Tyco International Inc (TYC) reported fourth-quarter fiscal 2014 income from continuing operations (before one-time items) of $252 million or 56 cents versus $218 million or 47 cents in the year-ago quarter. Adjusted earnings were in line with the Zacks Consensus Estimate of 56 cents. The increase in net income was driven by continued productivity initiatives and capital allocation.
For fiscal 2014, income from continuing operations (before one time items) came in at $922 million or $1.99 per share versus $785 million or $1.66 per share in fiscal 2013. Adjusted earnings for fiscal 2014 beat the Zacks Consensus Estimate of $1.98.
The company reported fourth quarter fiscal 2014 loss from continuing operations of $76 million or loss of 17 cents per share versus net income from continuing operations of $135 million or 29 cents in the year-ago quarter. The loss in the quarter was driven by higher selling, general and administrative expenses.
For fiscal 2014, the company reported net income from continuing operations of $794 million or $1.71 per share versus $443 million or 94 cents per share in fiscal 2013.
Revenues climbed 4.0% year over year to $2,704 million in the reported quarter, missing the Zacks Consensus Estimate of $2,741 million. Organic revenues improved 3.0%, led by 8% year-over-year growth in global products. Acquisitions contributed 1.0% to growth, which was partially offset by the impact of divestitures.
For fiscal 2014, revenues climbed 3.0% year over year to $10,340 million, missing the Zacks Consensus Estimate of $10,593 million. Organic revenues improved 3.0%, led by 6% year-over-year growth in global products. Acquisitions contributed 2.0% to growth, which was partially offset by divestitures.
Segment Performance
North America Systems Installation & Services: Fourth-quarter revenues were up 2% year over year to $1,012 million. The increase in revenue was driven by installation revenue growth of 6%, partially offset by a 2% decline in service. Organic revenue growth contributed 2% in the quarter.
Backlog was $2.5 billion up 3% year over year. Operating income came in at $117 million versus $113 million in the prior-year quarter. Operating margin improved to 11.6% versus 11.3% in the prior-year quarter, reaping the benefits of restructuring and productivity initiatives.
Rest of World Systems Installation & Services: Revenues improved 2.0% year over year to $1.0 billion driven by acquisitions, but partially offset by the adverse impact of divestitures. Organic revenue growth was 2.0% with installation revenues going up 6.0%, partially offset by a 2% decline in service revenue.
Backlog of $2.2 billion increased 6% year over year. Operating income came in at $101 million versus $83 million in the prior-year quarter. Operating margin stood at 10.0% versus 8.4% in the prior-year quarter.
Global Products: Revenues were $681 million in this segment, up 9.0% year over year, driven by acquisitions. Organic revenues were up 8%, with healthy growth across all three product platforms. Operating income came in at $129 million versus $119 million in the prior-year quarter. Operating margin stood at 18.9% versus 19.0% in the prior-year quarter.
Acquisitions
Subsequent to the end of the quarter, the company completed the previously announced acquisition of a security business in Brazil.
Balance Sheet and Cash Flow
Cash and cash equivalents for Sep 2014 were $892 million versus $563 million in Sep 2013, Long-term debt aggregated to $1.4 billion unchanged from the prior year. For fiscal 2014, cash provided from operating activities totaled $831 million with a free cash flow of $528 million, which included a cash outflow of $473 million. Adjusted free cash flow was $1,001 million.
During the quarter, the company repurchased 23 million shares for $1.0 billion, bringing the full year tally to 42 million shares repurchased for $1.8 billion. Additionally, the company approved an additional $1.0 billion authorization for share repurchases.
Outlook
Moving ahead, Tyco is set to boost its healthy organic growth momentum as it seeks opportunities to expand its revenue base. According to the company, its strong balance sheet provides flexibility so as to continuously fund organic and inorganic growth initiatives and maximize return for its shareholders.
Tyco currently has a Zacks Rank #4 (Sell). Other stocks that look promising and are worth a look now in the industry include Federal Signal Corp. (FSS), carrying a Zacks Rank #1 (Strong Buy), General Dynamics Corp. (GD) and The Babcock & Wilcox Co. (BWC), both carrying a Zacks Rank #2 (Buy).
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