Ingersoll Rand Co. last week reported third quarter net earnings of $243.8 million, or diluted earnings per share of 76 cents for the third quarter of 2006, a slight drop from $254.2 million in the third quarter of 2005 and earnings per share of 75 cents.
“Despite double-digit revenue growth and solid earnings in four of our business segments, our overall third quarter results were disappointing,” said Herbert Henkel, chairman, president and CEO. “While we continue to make progress against many of our long-term strategic priorities, our overall performance was unsatisfactory by our standards. We will take immediate corrective actions in the fourth quarter to deliver the type of results that we expect on a consistent basis. We will drive a sharper focus on cost control, including restructuring actions where warranted.”
The company’s revenues increased by about 6 percent to $2.77 million. Organic revenues, excluding acquisitions and currency, increased by about 4 percent compared with last year. Double-digit revenue growth in Climate Control Technologies, Construction Technologies, Industrial Technologies and Security Technologies offset revenue decreases at the Bobcat business. Recurring revenues, including parts, service, rental, attachments and used equipment, were $6.15 million, an 11 percent jump from the company’s Q305 total, and accounted for 22 percent of total revenues.
The company recently completed three acquisitions that expand its position in worldwide markets and, the company said, are expected to add more than $100 million to 2007 revenues. On Sept. 1, Ingersoll Rand acquired the assets of ZEKS Compressed Air Solutions, a leading North American provider of compressed air treatment. On Oct. 2, Ingersoll Rand acquired the global low-pressure air business of BOC Edwards, which manufactures centrifugal blowers. On Oct. 13, it acquired Geith International, a provider of attachments for the construction, excavation, demolition and scrap handling industries.
Bobcat revenues declined by more than 20 percent year over year, because of an unexpectedly severe deterioration in North American markets for compact equipment and a related decline in shipments to distributors to reduce their equipment field inventories. Third quarter 2005 results benefited from equipment and attachment sales related to Gulf Coast hurricane clean-up activities. Bobcat margins declined from the lower revenues.
Construction Technologies, including I-R’s road pavers, portable power products, general-purpose construction equipment and attachments. Revenues increased by 11 percent to $325.1 million, because of ongoing strength in the international road development and repair markets for utility equipment and attachments. Operating margins increased to 10.5 percent from 9.2 percent as higher volume offset material costs and negative product mix.
Henkel expressed concern over “a sharp deterioration in the North American market for compact equipment, slowing growth in our North American machinery business and a reduction in security products demand related to domestic residential construction.”
Ingersoll Rand Co. is based in Hamilton, Bermuda.
