Ingersoll-Rand plc said its board boosted the quarterly dividend to 12 cents a share from 7 cents, and authorized the repurchase of up to $2 billion of the environmental systems company's common shares.
The dividend at the 75% higher rate is payable June 30 to stock of record June 17.
Based on market conditions, the company said, share repurchases would be made in the open market and in privately negotiated transactions at the discretion of management. CEO Michael W. Lamach, who is also chairman and president of Ingersoll Rand, said the company was "on track to solidify our balance sheet through the reduction of debt." He added that "the strong cash flow delivered through ongoing productivity and margin improvement" was helping the company "move to the next phase of our communicated capital allocation strategy," allowing the dividend hike.
Ingersoll-Rand plans to release first-quarter financial results on April 21, and Lamach and CFO Steven R. Shawley, a senior vice president, will host a conference call at 10 a.m. that day, after the results are announced.
Ingersoll-Rand makes Trane air conditioners, among other products, and is based in Swords, Ireland.
The company had 329.6 million shares outstanding as of Feb. 11, according to data compiled by Bloomberg New. At yesterday's closing price, a $2 billion repurchase would amount to about 41.8 million shares.
In February the company had reported a 38% rise in fourth-quarter earnings from continuing operations, with results being in the mid-range of its guidance at the time. Its net income for that period was $212.1 million, or 62 cents a share, up from the prior year's $139.4 million, or 42 cents. The 2010 results included $1 million of after-tax income from discontinued operations. The 2009 results had included 4 cents a share from discontinued operations. Ingersoll-Rand had a 13% rise in fourth-quarter revenues, with orders increasing about 10%, excluding currency. Then, Lamach had said that the fourth quarter had reflected "additional progress toward reaching our long-term revenue growth and earnings objectives."
The fourth-quarter operating margin was 8.4%, an increase from 6.9% for the same period of 2009. Higher volumes and productivity drove the increase in operating profits and margins, the company had said, although the improvements were partially offset by higher inflation.