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Cooper Industries Reports Q1

DUBLIN — Cooper Industries plc (NYSE: CBE) today reported income from continuing operations of $156 million for the first quarter of fiscal year 2011, an increase of $37 million, or 31%, from $119 million in the same period last year. Earnings per share from continuing operations improved $0.23 per share, or 33%, to $0.93 compared to earnings per share from continuing operations of $0.70 for the same period a year ago. During the first quarter of 2011 Cooper recognized discrete tax items which improved reported results by $9.7 million, or $0.06 per share.

Total revenue, excluding Tools, increased $196 million, or 18%, to $1.28 billion for the first quarter of 2011 from revenues of $1.08 billion in the first quarter of the prior year. This resulted from record core revenue growth of 16%, excluding Tools, and was driven by double digit core revenue growth in nearly all divisions. Currency translation increased reported revenues by 0.5% and acquisitions added 1.5% compared to the prior year. Total Electrical Segments operating profit margin improved to 16.0% for the first quarter of 2011 from 15.7% in the same period last year.

“We are very pleased to report record earnings and core revenue growth for the combined Electrical Segments. This is the second consecutive quarter where Cooper has reported record core growth as the utility markets snapped back sharply, our industrial markets remained strong, and demand for energy-efficient technologies such as LED lighting gained additional momentum. During the quarter we invested in new product development and global initiatives which, although moderating incremental margins, should result in continued future growth opportunities. As expected, commodity cost pressures were not fully offset by pricing actions taken during the first quarter but we expect to see this reverse as we move through the balance of 2011,” said Cooper Industries' Chairman and Chief Executive Officer Kirk S. Hachigian.

During the first quarter of 2011 Cooper recognized a gain from discontinued operations of $190.3 million (net of tax of $105.6 million) or $1.14 per share in connection with the consummation of the settlement agreement with Pneumo Abex. As a result of the settlement agreement, Cooper and its subsidiaries have no further obligations under a Mutual Guaranty Agreement with Pneumo Abex, pursuant to which an affiliate of Cooper had assumed the defense and indemnity of certain asbestos related claims. The amount of the non-cash gain from discontinued operations reflects the difference between the Company's accrual for its potential liability and defense costs (on an undiscounted basis), net of certain anticipated insurance recoveries, and the amounts payable pursuant to the settlement agreement.

During the first quarter of 2011 Cooper reported free cash flow use of $25.6 million. The company's total debt net of cash as of March 31 was $427.8 million, which resulted in a 10.7% net debt to capitalization ratio. “The first quarter reported free cash flow results reflect working capital investments to support our strong revenue performance and increased investments to fund growth initiatives. With an exceptionally strong balance sheet, we will continue to fund internal growth projects and capitalize on an improving acquisition pipeline,” said Hachigian.

Cooper Industries

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