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Industrial goods manufacturer Ingersoll-Rand Plc (IR - Free Report) reported tepid fourth-quarter 2016 results with net earnings of $198.8 million or 75 cents per share compared with $233.5 million or 88 cents per share in the year-earlier quarter. The year-over-year decrease in GAAP earnings despite higher revenues was primarily attributable to higher operating and other expenses.
Excluding non-recurring items, adjusted earnings from continuing operations in the reported quarter were 84 cents per share compared with 94 cents in the year-ago quarter. Adjusted earnings from continuing operations missed the Zacks Consensus Estimate by 8 cents.
For full year 2016, Ingersoll recorded GAAP earnings of $1,476.2 million or $5.65 per share compared with $664.6 million or $2.48 per share in 2015. Excluding non-recurring items, adjusted earnings from continuing operations in 2016 were $4.13 per share compared with $3.73 in 2015.
Ingersoll-Rand PLC (Ireland) Price, Consensus and EPS Surprise
Quarterly revenues were $3,358.8 million, up from $3,325.8 million recorded in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $3,347 million. Meanwhile, organic revenues improved 2% year over year. While organic revenues from North America increased 6%, the same from International markets declined 4% compared with the prior-year period owing to below-par performances in Europe and the Middle East. For full year 2016, revenues improved to $13,508.9 million from $13,300.7 million in 2015 driven by strong growth in North American HVAC (heating, ventilation and air conditioning) business.
Segmental Performance
Climate segment recorded sales of $2,558.6 million compared with $2,492.0 million in the year-ago quarter. The upside was driven by solid revenues from commercial and residential HVAC businesses.
Industrial segment posted revenues of $800.2 million in the reported quarter, down from $833.8 million in the prior-year quarter owing to sharp decline in the material handling business.
Margins
Operating margin for the fourth quarter was 10.3% compared with 10.8% in the year-ago quarter. Adjusted operating margin contracted to 10.8% from 11.3% in the prior-year quarter. Adjusted operating margin for the Climate segment was 13.6% compared with 12.9% in the year-ago quarter. Adjusted operating margin for the Industrial segment was 11.4%, down from 13.8% in the year-ago quarter.
Balance Sheet and Cash Flow
As of Dec 31, 2016, cash and cash equivalents totaled $1,714.7 million while long-term debt was $3,709.4 million compared with the respective tallies of $736.8 million and $3,713.6 million in the year-ago period. Net cash from operating activities for 2016 grossed $1,500.2 million compared with $851.1 million in the prior-year period. Working capital was 3.4% of revenues for 2016 compared with 4.2% in 2015, representing an 80 basis point improvement. Free cash flow for 2016 was $1,345 million, up from $985 million in 2015.
Outlook
For full year 2017, management offered a relatively bullish guidance. The company anticipates organic revenue to improve 3%, while reported revenues are expected to be up 2% year over year.
Ingersoll expects adjusted earnings from continuing operations guidance to be in the range of $4.30 to $4.50 per share. Cash from operating activities is anticipated to be about $1.4 billion, while free cash flow is expected to be within $1.1 billion to $1.2 billion.
Ingersoll currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Altra Industrial Motion Corp. , Chart Industries Inc. (GTLS - Free Report) and Manitex International, Inc. (MNTX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial has a positive earnings surprise history with an average of 8.1% in the trailing four quarters, comprehensively beating estimates in each quarter.
Chart Industries has long-term earnings growth expectations of 19.5% and is currently trading at a forward P/E of 55.6x.
Manitex is currently trading at a forward P/E of 86.7x.
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Ingersoll (IR) Lags Q4 Earnings, 2017 Guidance Bullish
Industrial goods manufacturer Ingersoll-Rand Plc (IR - Free Report) reported tepid fourth-quarter 2016 results with net earnings of $198.8 million or 75 cents per share compared with $233.5 million or 88 cents per share in the year-earlier quarter. The year-over-year decrease in GAAP earnings despite higher revenues was primarily attributable to higher operating and other expenses.
Excluding non-recurring items, adjusted earnings from continuing operations in the reported quarter were 84 cents per share compared with 94 cents in the year-ago quarter. Adjusted earnings from continuing operations missed the Zacks Consensus Estimate by 8 cents.
For full year 2016, Ingersoll recorded GAAP earnings of $1,476.2 million or $5.65 per share compared with $664.6 million or $2.48 per share in 2015. Excluding non-recurring items, adjusted earnings from continuing operations in 2016 were $4.13 per share compared with $3.73 in 2015.
Ingersoll-Rand PLC (Ireland) Price, Consensus and EPS Surprise
Ingersoll-Rand PLC (Ireland) Price, Consensus and EPS Surprise | Ingersoll-Rand PLC (Ireland) Quote
Quarterly revenues were $3,358.8 million, up from $3,325.8 million recorded in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $3,347 million. Meanwhile, organic revenues improved 2% year over year. While organic revenues from North America increased 6%, the same from International markets declined 4% compared with the prior-year period owing to below-par performances in Europe and the Middle East. For full year 2016, revenues improved to $13,508.9 million from $13,300.7 million in 2015 driven by strong growth in North American HVAC (heating, ventilation and air conditioning) business.
Segmental Performance
Climate segment recorded sales of $2,558.6 million compared with $2,492.0 million in the year-ago quarter. The upside was driven by solid revenues from commercial and residential HVAC businesses.
Industrial segment posted revenues of $800.2 million in the reported quarter, down from $833.8 million in the prior-year quarter owing to sharp decline in the material handling business.
Margins
Operating margin for the fourth quarter was 10.3% compared with 10.8% in the year-ago quarter. Adjusted operating margin contracted to 10.8% from 11.3% in the prior-year quarter. Adjusted operating margin for the Climate segment was 13.6% compared with 12.9% in the year-ago quarter. Adjusted operating margin for the Industrial segment was 11.4%, down from 13.8% in the year-ago quarter.
Balance Sheet and Cash Flow
As of Dec 31, 2016, cash and cash equivalents totaled $1,714.7 million while long-term debt was $3,709.4 million compared with the respective tallies of $736.8 million and $3,713.6 million in the year-ago period. Net cash from operating activities for 2016 grossed $1,500.2 million compared with $851.1 million in the prior-year period. Working capital was 3.4% of revenues for 2016 compared with 4.2% in 2015, representing an 80 basis point improvement. Free cash flow for 2016 was $1,345 million, up from $985 million in 2015.
Outlook
For full year 2017, management offered a relatively bullish guidance. The company anticipates organic revenue to improve 3%, while reported revenues are expected to be up 2% year over year.
Ingersoll expects adjusted earnings from continuing operations guidance to be in the range of $4.30 to $4.50 per share. Cash from operating activities is anticipated to be about $1.4 billion, while free cash flow is expected to be within $1.1 billion to $1.2 billion.
Ingersoll currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Altra Industrial Motion Corp. , Chart Industries Inc. (GTLS - Free Report) and Manitex International, Inc. (MNTX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial has a positive earnings surprise history with an average of 8.1% in the trailing four quarters, comprehensively beating estimates in each quarter.
Chart Industries has long-term earnings growth expectations of 19.5% and is currently trading at a forward P/E of 55.6x.
Manitex is currently trading at a forward P/E of 86.7x.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>