Ingersoll-Rand Reports Earnings of $153.2MM

April 21, 2003 by Jeff Shepard

Ingersoll-Rand Company Limited announced that net earnings and revenues increased in the first quarter of 2003 compared to the 2002 first quarter. The company reported earnings of $153.2 million or diluted earnings per share (DEPS) of $0.90 for the first quarter of 2003.

"Despite a stubbornly weak economy, we delivered strong operating results for the quarter, with revenue increases in all four of our business sectors," said Herbert L. Henkel, chairman, president and chief executive officer. "We attribute these results to the actions we are taking internally to strengthen our leadership position as a proven source of innovation in our markets worldwide. These actions have included emphasizing our recurring revenue streams, which reached a new high and accounted for approximately 26% of revenues in the quarter. We also sold our Engineered Solutions business, an important step that provided cash to strengthen our balance sheet and better position our business to pursue opportunities for future growth and investment."

Compared to 2002, the company's revenues increased by approximately 9.0% to $2,198.7 million. Five percentage points of the revenue increase came from organic growth, with approximately one percentage point from acquisitions and three percentage points from currency translation. All four of the company's business sectors experienced revenue growth in the quarter compared to the 2002 first quarter, primarily driven by double-digit growth at Dresser-Rand (+31%), Thermo King (+20%) and the Security and Safety Sector (+11%). Total recurring revenues, which includes revenues from installation, parts, service and rental, increased by 16% compared to the first quarter of 2002, and accounted for 26% of total revenues.

The company reported net earnings of $153.2 million, or DEPS of $0.90. Earnings from continuing operations were $93.5 million, or DEPS of $0.55, and were consistent with the company's earnings guidance for the quarter. Discontinued operations included net earnings of $6.3 million, or approximately $0.04 DEPS, from the results of the Engineered Solutions business, offset by the retained continuing costs of previously divested businesses. The company's 2003 results included a gain of $53.4 million, or $0.31 DEPS, from the sale of the company's Engineered Solutions business to The Timken Company in February 2003. This gain, which is subject to certain final adjustments, was reported as part of discontinued operations.

The company’s Energy Systems business focused its marketing effort on environmental markets for the new 250 kilowatt (kW) unit and cogeneration applications for the 70kW product. Energy Systems received orders for the first seven 250 kW units in targeted market segments, including landfill, petrochemical and wastewater treatment. Customers ordered 2.6 million watts of microturbine generation capacity during the first quarter of 2003.

Dresser-Rand (D-R) is a leader in energy conversion technology and is positioned to deliver complete package solutions to the oil, gas, chemical and petrochemical industries. D-R's first-quarter 2003 revenues of $278.1 million increased by 31%, compared to last year. Excluding buyout components, revenues increased by 26%. D-R operating profit improved to $4.2 million in the first quarter of 2003, compared to a $0.4 million loss in the 2002 first quarter, due to higher revenues. The backlog totaled $761.8 million ($534.3 million excluding buyouts) at March 31, 2003. Aftermarket business comprised 52% of D-R revenues in the first quarter.

The Club Car(R) golf cars and utility vehicles business experienced mid single digit revenue gains in the first quarter with flat margins compared to 2002, primarily reflecting ongoing revenue from a contract with General Motors to produce its Pathway electric vehicle.