DUBLIN — Cooper Industries plc has reported third quarter 2009 earnings per share from continuing operations of 68 cents (diluted), compared with $1.08 per share from continuing operations for the third quarter of 2008. During the third quarter of 2009, Cooper recognized a pre-tax restructuring charge of $6.5 million or 3 cents per share. The third quarter of 2009 also included a favorable impact from discrete tax items, which improved reported results by approximately 1 cent per share. Excluding these unusual items, the third quarter 2009 earnings per share was 70 cents per share compared to 97 cents per share for earnings for the third quarter of 2008, excluding favorable discrete tax items.
Third quarter 2009 revenues decreased 25.5 percent to $1.29 billion, compared with $1.73 billion for the same period last year. Core revenues were 23.6 percent lower than comparable prior year with currency translation reducing reported revenue by 2 percent for the quarter.
“Our continued focus on cost management across the company allowed us to increase our operating margin 160 basis points sequentially from the second quarter, excluding unusual items, and deliver earnings per share at the top end of the forecast. Revenue and orders for maintenance and repair items and product lines that declined rapidly at the beginning of the economic downturn are beginning to improve, while the longer cycle products appear to have now bottomed,” said Cooper Industries’ Chairman and Chief Executive Officer Kirk Hachigian.
During the first nine months of 2009 Cooper generated a record $569 million in free cash flow after $70.8 million of capital expenditures compared with the previous record of $473.4 million for the first nine months of 2008. Our total debt net of cash and investments totaled $547.3 million compared to $952.4 million at Dec. 31, 2008. “Our global teams have delivered record free cash flow as we have adjusted our cost structure and working capital levels to be aligned with market conditions. As a result of these focused efforts, we are in position to retire our $275 million debt obligation in November from currently available cash and preserve our financial flexibility to continue to invest in our long-term strategic initiatives and return capital to our shareholders,” said Hachigian.
Revenues for the first nine months of 2009 were $3.81 billion, a 23.7 percent decrease from the $5 billion in revenues for the first nine months of 2008. Core revenues were 21.1 percent lower than the comparable prior year period with currency translation reducing reported revenue by 3.3 percent and acquisitions adding 0.7 percent to reported revenues for the nine month period. For the first nine months of 2009, income from continuing operations, excluding unusual items, was $296.0 million, compared with $487.1 million for the prior year’s first nine months excluding unusual items. Diluted earnings per share from continuing operations, excluding unusual items for comparable periods, were $1.76 compared with prior year’s $2.75.
During the third quarter of 2009, Cooper recognized a gain from discontinued operations of $6.6 million (net of tax of $4.2 million) or 4 cents per share and for the first nine months Cooper recognized a gain from discontinued operations of $25.5 (net of tax of $16.2 million) or 15 cents per share from negotiated insurance coverage settlements that were not previously recognized. Cooper believes that it is likely that additional insurance recoveries will be recorded in the future as new insurance-in-place agreements are consummated or settlements with insurance carriers are completed. Timing and value of these agreements and settlements cannot be currently estimated as they may be subject to extensive additional negotiation and litigation.
“In the third quarter, we delivered another strong performance in the face of a continuing difficult global economic environment. While we have done an outstanding job right-sizing our businesses for the new economic reality, we have also remained focused on future growth by continuing to invest in new products, international expansion and evaluating acquisitions that strengthen our core. We are very well-positioned to capitalize on the emerging technologies and global trends that are impacting our business. Our teams are aligned and we have ample resources to execute our long-term strategies,” commented Hachigian.
“For 2009, we now are forecasting earnings per share from continuing operations of $2.35 to $2.45, excluding restructuring and unusual items, compared to the $2.30 to $2.50 forecast in July 2009. For the year, we currently expect to incur 16 cents to 18 cents per share of restructuring charges. For the fourth quarter of 2009, we expect earnings per share of 60 cents to 70 cents, excluding restructuring and unusual items. In the fourth quarter of 2009, we expect to incur additional restructuring charges of 3 cents to 5 cents per share. Free cash flow after capital expenditures for the full year is expected to exceed $650 million,” said Hachigian.
