- Net income is $63.3 million, up 72 percent from comparable $36.7 million
- Margin expansion, earnings and revenue growth on track to meet stated
long-term financial objectives
WHITE PLAINS, N.Y., July 21 /PRNewswire/ -- ITT Industries, Inc.
(NYSE: IIN) today reported second quarter 1999 diluted earnings per share
(EPS) of $0.70, up $0.40 per share from the comparable figure in the second
quarter 1998. Net income for the quarter was $63.3 million, up 72 percent
from the comparable $36.7 million in the quarter last year before
non-recurring items. Operating income from ongoing segments was
$128.3 million, up $22.0 million excluding 1998 non-recurring items. This 21
percent increase is due to revenue growth and the impact of operating
improvements, which expanded operating margins by 1.2 percentage points.
Revenues for the quarter were $1.2 billion, up $66.4 million from the period
last year. Acquisitions and organic sales growth in the Defense and Specialty
Products segments contributed to this 5.9 percent increase.
"It is clear from these results that we are reaching the financial
milestones we've set for ourselves in the key areas of margin expansion, and
earnings and revenue growth," said Travis Engen, chairman and chief executive
of ITT Industries. "Through actions we began late last year and continue to
take today, we are moving toward higher profitability and faster growth with
greater financial flexibility to pursue attractive acquisition opportunities
as they arise."
At an Investor Conference held recently, Engen detailed multi-year growth
objectives for the company. Those objectives are revenue growth of
8 to 10 percent per year, EPS growth of 14 to 16 percent per year, and segment
operating margin expansion to 12 percent within the next four years.
"About half of our revenue growth in the second quarter was in our ongoing
businesses, and the remainder was attributable to acquisitions and one-time
items," Engen said. "Our margin expansion and EPS growth for the quarter are
also in line to meet our objectives for 1999 and beyond."
Engen said the company completed two acquisitions recently, HydroAir and K
and M Electronics (the latter closed in the third quarter), that are
indicative of the type of businesses in which the company will invest. While
relatively small (combined annual revenues of approximately $35 million), both
enhance existing ITT Industries business units' operational strength and
"Acquisitions like these and others we have in the pipeline have one
goal -- to enhance shareholder value," Engen said. "Additionally, our
recently announced strategic alliances in space imaging and voice recognition
technology will give us opportunities to expand our presence in these high
potential growth markets."
Connectors & Switches
Operating margins in the Connectors & Switches segment during the second
quarter jumped 3.3 percentage points over the period last year, reflecting
operating improvements and cost saving measures that were implemented
beginning in late 1998. Operating income for the quarter was up $3.1 million
over 1998, while segment sales were down $9.5 million to $123.8 million on
continued weakness in military/aerospace and commercial aircraft segments.
While some key end markets are expected to remain sluggish through the end of
the year, ITT Industries expects new product introductions in Europe and North
America, such as RF connectors and switches for mobile communication platforms
and new designs for transportation applications, will help offset the decline.
Defense Products & Services
ITT Industries' Defense Products & Services segment saw operating income
increase 7.4 percent, or $1.9 million, over the period last year, to
$27.5 million. Operating margin was down slightly due to product mix. Second
quarter revenues were up $65.8 million, or 21 percent, to $376.7 million, due
primarily to a 16 percent increase in international sales, increased volume in
the SINCGARS shipments and a $25 million settlement on a closed contract.
While full year operating margin should remain about the same as in 1998,
higher Avionics sales will help this segment deliver double-digit operating
income growth for the year.
Pumps & Complementary Products
Significant operating improvements in the Pumps & Complementary Products
segment over the last nine months helped push second quarter operating margins
up 1.2 percentage points over last year. Operating income for the quarter was
up 11 percent, or $4.3 million, to $43.0 million. Continued weakness in the
segment's industrial end-use markets was partially offset by strengths in
other market segments, including water and wastewater, and construction. For
the quarter, revenues were down 3 percent or $13.4 million to $441.3 million.
ITT Industries' Specialty Products segment reported operating income up
44.7 percent, or $12.7 million to $41.1 million, due primarily to increased
sales volume and market share gains in the Fluid Handling Systems unit and
significant cost reductions. Revenues for the quarter were $246.8 million, up
$32.4 million, or 15.1 percent, over the period in 1998. Revenue growth in
the segment was primarily driven by strong underlying market conditions,
market share gains in the segment's Fluid Handling unit and growth in the
Leisure Marine business. Increased volume helped boost operating margins in
the segment 3.5 percentage points over the 1998 period, and should fuel
continued operating income gains and a year-over-year margin increase for
ITT Industries Second Quarter Financial Results
(in millions, except EPS)
Total Sales and Revenues $1,191.7 $1,125.3
from Ongoing Segments $128.3 $106.3
Income from Continuing
Operations $63.3 $30.2
Shares, Diluted 90.8 122.1
from Continuing Operations $0.70 $0.30
* 1998 figures exclude non-recurring items of $6.5, after tax,
or $0.05 per share.
ITT Industries, Inc. (http://www.ittind.com) is a global engineering and
manufacturing company with leading positions in the markets it serves,
generating 1998 sales of $4.5 billion. ITT Industries is the world's premier
supplier of pumps, systems and services to move and control water and other
fluids. The company is a major supplier of sophisticated military defense
systems, and provides advanced technical and operational services to a broad
range of government agencies. ITT Industries also produces connectors,
switches and cabling used in telecommunications, computing, aerospace and
industrial applications, as well as network services. Further, ITT Industries
makes industrial components for a number of other markets, including
transportation, construction and aerospace. Based in White Plains, NY, ITT
Industries employs approximately 33,000 people around the world.
In addition to the New York Stock Exchange, ITT Industries' common stock
is traded on the Midwest, Pacific, London, Frankfurt and Paris exchanges.
Certain material presented herein consists of forward-looking statements
which 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. Such factors
include those set forth in Item 1. Business and Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Forward-Looking Statements in the ITT Industries, Inc. Form 10-K Annual Report
for the fiscal year ended December 31, 1998, and other of its filings with the
Securities and Exchange Commission.
SOURCE ITT Industries, Inc.
Web site: http://www.ittind.com
Company News On-Call: http://www.prnewswire.com/comp/110006.html
or fax, 800-758-5804, ext. 110006
CONTACT: Tom Glover of ITT Industries, 914-641-2160, or