ITT reports first quarter earnings per share of $1.02 from continuing operations
* Excluding special items, earnings from continuing operations were down 21 percent to 72 cents per share from 2008 first quarter, exceeding previous guidance
* Revenue for the quarter was $2.6 billion, down nine percent compared to the year-ago quarter
* Strong free cash flow for the quarter exceeded $165 million
* Excluding special items, full-year earnings forecast adjusted to $3.20 to $3.60 per share, including anticipated incremental restructuring and acquisition costs of $0.10 per share
WHITE PLAINS, N.Y.— ITT Corporation (NYSE: ITT) today reported first quarter 2009 income of $187 million, or $1.02 per share, from continuing operations, including a net $54 million tax benefit resulting primarily from the reorganization of certain international legal entities. Excluding special items, income from continuing operations for the quarter was $132 million, or 72 cents per share, and better than expected primarily due to performance in the Defense Electronics & Services and Fluid Technology segments. Compared to the prior year quarter, earnings decreased due to lower sales volumes and higher employee benefit plan and restructuring expenses, partially offset by cost saving initiatives and lower interest expense.
First quarter revenue was $2.6 billion, down nine percent compared to the first quarter of 2008, and down five percent excluding the impact of foreign exchange, acquisitions and divestitures on a comparable basis. Year-to-date free cash flow generation exceeded $165 million, representing a 128 percent conversion of income from continuing operations, excluding non-cash tax adjustments.
“Given our solid preparation, strong balance sheet, and focused execution by our teams, we believe we are managing the current conditions effectively and performing well relative to our peers,” said Steve Loranger, ITT’s chairman, president and chief executive officer.
“We anticipated a slower economy and have been very proactive in managing the changing conditions. Our current view suggests that while the outlook for the defense segment remains solid, we anticipate an extended slowdown in certain end markets affecting our commercial businesses. We no longer anticipate any sequential improvement this year in the industrial, commercial, and automotive markets, and have recalibrated our forecast accordingly,” Loranger added.
ITT now forecasts full-year earnings from continuing operations, excluding special items, to be in the range of $3.20 to $3.60 per share. This range includes an anticipated additional $26 million, or $0.10 per share, for incremental restructuring and acquisition expenses. Full-year 2009 revenue is now expected to be in the range of $10.6 billion to $11.0 billion.
2009 First Quarter Business Segment Results
* First quarter revenue for the segment was $744 million, down 16 percent compared to the first quarter of the prior year or down 6 percent excluding the impact of foreign currency exchange. This performance reflects better than anticipated sales in municipal markets and softer residential and commercial market performance.
* First quarter operating income for the segment was down to $69 million, primarily due to volume declines, change in order mix, and higher employee benefit plan and restructuring costs.
* During the first quarter, ITT won a $22 million contract to supply a number of high-end water pumps for two irrigation systems to the Andhra Pradesh irrigation project, the largest irrigation project in India.
* ITT recently announced that it has signed an agreement to acquire Laing GmbH, which will broaden the company’s portfolio of energy-efficient plumbing and HVAC pumps and demonstrates ITT’s commitment to its vision of achieving global water leadership.
Defense Electronics & Services
* Segment revenue for the first quarter was $1.5 billion, essentially flat as compared to the first quarter of 2008. Revenue performance was led by double-digit growth on a comparable basis in the Electronic Systems and Space businesses that offset a double-digit decline at Communication Systems due to large one-time shipments during the first quarter of 2008.
* Compared to the prior year quarter, segment operating income for the first quarter grew to $164 million. Operating margins improved 80 basis points compared to the first quarter of the prior year, as productivity improvements and mix offset increased employee benefit plan costs.
* Backlog for the segment remained flat year-over-year at $5.2 billion, on strong orders for Night Vision goggles, GPS and classified satellite payloads, and a $317 million order for counter-IED jammers for the U.S. Marines.
Motion & Flow Control
* Revenue for the first quarter was $306 million, down 27 percent compared to the prior year or down 18 percent excluding the impacts of foreign currency exchange, acquisitions and divestitures. This performance reflects challenging conditions in end markets served by the Flow Control, Interconnect Solutions and Motion Technologies businesses.
* First quarter 2009 segment operating income was $28 million, down significantly as compared to the prior year as volume declines, employee benefit plan costs and foreign currency exchange impacted earnings.
“We have continued confidence in our portfolio, which we’ve aligned around enduring growth drivers, including threats to global security, fresh water scarcity, and population growth. It’s a portfolio we anticipate will continue to perform relatively well compared to our peers during these times, and positions us for success well into the future,” said Loranger.
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