Ingersoll Rand Delivers Fourth-Quarter EPS from Continuing Operations of $0.77
Ingersoll Rand Delivers Fourth-Quarter EPS from Continuing Operations of
$0.77
* Fourth-quarter adjusted continuing earnings per share (EPS) of $0.76
* Revenues of $3.5 billion in the fourth quarter, flat compared with 2011
* Fourth-quarter 2012 operating margin of 10.6 percent, a 1.0 percentage
point improvement year-over-year excluding Hussmann and impairment for
2011
* Full-year 2012 EPS from continuing operations of $3.30
* Full-year 2012 adjusted EPS from continuing operations up 23 percent
year-over-year excluding Hussmann and impairment
Business Wire
SWORDS, Ireland -- February 1, 2013
Ingersoll-Rand plc (NYSE:IR), a world leader in creating and sustaining safe,
comfortable and efficient environments, today reported that total revenues,
excluding the divested Hussmann refrigeration business, were flat for the
fourth quarter of 2012 compared with the 2011 fourth quarter. Diluted earnings
per share from continuing operations were $0.77.
The company reported net earnings of $235.6 million, or EPS of $0.78, for the
fourth quarter of 2012. Fourth-quarter net earnings included $234.7 million,
or EPS of
$0.77, from continuing operations, as well as $0.9 million of income, or EPS
of $0.01, from discontinued operations. Continuing operations included EPS of
$0.01 from tax benefits related to the disposition of Hussmann. Excluding
these items, adjusted EPS from continuing operations for the fourth quarter of
2012 was $0.76.
This compares with reported net earnings of $242.2 million, or EPS of $0.76,
for the fourth quarter of 2011. Fourth-quarter 2011 net earnings included
$249.4 million, or EPS of $0.79, from continuing operations, as well as $7.2
million of costs, or EPS of $(0.03), from discontinued operations. Continuing
operations included EPS of $0.03 related to the disposition of Hussmann.
Excluding these items, adjusted EPS from continuing operations for the fourth
quarter of 2011 was $0.76. (See EPS table)
EPS for Q4 and Full Year
Q4 Full Year
2012 2011 2012 2011
EPS from Continuing $ 0.77 $ 0.79 $ 3.30 $ 1.18
Operations
Adjustments:
* Asset (0.01 ) (0.03 ) (0.01 ) 1.64
Impairment/Loss(Gain)
on Sale
Adjusted EPS from $ 0.76 $ 0.76 $ 3.29 $ 2.82
Continuing Operations
Full-Year Results
Full-year 2012 net revenues were $14,035 million and declined by 5 percent
compared with reported net revenues of $14,782 million in 2011. Excluding the
results of the divested Hussmann business, 2012 revenues increased by 1
percent. Operating income for 2012 totaled $1,505 million ($1,501 million when
adjusted for impairment) compared with $860 million in 2011 ($1,449 million
excluding impairment and Hussmann).
The company reported full-year 2012 EPS of $3.28. EPS from continuing
operations were $3.30 with $(0.02) of costs from discontinued operations. The
company reported full-year 2011 EPS of $1.01. EPS from continuing operations
were $1.18 with $(0.17) of costs from discontinued operations. Continuing
operations included an after-tax impairment charge/loss on sale of $558
million, or EPS of ($1.64) related to the divestiture of Hussmann. Excluding
these charges, the adjusted EPS for 2011 continuing operations was $2.82 (See
EPS table)
“In 2012, we improved the strength of our business operations, delivering
increased operating margins, and a 23 percent improvement in adjusted earnings
per share despite a challenging economic backdrop in a number of our key end
markets,” said Michael W. Lamach, chairman and chief executive officer. “We
are pleased with the progress we made during this past year. We made notable
improvements in pricing capabilities, productivity and working capital
management that helped to deliver the strong cash flow that supported our
share buyback and dividend expansion. Our management team is focused on
investing in multiple growth platforms identified in our planning process, as
well as accelerating restructuring and cost reduction actions to generate
sustained profitable growth in what we expect to be a slow growth economy in
2013.”
Additional Highlights for the 2012 Fourth Quarter
Revenues: The company’s reported revenues declined by 1 percent to $3,470
million, compared with revenues of $3,507 million for the 2011 fourth quarter.
Total revenues, excluding the divested Hussmann business, were flat compared
with 2011. U.S. revenues, excluding Hussmann, were flat compared with 2011,
and revenues from international operations were also flat (up 1 percent
excluding currency), as growth in Latin America and Asia was largely offset by
declining activity in Europe.
Operating Income and Margin: Operating income for the 2012 fourth quarter was
$367.5 million, an increase of 8 percent (up 11 percent when adjusted for
impairment and Hussmann) compared with the 2011 fourth quarter. The
fourth-quarter operating margin was 10.6 percent compared to an operating
margin of 9.7 percent (9.6 percent when adjusted for impairment and Hussmann)
for the same period of 2011. Pricing actions and operational excellence
initiatives drove the increase in operating profits and margins. These
improvements were partially offset by inflation, higher investment spending
and unfavorable revenue mix.
Interest Expense and Other Income/Expense: Interest expense of $61 million for
the fourth quarter of 2012 declined by approximately $9 million compared with
the same period last year due to lower debt balances. Other income totaled $4
million for the fourth quarter of 2012 and declined slightly compared with the
2011 fourth quarter.
Taxes: The company had a tax rate of 22 percent in the fourth quarter of 2012,
including a $5 million tax benefit related to the Hussmann divestiture.
Excluding this benefit, the tax rate was 24 percent. The company had an
effective tax rate of 7 percent in the fourth quarter of 2011, including a $5
million tax benefit resulting from the Hussmann divestiture. Excluding this
benefit and the corresponding adjustment to the asset impairment charge, the
effective tax rate was 9 percent in the fourth quarter of 2011.
Fourth-Quarter Business Review
Climate Solutions delivers energy-efficient solutions globally and includes
Trane, which provides heating, ventilation and air conditioning (HVAC) systems
and building services, parts and controls for commercial buildings, and Thermo
King, the leader in transport temperature control solutions.
The total results of the divested Hussmann refrigeration business are included
through the first three quarters of 2011. The company’s ownership interest in
Hussmann was reported within other income/expense using the equity method of
accounting for the fourth quarter of 2011 and for all of 2012. Fourth-quarter
2011 results also included approximately $37 million of revenues and $3
million of operating income from several Hussmann branch operations divested
on November 30, 2011.
Revenues for the fourth quarter of 2012 were $1,839 million and declined by 3
percent compared with the fourth quarter of 2011. Excluding Hussmann, revenue
declined by 2 percent (down 1 percent excluding currency). Bookings, excluding
Hussmann, declined by 1 percent year-over-year.
On a year-over-year basis, total commercial HVAC revenues were flat, with a
low-single digit percent decline in equipment and systems offset by increased
revenues from parts, services and solutions. Commercial revenues increased in
the Americas and declined in Europe and Asia. Fourth-quarter bookings for
commercial HVAC reflected a mid-single digit percentage improvement compared
with the 2011 fourth quarter with gains in the Americas and Asia offsetting a
slight decline in Europe. Total Thermo King refrigerated transport revenues
decreased in the fourth quarter compared with last year, primarily due to
declines in marine containers. Trailer and truck sales were up compared with
last year as revenue gains in the Americas and Asia were partially offset by
lower European volumes.
Fourth-quarter segment operating margin of 10.3 percent increased by 0.2
percentage points compared with 10.1 percent last year (excluding Hussmann,
operating margin was 10.2 percent). The combination of pricing and
productivity actions offset the negative impact of inflation, unfavorable
revenue/volume mix and higher investment spending.
Industrial Technologies provides products, services and solutions to enhance
customers’ productivity, energy efficiency and operations. Products include
compressed air systems, power tools, pumps, material handling equipment and
golf and utility vehicles.
Total revenues in the fourth quarter of $765 million increased approximately 3
percent (up 4 percent excluding currency) compared with the fourth quarter of
2011. Air and Productivity revenues showed a low-single digit percentage
increase, primarily due to gains in oil free air compressor sales. Bookings
also increased by a low-single digit percentage year-over-year with gains in
all geographic regions.
Club Car revenues increased by a high-single digit percentage compared with
the fourth quarter of 2011, showing gains in golf cars and aftermarket
activity. Bookings increased by a low-single digit percentage as golf-related
markets continued to show slowly improving activity levels.
Fourth-quarter segment operating margin for Industrial Technologies was 16.1
percent, an increase of 0.8 percentage points compared with last year. The
segment margin improvement was due to higher volumes, improved pricing and
productivity, which were partially offset by inflation and investment
spending. Air and Productivity operating margins exceeded 17 percent in the
fourth quarter and exceeded 16 percent for full year 2012.
Residential Solutions includes the Trane and Schlage brands, which deliver
safety, comfort and efficiency to homeowners throughout the Americas.
Products, services and solutions include mechanical and electronic locks, HVAC
systems, indoor air quality solutions and controls, and remote home management
systems. Fourth-quarter revenues were $422 million, a decrease of
approximately 5 percent (down 5 percent, excluding currency) compared with
2011. Bookings also declined by mid-single digit percentages year-over-year.
Total fourth quarter residential security revenues were down low-teen
percentages compared with 2011 as a result of lower sales to “big box”
customers, which offset increased year-over-year revenues from the new builder
market and South American customers.
Residential HVAC revenues declined by a low-single digit percentage compared
with fourth quarter 2011 results. 2012 fourth-quarter HVAC unit shipments were
flat compared with last year. Fourth quarter 2012 year-over-year revenue
comparisons were negatively impacted by significant fourth-quarter 2011
shipments related to planned inventory reductions. Excluding the impact of
2011 inventory reductions, fourth-quarter 2012 unit shipments increased by
high-single digit percentages compared with last year.
Fourth-quarter segment operating margin was 6.9 percent and increased by 8.1
percentage points compared with negative (1.2 percent) recorded in 2011. The
segment margin increase was due to improved pricing and productivity in 2012
and easy comparisons with the fourth quarter of 2011 when the residential HVAC
business significantly reduced inventory levels.
Security Technologies is a leading global supplier of commercial security
products and services. The segment’s market-leading products include
mechanical and electronic security products, biometric and access-control
systems, and security and time and attendance scheduling software.
Fourth-quarter revenues of $445 million increased by approximately 7 percent
(up 7 percent excluding currency) compared with the fourth quarter of 2011.
Revenues in the Americas increased by high-single digit percentages as price
improvements and market share gains in mechanical products more than offset
the impact of stagnant commercial building markets. Revenues in overseas
markets increased by a mid-single digit percentage as declines in European
revenues were more than offset by strong growth in Asia.
Overall segment bookings were up mid-teens, with bookings improvement in the
Americas and Asia and declines in Europe. Fourth-quarter segment operating
margin was 20.6 percent, up by 1.5 percentage points compared with 19.1
percent in the fourth quarter of 2011. The higher segment operating margin was
due to improved volume, productivity and higher pricing, which were partially
offset by inflation and higher investment spending.
Balance Sheet and Share Repurchase
Working capital was 2.8 percent of revenues at the end of the fourth quarter
of 2012. Available cash flow for the fourth quarter was $354 million and the
company generated $918 million of available cash flow in 2012. Cash balances
and total debt balances were $0.9 billion and $3.2 billion, respectively, at
the end of the fourth quarter. The company purchased approximately 10 million
shares during the fourth quarter and purchased a total of 18.4 million shares
for $840 million during 2012.
Spin-off of Commercial and Residential Security Businesses
On December 10, 2012, the company announced that its Board of Directors
unanimously approved a plan to spin off its commercial and residential
security businesses (the “new security” company). The separation will result
in two standalone companies: Ingersoll Rand, a world leader in creating
comfortable, sustainable and efficient environments through its industrial,
transport refrigeration, and heating, ventilation and air conditioning (HVAC)
businesses; and the new security company, a leading global provider of
electronic and mechanical security products and services, delivering
comprehensive solutions to commercial and residential customers.
The company expects the spin-off, which is intended to be tax free to
shareholders, to be completed prior to year-end 2013. Upon completion of the
spin-off, Ingersoll-Rand plc will cease to have any ownership interest in the
new security company, and the new security company will become an independent
publicly traded company. The new security company is anticipated to be an
Irish plc.
Outlook
For 2013 the company expects moderate growth in industrial markets, global
parts and service, and across most of the company’s businesses in Asia and
Latin America. Refrigerated transport markets and commercial HVAC replacement
activity are expected to demonstrate slow year-over-year growth, especially in
Europe where performance is hampered by low economic growth in key markets.
The North American non-residential construction market is continuing its weak
and uneven demand pattern with moderate growth in commercial markets,
partially offsetting ongoing weakness in key institutional markets. Activity
in North American consumer related markets, especially residential HVAC, is
expected to continue its ongoing recovery for 2013 with moderate increases in
demand levels.
For comparison purposes, the 2013 forecast is based on the current Ingersoll
Rand business structure, with four current operating sectors in place for the
full 12 months of 2013. Revenues for the full-year 2013 are expected to be in
the range of $14.2 billion to $14.6 billion. Full-year adjusted EPS from
continuing operations are expected to be in the range of $3.45 to $3.65. Costs
related to the impending spin-off of the residential and commercial security
businesses and restructuring expenses are expected to be in the range of $0.40
to $0.60 per share. Including these costs, EPS for 2013 continuing operations
are expected to be in the range of $2.85 to $3.25. The forecast includes a tax
rate of 23 percent for continuing operations and an average diluted share
count for the full year of approximately 300 million shares. Available cash
flow for full-year 2013 is expected to approximate $1.1 billion, excluding
restructuring expenses and costs related to the spin-off of the security
business.
First-quarter 2013 revenues are expected to be in the range of $3.1 billion to
$3.2 billion. Adjusted EPS from continuing operations for the first quarter of
2013 are expected to be in the range of $0.35 to $0.40, with reported EPS of
$0.15 to $0.20, including security business spin-off and restructuring costs
equal to approximately $0.10 per share and potential non-U.S. discrete tax
charges equal to approximately $0.10 per share. The first-quarter forecast
reflects an ongoing tax rate of 25 percent for continuing operations and an
average diluted share count of approximately 302 million shares.
This news release includes “forward-looking statements,” which are statements
that are not historical facts, including statements that relate to the mix of
and demand for our products, performance of the markets in which we operate,
the proposed spin-off of our commercial and residential security technologies
businesses, our capital allocation strategy and our 2013 full-year and
first-quarter financial performance. These forward-looking statements are
based on our current expectations and are subject to risks and uncertainties,
which may cause actual results to differ materially from our current
expectations. Such factors include, but are not limited to, our ability to
successfully, if ever, complete the proposed spin-off; our ability to fully
realize the expected benefits of the proposed spin-off; global economic
conditions, demand for our products and services and tax law changes.
Additional factors that could cause such differences can be found in our Form
10-K for the year ended December 31, 2011, Form 10-Q for the quarters ended
March 31, 2012, June 30, 2012 and September 30, 2012, and in our other SEC
filings. We assume no obligation to update these forward-looking statements.
This news release also includes adjusted non-GAAP financial information which
should be considered supplemental to, not a substitute for or superior to, the
financial measure calculated in accordance with GAAP. Further information
about the adjusted non-GAAP financial information, including reconciliation to
the nearest GAAP measure, is included in financial tables attached to this
news release.
All amounts reported within the earnings release above related to net earnings
(loss), earnings (loss) from continuing operations, earnings (loss) from
discontinued operations, and per share amounts are attributed to Ingersoll
Rand’s ordinary shareholders.
Ingersoll Rand (NYSE:IR) is a world leader in creating and sustaining safe,
comfortable and efficient environments in commercial, residential and
industrial markets. Our people and our family of brands—including Club Car®,
Ingersoll Rand®, Schlage®, Thermo King® and Trane®—work together to enhance
the quality and comfort of air in homes and buildings, transport and protect
food and perishables, secure homes and commercial properties, and increase
industrial productivity and efficiency. We are a $14 billion global business
committed to sustainable business practices within our company and for our
customers. For more information, visit www.ingersollrand.com.
02/01/13
(See Accompanying Tables)
* Condensed Consolidated Income Statement
* Segments
* Non-GAAP Financial Tables
* Condensed Consolidated Balance Sheet
* Condensed Consolidated Statement of Cash Flow
* Balance Sheet Metrics and Available Cash Flow
INGERSOLL-RAND PLC
Condensed Consolidated Income Statement
(In millions, except per share amounts)
UNAUDITED
Three Months Twelve Months
Ended December 31, Ended December 31,
2012 2011 2012 2011
Net revenues $ 3,470.2 $ 3,506.7 $ 14,034.9 $ 14,782.0
Cost of goods (2,410.5 ) (2,505.9 ) (9,758.2 ) (10,493.6 )
sold
Selling &
administrative (692.2 ) (666.3 ) (2,776.0 ) (2,781.2 )
expenses
Gain (loss) on
sale / (asset - 4.7 4.5 (646.9 )
impairment)
Operating income 367.5 339.2 1,505.2 860.3
Interest expense (61.4 ) (70.2 ) (253.5 ) (280.0 )
Other income 3.8 4.4 25.0 33.0
(expense), net
Earnings (loss)
before income 309.9 273.4 1,276.7 613.3
taxes
Provision for (69.0 ) (18.2 ) (227.0 ) (187.2 )
income taxes
Earnings (loss)
from continuing 240.9 255.2 1,049.7 426.1
operations
Discontinued
operations, net 0.9 (7.2 ) (5.7 ) (56.8 )
of tax
Net earnings 241.8 248.0 1,044.0 369.3
(loss)
Less: Net
earnings
attributable to (6.2 ) (5.8 ) (25.4 ) (26.1 )
noncontrolling
interests
Net earnings
(loss)
attributable to $ 235.6 $ 242.2 $ 1,018.6 $ 343.2
Ingersoll-Rand
plc
Amounts
attributable to
Ingersoll-Rand
plc
ordinary
shareholders:
Continuing $ 234.7 $ 249.4 $ 1,024.3 $ 400.0
operations
Discontinued 0.9 (7.2 ) (5.7 ) (56.8 )
operations
Net earnings $ 235.6 $ 242.2 $ 1,018.6 $ 343.2
(loss)
Diluted earnings
(loss) per share
attributable to
Ingersoll-Rand
plc ordinary
shareholders:
Continuing $ 0.77 $ 0.79 $ 3.30 $ 1.18
operations
Discontinued 0.01 (0.03 ) (0.02 ) (0.17 )
operations
$ 0.78 $ 0.76 $ 3.28 $ 1.01
Weighted-average
number of
ordinary
shares
outstanding:
Diluted 304.0 316.7 310.6 339.3
INGERSOLL-RAND PLC
Business Review
(In millions, except percentages)
UNAUDITED
Three Months Twelve Months
Ended December 31, Ended December 31,
2012 2011 2012 2011
Climate
Solutions
Net revenues $ 1,838.5 $ 1,904.6 $ 7,409.1 $ 8,284.6
Segment
operating 188.5 192.9 768.1 824.6 **
income *
and as a %
of Net 10.3 % 10.1 % 10.4 % 10.0 %
revenues
Industrial
Technologies
Net revenues 765.3 744.0 2,945.8 2,852.9
Segment
operating 123.3 113.9 455.8 415.5
income
and as a %
of Net 16.1 % 15.3 % 15.5 % 14.6 %
revenues
Residential
Solutions
Net revenues 421.7 442.9 2,054.4 2,012.7
Segment
operating 29.0 (5.2 ) 115.4 62.1
income
and as a %
of Net 6.9 % -1.2 % 5.6 % 3.1 %
revenues
Security
Technologies
Net revenues 444.7 415.2 1,625.6 1,631.8
Segment
operating 91.5 79.4 327.7 331.6
income
and as a %
of Net 20.6 % 19.1 % 20.2 % 20.3 %
revenues
Gain (loss)
on sale / - 4.7 4.5 (646.9 ) **
(asset
impairment)
Unallocated
corporate (64.8 ) (46.5 ) (166.3 ) (126.6 )
expense
Consolidated $ 3,470.2 $ 3,506.7 $ 14,034.9 $ 14,782.0
net revenues
Consolidated
operating $ 367.5 $ 339.2 $ 1,505.2 $ 860.3
income
and as a %
of Net 10.6 % 9.7 % 10.7 % 5.8 %
revenues
* Segment operating income is the measure of profit and loss that the Company
uses to evaluate the
financial performance of the business and as the basis for performance
reviews, compensation and
resource allocation. For these reasons, the Company believes that Segment
operating income represents
the most relevant measure of segment profit and loss. The Company may exclude
certain charges or gains
from Operating income to arrive at Segment operating income that is a more
meaningful measure of profit
and loss upon which to base its operating decisions.
** During the twelve months ended December 31, 2011, the Company recorded a
pre-tax loss on sale and
impairment charges related to the Hussmann divestiture of approximately $647
million. These charges
have been excluded from Segment operating income within the Climate Solutions
segment.
INGERSOLL-RAND PLC
Reconciliation of non-GAAP to GAAP
(In millions, except per share amounts)
UNAUDITED
For the quarter ended December 31, 2012 For the year ended December 31, 2012
As As As As
Reported Adjustments Adjusted Reported Adjustments Adjusted
Net revenues $ $ - $ $ $ - $
3,470.2 3,470.2 14,034.9 14,034.9
Operating income 367.5 - (a) 367.5 1,505.2 (4.5) (a) 1,500.7
Operating margin 10.6% 10.6% 10.7% 10.7%
Earnings from
continuing
operations
before income 309.9 - (a) 309.9 1,276.7 (4.5) (a) 1,272.2
taxes
Provision for (69.0) (4.8) (b) (73.8) (227.0) 2.6 (b) (224.4)
income taxes
Tax rate 22.3% 23.8% 17.8% 17.6%
Earnings from
continuing
operations
attributable to
Ingersoll-Rand 234.7 (4.8) (c) 229.9 1,024.3 (1.9) (c) 1,022.4
plc
Diluted earnings
per common share
Continuing $ 0.77 $ $ 0.76 $ 3.30 $ $ 3.29
operations (0.01) (0.01)
Weighted-average
number of common
shares
outstanding
Diluted 304.0 - 304.0 310.6 - 310.6
Detail of
Adjustments:
Adjustment
(a) to Hussmann $ - $ (4.5)
loss on
sale
Tax impact
(b) of Hussmann (4.8) 2.6
divestiture
Impact of
(c) adjustments
on earnings
from
continuing
operations
attributable to
Ingersoll-Rand $ (4.8) $ (1.9)
plc
The Company reports its financial results in accordance with generally
accepted accounting principles in the United States (GAAP). This supplemental
schedule provides adjusted non-GAAP financial information and a quantitative
reconciliation of the difference between the non-GAAP financial measures and
the financial measures calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a
substitute for or superior to, financial measures calculated in accordance
with GAAP. They have limitations in that they do not reflect all of the costs
associated with the operations of our businesses as determined in accordance
with GAAP. In addition, these measures may not be comparable to non-GAAP
financial measures reported by other companies.
We believe the non-GAAP financial information provides important supplemental
information to both management and investors regarding financial and business
trends used in assessing our financial condition and results of operations. We
believe that it is meaningful to provide the relative impact of impairment
charges and the corresponding tax impacts in order to present a better
understanding of our results on a period to period comparative basis.
The non-GAAP financial measures for operating income and margin, tax rate and
EPS assist investors with analyzing our business segment results as well as
with predicting future performance. In addition, these non-GAAP financial
measures are also reviewed by management in order to evaluate the financial
performance of each segment. They are the basis for performance reviews,
compensation and resource allocation. We believe that the presentation of
these non-GAAP financial measures will permit investors to assess the
performance of the Company on the same basis as management.
As a result, one should not consider these measures in isolation or as a
substitute for our results reported under GAAP. We compensate for these
limitations by analyzing results on a GAAP basis as well as a non-GAAP basis,
prominently disclosing GAAP results and providing reconciliations from GAAP
results to non-GAAP results.
INGERSOLL-RAND PLC
Reconciliation of non-GAAP to GAAP
(In millions, except per share amounts)
UNAUDITED
For the quarter ended December 31, 2011 For the year ended December 31, 2011
As As As As
Reported Adjustments Adjusted Reported Adjustments Adjusted
Net revenues $ 3,506.7 $ - $ 3,506.7 $ 14,782.0 $ - $ 14,782.0
Operating income 339.2 (4.7 ) (a) 334.5 860.3 646.9 (a) 1,507.2
Operating margin 9.7 % 9.5 % 5.8 % 10.2 %
Earnings (loss)
from continuing
operations
before income 273.4 (4.7 ) (a) 268.7 613.3 646.9 (a) 1,260.2
taxes
Provision for (18.2 ) (4.7 ) (b) (22.9 ) (187.2 ) (88.9 ) (b) (276.1 )
income taxes
Tax rate 6.7 % 8.5 % 30.5 % 21.9 %
Earnings (loss)
from continuing
operations
attributable to
Ingersoll-Rand 249.4 (9.4 ) (c) 240.0 400.0 558.0 (c) 958.0
plc
Diluted earnings
per common share
Continuing $ 0.79 $ (0.03 ) $ 0.76 $ 1.18 $ 1.64 $ 2.82
operations
Weighted-average
number of common
shares
outstanding
Diluted 316.7 - 316.7 339.3 - 339.3
Detail of
Adjustments:
Impairment
(a) charge related $ (4.7 ) $ 646.9
to Hussmann
Tax impact of
(b) Hussmann (4.7 ) (88.9 )
divestiture
Impact of
(c) adjustments on
earnings from
continuing
operations
attributable to
Ingersoll-Rand $ (9.4 ) $ 558.0
plc
The Company reports its financial results in accordance with generally
accepted accounting principles in the United States (GAAP). This supplemental
schedule provides adjusted non-GAAP financial information and a quantitative
reconciliation of the difference between the non-GAAP financial measures and
the financial measures calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a
substitute for or superior to, financial measures calculated in accordance
with GAAP. They have limitations in that they do not reflect all of the costs
associated with the operations of our businesses as determined in accordance
with GAAP. In addition, these measures may not be comparable to non-GAAP
financial measures reported by other companies.
We believe the non-GAAP financial information provides important supplemental
information to both management and investors regarding financial and business
trends used in assessing our financial condition and results of operations. We
believe that it is meaningful to provide the relative impact of impairment
charges and the corresponding tax impacts in order to present a better
understanding of our results on a period to period comparative basis.
The non-GAAP financial measures for operating income and margin, tax rate and
EPS assist investors with analyzing our business segment results as well as
with predicting future performance. In addition, these non-GAAP financial
measures are also reviewed by management in order to evaluate the financial
performance of each segment. They are the basis for performance reviews,
compensation and resource allocation. We believe that the presentation of
these non-GAAP financial measures will permit investors to assess the
performance of the Company on the same basis as management.
As a result, one should not consider these measures in isolation or as a
substitute for our results reported under GAAP. We compensate for these
limitations by analyzing results on a GAAP basis as well as a non-GAAP basis,
prominently disclosing GAAP results and providing reconciliations from GAAP
results to non-GAAP results.
INGERSOLL-RAND PLC
Reconciliation of non-GAAP to GAAP
(In millions)
UNAUDITED
For the quarter ended For the year ended
December 31, 2012 December 31, 2012
As Reported Margin As Margin
Reported
Climate
Solutions
Net revenues $ 1,838.5
Segment
operating $ 188.5 10.3 %
income
Other income (0.3 ) 0.0 %
(expense)
Depreciation
and 40.0 2.1 %
amortization
EBITDA $ 228.2 12.4 %
Industrial
Technologies
Net revenues $ 765.3
Segment
operating $ 123.3 16.1 %
income
Other income 0.8 0.1 %
(expense)
Depreciation
and 12.2 1.6 %
amortization
EBITDA $ 136.3 17.8 %
Residential
Solutions
Net revenues $ 421.7
Segment
operating $ 29.0 6.9 %
income
Other income 0.4 0.1 %
(expense)
Depreciation
and 24.7 5.8 %
amortization
EBITDA $ 54.1 12.8 %
Security
Technologies
Net revenues $ 444.7
Segment
operating $ 91.5 20.6 %
income
Other income 0.1 0.0 %
(expense)
Depreciation
and 9.0 2.0 %
amortization
EBITDA $ 100.6 22.6 %
Total Company
Net revenues $ 3,470.2 $ 14,034.9
Adjusted
operating $ 367.5 10.6 % $ 1,500.7 10.7 %
income
Other income - 0.0 % - 0.0 %
(expense)
Depreciation
and 90.1 2.6 % 375.5 2.7 %
amortization
EBITDA $ 457.6 13.2 % $ 1,876.2 13.4 %
The Company reports its financial results in accordance with generally
accepted accounting principles in the United States (GAAP). This
supplemental schedule provides adjusted non-GAAP financial information and a
quantitative reconciliation of the difference between the non-GAAP financial
measures and the financial measures calculated and reported in accordance
with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a
substitute for or superior to, financial measures calculated in accordance
with GAAP. They have limitations in that they do not reflect all of the
costs associated with the operations of our businesses as determined in
accordance with GAAP. In addition, these measures may not be comparable to
non-GAAP financial measures reported by other companies.
We believe the non-GAAP financial information provides important
supplemental information to both management and investors regarding
financial and business trends used in assessing our financial condition and
results of operations.
The non-GAAP financial measures of EBITDA and EBITDA margin assist investors
with analyzing our business segment results as well as with predicting
future performance. In addition, these non-GAAP financial measures are also
reviewed by management in order to evaluate the financial performance of
each segment. They are the basis for performance reviews, compensation and
resource allocation. We believe that the presentation of these non-GAAP
financial measures will permit investors to assess the performance of the
Company on the same basis as management.
As a result, one should not consider these measures in isolation or as a
substitute for our results reported under GAAP. We compensate for these
limitations by analyzing results on a GAAP basis as well as a non-GAAP
basis, prominently disclosing GAAP results and providing reconciliations
from GAAP results to non-GAAP results.
INGERSOLL-RAND PLC
Reconciliation of non-GAAP to GAAP
(In millions)
UNAUDITED
For the quarter ended December 31, 2011
As Reported Margin Hussmann As Adjusted Margin
Climate
Solutions
Net revenues $ 1,904.6 $ 36.8 $ 1,867.8
Segment
operating $ 192.9 10.1 % $ 2.5 $ 190.4 10.2 %
income
Other income 0.9 0.0 % - 0.9 0.0 %
(expense)
Depreciation
and 40.9 2.2 % - 40.9 2.2 %
amortization
EBITDA $ 234.7 12.3 % $ 2.5 $ 232.2 12.4 %
Industrial
Technologies
Net revenues $ 744.0
Segment
operating $ 113.9 15.3 %
income
Other income (2.1 ) -0.3 %
(expense)
Depreciation
and 13.2 1.8 %
amortization
EBITDA $ 125.0 16.8 %
Residential
Solutions
Net revenues $ 442.9
Segment
operating $ (5.2 ) -1.2 %
income
Other income 0.3 0.1 %
(expense)
Depreciation
and 28.5 6.4 %
amortization
EBITDA $ 23.6 5.3 %
Security
Technologies
Net revenues $ 415.2
Segment
operating $ 79.4 19.1 %
income
Other income 0.4 0.1 %
(expense)
Depreciation
and 9.0 2.2 %
amortization
EBITDA $ 88.8 21.4 %
Total
Company
Net revenues $ 3,506.7 $ 36.8 $ 3,469.9
Adjusted
operating $ 334.5 9.5 % $ 2.5 $ 332.0 9.6 %
income
Other income (1.6 ) 0.0 % - (1.6 ) -0.1 %
(expense)
Depreciation
and 100.6 2.9 % - 100.6 2.9 %
amortization
EBITDA $ 433.5 12.4 % $ 2.5 $ 431.0 12.4 %
The Company reports its financial results in accordance with generally
accepted accounting principles in the
United States (GAAP). This supplemental schedule provides adjusted non-GAAP
financial information and a
quantitative reconciliation of the difference between the non-GAAP financial
measures and the financial measures
calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a
substitute for or superior to,
financial measures calculated in accordance with GAAP. They have limitations
in that they do not reflect all
of the costs associated with the operations of our businesses as determined
in accordance with GAAP. In
addition, these measures may not be comparable to non-GAAP financial
measures reported by other companies.
We believe the non-GAAP financial information provides important
supplemental information to both management and
investors regarding financial and business trends used in assessing our
financial condition and results of
operations.
The non-GAAP financial measures of EBITDA and EBITDA margin assist investors
with analyzing
our business segment results as well as with predicting future performance.
In addition, these non-GAAP financial
measures are also reviewed by management in order to evaluate the financial
performance of each segment. They
are the basis for performance reviews, compensation and resource allocation.
We believe that the presentation
of these non-GAAP financial measures will permit investors to assess the
performance of the Company on the same
basis as management.
As a result, one should not consider these measures in isolation or as a
substitute for our results reported
under GAAP. We compensate for these limitations by analyzing results on a
GAAP basis as well as a non-GAAP
basis, prominently disclosing GAAP results and providing reconciliations
from GAAP results to non-GAAP results.
INGERSOLL-RAND PLC
Reconciliation of non-GAAP to GAAP
(In millions)
UNAUDITED
For the year ended December 31, 2011
As Margin Hussmann As Margin
Reported Adjusted
Total
Company
Net revenues $ 14,782.0 $ 818.5 $ 13,963.5
Adjusted
operating $ 1,507.2 10.2 % $ 58.6 $ 1,448.6 10.4 %
income
Other income - 0.0 % - - 0.0 %
(expense)
Depreciation
and 402.7 2.7 % - 402.7 2.9 %
amortization
EBITDA $ 1,909.9 12.9 % $ 58.6 $ 1,851.3 13.3 %
The Company reports its financial results in accordance with generally
accepted accounting principles in the
United States (GAAP). This supplemental schedule provides adjusted non-GAAP
financial information and a
quantitative reconciliation of the difference between the non-GAAP financial
measures and the financial measures
calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a
substitute for or superior to,
financial measures calculated in accordance with GAAP. They have limitations
in that they do not reflect all
of the costs associated with the operations of our businesses as determined in
accordance with GAAP. In
addition, these measures may not be comparable to non-GAAP financial measures
reported by other companies.
We believe the non-GAAP financial information provides important supplemental
information to both management and
investors regarding financial and business trends used in assessing our
financial condition and results of
operations.
The non-GAAP financial measures of EBITDA and EBITDA margin assist investors
with analyzing
our business segment results as well as with predicting future performance. In
addition, these non-GAAP financial
measures are also reviewed by management in order to evaluate the financial
performance of each segment. They
are the basis for performance reviews, compensation and resource allocation.
We believe that the presentation
of these non-GAAP financial measures will permit investors to assess the
performance of the Company on the same
basis as management.
As a result, one should not consider these measures in isolation or as a
substitute for our results reported
under GAAP. We compensate for these limitations by analyzing results on a GAAP
basis as well as a non-GAAP
basis, prominently disclosing GAAP results and providing reconciliations from
GAAP results to non-GAAP results.
INGERSOLL-RAND PLC
Reconciliation of non-GAAP to GAAP
(In millions)
UNAUDITED
For the year ended For the year ended
December 31, 2010 December 31, 2009
As Reported Margin As Margin
Reported
Total Company
Net revenues $ 14,001.1 $ 13,009.1
Operating $ 1,261.4 9.0 % $ 885.2 6.8 %
income
Other income - 0.0 % - 0.0 %
(expense)
Depreciation
and 436.8 3.1 % 421.5 3.2 %
amortization
EBITDA $ 1,698.2 12.1 % $ 1,306.7 10.0 %
The Company reports its financial results in accordance with generally
accepted accounting principles in the United States (GAAP). This supplemental
schedule provides adjusted non-GAAP financial information and a quantitative
reconciliation of the difference between the non-GAAP financial measures and
the financial measures calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a
substitute for or superior to, financial measures calculated in accordance
with GAAP. They have limitations in that they do not reflect all of the costs
associated with the operations of our businesses as determined in accordance
with GAAP. In addition, these measures may not be comparable to non-GAAP
financial measures reported by other companies.
We believe the non-GAAP financial information provides important supplemental
information to both management and investors regarding financial and business
trends used in assessing our financial condition and results of operations.
The non-GAAP financial measures of EBITDA and EBITDA margin assist investors
with analyzing our business segment results as well as with predicting future
performance. In addition, these non-GAAP financial measures are also reviewed
by management in order to evaluate the financial performance of each segment.
They are the basis for performance reviews, compensation and resource
allocation. We believe that the presentation of these non-GAAP financial
measures will permit investors to assess the performance of the Company on the
same basis as management.
As a result, one should not consider these measures in isolation or as a
substitute for our results reported under GAAP. We compensate for these
limitations by analyzing results on a GAAP basis as well as a non-GAAP basis,
prominently disclosing GAAP results and providing reconciliations from GAAP
results to non-GAAP results.
INGERSOLL-RAND PLC
Condensed Consolidated Balance Sheets
(In millions)
UNAUDITED
December 31, December 31,
2012 2011
ASSETS
Cash and cash equivalents $ 882.1 $ 1,160.7
Accounts and notes receivable, net 2,157.5 2,135.6
Inventories 1,308.8 1,278.3
Other current assets 594.3 704.6
Total current assets 4,942.7 5,279.2
Property, plant and equipment, net 1,652.6 1,639.4
Goodwill 6,138.9 6,104.0
Intangible assets, net 4,200.9 4,333.6
Other noncurrent assets 1,557.8 1,487.9
Total assets $ 18,492.9 $ 18,844.1
LIABILITIES AND EQUITY
Accounts payable $ 1,230.2 $ 1,224.2
Accrued expenses and other current 1,967.4 2,138.1
liabilities
Short-term borrowings and current 963.7 763.3
maturities of long-term debt
Total current liabilities 4,161.3 4,125.6
Long-term debt 2,269.3 2,879.3
Other noncurrent liabilities 4,833.0 4,823.5
Equity 7,229.3 7,015.7
Total liabilities and equity $ 18,492.9 $ 18,844.1
INGERSOLL-RAND PLC
Condensed Consolidated Statement of Cash Flow
(In millions)
UNAUDITED
Twelve Months
Ended December 31,
2012 2011
Operating Activities
Income from continuing operations $ 1,049.7 $ 426.1
Loss (Gain) on sale/asset impairment (4.5 ) 646.9
Depreciation and amortization 375.5 402.7
Changes in assets and liabilities and (143.0 ) (245.5 )
other non-cash items
Net cash from operating activities of 1,277.7 1,230.2
continuing operations
Net cash from operating activities of (96.8 ) (43.4 )
discontinued operations
Net cash from operating activities 1,180.9 1,186.8
Investing Activities
Capital expenditures (262.6 ) (242.9 )
Proceeds from business dispositions, net 52.7 400.3
of cash
Other investing activities, net 63.5 50.1
Net cash from investing activities of (146.4 ) 207.5
continuing operations
Net cash from investing activities of - -
discontinued operations
Net cash from investing activities (146.4 ) 207.5
Financing Activities
Net debt proceeds (repayments) (414.8 ) (54.0 )
Dividends paid (213.1 ) (163.5 )
Repurchase of ordinary shares (839.8 ) (1,157.5 )
Other financing activities, net 163.8 128.6
Net cash from financing activities of (1,303.9 ) (1,246.4 )
continuing operations
Net cash from financing activities of - -
discontinued operations
Net cash from financing activities (1,303.9 ) (1,246.4 )
Effect of exchange rate changes on cash (9.2 ) (1.5 )
and cash equivalents
Net increase (decrease) in cash and cash (278.6 ) 146.4
equivalents
Cash and cash equivalents - beginning of 1,160.7 1,014.3
period
Cash and cash equivalents - end of $ 882.1 $ 1,160.7
period
INGERSOLL-RAND PLC
Balance Sheet Metrics and Available Cash Flow
($ in millions)
UNAUDITED
December 31, December 31,
2011 2012
Net Receivables $ 2,136 $ 2,158
Days Sales Outstanding 56.2 56.7
Net Inventory $ 1,278 $ 1,309
Inventory Turns 7.7 7.4
Accounts Payable $ 1,224 $ 1,230
Days Payable Outstanding 45.1 46.6
Twelve Months
Ended
December 31, 2012
Cash flow from operating activities $ 1,180.9
(a)
Capital expenditures (a) (262.6 )
Available cash flow $ 918.3
(a) Includes both continuing and discontinued operations.
The Company reports its financial results in accordance with generally
accepted accounting principles in the
United States (GAAP). This supplemental schedule provides adjusted
non-GAAP financial information and a
quantitative reconciliation of the difference between the non-GAAP
financial measure and the financial measure
calculated and reported in accordance with GAAP.
The non-GAAP financial measure should be considered supplemental to, not a
substitute for or superior to,
the financial measure calculated in accordance with GAAP. It has
limitations in that it does not reflect all
of the costs associated with the operations of our businesses as
determined in accordance with GAAP. In
addition, this measure may not be comparable to non-GAAP financial
measures reported by other companies.
We believe the non-GAAP financial information provides important
supplemental information to both management
and investors regarding financial and business trends used in assessing
our financial condition and cash flow.
The non-GAAP financial measure of available cash flow assists investors
with analyzing our business results
as well as with predicting future performance. In addition, this non-GAAP
financial measure is reviewed by
management in order to evaluate the financial performance of each segment
as well as the Company as a whole.
It is the basis for performance reviews, compensation and resource
allocation. We believe that the presentation
of this non-GAAP financial measure will permit investors to assess the
performance of the Company on the same
basis as management.
As a result, one should not consider this measure in isolation or as a
substitute for our results reported under
GAAP. We compensate for these limitations by analyzing results on a GAAP
basis as well as a non-GAAP basis,
prominently disclosing GAAP results and providing reconciliations from
GAAP results to non-GAAP results.
Contact:
Ingersoll-Rand plc
Media:
Misty Zelent, 704-655-5324
mzelent@irco.com
or
Investors and Financial Analysts:
Joe Fimbianti, 704-655-4721
joseph_fimbianti@irco.com
or
Janet Pfeffer, 704-655-5319
janet_pfeffer@irco.com
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