Tyco Intl. Q2 Adj. Profit Tops View, Revenues Match; Slashes 2015 EPS Outlook

(RTTNews) - Swiss security products maker Tyco International Ltd. (TYC) reported Friday a profit for the second quarter that declined from last year, hurt by higher charges, lower operating margins and a revenue drop amid currency headwinds.

Adjusted earnings per share from continuing operations topped analysts' expectations, while quarterly revenues matched their estimates. The company also slashed earnings outlook for the full-year 2015, citing currency headwinds.

"We continued to deliver strong profitability in the second quarter, with earnings per share growing 17% year over year before special items and segment operating margin improving 50 basis points on a normalized basis. Excluding the impact of foreign currency exchange rates, we grew revenue 4% in the quarter through a combination of organic growth and acquisitions," CEO George Oliver said.

The Schaffhausen, Switzerland-based company posted net income attributable to ordinary shareholders of $167 million or $0.39 per share for the second quarter, lower than $207 million or $0.44 per share in the year-ago quarter.

Income from continuing operations for the quarter increased to $183 million or $0.43 per share from $192 million or $0.41 per share in the prior-year quarter.

Results for the latest quarter include net charges of $0.12 per share, while the year-ago quarter included net charges of $0.06 per share.

Before special items, adjusted income from continuing operations for the quarter was $234 million or $0.55 per share, compared to $221 million or $0.47 per share in the year-ago quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.49 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenue for the quarter decreased 2 percent to $2.43 billion from $2.48 billion in the same quarter last year, but matched fourteen Wall Street analysts' consensus estimate of $2.43 billion. The revenue decline was due to a 6 percent negative impact of the stronger U.S. dollar against foreign currencies.

Excluding the impact of foreign currency exchange rates, revenues increased 4 percent, with 2 percent organic growth and 2 percent growth from acquisitions.

North America installation & services revenues edged up 0.5 percent to $944 million, and global products revenue improved 5.6 percent to $639 million, while Rest of World installation & services revenue declined 9.5 percent to $847 million from last year.

Operating margin for the quarter contracted 130 basis points to 9.1 percent from last year's 10.4 percent. Selling, general and administrative expenses also grew to $648 million from $653 million a year ago.

Looking ahead to the third quarter, the company expects adjusted earnings in a range of $0.55 to $0.57 per share, while analysts expect $0.65 per share.

For fiscal 2015, the company slashed its adjusted earnings guidance to a range of $2.23 to $2.27 per share from the previous projection of $2.30 to $2.40 per share, citing currency headwinds and the decline in the oil and gas end market. Street is currently looking for full-year 2015 earnings of $2.33 per share.

"The investments we are making to expand our capabilities and technology, along with our efforts to further streamline our operations, position us well to deliver strong double-digit earnings growth this year and give us confidence in our ability to transition to a growth company and deliver sustained double-digit earnings growth as we enter our next three-year plan," Oliver added.

TYC closed Thursday's regular trading session at $42.59, up $0.12 on a volume of 2.96 million shares. In the past 52-week period, the stock has been trading in a range of $38.15 to $46.64.