during
the second quarter.
Ingersoll increased its quarterly dividend by 19% year over year
to 25 cents per share. The increased dividend was paid on Mar 31,
2014 to shareholders of record on Mar 14.
For full year 2014, management reiterated its earlier guidance
and continues to expect revenues to increase by 3%-4% year over
year due to slow-to-moderate growth in global industrial and
construction markets. Adjusted earnings from continuing
operations are expected to be between $3.05 and $3.20.
Reported earnings for 2014 are expected to be in the range of
$2.95-$3.10. Free cash flow for the year is expected to be $900
For second quarter 2014, Ingersoll projects revenues to increase
by 4%-5% year over year. Adjusted earnings from continuing
operations are expected to be in the range of $1.09 to $1.13 per
share, with reported earnings in the range of $1.08 to $1.12.
Ingersoll currently carries a Zacks Rank #3 (Hold). Other stocks
that are worth a look in the industry include
), each carrying a Zacks Rank #2 (Buy).
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