Tyco International reported $1.00 in diluted earnings per share (EPS) from continuing operations for the fiscal first quarter of 2011 and diluted EPS from continuing operations before special items of $0.75 per share. Revenue in the quarter of $4.4 billion increased 5% versus the prior year with organic revenue growth of 4% including a 1 percentage point contribution from the Electrical & Metal Products business.
Tyco Chairman and Chief Executive Officer Ed Breen said, "Our first quarter results reflect continued improvement in our end markets which contributed to a stronger operating margin and helped us deliver a 17% increase in diluted earnings per share. We finished the quarter in a strong cash position which provides us the financial flexibility to continue to increase investments in R&D, fund our growth initiatives, and return excess cash to shareholders."
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. Beginning with the first quarter of fiscal 2011, the company's organic growth / decline calculations incorporate an estimate of prior year reported revenue associated with the acquired entities that have been fully integrated within the first year, and exclude prior year revenues associated with entities divested within the past year. For a reconciliation of these non-GAAP measures, see the attached tables.
Segment Results
In the first fiscal quarter of 2011, the company reorganized its reportable segments to more closely align with certain portfolio refinement actions taken in fiscal 2010. Under the new reporting structure, the former Safety Products segment has been split between the former ADT Worldwide and former Fire Protection Services segments. The new Tyco Security Solutions segment consists of the former ADT Worldwide segment and the portion of the Safety Products segment that manufactures electronic security products. The new Tyco Fire Protection segment consists of the former Fire Protection Services segment and the remaining portion of the Safety Products segment consisting of the fire suppression and life safety businesses. The revenue and operating income results shown below have been adjusted to reflect these changes. All dollar amounts are pre-tax and stated in millions. All comparisons are to the fiscal first quarter of 2010 unless otherwise indicated.
Security Solutions
Revenue of $2.1 billion increased 10% in the quarter with organic revenue growth of 6%. Recurring revenue grew 4% organically on a global basis. Non-recurring revenue grew 7% with growth in all geographic regions led by increased volume in the North American commercial business.
Operating income was $347 million and the operating margin was 16.5%. Operating income before special items was $352 million and the operating margin improved 240 basis points to 16.7%. Increased volume in the commercial business, growth in the higher margin recurring revenue business and the continued benefit of restructuring activities drove the year-over-year operating margin improvement.
Fire Protection
Revenue of $1.1 billion declined 1% in the quarter with organic revenue growth of 1.5%. Organic revenue growth of 1% in service and 9% in fire products more than offset the organic revenue decline of 3% in installation revenue. Backlog of $1.2 billion increased 1% on a quarter sequential basis, excluding the impact of foreign currency and the deconsolidation of a joint venture related to the adoption of a new accounting standard. Operating income was $88 million and the operating margin was 8.0%. Special items of $39 million consisted of restructuring and losses on divestitures. Operating income before special items was $127 million and the operating margin was 11.6%. The 190 basis point margin improvement was driven by cost-containment and restructuring actions as well as business mix and selectivity of project work.
