01—Abstract
Summary
Summary of the 10-Q filed January 31, 2012. Cited figures are marked; the original filing is the authoritative source.
Tyco International Ltd. reported net revenue of $4.2 billiona for the quarter ended December 30, 2011, a decrease of 3.9% compared to the prior year's quarter.
This decline was primarily driven by the divestiture of a majority interest in its Electrical and Metal Products business. Despite the revenue decrease, the company saw positive trends in its service revenue, which constituted 45% of total revenue, and experienced growth in product sales within the Tyco Flow Control segment, attributed to strong end-market performance. Operating income saw a significant decrease to $472 millionb from $706 million in the prior year.
This was largely due to a $246 millionc gain on divestitures in the prior year's quarter, compared to no such gain in the current quarter. The company incurred $32 million in separation costs related to its planned 2012 separation into three independent companies. Tyco's cash position decreased to $1.0 billion, with cash generated from operations at $338 million, while investing activities used $441 million and financing activities used $271 million, including $200 million for share repurchases.
02—Key points
Key Highlights
- Net revenue decreased by 3.9% to $4.2 billion, primarily due to the sale of the Electrical and Metal Products business.
- Service revenue represented 45% of total revenue, indicating a continued shift towards recurring revenue streams.
- Operating income decreased significantly to $472 million, impacted by a large gain on divestitures in the prior year's comparable quarter.
- The company incurred $32 million in separation costs as it proceeds with its plan to split into three separate entities.
- Cash and cash equivalents decreased to $1.0 billion, with operating cash flow of $338 million.
- Tyco Security Solutions' recurring revenue grew by 3.6% year-over-year, driven by an increase in customer accounts.
- Tyco Flow Control showed strong performance with an 11.7% increase in net revenue, driven by its Valves and Controls and Thermal Controls businesses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2012, Johnson Controls International plc kept $0.13.
- Revenue$2.48B100.0%
- Cost of revenue−$1.58B63.7%
- Gross profit$899.0M36.3%
- Operating costs−$713.0M28.8%
- Operating income$186.0M7.5%
- Interest, other & tax$136.0M5.5%
- Net income$322.0M13.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2012filed January 31, 2012Financial Statements
Q1 FY2012 against Q1 FY2011
| Line item | Q1 FY2012Q1 FY2011 | Change |
|---|---|---|
| Revenue | $2.48B$4.38B | −43.4% |
| Cost of Revenue | $1.58B$2.75B | −42.6% |
| Gross Profit | $899.00M$1.63B | −44.8% |
| SG&A Expenses | $677.00M$1.14B | −40.5% |
| Operating Income | $186.00M$706.00M | −73.7% |
| Interest Expense | $58.00M$62.00M | −6.5% |
| Net Income | $322.00M$659.00M | −51.1% |
| EPS (Basic) | $0.69$1.35 | −48.9% |
| EPS (Diluted) | $0.69$1.34 | −48.5% |
| Shares Outstanding (Basic) | 464.00M488.00M | −4.9% |
| Shares Outstanding (Diluted) | 469.00M492.00M | −4.7% |
05—Questions
Frequently Asked Questions
What is the primary reason for the decrease in net revenue compared to the prior year?
The primary reason for the decrease in net revenue is the divestiture of a majority interest in Tyco's Electrical and Metal Products business, which occurred in the prior year's comparable quarter. This significantly reduced the revenue contribution from that segment.
How is the planned separation into three companies impacting the current financial results?
The planned separation is incurring separation costs, with $32 million recorded in the current quarter primarily for professional fees. While this impacts operating income, the strategic rationale is to create more focused, independent entities.
What is the outlook for recurring revenue, and which segment is driving this growth?
Recurring revenue is a key focus, representing 45% of total revenue. Tyco Security Solutions showed strong recurring revenue growth of 3.6% year-over-year, driven by an increasing customer account base and higher average revenue per customer.
How is the company managing its cash flow and capital allocation?
Tyco generated $338 million in cash from operating activities. Cash was utilized for capital expenditures ($207 million), acquisitions ($95 million), customer contract purchases ($170 million), share repurchases ($200 million), and dividends ($116 million). The company ended the quarter with $1.0 billion in cash and cash equivalents.
06—Continue