Tyco Electronics Ltd. (TEL), a wholly-owned subsidiary of Tyco International Ltd. (TYC), posted a profit for the first quarter compared to a loss last year. The turnaround reflected strong sales performance in electronic components segment, significant increase in orders, margin improvement and cost reductions. Both adjusted earnings and revenue surpassed Wall Street predictions. The company also guided second quarter adjusted earnings and revenue outlook in ranges above analysts' expectations.
The Schaffhausen, Switzerland-based group's quarterly income from continuing operations surged to $172 million or $0.37 per share from $30 million or $0.07 per share last year.
Net income attributable to the company was $172 million or $0.37 per share versus a loss of $37 million or $0.08 per share a year ago.
On an adjusted basis, earnings from continuing operations rose to $219 million or $0.47 per share from $99 million or $0.21 per share in the year-ago period. On average, ten analysts polled by Thomson Reuters expected earnings per share of $0.39 for the quarter. Analysts' estimates typically exclude special items.
Tyco Electronics's quarterly net sales grew 6.6% year-over-year to $2.89 billion from $2.71 billion, surpassing Street view of $2.79 billion. Segmentally, a 14% revenue growth in electronic components division outweighed the drop in revenue experienced in the rest of the segments.
Organic revenues for the group improved 2%, with electronic components division demonstrating a 12.2% rise, while network solutions, specialty products and undersea telecommunications arms saw a 14.8%, 6.6% and 24.2% decline in organic revenues respectively.
In the first quarter, total company orders increased 15% year-over-year, with a book-to-bill ratio of 1.02. Excluding the company's Undersea Telecommunications segment, which is a project-oriented business with uneven order patterns, the group's orders jumped 34% year-over-year and the book-to-bill ratio was 1.09.
During the latest first-quarter under review, operating income shot up 224% to $269 million from $83 million, while adjusted operating income rose 87% to $332 million from $178 million. Operating margin improved to 9.3% from 3.1% in the earlier year.
Adjusted operating margin improved to 11.5% compared to 6.6% a year ago, reflecting not only the benefits of higher sales, footprint restructuring and cost reduction actions, but also the absence of $50 million of foreign currency losses on hedging activity incurred in the prior-year period.
Looking ahead, for the second quarter, the group forecasts earnings between $0.46 - $0.51 per share and revenues of between $2.85 billion - $2.95 billion. On an adjusted basis, it expects earnings to be between $0.49 - $0.54 per share. The projected numbers are ahead of current Street consensus of earnings per share of $0.39 on revenues of $2.75 billion.
Further the group predicted operating income of $315 million to $350 million for the second quarter, which includes restructuring and other charges of approximately $20 million. Adjusted operating income is expected to be $335 million to $370 million.
"In the second quarter, we expect the trends we experienced in the first quarter to continue, and overall sales to be similar to first quarter levels. We anticipate that our adjusted operating margin will approach 12 percent in the second quarter," said Tom Lynch, Tyco Electronics' Chief Executive.
TEL closed Tuesday's trading at $25.37 on the NYSE.
For comments and feedback: editorial@rttnews.com