Hamilton, Bermuda-based Ingersoll-Rand Co., last week announced earnings and revenues for the third quarter of 2007. The company reported net earnings of $266.6 million, or diluted earnings per share of $0.92, for the third quarter of 2007 compared with $243.8 million, or EPS of $0.76 in the year-ago period. Third-quarter net earnings included $197.6 million, or EPS of $0.68, from continuing operations, as well as $69.0 million of income equal to EPS of $0.24 from discontinued operations. Discontinued operations included EPS of $0.29 from the earnings of discontinued businesses, and the retained costs of divested businesses equal to EPS of ($0.05). The operating results of the Road Development, Bobcat, Utility Equipment and Attachments businesses were reclassified as discontinued operations for the third quarter of 2007 and all prior periods.
“Third-quarter 2007 performance continued to demonstrate the benefits of our transformed business portfolio, expanded market and geographic diversity, and our investments to fuel innovation,” said Herbert Henkel, chairman, president and CEO. “We again offset several soft domestic markets with strong revenue growth from international operations, new product offerings and recurring revenues.”
The company's revenues increased by 10 percent to $2.24 billion, compared with revenues of $2.04 billion for the 2006 third quarter. Third-quarter domestic revenues increased by 4 percent, while revenues from international operations increased by approximately 19 percent.
Total recurring revenues, which include revenues from parts, service, rental, and used equipment, increased by 6 percent compared with the third quarter of 2006, and accounted for 18 percent of total revenues.
On July 29, the company entered into a definitive agreement to sell its Bobcat and other construction-related businesses, including Utility Equipment and Attachments, to Doosan Infracore for cash proceeds of $4.9 billion. Net after-tax proceeds from the transaction are expected to approximate $3.7 billion. The sale is targeted to close late in the fourth quarter.
“The disposition of our construction-related businesses is the culmination of our strategy to transition away from cyclical, heavy machinery businesses and to transform our business portfolio to reposition Ingersoll Rand as a leading global diversified industrial company,” said Henkel.
Collectively, this transaction and the recent sale of our Road Development business in April 2007 will generate $6.2 billion and approximately $4.8 billion of after tax proceeds. As a result, we have created immediate value for our shareholders and unlocked significant capital to drive long-term growth.”
Discontinued operations (Bobcat, Utility Equipment, and Attachments) achieved planned revenue, which increased by 26 percent in the third quarter of 2007 compared with weak results last year. Third-quarter 2006 results were depressed by a severe deterioration in North American markets for compact equipment and a related decline in shipments to distributors to reduce their equipment inventories. Recurring revenues and international market volumes also increased compared with last year. Third-quarter orders increased by approximately 25 percent compared with last year and backlog levels also improved. Dealer inventories remain well balanced and consistent with demand levels.