ITT Announces Solid Results for 2013 First Quarter

ITT Announces Solid Results for 2013 First Quarter

  • Revenue grew 7 percent to $608 million, including 11 percent growth in emerging markets, with organic revenue up 2 percent
  • GAAP earnings from continuing operations increased to $0.20 per share
  • Adjusted earnings from continuing operations increased 21 percent to $0.47 per share
  • Adjusted segment operating margins expanded by 130 basis points
  • 2013 guidance maintained; full-year adjusted earnings in the range of $1.80 to $1.90 per share, total revenue growth of 9 to 11 percent

WHITE PLAINS, N.Y.--(BUSINESS WIRE)-- ITT Corporation (NYS: ITT) today reported that first-quarter 2013 revenue grew by 7 percent to $608 million, including 11 percent growth in emerging markets and solid 2 percent organic growth (defined as total revenue excluding foreign exchange, acquisitions and divestitures). Revenue results reflect gains in key global end-markets including energy and transportation, and a solid performance from the recently acquired Bornemann Pumps business.

On a GAAP basis, segment operating margins were flat year-over-year. Adjusted segment operating margins, which exclude special items, expanded by 130 basis points, reflecting net operating productivity and expanded sourcing initiatives partially offset by the Bornemann Pumps operations and the funding of strategic investments.

First-quarter GAAP earnings from continuing operations increased to $0.20 per share. Adjusted earnings from continuing operations, which excludes special items, increased 21 percent to $0.47 per share, reflecting stronger operational performance, improved volumes and favorable mix.

"ITT is executing at a high level early in 2013 as we continued to make meaningful progress against our key drivers of profitable growth and value creation," said Denise Ramos, chief executive officer and president. "We continued our consistent market expansion by achieving strong growth in emerging markets, winning share in a tough Western European environment and enhancing our presence in key global end-markets such as energy and automotive.

"We also are seeing the results of our effective capital deployment as we drive key customer-focused strategic actions such as expanding our automotive capabilities in China and successfully integrating Bornemann. At the same time, our focus on operational excellence is helping us improve margins, productivity and key customer metrics such as on-time delivery. All of these efforts position us well to continue to deliver results during this period of continuing uncertainty in the global economic environment."

The company also repurchased $46 million of ITT common stock in the first quarter under its recently announced $75 million share repurchase program.

2013 First-Quarter Business Segment Results

All results are compared with the prior-year first quarter

Industrial Process designs and manufactures industrial pumps and valves for the oil and gas, chemical, mining and industrial markets.

  • 2013 first-quarter revenue was up 14 percent to $257 million. The increase reflects a 28 percent increase in organic global oil and gas shipments, as well as the impact from the company's successful acquisition of Bornemann Pumps, partially offset by mining declines in emerging markets. Organic revenue was flat compared to the prior year.
  • Adjusted operating income increased 19 percent to $27 million, reflecting strong operating productivity and favorable sales mix that was partially offset by Bornemann Pumps impacts and the recent currency devaluation in Venezuela.

Motion Technologies designs and manufactures braking technologies and shock absorbers for the automotive and rail markets.

  • 2013 first-quarter total and organic revenue increased 7 percent to $193 million driven by significant share gains in the global automotive brake pad market. The revenue results, which reflected a 24 percent increase in the United States, 20 percent growth in emerging markets and 3 percent growth in difficult Western European automotive markets, were partially offset by weakness in the global rail shock absorber market.
  • Adjusted operating income increased by 22 percent to $33 million. The gain reflects volume increases, favorable sales mix and net operating productivity, partially offset by pricing and start-up costs related to a new production and research facility in Wuxi, China.

Interconnect Solutions designs and manufactures connectors and interconnects for the aerospace, industrial and transportation markets.

  • 2013 first-quarter total revenue for Interconnect Solutions decreased 2 percent to $91 million, as gains in general industrial and oil and gas connectors were offset by weakness in European aerospace, transportation and communication connectors. Organic revenue declined 1 percent.
  • Adjusted operating income was $3 million, a 29 percent increase, as net operating productivity and restructuring savings were partially offset by unfavorable sales mix and lower volumes.

Control Technologies designs and manufactures products including fuel management, actuation, and noise and energy absorption components for the aerospace and industrial markets.

  • First-quarter total and organic revenue decreased 2 percent to $69 million as growth in North American and European aerospace was offset by declines related to the fulfillment of an aerospace program and weakness in the global general industrial and defense markets.
  • Adjusted operating income increased 8 percent to $14 million, as net operating productivity and impacts from pricing initiatives were only partially offset by unfavorable sales mix and volume.


The company maintains its guidance for full-year 2013 adjusted earnings in the range of $1.80 to $1.90 per share. Total revenue is expected to grow 9 to 11 percent, and adjusted segment operating margin is expected to grow 50 basis points.

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 Web site:

For a reconciliation of GAAP to non-GAAP results, please visit the company's Web site.

About ITT

ITT is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for the energy, transportation and industrial 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. Founded in 1920, 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 2012 revenues of $2.2 billion. For more information, visit

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, 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: Uncertainties with respect to our estimate of asbestos exposures, third-party recoveries and net cash flows; economic, political and social conditions in the countries in which we conduct our businesses; changes in U.S. or international sales and operations; contingencies related to actual or alleged environmental contamination, claims and concerns and related recoveries from insurers; decline in consumer spending; revenue mix and pricing levels; availability of adequate union and non-union labor, commodities, supplies and raw materials; foreign currency exchange rate fluctuations and devaluations; changes in government regulations and compliance therewith; competition, industry capacity and production rates; declines in orders or sales as a result of industry or geographic downturns; ability of third parties, including our commercial partners, counterparties, financial institutions and insurers, to comply with their commitments to us; our ability to borrow and availability of liquidity sufficient to meet our needs; changes in the recoverability 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; our ability to effect restructuring and cost reduction programs and realize savings from such actions; changes in our effective tax rate as a result in changes in the geographic earnings mix, valuation allowances, tax examinations or disputes, tax authority rulings or changes in applicable tax laws; changes in technology; intellectual property matters; potential future post-retirement benefit plan contributions and other employment and pension matters; susceptibility to market fluctuations and costs as a result of becoming a smaller, more focused company after the spin-off; changes in generally accepted accounting principles within the U.S.; and other factors set forth in our Annual Report on Form 10−K for the fiscal year ended December 31, 2012 and our other filings with the Securities and Exchange Commission.

The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

(In millions, except per share)
Three Months Ended
Costs of revenue417.7397.9
Selling, general and administrative expenses114.799.7
Research and development expenses16.416.1
Asbestos-related costs, net16.012.6
Transformation costs0.74.9
Restructuring and asset impairment charges, net 5.5  0.2 
Total costs and expenses571.0531.4
Operating income37.236.7
Interest and non-operating (income) expenses, net 2.7  1.6 
Income from continuing operations before
Income tax (benefit) expense34.535.1
Income tax (benefit) expense 15.0  24.6 
Income from continuing operations19.510.5
Income (loss) from discontinued operations, net of tax 1.7  (7.3)
Net Income 21.2  3.2 
Income attributable to non-controlling interest (0.4) - 
Net Income attributable to ITT Corp$20.8 $3.2 
Amounts attributable to ITT Corp.:
Income from continuing operations, net of tax19.110.5
Income (loss) from discontinued operations, net of tax 1.7  (7.3)
Net Income$20.8 $3.2 
Earnings (Loss) Per Share attributable to ITT Corp.:
Basic EPS
Continuing operations$0.21$0.11
Discontinuing operations 0.02  (0.08)
Net income (loss)$0.23$0.03
Diluted EPS
Continuing operations$0.20$0.11
Discontinuing operations 0.02  (0.08)
Net income (loss)$0.22$0.03
Average common shares - basic92.094.3
Average common shares - diluted93.295.7

(In millions)
For Year Ended
March 31,December 31,
Current Assets:
Cash and cash equivalents$483.1$544.5
Receivables, net506.2440.3
Inventories, net314.9304.2
Other current assets 265.6 251.4
Total current assets1,569.81,540.4
Plant, property and equipment, net365.1373.1
Other intangible assets, net114.2123.3
Asbestos-related assets504.1525.3
Other non-current assets 176.4 172.6
Total assets 3,373.6 3,386.1
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable350.7347.0
Accrued liabilities 492.2 458.3
Total current liabilities842.9805.3
Asbestos-related liabilities1,246.61,255.0
Postretirement benefits330.1330.3
Other non-current liabilities 287.0 292.3
Total liabilities2,706.62,682.9
Total ITT Corporation shareholders' equity662.7703.2
Noncontrolling interests 4.3 -
Total shareholders' equity 667.0 703.2
Total liabilities and shareholders' equity$3,373.6$3,386.1

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(In millions)
Three Months Ended
March 31,
Operating Activities
Net income$21.2$3.2
Less: (Loss) income from discontinued operations1.7(7.3)
Less: Income attributable to noncontrolling interest 0.4  - 
Income (loss) from continuing operations - ITT Corp19.110.5
Adjustments to income (loss) from continuing operations:
Depreciation and amortization24.516.2
Stock-based compensation3.02.8
Asbestos-related costs, net16.012.6
Asbestos-related payments, net(3.4)(15.7)
Contributions to pension plans(0.9)(32.2)
Change in receivables(72.5)(58.8)
Change in inventories(15.4)(10.6)
Change in accounts payable0.911.1
Change in accrued expenses(2.0)(38.3)
Change in accrued and deferred income taxes12.4107.7
Other, net 6.0  13.1 
Net Cash - Operating Activities (12.3)