Tyco International Ltd.
) reported first quarter 2014 GAAP income from continuing
operations of $270 million or 57 cents per share, a significant
improvement from $159 million or 34 cents per share from the
year-ago quarter. However, the reported earnings beat the Zacks
Consensus Estimate of 45 cents per share. The year-on-year
increase in earnings was driven by strong execution across all
Excluding non-recurring items, income from continuing operations
stood at $222 million or 47 cents per share versus $195 million
or 41 cents per share in the year-ago quarter.
Revenues for the quarter increased 2% year over year to $2,647
million, but were below the Zacks Consensus Estimate of $2,662
million. Organic revenues improved 1.5% in the quarter, primarily
led by a 2% increase in products and a 2% improvement in service.
Installation revenue remains unchanged from the prior year on an
organic basis. Acquisitions contributed 2% growth, which
was offset by the impact of divestitures and changes in foreign
currency exchange rates.
North America Systems Installation &
: First quarter revenues decreased 2% year over year to $957
million due to the divestiture of the guarding business. A 2%
increase in service revenue was offset by a 3% decline in
installation resulting in flat organic revenue growth.
Backlog in the quarter stood at $2.4 billion, flat year over
year. Operating income in the reported quarter was $117 million
versus $108 million year over year. Operating margin stood
at 12.2% versus 11.1% in the prior year.
Rest of World Systems Installation &
: Revenues in the first quarter increased 3% to $1.1 billion
driven by acquisitions, but offset by negative impact of
divestitures and changes in foreign currency exchange rates.
Organic revenue growth was 2% with service revenues rising 2% and
installation revenues going up 3.0%. Backlog of $2.7 billion
increased 11% year over year, excluding the impact of foreign
currency. Operating income in the reported quarter was $125
million versus $114 million year over year. Operating
margin stood at 11.1% versus 10.5% in the prior year.
: Revenues of $565 million from this segment improved 6% year
over year, driven by acquisitions. Organic revenues were up 2%.
Operating income in the reported quarter was $86 million versus
$74 million year over year. Operating margin stood at 15.2%
versus 13.9% in the prior year.
Balance Sheet and Cash Flow
Cash and cash equivalents at quarter-end were $479 million, while
long-term debt aggregated $1,443 million. Cash from operating
activities totaled $123 million with free cash flow of $24
million, which included a net cash outflow of $25 million.
Adjusted free cash flow for the reported quarter was $49 million.
The company repurchased 6.6 million shares for $250 million
during the quarter.
Acquisitions and Disposals
During the quarter, Tyco International closed the acquisition of
Westfire, Inc., a leading fire installation and services business
in the mining and special hazard verticals in the United States,
Chile and Peru. This acquisition is expected to generate
approximately $80 million in revenues in fiscal 2014 and provides
the company a platform for further growth in Latin America.
Furthermore, during the quarter, the company divested its
Armourguard business in New Zealand and its fire and security
business in Fiji.
Moving ahead, Tyco International believes that its strong balance
sheet provides flexibility to continuously fund organic and
inorganic growth initiatives and maximize return for its
shareholders. Additionally, accretive acquisitions are expected
to strengthen the company's position by broadening its product
and service offerings in the long term. There are also signs of a
recovery in non-residential construction markets in North
America, stability in Europe and going forward the company
expects to capture double-digit growth in its markets.
Share prices dipped in pre-market trading as investors probably
expected a more positive outlook from the company with a healthy
beat in earnings.
Tyco currently has a Zacks Rank #3 (Hold). Other stocks that
look promising and are worth a look include
Carlisle Companies Inc.
Hutchison Whampoa Ltd
), each carrying a Zacks Rank #2 (Buy).
CRANE CO (CR): Free Stock Analysis Report
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TYCO INTL LTD (TYC): Free Stock Analysis
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