ITT Reports Q1 2006
ITT Industries, reported first quarter 2006 net income of $155.9 million or $0.83 per share, including the net impact of special items of $37.8 million or $0.20 per share, with the gain on the sale of ITT's auto tubing and Richter businesses partially offset by restructuring charges.
Excluding special items, earnings from continuing operations grew 19 percent to $0.63 per share over the first quarter 2005. Excluding the ($0.01) per share impact of the adoption of SFAS - 123R, earnings grew 21 percent to $0.64 per share. First quarter 2006 revenue was $1.89 billion, up 7 percent over the period last year.
"We laid out an aggressive growth plan for 2006 and expect to deliver on that commitment," said Steve Loranger, Chairman, President and Chief Executive Officer.. "Based on our strong start for the year, we are raising our full-year earnings forecast excluding special items from a range of $2.89 - $2.96 to $2.91 - $2.97 per share, up 12 – 15 percent compared to 2005, including the estimated ($0.09) per share impact from the adoption of SFAS-123R. Excluding the impact of the adoption of SFAS-123R, our outlook for full year 2006 earnings from continuing operations excluding special items would be up 16 - 18 percent. We're also raising the mid-point of our full- year revenue guidance by $50 million, from a range of $7.82 - $7.97 billion to $7.90 - $8.01 billion."
Primary Business Results
- First quarter 2006 Fluid Technology revenue was $685.7 million, up $55.6 million or 9 percent; organic revenues grew 11 percent over the period in 2005, led by Water and Wastewater and Industrial/Biopharm. Operating income was $63.3 million, including the impact of restructuring.Excluding restructuring, operating income was up 10 percent to $67.3 million.
- Order activity remains robust in this segment, with double digit organic order growth in Water/Wastewater, Industrial/Biopharm and Building Trades. Segment organic orders grew 12 percent in the quarter.
- Growth was particularly strong in the wastewater business, with 14 percent growth in organic revenue and 17 percent growth in organic orders. ITT's Flygt group is preparing to introduce a new series of large pumps incorporating the company's N-pump technology, extending the N-pump's energy-saving and life-cycle cost advantages through its wastewater products. This month, Flygt also introduced a new line of dewatering pumps using N-pump technology.
- In the first quarter, ITT was awarded the contract to provide pumps and systems for the 2008 Summer Olympic Kayaking venue in Beijing. The course will be designed to move 5,000 gallons of water/second over the 500-meter course. It is the fourth summer Olympic kayaking course powered by ITT Fluid Technology products.
Defense Electronics & Services
- ITT's Defense Electronics & Services segment reported first quarter revenues of $831.1 million, up 7 percent over the same period in 2005. Operating income for the segment was $95.8 million, including the impact of restructuring. Excluding restructuring, operating income was up 26 percent in the quarter to $97.8 million. Higher volume, better yields and contract performance drove Defense operating margin up 180 basis points in the first quarter, excluding restructuring.
- Order activity remains strong, with order growth of 45 percent in the quarter, led by Aerospace Communications, Night Vision, Systems and Space, increasing ITT's Defense backlog by 10 percent to $3.9 billion. Order growth in Defense is expected to continue outpacing revenue growth through 2006.
- The growth at Defense is being led by Aerospace Communications, which has more than tripled its production rate for its SINCGARS tactical radios over the last year. During the first quarter, ITT received a U.S. Army order for 60,000 additional radios valued at more than $400 million, extending the growth visibility in this important product line. The company also foresees greater potential for international sales of SINCGARS, as coalition partners and allies upgrade their communications to be compatible with U.S. forces.
- ITT's Systems division continues to grow revenues due to increased outsourcing of services by the U.S. Department of Defense. Revenues were up 17 percent in the first quarter, and orders grew 42 percent.
Motion & Flow Control
- First quarter revenues for ITT's Motion & Flow Control segment were $188.3 million, down 1 percent from the first quarter last year, primarily due to the negative impact of foreign currency translation. On an organic basis, Motion & Flow Control revenues grew 5 percent. First quarter operating income for the segment was $35.9 million, including the impact of restructuring charges. Excluding restructuring, operating income for this segment was $38.2 million, up 6 percent, and segment operating margin grew 130 basis points on higher volumes and operating improvements at Leisure Marine, Friction Materials and Aerospace Controls.
- Order activity levels are robust, with 7 percent order growth and 13 percent organic order growth over the same period last year, driven primarily in Friction Materials and Leisure Marine.
- Aerospace Controls, which produces fuel valves and other components, continues to benefit from the upturn in the aerospace market, with organic revenue growth of 18 percent.
- First quarter revenues for the Electronic Components segment were $185 million, up 7 percent over the same period in 2005. Organic revenue grew 10 percent, with growth in cellular handsets, transportation, auto and industrial markets. Operating income for the first quarter was $7.5 million including the impact of restructuring charges. Excluding restructuring, operating income was $14.2 million, up 69 percent over the first quarter last year, and operating margins grew 290 basis points, primarily driven by restructuring actions and other operational improvements made over the last year, as well as higher volumes.
- Order intake at Electronic Components was at the highest level since the third quarter 2000, up 15 percent over the first quarter last year, and up 18 percent on an organic basis. This is primarily attributable to growth in the cellular handset market. The segment's book-to-bill ratio stood at 1.12.
- The process to prepare Electronic Components' Switches business for disposition is underway. The company will continue to improve and manage the business to create value until a disposition is completed.
Source: ITT Inc.