Diversified industrial conglomerate Ingersoll-Rand Co. Ltd. (IR) on Friday reported a decline in third-quarter profit, with revenue slipping year-over-year in all operating segments, as its major end markets continued to experience weaker demand. Looking ahead, the company tightened its full year earnings forecast.
The Dublin, Ireland-based company said third-quarter net earnings attributable to Ingersoll-Rand dropped to $216.6 million, or $0.65 per share, compared to net earnings of $227.7 million, or $0.70 per share in the year-ago quarter.
The latest results included $10 million of pre-tax restructuring costs and a discrete tax benefit of $13.7 million.
On a non-GAAP basis, net earnings attributable to the company was $223.2 million or $0.67 per share.
Earnings from continuing operations dropped to $224.9 million or $0.68 per share from $233.7 million or $0.72 per share in the previous year. On a non-GAAP basis, earnings from continuing operations attributable to the company was $231.5 million or $0.70 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.61 per share for the quarter. Analysts' estimates typically exclude special items.
The company had projected third-quarter earnings from continuing operations to range between $0.55 and $0.70 per share, excluding $0.04 of restructuring expenses.
Net revenues for the quarter decreased 19% to $3.483 billion from $4.313 billion for the same period last year. The company's projection was for third-quarter revenues of $3.5 billion - $3.7 billion. Analysts expected revenues of $3.56 billion for the quarter. Negative currency hurt revenues by 2%.
The company noted that third-quarter orders, excluding currency, declined by approximately 17% compared with last year. Operating income declined to $318.3 million from $347.4 million in the prior year.
The company operates in four segments: Air Conditioning Systems and Services, Climate Control Technologies, Industrial Technologies, and Security Technologies.
At Air Conditioning Systems and Services, quarterly revenues dropped to $1.771 billion from $2.051 billion. The segment's operating income advanced to $151.7 million from $89.5 million. The company noted that commercial revenues decreased in all major geographic regions due to continued lower activity in non-residential construction markets and ongoing deferral of maintenance by customers. Residential revenues declined by 6% from last year.
Climate Control Technologies generated $649.5 million in the latest period, compared to $895.0 million last year. Operating income dropped to $60.5 million from $103.0 million. Total refrigerated trailer and truck revenues decreased by about 30%, while revenues for refrigerated display cases and contracting decreased by 25%. Sea-going container revenues and bus and aftermarket revenues declined due to the ongoing lower end market activity.
Third-quarter revenue for Industrial Technologies declined to $512.1 million from $718.3 million in the previous year, with operating income plunging to $43 million from last year's $81.4 million. Air and Productivity revenues declined by 29%, due to lower volumes in all geographic regions and the negative impact of currency translation. Club Car revenues declined by 29% due to ongoing weak fundamentals in key golf, hospitality and recreation markets, the company said.
At Security Technologies, net revenues dropped to $550.3 million from $648.8 million, reflecting contracting worldwide commercial and residential building markets. Operating income declined to $117.3 million from $126.0 million.
Further, the company said it is on track to achieve $670 million of gross productivity for the full year, exceeding the original target of $650 million.
During the third quarter, the company expanded the scope of its restructuring program initiated in the fourth quarter of 2008. The company now expects to spend about $277 million on it, an increase of $137 million compared to prior guidance.
For the second quarter, the company reported net income attributable to Ingersoll-Rand of $122.1 million or $0.38 per share, down from $256.1 million or $0.88 per share in the prior-year quarter. Quarterly revenues advanced 13% to $3.47 billion from the previous year's $3.08 billion.
For the first three quarters of the fiscal, net earnings attributable to the company dropped to $311.9 million or $0.96 per share from $665.4 million or $2.24 per share in the prior year. Net revenues for nine months increased to $9.890 billion from $9.557 billion in the same period last year.
Looking ahead, the company said fourth-quarter results would continue to be hurt by the ongoing difficult economic conditions. Adjusted earnings per share from continuing operations for the fourth quarter are expected in the range of $0.44 to $0.54.
The company now expects fourth-quarter revenue in the range of $3.2 billion-$3.4 billion, down by $200 million from the prior guidance. Analysts expect fourth-quarter earnings of $0.55 per share on revenues of $3.38 billion.
Further, the company expects full-year 2009 earnings per share from continuing operations in the range of $1.60-$1.70 with costs related to discontinued operations equal to $0.10 per share. Previous outlook was for 2009 earnings from continuing operations to range between $1.50 and $1.80 per share, with discontinued costs equal to $0.11 per share.
For full year, revenues are expected in the range of $13.1 billion-$13.3 billion. The previous forecast was for pro forma revenues of $13.3 billion - $13.7 billion. Wall Street looks for full year earnings of $1.58 per share on revenues of $13.33 billion.
For 2010, the company projects earnings in the range of $2.00-$2.40 per share, excluding restructuring costs, even in a flat year over year end market environment. Analysts expect 2010 earnings in the range of $1.47-$2.30 per share.
IR closed Thursday's regular trade at $35.35, up from the previous close of $34.66, on 6.52 million shares.
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