ITT Industries Reports First Quarter EPS of $0.92 with Revenues Up 9 Percent
- Revenue growth in all four business segments
- Defense backlog reaches record $3 billion
- Water/wastewater organic revenue growth 13 percent
- Company maintains full year 2003 earnings guidance
ITT Industries,Inc. (NYSE: ITT) announced first quarter 2003 net income of $86.7 million and diluted earnings per share of $0.92, up $15.2 million and $0.15 respectively over the first quarter 2002. Reported EPS contains a $0.09 net positive impact from an IRS settlement of $ 23.1 million or $0.17 per share, and a $10.4 million pre-tax charge or ($0.08) per share, for restructuring actions, primarily in the Electronic Components segment.
"Our results this quarter came in above expectations and speak to the strength of our operating disciplines and balanced global portfolio. I'm proud of our management team for delivering these results in a demanding environment. It underscores our continued focus on enhancing customer service, improving operations and introducing new products despite tough conditions," said Lou Giuliano, Chairman, President, and Chief Executive Officer of ITT Industries. "Our strong platforms in the Defense, water/wastewater and Motion & Flow Control businesses helped fuel 9 percent revenue growth for the quarter. Additionally, we are seeing stability in order rates at the Electronic Components segment, which performed in line with expectations.
"We continue to make adjustments in each business based on market conditions, maintaining a defensive posture while positioning the company for an eventual economic upturn," Giuliano said. "The actions being taken in Electronic Components will increase its flexibility to adjust to market conditions and enhance the competitiveness of its global manufacturing footprint."
First Quarter Financial Highlights
- First quarter 2003 revenues up 9 percent to $1.3 billion, due to contribution of Fluid Technology and Defense, acquisitions and positive impact of foreign currency translation.
- Higher revenues, lower interest costs and continued process improvements combined to increase net income 21 percent and increase EPS 20 percent, as reported.
- Operating income up in three of four segments on higher volumes and Value-Based Six Sigma contributions.
- The company recorded a $10.4 million, or ($0.08) per share, charge for restructuring, primarily within the Electronic Components segment. Including this charge, Operating Income was $109.7 million, off $5.9 million or 5 percent from first quarter 2002. The company anticipates additional EPS impact of restructuring to be ($0.08) through end of 2003.
- Effective tax rate for first quarter of 30.1 percent, down from previous guidance of 32 percent; full-year 2003 estimated effective tax rate of 31 percent.
- Cash flow came in as expected. The company's first quarter 2003 cash usage from operations of ($215.7 million) included previously announced $200 million funding of U.S. Salaried Pension Plan.
First Quarter Segment Highlights
- First quarter 2003 FTC revenues $503.6 million, up $59.4 million or 13 percent.
- Revenue growth driven by 13 percent organic growth in water/wastewater, acquisitions and positive impact of foreign currency translation.
- Segment operating income rose $2.6 million to $56.3 million, and operating margin declined on impact of acquisitions.
- FTC aftermarket parts and services orders grew 18 percent, with water/wastewater orders up 30 percent.
- Production capability expanded in China, with newly acquired Robot manufacturing in Shenyang.
- Strength in water/wastewater and acquisitions expected to drive full year FTC revenue growth of 8-10 percent.
- Revenues $258.1 million, up $22.1 million or 9 percent on higher volume in automotive and leisure marine, and positive impact of foreign currency translation.
- Operating income $38.0 million, up $10.1 million or 36 percent, and operating margin increased 290 basis points.
- MFC benefits from operational improvements, stronger European performance, strength of new products and the absence of 2002 Strategic Review charges.
- Automotive-related businesses win U.S. platforms, gain market share with key European OEMs.
- MFC full year revenue expected to fall 1-3 percent on anticipated declines in auto build rates and platform roll-offs at automotive fluid systems.
ITT Industries Second Quarter and Full Year 2003 Outlook (in millions, except EPS)
|Second Quarter||Full Year|
|Segment Operating Margin||11.8%-12.0%||11.5% - 12.0%||Diluted EPS||$1.00 - $1.03||$3.70 - $3.90|
About ITT Industries
ITT Industries, Inc. supplies advanced technology products and services in key markets including: electronic interconnects and switches; defense communication, opto-electronics, information technology and services; fluid and water management and other specialty products. Headquartered in White Plains, NY, the company generated $4.99 billion in 2002 sales. In addition to the New York Stock Exchange, ITT Industries stock is traded on the Midwest, Pacific, London, Paris and Frankfurt exchanges.
Source: ITT Inc.