Ingersoll-Rand Plc’s (IR) net income in fourth-quarter 2014 registered over a five-fold jump to $255.5 million or 95 cents per share from $47.7 million or 16 cents per share in the year-earlier quarter. The year-over-year increase in earnings per share was due to higher revenues.
The company reported full-year 2014 net income of $931.7 million or $3.40 per share compared with $618.8 million or $2.07 per share in 2013.
Excluding non-recurring items, adjusted earnings from continuing operations for the reported quarter was 82 cents per share, catapulting 34% from the year-ago quarter. Adjusted earnings from continuing operations exceeded the Zacks Consensus Estimate of 70 cents per share.
Excluding non-recurring items, adjusted earnings from continuing operations for full year 2014 were $3.33 share up 25% from 2013. Adjusted earnings from continuing operations exceeded the Zacks Consensus Estimate of $3.21.
Quarterly revenues of $3,240.5 million were slightly above the Zacks Consensus Estimate of $3,209 million and rose 5.0% from the year-ago quarter. Revenues from the U.S. and International segment were up 7% and 2%, respectively, compared with the year-ago quarter.
For full-year 2014, the company reported revenues of $12,891 million, up 4.0% year over year.
Segment Performance
Climate segment delivered sales of approximately $2,446 million in fourth-quarter 2014, up 5% from the year-ago quarter. The year-over-year increase was driven by mid single-digit increase in commercial HVAC (heating, ventilation, and air conditioning) revenues and high single-digit improvement in revenues from parts, services and solutions.
Revenues from the Thermo King sub-segment also increased by mid single digit percentage driven by strong revenue gains in North America. Bookings increased 6% year over year.
Industrial segment posted revenues of $795.0 million in the fourth quarter, up 3% from the year-ago quarter. Revenues for air compressors and industrial products were up by the low-single digits percentage. Club Car revenues increased by mid-single digit percentage driven by gains in both golf car and utility vehicle sales.
Margins
Operating margin for the fourth quarter of 2014 was 10.7% compared with 7.0% in the year-ago quarter. The operating margin for the Climate segment was 12.2% .The operating margin for the Industrial segment was 15.7%.
Balance Sheet and Cash Flow
As of Dec 31, 2014, cash and cash equivalents stood at $1,705.2 million compared with $1937.2 million as of Dec 31, 2013. Long-term debt stood at $3,741.7 million compared to $3153.5 million as of Dec 31, 2013. Net cash from operating activities for year ended Dec 31, 2014 was $973.2 million compared with $1,091.5 million in the prior-year period.
Capital expenditure for the year ended Dec 31, 2014 stood at $233.5 million compared with $242.2 million in the year-ago period. At the end of the reported quarter, working capital was 3.1% of revenues, compared with 2.1% in 2013.
Share Repurchase
During the reported quarter, the company repurchased approximately 3.4 million shares for approximately $200 million as part of a $1.5 billion program. The company repurchased approximately 22 million shares for approximately $1.4 billion during full-year 2014.
Acquisition
The company completed the acquisition of the assets of Cameron International Corp’s (CAM) Centrifugal Compression division for $850 million. This acquisition is expected to expand the company’s Industrial Segment.
Outlook
For first-quarter 2015, organic revenues are expected to increase in the range of 5% to 6 % with reported revenues expected to increase in the range of 4% to 5%. Adjusted EPS from continuing operations are expected to be in the range of 29 cents to 33 cents with reported EPS in the range of 26 cents to 30 cents
For full-year 2015, company expects organic and reported revenues to increase in the range of 4% to 5%. Full-year adjusted EPS from continuing operations is expected to be in the range of $3.66 to $3.81, with reported continuing EPS expected to be $3.60 to $3.75. Free cash flow is expected to be in a range of $950 million to $1 billion.
Ingersoll currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Graham Corp. (GHM), carrying a Zacks Rank #1 (Strong Buy), and Kadant Inc (KAI), carrying a Zacks Rank #2 (Buy).
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