- First-quarter revenue of $2.76 billion was up 7 percent from the same period in 2010.
- Earnings from continuing operations were $126 million, or $0.67 per share.
- Adjusted earnings from continuing operations rose to $0.98 per share, up 18 percent from the year-ago period.
- Double-digit order growth in all segments.
- Company raises full-year adjusted EPS guidance midpoint to $4.76 per share.
- Spinoff transactions are on track to close by the end of the year.
WHITE PLAINS, N.Y., April 29, 2011 — ITT Corporation (NYSE: ITT) today reported 2011 first-quarter revenue of $2.76 billion. Income from continuing operations was $126 million, down 13 percent from the prior-year period, due to costs related to the company's planned spinoffs of its defense and water businesses. Excluding the impact of these costs, income from continuing operations for the quarter was $182 million, or $0.98 per share, representing 18 percent year-over-year growth.
"We are off to a very strong start in the first quarter of 2011, with double-digit revenue and earnings growth in both Fluid Technology and Motion and Flow Control, which is more than offsetting the headwinds we are facing in the U.S. defense market and higher commodity costs," said Steve Loranger, ITT's chairman, president and chief executive officer. "Our businesses delivered excellent operating performance, and productivity drove strong operating margin expansion. When coupled with double-digit order demand, this gives us confidence to raise full-year adjusted earnings guidance."
First-Quarter Segment Results
Defense and Information Solutions
- First-quarter 2011 revenue was $1.3 billion, down 4 percent from the first quarter of 2010, due largely to the combined impact of changing U.S. Department of Defense market dynamics and decreased revenue from jammers and radios that was partially offset by revenue from recent long-term services contract wins. Orders were 26 percent better than the comparable period in 2010, driven by increased service activity and new key program wins.
- First-quarter operating income was $137 million, down 3 percent from the same period in 2010, as a result of the decline in revenue, which was partially offset by savings resulting from planned realignment activities begun in 2010 and productivity improvements.
Fluid Technology
- First-quarter 2011 Fluid Technology revenue of $992 million was up 24 percent on a year-over-year basis, driven by acquisitions as well as strong organic growth in the Water and Wastewater and Residential and Commercial Water businesses.
- Organic revenue (defined as total revenue excluding foreign exchange and acquisition impacts) was up 8 percent, driven by strength in the public utilities treatment and transport, dewatering, light industrial and commercial building services markets around the world. Organic orders for the segment were up 12 percent, largely driven by growth in the Industrial Process business within the oil and gas and mining markets, combined with strong orders across the Water and Wastewater and Residential and Commercial Water businesses.
- First-quarter operating income was $124 million, up 36 percent from the comparable prior-year period, driven by volume and productivity gains, which more than offset unfavorable foreign exchange and higher pension costs.
Motion and Flow Control
- First-quarter 2011 revenue for the Motion and Flow Control segment grew 11 percent on a comparable prior-year basis to $430 million, driven by increased demand across all of the businesses in this segment.
- Organic orders were up 20 percent, driven primarily by significant growth in the aerospace market at Control Technologies, as well as strong performance in the automotive and rail markets for Motion Technologies. The Interconnect Solutions business also experienced strong demand in the oil and gas and handheld device connector markets; Flow Control drove share gains in the marine aftermarket.
- Operating income of $65 million was up 18 percent from the same period in 2010, driven by increased volumes.
ITT Transformation
Efforts to separate ITT into three independent publicly traded companies have progressed nicely in 2011.
"While we continue to make excellent progress on our transformation plans, we remain focused on operating the company in alignment with our business goals, vision and values," said Loranger. "I'm very proud of our people and the progress they have made so far. I am confident we will continue to deliver excellent operating results, while executing the separation transaction before the end of the year to unlock significant value for shareowners."
Pre-tax transformation charges during the first quarter included $30 million in advisory and other costs, as well as a $55 million non-cash impairment charge related to the discontinuation of information technology consolidation initiatives that are no longer planned. After-tax estimates for one-time separation-related cash costs expected to be incurred prior to the company's planned separation date are approximately $500 million.
Guidance
ITT has tightened its 2011 full-year adjusted earnings per share guidance range to a new range of $4.70 to $4.82, up from the previously announced range of $4.62 to $4.82, increasing the midpoint to $4.76 per share. Strong operating performance and revenue growth in the commercial businesses are expected to more than offset lowered expectations in the Defense segment.
The company is revising its total revenue outlook for the full year 2011 from $11.4 billion to $11.3 billion, due to uncertainty in the U.S. defense market, which is expected to be somewhat offset by revenue increases across the commercial businesses.
Full-year revenue for Defense and Information Solutions is expected to decline to a range of $5.4 billion to $5.6 billion due to persistently difficult budget conditions caused by the U.S. Congress' Continuing Resolution and changing order patterns. Operating margin for the segment remains unchanged at approximately 12.4 percent. Fluid Technology revenue is expected to grow 15 percent, with organic revenue forecasted to grow 5.5 percent. Fluid Technology operating margin is now expected to increase by 40 basis points to 14.4 percent. Motion and Flow Control revenue is expected to grow 10 percent, and organic revenue growth for the business is projected at approximately 6.5 percent. Operating margin for Motion and Flow Control is now expected to increase by 80 basis points to 15.8 percent.
Second-quarter adjusted earnings for the company are expected to be in the range of $1.10 to $1.14 per share on revenues of $2.8 billion. This forecast reflects the lingering impacts of the current Defense environment, combined with improved expectations for the Fluid Technology and Motion and Flow Control segments.
Investor Call Today
ITT's senior management will host a conference call for investors today at 9:00 a.m. Eastern Daylight Time to review first-quarter performance and answer questions. The briefing can be monitored live via webcast at the following address on the company's Web site: www.itt.com/investors.
About ITT Corporation
ITT Corporation is a high-technology engineering and manufacturing company operating on all seven continents in three vital markets: water and fluids management, global defense and security, and motion and flow control. With a heritage of innovation, ITT partners with its customers to deliver extraordinary solutions that create more livable environments, provide protection and safety and connect our world. Headquartered in White Plains, N.Y., the company reported 2010 revenue of $11 billion. www.itt.com.
Safe Harbor Statement
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, statements about the separation of the Company into three independent publicly-traded companies, the terms and the effect of the separation, the nature and impact of such a separation, capitalization of the companies, 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: economic, political and social conditions in the countries in which we conduct our businesses; changes in U.S. or international government defense budgets; decline in consumer spending; sales and revenue mix and pricing levels; availability of adequate labor, commodities, supplies and raw materials; interest and foreign currency exchange rate fluctuations and changes in local government regulations; competition, industry capacity and production rates; ability of third parties, including our commercial partners, counterparties, financial institutions and insurers, to comply with their commitments to us; our ability to borrow or to refinance our existing indebtedness and availability of liquidity sufficient to meet our needs; changes in the value 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 company or the degree of liability; uncertainties with respect to our estimation of asbestos liability exposures, third party recoveries, and net cash flow; our ability to effect restructuring and cost reduction programs and realize savings from such actions; government regulations and compliance therewith, including compliance with and costs associated with new Dodd-Frank legislation; changes in technology; intellectual property matters; governmental investigations; potential future employee benefit plan contributions and other employment and pension matters; contingencies related to actual or alleged environmental contamination, claims and concerns; changes in generally accepted accounting principles; other factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and our other filings with the Securities and Exchange Commission. In addition, there are risks and uncertainties relating to the planned tax-free spinoffs of our Water and Defense businesses, including the timing and certainty of the completion of those transactions and the ability of each business to operate as an independent entity. The guidance for full-year 2011 is based on the company's current structure and does not give effect to the separation of our Water and Defense businesses into newly independent public companies.
The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Press Contact:
Jenny Schiavone
+1 914 641 2160
jennifer.schiavone@itt.com
Investor Contact:
Thomas Scalera
tel +1 914 641 2030
thomas.scalera@itt.com