Tyco International Ltd.
) reported income from continuing operations of $132 million or
28 cents per share in third quarter fiscal 2013 versus $65
million or 14 cents per share in the year-ago quarter.
Excluding non-recurring items, income from continuing operations
stood at $233 million or 50 cents per share versus $223 million
or 47 cents per share in the year-ago quarter. Quarterly adjusted
earnings beat the Zacks Consensus Estimate by a couple of cents.
Revenues for the quarter increased 1% year over year to $2,678
million, missing the Zacks Consensus Estimate of $2,707 million.
Organic revenue improved 1% in the quarter, primarily led by a 5%
growth in products and a 3% growth in service, partially offset
by a 4% decline in installation revenues.
North America Systems Installation &
Third quarter fiscal 2013 revenues for this segment plummeted 4%
year over year to $966 million due to continued project
selectivity in the commercial security business. Organic revenue
dipped 3% year over year, including a 2% service growth and an 8%
decline in installation. Backlog in the quarter stood at $2.5
billion, up 1% sequentially, excluding the impact of foreign
currency. Operating income in the reported quarter was $88
million with an operating margin of 9.1%.
Rest of World Systems Installation &
Revenues for third quarter fiscal 2013 increased 2% to $1.1
billion, driven by acquisitions but offset by negative impact of
foreign currency translation. Organic revenue growth was 2% with
service revenue up 4% but installation revenue down 1%. Backlog
of $2.6 billion increased 3% sequentially, excluding the impact
of foreign currency. Operating income for the segment was $104
million while the operating margin was 9.4%.
Revenues of $600 million from this segment improved 7% year over
year, driven by acquisitions. Organic revenues were up 5% across
all the three product platforms. Operating income was $114
million and operating margin was 19% in the reported quarter.
Balance Sheet and Cash Flow
Cash and cash equivalents at quarter-end were $455 million, while
long-term debt aggregated $1.5 billion. Cash from operating
activities totaled $265 million with free cash flow of $167
million, which included a cash outflow of $106 million related to
special items. Adjusted free cash flow for the reported quarter
was $273 million.
During the reported quarter, Tyco International repurchased 3.1
million shares for $100 million under its $750 million share
repurchase program. Currently, the company has an additional $500
million worth of share repurchase remaining under the program.
Acquisitions and Disposals
During the quarter, Tyco International penned an agreement to
acquire Exacq Technologies, a developer of open architecture
Video Management Systems (VMS) for security and surveillance
applications, for an undisclosed amount. This acquisition is
expected to generate approximately $75 million in revenues in
Furthermore, during the reported quarter, the company completed
the acquisition of National Fire Solutions Group - a provider of
fire protection services in Australia including installation,
inspection and maintenance services. National Fire is expected to
contribute revenues of $65 million in 2014.
During the quarter, Tyco International completed the divesture of
its North America guarding business, which had generated revenue
of $75 million in fiscal 2012.
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.
Tyco International currently has a Zacks Rank #3 (Hold). Other
stocks that look promising and are worth considering now in the
United Technologies Corp.
Hutchison Whampoa Ltd.
Macquarie Infrastructure Company LLC
), each carrying a Zacks Rank #2 (Buy).
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