Cooper Industries Cl A (CBE) News

Second Quarter Core Revenues Increase 4.8 Percent

Jul. 22, 2010 (Business Wire) -- Cooper Industries plc (NYSE: CBE) reported second quarter 2010 earnings per share of $.80 (diluted), excluding a non-cash after-tax charge of $93.7 million or $.55 per share related to the formation of the previously announced Tools Joint Venture, compared with $.53 per share for the second quarter of 2009. Including this non-cash loss, the second quarter 2010 earnings per share was $.25 per share. Second quarter 2010 revenues increased 5.3 percent to $1.34 billion, compared with $1.27 billion for the same period last year. Core revenues were 4.8 percent higher than comparable prior year with minimal impact for currency translation compared to the prior year quarter and acquisitions adding 0.5 percent for the quarter.

“In the second quarter, for the first time in 18 months, we delivered core revenue growth as our industrial businesses remained strong, emerging markets continued to grow and our longer cycle businesses gained momentum. Our intense cost management across the company and the favorable impact from previous resizing efforts allowed us to deliver strong incremental earnings growth as adjusted earnings per share increased 51 percent,” said Cooper Industries’ Chairman and Chief Executive Officer Kirk S. Hachigian.

During the first half of 2010 Cooper generated $222.5 million in free cash flow, our second best first half performance in the Company’s history. Our total debt net of cash as of June 30, 2010 totaled $503.3 million. “Our global teams continue to deliver solid free cash flow, a result of our improved earnings performance and continued working capital efficiency. We are anticipating continuing this performance in the second half and remain confident that 2010 will be the tenth consecutive year that we will generate free cash flow in excess of recurring income,” said Hachigian.

Revenues for the first six months of 2010 were $2.57 billion, a 1.5 percent increase from the $2.53 billion in revenues for the first six months of 2009. For the first six months of 2010, net income excluding the loss on the Tools Joint Venture was $253.9 million, compared with $170.5 million from continuing operations for the prior year’s first six months. Diluted earnings per share, excluding the non-cash charge related to the Tools Joint Venture, were $1.50 compared with prior year’s $1.01 from continuing operations.

On July 6, 2010, Cooper announced the completion of the Joint Venture, named Apex Tool Group, LLC. Cooper and Danaher Corporation each own a 50 percent interest in the Joint Venture. The Tools assets and liabilities to be contributed to the Joint Venture in July 2010 have been reclassified to separate lines in the accompanying consolidated balance sheets. The second quarter 2010 results include a non-cash after-tax charge of $93.7 million or $.55 per share primarily related to the recognition of cumulative translation losses included in other nonowner changes in equity through the income statement.

During the first quarter of 2009 Cooper recognized a gain from discontinued operations of $18.9 million (net of tax of $12.0 million) or $.11 per share from negotiated insurance coverage settlements consummated in the first quarter of 2009 that were not previously recognized.

Segment Results

Energy & Safety Solutions segment revenues for the second quarter of 2010 increased 0.8 percent to $614.4 million, compared with $609.7 million in the second quarter 2009. Cores revenues were 0.6 percent higher than comparable prior year periods with currency translation decreasing reported revenues 0.9 percent and acquisitions adding 1.1 percent for the second quarter. Segment operating earnings were $103.7 million, an increase of 16 percent from the $89.4 million in the prior year’s second quarter. Segment operating margin increased 220 basis points to 16.9 percent for the second quarter 2010, compared to the second quarter of 2009.

Revenues for the first six months of 2010 decreased 2.6 percent to $1.18 billion, compared to $1.22 billion for the same period last year. Segment operating earnings for the first half of 2010 increased to $199.8 million compared to $179.6 million in the prior-year period.

Electrical Products Group segment revenues for the second quarter of 2010 increased 6.9 percent to $557.6 million, compared with $521.4 million in the second quarter 2009. Core revenues were 6.4 percent higher than comparable prior year periods with currency translation increasing reported results 0.5 percent for the second quarter. Segment operating earnings were $82.6 million, an increase of 29 percent from the $64.1 million in the prior year’s second quarter. Segment operating margin increased 250 basis points to 14.8 percent for the second quarter of 2010, compared to the second quarter of 2009.

Revenues for the first six months of 2010 increased 2.3 percent to $1.07 billion, compared to $1.05 billion for the same period last year. Segment operating earnings for the first half of 2010 increased to $156.1 million compared to $113.9 million in the prior-year period.

Tools segment revenues for the second quarter of 2010 were $164.7 million, an increase of 18.8 percent from 2009 second quarter revenues of $138.7 million. Excluding the effects of currency translation, which increased reported revenues in the quarter by 2.1 percent, core revenues for the quarter were 16.7 percent higher than 2009 second quarter. Segment operating earnings were $21.1 million, compared to $2.9 million for the second quarter 2009. Segment operating margin for the second quarter 2010 was 12.8 percent compared to 2.1 percent for the comparable prior-year period.

Revenues for the first six months of 2010 increased 17.4 percent to $311.2 million, compared to $265.0 million for the same period last year. Segment operating earnings for the first half of 2010 increased to $33.1 million compared to a $1.0 million loss in the prior-year period.

Outlook

“While we are encouraged by improving conditions in our end markets, we remain cautious about the global economic recovery and will continue to stay focused on cost management, funding strategic core investments and delivering solid incremental earnings growth. Long-term, we remain optimistic about the future of our electrical products portfolio and our diverse end market exposure that allows us to capitalize on emerging technologies and key market trends. Additionally, our strong balance sheet provides us great strategic flexibility,” commented Hachigian.

“For 2010 we are increasing our EPS guidance for continuing operations to $2.95 to $3.10, excluding the loss from the formation of the Tools Joint Venture. Our revised guidance now includes approximately $.06 per share of purchase accounting charges related to the Tools Joint Venture. This guidance assumes full-year revenue growth of 1 to 4 percent adjusted for the deconsolidation of the Tools segment. For the third quarter of 2010 we expect earnings per share of $.75 to $.80 with revenue up 2 to 5 percent compared to the third quarter of 2009, adjusted for the deconsolidation of the Tools segment. The third quarter guidance includes additional restructuring charges of $.01 to $.02 per share,” said Hachigian.

About Cooper Industries

Cooper Industries plc (NYSE: CBE) is a global electrical products manufacturer with 2009 revenues of $5.1 billion. Founded in 1833, Cooper's sustained level of success is attributable to a constant focus on innovation, evolving business practices while maintaining the highest ethical standards, and meeting customer needs. The Company has seven operating divisions with leading market share positions and world-class products and brands including: Bussmann electrical and electronic fuses; Crouse-Hinds and CEAG explosion-proof electrical equipment; Halo and Metalux lighting fixtures; and Kyle and McGraw-Edison power systems products. With this broad range of products, Cooper is uniquely positioned for several long-term growth trends including the global infrastructure build-out, the need to improve the reliability and productivity of the electric grid, the demand for higher energy-efficient products and the need for improved electrical safety. In 2009, sixty-one percent of total sales were to customers in the industrial and utility end-markets and thirty-nine percent of total sales were to customers outside the United States. Cooper has manufacturing facilities in 23 countries as of 2009. For more information, visit the website at www.cooperindustries.com.

Comparisons of 2010 and 2009 second quarter results appear on the following pages.

Statements in this news release are forward-looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, any statements regarding future revenues, costs and expenses, earnings, earnings per share, margins, cash flows, dividends and capital expenditures. Important factors which may affect the actual results include, but are not limited to, political developments, market and economic conditions, changes in raw material, transportation and energy costs, industry competition, the ability to execute and realize the expected benefits from strategic initiatives including revenue growth plans and cost control and productivity improvement programs, the ability to develop and introduce new products, the magnitude of any disruptions from manufacturing rationalizations, changes in mix of products sold, mergers and acquisitions and their integration into Cooper, the timing and amount of any stock repurchases by Cooper, changes in financial markets including currency exchange rate fluctuations, changing legislation and regulations including changes in tax law, tax treaties or tax regulations, and the resolution of potential liabilities and insurance recoveries resulting from on-going Pneumo-Abex related asbestos claims.

Conference Call

Cooper will hold a conference call today at 12:00 noon EDT to provide shareholders and other interested parties an overview of the Company’s second quarter 2010 performance. Those interested in hearing the conference call may listen via telephone by dialing (800) 706-7745 using pass code 52224377, or over the Internet in the “Investors” section of the company website, www.cooperindustries.com. International callers should dial (617) 614-3472 and use pass code 52224377.

The conference call may include non-GAAP financial measures. Cooper will post a reconciliation of those measures to the most directly comparable GAAP measures in the “Investors” section of the Company’s website, www.cooperindustries.com.

Informational exhibits concerning the Company’s second quarter performance that may be referred to during the conference call will be available in the “Investors” section of the Company’s website, www.cooperindustries.com prior to the beginning of the call.