Industrial equipment maker Illinois Tool Works, Inc. (ITW: Quote) reported Tuesday a profit for the second quarter that nearly doubled from last year, reflecting significant gains from discontinued operations.
However, earnings per share from continuing operations grew 16 percent and topped analysts' expectations by a penny, while quarterly revenues missed their estimates.
The company also lowered its earnings and revenue growth guidance for the full-year 2012, citing the ongoing negative impact of currency translation, additional restructuring expenditures and expected continued sluggish demand in international markets.
"Despite slowing in a variety of international end markets and significant currency translation headwinds, we were very pleased with our second quarter operating performance. Based on our differentiated 80/20 operational focus, our businesses produced very strong operating margin improvement in the quarter with excellent management of input and overhead costs," Chairman and CEO David Speer said in a statement.
The Glenview, Illinois-based company reported net income of $881 million or $1.85 per share for the second quarter, sharply higher than $499 million or $0.99 per share in the prior-year quarter.
Income from continuing operations for the quarter increased 16 percent to $1.11 per share from $0.96 per share in the year-ago quarter.
On average, 17 analysts polled by Thomson Reuters expected the company to earn $1.10 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter edged up 0.9 percent to $4.66 billion from $4.62 billion in the same quarter last year, but missed thirteen Wall Street analysts' consensus estimate of $4.86 billion.
Organic revenue growth was 2.3 percent. Acquisitions net of divestitures added 3.0 percent to revenues, while currency translation negatively impacted revenues by 4.5 percent.
The company said it saw a moderation in revenue growth due to the higher-than-expected negative impact of currency translation and slowing demand in a variety of international end markets.
Operating margins for the quarter improved 110 basis points to 16.5 percent, due to favorable raw material price/cost dynamics as well as effective management of overheads within the decentralized businesses.
Looking ahead to the third quarter, the company expects income from continuing operations to be in a range of $1.03 to $1.11 on projected total revenue growth range of minus 1 to plus 1 percent. Analysts expect the company to report earnings of $1.10 per share on revenues of $4.82 billion for the third quarter.
For fiscal 2012, the company lowered its guidance for income from continuing operations to a range of $4.03 to $4.19 from the prior forecast of $4.14 to $4.38 per share. Full-year revenue growth is now expected to be in a range of 1 to 3 percent, down from previously expected growth of 5 to 7 percent.
Street is currently looking for full-year 2012 earnings of $4.18 per share on annual revenues of $18.76 billion.
ITW closed Monday's regular trading session at $53.57, up $0.91 on a volume of 4.15 million shares, higher than the three-month average volume of 3.45 million shares.
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by RTT Staff Writer
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