ITT Corporation (NYSE:ITT) today reported that second-quarter 2014 revenue grew by 9 percent to $663 million, driven by solid performances in all four business segments across most strategic end markets.
Revenue results also reflect growth in key geographies, including 9 percent growth in both North America and emerging markets and 7 percent growth in Europe, as well as 8 percent overall organic revenue growth (defined as total revenue excluding foreign exchange, acquisitions and divestitures).
Second-quarter GAAP earnings from continuing operations increased to $0.44 per diluted share. Adjusted earnings from continuing operations, which excludes special items, increased 18 percent to $0.60 per diluted share, reflecting strong segment operational performances and a lower effective tax rate, partially offset by increased corporate costs. Special items primarily included asbestos-related expenses, restructuring and repositioning costs, and tax-related items.
On a GAAP basis, segment operating margins increased 130 basis points year-over-year. Adjusted segment operating margins expanded by 100 basis points to 14.1 percent. The growth reflects increased volume and strong net operating productivity, partially offset by growth investments.
“In the second quarter, ITT continued its proven track record of execution with outstanding organic revenue growth, and we delivered our strongest adjusted segment operating margin as today’s ITT,” said CEO and President Denise Ramos. “This is the result of consistent execution by employees across all of our businesses and steady progress on strategies that build our core capabilities and position us for future success.
“These strategies – including driving Lean transformations, turning around our connectors and shock absorber businesses and making strategic investments for growth – reflect our ongoing commitment to profitable growth and value creation for employees, customers and shareowners in 2014 and beyond.”
2014 Second-Quarter Business Segment Results
All results are compared with the prior-year second quarter
Industrial Process manufactures engineered fluid process equipment for the oil and gas, chemical, mining and industrial markets and provides aftermarket services and parts.
- Second-quarter revenue was up 8 percent to $289 million with organic revenue also up 8 percent. The increase reflects strong growth and share gains in oil and gas project pumps in North America, Europe and the Middle East, as well as global mining project pump growth in Latin America.
- GAAP operating income decreased 10 percent to $25 million. Adjusted operating income decreased 12 percent to $27 million, reflecting a higher mix of generally lower-margin large projects, incremental strategic investments and unfavorable foreign exchange, partially offset by increased volume and net operating productivity.
Motion Technologies manufactures braking technologies and shock absorbers for the automotive and rail markets.
- Second-quarter total revenue increased 16 percent to $198 million and organic revenue increased 11 percent, driven by automotive brake pad share gains and market growth in China, automotive aftermarket growth in Europe and strong performance by the shock absorber business in global rail and automotive end markets.
- GAAP operating income and adjusted operating income were up 49 percent and 37 percent, respectively, to $35 million. The gain reflects increased volume, an increase in generally higher-margin aftermarket products and legal settlement favorability, partially offset by pricing pressures and incremental strategic investments.
Interconnect Solutions manufactures highly specialized connectors for the oil and gas, medical, industrial and transportation, and aerospace and defense markets.
- Second-quarter total revenue increased 3 percent to $104 million and organic revenue increased 2 percent, reflecting growth in global aerospace, oil and gas, and general industrial connectors, partially offset by weaker defense and communication connectors.
- GAAP operating income was up 84 percent to $12 million while adjusted operating income was up 92 percent to $15 million. The increase is due to net operating productivity, restructuring benefits and increased volume.
Control Technologies manufactures specialized equipment including actuation, valve, and noise and energy absorption components for the aerospace and industrial markets.
- Second-quarter total and organic revenue increased 5 percent to $74 million. The results reflect growth in general industrial solutions, primarily in energy absorption, and in aerospace components, partially offset by the impact of a high-margin end-of-life aerospace program.
- GAAP operating income and adjusted operating income increased 5 percent to $16 million, as net operating productivity, positive pricing and volume increases were partially offset by negative mix shift due to the impact of an end-of-life aerospace program and incremental strategic investments.
Guidance
The company is increasing its full-year total revenue growth guidance to a range of 5 to 7 percent and its full-year organic revenue growth guidance to a range of 5 to 6 percent, respectively, versus the prior year. Both the total and organic revenue growth guidance ranges were previously 4 to 6 percent. The company is also raising its earnings per share guidance. GAAP EPS is expected to be in the range of $1.58 to $1.69. Adjusted EPS is expected to be in the range of $2.38 to $2.46 compared to a previous range of $2.28 to $2.36. The new adjusted EPS range reflects a 20 percent increase at the mid-point compared to the prior year. The $0.10 increase to the previous adjusted guidance reflects operational impacts – including improved volume in global automotive brake pads and shock absorbers, and benefits from the turnaround of the shock absorber business – and an expected lower full-year effective tax rate.
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 from the Investor Relations page on the company's website.
For a reconciliation of GAAP to non-GAAP items and a statement regarding the usefulness of these measures to management, please see the tables attached to this press release and visit the Non-GAAP Reconciliations page on the company’s website.
About ITT
ITT is a focused multi-industrial company that designs and manufactures highly engineered critical components and customized technology solutions. Our customers in the energy, transportation and industrial markets depend on us to solve their most critical problems, and we focus on partnering with them to find solutions to their unique challenges. Founded in 1920, ITT is headquartered in White Plains, N.Y., with employees in more than 35 countries. The company has sales in approximately 125 countries and generated 2013 revenues of $2.5 billion. For more information, visit www.itt.com.
Safe Harbor Statement
This press release contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 (the “Act”). No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. All forward-looking statements included in this presentation are based on information available to us on the date hereof, and we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and future financial results of the industry in which we operate, and other legal, regulatory and economic developments. 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.
We use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target,“ “future,” “may,” “will,” “could,” “should,” “potential,” “continue,” “guidance” and other similar expressions 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.
Forward-looking statements in this press release should be evaluated together with the risks and uncertainties that affect our business, particularly those mentioned in the Risk Factors section of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the Securities and Exchange Commission.
| ITT CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||
| CONSOLIDATED CONDENSED INCOME STATEMENTS | ||||||||||||||||||||||||||||||||||
| (In millions, except per share) | ||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| June | June | |||||||||||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||||
| Revenue | $ | 663.0 | $ | 609.2 | $ | 1,337.5 | $ | 1,217.4 | ||||||||||||||||||||||||||
| Costs of revenue | 448.2 | 411.4 | 907.9 | 829.1 | ||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 125.8 | 124.1 | 258.8 | 245.0 | ||||||||||||||||||||||||||||||
| Research and development expenses | 18.6 | 16.4 | 36.3 | 32.8 | ||||||||||||||||||||||||||||||
| Asbestos-related costs, net | 15.9 | 15.9 | 31.7 | 31.9 | ||||||||||||||||||||||||||||||
| Total costs and expenses | 608.5 | 567.8 | 1,234.7 | 1,138.8 | ||||||||||||||||||||||||||||||
| Operating income | 54.5 | 41.4 | 102.8 | 78.6 | ||||||||||||||||||||||||||||||
| Interest and non-operating expenses, net | 0.5 | 2.2 | 1.6 | 4.9 | ||||||||||||||||||||||||||||||
| Income from continuing operations before | ||||||||||||||||||||||||||||||||||
| income tax expense | 54.0 | 39.2 | 101.2 | 73.7 | ||||||||||||||||||||||||||||||
| Income tax expense | 12.4 | 14.4 | 25.4 | 29.4 | ||||||||||||||||||||||||||||||
| Income from continuing operations | 41.6 | 24.8 | 75.8 | 44.3 | ||||||||||||||||||||||||||||||
| (Loss) Income from discontinued operations, net of tax | (2.9 | ) | 1.1 | (3.9 | ) | 2.8 | ||||||||||||||||||||||||||||
| Net Income | 38.7 | 25.9 | 71.9 | 47.1 | ||||||||||||||||||||||||||||||
| Less: Income attributable to noncontrolling interests | 0.4 | 0.1 | 1.4 | 0.5 | ||||||||||||||||||||||||||||||
| Net Income attributable to ITT Corporation | $ | 38.3 | $ | 25.8 | $ | 70.5 | $ | 46.6 | ||||||||||||||||||||||||||
| Amounts attributable to ITT Corporation: | ||||||||||||||||||||||||||||||||||
| Income from continuing operations, net of tax | 41.2 | 24.7 | 74.4 | 43.8 | ||||||||||||||||||||||||||||||
| (Loss) income from discontinued operations, net of tax | (2.9 | ) | 1.1 | (3.9 | ) | 2.8 | ||||||||||||||||||||||||||||
| Net Income | $ | 38.3 | $ | 25.8 | $ | 70.5 | $ | 46.6 | ||||||||||||||||||||||||||
| Earnings (loss) per share attributable to ITT Corporation: | ||||||||||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.45 | $ | 0.27 | $ | 0.81 | $ | 0.48 | ||||||||||||||||||||||||||
| Discontinuing operations | (0.03 | ) | 0.02 | (0.04 | ) | 0.03 | ||||||||||||||||||||||||||||
| Net income | $ | 0.42 | $ | 0.29 | $ | 0.77 | $ | 0.51 | ||||||||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.44 | $ | 0.27 | $ | 0.80 | $ | 0.47 | ||||||||||||||||||||||||||
| Discontinuing operations | (0.03 | ) | 0.01 | (0.04 | ) | 0.03 | ||||||||||||||||||||||||||||
| Net income | $ | 0.41 | $ | 0.28 | $ | 0.76 | $ | 0.50 | ||||||||||||||||||||||||||
| Weighted average common shares - basic | 91.7 | 90.4 | 91.5 | 91.2 | ||||||||||||||||||||||||||||||
| Weighted average common shares - diluted | 93.0 | 91.6 | 92.8 | 92.4 | ||||||||||||||||||||||||||||||
| ITT CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | |||||||||||||||||||
| (In millions) | |||||||||||||||||||
| June 30, | December 31, | ||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Assets | |||||||||||||||||||
| Cash and cash equivalents | $ | 527.7 | $ | 507.3 | |||||||||||||||
| Receivables, net | 575.3 | 496.7 | |||||||||||||||||
| Inventories, net | 309.0 | 315.9 | |||||||||||||||||
| Other current assets | 345.6 | 345.6 | |||||||||||||||||
| Total current assets | 1,757.6 | 1,665.5 | |||||||||||||||||
| Plant, property and equipment, net | 443.0 | 426.2 | |||||||||||||||||
| Goodwill | 659.6 | 659.8 | |||||||||||||||||
| Other intangible assets, net | 101.0 | 106.9 | |||||||||||||||||
| Asbestos-related assets | 404.6 | 433.3 | |||||||||||||||||
| Deferred income taxes | 299.7 | 303.6 | |||||||||||||||||
| Other non-current assets | 147.0 | 144.9 | |||||||||||||||||
| Total assets | 3,812.5 | 3,740.2 | |||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||
| Accounts payable | 343.9 | 332.7 | |||||||||||||||||
| Accrued liabilities | 496.0 | 499.9 | |||||||||||||||||
| Total current liabilities | 839.9 | 832.6 | |||||||||||||||||
| Asbestos-related liabilities | 1,178.9 | 1,179.6 | |||||||||||||||||
| Postretirement benefits | 240.8 | 243.3 | |||||||||||||||||
| Other non-current liabilities | 285.8 | 277.8 | |||||||||||||||||
| Total liabilities | 2,545.4 | 2,533.3 | |||||||||||||||||
| Total ITT Corporation shareholders' equity | 1,262.7 | 1,201.0 | |||||||||||||||||
| Noncontrolling interests | 4.4 | 5.9 | |||||||||||||||||
| Total shareholders' equity | 1,267.1 | 1,206.9 | |||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,812.5 | $ | 3,740.2 | |||||||||||||||
| ITT CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Six Months Ended | ||||||||||||||||||||
| June 30, | ||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||
| Operating Activities | ||||||||||||||||||||
| Net income | $ | 71.9 | $ | 47.1 | ||||||||||||||||
| Less: (Loss) income from discontinued operations | (3.9 | ) | 2.8 | |||||||||||||||||
| Less: Income attributable to noncontrolling interest | 1.4 | 0.5 | ||||||||||||||||||
| Income from continuing operations - ITT Corporation | 74.4 | 43.8 | ||||||||||||||||||
| Adjustments to income from continuing operations: | ||||||||||||||||||||
| Depreciation and amortization | 42.2 | 44.6 | ||||||||||||||||||
| Stock-based compensation | 6.8 | 6.2 | ||||||||||||||||||
| Asbestos-related costs, net | 31.7 | 31.9 | ||||||||||||||||||
| Asbestos-related payments, net | (6.9 | ) | (11.7 | ) | ||||||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||||||
| Change in receivables | (79.3 | ) | (64.2 | ) | ||||||||||||||||
| Change in inventories | 5.8 | (18.2 | ) | |||||||||||||||||
| Change in accounts payable | (0.4 | ) | 15.4 | |||||||||||||||||
| Change in accrued expenses | (3.5 | ) | (5.0 | ) | ||||||||||||||||
| Change in accrued and deferred income taxes | 0.2 | 17.3 | ||||||||||||||||||
| Other, net | 13.3 | 8.7 | ||||||||||||||||||
| Net Cash - Operating Activities | 84.3 | 68.8 | ||||||||||||||||||
| Investing Activities | ||||||||||||||||||||
| Capital expenditures | (45.7 | ) | (36.8 | ) | ||||||||||||||||
| Purchases of investments | (120.6 | ) | (47.8 | ) | ||||||||||||||||
| Maturities of investments | 135.8 | 49.9 | ||||||||||||||||||
| Other, net | (2.1 | ) | 1.1 | |||||||||||||||||
| Net Cash — Investing Activities | (32.6 | ) | (33.6 | ) | ||||||||||||||||
| Financing Activities | ||||||||||||||||||||
| Short-term debt, net | (15.5 | ) | 27.3 | |||||||||||||||||
| Long-term debt, repaid | (0.7 | ) | (5.5 | ) | ||||||||||||||||
| Repurchase of common stock | (14.9 | ) | (87.9 | ) | ||||||||||||||||
| Issuance of common stock | 11.4 | 21.9 | ||||||||||||||||||
| Dividends paid | (10.3 | ) | (9.3 | ) | ||||||||||||||||
| Excess tax benefit from equity compensation activity | 6.4 | 3.7 | ||||||||||||||||||
| Other, net | (1.6 | ) | (1.3 | ) | ||||||||||||||||
| Net Cash — Financing Activities | (25.2 | ) | (51.1 | ) | ||||||||||||||||
| Exchange rate effects on cash and cash equivalents | (1.6 | ) | (7.2 | ) | ||||||||||||||||
| Net Cash – Operating activities of discontinued operations | (4.5 | ) | (3.7 | ) | ||||||||||||||||
| Net change in cash and cash equivalents | 20.4 | (26.8 | ) | |||||||||||||||||
| Cash and cash equivalents — beginning of year | 507.3 | 544.5 | ||||||||||||||||||
| Cash and cash equivalents - end of period | $ | 527.7 | $ | 517.7 | ||||||||||||||||
| Key Performance Indicators and Non-GAAP Measures |
| Management reviews key performance indicators including revenue, segment operating income and margins, earnings per share, order growth, and backlog, among others. In addition, we consider certain measures to be useful to management and investors when evaluating our operating performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and management of assets from period to period. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including, but not limited to, dividends, acquisitions and share repurchases. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for measures determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators for purposes of our reconciliation tables. |
| Organic Revenues and Organic Orders are defined as revenues and orders, excluding the impact of foreign currency fluctuations and contributions from acquisitions and divestitures made during the last twelve months. Divestitures include sales of insignificant portions of our business that did not meet the criteria for presentation as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations assumes translation at a constant exchange rate for the current and prior periods. |
| Adjusted Segment Operating Income and Adjusted Segment Operating Margin are defined as operating income, adjusted to exclude costs incurred in connection with the acquisition of Bornemann Pumps, the transformation costs, restructuring charges, spin-related repositioning charges and realignment costs; and adjusted segment operating margin is defined as adjusted segment operating income divided by total revenue. Spin-related repositioning charges are expenses to reposition the post-transformation organization to its full operating structure primarily consist of transition services agreement exit costs, advisory fees and other redesign actions related to the new company structure. |
| Adjusted Income from Continuing Operations and Adjusted EPS from Continuing Operations are defined as income from continuing operations and income from continuing operations per diluted share, adjusted to exclude special items. Special items may include, but are not limited to, asbestos-related costs, transformation costs, repositioning costs, realignment costs, restructuring costs, acquisition-related expenses, income tax settlements or adjustments, and other unusual and infrequent non-operating items. Special items represent significant charges or credits on an after-tax basis that impact current results, but may not be related to the Company’s ongoing operations and performance. |
| Adjusted Free Cash Flow is defined as net cash provided by operating activities less capital expenditures, cash payments for restructuring costs, transformation costs, repositioning costs, net asbestos cash flows and other significant items that impact current results which management believes are not related to our ongoing operations and performance. Due to other financial obligations and commitments, the entire free cash flow may not be available for discretionary purposes. |
| ITT Corporation Non-GAAP Reconciliation | |||||||||||||||||||||||||||||||||||||||||||
| Reported vs. Organic Revenue / Order Growth | |||||||||||||||||||||||||||||||||||||||||||
| Second Quarter 2014 & 2013 | |||||||||||||||||||||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||||||||||||||||
| (As Reported - GAAP) | (As Adjusted - Organic) | ||||||||||||||||||||||||||||||||||||||||||
| (A) | (B) | (C) | (D) | (E) = B-C-D | (F) = E / A | ||||||||||||||||||||||||||||||||||||||
| Change | % Change |
Acquisition/ | FX Impact | Change | % Change | ||||||||||||||||||||||||||||||||||||||
| 3M 2014 | 3M 2013 | 2014 vs. 2013 | 2014 vs. 2013 | 3M 2014 | 3M 2014 | Adj. 2014 vs. 2013 | Adj. 2014 vs. 2013 | ||||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||
| ITT Corporation - Consolidated | 663.0 | 609.2 | 53.8 | 8.8% | 0.8 | 7.1 | 45.9 | 7.5% | |||||||||||||||||||||||||||||||||||
| Industrial Process | 289.4 | 268.7 | 20.7 | 7.7% | 0.8 | (1.4) | 21.3 | 7.9% | |||||||||||||||||||||||||||||||||||
| Motion Technologies | 198.0 | 171.4 | 26.6 | 15.5% | 0.0 | 7.3 | 19.3 | 11.3% | |||||||||||||||||||||||||||||||||||
| Interconnect Solutions | 103.7 | 100.3 | 3.4 | 3.4% | 0.0 | 1.2 | 2.2 | 2.2% | |||||||||||||||||||||||||||||||||||
| Control Technologies | 73.7 | 70.2 | 3.5 | 5.0% | 0.0 | 0.0 | 3.5 | 5.0% | |||||||||||||||||||||||||||||||||||
| Orders | |||||||||||||||||||||||||||||||||||||||||||
| Total Segment Orders | 674.4 | 619.8 | 54.6 | 8.8% | 0.8 | 2.9 | 50.9 | 8.2% | |||||||||||||||||||||||||||||||||||
| Industrial Process | 291.5 | 274.1 | 17.4 | 6.3% | 0.8 | (3.1) | 19.7 | 7.2% | |||||||||||||||||||||||||||||||||||
Motion Technologies | 208.9 | 169.3 | 39.6 | 23.4% | 0.0 | 4.9 | 34.7 | 20.5% | |||||||||||||||||||||||||||||||||||
| Interconnect Solutions | 98.3 | 105.1 | (6.8) | (6.5%) | 0.0 | 1.3 | (8.1) | (7.7%) | |||||||||||||||||||||||||||||||||||
| Control Technologies | 77.2 | 73.4 | 3.8 | 5.2% | 0.0 | (0.1) | 3.9 | 5.3% | |||||||||||||||||||||||||||||||||||
Note: Excludes intercompany eliminations | |||||||||||||||||||||||||||||||||||||||||||
| ITT Corporation Non-GAAP Reconciliation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Reported vs Adjusted Segment Operating Income & Operating Margin | ||||||||||||||||||||||||||||||||||||||||||||||||
| Second Quarter of 2014 & 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3M 2014 | 3M 2014 | 3M 2014 | 3M 2013 | 3M 2013 | 3M 2013 | % Change | % Change | |||||||||||||||||||||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted |
As Reported |
As Adjusted | |||||||||||||||||||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Industrial Process | 289.4 | 289.4 | 268.7 | 268.7 | 7.7% | 7.7% | ||||||||||||||||||||||||||||||||||||||||||
| Motion Technologies | 198.0 | 198.0 | 171.4 | 171.4 | 15.5% | 15.5% | ||||||||||||||||||||||||||||||||||||||||||
| Interconnect Solutions | 103.7 | 103.7 | 100.3 | 100.3 | 3.4% | 3.4% | ||||||||||||||||||||||||||||||||||||||||||
| Control Technologies | 73.7 | 73.7 | 70.2 | 70.2 | 5.0% | 5.0% | ||||||||||||||||||||||||||||||||||||||||||
| Intersegment eliminations | (1.8) | (1.8) | (1.4) | (1.4) | 28.6% | 28.6% | ||||||||||||||||||||||||||||||||||||||||||
| Total Revenue | 663.0 | 663.0 | 609.2 | 609.2 | 8.8% | 8.8% | ||||||||||||||||||||||||||||||||||||||||||
| Operating Margin: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Industrial Process | 8.8% | 70 | BP | 9.5% | 10.5% | 110 | BP | 11.6% | (170) | BP | (210) | BP | ||||||||||||||||||||||||||||||||||||
| Motion Technologies | 17.5% | 10 | BP | 17.6% | 13.6% | 120 | BP | 14.8% | 390 | BP | 280 | BP | ||||||||||||||||||||||||||||||||||||
| Interconnect Solutions | 11.9% | 240 | BP | 14.3% | 6.7% | 100 | BP | 7.7% | 520 | BP | 660 | BP | ||||||||||||||||||||||||||||||||||||
| Control Technologies | 22.0% | - | BP | 22.0% | 21.9% | - | BP | 21.9% | 10 | BP | 10 | BP | ||||||||||||||||||||||||||||||||||||
| Total Operating Segments | 13.4% | 70 | BP | 14.1% | 12.1% | 100 | BP | 13.1% | 130 | BP | 100 | BP | ||||||||||||||||||||||||||||||||||||
| Income: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Industrial Process | 25.4 | 2.0 | 27.4 | 28.1 | 3.1 | 31.2 | (9.6%) | (12.2%) | ||||||||||||||||||||||||||||||||||||||||
| Motion Technologies | 34.7 | 0.2 | 34.9 | 23.3 | 2.1 | 25.4 | 48.9% | 37.4% | ||||||||||||||||||||||||||||||||||||||||
| Interconnect Solutions | 12.3 | 2.5 | 14.8 | 6.7 | 1.0 | 7.7 | 83.6% | 92.2% | ||||||||||||||||||||||||||||||||||||||||
| Control Technologies | 16.2 | 0.0 | 16.2 | 15.4 | 0.0 | 15.4 | 5.2% | 5.2% | ||||||||||||||||||||||||||||||||||||||||
| Total Segment Operating Income | 88.6 | 4.7 | 93.3 | 73.5 | 6.2 | 79.7 | 20.5% | 17.1% | ||||||||||||||||||||||||||||||||||||||||
| Note: Immaterial differences due to rounding. | ||||||||||||||||||||||||||||||||||||||||||||||||
Special items include, but are not limited to, certain costs
associated primarily with repositioning costs associated with
spin-related activities, | ||||||||||||||||||||||||||||||||||||||||||||||||
| ITT Corporation Non-GAAP Reconciliation | |||||||||||||||||||||||||||||||||||
| Reported vs. Adjusted Income from Continuing Operations & Adjusted EPS | |||||||||||||||||||||||||||||||||||
| Second Quarter of 2014 & 2013 | |||||||||||||||||||||||||||||||||||
| (In Millions, except per share amounts) | |||||||||||||||||||||||||||||||||||
| Percent Change | |||||||||||||||||||||||||||||||||||
| Q2 2014 | Non-GAAP | Q2 2014 | Q2 2013 | Non-GAAP | Q2 2013 | 2014 vs. 2013 | 2014 vs. 2013 | ||||||||||||||||||||||||||||
| As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | As Adjusted | As Adjusted | ||||||||||||||||||||||||||||
| Segment Operating Income | 88.6 | 4.7 | #A | 93.3 | 73.5 | 6.2 | #A | 79.7 | |||||||||||||||||||||||||||
| Interest Income (Expense) | - | - | - | (1.8) | - | (1.8) | |||||||||||||||||||||||||||||
| Other Income (Expense) | (0.5) | - | (0.5) | (0.4) | - | (0.4) | |||||||||||||||||||||||||||||
| Gain on sale of Assets | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Corporate (Expense) | (34.1) | 16.8 | #B | (17.3) | (32.1) | 22.8 | #B | (9.3) | |||||||||||||||||||||||||||
| Income from Continuing Operations before Tax | 54.0 | 21.5 | 75.5 | 39.2 | 29.0 | 68.2 | |||||||||||||||||||||||||||||
| Income Tax Benefit (Expense) | (12.4) | (7.3) | #C | (19.7) | (14.4) | (6.7) | #C | (21.1) | |||||||||||||||||||||||||||
| Income from Continuing Operations | 41.6 | 14.2 | 55.8 | 24.8 | 22.3 | 47.1 | |||||||||||||||||||||||||||||
| Less: Non Controlling Interest | 0.4 | - | 0.4 | 0.1 | - | 0.1 | |||||||||||||||||||||||||||||
| Income from Continuing Operations - ITT Corporation | 41.2 | 14.2 | 55.4 | 24.7 | 22.3 | 47.0 | |||||||||||||||||||||||||||||
| EPS from Continuing Operations | 0.44 | 0.16 | 0.60 | 0.27 | 0.24 | 0.51 | 0.09 | 17.6% | |||||||||||||||||||||||||||
| Note: Amounts may not calculate due to rounding. | |||||||||||||||||||||||||||||||||||
#A - | 2014 segment operating income includes restructuring costs ($3.8M); and realignment costs ($0.9M). | ||
#A - | 2013 segment operating income includes transformation and repositioning costs ($0.2M); restructuring costs ($3.3M). Bornemann Pumps integration costs and backlog amortization $(2.7M). | ||
#B - | 2014 corporate (expense) includes repositioning costs ($0.9M); asbestos related expense ($15.9M). | ||
#B - | 2013 corporate (expense) includes transformation and repositioning costs ($7.3M); restructuring costs ($0.1M); asbestos related expense ($15.9M) and a reversal of Bornemann integration costs $0.5M. | ||
#C - | 2014 includes various tax-related special items including tax impact of change in valuation allowance assessment ($1.5), tax basis step-up $2.3 and U.S. tax on foreign earnings of ($1.2M), in addition to the tax impact of other operating special items. | ||
#C - | 2013 includes various tax-related special items including changes in tax valuation allowances. | ||
| ITT Corporation Non-GAAP Reconciliation | ||||||||||||||||||||
| Net Cash - Operating Activities vs. Adjusted Free Cash Flow Conversion | ||||||||||||||||||||
| Second Quarter 2014 & 2013 | ||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| 6M 2014 | 6M 2013 | |||||||||||||||||||
| Net Cash - Operating Activities | 84.3 | 68.8 | ||||||||||||||||||
| Capital Expenditures | 45.7 | 36.8 | ||||||||||||||||||
| Free Cash Flow, including Transformation | 38.6 | 32.0 | ||||||||||||||||||
| Transformation & Repositioning Related Cash Payments | 7.5 | 17.6 | ||||||||||||||||||
| Restructuring Cash Payments | 9.2 | 10.0 | ||||||||||||||||||
| Asbestos Cash Payments, net | 6.9 | 11.7 | ||||||||||||||||||
| Adjusted Free Cash Flow | 62.2 | 71.3 | ||||||||||||||||||
| Income from Continuing Operations - ITT Corp | 74.4 | 43.8 | ||||||||||||||||||
| Special Items (including Transformation & Repositioning Costs) | 38.4 | 47.4 | ||||||||||||||||||
| Income from Continuing Operations - ITT Corp., Excluding | ||||||||||||||||||||
| Special Items | 112.8 | 91.2 | ||||||||||||||||||
| Adjusted Free Cash Flow Conversion | 55.1% | 78.2% | ||||||||||||||||||
| ITT Corporation Non-GAAP Reconciliation | |||||||||||||||||||||||||||||
| GAAP vs. Adjusted EPS Guidance | |||||||||||||||||||||||||||||
| Full Year 2014 | |||||||||||||||||||||||||||||
| 2014 Full-Year Guidance | |||||||||||||||||||||||||||||
| Low | High | ||||||||||||||||||||||||||||
| Earnings Per Share - GAAP Basis | $ | 1.58 | $ | 1.69 | |||||||||||||||||||||||||
| Asbestos Related Expense, Net of Tax | 0.44 | 0.41 | |||||||||||||||||||||||||||
| $ | 2.02 | $ | 2.10 | ||||||||||||||||||||||||||
| Restructuring and Realignment Costs, Net of Tax | 0.27 | ||||||||||||||||||||||||||||
| Repositioning Costs, Net of Tax | 0.06 | ||||||||||||||||||||||||||||
| Tax-Related Special Items | 0.03 | ||||||||||||||||||||||||||||
| Earnings Per Share - Adjusted Basis | $ | 2.38 | $ | 2.46 | |||||||||||||||||||||||||
Contacts:
Investors:
Melissa
Trombetta, +1 914-641-2030
melissa.trombetta@itt.com
or
Media:
Kathleen
Bark, +1 914-641-2103
kathleen.bark@itt.com
