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Eaton First Quarter Net Income Per Share Rises 80 Percent
Dépèche transmise le 20 avril 2011 par Business Wire
Eaton First Quarter Net Income Per Share Rises 80 Percent
CLEVELAND--(BUSINESS WIRE)--Diversified industrial manufacturer Eaton Corporation (NYSE:ETN) today announced net income per share of $0.83 for the first quarter of 2011, an increase of 80 percent over the first quarter of 2010. Sales in the quarter were $3.8 billion, 23 percent above the same period in 2010. Net income was $287 million, up 85 percent over the first quarter of 2010.
“The joint venture will focus on the design and manufacture of fuel and hydraulic conveyance systems.”
Net income in both periods included charges for integration of acquisitions. Before acquisition integration charges, operating earnings per share in the first quarter of 2011 was $0.84, an increase of 75 percent over the first quarter of 2010. Operating earnings for the first quarter of 2011 were $289 million, an increase of 80 percent over 2010.
Alexander M. Cutler, Eaton chairman and chief executive officer, said, “We had a strong first quarter, with earnings per share above the high end of our increased earnings guidance provided at the end of February. Our markets enjoyed strong growth during the first quarter, increasing 14 percent compared to the first quarter of 2010. The sales growth in the first quarter of 23 percent consisted of 19 percent organic growth, 2 percent from acquisitions, and 2 percent from higher foreign exchange rates.
“Our Electrical Americas, Hydraulics, and Truck markets grew more strongly than anticipated and we are increasing our expectations for the growth of these three markets in 2011,” said Cutler. “As a result, we now anticipate our markets for all of 2011 will grow by 10 percent.
“We anticipate net income per share for the second quarter of 2011 to be between $0.89 and $0.95 and operating earnings per share, which exclude charges to integrate our recent acquisitions, to be between $0.90 and $0.96. As a result of our strong first quarter and our slightly stronger market outlook for the year, we are raising our full year guidance by $0.15 for net income per share to between $3.66 and $3.96 and for operating earnings per share to between $3.70 and $4.00.”
Business Segment Results
Sales for the Electrical Americas segment were $964 million, up 20 percent over 2010. The sales increase was made up of a 15 percent increase in core sales, 4 percent from acquisitions, and 1 percent from foreign exchange. Operating profits were $132 million. Excluding acquisition integration charges of $3 million during the quarter, operating profits were $135 million, up 27 percent over the first quarter of 2010.
“End markets for our Electrical Americas segment grew 14 percent in the first quarter,” said Cutler. “We saw solid growth in our industrial markets, and we continue to believe nonresidential construction activity is on track to begin recovering by the middle of this year.
“Our bookings in the Electrical Americas segment were up 21 percent from the first quarter a year ago,” said Cutler. “We are revising our estimate of the growth in 2011 of the Electrical Americas markets to 7 percent, 1 percent higher than our prior estimate.”
Sales for the Electrical Rest of World segment were $743 million, up 22 percent over the first quarter of 2010. Our Electrical Rest of World markets grew 9 percent in the quarter. The segment reported operating profits of $70 million, compared to operating profits of $42 million in the first quarter of 2010. Bookings in the quarter grew 9 percent over the first quarter of 2010.
“During the quarter, we reached agreement to acquire ACTOM (Pty) Limited’s low-voltage electrical business in South Africa,” said Cutler. “This acquisition provides us with a solid position in the South African electrical market, as well as a platform for growth in southern Africa.”
Hydraulics segment sales were $685 million, an increase of 40 percent compared to the first quarter of 2010. Global hydraulics markets increased 27 percent in the quarter compared to the first quarter of 2010. Operating profits in the first quarter were $106 million, an increase of 96 percent over the first quarter of 2010.
“The hydraulics markets in the first quarter continued their ‘V’ shape recovery from the sharp downturn of 2008-2009,” said Cutler. “Bookings in the quarter grew 39 percent over the first quarter of 2010, establishing a new quarterly bookings record. For all of 2011, we now believe hydraulics markets are likely to grow by 18 percent, up from our prior estimate of 16 percent.
“We were particularly pleased with the record quarterly margin of 15.5 percent,” said Cutler. “We believe this business is likely to earn margins of this level for the full year.
“We completed the acquisition of Tuthill Couplings on January 1,” said Cutler. “This acquisition further expands our offerings of hydraulic and pneumatic quick connect coupling solutions.
“We signed an agreement in March to acquire Internormen Technology Group, a leader in hydraulic filtration and instrumentation based in Germany,” said Cutler. “This acquisition significantly expands our portfolio of filtration products and adds additional presence in emerging markets.”
Aerospace segment sales were $389 million, up 3 percent over the first quarter of 2010. Aerospace markets grew 2 percent compared to the first quarter of 2010. Operating profits in the first quarter were $45 million, a decline of 8 percent compared to a year earlier.
“Our margins in Aerospace were impacted during the quarter by increased expenses stemming from changes in scope, program delays, and execution of new customer programs,” said Cutler. “We anticipate that margins will likely improve by the second half of the year.
“We were pleased to establish our new joint venture in China with Shanghai Aircraft Manufacturing Co., Ltd., a subsidiary of Commercial Aircraft Corporation of China (COMAC), to produce products for the new COMAC C919 single-aisle passenger aircraft,” said Cutler. “The joint venture will focus on the design and manufacture of fuel and hydraulic conveyance systems.”
The Truck segment posted sales of $576 million, up 27 percent compared to the first quarter of 2010. Truck markets increased by 20 percent in the first quarter. The segment reported operating profits in the first quarter of $90 million, an increase of 96 percent over the first quarter of 2010.
“U.S. truck markets accelerated in the first quarter, growing 36 percent compared to the first quarter in 2010 and 16 percent over the fourth quarter of 2010,” said Cutler. “Our non-U.S. markets grew 9 percent.
“We were pleased with the 15.6 percent operating margin our Truck segment posted in the first quarter,” said Cutler. “As the NAFTA Class 8 market continues to expand over the course of this year, we believe margins will improve even further.”
The Automotive segment posted first quarter sales of $446 million, up 19 percent from the first quarter of 2010. Global automotive markets were up 13 percent. The segment reported operating profits of $50 million, up 19 percent compared to the first quarter of 2010.
“Global auto markets posted strong growth in the first quarter,” said Cutler. “U.S. markets grew 17 percent while markets outside the U.S. grew 12 percent.”
Eaton Corporation is a diversified power management company with 2010 sales of $13.7 billion. Celebrating its 100th anniversary in 2011, Eaton is a global technology leader in electrical components and systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and military use; and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. Eaton has approximately 70,000 employees and sells products to customers in more than 150 countries. For more information, visit www.eaton.com.
Notice of conference call: Eaton’s conference call to discuss its first quarter results is available to all interested parties as a live audio webcast today at 10 a.m. Eastern time via a link on the center of Eaton’s home page. This news release can be accessed under its headline on the home page. Also available on the website prior to the call will be a presentation on first quarter results, which will be covered during the call.
This news release contains forward-looking statements concerning second quarter and full year 2011 net income per share and operating earnings per share, and our worldwide markets. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company’s control. The following factors could cause actual results to differ materially from those in the forward-looking statements: unanticipated changes in the markets for the company’s business segments; unanticipated downturns in business relationships with customers or their purchases from us; competitive pressures on sales and pricing; increases in the cost of material and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest; the impact of acquisitions and divestitures; unanticipated difficulties integrating acquisitions; new laws and governmental regulations; interest rate changes; stock market and currency fluctuations; and unanticipated deterioration of economic and financial conditions in the United States and around the world. We do not assume any obligation to update these forward-looking statements.
Financial Results
The company’s comparative financial results for the three months ended March 31, 2011 are available on the company’s website, www.eaton.com.
| EATON CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| Three months ended | ||||||||
| (In millions except for per share data) | March 31 | |||||||
| 2011 | 2010 | |||||||
| Net sales | $ | 3,803 | $ | 3,103 | ||||
| Cost of products sold | 2,682 | 2,201 | ||||||
| Selling and administrative expense | 665 | 587 | ||||||
| Research and development expense | 105 | 101 | ||||||
| Interest expense-net | 32 | 35 | ||||||
| Other income-net | (16 | ) | (8 | ) | ||||
| Income before income taxes | 335 | 187 | ||||||
| Income tax expense | 49 | 31 | ||||||
| Net income | 286 | 156 | ||||||
| Adjustment for net income (loss) for noncontrolling interests | 1 | (1 | ) | |||||
| Net income attributable to Eaton common shareholders | $ | 287 | $ | 155 | ||||
| Net income per common share | ||||||||
| Diluted | $ | 0.83 | $ | 0.46 | ||||
| Basic | 0.84 | 0.46 | ||||||
| Weighted-average number of common shares outstanding | ||||||||
| Diluted | 345.7 | 339.2 | ||||||
| Basic | 340.1 | 334.2 | ||||||
| Cash dividends paid per common share | $ | 0.34 | $ | 0.25 | ||||
| Reconciliation of net income attributable to Eaton common | ||||||||
| shareholders to operating earnings | ||||||||
| Net income attributable to Eaton common shareholders | $ | 287 | $ | 155 | ||||
| Excluding acquisition integration charges (after-tax) | 2 | 6 | ||||||
| Operating earnings | $ | 289 | $ | 161 | ||||
| Net income per common share - diluted | $ | 0.83 | $ | 0.46 | ||||
| Excluding per share impact of acquisition integration charges (after-tax) | 0.01 | 0.02 | ||||||
| Operating earnings per common share | $ | 0.84 | $ | 0.48 | ||||
|
Net income per common share, weighted-average number of common
shares outstanding, cash dividends paid per |
||||||||
| See accompanying notes. | ||||||||
| EATON CORPORATION | ||||||||||
| BUSINESS SEGMENT INFORMATION | ||||||||||
| Three months ended | ||||||||||
| (In millions) | March 31 | |||||||||
| 2011 | 2010 | |||||||||
| Net sales | ||||||||||
| Electrical Americas | $ | 964 | $ | 802 | ||||||
| Electrical Rest of World | 743 | 608 | ||||||||
| Hydraulics | 685 | 490 | ||||||||
| Aerospace | 389 | 376 | ||||||||
| Truck | 576 | 453 | ||||||||
| Automotive | 446 | 374 | ||||||||
| Total net sales | $ | 3,803 | $ | 3,103 | ||||||
| Segment operating profit | ||||||||||
| Electrical Americas | $ | 132 | $ | 105 | ||||||
| Electrical Rest of World | 70 | 42 | ||||||||
| Hydraulics | 106 | 54 | ||||||||
| Aerospace | 45 | 49 | ||||||||
| Truck | 90 | 46 | ||||||||
| Automotive | 50 | 42 | ||||||||
| Total segment operating profit | 493 | 338 | ||||||||
| Corporate | ||||||||||
| Amortization of intangible assets | (48 | ) | (45 | ) | ||||||
| Interest expense-net | (32 | ) | (35 | ) | ||||||
| Pension and other postretirement benefits expense | (33 | ) | (32 | ) | ||||||
| Other corporate expense-net | (45 | ) | (39 | ) | ||||||
| Income before income taxes | 335 | 187 | ||||||||
| Income tax expense | 49 | 31 | ||||||||
| Net income | 286 | 156 | ||||||||
| Adjustment for net income (loss) for noncontrolling interests | 1 | (1 | ) | |||||||
| Net income attributable to Eaton common shareholders | $ | 287 | $ | 155 | ||||||
| See accompanying notes. | ||||||||||
| EATON CORPORATION | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| March 31, | December 31, | ||||||||||
| (In millions) | 2011 | 2010 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 201 | $ | 333 | |||||||
| Short-term investments | 496 | 838 | |||||||||
| Accounts receivable-net | 2,466 | 2,239 | |||||||||
| Inventory | 1,667 | 1,564 | |||||||||
| Other current assets | 640 | 532 | |||||||||
| Total current assets | 5,470 | 5,506 | |||||||||
| Property, plant and equipment-net | 2,523 | 2,477 | |||||||||
|
Other noncurrent assets |
|||||||||||
| Goodwill | 5,569 | 5,454 | |||||||||
| Other intangible assets | 2,304 | 2,272 | |||||||||
| Deferred income taxes and other noncurrent assets | 1,471 | 1,543 | |||||||||
| Total assets | $ | 17,337 | $ | 17,252 | |||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Short-term debt | $ | 93 | $ | 72 | |||||||
| Current portion of long-term debt | 4 | 4 | |||||||||
| Accounts payable | 1,456 | 1,408 | |||||||||
| Accrued compensation | 300 | 465 | |||||||||
| Other current liabilities | 1,348 | 1,284 | |||||||||
| Total current liabilities | 3,201 | 3,233 | |||||||||
| Non-current liabilities | |||||||||||
| Long-term debt | 3,354 | 3,382 | |||||||||
| Pension liabilities | 1,207 | 1,429 | |||||||||
| Other postretirement benefits liabilities | 741 | 743 | |||||||||
| Deferred income taxes and other long-term liabilities | 1,010 | 1,062 | |||||||||
| Total noncurrent liabilities | 6,312 | 6,616 | |||||||||
| Shareholders' equity | |||||||||||
| Eaton shareholders' equity | 7,783 | 7,362 | |||||||||
| Noncontrolling interests | 41 | 41 | |||||||||
| Total equity | 7,824 | 7,403 | |||||||||
| Total liabilities and equity | $ | 17,337 | $ | 17,252 | |||||||
| See accompanying notes. | |||||||||||
EATON CORPORATION
NOTES TO THE FIRST QUARTER 2011 EARNINGS RELEASE
Amounts are in millions of dollars unless indicated otherwise (per share data assume dilution).
On January 27, 2011, Eaton’s Board of Directors announced a two-for-one stock split of the Company’s common shares effective in the form of a 100% stock dividend. The record date for the stock split was February 7, 2011, and the additional shares were distributed on February 28, 2011. Accordingly, all per share amounts and average shares outstanding presented in this earnings release have been adjusted retroactively to reflect the stock split.
This earnings release includes certain non-GAAP financial measures. These financial measures include operating earnings, operating earnings per common share, and operating profit before acquisition integration charges for each business segment, each of which excludes amounts that differ from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of each of these financial measures to the most directly comparable GAAP measure is included in this earnings release. Management believes that these financial measures are useful to investors because they exclude transactions of an unusual nature, allowing investors to more easily compare Eaton's financial performance period to period. Management uses this information in monitoring and evaluating the on-going performance of Eaton and each business segment.
Note 1. ACQUISITIONS OF BUSINESSES
In 2011 and 2010, Eaton acquired businesses and entered into a joint venture in separate transactions. The Consolidated Statements of Income include the results of these businesses from the dates of the transactions or formation. These transactions are summarized below:
| Acquired business |
Date of |
Business |
Annual sales | |||||
|
Eaton-SAMC (Shanghai) Aircraft Conveyance |
March 8, |
Aerospace |
New joint |
|||||
|
A 49%-owned joint venture in China focusing on |
||||||||
| Tuthill Coupling Group | January 1, | Hydraulics | $35 for the | |||||
|
A United States and France-based manufacturer |
2011 |
year ended |
||||||
| Chloride Phoenixtec Electronics | October 12, | Electrical Rest | $25 for the | |||||
|
A China manufacturer of uninterruptible power |
2010 | of World |
year ended |
|||||
| CopperLogic, Inc. | October 1, | Electrical | $35 for the | |||||
|
A United States-based manufacturer of
|
2010 | Americas |
year ended |
|||||
| Wright Line Holding, Inc. | August 25, | Electrical | $101 for the | |||||
|
A United States provider of customized |
2010 | Americas |
year ended |
|||||
| EMC Engineers, Inc. | July 15, | Electrical | $24 for 2009 | |||||
|
A United States energy engineering and energy |
2010 | Americas | ||||||
|
|
||||||||
On January 20, 2011, Eaton reached an agreement to acquire ACTOM (Pty) Limited’s low-voltage electrical business in South Africa. This business is a manufacturer and supplier of motor control components, engineered electrical distribution systems, and uninterruptible power supply systems and had sales of $58 for the year ended December 31, 2010. The terms of the agreement are subject to regulatory approvals and other customary closing conditions. The acquisition is expected to close during the second quarter of 2011. This business will be included in the Electrical Rest of World segment.
On March 14, 2011, Eaton reached an agreement to acquire Internormen Technology Group, a leading Germany-based manufacturer of hydraulic filtration and instrumentation. This business had sales of more than $55 in 2010 and has sales and distribution subsidiaries in India, China, Brazil and the United States. The terms of the agreement are subject to customary closing conditions. The acquisition is expected to close during the second quarter of 2011. This business will be included in the Hydraulics segment.
Note 2. ACQUISITION INTEGRATION CHARGES
Eaton incurs charges related to the integration of acquired businesses. A summary of these charges follows:
