ITT Reports Solid Growth in 2012 Second Quarter, Maintains Full-Year EPS and Organic Revenue Guidance
- Second-quarter revenue grew to $568 million
- Organic revenue up 6 percent
- U.S. revenue up 18 percent
- Earnings from continuing operations totaled $0.18 per share
- Adjusted earnings from continuing operations up 8 percent to $0.50 per share
WHITE PLAINS, N.Y., Aug. 3, 2012 — ITT Corporation (NYSE: ITT) today reported second-quarter 2012 revenue of $568 million, including 6 percent growth in organic revenue (defined as total revenue excluding foreign exchange, acquisition and divestiture impacts) compared with the 2011 second quarter.
Revenue results included 18 percent U.S. growth; strength in core markets such as mining, chemical and general industrial; and share gains in the global automotive market.
On a GAAP basis, earnings from continuing operations totaled $0.18 per share compared with $0.20 per share in the prior-year second quarter. Adjusted earnings from continuing operations, which excludes special items, increased to $0.50 per share compared with pro forma adjusted earnings of $0.46 per share in the second quarter of 2011. This 8 percent increase in adjusted EPS reflects strong top-line performance and operational execution, as well as lower interest and corporate expenses, which more than offset lower connector volumes and incremental post-spin recurring costs.
“Our steady revenue growth in the second quarter demonstrates our ability to execute consistently on our growth strategies even in the midst of an uncertain global economic environment,” said CEO and President Denise Ramos. “We saw momentum across our businesses as our Industrial Process business had its third consecutive quarter of record shipments, and our Motion Technologies business grew 36 percent in emerging markets and gained European and North American market share. Our Interconnect Solutions business achieved sequential improvement in end markets including oil and gas, and Control Technologies made solid progress with aerospace and industrial customers.
“Our results also reflect the stability we gain as a global industrial company from a portfolio that is balanced and diversified across end markets, business cycles and geographies. Our business model — combined with the execution of our profitable growth drivers including operational excellence, premier customer experience and effective capital deployment — has positioned us well to continue to deliver growth and value creation.”
2012 Second-Quarter Business Segment Results
Industrial Process designs and manufactures industrial pumps and valves for the oil and gas, chemical, mining and industrial markets.
- 2012 second-quarter revenue was up 16 percent to $233 million and organic revenue was up 15 percent compared to the prior year, reflecting strength in all end markets served in North America, global mining strength and a 19 percent increase in aftermarket revenue.
- Adjusted operating income for the segment in the second quarter was $29 million, a 2 percent year-over-year decrease, as volume and strong operating productivity were offset by competitive project pricing conditions in emerging markets and post-spin incremental recurring costs.
Motion Technologies designs and manufactures braking technologies and shock absorbers for the automotive and rail markets.
- 2012 second-quarter revenue declined 6 percent to $155 million. However, organic revenue increased 5 percent, when adjusted for foreign currency impact. Results were driven by global share gains in both automotive and rail markets, which more than offset European weakness.
- Adjusted operating income for the business in the second quarter of 2012 was $20 million, a 7 percent decrease compared with the prior-year quarter, as volume increases and operating productivity were offset by unfavorable foreign currency exchange, expenses incurred in the development of a new production and research facility in Wuxi, China, and negative sales mix shift.
Interconnect Solutions designs and manufactures connectors and interconnects for the aerospace, industrial and transportation markets.
- 2012 second-quarter revenue for Interconnect Solutions was $100 million, an 8 percent decline, as strength in oil and gas connectors was more than offset by general weakness in the European market combined with a decrease in the communications connectors market. Organic revenue declined 5 percent compared to the prior-year second quarter.
- Adjusted operating income for the second quarter of 2012 was $6 million, a 61 percent decrease compared with the 2011 second quarter, as net operating productivity was more than offset by lower volumes and negative mix shift as well as a prior year gain on an asset sale.
Control Technologies designs and manufactures products including fuel management, actuation, and noise and energy absorption components for the aerospace and industrial markets.
- In Control Technologies, second-quarter total and organic revenue declined 3 percent and 2 percent, respectively, to $81 million. However, excluding the impact of a prior-year rail project, revenue was up 4 percent driven by growth in commercial aerospace in North America and global general industrial markets.
- 2012 second-quarter adjusted operating income was $15 million, a decrease of 4 percent, as improvements in pricing, mix shift and net operational productivity were offset by lower volumes and negative foreign currency exchange impacts.
The company maintains its guidance for full-year 2012 of adjusted earnings in the range of $1.62 to $1.72 per share and organic revenue of 5 to 7 percent including expected market share gains as well as the impact of late-cycle strength in oil and gas and mining. The company also expects emerging markets growth will be approximately 10 percent driven by oil and gas in the Middle East and mining in Latin America, automotive gains in China and new global platforms and products.
Investor Call Today
ITT's senior management will host a conference call for investors today at 9 a.m. EDT to review second-quarter performance and answer questions. The briefing can be monitored live via webcast at the following address on the company's website: www.itt.com.
ITT is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for growing industrial end-markets in energy infrastructure, electronics, aerospace and transportation. Building on its heritage of innovation, ITT partners with its customers to deliver enduring solutions to the key industries that underpin our modern way of life. Founded in 1920, ITT is headquartered in White Plains, N.Y., with employees in more than 30 countries and sales in a total of approximately 125 countries. The company generated 2011 revenues of $2.1 billion. For more information, visit www.itt.com.
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Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, future strategic plans and other 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 or implied in, or reasonably inferred from, such forward-looking statements. Factors that could cause results to differ materially from those anticipated include, but are not limited to: Uncertainties with respect to our estimation of asbestos liability exposures, third-party recoveries and net cash flow; economic, political and social conditions in the countries in which we conduct our businesses; changes in U.S. or International sales and operations; contingencies related to actual or alleged environmental contamination, claims and concerns, and related third-party recoveries; decline in consumer spending; sales and revenues mix and pricing levels; availability of adequate union and non-union labor, commodities, supplies and raw materials; interest and foreign currency exchange rate fluctuations; changes in local government regulations and compliance therewith; competition, industry capacity and production rates; declines in orders or sales as a result of industry or geographic downturn; ability of third parties, including our commercial partners, counterparties, financial institutions and insurers, to comply with their commitments to us; our ability to borrow and availability of liquidity sufficient to meet our needs; changes in the recoverability of goodwill or intangible assets; our ability to achieve stated synergies or cost savings from acquisitions or divestitures; the number of personal injury claims filed against the companies or the degree of liability; our ability to effect restructuring and cost reduction programs and realize savings from such actions; changes in our effective tax rate as a result in changes in the geographic earnings mix, valuation allowances, tax examinations or disputes, tax authority rulings or changes in applicable tax laws; intellectual property matters; governmental investigations; potential future postretirement benefit plan contributions and other employment and pension matters; susceptibility to market fluctuations and costs as a result of becoming a smaller, more focused company after the spin-off; changes in generally accepted accounting principles; and other factors set forth in our Annual Report on Form 10−K for the fiscal year ended December 31, 2011 and our other 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.
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