Industrial equipment maker Illinois Tool Works Inc. (ITW) on Tuesday reported a 27 percent decline in profit for the first quarter from last year, as losses from discontinued operations and lower revenues more than offset a one-time gain as well as a decline in expenses.
Looking ahead to fiscal 2013, the company tightened its earnings and revenue outlook, but maintained its midpoint forecast for earnings per share from continuing operations.
Scott Santi, president and CEO of ITW said, "...we continued to make significant progress with respect to our portfolio management initiative in the quarter as we announced the strategic review of our Industrial Packaging segment and moved more than $600 million of other non-core revenues to discontinued operations. With these two moves, we have largely completed the process of identifying the core businesses that will constitute our faster growing and more profitable portfolio moving forward."
Test & Measurement and Electronics revenue for the latest quarter declined 2 percent from the year-ago period to $520 million, while polymers & fluids revenue declined 6 percent to $495 million, food equipment revenue edged down 1 percent to $467 million and welding revenue decreased 5 percent to $472 million.
In addition, construction products revenue decreased 3 percent to $418 million and industrial packaging revenue declined 5 percent to $579 million. However, specialty products revenues rose 4 percent to $481 million and automotive OEM revenue also grew 4 percent to $589 million.
ITW's first-quarter net income declined to $354 million or $0.78 per share from $486 million or $1.00 per share in the year-ago period. The latest quarter's results include loss from discontinued operations of $105 million or $0.23 per share, compared to income from discontinued operations of $22 million or $0.05 per share in the same period last year.
Excluding the one-time impact of a $30 million pre-tax gain associated with the acquisition of the majority interest in a consumer packaging joint venture, adjusted earnings per share from continuing operations for the latest quarter were $0.96, compared to $0.89 in the prior-year quarter.
On average, eighteen analysts polled by Thomson Reuters expected the company to report earnings of $0.96 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter decreased 8 percent to $4.01 billion from $4.36 billion in the year-ago period. Analysts had a consensus revenue estimate of $4.28 billion.
The decline in sales reflects the Decorative Surfaces segment results being included in the prior year and weaker than expected organic revenue activity. Excluding the impact of Decorative Surfaces, total revenues declined 1.8 percent.
Organic revenues declined 2.7 percent in the quarter and was lower than the company's original forecast in January 2013.
Looking ahead to the second quarter, ITW forecasts earnings from continuing operations in a range of $1.04 to $1.12 per share and total revenue growth of 2.5 percent to 3.5 percent. Analysts expect the company to earn $1.12 per share for the quarter on revenues of $4.51 billion.
For fiscal 2013, ITW tightened its earnings and revenue outlook, but maintained its midpoint forecast for earnings per share from continuing operations of $4.25.
However, the company now forecasts full-year earnings per share from continuing operations in a range of $4.15 to $4.35 and total revenue growth in a range of 2 percent to 4 percent. Earlier, the company projected earnings per share from continuing operations in a range of $4.13 to $4.37 and revenue growth of 3 percent to 5 percent.
Analysts expect the company to earn $4.26 per share for the year on revenues of $17.53 billion.
In Tuesday's regular session, ITW is trading at $62.26, up $1.48 or 2.43 percent on a volume of 54,940 shares.
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