Q2 2013 Earnings Call Transcript

Transcript Call Date 04/26/2013

Operator: Welcome to the Tyco Second Quarter Earnings Conference Call. All participants have been placed on a listen-only mode until the question-and-answer session. Today's call is being recorded. If you have any objections, please disconnect at this time.

I will now turn the call over to Antonella Franzen, Vice President of Investor Relations. You may begin.

Antonella Franzen - IR: Good morning, and thank you for joining our conference call to discuss Tyco's second quarter results for fiscal year 2013 and the press release issued earlier this morning.

With me today are Tyco's Chief Executive Officer, George Oliver; and Chief Financial Officer, Arun Nayar.

I would like to remind you that during the course of today's call, we will be providing certain forward-looking information. We ask that you look at today's press release and read through the forward-looking, cautionary, informational statements that we've included there.

In addition, we will use certain non-GAAP measures including normalized earnings per share in our discussion, and we ask that you read through the sections of our press release that address the use of these items. The press release issued this morning and all related tables, as well as the conference call slides, which contain summary financial information, can be found on the Investor Relations portion of our website at Please also note that we will be filing our second quarter SEC Form 10-Q later today.

In discussing our segment operations, when we refer to changes in backlog and order activity, these figures exclude the impact of foreign currency. Additionally, references to operating margins during the call exclude special items making them non-GAAP metrics. These non-GAAP metrics are reconciled in the schedules attached to our press release.

Now, let me quickly recap this quarter's earnings. Earnings per share from continuing operations attributable to Tyco common shareholders was $0.16, and included charges of $0.26 related to special items. These charges related primarily to a legacy environmental matter as well as separation and restructuring activity.

Earnings per share from continuing operations before special item was $0.42 compared to the prior year quarter of $0.30. As we mentioned on our last earnings call, EPS this fiscal year is not directly comparable to the prior year as the prior year's results include corporate and interest expense associated with supporting the ADT and Flow Control businesses.

Additionally, our 2013 results are being impacted by the synergies associated with the separation of the commercial security operations in North America from ADT. Normalizing last year's results for these items, the comparable prior year earnings per share before special items would have been $0.35.

Now, let me turn the call over to George.

George R. Oliver - CEO: Thanks, Antonella, and good morning, everyone. I am pleased with our second quarter results and the progress we are making in executing our growth strategy. In our Installation & Services businesses, service revenue growth is accelerating, the margin in our installed business is improving, and backlog is growing.

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