Ingersoll-Rand plc Earnings: Margins Expand For Fifth Straight Quarter, but Net Income Falls

S&P 500 (NYSE:SPY) component Ingersoll-Rand plc (NYSE:IR) reported a lower net income in the second quarter compared with a year earlier, falling below analysts’ estimates. Ingersoll-Rand PLC 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 Second Quarter

Results: Net income for the diversified machinery company fell to $92.3 million (26 cents per share) vs. $196.4 million (58 cents per share) a year earlier. This is a decline of 53% from the year earlier quarter.

Revenue: Rose 11.8% to $3.89 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: IR fell short of the mean analyst estimate of 94 cents per share. Analysts were expecting revenue of $3.87 billion.

Quoting Management: “There were many signs of progress in our second-quarter results,” said Michael W. Lamach, chairman, president and chief executive officer of Ingersoll Rand. “We benefited from upward momentum in most of our key end markets, which drove a 12 percent revenue increase in the second quarter. We leveraged these gains to improve operating income by 31 percent and to increase our operating margins, earnings and cash flow. Despite these improvements, we had disappointing results in our Residential Solutions segment, where the combination of softening end-market activity and operational execution issues led to a year-over-year decline in both revenues and operating earnings. We are taking corrective actions to ensure that the operating results for the Residential segment will improve during the second half of the year.”

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 2.1 percentage points to 30.4% from the year earlier quarter. Over that span, margins have grown on average 1.2 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 6.3% to $3.14 billion in the first quarter. The figure rose 12.3% in the fourth quarter of the last fiscal year from the year earlier and climbed 7.1% in the third quarter of the last fiscal year from the year-ago quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 35 cents versus a mean estimate of net income of 32 cents per share.

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)