Tyco Posts $3.55B Loss, But Earnings From Continuing Operations Beat

Tyco International reported earnings for the first time since spinning-off its health care and electronics divisions. The company swung to a $3.55 billion, or $7.18/share loss, hurt by a class action securities litigation settlement. Adjusted EPS of $0.55 topped analysts' average estimate of $0.48. Tyco's fiscal 3Q revenues rose 7.8% to $5.09b. Tyco completed the spin-offs on June 29 and also executed a 4:1 reverse share split. Its realigned business segments include: ADT Worldwide; Fire Protection Services; Flow Control; Safety Products and Electrical and Metal Products. The Flow Control segment led revenue growth, up 22% to $982m. Electrical and Metal Products was the only segment to record a decline in sales, at -1% to $519m. CEO Ed Breen commented that "performance came in at the high end of our estimates ... driven by improvements across most of our businesses." Tyco expects 4Q sales growth of 6% - 7% (organic at 4%), with operating profit margin before special items of 9.0% - 9.5%. Shares of Tyco gained 0.8% to $48.00 on Monday and are untraded so far in the pre-market.

Sources: Press release, Bloomberg, MarketWatch
Commentary: Why I Passed On the Tyco Spinoffs • Tyco Spinoffs' Valuation Uninspiring • On the Tyco Break-Up: Come Up With a Hard Estimate in Advance
Stocks/ETFs to watch: TYC. Competitors: GE, HON, UTX. ETFs: XLI, IYJ, VIS

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