ITT Announces Solid Results for 2013 Second Quarter

ITT Announces Solid Results for 2013 Second Quarter

2013 operating performance drives increase in guidance for revenue and adjusted EPS

  • Revenue grew 9 percent to $609 million, with organic revenue up 2 percent, representing strength across key geographies and end markets
  • GAAP earnings from continuing operations increased to $0.27 per share
  • Adjusted earnings from continuing operations increased 4 percent to $0.51 per share
  • Adjusted segment operating income expanded 15 percent and margins expanded by 70 basis points due to volume and productivity gains
  • New increased 2013 guidance ranges announced: total revenue 10 to 11 percent, organic revenue 3 to 4 percent and adjusted earnings $1.86 to $1.92 per share

WHITE PLAINS, N.Y.--(BUSINESS WIRE)-- ITT Corporation (NYS: ITT) today reported that second-quarter 2013 total revenue grew by 9 percent to $609 million with 2 percent organic growth (defined as total revenue excluding foreign exchange, recent acquisitions and divestitures).

ITT's total revenue results reflect gains in key geographies, including 13 percent growth in Western Europe and 12 percent growth in emerging markets. These increases were driven by automotive gains and the performance of its Bornemann Pumps acquisition. In the second quarter, ITT achieved organic growth of 12 percent in the global automotive brake pad market and 19 percent in global energy, which were offset by a 35 percent decline in global mining.

On a GAAP basis, segment operating margins improved by 10 basis points. Adjusted segment operating margins, which exclude special items, expanded by 70 basis points, reflecting net operating productivity and increased volume partially offset by the Bornemann Pumps operations and the funding of strategic investments.

Second-quarter GAAP earnings from continuing operations increased to $0.27 per share. Adjusted earnings from continuing operations, which excludes special items, increased 4 percent to $0.51 per share, reflecting a 15 percent increase in adjusted segment operating income that was partially offset by a higher effective tax rate and the impacts of favorable prior-year corporate items.

"ITT has consistently executed our strategies to drive profitable growth and value creation, and the first half of 2013 was no exception," said Denise Ramos, chief executive officer and president. "In both quarters, we continued to drive market expansion with 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're supporting that growth longer-term by making strategic customer-focused investments globally including expanding our automotive capabilities in China and enhancing our oil and gas capabilities in Korea and the United States. At the same time, our intense focus on execution is helping us continually improve productivity, key customer metrics and margins. All of these efforts represent sustainable achievements that position us well to continue to deliver strong results for the remainder of 2013 and beyond."

The company also has continued to return cash to shareholders through $85 million in share repurchases year-to-date.

2013 Second-Quarter Business Segment Results

All results are compared with the prior-year second quarter

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

  • 2013 second-quarter total revenue was up 15 percent to $269 million. The growth reflects a 40 percent increase in organic global oil and gas shipments and the impact from the company's successful acquisition of Bornemann Pumps. Organic revenue was down 1 percent compared to the prior year due to global mining declines. Organic orders were up 8 percent due to solid project activity, primarily in the oil and gas market, and total backlog has increased 10 percent in 2013.
  • Adjusted operating income increased 9 percent to $31 million, reflecting strong operating productivity that was partially offset by the funding of a strategic expansion in our oil and gas capabilities.

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

  • 2013 second-quarter total revenue increased 11 percent to $171 million and organic revenue increased 9 percent driven by 12 percent growth in global automotive brake pads. The results reflect a strong performance in Western Europe, where revenue was up 9 percent despite difficult markets, as well as 70 percent growth in China. These gains were partially offset by unfavorable automotive shipment timing in North America and weakness in the global rail shock absorber market.
  • Adjusted operating income increased by 26 percent to $25 million. The gain reflects volume increases, net operating productivity and operational improvements in the KONI shock absorber business, partially offset by pricing and an unfavorable sales mix.

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

  • 2013 second-quarter total revenue for Interconnect Solutions was flat at $100 million, with organic revenue up 1 percent, as strength in defense and general industrial connectors was offset by a difficult comparison in oil and gas connectors.
  • Adjusted operating income was up 31 percent to $8 million, as net operating productivity, restructuring savings and higher volumes were partially offset by unfavorable sales mix.
  • 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. As a result of those efforts, the business marked its third consecutive quarter of sequential order growth.

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

  • Second-quarter total revenue decreased 2 percent to $70 million and organic revenue decreased 1 percent as growth in North American and European aerospace was offset by anticipated declines related to the fulfillment of an aerospace program and weakness in the global general industrial and defense markets.
  • Adjusted operating income increased 7 percent to $15 million, as net operating productivity and impacts from pricing initiatives were only partially offset by unfavorable sales mix and volume.


ITT's operating performance in the first half of 2013 drove the company's decision to raise its guidance for full-year revenue and adjusted earnings per share. The revised revenue guidance ranges include increasing expectations for total revenue growth to 10 to 11 percent from 9 to 11 percent and organic revenue growth to 3 to 4 percent from 2 to 4 percent. Adjusted EPS guidance was increased to a range of $1.86 to $1.92 from a previous range of $1.80 to $1.90. The revised adjusted EPS guidance reflects a mid-point that is $0.04 higher than the prior mid-point as well as 12.5 percent higher than 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 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; 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 EndedSix Months Ended
Costs of revenue411.4387.5829.1785.4
Selling, general and administrative expenses124.187.1245.0191.9
Research and development expenses16.416.632.832.7
Asbestos-related costs, net 15.9 9.7 31.9 22.3 
Total costs and expenses567.8500.91,138.81,032.3
Operating income41.457.078.693.7
Interest and non-operating expenses, net 2.2 3.4 4.9 5.0 
Income from continuing operations before
income tax expense39.253.673.788.7
Income tax expense 14.4 37.4 29.4 62.0 
Income from continuing operations24.816.244.326.7
Income (loss) from discontinued operations, net of tax 1.1 0.6 2.8 (6.7)
Net Income 25.9 16.8 47.1 20.0 
Less: Income attributable to noncontrolling interest 0.1 - 0.5 - 
Net Income attributable to ITT Corporation$25.8$16.8$46.6$20.0 
Amounts attributable to ITT Corporation:
Income from continuing operations, net of tax24.716.243.826.7
Income (loss) from discontinued operations, net of tax 1.1 0.6 2.8 (6.7)
Net Income$25.8$16.8$46.6$20.0 
Earnings (loss) per share attributable to ITT Corporation:
Continuing operations$0.27$0.17$0.48$0.29
Discontinuing operations 0.02 0.01 0.03 (0.08)
Net income$0.29$0.18$0.51$0.21
Continuing operations$0.27$0.17$0.47$0.28
Discontinuing operations 0.01 0.01 0.03 (0.07)
Net income$0.28$0.18$0.50$0.21
Weighted average common shares - basic90.492.891.293.4
Weighted average common shares - diluted91.693.992.494.7

(In millions)
For Year Ended
June 30,December 31,
Cash and cash equivalents$517.7$544.5
Receivables, net499.3440.3
Inventories, net308.5304.2
Other current assets 245.1 251.4
Total current assets1,570.61,540.4
Plant, property and equipment, net367.4373.1
Other intangible assets, net110.9123.3
Asbestos-related assets493.4525.3
Other non-current assets 177.2 172.6
Total assets 3,365.8 3,386.1
Liabilities and Shareholders' Equity
Accounts payable364.1347.0
Accrued and other current liabilities 477.4 458.3
Total current liabilities841.5805.3
Asbestos-related liabilities1,243.31,255.0
Postretirement benefits329.9330.3
Other non-current liabilities 290.6 292.3
Total liabilities2,705.32,682.9
Total ITT Corporation shareholders' equity656.1703.2
Noncontrolling interests 4.4 -
Total shareholders' equity 660.5 703.2
Total liabilities and shareholders' equity$3,365.8$3,386.1

(In millions)
Six Months Ended
June 30,
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