Ingersoll-Rand plc Earnings Cheat Sheet: Margins Expand Again, but Profit Drops

S&P 500 (NYSE:SPY) component Ingersoll-Rand plc (NYSE:IR) reported its results for the third quarter. Ingersoll-Rand provides products and services to improve the quality and comfort of air in homes and buildings, transport and protect food and perishables and commercial properties.

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Ingersoll-Rand plc Earnings Cheat Sheet for the Third Quarter

Results: Net income for the diversified machinery company fell to $86.2 million (25 cents per share) vs. $232.2 million (68 cents per share) a year earlier. This is a decline of 62.9% from the year earlier quarter.

Revenue: Rose 5.3% to $3.93 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: IR reported adjusted net income of 81 cents per share. By that measure, the company beat the mean estimate of 78 cents per share. Analysts were expecting revenue of $3.89 billion.

Quoting Management: “We are seeing challenging economic conditions in our residential heating ventilation and air conditioning (HVAC), security and golf businesses, as reflected in our revised guidance,” said Michael W. Lamach. “Although our residential and consumer markets remain depressed, there are a number of opportunities well within our control to improve our earnings and margins going forward. Our focus on the continuation of our operational excellence and innovation strategies remains the central theme in our journey to improve our company for the benefit of our employees, customers and shareholders.”

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 0.5 percentage point to 29.4% from the year earlier quarter. Over that span, margins have grown on average one percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 5.1% to $3.89 billion in the second quarter. The figure rose 6.3% in the first quarter from the year earlier and climbed 12.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the second quarter with net income of 88 cents versus a mean estimate of net income of 94 cents per share.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for fourth quarter has fallen from 82 cents per share to 72 cents. The average estimate for the fiscal year is $2.73 per share, down from $3.10 ninety days ago.

Competitors to Watch: Lennox International Inc. (NYSE:LII), Standex Int’l Corp. (NYSE:SXI), AAON, Inc. (NASDAQ:AAON), Lennox International (NYSE:LII), Honeywell International (NYSE:HON), General Electric Company (NYSE:GE), Johnson Controls Inc. (NYSE:JCI) and Refrigeration Electrical Engineering (AMEX:REE).

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(Source: Xignite Financials)