News & Releases
ITT Reports Strong 2018 First-Quarter Results
Friday, 4 May 2018
Raises full-year EPS guidance
2018 First-Quarter GAAP Results
2018 First-Quarter Adjusted Results
- Record revenue up 10% to $689 million
- Record orders up 14% to $761 million
- Segment operating income up 28% to $102 million
- EPS of $1.14
- Organic revenue up 2%
- Organic orders up 4%
- Record adjusted segment operating income up 22% to $103 million
- Record adjusted EPS up 20% to $0.77
WHITE PLAINS, N.Y., May 4, 2018
- Won 2 North American Front Axle, Copper Free OEM Friction Platforms with Major OEMs
- Successfully Ramping Production at New State-of-the-Art North American Friction Facility
- Record Orders on Share Gains in Rotorcraft, and Electric Vehicle Charging Station Markets
– ITT Inc. (NYSE: ITT) today reported 2018 first-quarter financial results that reflect the company's continued focus on operational execution and growth strategies to win share in key global end markets. "In the first quarter, ITT delivered record results and double-digit growth across a number of key metrics including orders, revenue, adjusted segment operating income and adjusted EPS," said CEO and President Denise Ramos. "This performance was driven by our intense focus on optimizing execution, reflected in our strong productivity gains, and on initiatives that are helping us gain share in strategic end markets around the world. In 2018, while we'll continue to drive results through operational efficiencies, I am excited by the progress we are making in a number of new growth markets and see significant potential for us to accelerate our top-line momentum."
Revenue and Orders
On a GAAP basis, the company delivered revenue of $689 million, reflecting a 10 percent increase over the prior year, which included a 7 percent benefit from foreign exchange. Organic revenue (defined as total revenue excluding foreign exchange, acquisition and divestiture impacts) increased 2 percent driven by strength in emerging markets and transportation. The revenue results also reflect growth in aftermarket pump services and rotorcraft equipment, offset by declines in short-cycle baseline pumps in Asia. Organic orders grew 4 percent as growth in global auto friction, rotorcraft equipment, defense aftermarket, and electric vehicle connectors more than offset an unfavorable comparison due to a significant prior year oil and gas pump project order. Organic orders grew 8 percent excluding this large prior year oil and gas order.
Segment Operating Income
GAAP segment operating income increased 28 percent to $102 million on segment margins of 14.8 percent. Adjusted segment operating income increased 22 percent to $103 million, with double-digit growth delivered by each segment. Adjusted segment operating margins improved 140 basis points to 15.0 percent due to higher volumes, productivity and restructuring benefits, improved performance on pump projects and favorable foreign exchange, partially offset by higher commodity costs and growth investments. GAAP segment operating income benefited from lower restructuring and realignment costs.
Earnings Per Share
GAAP EPS increased 119 percent to $1.14. Adjusted EPS, which excludes special items, increased 20 percent to $0.77, reflecting the growth in adjusted segment operating income and favorable impacts from a lower tax rate of 23.8 percent, partially offset by unfavorable environmental and corporate cost comparisons. GAAP EPS benefited by $32 million from an asbestos-related insurance settlement agreement, in addition to favorable tax adjustments, and lower restructuring and realignment costs.
The company is raising the mid-point of its previously announced 2018 full-year adjusted EPS guidance by five cents to $3.05 which represents an 18 percent increase compared to the prior year. The updated adjusted EPS guidance range of $2.95 to $3.15 reflects stable market dynamics and improved net operating productivity including restructuring benefits, partially offset by higher commodity costs.
2018 First-Quarter Business Segment Results
All quarterly results are compared with the respective prior-year period.
- Total revenue increased 19 percent to $342 million, which includes a $37 million favorable impact from foreign exchange and $6 million from the Axtone acquisition. Organic revenue increased 4 percent. Both measures reflect 9.5 percent growth in global OEM automotive brake pads and significant growth in the China high-speed rail market, partially offset by an anticipated decline in European aftermarket due to phasing and destocking by distributors.
- GAAP operating income increased 13 percent to $62 million, and adjusted segment operating income increased 13 percent to $63 million. Both increases reflect strong volume growth, productivity improvements from the Wolverine business, and favorable impacts from foreign exchange, partially offset by unfavorable aftermarket mix, higher commodity costs, and strategic investments.
Connect and Control Technologies
- Total revenue increased 2 percent to $190 million, and organic revenue was flat, reflecting growth in aftermarket service, which was offset by declines in short-cycle baseline pumps primarily in oil & gas in Asia. Project revenue declined 1 percent due to oil and gas, offset by strong petrochemical and general industrial. Total revenue also includes the impact of favorable foreign exchange.
- GAAP operating income increased 109 percent to $17 million, and adjusted segment operating income increased 57 percent to $17 million. Both measures reflect increased productivity from supply chain actions and restructuring benefits, as well as continued project performance improvements, partially offset by higher strategic investments in efficiency initiatives. The GAAP operating income benefited from lower restructuring and realignment costs.
- Total revenue increased 3 percent to $158 million, and organic revenue was flat, reflecting strength in commercial aerospace, as well as increased demand for electric vehicle and oil and gas connectors, offset by a decline in defense connectors. Total revenue benefited from the impact of favorable foreign exchange.
- GAAP operating income increased 38 percent to $23 million and adjusted segment operating income increased 28 percent to $23 million. Both measures reflect improved productivity including restructuring benefits driven by the CCT integration, partially offset by unfavorable material cost headwinds. GAAP operating income benefited from lower realignment costs.
Investor Call Today
ITT's senior management will host a conference call for investors today at 9 a.m. ET to review performance and answer questions. The briefing can be monitored live via webcast at the following address on the company's website:
and a replay of the webcast will be available for 90 days following the presentation. A replay will also be available telephonically from two hours after
the webcast until Friday, May 18, 2018, at midnight.
For a reconciliation of GAAP to non-GAAP results, please refer to
. All references to EPS are defined as diluted earnings per share from continuing operations.
ITT is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and oil and gas markets. 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. ITT is headquartered in White Plains, N.Y., with employees in more than 35 countries and sales in a total of approximately 125 countries. The company generated 2017 revenues of $2.6 billion.
Safe Harbor Statement
This release contains "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 are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our business, future financial results and the industry in which we operate, and other legal, regulatory and economic developments. 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.
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