Cooper Industries Reports Strong Fourth Quarter Results
Share:
Earnings Per Share of $.85 As Core Revenues Increase a Record 14 Percent
DUBLIN, Jan. 26, 2011 - Cooper Industries plc CBE reported core revenue growth of 14.1 percent as revenue reached $1.26 billion compared with $1.10 billion for the same period last year, excluding Tools segment revenue in 2009. Fourth quarter 2010 earnings per share from operations increased 12 percent to $.85 (diluted) compared with $.76 per share for the fourth quarter of 2009. For the quarter currency translation reduced reported revenues by 0.6 percent and acquisitions added 0.7 percent compared to the prior year.
"We are very pleased to report record core revenue growth in the fourth quarter for the combined Electrical Segments, a result of the improving conditions in our global end-markets and the continued success of our key growth initiatives. Our core growth accelerated in the quarter, as our industrial markets remained strong, utility markets continued to improve and demand for energy-efficient lighting technologies such as LED gained additional momentum. Additionally, we benefited from previous investments in strategic growth initiatives as both new product sales and international sales as a percent of total revenues were at all-time highs in the quarter. Incremental margins were somewhat muted by increasing commodity costs, the negative fixed cost absorption impact of inventory reductions and non-recurring legal and acquisition costs," said Cooper Industries' Chairman and Chief Executive Officer Kirk S. Hachigian.
Revenues for the twelve months of 2010 were $4.75 billion, a 5.4 percent increase from the $4.51 billion in revenues for the twelve months of 2009, excluding the Tools segment revenues. For 2010, net income excluding the loss on the Tools Joint Venture recognized in the second quarter was $537.5 million, compared with $413.6 million from continuing operations for the prior year of 2009. Diluted earnings per share of $3.20, excluding the loss on the Tools Joint Venture, increased 30.1 percent compared with prior year's earnings per share of $2.46 from continuing operations.
During 2010 Cooper generated $606.6 million in free cash flow. Our total debt net of cash as of December 31 was $393.4 million, which results in a 10.9 percent net debt to capitalization ratio. "This is the tenth consecutive year we have reported free cash flow from operations greater than earnings from continuing operations. Our ability to generate strong free cash flow through all business cycles has provided us the flexibility to execute a consistent, well balanced capital allocation program. During the fourth quarter, we successfully issued $250 million of 5-year senior unsecured notes and $250 million of 10-year senior unsecured notes at a blended interest rate of 3.125 percent. With an exceptionally strong balance sheet, we continued to fund our core growth initiatives and are well positioned to capitalize on an improving acquisition pipeline as demonstrated by the three acquisitions completed in the fourth quarter of 2010 around our strategic growth platforms," said Hachigian.
Segment Results
Energy & Safety Solutions segment revenues for the fourth quarter of 2010 increased 15.0 percent to $676.7 million, compared with $588.5 million in the fourth quarter 2009. Core revenues were 14.9 percent higher than the comparable prior year period with currency translation decreasing reported revenues 1.2 percent and acquisitions adding 1.3 percent. Segment operating earnings were $113.8 million, an increase of over 21 percent from the $93.8 million in the prior year's fourth quarter. Segment operating margin increased 90 basis points to 16.8 percent for the fourth quarter 2010, compared to the fourth quarter of 2009 as a result of previous and ongoing cost reduction actions and favorable leverage of fixed costs from higher revenue.
Revenues for the twelve months of 2010 increased 4.1 percent to $2.52 billion, compared to $2.42 billion for 2009. Segment operating earnings for 2010 increased to $424.7 million, compared to $374.9 million in the prior-year. For 2010 the segment operating margin increased 140 basis points to 16.9 percent, compared to the twelve months of 2009.
Electrical Products Group segment revenues for the fourth quarter of 2010 increased 13.3 percent to $583.2 million, compared with $514.6 million in the fourth quarter 2009. Core revenues were 13.0 percent higher than prior year, with currency translation increasing reported results 0.2 percent and acquisitions adding 0.1 percent. Segment operating earnings were $80.4 million, an increase of nearly 4 percent from the $77.4 million reported in the prior year's fourth quarter. Segment operating margin decreased 120 basis points to 13.8 percent for the fourth quarter of 2010, compared to the fourth quarter of 2009 driven by the under absorption of fixed costs as a result of reductions in inventory, increasing commodity costs, prior year LIFO benefits and continued facility rationalization.
Revenues for the full year 2010 increased 6.8 percent to $2.24 billion, compared to $2.10 billion for the same period last year. Segment operating earnings for the twelve months of 2010 increased to $330.7 million compared to $263.3 million in the prior-year period.
As a result of the creation of the Apex Tool Group joint venture on July 4, 2010, the Tools business was deconsolidated in the third quarter 2010. Equity income from the Apex Tool Group joint venture of $12.3 million is included in operating earnings in the fourth quarter 2010. Tools segment reported operating earnings of $12.7 million in the fourth quarter of 2009. The second quarter 2010 results included a non-cash after-tax charge related to the formation of the JV of $93.7 million or $.56 per share which was primarily related to the recognition of cumulative translation losses.
Outlook
"We exit 2010 with strong core revenue growth performance, improving end-markets, and an exceptionally strong balance sheet. Our diverse portfolio and exposure to emerging global markets, innovative products and technologies have us well positioned for solid growth in 2011 and beyond. We will continue to fund our core businesses, invest in new products and technologies and increase our presence in strategic international markets to drive future growth. Our balance sheet provides us with the financial flexibility to make strategic acquisitions and continue to return capital to our shareholders," commented Hachigian.
"For 2011 we are forecasting earnings per share from continuing operations of $3.60 to $3.80. This guidance assumes full-year revenue growth of 6 to 9 percent, excluding Tools segment revenue from 2010. For the first quarter of 2011 we expect earnings per share of $.80 to $.84 with revenue up 10 to 14 percent compared to the first quarter of 2010, again excluding Tools revenue. First quarter 2011 guidance includes a tax rate assumption of 19 to 20 percent which negatively impacts results by approximately $.05 per share compared to the fourth quarter of 2010," said Hachigian.
About Cooper Industries
Cooper Industries plc CBE is a global electrical products manufacturer with 2010 revenues of $5.1 billion. Founded in 1833, Cooper's sustained success is attributable to a constant focus on innovation, evolving business practices while maintaining the highest ethical standards, and meeting customer needs. The Company has seven operating divisions with leading market positions and world-class products and brands including: Bussmann electrical and electronic fuses; Crouse-Hinds and CEAG explosion-proof electrical equipment; Halo and Metalux lighting fixtures; and Kyle and McGraw-Edison power systems products. With this broad range of products, Cooper is uniquely positioned for several long-term growth trends including the global infrastructure build-out, the need to improve the reliability and productivity of the electric grid, the demand for higher energy-efficient products and the need for improved electrical safety. In 2010 fifty-nine percent of total sales were to customers in the industrial and utility end-markets and thirty-nine percent of total sales were to customers outside the United States. Cooper has manufacturing facilities in 21 countries as of 2010. For more information, visit the website at www.cooperindustries.com.
Comparisons of 2010 and 2009 fourth quarter results appear on the following pages.
Conference Call
Cooper will hold a conference call today at 12:00 noon EST to provide shareholders and other interested parties an overview of the Company's fourth quarter 2010 performance. Those interested in hearing the conference call may listen via telephone by dialing (888) 873-4896 using pass code 98251838, or over the Internet in the "Investors" section of the company website, www.cooperindustries.com. International callers should dial (617) 213-8850 and use pass code 98251838.
The conference call may include non-GAAP financial measures. Cooper will post a reconciliation of those measures to the most directly comparable GAAP measures in the "Investors" section of the Company's website, www.cooperindustries.com.
Informational exhibits concerning the Company's fourth quarter performance that may be referred to during the conference call will be available in the "Investors" section of the Company's website, www.cooperindustries.com prior to the beginning of the call.
Contact:
Mark Doheny
Director, Investor Relations
713-209-8484
Mark.Doheny@cooperindustries.com
