ITT Forecasts Strong Performance Improvement
ITT Corporation said that continued organic growth in its core businesses, stronger operating performance and a more focused portfolio have positioned the company to deliver another year of solid earnings growth in 2007.
The company now expects full year 2006 earnings from continuing operations will be $2.78- $2.80 per share, reflecting a charge to net income of $25 million ($0.13 per share) in the 4th quarter of 2006 in anticipation of resolution of a legal matter in its Roanoke-based Night Vision business. The charge, in addition to previous reserves, is expected to cover the financial requirements of the pending resolution. A settlement that would resolve all outstanding issues relating to this investigation that began several years ago regarding compliance with U.S. export regulations is expected to be concluded in the first quarter of 2007.
The company also announced that it plans to raise its annual dividend by 27 percent to $0.56 per share effective April 2007, subject to approval by the Board of Directors. The company announced in October that it would repurchase up to $1 billion of its common stock from time to time in the open market over a three-year period.
2007 Segment Forecast
Fluid Technology
The water/wastewater businesses, coupled with the rollout of new commercial water products, should lead the improvements in Fluid Technology in 2007, driving projected revenue growth of 6 to 7 percent to approximately $3.2 billion in this segment. Operating margin is expected to grow 80-100 basis points, driven primarily by higher incremental margins on new business, lean and Six Sigma initiatives, low cost sourcing and footprint rationalization efforts.
Defense Electronics & Services
The company's Defense Electronics & Services segment anticipates that it will extend its growth trend in 2007, with revenue expected to increase 8 to 9 percent to approximately $4 billion. This should be driven by continued strong demand for its Aerospace/Communications and Night Vision businesses, and recent contract wins in Systems, and Advanced Engineering and Sciences. Segment operating margins are expected to be up 20 to 30 basis points in 2007 over 2006 performance that includes the charge recorded for the Night Vision legal matter.
Motion & Flow Control
For 2007, the Connectors business, formerly included with Switches in the Electronic Components segment, will be reported within Motion and Flow Control. Market share growth in Friction Materials and Aerospace Controls are expected to drive overall growth in the Motion & Flow Control segment in 2007. The company anticipates 2007 segment revenues of approximately $1.1 billion, representing a 3 to 5 percent revenue growth. Improved cost positions through production in low cost areas, global sourcing and lean manufacturing initiatives, are expected to improve the segment's operating margins by 40-80 basis points for 2007.
Source: ITT Inc.
