Tyco International reports 4% revenue growth for Q1

Tyco International today reported $0.71 in diluted earnings per share (EPS) from continuing operations for the fiscal first quarter of 2012 and diluted EPS from continuing operations before special items of $0.84 per share. Revenue in the quarter of $4.2 billion increased 4% versus the prior year excluding the Electrical & Metal Products business, which is now reported as an equity investment, and organic revenue also grew 4%.

Tyco Chairman and Chief Executive Officer Ed Breen said, "We delivered a strong quarter operationally with continued organic revenue growth supported by improving order activity. The year over year improvement in our operating margin reflects increased volume in our product businesses, a higher mix of service revenue and the benefits of our cost containment and restructuring actions. This helped us deliver another quarter of double digit increases in earnings per share."

"We are making good progress with our plan to separate Tyco into three standalone public companies and we remain on track to complete the proposed transaction by the end of our fiscal fourth quarter," Breen added.

Organic revenue, free cash flow and operating income, operating margin, income and diluted EPS from continuing operations before special items are non-GAAP financial measures and are described below. For a reconciliation of these non-GAAP measures, see the attached tables. Additional schedules as well as First Quarter Review slides can be found at www.tyco.com on the Investor Relations portion of Tyco's website.

Segment Results

The financial results presented in the tables below are in accordance with GAAP unless otherwise indicated. All dollar amounts are pre-tax and stated in millions. All comparisons are to the fiscal first quarter of 2011 unless otherwise indicated.

Security Solutions

Revenue of $2.2 billion increased 2% in the quarter with organic revenue growth of 3%. Recurring revenue grew 4% organically with growth in all geographic regions. Non-recurring revenue grew 1% with strong growth in Asia Pacific and Latin America partially offset by modest declines in the North America and EMEA regions.

Operating income was $339 million and the operating margin was 15.7%. Special items of $36 million primarily consisted of separation-related impairment and restructuring charges. Operating income before special items was $375 million and the operating margin improved 70 basis points to 17.4%. The increase in operating margin resulted from faster growth in ADT's higher margin recurring revenue business and the continued benefit of restructuring and cost reduction activities.

Fire Protection

Revenue of $1.1 billion increased 3% in the quarter with organic revenue growth of 2%. Organic revenue growth of 8% in fire products and 2% in service partially was offset by a 5% organic revenue decline in systems installation due to continued softness in the non-residential construction market. Excluding the impact of foreign currency, orders increased 6% year-over-year and backlog increased 4% to $1.2 billion on a quarter sequential basis.

Operating income was $144 million and the operating margin was 12.7%. Operating income before special items was $147 million and the operating margin was 13.0%. The 140 basis point margin improvement was driven by increased volume in products and a higher mix of service revenue as well as the continued benefit of cost-containment and restructuring actions.

Flow Control

Revenue of $923 million increased 12% in the quarter with organic revenue growth of 10%. Organic revenue growth of 13% in Valves and 28% in Thermal Controls was partially offset by an organic revenue decline of 15% in the Water business. Excluding the impact of foreign currency, orders increased 16% year-over-year and backlog increased 4% to $1.8 billion on a quarter sequential basis. Operating income was $114 million and the operating margin was 12.4%. Operating income before special items of $113 million benefited from increased volume driven by the Valves business.