Security products maker Tyco International Ltd. (TYC) reported Tuesday a lower third-quarter profit, reflecting mainly separation costs as well as charges related to restructuring and asset impairment. Adjusted earnings, excluding items, beat analysts' expectations, while topline missed their view.
According to the company, the proposed separation of Tyco into three independent companies with the spin-offs of ADT and Flow Control business, and merger of flow control business with Pentair Inc. (PNR), remains on track for completion at the end of September.
In March end, water systems firm Pentair signed a definitive agreement with Switzerland-based Tyco International to combine Tyco's Flow Control business segment with Pentair in a tax-free, all-stock merger.
In the third quarter, net income attributable to common shareholders declined to $242 million or $0.51 per share from $359 million or $0.76 per share reported last year.
Earnings per share from continuing operations in the recent quarter was $0.54 per share. The company classified its Fire Equipment de Mexico, S.A. business as a discontinued operation in connection with Tyco's sale of the business.
Income from continuing operations in the fiscal third quarter was negatively impacted by special items totaling $0.47 per share, mainly related to a change in valuation methodology associated with asbestos liabilities; along with separation costs, restructuring activities and a legacy legal settlement.
Excluding special items, earnings from continuing operations were $1.01 per share, up from $0.85 per share in the prior year. On average, 15 analysts polled by Thomson Reuters expected the company to earn $0.93 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter grew 4 percent to $4.46 billion, but came in below analysts' consensus of $4.54 billion. Organic revenue grew 5 percent from last year.
Ed Breen, chairman and chief executive officer of the company said, "Our third quarter results reflect good top-line growth and strong operating performance across our businesses which helped us deliver a 19% increase in earnings per share."
Effective in the second quarter, the company reorganized its management and reporting structure in anticipation of the spin-offs of ADT North American Residential and Flow Control businesses.
As per the new reporting structure, the former Tyco Security Solutions segment has been split between the new ADT North American Residential segment and the new Fire & Security segment. The Flow Control segment continues as previously constituted.
Revenues from Fire & Security increased 3 percent from last year, ADT revenues were up 4 percent, and revenues from Flow Control grew 6 percent from a year ago.
TYC closed Monday's regular trading at $53.78 on the NYSE.
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