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ITT reports strong fourth quarter and record full-year results, affirms 2008 outlook
Fourth quarter
- Revenue was up 23 percent to $2.5 billion, with double-digit organic growth in
each business segment
- Earnings from continuing operations were up eight percent to 70 cents per share;
excluding special items, earnings per share were 94 cents, up 29 percent
Full-year
- 2007 revenue tops $9 billion, up 15 percent; organic revenue up 11 percent for the
year
- 2007 earnings from continuing operations grew to $3.44 per share, up 29 percent;
excluding special items, earnings per share were up 24 percent to $3.53
WHITE PLAINS, N.Y. - February 6, 2008 – ITT Corporation (NYSE: ITT) today reported fourth
quarter 2007 income from continuing operations of $128 million, or 70 cents per share.
Excluding special items and restructuring costs, income from continuing operations was $172
million, or 94 cents per share, up 29 percent on strong profit performance from each business
segment. Fourth quarter revenue was up 23 percent year-over-year to $2.5 billion on continued
robust growth in the Defense segment and strong international sales in ITT's commercial segments.
Improved full-year 2007 margin performance across all segments led to record income from
continuing operations of $633 million, or $3.44 per share. Excluding the impact of special items
and restructuring, income rose to $650 million, or $3.53 per share, up 24 percent over the prior
year. For the full-year 2007, ITT reported record revenues of $9.0 billion, a 15 percent
improvement, driven by strong double-digit organic revenue growth. This marks the fourth
straight year of double-digit organic revenue growth.
"We are proud of our performance this quarter and for 2007 on the whole – we set a high bar and
cleared it. On top of outstanding operational performance, we made significant progress on our
strategic plan and effectively realigned and enhanced our portfolio for long-term success," said
Steve Loranger, ITT's chairman, president and chief executive officer. "Our strong operational
capability, combined with a portfolio that is built to weather economic cycles, gives us confidence
heading into 2008. Despite the uncertainty facing the U.S. market, we believe our team has
effectively positioned the company to have another strong year and meet our goals."
2008 Outlook
ITT is confirming its full-year 2008 earnings forecast in the range of $3.80 to $3.95 per share,
reflecting anticipated 16 to 20 percent earnings growth over 2007 on a comparable basis. The
company expects top-line revenue to be $11.1 billion to $11.3 billion in 2008, approximately 25
percent higher than 2007 revenue. Revenue growth expectations include mid-single digit organic
growth and full-year revenues of recent acquisitions, including EDO Corporation and
International Motion Control.
In November 2007, ITT announced that effective with its first quarter 2008 earnings report it
would no longer present restructuring costs within adjusted earnings figures. In anticipation of
this change, projected restructuring costs of $35-45 million are included in this earnings forecast.
Fourth Quarter and Full-Year Business Segment Results
Defense Electronics & Services
- Fourth quarter revenue for the Defense segment was up 24 percent to $1.2 billion, on
strong organic growth from the segment's services businesses. Fourth quarter operating
income for the segment grew to $125 million. Excluding restructuring, operating income
was up 32 percent to $129 million.
- Full-year 2007 revenue for the segment reached $4.2 billion, up 14 percent over 2006, led
by the strong year-over-year growth of ITT's Advanced Engineering & Sciences and
Systems businesses. For the full year, operating income for the segment was $503 million.
Excluding restructuring, operating income was up 25 percent to $512 million, attributable
to high performance on fixed-price contracts and continued focus on operational
efficiency.
- On Dec. 20, 2007, ITT closed its acquisition of EDO Corporation. The agreement to
purchase EDO was announced in September 2007 and approved by EDO shareholders at a
special meeting held two days prior to closing. The acquisition was ITT's largest in its
history and makes ITT a top 10 U.S. defense contractor, as measured by revenue.
Fluid Technology
- ITT's Fluid Technology segment reported fourth quarter revenue of $985 million, up 18
percent year-over-year and 11 percent organically. Growth in the segment was driven by
strong international sales in commercial and industrial end markets, which offset weakness
in the U.S. residential market. Fourth quarter segment operating income was $125 million.
Excluding restructuring, operating income grew 18 percent to $145 million year-over-year.
- For the full-year 2007, the segment grew 14 percent on revenues of $3.5 billion and
generated operating income of $433 million. Excluding restructuring, operating income
improved 19 percent to $473 million, driven by ongoing deployment of operational and
productivity improvement initiatives.
Motion & Flow Control
- Fourth quarter revenue for the segment was up 41 percent to $370 million, which includes
full-quarter revenues of the recently acquired International Motion Control. Organic
growth for the quarter was also strong at 12 percent, on continued strength in the
Aerospace Controls and Friction Technologies businesses. The segment reported fourth
quarter operating income of $38 million. Excluding restructuring expenses, operating
income improved 37 percent to $50 million.
- Full-year 2007 revenue for the Motion & Flow Control segment was $1.3 billion, up 22
percent over 2006. Operating income grew to $187 million for the year. Excluding
restructuring, segment operating income of $202 million improved 22 percent, benefiting
from continued focus on operational and lean initiatives.
Emerging Markets Progress
During the fourth quarter, ITT made significant progress against its emerging markets growth
strategies by opening three state-of-the-art manufacturing facilities and a new research and
development center. The new sites serving ITT's commercial businesses will focus on customizing
and building products designed to meet the specific needs of customers throughout Asia Pacific, as
well as other markets.
ITT opened two advanced manufacturing and assembly centers in China and one in Poland. The
Wuxi, China site will primarily support ITT's Motion & Flow Control segment. The Nanjing,
China and Poland plants will primarily develop products for the Fluid Technology segment. The
Nanjing facility is a showcase of ITT technologies as it deploys an advanced industrial water
treatment system enabling the plant to reuse virtually all the water needed to operate the facility.
During the quarter, the company also opened an ITT Technology Center, in Vadodara, India,
which was established to meet the specific needs of Indian customers, and eventually global
customers.
Income Tax Controls
In the fourth quarter, ITT identified a material weakness specifically related to income tax
accounting controls. The company has initiated remedial steps to enhance controls in this area,
and also performed additional analyses and post-closing procedures that reasonably assured the
reliability of income tax accounts as of December 31, 2007. This control issue, which will be more
fully discussed in the company's 10-K, did not result in the restatement of, or otherwise materially
impact, ITT's financial statements for any period.
Investor Call Today
ITT's senior management will host a conference call for investors today at 9:00 a.m. Eastern
Standard Time to review fourth quarter and full-year performance and answer questions. The
briefing can be monitored live via webcast at the following address on the company's Web site:
www.itt.com/ir.
About ITT Corporation
ITT Corporation (www.itt.com) is a diversified high-technology engineering and manufacturing
company dedicated to creating more livable environments, enabling communications and
providing protection and safety. The company plays an important role in vital markets including
water and fluids management, global defense and security, and motion and flow control. ITT
employs approximately 40,000 people serving customers in more than 50 countries.
Headquartered in White Plains, N.Y., the company generated $9 billion in 2007 sales.
Safe Harbor Statement
Certain material presented herein includes forward-looking statements intended to qualify for the safe
harbor from liability established by the Private Securities Litigation Reform Act of 1995 ("the Act"). These
forward-looking statements include statements that describe the Company's business strategy, outlook,
objectives, plans, intentions or goals, and any discussion of future operating or financial performance.
Whenever used, words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target"
and other terms of similar meaning are intended to identify such forward-looking statements. Forwardlooking
statements are uncertain and to some extent unpredictable, and involve known and unknown risks,
uncertainties and other important factors that could cause actual results to differ materially from those
expressed in, or implied from, such forward-looking statements. Factors that could cause results to differ
materially from those anticipated by the Company include general global economic conditions, decline in
consumer spending, interest and foreign currency exchange rate fluctuations, availability of commodities,
supplies and raw materials, competition, acquisitions or divestitures, changes in government defense budgets,
employment and pension matters, contingencies related to actual or alleged environmental contamination,
claims and concerns, intellectual property matters, personal injury claims, governmental investigations, tax
obligations, and changes in generally accepted accounting principles. Other factors are more thoroughly set
forth in Item 1. Business, Item 1A. Risk Factors, and Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Forward-Looking Statements in the ITT Corporation
Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and other of its filings with the
Securities and Exchange Commission. The Company undertakes no obligation to update any forwardlooking
statements, whether as a result of new information, future events or otherwise.
Contact:
Andy Hilton
(914) 641-2160
andy.hilton@itt.com
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