Tyco International Ltd
) dipped 2.18% on Friday following the announcement of its second
quarter 2014 results, as it failed to cheer investors' sentiments
with almost flat revenues year over year .However, the company
reported second quarter 2014 GAAP income from continuing
operations of $183 million or 39 cents per share, a significant
improvement from $51 million or 11 cents per share in the
year-ago quarter. The year-over-year improvement in earnings was
driven by lower operating expenses.
Excluding non-recurring items, income from continuing operations
stood at $212 million or 45 cents per share versus $175 million
or 37 cents per share in the year-ago quarter. The adjusted
earnings beat the Zacks Consensus Estimate of 40 cents
Revenues for the quarter edged up 0.5% year over year to $2,487
million, but were below the Zacks Consensus Estimate of $2,516
million. Organic revenues improved 2.0% in the quarter, primarily
led by a 2% increase in products, a 1.5% improvement in service
and 1% growth in installation. Acquisitions contributed 2%
growth, which was offset by the impact of divestitures and
changes in foreign currency exchange rates.
North America Systems Installation & Service
s: Second quarter revenues edged down 1% year over year to $939
million due to the divestiture of the guarding business and
foreign currency impacts. A 2% increase in service revenue was
offset by a 1% decline in installation resulting in 1% organic
Backlog in the quarter stood at $2.4 billion, flat year over
year. Operating income in the reported quarter was $99 million
versus $79 million year over year. Operating margin stood
at 10.5% versus 8.3 % in the prior year.
Rest of World Systems Installation &
: Revenues in the second quarter was flat year over year to $943
million 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 1% and
installation revenues going up 3.0%. Backlog of $2.3 billion
increased 11% year over year, excluding the impact of foreign
currency. Operating income in the reported quarter was $103
million versus $77 million year over year. Operating margin
stood at 10.9% versus 8.2% in the prior year.
: Revenues were $605 million in this segment, up 5% year over
year, driven by acquisitions. Organic revenues were up 2%.
Operating income in the reported quarter was $107 million and
operating margin stood at 17.7%.
Balance Sheet and Cash Flow
Cash and cash equivalents at quarter-end were $495 million, while
long-term debt aggregated $1,442 million. Cash from operating
activities totaled $262 million with free cash flow of $187
million, which included a net cash outflow of $133 million.
Adjusted free cash flow for the reported quarter was $320
The company approved an additional $1.75 billion authorization
for share repurchases bringing the total authorization to $2
Acquisitions and Disposals
During the quarter, Tyco International entered into an agreement
to divest its South Korean security business, ADT Korea, for
Also, Tyco's remaining stake in Atkore International, the
company's former electrical and metal products business, was
redeemed by Atkore for $250 million in cash.
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. The company expects to witness uplift in its top
line, as continued growth in service and products revenue is
being supported by a rise in installation revenue. As per the
three-year growth strategy outlined, the company is on track to
deliver 15% EPS Compounded Annual Growth Rate (CAGR) through
TYC currently has a Zacks Rank #4 (Sell). Other stocks that look
promising and are worth a look now include
Noble Group Ltd
Federal Signal Corp
Icahn Enterprises, L.P
), each having a Zacks Rank #1 (Strong Buy).
FED SIGNAL CP (FSS): Free Stock Analysis
ICAHN ENTERPRIS (IEP): Get Free Report
NOBLE GROUP LTD (NOBGY): Get Free Report
TYCO INTL LTD (TYC): Free Stock Analysis
To read this article on Zacks.com click here.