DUBLIN -- Cooper Industries plc today reported record third quarter earnings per share of $1.16, an increase of 18% compared to earnings per share of $.98 for the same period last year. Total operating profit margin was 17.0% for the third quarter of 2012, an increase from 14.8% in the same period last year.
Third quarter 2012 revenues increased $107.8 million, or 7.8%, to $1.50 billion compared to revenues of $1.39 billion in the third quarter of the prior year. Core revenue growth was 6.7%, with acquisitions adding 2.6% and currency translation reducing reported revenues by 1.5% when compared to the prior year. Order rates slowed during the quarter resulting in a third quarter book-to-bill ratio of 98%; however, the order backlog was still up 16% versus December 31, 2011. North America and developing markets continue to perform well, as businesses selling into key growth markets such as industrial and oil & gas experienced solid demand. Commercial and residential construction demand showed positive trends with orders increasing throughout the quarter, but overall demand still remains muted.
For the first nine months of 2012 Cooper reported free cash flow of $432.7 million, an increase of 20.9% compared to the same period last year. The $432.7 million of free cash flow for the first nine months includes an increase of $28.6 million in capital expenditures compared to the same period last year. The company's debt, net of cash as of September 30 was $460.6 million, which resulted in a 10.0% net debt-to-capitalization ratio. The effective tax rate was 21.6% for the third quarter versus 15.2% for the same period last year. The increase in the effective tax rate is primarily due to increased income in higher tax jurisdictions.
Market Commentary
Geographic End Markets Core growth for the United States and Canada was 4%, reflecting continued favorable growth trends in the industrial end market but offset somewhat by a softening of demand in the utility end market. The North American lighting business showed double-digit core growth driven by continued adoption of LED technology and demand for energy efficient products. LED-based products represented greater than 20% of third quarter net sales for the Cooper Lighting division. Western Europe remained stable and experienced slightly negative core growth. The Company's exposure to large industrial and energy projects in the region continued to serve as a source of growth which offset the persistent weakness in commercial end markets.
Core growth for developing markets was 19%. Latin America, Australia and the Middle East experienced strong double-digit core growth due to continued demand related to large global energy projects; while China experienced core growth of over 20%, reflecting a reacceleration of growth in electronics and utility products.
Industry End Markets The momentum from the first half of 2012 continued with very solid project activity in the energy markets and demand in the industrial distribution/MRO markets. Increased growth is being driven by large projects, recent acquisitions, new products and our expanded global footprint.
Utility end markets experienced mixed results. Strong growth in Asia and other developing economies was driven by large projects and increased quote activity, as well as demand for Switchgear and LIPE products. This growth was offset by North America which experienced slower growth as utility customers postponed larger projects and sales relating to the Energy Automation Solutions (EAS) business continued to be sluggish.
Commercial construction activity was bolstered by an increase in new projects and continued retrofit/remodeling activity. Sales of energy efficient LED-based products grew rapidly across all channels and geographies.
Segment Results
Energy & Safety Solutions Segment revenues for the third quarter of 2012 increased 6.9% to a record $804.0 million, compared with $752.2 million in the third quarter 2011. Core revenues were 6.9% higher than the comparable prior year period, with acquisitions adding 2.3% and currency translation reducing reported revenues by 2.3%. Core revenue growth was driven by strong demand for our highly specified products used in energy markets and global infrastructure.
Segment operating earnings, also a record for the third quarter, were $152.6 million, an increase of 21.5% from the $125.6 million in the prior year's third quarter. Segment operating margin increased 230 basis points to 19.0% for the third quarter 2012, compared to 16.7% for the third quarter of 2011.
Excluding the impact of acquisitions, segment operating earnings were $150.8 million, an increase of 20.0% and segment operating margin increased 240 basis points to 19.1%.
Electrical Products Group Segment revenues for the third quarter of 2012 increased 8.8% to $693.5 million, compared with $637.5 million in the third quarter 2011. Core revenues were 6.5% higher than prior year, with acquisitions adding 3.0% and currency translation decreasing reported results by 0.7%. Core revenue growth was driven by industrial and commercial products relating to energy projects and continued robust demand for energy efficient products. Residential demand showed solid strength with order rates up double-digits.
Segment operating earnings were $103.3 million, an increase of 17.0% from the $88.3 million reported in the prior year's third quarter. Segment operating margin increased 100 basis points to 14.9% for the third quarter of 2012, compared to a third quarter 2011 of 13.9%. Excluding the impact from acquisitions, segment operating margin increased 150 basis points to 15.4%.
Tools
Joint Venture Equity income from the Apex Tool Group joint venture was $18.5 million for the third quarter of 2012, compared to equity income of $16.0 million in the third quarter of 2011. The earnings improvement was a result of solid top line results and the continued benefits resulting from productivity programs. On October 10, 2012, Cooper and Danaher Corporation (NYSE:DHR) announced they have signed a definitive agreement to sell Apex Tool Group to Bain Capital for approximately $1.6 billion subject to post-closing adjustments. Currently, Cooper and Danaher each maintain a 50% ownership interest in Apex.
