ITT Corporation (NYSE:ITT) today reported that second-quarter 2014 revenue grew by 9 percent to $663 million, driven by solid performances in all four business segments across most strategic end markets.
Revenue results also reflect growth in key geographies, including 9 percent growth in both North America and emerging markets and 7 percent growth in Europe, as well as 8 percent overall organic revenue growth (defined as total revenue excluding foreign exchange, acquisitions and divestitures).
Second-quarter GAAP earnings from continuing operations increased to $0.44 per diluted share. Adjusted earnings from continuing operations, which excludes special items, increased 18 percent to $0.60 per diluted share, reflecting strong segment operational performances and a lower effective tax rate, partially offset by increased corporate costs. Special items primarily included asbestos-related expenses, restructuring and repositioning costs, and tax-related items.
On a GAAP basis, segment operating margins increased 130 basis points year-over-year. Adjusted segment operating margins expanded by 100 basis points to 14.1 percent. The growth reflects increased volume and strong net operating productivity, partially offset by growth investments.
“In the second quarter, ITT continued its proven track record of execution with outstanding organic revenue growth, and we delivered our strongest adjusted segment operating margin as today’s ITT,” said CEO and President Denise Ramos. “This is the result of consistent execution by employees across all of our businesses and steady progress on strategies that build our core capabilities and position us for future success.
“These strategies – including driving Lean transformations, turning around our connectors and shock absorber businesses and making strategic investments for growth – reflect our ongoing commitment to profitable growth and value creation for employees, customers and shareowners in 2014 and beyond.”
2014 Second-Quarter Business Segment Results
All results are compared with the prior-year second quarter
Industrial Process manufactures engineered fluid process equipment for the oil and gas, chemical, mining and industrial markets and provides aftermarket services and parts.
- Second-quarter revenue was up 8 percent to $289 million with organic revenue also up 8 percent. The increase reflects strong growth and share gains in oil and gas project pumps in North America, Europe and the Middle East, as well as global mining project pump growth in Latin America.
- GAAP operating income decreased 10 percent to $25 million. Adjusted operating income decreased 12 percent to $27 million, reflecting a higher mix of generally lower-margin large projects, incremental strategic investments and unfavorable foreign exchange, partially offset by increased volume and net operating productivity.
Motion Technologies manufactures braking technologies and shock absorbers for the automotive and rail markets.
- Second-quarter total revenue increased 16 percent to $198 million and organic revenue increased 11 percent, driven by automotive brake pad share gains and market growth in China, automotive aftermarket growth in Europe and strong performance by the shock absorber business in global rail and automotive end markets.
- GAAP operating income and adjusted operating income were up 49 percent and 37 percent, respectively, to $35 million. The gain reflects increased volume, an increase in generally higher-margin aftermarket products and legal settlement favorability, partially offset by pricing pressures and incremental strategic investments.
Interconnect Solutions manufactures highly specialized connectors for the oil and gas, medical, industrial and transportation, and aerospace and defense markets.
- Second-quarter total revenue increased 3 percent to $104 million and organic revenue increased 2 percent, reflecting growth in global aerospace, oil and gas, and general industrial connectors, partially offset by weaker defense and communication connectors.
- GAAP operating income was up 84 percent to $12 million while adjusted operating income was up 92 percent to $15 million. The increase is due to net operating productivity, restructuring benefits and increased volume.
Control Technologies manufactures specialized equipment including actuation, valve, and noise and energy absorption components for the aerospace and industrial markets.
- Second-quarter total and organic revenue increased 5 percent to $74 million. The results reflect growth in general industrial solutions, primarily in energy absorption, and in aerospace components, partially offset by the impact of a high-margin end-of-life aerospace program.
- GAAP operating income and adjusted operating income increased 5 percent to $16 million, as net operating productivity, positive pricing and volume increases were partially offset by negative mix shift due to the impact of an end-of-life aerospace program and incremental strategic investments.