Industrial equipment maker Illinois Tool Works Inc. (ITW) on Tuesday reported a profit for the fourth quarter that more than doubled from last year as a gain on divestiture of the company's decorative surfaces unit and lower expenses helped offset a decline in revenues.
Lookuing ahead, the company forecast earnings for the first quarter and fiscal 2013 below analysts' estimates. The company believes fiscal 2013 would be characterized by modest growth for both North American and international geographies.
Transportation revenue for the fourth quarter grew 5 percent from last year to $873 million and construction revenues increased 1 percent to $467 million.
Meanwhile, power systems and electronics segment revenue declined 1 percent to $737 million, Industrial packaging revenues edged down 1 percent to $575 million and food equipment revenues declined 2 percent to $498 million.
ITW's fourth-quarter net income was $979 million or $2.11 per share, up from $442 million or $0.91 per share in the prior-year period.
The latest quarter's results include a gain of $933 million or $1.37 per share on divestiture of the decorative surfaces segment.
In August 2012, ITW agreed to sell a 51 percent stake in its decorative surfaces unit to a fund managed by private equity firm Clayton, Dubilier & Rice, LLC for cash proceeds of about $1.05 billion at closing. The company will retain a 49 percent equity stake in the business.
Excluding items, adjusted earnings per share for the latest quarter were $0.89, compared to $0.88 in the prior-year period. On average, 18 analysts polled by Thomson Reuters expected earnings per share of $0.89 for the quarter. Analysts' estimates typically exclude one-time items.
Operating revenues for the quarter declined 2 percent to $4.22 billion from $4.32 billion in the same period last year, largely due to the impact of the decorative surfaces unit divestiture and the negative impact of currency translation. Analysts had a consensus revenue estimate of $4.15 billion.
Excluding the impact of divestitures, total revenues for the quarter increased about 2 percent. Organic revenues rose 60 basis points and was in line with the company's expectations.
For fiscal 2012, ITW's net income rose to $2.87 billion or $6.06 per share from $2.07 billion or $4.19 per share in the previous year. Adjusted earnings per share were $4.09 compared to $3.72 in the prior year. Operating revenues increased to $17.92 billion from $17.79 billion last year.
Analysts expected the company to earn $4.08 per share for the year on revenues of $17.86 billion.
Looking ahead to the first quarter of fiscal 2013, ITW forecasts earnings per share from continuing operations of $0.91 to $0.99, and total revenue growth in a range of flat to down 2 percent. Analysts expect the company to earn $1.02 per share for the quarter on revenues of $4.38 billion.
The company forecasts fiscal 2013 income per share from continuing operations in a range of $4.13 to $4.37 and total revenue growth in a range of 3 percent to 5 percent. The company projects organic revenue growth to range between 1 percent and 3 percent.
Analysts expect the company to report earnings per share of $4.38 for the year on revenues of $17.61 billion.
As part of its enterprise strategy in 2013, the company expects to spend $120 million to $140 million for restructuring activities.
ITW closed Monday's trading at $65.44, up $0.45 on a volume of 2.79 million shares.
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