Tyco International Ltd
) reported results for the second quarter 2012. Earnings for the
quarter (excluding one-time items) grew 18% year over year to 86
cents a share. However, earnings were well below the Zacks
Consensus Estimate of 96 cents.
GAAP earnings for the quarter were 70 cents a share which were
up 7.0% year over year compared to 66 cents reported in the
Revenue for the quarter grew 9% year over year to $4.4 billion.
Organic revenue (revenue excluding the impact of foreign exchange
translation and acquisitions) growth was 7%.
Effective second quarter 2012, the company has reorganized its
business segments as Fire & Security, ADT and Flow Control.
Fire & Security
Revenue for the quarter increased 5% to $2.6 billion. Organic
revenue for the quarter grew 3.5% driven by acquisitions adding 3%
partially offset by 1% unfavorable foreign exchange. Organic
revenue growth of 14% in fire and security products and 3% in
service was partially offset by a 1% organic revenue decline in
systems installation due to softness in the non-residential
However, excluding the impact of foreign currency, orders
increased 9.5% year-over-year and backlog increased 5% to $4.7
billion on both a year-over-year and sequential basis.
Revenue increased 5% in the quarter both on a GAAP and organic
basis to $807 million. Revenue growth was driven by 3.5% growth in
average revenue per user (ARPU) and 2% growth in customer accounts.
The 13.2% attrition rate for the quarter was flat year over year,
although it increased 20 basis points sequentially.
Revenue of $996 million increased 24% in the quarter with
organic revenue growth of 21%. Organic revenue grew 18% in Valves,
21% in Water and 32% in Thermal Controls. Excluding the impact of
foreign currency, orders increased 21% year-over-year and backlog
increased 4% on year over year and sequential basis to $1.9
Balance Sheet and Share
For the second quarter of 2012, cash from operating activities
was $716 million while free cash flow (after deducting capex) was
$326 million. Cash and cash equivalents for the quarter were $1.0
During the second quarter of 2012, the company repurchased 2.1
million shares for $100 million.
Concurrent with the earnings release, management provided
guidance for the third quarter. Revenue for the third quarter
is expected to increase a little above $4.5 billion.
Based on the company's performance year-to-date, management has
increased its full year earnings guidance to approximately $3.65
compared to its previous guidance of $3.55 to $3.60 per share.
The company has reported a strong second quarter performance
driven by robust organic revenue growth. Order momentum over the
last few quarters, coupled with continued growth in the ADT
Residential business continues to drive higher top line growth.
Tyco's large and stable base of recovering and service revenue,
which represented 45% of its revenue in the quarter, coupled with
strong operating leverage led by the Fire and Security
manufacturing businesses, drove the operating performance during
the reported quarter. All the three operating segments of the
company also posted strong revenue growth.
Tyco International currently has a Zacks Rank #2 which implies
short-term Buy rating on the stock.
TYCO INTL LTD (
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