• Second-quarter revenue grew to $568 million;
• Organic revenue up 6 percent;
• U.S. revenue up 18 percent;
• Earnings from continuing operations totaled $0.18 per share;
• Adjusted earnings from continuing operations up 8 percent to $0.50 per share.
ITT Corporation (NYSE: ITT) today reported second-quarter 2012 revenue of $568 million, including 6 percent growth in organic revenue (defined as total revenue excluding foreign exchange, acquisition and divestiture impacts) compared with the 2011 second quarter.
Revenue results included 18 percent U.S. growth; strength in core markets such as mining, chemical and general industrial; and share gains in the global automotive market.
On a GAAP basis, earnings from continuing operations totaled $0.18 per share compared with $0.20 per share in the prior-year second quarter. Adjusted earnings from continuing operations, which excludes special items, increased to $0.50 per share compared with pro forma adjusted earnings of $0.46 per share in the second quarter of 2011. This 8 percent increase in adjusted EPS reflects strong top-line performance and operational execution, as well as lower interest and corporate expenses, which more than offset lower connector volumes and incremental post-spin recurring costs.
“Our steady revenue growth in the second quarter demonstrates our ability to execute consistently on our growth strategies even in the midst of an uncertain global economic environment,” said CEO and President Denise Ramos. “We saw momentum across our businesses as our Industrial Process business had its third consecutive quarter of record shipments, and our Motion Technologies business grew 36 percent in emerging markets and gained European and North American market share. Our Interconnect Solutions business achieved sequential improvement in end markets including oil and gas, and Control Technologies made solid progress with aerospace and industrial customers.
“Our results also reflect the stability we gain as a global industrial company from a portfolio that is balanced and diversified across end markets, business cycles and geographies. Our business model — combined with the execution of our profitable growth drivers including operational excellence, premier customer experience and effective capital deployment — has positioned us well to continue to deliver growth and value creation.”
2012 Second-Quarter Business Segment Results
Industrial Process designs and manufactures industrial pumps and valves for the oil and gas, chemical, mining and industrial markets.
2012 second-quarter revenue was up 16 percent to $233 million and organic revenue was up 15 percent compared to the prior year, reflecting strength in all end markets served in North America, global mining strength and a 19 percent increase in aftermarket revenue.
Adjusted operating income for the segment in the second quarter was $29 million, a 2 percent year-over-year decrease, as volume and strong operating productivity were offset by competitive project pricing conditions in emerging markets and post-spin incremental recurring costs.
Motion Technologies designs and manufactures braking technologies and shock absorbers for the automotive and rail markets.
2012 second-quarter revenue declined 6 percent to $155 million. However, organic revenue increased 5 percent, when adjusted for foreign currency impact. Results were driven by global share gains in both automotive and rail markets, which more than offset European weakness.
Adjusted operating income for the business in the second quarter of 2012 was $20 million, a 7 percent decrease compared with the prior-year quarter, as volume increases and operating productivity were offset by unfavorable foreign currency exchange, expenses incurred in the development of a new production and research facility in Wuxi, China, and negative sales mix shift.
Interconnect Solutions designs and manufactures connectors and interconnects for the aerospace, industrial and transportation markets.
2012 second-quarter revenue for Interconnect Solutions was $100 million, an 8 percent decline, as strength in oil and gas connectors was more than offset by general weakness in the European market combined with a decrease in the communications connectors market. Organic revenue declined 5 percent compared to the prior-year second quarter.
Adjusted operating income for the second quarter of 2012 was $6 million, a 61 percent decrease compared with the 2011 second quarter, as net operating productivity was more than offset by lower volumes and negative mix shift as well as a prior year gain on an asset sale.
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, second-quarter total and organic revenue declined 3 percent and 2 percent, respectively, to $81 million. However, excluding the impact of a prior-year rail project, revenue was up 4 percent driven by growth in commercial aerospace in North America and global general industrial markets.
2012 second-quarter adjusted operating income was $15 million, a decrease of 4 percent, as improvements in pricing, mix shift and net operational productivity were offset by lower volumes and negative foreign currency exchange impacts.
The company maintains its guidance for full-year 2012 of adjusted earnings in the range of $1.62 to $1.72 per share and organic revenue of 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.
Investor Call Today
ITT's senior management will host a conference call for investors today at 9 am. EDT to review second-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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