* Income from Continuing Operations is $42.5 Million - up from Comparable
$20.3 Million, Before Nonrecurring Items
* Leaner Cost Structure, Operating Improvements Drive Margin Growth
* $1.1 Billion Stock Repurchase Completed, Reducing Shares Outstanding by
WHITE PLAINS, N.Y., April 21 /PRNewswire/ -- ITT Industries, Inc.
(NYSE: IIN) today reported first quarter 1999 diluted earnings per share (EPS)
from continuing operations of $0.45, an increase of $0.28 per share before
nonrecurring items from the comparable figure in the first quarter 1998.
Income from continuing operations for the first quarter was $42.5 million, up
from the comparable $20.3 million before nonrecurring items in the period last
year. Operating income from ongoing segments was $89.7 million, up
$8.1 million or 9.9 percent over the period last year, resulting from an
operating margin increase of 0.6 percentage points. The margin expansion was
attributable to operating improvements and cost-saving moves that the company
began implementing last year. Revenues from ongoing segments for the first
quarter were $1.09 billion, up $15.1 million or 1.4 percent from 1998. Due to
the disposition of the company's automotive business, treated as a
discontinued operation in 1998, reported net income for the first quarter is
off $13.1 million from the reported net income in the period last year.
"We are especially pleased to see the margin gains we're making across our
businesses, particularly in the Connectors & Switches and Specialty Products
segments; it is clear that we have taken effective steps to improve our
profitability," said Travis Engen, chairman and chief executive of ITT
Industries. "The restructuring initiative we began in the fourth quarter is
progressing on schedule. With this and other ongoing improvements in our
operations, we foresee that margin improvements will continue through the
remainder of 1999 and help us deliver another year of solid earnings growth."
Engen said the company's $1.1 billion stock repurchase program was
completed late in the first quarter. During the course of the program
initiated last July, ITT Industries repurchased 30.5 million of its shares on
the open market, at an average price of approximately $36 per share. As a
result, the current number of ITT Industries shares outstanding has been
reduced to 87.9 million.
"We have been and will continue to be selective in how we invest the
proceeds from the 1998 sale of our automotive business," Engen said. "The
investment in our own stock has proved to be a good one, since we were able to
complete the program ahead of schedule, and at an attractive average price.
Other investments include our acquisition of Water Pollution Control
Corporation, enhancing our wastewater treatment business, and our recently
announced investment in EarthWatch, a company developing a global satellite
imaging network that allows us to increase our involvement in the growing
commercial satellite market."
Engen said that proceeds from the automotive sale have also enabled the
company to increase its financial flexibility by paying off debt. He said the
company remains interested in acquisitions where they can add economic value
and strengthen existing market positions.
"Over the last two years, through a series of actions, we've redirected
our focus toward our businesses with higher potential for value creation,"
Engen said. "We continue to look inside the company, as well as at potential
acquisition candidates, seeking investment opportunities that will enhance
value for our shareholders."
Primary Business Results
Operating margins for the first quarter in the Specialty Products segment
were up sharply over the period last year, an improvement of 1.6 percentage
points due to increased sales and improved operating performance. Operating
income for the first quarter was $31.2 million, up $7.9 million or
33.9 percent over the first quarter 1998, due to cost reductions and higher
volume. First quarter revenue was $240.0 million, up $35.6 million or
17.4 percent, due to strong revenue gains within the Friction Materials, Fluid
Handling and Shock Absorber businesses, and the acquisition of Rule Marine.
Ongoing operational improvements should expand margins in this segment through
the remainder of the year.
Connectors & Switches
ITT Industries' Connectors & Switches segment saw first quarter operating
margins increase 0.7 percentage points over the period last year, due to the
cost saving measures taken in conjunction with its restructuring and continued
manufacturing improvements. These measures will help fuel significant margin
expansion through 1999. First quarter operating income was relatively flat at
$10.5 million, despite revenues that were down $10.9 million from last year to
$121.2 million. The revenue decline reflects weak demand in some major
markets, particularly military/aerospace. ITT Industries expects that weak
market conditions in this segment will be partially offset by strong growth in
the Switches business through the remainder of the year, with new products
introduced for customers such as Ericsson, Nokia, Motorola and Alcatel.
Defense Products & Services
The Defense Products & Services segment reported operating margin
increases of 0.2 percentage points from the first quarter 1998. First quarter
operating income was flat at $18.6 million, on revenue of $326.6 million.
Revenue for the quarter was off $10.3 million, or 3.0 percent, from the period
last year, which is due to shipments in the aerospace/communications division
that were delayed until the second quarter. Sales were up within the
segment's Avionics, Night Vision and Gilfillan units. ITT Industries expects
margin expansion to continue in the defense segment in 1999, and full-year
revenue to grow, primarily due to continued strong increases in international
sales and growth within the government services business.
Pumps & Complementary Products
Aggressive restructuring within the Pumps & Complementary Products segment
allowed the business to maintain its margins in a weak environment. Excluding
period costs from restructuring, margins in this segment would have increased
0.8 percentage points. Operating income for the first quarter was
$29.4 million, up slightly from the period last year. Revenue for the quarter
was $401.5 million, up $0.3 million from the first quarter 1998; lower sales
in the industrial pump process industries were offset by increases in the
construction and wastewater businesses, and by the acquisition of Water
Pollution Control Corporation in January 1999. Though some key end markets
are expected to remain weak through the remainder of the year, ITT Industries
expects continued growth in operating margin for this segment.
ITT Industries First Quarter Financial Results
(in millions, except EPS)
Total Sales and Revenues $1,091.7 $1,099.2
from Ongoing Segments $89.7 $81.6
Continuing Operations $42.5 $20.3
Shares, Diluted 95.3 121.6
from Continuing Operations $0.45 $ 0.17
* 1998 figures exclude nonrecurring items of $12.3, after tax, or
$0.10 per share.
ITT Industries, Inc. (http://www.ittind.com) is a global industrial
manufacturing company with leading positions in the markets that it serves,
generating 1998 global sales of $4.5 billion. ITT Industries is the world's
premier and largest producer of pumps and produces other systems and services
to move and control fluids. The company is also a leading supplier of
sophisticated military defense systems, and provides advanced technical and
operational services to a broad range of government agencies. ITT Industries
is a leading provider of connectors, switches and cabling used in
telecommunications, computing, aerospace and industrial applications, as well
as network services. Further, ITT Industries provides 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.
ITT Industries and its subsidiaries' news releases are available at no
charge via fax and the Internet. For ITT Industries news and information on
the Internet, visit http://www.ittind.com. To receive releases by fax, call
800-758-5804, extension 110006.
SOURCE ITT Industries, Inc.
Web site: http://www.ittind.com
CONTACT: Tom Glover of ITT Industries, 914-641-2160,