Ingersoll-rand Plc (IR), a manufacturer of industrial and commercial products, has recorded a 3.53 percent fall in profit for the quarter ended Jun. 30, 2014. The company earned $306 million or $1.12 a share in the second-quarter compared with $317.20 million or $1.05 a share a year ago. Analysts on average had predicted net income of $1.11 a share.
Revenue during the second-quarter grew 4.25 percent to $3542.90 million from $3398.40 million in the last year period.
Gross margin expanded by 109 basis points over the previous year period to 31.13 percent. Total expenses as a percentage of revenues decreased to 86.92 percent from 88.60 percent in the same period last year. That has resulted in improvement of 167 basis points in operating margins to 13.08 percent.
The company disclosed operating income of $463.30 million, compared with operating income of $387.50 million in the last year period.
''We are pleased to have delivered on our earnings, revenue and margin improvement commitments in the second quarter, particularly with our adjusted EPS at a 22 percent year-over-year increase,'' said Michael W. Lamach, chairman and chief executive officer. ''Our discipline and focus on growth, in coordination with ongoing productivity efforts, achieved adjusted operating leverage of 47 percent and strong revenue and order increases over last year. As we move into the second half of 2014, we are increasing our 2014 earnings forecast. We feel good about our positioning and our focus to deliver on our commitments to our customers and our shareholders.''
The company expects revenues for the full-year 2014 to increase by approximately 4 percent with full-year reported EPS from continuing operations expected to be in the range of $3.13 to $3.21.
For third-quarter, revenues are expected to increase approximately 4 percent with reported EPS from continuing operations for the third-quarter in the range of $1.00 to $1.04, it said.
Cash Flow
Ingersoll-Rand has generated cash of $120.10 million from operating activities during the first half, down 71.99 percent or $308.70 million when compared with the last year period.
The company has spent $64.20 million cash to meet investing activities during the first half, as against cash outgo of $130.50 million in the last year period. It has made net capital expenditure of $92.60 million during the first half, which was lower by 29.64 percent or $39 million, from a year ago.
The company's free cash flow accounted for 22.90 percent of operating cash flow for the first half, compared with 69.31 percent in the last year period.
The company has spent $1055.20 million from financing activities during the first half, as against cash inflow of $1045.20 million in the last year period. It has borrowed net of $39 million through debt during the first half. It has spent net of $1012.80 million on repurchase of common stocks.
The company's cash dividend payment increased 6.75 percent or $8.40 million to $132.80 million. Dividend payment accounted for 110.57 percent of operating cash flow for the first half, compared with 29.01 percent in the same period previous year.
As on Jun. 30, 2014, the company's cash balance stood at $929.80 million, down 57.75 percent or $1270.70 million from Jun. 30, 2013.
Working Capital
Ingersoll-Rand has witnessed a decline in the working capital over the last one year. The company's working capital stood at $1072.40 million as at Jun. 30, 2014, down $609.20 million or 36.23 percent from $1681.60 million on Jun. 30, 2013. It registered a decrease in current ratio to 1.25 as at Jun. 30, 2014 from 1.33 on Jun. 30, 2013.
Debt Position
Ingersoll-Rand has witnessed a decline in the total debt over the last one year. As on Jun. 30, 2014, total debt stood at $3562.20 million, down 25.51 percent or $1219.60 million, from Jun. 30, 2013.
The company's total debt was 20.76 percent of total assets as on Jun. 30, 2014, compared with 23.59 percent on Jun. 30, 2013. It has witnessed a decline in debt to equity ratio to 0.55 on Jun. 30, 2014 compared with 0.67 on Jun. 30, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 8.74 from 6.26 in the same period last year.
Shares of Ingersoll-Rand declined $0.35 or 0.56 percent to settle at $61.85 on Monday.
