ITT Reports Solid Second Quarter and Forecasts Strong Operational Performance for the Full Year

  • Second-quarter revenue up 1 percent to $2.7 billion with significant increase in organic orders in commercial businesses.
  • Second-quarter earnings from continuing operations up 12 percent to $1.22 per share. Adjusted earnings from continuing operations up 9 percent to $1.14 per share, topping previous guidance.
  • Company announces plans to divest CAS, Inc., a component of the Defense & Information Solutions segment; classifies CAS as a discontinued operation.
  • Strong operational performance expected to offset the $0.11 full-year dilutive impact of acquisitions and discontinued operations announced in the second quarter; adjusted full-year earnings per share guidance of $4.08 to $4.18 represents 11 percent growth at the mid-point compared with 2009.

WHITE PLAINS, N.Y. — (BUSINESS WIRE) — July 30, 2010 — ITT Corporation (NYSE: ITT) today reported 2010 second-quarter revenue of $2.7 billion and income from continuing operations of $226 million, or $1.22 per share. Excluding special items, income from continuing operations for the quarter was $211 million, or $1.14 per share, representing 9 percent year-over-year growth. Special items resulted from the completion of a tax audit.

“We are pleased with ITT’s strong productivity and solid operating margins this quarter, and we are making substantial progress realigning our portfolio of essential products and services to drive future growth,” said Steve Loranger, ITT’s chairman, president and chief executive officer. “Our Motion & Flow Control business once again delivered exceptional performance with significant increases in revenue and operating income. Our Defense & Information Solutions business delivered improved productivity and lower expenses driven by its business transformation. Our Fluid Technology team posted solid margin expansion with outstanding productivity. We are growing in emerging markets and seeing market recovery in some of our commercial businesses, driving significant growth in organic orders. All in, it adds up to a great first half.”

During the quarter the company announced that it acquired Canberra Pumps in Brazil and that it signed a definitive agreement to acquire Godwin Pumps as part of ITT’s portfolio repositioning strategy. These businesses will be included in the Fluid Technology segment. The company also today announced its plans to divest CAS, Inc., a systems engineering and technical assistance (SETA) component of the Defense & Information Solutions segment.

“Our strategies for long-term sustainable growth include increasing our presence in emerging markets, rebalancing our revenue mix and strengthening the portion of our business that is aligned with global macro trends, including the need for fresh water and modernized infrastructure, and we made good progress in the second quarter. The purchase of Godwin will build our global position in water, wastewater and industrial process, and Canberra Pumps expands our position in Latin America and enables us to sharpen our focus on the growing oil and gas market,” Loranger said. “Our plans to divest CAS will reduce the potential for perceived organizational conflicts of interest for ITT as a top-tier defense contractor. CAS is an outstanding business; however, as we continue to grow our Defense & Information Solutions business revenues in adjacent platforms, we believe CAS would be better positioned for growth with another company.”

CAS is being classified as a discontinued operation, including full-year 2009 revenues of $230 million; and taken together with the Godwin and Canberra acquisitions, the 2010 full-year dilutive impact of these portfolio repositioning activities is expected to be $0.11. The company projects this will be offset by strong operational performance.

“Notwithstanding the one-time impact of our repositioning strategy on our full-year outlook, we are poised for double-digit earnings growth in 2010, building on a best-in-class earnings performance in 2009. The focused execution of our global teams, combined with improving conditions in certain end markets, gives us confidence in our ability to deliver a strong second half and raise our outlook for the full year -- and we are well positioned for sustainable growth over the long term,” Loranger said.

Second-Quarter Segment Results

Defense & Information Solutions

  • Second-quarter 2010 revenue for the Defense segment was $1.5 billion, down 3 percent compared to the year-ago period. Backlog at the end of the quarter was $4.1 billion. Second-quarter volume declines from strong prior-year results for tactical radios and counter improvised explosive device units were partially offset by growth in special purpose jammers, radar, composite structures, increased activity under the Automatic Dependent Surveillance-Broadcast (ADS-B) air-traffic control program and strong international night vision goggle revenues. Organic orders declined 49 percent from a very strong prior-year period due to deferral of an international radio order and delayed award timing of service contracts and jammer upgrades.
  • Significant wins during the quarter included a $1.4 billion Systems Engineering 2020 award under the FAA’s next generation air transportation system, and a NASA range operations contract. The company also recently won two independent contracts, totaling up to $800 million, from the U.S. Army Corps of Engineers to provide operations and maintenance support for the Afghanistan National Security Forces.
  • Strong productivity and cost reductions in the segment were offset by costs related to the business transformation that was implemented in the first quarter, higher pension costs, and lower volumes, resulting in a 2 percent decline in second-quarter operating income to $194 million.

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