) reported adjusted earnings per share (EPS) of $1.07 in its
third quarter of 2012 compared to 81 cents per share in the
year-ago quarter and $1.15 per share in the last quarter,
comprehensively beating the Zacks Consensus Estimate of 99
The rise in the earnings was primarily driven by the company's
effective operational strategy. The company's earnings surpassed
management's prior guidance range of 95 cents and $1.00 per share
for the quarter.
Sales amounted to $3.6 billion; declining 8.1% year over year
and 6% sequentially. Total revenue, excluding the recently
divested Hussmann business and the impact of currency
translation, were up 1% year over year.
Revenue in the quarter was at the lower-end of management's
guidance range of $3.6 billion to $3.7 billion. Moreover, sales
were in line with the Zacks Consensus Estimate of $3.6
Geographically, revenues from U.S. markets escalated 3%
annually, whereas revenues from international operations were
down nearly by 7% (down 1% excluding currency).
Segment-wise, Climate Solutions delivered sales of
approximately $2 billion, down 15% year over year and 1.3%
sequentially. The year-over-year decline in revenue was primarily
due to weakened commercial HVAC sales and Thermo King
refrigerated transport sales.
The Industrial Technologies segment posted revenues of $702
million, up nearly 1% year over year but down 11.2%
Revenues from the Residential Solutions segment increased 11%
year over year but declined 14.4% sequentially to $558.6
Finally, the Security Technologies segment recorded sales of
$391 million, down 7% year over year and nearly 5% sequentially.
The year-over-year decline was primarily due to the weakened
sales in the overseas business and low sales in the Americas.
Adjusted operating margin for the third quarter of 2012 came
in at 12.5% compared with 11.4% in the year-ago quarter and 12.4%
in the previous quarter.
The company's improved price structure and high productivity
neutralized the negative effects of inflationary pressures,
unfavorable product mix and currency conversion, which resulted
in the annual rise in operating margin in the quarter.
The effective adjusted tax rate came in at 16.1% in the third
quarter of 2012 compared with 28.4% in the year-ago quarter.
Balance Sheet and Cash Flows
Exiting third quarter of 2012, cash and cash equivalents
amounted to $929.6 million, rising from $903.4 million at the end
of the previous quarter. Net inventories amounted to a total of
$1,462.1 million in comparison with $1,475.0 million at the end
of the prior quarter. Long-term debt was $2,271.6 million versus
$2,871.5 million in the previous quarter.
Cash flow from operating activities for the first nine months
of 2012 amounted to $735.5 million. Capital expenditure for the
period was $170.9 million.
In the third quarter of 2012, Ingersoll-Rand bought-back 7.6
million shares. As of October 18, 2012, the company repurchased a
total of 10.8 million shares worth $480 million. For 2012, the
company expects to repurchase shares worth $840 million in order
to complete its $2 billion share repurchase program.
For the fourth quarter of 2012, management expects revenues to
fall within $3.4 billion to $3.5 billion with EPS from continuing
operations between 64 cents and 70 cents. The tax rate is
projected to be at 29% for the quarter.
For 2012, Ingersoll-Rand projects revenues to be between
$13.95 billion and $14.05 billion. The revenue is likely to be
negatively impacted by currency translation. EPS for 2012 is
targeted to be in the range of $3.17 - $3.23. The tax rate is
projected to be at 19% for the quarter. The available cash flow
is expected to be $1.0 billion by the end of 2012.
Ingersoll-Rand currently has a Zacks Rank #3, which implies a
short-term (1-3 months) Hold rating on the stock.
INGERSOLL RAND (IR): Free Stock Analysis
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