• First-quarter revenue grew to $577 million, including a 9 percent increase in organic revenue;
• Emerging market revenue grew 22 percent;
• North American revenue grew 11 percent;
• Earnings from continuing operations increased to $0.11 per share compared with a prior-year loss of ($0.23) per share;
• Adjusted earnings from continuing operations totaled $0.39 per share;
• 2012 guidance maintained.
ITT Corporation (NYSE: ITT) today reported first-quarter 2012 revenue of $577 million, including 9 percent growth in organic revenue (defined as total revenue excluding foreign exchange, acquisition and divestiture impacts) compared with the 2011 first quarter.
Revenue results included 22 percent growth in emerging markets and 11 percent growth in North America, as well as gains in core markets such as oil and gas, mining, chemical and general industrial.
On a GAAP basis, earnings from continuing operations increased to $0.11 per share compared with a loss of ($0.23) per share in the prior-year first quarter. Adjusted earnings from continuing operations, which excludes special items, totaled $0.39 per share compared with pro forma adjusted earnings of $0.45 per share in the first quarter of 2011. The decrease partially reflects lower segment operating income due to post-spin incremental recurring costs, expected lower connectors volume, and increased large project mix in the Industrial Process business.
"In the first quarter, ITT delivered strong revenue growth and made investments that will provide the foundation for additional future growth, including expanding our automotive facility in Wuxi, China, and investing to support our other key drivers of profitable growth, including premier customer experience, aftermarket expansion, and technical and operational excellence," said CEO and President Denise Ramos.
"Our results also reflect the advantage we gain as a global industrial company from our portfolio that is balanced and diversified across end markets, business cycles and geographies. We saw the benefits in the first quarter as our global growth in the oil and gas, mining and automotive markets offset expected lower volumes in the connectors market. In addition, despite overall market softness in Western Europe, we drove strong growth globally, particularly in North America, Asia and the Middle East. We believe that going forward our business model will position us well to continue building our track record of growth and value creation."
The company also deployed capital to buy back 1.55 million shares of ITT common stock under its authorized share repurchase program and contributed $32 million, including a $15 million discretionary contribution, to its various U.S. pension plans.
2012 First-Quarter Business Segment Results
Industrial Process designs and manufactures industrial pumps and valves for the oil and gas, chemical, mining and industrial markets.
2012 first-quarter revenue was up 35 percent to $226 million, reflecting an increase in project shipments across all regions and markets, particularly in Latin America where revenue increased 71 percent. First-quarter revenue included $7 million from Industrial Process' Blakers Pump Engineers, which ITT acquired in October 2011.
Organic revenue was up 30 percent compared to the prior year.
Adjusted operating income for the segment in the first quarter was $23 million, a 7 percent year-over-year increase, driven by increased volume and strong operating productivity partially offset by negative project mix shift and post-spin incremental recurring costs.
Motion Technologies designs and manufactures braking technologies and shock absorbers for the automotive and rail markets.
2012 first-quarter revenue declined 2 percent to $180 million. However, organic revenue increased 2 percent, driven by share gains in Europe and growth in emerging markets and North America in automotive, which was offset by weakness in the shock absorbers product lines.
Adjusted operating income for the business in the first quarter of 2012 was $27 million, a 1 percent decrease compared with the prior-year quarter, reflecting negative foreign exchange impacts, start-up costs for our Wuxi, China, facility, and higher commodity costs, partially offset by operating productivity gains.
Interconnect Solutions designs and manufactures connectors and interconnects for the aerospace, industrial and transportation markets.
2012 first-quarter revenue for Interconnect Solutions decreased 14 percent to $93 million, driven primarily by general weakness in the global connector industry combined with a decrease in our communication market due to a customer's loss of market share. Organic revenue declined 12 percent compared to the prior-year first quarter.
Adjusted operating income for the first quarter of 2012 was $2 million, a 79 percent decrease compared with the 2011 first quarter, reflecting lower volumes and negative mix shift.
Control Technologies designs and manufactures products including fuel management, actuation, and noise and energy absorption components for the aerospace and industrial markets.
In Control Technologies, first-quarter total and organic revenue increased 1 percent to $79 million compared to the prior year as growth in the aerospace and industrial segments was offset by expected declines in defense and a lack of revenue from a prior-year rail seat project.
2012 first-quarter adjusted operating income was $13 million, a decrease of 10 percent, as incremental growth investments and negative mix shift offset higher volume, pricing and net operational productivity.
The company maintains its guidance for full-year 2012 of adjusted earnings in the range of $1.62 to $1.72 per share. Total revenue is expected to grow 5 to 7 percent including expected market share gains as well as the impact of late-cycle strength in oil and gas and mining. The company also expects emerging markets growth will be approximately 10 percent driven by oil and gas in the Middle East and mining in Latin America, automotive gains in China and new global platforms and products.
Historical Quarterly Financial Data
ITT's selected historical quarterly financial data for fiscal years 2010 and 2011 is available on the company website at the following address: itt.com/investors.
Investor Call Today
ITT's senior management will host a conference call for investors today at 9 am. EDT to review first-quarter performance and answer questions. The briefing can be monitored live via webcast at the following address on the company's website.
ITT (itt.com) is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for growing industrial end-markets in energy infrastructure, electronics, aerospace and transportation. 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 30 countries and sales in a total of approximately 125 countries. The company generated 2011 revenues of $2.1 billion.
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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 estimation of asbestos liability exposures, third-party recoveries and net cash flow; 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; decline in consumer spending; sales and revenues mix and pricing levels; availability of adequate union and non-union labor, commodities, supplies and raw materials; interest and foreign currency exchange rate fluctuations; changes in local government regulations and compliance therewith; competition, industry capacity and production rates; declines in orders or sales as a result of industry or geographic downturn; 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 companies 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; intellectual property matters; governmental investigations; potential future postretirement 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; and other factors set forth in our Annual Report on Form 10−K for the fiscal year ended December 31, 2011 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.
T: +1 914 641 2032 - E: melissa.trombetta[.]itt.com.