Company raises full-year GAAP EPS guidance; maintains adjusted EPS,
and revenue guidance
Sees benefits from continued effective management of net asbestos
liability
GAAP Results:
-
Revenue down 8% to $602 million
-
Segment operating margin at 14.1%
-
EPS increased to $1.07
Adjusted Results:
-
Organic revenue down 2%
-
Segment operating margin at 15%
-
EPS of $0.63
ITT Corporation (NYSE: ITT) today reported 2015 third-quarter financial
results, including solid adjusted operating margins, that reflected
strong net operating productivity and effective cost containment in a
challenging macroeconomic environment.
On a GAAP basis, the company delivered revenue of $602 million in the
third quarter, reflecting an 8 percent decline, primarily due to
unfavorable foreign exchange. GAAP segment operating margins declined 30
basis points to 14.1 percent primarily due to unfavorable foreign
exchange and negative pricing impacts, which were partially offset by
strong operating productivity and benefits from proactive restructuring.
Third-quarter GAAP EPS increased to $1.07, compared with $0.87 in the
prior year, primarily due to the successful resolution of a federal tax
audit.
On an adjusted basis, organic revenue (defined as total revenue
excluding foreign exchange, acquisition and divestiture impacts)
decreased 2 percent, reflecting declines in the global general
industrial and the upstream and midstream oil and gas markets, as well
as weakness in the global rail market, which more than offset share
gains and aftermarket growth in automotive brake pads.
Adjusted segment operating income declined 9 percent, as strong net
operating productivity, including restructuring benefits from proactive
actions, was more than offset by unfavorable foreign exchange of $10
million, negative pricing impacts, and operational disruption costs due
to the relocation of certain connectors operations within North America.
Adjusted segment operating income, excluding the negative impact from
foreign exchange, grew 1 percent in the quarter.
Adjusted EPS, which excludes special items, decreased 5 percent to
$0.63, as solid segment operational performance, lower corporate costs,
including efficiencies and lower environmental costs, and a lower share
count were more than offset by unfavorable foreign exchange. Adjusted
EPS, excluding the negative impact from foreign exchange, grew 8 percent
in the quarter.
“Despite the persistent headwinds from foreign exchange and global oil
and gas and industrial markets, we continued our track record of
execution and delivered solid operating margins in the quarter,” said
Denise Ramos, Chief Executive Officer and President. “We are
consistently seeing the benefits from driving productivity, proactively
restructuring our operations and actively controlling our costs.
“In addition, we are deploying our capital to position us for long-term
success, including acquiring close-to-core businesses such as Hartzell
Aerospace in the second quarter and Wolverine Advanced Materials early
in the fourth quarter. And, we are also continuing to effectively manage
our net asbestos liability, resulting in improved cash flow projections
and a significant 15 percent reduction in the net liability in 2015.
“As we continue to manage those areas over which we have control, we
remain mindful of the ongoing volatility in the global macroeconomic
environment and the impact these conditions will continue to have on our
businesses. As we look ahead to the remainder of the year and into 2016,
we will continue our strong focus on optimizing and aligning our
businesses and their respective cost structures in order to drive
enhanced long-term value for shareowners.”
2015 Third-Quarter Business Segment Results
All quarterly results are compared with the respective prior-year
periods
Industrial Process designs and manufactures industrial pumps
and valves for the oil and gas, chemical, mining and industrial markets.
-
Third-quarter GAAP revenue decreased 8 percent to $271 million.
Third-quarter GAAP operating income increased 10 percent to $34
million.
-
Organic revenue decreased 1 percent, reflecting strength in industrial
project pumps and short-cycle baseline pumps and valves, due to solid
backlog entering the year, offset by declines in aftermarket sales due
to the impact of delayed customer maintenance.
-
Adjusted operating income increased 10 percent to $36 million as
strong net operating productivity, including restructuring benefits
and cost containment actions, was partially offset by negative pricing
impacts and negative mix shift.
-
The business also expanded adjusted segment operating margins by 220
basis points, reflecting benefits from ongoing actions to optimize
Industrial Process to better leverage previous investments, including
reorganizing into three more focused verticals, which drives improved
execution while lowering the structural cost base.
Motion Technologies designs and manufactures braking
technologies and shock absorbers for the automotive and rail markets.
-
Third-quarter GAAP revenue decreased 9 percent to $180 million.
Third-quarter GAAP operating income decreased 10 percent to $33
million.
-
Organic revenue increased 4 percent due to strength in global
automotive brake pads, reflecting global volume growth with Original
Equipment Manufacturers, partially offset by negative pricing impacts,
and aftermarket growth due to an anticipated shift in an independent
aftermarket customer’s order patterns. Organic revenue growth was
partially offset by softness in the global rail market.
-
Third-quarter adjusted operating income decreased 4 percent to $35
million, reflecting higher volume and net operating productivity,
which was more than offset by $6 million of unfavorable foreign
exchange and negative pricing impacts. Adjusted operating income,
before the negative impact from foreign exchange, grew 13 percent in
the quarter.
Interconnect Solutions designs and manufactures connectors and
interconnects for the oil and gas, industrial and transportation, and
aerospace and defense markets.
-
Third-quarter GAAP revenue decreased 16 percent to $83 million.
Third-quarter GAAP operating results decreased 68 percent to $4
million.
-
Organic revenue declined 11 percent due to weakness in the general
industrial and upstream oil and gas connector markets, as well as
delayed shipments caused by disruption impacts due to the relocation
of certain operations within North America.
-
Adjusted operating income declined 68 percent to $5 million, as
savings from restructuring initiatives were more than offset by
impacts from operational disruptions due to the relocation of certain
operations within North America and volume declines in high-margin oil
and gas connectors.
Control Technologies designs and manufactures products
including fuel management, actuation, and noise and energy absorption
components for the aerospace and industrial markets, as well as
aerospace environmental control system components.
-
Third-quarter GAAP revenue decreased 1 percent to $70 million, which
included revenue from the acquired Hartzell Aerospace business of $9
million. Third-quarter GAAP operating income decreased 11 percent to
$14 million.
-
Organic revenue decreased 11 percent, due to industrial declines
driven by softness in China and a difficult prior-year comparison in
North America, as well as declines in the aerospace aftermarket.
-
Adjusted operating income decreased 6 percent to $15 million, as net
operating productivity, lower compensation costs and the impact of the
Hartzell Aerospace acquisition were more than offset by lower volume,
unfavorable mix shift due to lower aerospace aftermarket, and
incremental strategic investments.
Annual Asbestos Remeasurement
In the third quarter, ITT recognized a $45 million pre-tax benefit as a
result of its annual remeasurement of its asbestos liability and related
insurance asset. This benefit reflects lower acceptance rates and lower
recent average settlement values. The benefit was recognized as a
special item and was excluded from adjusted results.
The company also projects a favorable $5 million decrease in the net
annual average (years 6-10) after-tax cash outflow projections versus
prior projections primarily due to benefits from a single firm defense
strategy implemented in the second quarter of 2015. This strategy has
contributed to a 15 percent year-to-date reduction in the company’s net
liability in 2015.
2015 Guidance
The company is maintaining its previously announced full-year GAAP
revenue guidance and raising its GAAP EPS guidance. GAAP EPS is now
expected to be in the range of $3.07 to $3.33. GAAP revenue is expected
to be down 9 percent to down 7 percent year-over-year.
The previously announced adjusted full-year EPS and organic revenue
guidance is being maintained. On an adjusted basis, the company
continues to expect EPS to be in the range of $2.45 to $2.55 and organic
revenue is expected to range from down 3 percent to down 1 percent.
Investor Call Today
ITT's senior management will host a conference call for investors today
at 9 a.m. EDT to review 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/investors
and will be available on the website from two hours after the webcast
until Friday, Nov. 13, 2015, at midnight.
For a reconciliation of GAAP to non-GAAP results, please click
here.
All references to EPS are defined as diluted earnings per share from
continuing operations.
About ITT
ITT is a diversified leading manufacturer of highly engineered critical
components and customized technology solutions for the energy,
transportation and industrial markets. Building on its heritage of
innovation, ITT partners with its customers to deliver enduring
solutions to the key industries that underpin our modern way of life.
Founded in 1920, ITT is headquartered in White Plains, N.Y., with
employees in more than 35 countries and sales in a total of
approximately 125 countries. The company generated 2014 revenues of $2.7
billion. For more information, visit www.itt.com.
Safe Harbor Statement
This release contains “forward-looking statements” intended to qualify
for the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995 (the “Act”). No forward-looking statement
can be guaranteed, and actual results may differ materially from those
projected. All forward-looking statements included in this release are
based on information available to us on the date hereof, and we
undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. The forward-looking statements are not historical facts, but
rather are based on current expectations, estimates, assumptions and
projections about the business and future financial results of the
industry in which we operate, and other legal, regulatory and economic
developments. These forward-looking statements include, but are not
limited to, future strategic plans and other statements that describe
the company’s business strategy, outlook, objectives, plans, intentions
or goals, and any discussion of future operating or financial
performance.
We use words such as "anticipate," "estimate," "expect," "project,"
"intend," "plan," "believe," "target,” “future,” “may,” “will,” “could,”
“should,” “potential,” “continue,” “guidance” and other similar
expressions to identify such forward-looking statements. Forward-looking
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 or
implied in, or reasonably inferred from, such forward-looking statements.
Forward-looking statements in this release should be evaluated together
with the risks and uncertainties that affect our business, particularly
those mentioned in the Risk Factors section of the Company's Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents
filed from time to time with the Securities and Exchange Commission.
|
|
|
|
ITT CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED CONDENSED INCOME STATEMENTS
|
|
(In millions, except per share)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
Nine Months
|
|
For the Periods Ended September 30,
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
Revenue
|
|
|
$
|
601.9
|
|
|
$
|
657.1
|
|
|
|
$
|
1,818.8
|
|
|
$
|
1,994.6
|
|
|
Costs of revenue
|
|
|
|
407.0
|
|
|
|
437.2
|
|
|
|
|
1,211.0
|
|
|
|
1,345.1
|
|
|
Gross Profit
|
|
|
|
194.9
|
|
|
|
219.9
|
|
|
|
|
607.8
|
|
|
|
649.5
|
|
|
General and administrative expenses
|
|
|
|
60.2
|
|
|
|
69.1
|
|
|
|
|
186.8
|
|
|
|
216.3
|
|
|
Sales and marketing expenses
|
|
|
|
43.1
|
|
|
|
53.5
|
|
|
|
|
139.2
|
|
|
|
165.1
|
|
|
Research and development expenses
|
|
|
|
18.0
|
|
|
|
20.1
|
|
|
|
|
55.2
|
|
|
|
56.4
|
|
|
Asbestos-related benefit, net
|
|
|
|
(30.3
|
)
|
|
|
(42.5
|
)
|
|
|
|
(99.7
|
)
|
|
|
(10.8
|
)
|
|
Operating Income
|
|
|
|
103.9
|
|
|
|
119.7
|
|
|
|
|
326.3
|
|
|
|
222.5
|
|
|
Interest and non-operating (income) expenses, net
|
|
|
|
(4.0
|
)
|
|
|
0.7
|
|
|
|
|
(2.5
|
)
|
|
|
2.3
|
|
|
Income from continuing operations before income tax expense
|
|
|
|
107.9
|
|
|
|
119.0
|
|
|
|
|
328.8
|
|
|
|
220.2
|
|
|
Income tax expense
|
|
|
|
11.4
|
|
|
|
38.0
|
|
|
|
|
53.0
|
|
|
|
63.4
|
|
|
Income from continuing operations
|
|
|
|
96.5
|
|
|
|
81.0
|
|
|
|
|
275.8
|
|
|
|
156.8
|
|
|
Income (loss) from discontinued operations
|
|
|
|
34.2
|
|
|
|
(0.3
|
)
|
|
|
|
39.3
|
|
|
|
(4.2
|
)
|
|
Net Income
|
|
|
|
130.7
|
|
|
|
80.7
|
|
|
|
|
315.1
|
|
|
|
152.6
|
|
|
Less: Income attributable to noncontrolling interests
|
|
|
|
-
|
|
|
|
0.4
|
|
|
|
|
-
|
|
|
|
1.8
|
|
|
Net Income attributable to ITT Corporation
|
|
|
$
|
130.7
|
|
|
$
|
80.3
|
|
|
|
$
|
315.1
|
|
|
$
|
150.8
|
|
|
Amounts attributable to ITT Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
$
|
96.5
|
|
|
$
|
80.6
|
|
|
|
$
|
275.8
|
|
|
$
|
155.0
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
34.2
|
|
|
|
(0.3
|
)
|
|
|
|
39.3
|
|
|
|
(4.2
|
)
|
|
Net Income
|
|
|
$
|
130.7
|
|
|
$
|
80.3
|
|
|
|
$
|
315.1
|
|
|
$
|
150.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share attributable to ITT Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
1.08
|
|
|
$
|
0.88
|
|
|
|
$
|
3.07
|
|
|
$
|
1.69
|
|
|
Discontinued operations
|
|
|
|
0.38
|
|
|
|
-
|
|
|
|
|
0.44
|
|
|
|
(0.04
|
)
|
|
Net income
|
|
|
$
|
1.46
|
|
|
$
|
0.88
|
|
|
|
$
|
3.51
|
|
|
$
|
1.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
1.07
|
|
|
$
|
0.87
|
|
|
|
$
|
3.04
|
|
|
$
|
1.67
|
|
|
Discontinued operations
|
|
|
|
0.38
|
|
|
|
(0.01
|
)
|
|
|
|
0.43
|
|
|
|
(0.05
|
)
|
|
Net income
|
|
|
$
|
1.45
|
|
|
$
|
0.86
|
|
|
|
$
|
3.47
|
|
|
$
|
1.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - basic
|
|
|
|
89.4
|
|
|
|
91.6
|
|
|
|
|
89.9
|
|
|
|
91.5
|
|
|
Weighted average common shares - diluted
|
|
|
|
90.3
|
|
|
|
92.9
|
|
|
|
|
90.8
|
|
|
|
92.9
|
|
|
|
|
|
|
ITT CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED CONDENSED BALANCE SHEETS
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
504.9
|
|
|
$
|
584.0
|
|
Receivables, net
|
|
|
|
|
567.8
|
|
|
|
500.1
|
|
Inventories, net
|
|
|
|
|
299.7
|
|
|
|
302.3
|
|
Other current assets
|
|
|
|
|
198.7
|
|
|
|
249.8
|
|
Total current assets
|
|
|
|
|
1,571.1
|
|
|
|
1,636.2
|
|
Plant, property and equipment, net
|
|
|
|
|
414.4
|
|
|
|
443.9
|
|
Goodwill
|
|
|
|
|
622.7
|
|
|
|
632.1
|
|
Other intangible assets, net
|
|
|
|
|
106.6
|
|
|
|
91.4
|
|
Asbestos-related assets
|
|
|
|
|
342.4
|
|
|
|
374.0
|
|
Deferred income taxes
|
|
|
|
|
272.5
|
|
|
|
304.1
|
|
Other non-current assets
|
|
|
|
|
148.6
|
|
|
|
149.8
|
|
Total non-current assets
|
|
|
|
|
1,907.2
|
|
|
|
1,995.3
|
|
Total assets
|
|
|
|
$
|
3,478.3
|
|
|
$
|
3,631.5
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Commercial paper
|
|
|
|
$
|
10.5
|
|
|
$
|
-
|
|
Accounts payable
|
|
|
|
|
291.9
|
|
|
|
309.6
|
|
Accrued liabilities
|
|
|
|
|
414.8
|
|
|
|
465.8
|
|
Total current liabilities
|
|
|
|
|
717.2
|
|
|
|
775.4
|
|
Asbestos-related liabilities
|
|
|
|
|
961.2
|
|
|
|
1,116.6
|
|
Postretirement benefits
|
|
|
|
|
238.8
|
|
|
|
249.7
|
|
Other non-current liabilities
|
|
|
|
|
194.2
|
|
|
|
269.5
|
|
Total non-current liabilities
|
|
|
|
|
1,394.2
|
|
|
|
1,635.8
|
|
Total liabilities
|
|
|
|
$
|
2,111.4
|
|
|
$
|
2,411.2
|
|
Total ITT Corporation shareholders' equity
|
|
|
|
|
1,363.3
|
|
|
|
1,214.9
|
|
Noncontrolling interests
|
|
|
|
|
3.6
|
|
|
|
5.4
|
|
Total shareholders' equity
|
|
|
|
|
1,366.9
|
|
|
|
1,220.3
|
|
Total liabilities and shareholders' equity
|
|
|
|
$
|
3,478.3
|
|
|
$
|
3,631.5
|
|
|
|
ITT CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
2015
|
|
|
2014
|
Operating Activities
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
315.1
|
|
|
|
$
|
152.6
|
|
Less: Income (loss) from discontinued operations
|
|
|
|
|
39.3
|
|
|
|
|
(4.2
|
)
|
Less: Income attributable to noncontrolling interests
|
|
|
|
|
-
|
|
|
|
|
1.8
|
|
Income from continuing operations - ITT Corporation
|
|
|
|
|
275.8
|
|
|
|
|
155.0
|
|
Adjustments to income from continuing operations:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
63.1
|
|
|
|
|
64.2
|
|
Stock-based compensation
|
|
|
|
|
11.1
|
|
|
|
|
10.8
|
|
Asbestos-related benefit, net
|
|
|
|
|
(99.7
|
)
|
|
|
|
(10.8
|
)
|
Asbestos-related payments, net
|
|
|
|
|
(15.2
|
)
|
|
|
|
(8.9
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
Change in receivables
|
|
|
|
|
(77.2
|
)
|
|
|
|
(93.5
|
)
|
Change in inventories
|
|
|
|
|
(6.3
|
)
|
|
|
|
(6.3
|
)
|
Change in accounts payable
|
|
|
|
|
(0.4
|
)
|
|
|
|
1.2
|
|
Change in accrued expenses
|
|
|
|
|
(26.1
|
)
|
|
|
|
4.1
|
|
Change in accrued and deferred income taxes
|
|
|
|
|
21.9
|
|
|
|
|
5.0
|
|
Other, net
|
|
|
|
|
0.1
|
|
|
|
|
11.1
|
|
Net Cash - Operating Activities
|
|
|
|
|
147.1
|
|
|
|
|
131.9
|
|
Investing Activities
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(64.2
|
)
|
|
|
|
(74.4
|
)
|
Acquisitions, net of cash acquired
|
|
|
|
|
(53.5
|
)
|
|
|
|
(2.8
|
)
|
Purchases of investments
|
|
|
|
|
(73.0
|
)
|
|
|
|
(165.1
|
)
|
Maturities of investments
|
|
|
|
|
68.2
|
|
|
|
|
207.0
|
|
Proceeds from sale of businesses and assets
|
|
|
|
|
8.6
|
|
|
|
|
3.4
|
|
Proceeds from insurance recovery
|
|
|
|
|
2.5
|
|
|
|
|
-
|
|
Other, net
|
|
|
|
|
-
|
|
|
|
|
(0.6
|
)
|
Net Cash - Investing Activities
|
|
|
|
|
(111.4
|
)
|
|
|
|
(32.5
|
)
|
Financing Activities
|
|
|
|
|
|
|
|
Short-term debt, net
|
|
|
|
|
10.5
|
|
|
|
|
(38.0
|
)
|
Long-term debt, repaid
|
|
|
|
|
(2.1
|
)
|
|
|
|
(1.2
|
)
|
Repurchase of common stock
|
|
|
|
|
(83.9
|
)
|
|
|
|
(25.5
|
)
|
Proceeds from issuance of common stock
|
|
|
|
|
5.5
|
|
|
|
|
14.3
|
|
Dividends Paid
|
|
|
|
|
(21.6
|
)
|
|
|
|
(20.4
|
)
|
Excess tax benefit from equity compensation activity
|
|
|
|
|
3.2
|
|
|
|
|
8.4
|
|
Other, net
|
|
|
|
|
(1.8
|
)
|
|
|
|
(1.5
|
)
|
Net Cash - Financing Activities
|
|
|
|
|
(90.2
|
)
|
|
|
|
(63.9
|
)
|
Exchange rate effects on cash and cash equivalents
|
|
|
|
|
(23.9
|
)
|
|
|
|
(15.1
|
)
|
Net Cash – Operating activities of discontinued operations
|
|
|
|
|
(0.7
|
)
|
|
|
|
(5.1
|
)
|
Net change in cash and cash equivalents
|
|
|
|
|
(79.1
|
)
|
|
|
|
15.3
|
|
Cash and cash equivalents - beginning of year
|
|
|
|
|
584.0
|
|
|
|
|
507.3
|
|
Cash and cash equivalents - end of period
|
|
|
|
$
|
504.9
|
|
|
|
$
|
522.6
|
|
|
|
Key Performance Indicators and Non-GAAP Measures
|
|
Management reviews key performance indicators including revenue,
segment operating income and margins, earnings per share, order
growth, and backlog, among others. In addition, we consider certain
measures to be useful to management and investors when evaluating
our operating performance for the periods presented. These measures
provide a tool for evaluating our ongoing operations and management
of assets from period to period. This information can assist
investors in assessing our financial performance and measures our
ability to generate capital for deployment among competing strategic
alternatives and initiatives, including, but not limited to,
dividends, acquisitions and share repurchases. These metrics,
however, are not measures of financial performance under GAAP and
should not be considered a substitute for measures determined in
accordance with GAAP. We consider the following non-GAAP measures,
which may not be comparable to similarly titled measures reported by
other companies, to be key performance indicators for purposes of
our reconciliation tables.
|
|
Organic Revenues and Organic Orders are defined as
revenues and orders, excluding the impact of foreign currency
fluctuations and acquisitions and divestitures. Divestitures include
sales of portions of our business that did not meet the criteria for
presentation as a discontinued operation. The period-over-period
change resulting from foreign currency fluctuations is estimated
using a fixed exchange rate for the current and prior periods.
|
|
Adjusted Segment Operating Income and Adjusted Segment
Operating Margin are defined as operating income, adjusted to
exclude special items that include but are not limited to,
restructuring and realignment costs, asset impairment charges,
repositioning costs, certain acquisitions-related expenses, and
other unusual or infrequent operating items. Special items represent
significant charges or credits that impact the current results, but
may not be related to the Company's ongoing operations and
performance. Adjusted segment operating margin is defined as
adjusted segment operating income divided by total revenue.
|
|
Adjusted Income from Continuing Operations, Adjusted EPS and
Adjusted EPS Guidance are defined as income from continuing
operations attributable to ITT Corporation and income from
continuing operations attributable to ITT Corporation per diluted
share, adjusted to exclude special items that include, but are not
limited to, asbestos-related costs, repositioning costs,
restructuring and realignment costs, asset impairment charges,
certain acquisition-related expenses, income tax settlements or
adjustments, and other unusual and infrequent non-operating items.
Special items represent significant charges or credits on an
after-tax basis that impact current results, but may not be related
to the Company’s ongoing operations and performance.
|
|
Adjusted Free Cash Flow is defined as net cash provided by
operating activities less capital expenditures, adjusted for cash
payments for restructuring actions, repositioning costs, net
asbestos cash flows and other significant items that impact current
results which management believes are not related to our ongoing
operations and performance. Due to other financial obligations and
commitments, the entire free cash flow may not be available for
discretionary purposes.
|
|
|
|
|
ITT Corporation Non-GAAP Reconciliation
Reported vs. Organic Revenue / Order Growth
Third Quarter 2015 & 2014
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Reported - GAAP)
|
|
|
(As Adjusted - Organic)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
|
(B)
|
|
|
|
|
(C)
|
|
(D)
|
|
(E) = B-C-D
|
|
(F) = E / A
|
|
|
|
|
3M 2015
|
|
3M 2014
|
|
Change
2015 vs. 2014
|
|
% Change
2015 vs. 2014
|
|
|
Acquisition /
Divestitures
3M 2015
|
|
FX Impact
3M 2015
|
|
Change
Adj. 2015 vs. 2014
|
|
% Change
Adj. 2015 vs.2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITT Corporation - Consolidated
|
|
|
601.9
|
|
657.1
|
|
(55.2)
|
|
(8.4%)
|
|
|
7.1
|
|
(50.8)
|
|
(11.5)
|
|
(1.8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Process
|
|
|
270.6
|
|
292.7
|
|
(22.1)
|
|
(7.6%)
|
|
|
0.0
|
|
(20.0)
|
|
(2.1)
|
|
(0.7%)
|
|
Motion Technologies
|
|
|
179.9
|
|
197.0
|
|
(17.1)
|
|
(8.7%)
|
|
|
0.0
|
|
(25.2)
|
|
8.1
|
|
4.1%
|
|
Interconnect Solutions
|
|
|
82.8
|
|
98.4
|
|
(15.6)
|
|
(15.9%)
|
|
|
0.0
|
|
(5.2)
|
|
(10.4)
|
|
(10.6%)
|
|
Control Technologies
|
|
|
69.8
|
|
70.7
|
|
(0.9)
|
|
(1.3%)
|
|
|
7.1
|
|
(0.4)
|
|
(7.6)
|
|
(10.7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Orders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Orders
|
|
|
530.4
|
|
688.7
|
|
(158.3)
|
|
(23.0%)
|
|
|
6.4
|
|
(49.6)
|
|
(115.1)
|
|
(16.7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Process
|
|
|
208.9
|
|
325.3
|
|
(116.4)
|
|
(35.8%)
|
|
|
0.0
|
|
(18.5)
|
|
(97.9)
|
|
(30.1%)
|
|
Motion Technologies
|
|
|
177.5
|
|
203.9
|
|
(26.4)
|
|
(12.9%)
|
|
|
0.0
|
|
(25.9)
|
|
(0.5)
|
|
(0.2%)
|
|
Interconnect Solutions
|
|
|
83.5
|
|
92.7
|
|
(9.2)
|
|
(9.9%)
|
|
|
0.0
|
|
(4.8)
|
|
(4.4)
|
|
(4.7%)
|
|
Control Technologies
|
|
|
62.1
|
|
68.0
|
|
(5.9)
|
|
(8.7%)
|
|
|
6.4
|
|
(0.4)
|
|
(11.9)
|
|
(17.5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Excludes intercompany eliminations
|
|
Immaterial differences due to rounding
|
|
|
|
ITT Corporation Non-GAAP Reconciliation
|
Reported vs Adjusted Segment Operating Income & Operating Margin
|
Third Quarter 2015 & 2014
|
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3M 2015
As Reported
|
|
3M 2015
Special Items
|
|
|
|
3M 2015
As Adjusted
|
|
|
3M 2014
As Reported
|
|
3M 2014
Special Items
|
|
|
|
3M 2014
As Adjusted
|
|
% Change
As Reported
2015 vs. 2014
|
|
|
|
% Change
As Adjusted
2015 vs. 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Process
|
|
|
270.6
|
|
|
|
|
|
270.6
|
|
|
292.7
|
|
|
|
|
|
292.7
|
|
(7.6%)
|
|
|
|
(7.6%)
|
|
|
Motion Technologies
|
|
|
179.9
|
|
|
|
|
|
179.9
|
|
|
197.0
|
|
|
|
|
|
197.0
|
|
(8.7%)
|
|
|
|
(8.7%)
|
|
|
Interconnect Solutions
|
|
|
82.8
|
|
|
|
|
|
82.8
|
|
|
98.4
|
|
|
|
|
|
98.4
|
|
(15.9%)
|
|
|
|
(15.9%)
|
|
|
Control Technologies
|
|
|
69.8
|
|
|
|
|
|
69.8
|
|
|
70.7
|
|
|
|
|
|
70.7
|
|
(1.3%)
|
|
|
|
(1.3%)
|
|
|
Intersegment eliminations
|
|
|
(1.2)
|
|
|
|
|
|
(1.2)
|
|
|
(1.7)
|
|
|
|
|
|
(1.7)
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
601.9
|
|
|
|
|
|
601.9
|
|
|
657.1
|
|
|
|
|
|
657.1
|
|
(8.4%)
|
|
|
|
(8.4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Process
|
|
|
12.6%
|
|
70
|
|
BP
|
|
13.3%
|
|
|
10.6%
|
|
50
|
|
BP
|
|
11.1%
|
|
200
|
|
BP
|
|
220
|
|
BP
|
Motion Technologies
|
|
|
18.3%
|
|
120
|
|
BP
|
|
19.5%
|
|
|
18.5%
|
|
10
|
|
BP
|
|
18.6%
|
|
(20)
|
|
BP
|
|
90
|
|
BP
|
Interconnect Solutions
|
|
|
4.3%
|
|
130
|
|
BP
|
|
5.6%
|
|
|
11.4%
|
|
300
|
|
BP
|
|
14.4%
|
|
(710)
|
|
BP
|
|
(880)
|
|
BP
|
Control Technologies
|
|
|
20.1%
|
|
100
|
|
BP
|
|
21.1%
|
|
|
22.2%
|
|
-
|
|
BP
|
|
22.2%
|
|
(210)
|
|
BP
|
|
(110)
|
|
BP
|
Total Operating Segments
|
|
|
14.1%
|
|
90
|
|
BP
|
|
15.0%
|
|
|
14.4%
|
|
70
|
|
BP
|
|
15.1%
|
|
(30)
|
|
BP
|
|
(10)
|
|
BP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Process
|
|
|
34.0
|
|
1.9
|
|
|
|
35.9
|
|
|
31.0
|
|
1.6
|
|
|
|
32.6
|
|
9.7%
|
|
|
|
10.1%
|
|
|
Motion Technologies
|
|
|
33.0
|
|
2.1
|
|
|
|
35.1
|
|
|
36.5
|
|
0.1
|
|
|
|
36.6
|
|
(9.6%)
|
|
|
|
(4.1%)
|
|
|
Interconnect Solutions
|
|
|
3.6
|
|
1.0
|
|
|
|
4.6
|
|
|
11.2
|
|
3.0
|
|
|
|
14.2
|
|
(67.9%)
|
|
|
|
(67.6%)
|
|
|
Control Technologies
|
|
|
14.0
|
|
0.7
|
|
|
|
14.7
|
|
|
15.7
|
|
0.0
|
|
|
|
15.7
|
|
(10.8%)
|
|
|
|
(6.4%)
|
|
|
Total Segment Operating Income
|
|
|
84.6
|
|
5.7
|
|
|
|
90.3
|
|
|
94.4
|
|
4.7
|
|
|
|
99.1
|
|
(10.4%)
|
|
|
|
(8.9%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Immaterial differences due to rounding.
|
|
Special items include, but are not limited to, certain costs
associated with the Wolverine acquisition, restructuring and
realignment costs and other unusual and infrequent non-operating
items.
|
|
|
ITT Corporation Non-GAAP Reconciliation
|
Reported vs. Adjusted Income from Continuing Operations &
Adjusted EPS
|
Third Quarter of 2015 & 2014
|
(In Millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2015
As Reported
|
|
Non-GAAP
Adjustments
|
|
|
|
Q3 2015
As Adjusted
|
|
|
|
|
Q3 2014
As Reported
|
|
Non-GAAP
Adjustments
|
|
|
|
Q3 2014
As Adjusted
|
|
2015 vs. 2014
As Adjusted
|
|
Percent Change
2015 vs. 2014
As Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income
|
|
|
84.6
|
|
|
5.7
|
|
|
#A
|
|
90.3
|
|
|
|
|
|
94.4
|
|
|
4.7
|
|
|
#A
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income (Expense)
|
|
|
3.1
|
|
|
(3.4
|
)
|
|
#B
|
|
(0.3
|
)
|
|
|
|
|
(0.2
|
)
|
|
-
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
Other Income (Expense)
|
|
|
0.9
|
|
|
(1.6
|
)
|
|
#C
|
|
(0.7
|
)
|
|
|
|
|
(0.5
|
)
|
|
-
|
|
|
|
|
(0.5
|
)
|
|
|
|
|
Corporate (Expense)
|
|
|
19.3
|
|
|
(30.3
|
)
|
|
#D
|
|
(11.0
|
)
|
|
|
|
|
25.3
|
|
|
(38.4
|
)
|
|
#D
|
|
(13.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations before Tax
|
|
|
107.9
|
|
|
(29.6
|
)
|
|
|
|
78.3
|
|
|
|
|
|
119.0
|
|
|
(33.7
|
)
|
|
|
|
85.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Benefit (Expense)
|
|
|
(11.4
|
)
|
|
(10.0
|
)
|
|
#E
|
|
(21.4
|
)
|
|
|
|
|
(38.0
|
)
|
|
14.8
|
|
|
#E
|
|
(23.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
|
96.5
|
|
|
(39.6
|
)
|
|
|
|
56.9
|
|
|
|
|
|
81.0
|
|
|
(18.9
|
)
|
|
|
|
62.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Non Controlling Interest
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
0.4
|
|
|
-
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations - ITT Corporation
|
|
|
96.5
|
|
|
(39.6
|
)
|
|
|
|
56.9
|
|
|
|
|
|
80.6
|
|
|
(18.9
|
)
|
|
|
|
61.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS from Continuing Operations
|
|
|
1.07
|
|
|
(0.44
|
)
|
|
|
|
0.63
|
|
|
|
|
|
0.87
|
|
|
(0.21
|
)
|
|
|
|
0.66
|
|
|
(0.03
|
)
|
|
(4.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts may not calculate due to rounding.
|
#A -
|
|
2015 segment operating income includes restructuring and
realignment costs ($3.2M), Hartzell backlog amortization ($0.4M),
and acquisition costs related to Wolverine ($2.1M).
|
|
#A -
|
|
2014 segment operating income includes restructuring and
realignment costs ($4.7M).
|
|
|
|
|
|
#B -
|
|
2015 Interest income related to update in uncertain tax position
principally due to favorable resolution of IRS Audit.
|
|
|
|
|
|
#C -
|
|
2015 Other income related to recognition of receivable entitled
under the Tax Matters Agreement.
|
|
|
|
|
|
#D -
|
|
2015 corporate (expense) includes net asbestos related income of
($30.3M).
|
|
|
|
Note: ($30.3M) net asbestos related income includes adjustment to
maintain 10 year accrual ($15.7M), remeasurement income ($44.8M) and
($1.2M) for a settlement with an insurance carrier.
|
|
#D -
|
|
2014 corporate (expense) includes repositioning, re-alignment and
restructuring costs ($4.1M); net asbestos related income ($42.5M).
|
|
|
|
Note: ($42.5M) net asbestos related income includes adjustment to
maintain 10 year accrual ($16.3M) and remeasurement income ($58.8M).
|
|
|
|
|
|
#E -
|
|
2015 includes various tax-related special items including changes
in tax benefit related to the closing of the IRS Audit ($18.0M),
offset by the tax expense of other operating special items ($8.0M).
|
|
#E -
|
|
2014 includes various tax-related special items including tax
impact of change in valuation allowance assessment ($0.3M), change
in uncertain tax position ($0.7M), and U.S. tax on foreign
earnings of ($0.5M), in addition to the tax impact of the
operating special items.
|
|
|
|
ITT Corporation Non-GAAP Reconciliation
|
Net Cash - Operating Activities vs. Adjusted Free Cash Flow
Conversion
|
Third Quarter 2015 & 2014
|
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
9M 2015
|
|
|
|
9M 2014
|
|
|
|
|
|
|
|
|
|
Net Cash - Operating Activities
|
|
|
|
147.1
|
|
|
|
131.9
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
|
64.2
|
|
|
|
74.4
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
82.9
|
|
|
|
57.5
|
|
|
|
|
|
|
|
|
|
Repositioning & Realignment Related Cash Payments, including Capex
|
|
|
|
2.8
|
|
|
|
8.8
|
|
|
|
|
|
|
|
|
|
Restructuring Cash Payments
|
|
|
|
19.5
|
|
|
|
13.0
|
|
|
|
|
|
|
|
|
|
Asbestos Cash Payments, net
|
|
|
|
15.2
|
|
|
|
8.9
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
|
|
120.4
|
|
|
|
88.2
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations - ITT Corporation
|
|
|
|
275.8
|
|
|
|
155.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Items
|
|
|
|
(96.8
|
)
|
|
|
19.5
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations - ITT Corporation, Excluding
|
|
|
|
|
|
|
|
Special Items
|
|
|
|
179.0
|
|
|
|
174.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow Conversion
|
|
|
|
67.3
|
%
|
|
|
50.5
|
%
|
|
|
ITT Corporation Non-GAAP Reconciliation
|
GAAP vs. Adjusted EPS Guidance
|
Full Year 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Full-Year Guidance
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
|
|
|
|
|
EPS from Continuing Operations - GAAP
|
|
|
|
$
|
|
|
|
3.07
|
|
|
|
$
|
|
|
|
3.33
|
|
|
|
|
|
|
|
|
|
Estimated Asbestos Related (Benefit), Net of Tax
|
|
|
|
|
|
|
|
(0.55
|
)
|
|
|
|
|
|
|
(0.59
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
2.52
|
|
|
|
$
|
|
|
|
2.74
|
|
|
|
|
|
|
|
|
|
Estimated Restructuring and Realignment Costs, Net of Tax
|
|
|
|
|
|
|
|
0.36
|
|
|
|
|
|
|
|
0.32
|
|
|
|
|
|
|
|
|
|
Acquisition Related Costs, Net of Tax
|
|
|
|
|
|
|
|
0.12
|
|
|
|
|
|
|
|
0.08
|
|
|
|
|
|
|
|
|
|
Other Special Items, Net of Tax
|
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
Other Special Tax Items
|
|
|
|
|
|
|
|
(0.51
|
)
|
|
|
|
|
|
|
(0.51
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS from Continuing Operations - Adjusted
|
|
|
|
$
|
|
|
|
2.45
|
|
|
|
$
|
|
|
|
2.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151030005150/en/
Copyright Business Wire 2015