Cooper Industries Reports Core Revenue Up 13%, EPS From Continuing Operations Up 20%
DUBLIN, July 21, 2011 /PRNewswire via COMTEX/ — Cooper Industries plc (NYSE: CBE) today reported income from continuing operations of $161 million for the second quarter of fiscal year 2011, an increase of $26 million, or 19%, from $135 million in the same period last year. Earnings per share from continuing operations improved $0.16 per share, or 20%, to $0.96 compared to earnings per share from continuing operations of $0.80 for the same period a year ago. The second quarter 2010 results exclude a non-cash after-tax charge of $93.7 million, or $0.55 per share, related to the formation of the Apex Tool Group joint venture with Danaher Corporation.
Total revenue, excluding Tools, increased $197 million, or 16.8%, to $1.37 billion for the second quarter of 2011 from revenues of$1.17 billion in the second quarter of the prior year. Core revenue growth was 12.7%, excluding Tools. Currency translation increased reported revenues by 2.5% and acquisitions added 1.6% compared to the prior year. Total Electrical operating profit margin improved to 16.6% for the second quarter of 2011 from 15.9% in the same period last year.
“With continued momentum in our utility and industrial businesses Cooper Industries was able to generate significant growth in revenue and earnings. Our businesses selling into key growth markets such as industrial, electrical utilities, and oil & gas, along with our energy efficient lighting applications, have realized significant customer demand, more than offsetting the continued weak demand in both non-residential and residential construction markets,” said Cooper Industries’ Chairman and Chief Executive Officer Kirk S. Hachigian. “Additionally, we realized our highest Electrical operating profit margin since the peak of 17.2% in the 2nd quarter of 2008 when revenues were 10% higher. The focus on operational efficiency, new products and global growth allowed us to continue to expand margins and profitability.”
During the first six months of 2011 Cooper reported free cash flow of $191.7 million, excluding the $250 million asbestos trust settlement payment. The company’s total debt net of cash as of June 30 was $529.8 million, which resulted in a 12.5% net debt to capitalization ratio. “We continue to generate strong cash flow, and used that cash during the second quarter to fund the previously announced asbestos trust and continued to make significant organic growth investments such as capital expenditures, research and development, and sales and marketing. Cooper has a strong balance sheet and will continue to allocate capital to organic growth, acquisitions, and return cash to shareholders through share repurchases and dividends,” said Hachigian.
Segment Results
Energy & Safety Solutions segment revenues for the second quarter of 2011 increased 22.2% to $751.1 million, compared with$614.4 million in the second quarter 2010. Core revenues were 15.4% higher than the comparable prior year period, with currency translation increasing reported revenues 3.9% and acquisitions adding 2.9%. Core revenue growth was primarily related to continued strong demand for utility products and improving industrial and energy markets.
Segment operating earnings were $133.5 million, an increase of 28.7% from the $103.7 million in the prior year’s second quarter. Segment operating margin increased 90 basis points to 17.8% for the second quarter 2011, compared to 16.9% for the second quarter of 2010.
Electrical Products Group segment revenues for the second quarter of 2011 increased 10.8% to $617.8 million, compared with$557.6 million in the second quarter 2010. Core revenues were 9.6% higher than prior year, with currency translation increasing reported results 1.0% and acquisitions adding 0.2%. Core revenue growth was driven primarily by demand for energy efficiency products and broad industrial demand.
Segment operating earnings were $93.1 million, an increase of 12.7% from the $82.6 million reported in the prior year’s second quarter. Segment operating margin increased 30 basis points to 15.1% for the second quarter of 2011, compared to 14.8% for the second quarter of 2010.
Tools Joint Venture
As a result of the creation of the Apex Tool Group joint venture on July 4, 2010, the Tools business was deconsolidated beginning with the third quarter 2010. Equity income from the Apex Tool Group joint venture of $14.4 million is included in operating earnings in the second quarter 2011, compared to Tools segment reported operating earnings of $21.1 million in the second quarter of 2010.
Outlook
“We remain committed to delivering a balance of growth, margin expansion and cash generation. We are tightening our 2011 forecasted earnings per share from continuing operations to $3.80 to $3.90 from $3.75 to $3.90, including Tools equity income. This guidance now assumes full-year revenue growth of 10 to 13 percent, excluding Tools segment revenue from 2010. For the third quarter of 2011 we expect earnings per share of $.98 to $1.03 on a tax rate of 16 to 18 percent and revenue growth of 9 to 12 percent compared to the third quarter of 2010,” said Hachigian.