News & Releases
ITT Announces Strong Results for 2013 Third Quarter
Thursday, 31 Oct 2013
Revenue grew 16 percent to $634 million, with organic revenue up 9 percent, representing strength across key geographies and strategic end markets
GAAP earnings from continuing operations increased to $4.71 per share, primarily reflecting a reduction in a tax valuation allowance
Adjusted earnings from continuing operations increased 23 percent to $0.54 per share
Adjusted segment operating income increased 21 percent and margins expanded by 60 basis points due to productivity gains and volume
New increased 2013 guidance ranges announced: total revenue growth of 11 to 12 percent, organic revenue growth of 5 to 6 percent and adjusted earnings of $1.97 to $2.00 per share
WHITE PLAINS, N.Y., Oct. 31, 2013 – ITT Corporation (NYSE: ITT) today reported that third-quarter 2013 total revenue grew by 16 percent to $634 million with 9 percent organic revenue growth (defined as total revenue excluding foreign exchange, recent acquisitions and divestitures). ITT’s revenue growth reflects gains in key geographies and strategic end markets, including 56 percent growth in energy, 14 percent growth in transportation and 1 percent growth in industrial.
On a GAAP and adjusted basis, segment operating margins improved by 60 basis points, reflecting net operating productivity and increased volume partially offset by the impact of the Bornemann Pumps acquisition and the funding of strategic investments. Excluding the impact of the acquisition, adjusted segment operating margins improved 170 basis points.
Third-quarter GAAP earnings from continuing operations increased to $4.71 per share, primarily reflecting a reduction in a U.S. tax valuation allowance recorded at the end of 2011. Adjusted earnings from continuing operations, which excludes special items, increased 23 percent to $0.54 per share, reflecting a 21 percent increase in adjusted segment operating income and a lower share count due to repurchases in the first half of the year.
“Throughout 2013, our team has executed at a high level and I am pleased to report another quarter of positive revenue growth, margin expansion and EPS improvement,” said CEO and President Denise Ramos. “Our financial performance reflects our efforts throughout ITT to continually enhance our strategic alignment with key end markets, geographies and customers across our businesses.
“Our growth is being driven by our strong positions in the high-growth energy, transportation and industrial end markets, our commitment to enhancing our manufacturing capabilities in key growth countries such as China and Korea, and our emphasis on ensuring a premier customer experience. We are swiftly and consistently executing our strategies to drive profitable growth and value creation while making sustainable achievements that position us well to continue to deliver strong results.”
2013 Third-Quarter Business Segment Results
All results are compared with the prior-year third quarter.
designs and manufactures industrial pumps and valves for the oil and gas, chemical, mining and industrial markets.
2013 third-quarter total revenue was up 19 percent to $285 million and organic revenue was up 6 percent. The organic growth reflects a 50 percent increase in global oil and gas project shipments and a 12 percent increase in the North American chemical pumps project market. These gains were partially offset by weakness in North American short-cycle base pumps and in the global mining and general industrial markets. Organic orders were up 7 percent due to solid project activity, primarily in the oil and gas market. The total backlog has increased 24 percent in 2013.
Adjusted operating income decreased 4 percent to $32 million, as net operating productivity and volume were offset by the funding of a strategic expansion of our oil and gas capabilities and unfavorable mix and large project pricing.
designs and manufactures braking technologies and shock absorbers for the automotive and rail markets.
2013 third-quarter total revenue increased 17 percent to $177 million and organic revenue increased 13 percent. The results reflect an 18 percent increase in global automotive brake pads driven by share gains and market growth in key geographies, including 21 percent growth in Western Europe and 31 percent growth in China. These gains were partially offset by weakness in our global rail shock absorber business.
Adjusted operating income increased by 33 percent to $27 million. The gain reflects net operating productivity and higher sales volume, partially offset by pricing pressure.
designs and manufactures connectors and interconnects for the aerospace, industrial and transportation markets.
2013 third-quarter total revenue was up 14 percent to $104 million, with organic revenue up 15 percent. These results reflect a combined 36 percent increase in the North American aerospace and defense markets and a 14 percent increase in the general industrial market, as well as connector strength in emerging markets.
Adjusted operating income increased significantly to $11 million, reflecting higher volumes, positive mix shift and the benefits of proactive restructuring actions. In the quarter, Interconnect Solutions continued making progress on efforts to enhance its focus on harsh environment connector applications in key end markets and improve global efficiency.
designs and manufactures products including fuel management, actuation, and noise and energy absorption components for the aerospace and industrial markets.
Third-quarter total revenue was up 3 percent to $70 million and organic revenue increased 4 percent. The results reflect 14 percent growth in aerospace components, partially offset by anticipated declines related to the fulfillment of an aerospace program, weakness in the global defense market and the impact of a large prior-year infrastructure project.
Adjusted operating income decreased 9 percent to $14 million, as net operating productivity and positive impacts from pricing initiatives were more than offset by funding of investments to enhance our engineering and customer capabilities and unfavorable sales mix.
Annual Asbestos Remeasurement
In the third quarter, ITT recognized a net after-tax, asbestos-related charge of less than $1 million as a result of its annual remeasurement of the underlying assumptions used in liability and asset estimates. In addition, future cash flow expectations related to asbestos matters remain consistent with prior-year estimates.
ITT’s operating performance in the first nine months of 2013 drove the company’s decision to raise its guidance for full-year total revenue, organic revenue and adjusted earnings per share. The revised revenue guidance ranges are now 11 to 12 percent for total revenue and 5 to 6 percent for organic revenue. Adjusted EPS guidance was increased to a range of $1.97 to $2.00 from a previous range of $1.86 to $1.92. The revised adjusted EPS guidance reflects a 5 percent increase at the mid-point compared to previous guidance and an 18 percent increase compared to the prior year’s adjusted EPS.
Investor Call Today
ITT's senior management will host a conference call for investors today at 9 a.m. EDT to review performance and answer questions. The briefing can be monitored live via webcast at the following address on the company's website:
For a reconciliation of GAAP to non-GAAP results, please