Swiss security products maker Tyco International Ltd. (TYC) reported Friday a profit for the third quarter that plunged from last year, which was boosted by asset sale gains. The results also reflected lower operating margins and a revenue drop amid currency headwinds.
Adjusted earnings per share from continuing operations topped analysts' expectations, while quarterly revenues missed their estimates. The company also trimmed earnings outlook for full-year 2015.
"While we were disappointed with our top-line growth, we once again demonstrated our ability to leverage and accelerate internal productivity and cost containment initiatives to deliver on our earnings commitment for the quarter," CEO George Oliver said.
The Schaffhausen, Switzerland-based company posted net income attributable to ordinary shareholders of $156 million or $0.37 per share for the third quarter, sharply lower than $1.45 billion or $3.11 per share in the year-ago quarter.
Income from continuing operations for the quarter more than halved to $188 million or $0.44 per share from $435 million or $0.93 per share in the prior-year quarter.
Results for the latest quarter include net charges of $0.15 per share, while the year-ago quarter included net gains of $0.39 per share.
Before special items, adjusted income from continuing operations for the quarter was $251 million or $0.59 per share, compared to $254 million or $0.54 per share in the year-ago quarter.
On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenue for the quarter decreased 6.4 percent to $2.49 billion from $2.66 billion in the same quarter last year, and missed fourteen Wall Street analysts' consensus estimate of $2.52 billion.
The revenue decline was due to a 6.9 percent negative impact of the stronger U.S. dollar against foreign currencies. Organic revenue declined 1 percent.
Organic revenue declined 1.1 percent. Acquisitions contributed 2.4 percentage points of growth, which was partially offset by a 0.8 percent impact of a divestiture.
North America installation & services revenues edged up 0.4 percent to $972 million, while global products revenue decreased 3 percent to $675 million, and Rest of World installation & services revenue declined 16 percent to $842 million from last year.
Operating margin for the quarter contracted 100 basis points to 10.2 percent from last year's 11.2 percent. Selling, general and administrative expenses declined to $625 million from $671 million a year ago.
"We produced strong margin expansion of 90 basis points, driven by an improvement in fundamentals in our North America Installation & Services business. That, combined with additional restructuring actions, position us well to achieve 12% to 13% EPS growth for the year," Oliver added.
Looking ahead to the fourth quarter, the company expects adjusted earnings in a range of $0.60 to $0.62 per share, while analysts expect $0.63 per share.
For fiscal 2015, the company now expects adjusted earnings guidance in a range of $2.23 to $2.25 per share, compared to the previous projection of $2.23 to $2.27 per share. The Street is currently looking for full-year 2015 earnings of $2.23 per share.
TYC closed Thursday's regular trading session at $36.93, up $0.31 on a volume of 3.39 million shares. In the past 52-week period, the stock has been trading in a range of $35.92 to $45.24.
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