ITT Industries Raises FY 2005 Guidance
ITT Industries announced second quarter 2005 net income of $137.7 million, up $25.7 million over the second quarter 2004 including the net benefit of special items.
Diluted earnings per share (EPS) for the quarter, including the net benefit of special items, was $1.46, up $0.28 from the same period in 2004. The company realized a $0.08 per share benefit primarily from tax items, offset by restructuring costs of $0.05 per share. The net effect of these special items was a $0.03 increase in reported EPS for the second quarter 2005. Adjusting results to exclude these special items, earnings for the second quarter 2005 were $1.43 per share, up 21 percent over the comparable 2004 figure of $1.18.
"This was our seventh consecutive quarter of double-digit organic revenue growth, with Fluid Technology and Defense leading the way. We are encouraged by the favorable environment and the traction we're seeing in our end markets," said Steve Loranger, ITT Industries' Chairman, President and Chief Executive Officer. "Order growth has been outstanding. Defense order activity was up 109 percent in the second quarter, leading to an all-time high Defense backlog of $4 billion. Our Fluid Technology businesses continue to demonstrate strong organic growth, and we're beginning to show attractive margin expansion through successful implementation of lean initiatives."
"We see excellent potential for future growth, and for the second time this year we're raising our full-year earnings, revenue and cash flow guidance," Loranger said. "With a strong first half and solid orders across most of our businesses, we're once again raising our full year earnings target to a range of $5.30 - $5.40 per share, which represents an EPS growth of 17 percent over full year 2004. We now estimate full-year 2005 revenues of $7.7 - $7.8 billion, up 14 - 15 percent from results last year, and we are raising our full-year 2005 cash forecast to $525 - $560 million."
Second Quarter Financial Highlights
- Second quarter revenues rose 20 percent over the same period 2004 to $1.98 billion on sales growth across the portfolio, the acquisition of Kodak's Remote Sensing business and the positive impact of foreign exchange. Organic revenue, excluding foreign exchange and acquisitions, grew 12 percent and organic order growth was 32 percent.
- Segment operating income grew 30 percent over the second quarter 2004 to $229.9 million.
- Year-to-date 2005 cash from operations grew 176 percent to $163.1 million. Free cash flow (cash from operations excluding voluntary pension pre-funding less capital expenditures) nearly doubled the 2004 six-month performance to $191.3 million, due to earnings growth and lower working capital investment.
- The company named George Minnich as the new Chief Financial Officer. Minnich joined ITT from United Technologies, where he served as the CFO of UTC's $10 billion Otis unit. Minnich replaces Ed Williams, who is retiring after an 18-year career with ITT.
Fluid Technology's Second Quarter Segment Highlights
- Second quarter Fluid Technology revenues were $734.5 million, up $83.6 million or 13 percent from the same period last year, with organic revenue growth of 11 percent. Revenue growth was driven by organic growth in wastewater, building trades and industrial product sales, as well as currency translation. Segment operating income was $94.3 million and operating margin rose 120 basis points, including the impact of restructuring charges. Adjusting to exclude restructuring costs, operating income was $96.6 million, up 22 percent from the comparable figure in 2004.
- The wastewater business saw 15 percent revenue growth, with double-digit sales growth in Europe and Asia Pacific. One key to the growth has been ITT's proprietary N-pump technology, which is energy efficient, easy to maintain and reduces clogging even under the most extreme conditions. ITT is leveraging this innovative technology to cover a broader range of applications, and expects N-pump to represent half of the wastewater pump revenue in the next five years.
- ITT's water treatment business continues its growth pattern, particularly in the ultraviolet and ozone disinfection business which saw second quarter order activity grow 13 percent. ITT won its first order to combat endocrine disruptors in wastewater.
About ITT Industries
ITT Industries, Inc. (NYSE: ITT) supplies advanced technology products and services in key markets including: fluid and water management including water treatment; defense communication, opto-electronics, information technology and services; electronic interconnects and switches; and other specialty products. Headquartered in White Plains, NY, the company generated $6.8 billion in 2004 sales.
In addition to the New York Stock Exchange, ITT Industries stock is traded on the Midwest, Pacific, Paris, London and Frankfurt exchanges.
Source: ITT Inc.