Investor News
ITT Reports Strong Fourth Quarter and Full Year 2006 Operating Results; Reaffirms Solid Outlook for 2007
- Fourth quarter revenue up 11 percent to $2.1 billion on strong growth in all segments; organic revenue up 8 percent; strong cash flow performance.
- Fourth quarter operating margins improve in commercial segments.
- Full year 2006 revenues increase 11 percent to $7.8 billion; 10 percent organic revenue growth.
- Dividend increasing by 27 percent to $0.56 per share.
White Plains, New York - February 2, 2007 - ITT Corporation (NYSE: ITT) today reported fourth quarter 2006 net income of $140.8 million or $0.75 per share, including the impact of special items of $3.4 million or $0.02 per share. Excluding special items, earnings from continuing operations were $0.73 per share. Fourth quarter 2006 revenue was $2.1 billion, up 11 percent over the fourth quarter last year.
"We are quite pleased with our performance in the quarter and for 2006 as a whole," said Steve Loranger, Chairman, President and Chief Executive Officer. "We have delivered double-digit annual organic growth for three straight years, placing ITT in a leadership position among multi-industry companies. Our continuing organic growth demonstrates our ability to anticipate market needs with new products, to expand geographically and to compete in a wide range of markets. We believe our diverse range of products and attractive end markets also provide resilience to economic cycles. Based on our strong portfolio, coupled with our continuing improvement in operating performance, we believe we are well positioned to achieve our goals as we enter 2007."
The company also announced that its Board of Directors had approved a 27 percent increase in the annual dividend on ITT's common shares from $0.44 per share to $0.56 per share effective April 1, 2007.
Full Year 2006 Results
Reported net income for 2006 was $581.1 million and full year reported earnings per share was $3.10, including the impact of special items. Excluding special items, earnings from continuing operations were $534.7 million or $2.85 per share, up 11 percent over 2005. As previously announced, 2006 fourth quarter operating results included a charge to net income of $25 million ($0.13 per share) in anticipation of resolution of a legal matter at the company's Night Vision business. Full year 2006 revenues were $7.8 billion, up 11 percent from the prior year. Organic revenue, which excludes the impact of acquisitions and currency translation, grew 10 percent in 2006. Free cash flow (defined as cash from operations before pension pre-funding net of tax, minus capital spending) was $669 million compared to $614 million in 2005.
2007 Outlook
"With our strong fourth quarter performance, we are confirming our full year guidance for 2007," Loranger said. "We continue to expect earnings per share of $3.30 - $3.38, an increase of 16 - 19 percent over full year 2006 operating results excluding special items. We expect to achieve revenues of $8.29 to $8.38 billion, with segment operating margins in the 13 percent range and free cash flow at or above our income from continuing operations."
Primary Business Results
Fluid Technology
- Fourth quarter 2006 Fluid Technology revenue was $838.8 million, up $89 million or 12 percent from the previous year. Full year revenues were $3.1 billion up 10 percent over 2005. 2006 organic revenues grew 6 percent in the fourth quarter and 7 percent for the year.
- Fourth quarter 2006 operating income was $108.2 million including the impact of restructuring. Excluding restructuring, fourth quarter operating income was up 17 percent over the same period in 2005 to $123.4 million. Full-year 2006 operating income was $370.6 million, including restructuring. Excluding restructuring, operating income was up 13 percent to $397.3 million over the same period in 2005.
- Fourth quarter segment operating margin excluding restructuring increased 70 basis points over the prior year, reflecting a continued focus on lean initiatives, refinement of the manufacturing footprint, and global sourcing. The company anticipates continued margin improvement in Fluid Technology in 2007.
- The company's water and wastewater businesses continued to grow organically, with growth in de-watering particularly robust in the quarter.
Defense Electronics & Services
- ITT's Defense Electronics & Services segment reported 2006 fourth quarter revenues of $952.3 million, up 10 percent over the same period in 2005, with full year revenues of $3.7 billion, up 13 percent over 2005. Organic revenue growth for Defense for the fourth quarter and full year was up 10 percent and 13 percent, respectively, over 2005. Revenue growth in the fourth quarter was driven by continued strong demand in Tactical Communications, Night Vision and Advanced Engineering and Sciences.
- Operating income for the fourth quarter of 2006 including restructuring was $95.3 million and $404.3 million for the full year 2006. Excluding restructuring, operating income in the quarter declined 6 percent to $97.8 million, and was up 13 percent for the full year 2006 to $410.6 million. Fourth quarter 2006 operating income for Defense was negatively affected by a charge relating to the resolution of a legal matter involving the Night Vision business.
- 2006 full year orders increased by 21 percent and order backlog was up 12 percent at year end compared to 2005. Both Advanced Engineering and Sciences and Electronic Systems businesses received over $100 million in orders during the fourth quarter of 2006.
Motion & Flow Control
- Starting with the fourth quarter 2006 results, ITT's Motion & Flow Control segment includes the Connectors business, formerly reported as part of Electronic Components. Electronic Components had also included the Switches business, which is reported in discontinued operations. Prior periods have been restated to reflect this change.
- Fourth quarter 2006 revenues were $263.1 million, up 11 percent from the fourth quarter of 2005. Fourth quarter 2006 operating income for the segment including restructuring was $35.9 million. Excluding restructuring, fourth quarter operating income was $36.6 million, up 14 percent from the comparable period in 2005.
- 2006 full year segment revenues rose 6 percent to $1.1 billion over 2005. On an organic basis, fourth quarter and full year revenues increased 6 percent compared to 2005. 2006 full year segment operating income including restructuring was $149.7 million.
- Excluding restructuring, operating income rose 7 percent to $166.2 million over 2005. This performance reflects both market share gains in the friction materials business, and strong order growth across all value centers.
- Operating margins, excluding restructuring, increased by 30 basis points for the quarter and 10 basis points for the year compared to 2005.
- Organic orders grew by 10 percent for the full year, compared to 2005.
About ITT Corporation
ITT Corporation (www.itt.com) supplies advanced technology products and services in several growth markets. ITT is a global leader in the transport, treatment and control of water, wastewater and other fluids. The company plays a vital role in international security through its defense communications and electronics products; space surveillance and intelligence systems; and advanced engineering and related services. It also serves the growing leisure marine and electronic components markets with a wide range of products. Headquartered in White Plains, NY, the company generated $7.8 billion in 2006 sales. In addition to the New York Stock Exchange, ITT Corporation stock is traded on the Paris, London and Frankfurt exchanges.
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"Safe Harbor Statement" under the Private Securities Litigation Reform Act of 1995 ("the Act"):
Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include statements that describe the Company's business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. Whenever used, words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target" and other terms of similar meaning are intended to identify such forward-looking statements. Forward-looking statements are uncertain and to some extent unpredictable, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed in, or implied from, such forward-looking statements. Factors that could cause results to differ materially from those anticipated by the Company include general global economic conditions, decline in consumer spending, interest and foreign currency exchange rate fluctuations, availability of commodities, supplies and raw materials, competition, acquisitions or divestitures, changes in government defense budgets, employment and pension matters, contingencies related to actual or alleged environmental contamination, claims and concerns, intellectual property matters, personal injury claims, governmental investigations, tax obligations, and changes in generally accepted accounting principles. Other factors are more thoroughly set forth in Item 1. Business, Item 1A. Risk Factors, and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements in the ITT Industries, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and other of its filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact:
Peter Milligantel +1 914 641 2030
