Ingersoll Rand Conference Call Highlights

Ingersoll-Rand PLC IR reported its third quarter earnings on Wednesday. Shares of the company are up 5 percent.

Below are some key highlights and takeaways from its conference call.

Performance:

• In the third quarter, we delivered earnings per share of $1.10.
• There was a small amount of restructuring in the quarter, it was less than $0.01, so reported and adjusted EPS are identical.
• That's a 21% increase versus adjusted earnings per share in the third quarter of 2013.
• Revenues were $3.4 billion, up 5% versus last year on a reported basis.
• Revenue growth was about a point higher than our guide, which was to be up about 4% for the quarter.
• We saw somewhat stronger revenues in transport particularly in our Auxiliary Power units and Marine Equipment and in commercial HVAC equipment in both North America and Europe.
• Revenues were up 6% excluding currency.
• Orders were up 7% in the third quarter and up 8% excluding currency.
• Climate orders were up 9% led by Auxiliary Power unit, marine unit and commercial HVAC equipment orders.
• Industrial orders were up 3%.
• Adjusted operating margin which excludes restructuring was up 90 basis points.
• For the company, pricing exceeded direct material inflation as it has each quarter for more than three years. Operating leverage was 31% on an adjusted basis.
• On a year-to-date basis, we have delivered 110 basis points of margin improvement.
• We repurchased 2.6 million shares in the third quarter. We have narrowed the range of our full-year forecast.
• The midpoint of guidance for adjusted EPS at $3.22 is unchanged.
• Our reported bookings for the quarter were up 7%.
• Reported earnings per share were $1.10. Versus mid-point guidance of $1.03, the $0.07 beat came from a few areas.
• Revenue growth was about a point higher than mid-point guidance, which would be about $0.03 of earnings.
• Third quarter guidance of $10 million cost or about $0.03 did not occur in the quarter.
• So that was $0.03 of the $0.07 difference plus the revenue.
• However, the risk in Venezuela remains and we've rolled that now into the fourth quarter guidance.
• The tax rate and share count were each about $0.01 favorable.
• FX, excluding the Venezuela item, was about $0.01 unfavorable to guidance, so that gives you the full $0.07.
• We repurchased 2.6 million shares for approximately $160 million in the third quarter.
• Year-to-date September, we have spent $1.2billion in share repurchases and repurchased about 20 million shares.
• Our forecast for the year remains to spend between $1.375 billion on repurchase.

Guidance:

• Our full-year revenue forecast for growth of about 4% is unchanged.
• There has been some movement within the Climate segment where transport is going to come in somewhat stronger given the orders we have in hand for marine containers and APUs that will ship this year.
• We are adjusting our full-year 2014 earnings outlook to a range of $3.17 to $3.21 on a reported basis
• For the full year, we now expect to spend about $0.03 in restructuring versus $0.05 in our prior guidance.
• So on an adjusted basis, the new range is $3.20 to $3.24.
• There was no change to the full-year average share count guidance of 275 million shares and a tax rate of approximately 25%.
• Fourth quarter 2014 revenues are forecast to be up approximately 3% to 4%.
• We expect mid-single-digit growth in Climate and low-single digit growth in Industrial.
• Fourth quarter GAAP continuing earnings per share are forecast to be in the range of $0.68 to $0.72.
• Restructuring costs are expected to be about $0.01 in the quarter.
• So on an adjusted basis, the EPS range is $0.69 to $0.73.