Electrical products and tools maker Cooper Industries plc (CBE) on Tuesday reported a 16% increase in profit for the fourth quarter from last year, as lower costs and charges helped offset a 17.5% decline in revenues. Adjusted earnings and revenues declined, yet topped analysts' consensus estimates.
Looking ahead, the company provided earnings outlook for the first quarter and fiscal year 2010 above analysts' estimates. Cooper's net income for the fourth quarter increased to $128.8 million or $0.76 per share from $111.1 million or $0.65 per share in the same period last year.
During the latest quarter, Cooper recognized a pre-tax restructuring and asset impairment charge of $4.2 million or $0.02 per share, related primarily to reductions in work force, offset by discrete tax items which improved reported results by $0.02 per share.
Excluding items, net income for the quarter was $0.76 per share, down from $0.84 per share in the comparable quarter last year. Earlier, the company had projected earnings for the quarter, excluding restructuring and unusual items, in a range of $0.60-$0.70 per share. On average, fourteen analysts polled by Thomson Reuters expected the company to earn $0.67 per share for the quarter. Analysts' estimates typically exclude special items.
Earnings from continuing operations for the latest quarter was $0.76 per share, up from $0.65 per share in the same period last year.
Quarterly revenues declined 17.5% to $1.26 billion from $1.52 billion in the comparable quarter last year, but topped analysts' consensus revenue estimate of $1.25 billion.
Core revenues for the quarter were 19.8% lower than the prior-year period, with currency translation reducing reported revenue by 2.0% and acquisitions adding 0.3% for the quarter.
Kirk Hachigian, Chairman and Chief Executive Officer of Cooper Industries, said, "Our employees rapidly and efficiently right-sized our businesses for the economic challenges faced in 2009, allowing the company to improve earnings sequentially in the fourth quarter. As we begin to see growth in several of our end markets, our businesses are very well positioned to capitalize on the improvements with exceptional earnings growth."
Among Cooper's peers, Black & Decker Corp. (BDK) is slated to report its financial results for the fourth quarter on February 3, 2010. Analysts expected the company to report earnings of $0.77 per share for the quarter on revenues of $1.20 billion.
Cooper's cost of sales for the latest quarter were $837.5 million, down from $1.05 billion a year ago. Selling and administrative expenses declined to $254.4 million from $270.9 million in the prior-year period. Restructuring and asset impairment charges for the quarter were $4.2 million, down from $44.8 million in the same period last year.
Operating earnings for the quarter increased to $160.5 million from $158.9 million in the year-ago period.
Segment wise, Electrical Products revenues for the quarter slipped 18.8% to $1.10 billion from $1.36 billion a year ago. Segment operating earnings, excluding the impact of restructuring and asset impairment charges, decreased 14% from the year-ago period to $171.2 million.
Tools segment revenue declined 7% to $153.5 million from $165.1 million in the prior-year quarter. Segment operating earnings, excluding restructuring charges, declined to $12.7 million from $17.5 million last year. For fiscal year 2009, Cooper reported net income of $439.1 million or $2.61 per share, down from $632.2 million or $3.60 per share in the prior year.
The results for the year include a gain from discontinued operations of $16.2 million, net of tax, or $0.15 per share from negotiated insurance coverage settlements that were not previously recognized.
Excluding unusual items, income from continuing operations for the year was $425.2 million or $2.52 per share, down from $630.8 million or $3.59 per share in the previous year. Earlier, the company had forecast earnings from continuing operations, excluding restructuring and unusual items, in a range of $2.35-$2.45 per share.
Revenues for the year were $5.07 billion, down 22.3% from $6.52 billion a year ago.
Core revenues were 20.9% lower than last year, with currency translation reducing reported revenue by 2.0% and acquisitions adding 0.6% to reported revenues for the year.
During 2009, Cooper generated $632.6 million in free cash flow, including a $90 million discretionary income tax deposit. This compares with free cash flow of $761.2 million in the prior year.
Hachigian said, "As a result of our record cash flow, we were able to retire our $275 million debt obligation in November from available cash and preserve our financial flexibility to continue to invest in our long-term strategic initiatives and return capital to our shareholders."
Looking ahead to the first quarter, Cooper forecasts earnings excluding items in a range of $0.65-$0.70 per share. The company expects revenue to be down 3%-up 2% compared to both the first quarter and the preceding fourth quarter. The company also said it expects to incur additional restructuring charges of $0.01-$0.02 per share during the quarter. Analysts currently anticipate the company to earn $0.59 per share on revenue of $1.23 billion for the quarter.
For fiscal year 2010, Cooper forecasts earnings from continuing operations excluding items in a range of $2.70-$2.90 per share. The company expects revenue to be down 1%-up 4%, including currency translation and acquisition revenue of approximately 2%. Analysts currently anticipate the company to earn $2.42 per share on revenue of $5.08 billion for the full year.
In Tuesday's regular trading session, CBE is trading at $42.64, up $0.88 or 2.11% on a volume of 0.81 million shares. In the past 52 weeks, the stock has been trading in a range of $18.86-$45.37.
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