Engineering and manufacturing company ITT Corp. (ITT) reported Wednesday a 7% year-over-year increase in profit for the fourth quarter as productivity gains and lower restructuring costs more than offset lower volumes and a slight decline in revenues.
Excluding items, adjusted earnings per share from continuing operations rose 18%, and topped analysts' expectations by three cents. Quarterly revenues declined 2.6% and missed consensus estimate by a whisker. The company also raised its adjusted earnings guidance for the full year 2010.
In a statement, chairman, president and chief executive officer, Steve Loranger said, "The strength of our well-balanced portfolio enabled us to achieve EPS performance that was best in class for our multi-industry peer group. We are very proud of our teams around the globe for delivering on our commitments. We took important steps intended to position the company for the long term by increasing our strategic investments and accelerating our productivity initiatives while continuing to generate strong free cash flow to invest in our future."
Fourth Quarter Results
The White Plains, New York-based provider of advanced technology products and services reported net income of $199.2 million or $1.08 per share for the fourth quarter, higher than $185.5 million or $1.01 per share in the prior-year quarter.
Income from continuing operations for the quarter grew to $195.6 million or $1.06 per share from $175.5 million or $0.96 per share in the year-ago quarter.
The results for the latest quarter include a tax benefit of $17.3 million or $0.09 per share, while the year-ago quarter included $26.3 million or $0.14 per share of tax benefit.
Excluding special items, adjusted income from continuing operations rose to $178.3 million or $0.97 per share from $149.2 million or $0.82 per share in the comparable quarter a year ago. On average, fifteen analysts surveyed by Thomson Reuters expected the company to earn $0.94 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Sales and revenues for the quarter declined 2.6% to $2.87 billion from $2.95 billion in the same quarter last year, and missed eleven Wall Street analysts' consensus estimate of $2.88 billion by a whisker. Excluding the impacts of foreign exchange and acquisitions, revenues for the quarter was down 5.2%.
Segmental details
Revenues from defense electronics & services segment for the fourth quarter edged down 1.2% to $1.62 billion over last year. Segment operating income grew 10.5% to $207.1 million from last year, while operating margins expanded 130 basis points to 12.8% on strong productivity actions.
Fluid technology revenues for the quarter totaled $924.3 million, down 6.1% from the year-ago quarter, with revenues declining 13.1% organically. Segment operating income increased 9.2% to $104.5 million, driven by strong productivity, lower restructuring and realignment costs, as well as the favorable impact of foreign exchange transactions, more than offsetting lower volumes. Operating margin grew 160 basis points to 11.3% from last year.
Motion & flow control revenues edged up 1.7% to $332.0 million from last year, with organic revenues declining 1.0%. Segment operating income was to $16.7 million, compared to operating loss of $3.6 million last year, while operating margins climbed 610 basis points to 5.0% from a year ago, due to strong productivity and lower realignment costs. The segment benefited from the European auto stimulus, and increased activity in the global rail market, especially the emerging markets, partially offset by declines in the aerospace and industrial markets.
Other Metrics
Operating income for the fourth quarter rose to $288.0 million from $243.2 million in the year-ago quarter.
Total costs and expenses were $2.58 billion, down from $2.70 billion in the prior-year quarter. Expenses include selling, general and administrative expenses of $414.0 million, lower than $437.0 million in the comparable quarter a year ago, and Restructuring and asset impairment charges of $39.3 million, down from $61.6 million last year.
Interest expense for the quarter decreased to $25.8 million from $39.5 million in the same quarter last year, while income tax expense was $69.6 million, higher than $32.4 million in the prior-year quarter.
The company ended the fourth quarter with cash and cash equivalents of $1.22 billion, compared to $0.96 billion at end of the year-ago quarter.
In early January, ITT revealed a realignment of its defense segment to enable better integration of its product portfolio, encourage a more coordinated market approach and reduce operational redundancies. The defense segment will be renamed ITT Defense and Information Solutions with the current organizational structure, comprising of seven separate business units to be consolidated into three larger ones.
The company noted that electronic systems and communications systems divisions, as well as a portion of the intelligence & information warfare division, will be merged to form a more versatile Electronic Systems division. Further, the space systems and night vision divisions will merge to form Geospatial Systems, while the advanced engineering & sciences and systems divisions will be combined with a portion of the intelligence & information warfare division to form the Information Systems division.
Full-Year Highlights
For fiscal 2009, ITT posted net income of $643.7 million or $3.50 per share, lower than $794.7 million or $4.32 per share posts in fiscal 2008. Income from continuing operations for the year dropped to $650.7 million or $3.54 per share from $775.2 million or $4.21 per share in the previous year.
Excluding special items, adjusted income from continuing operations were $695.7 million or $3.78 per share, down from $741.1 million or $4.03 per share a year ago. Analysts expected the company to report earnings of 3.74 per share for fiscal 2009.
Total sales and revenues for the full year declined 6.8% to $10.90 billion from $11.69 billion reported last year. The Street was looking for full-year 2009 revenues of 10.92 billion.
Looking Ahead...
"We believe our innovative and essential products and services position us well to grow at or above the markets we serve. We saw this play out in 2009 with many key customer wins, and our outstanding achievements in operational excellence enable our confidence to raise our outlook for growth in 2010. For the long term, we believe we have the right strategies in place to grow organically while we invest for our future -- in categories that are adjacent to our core businesses and in emerging markets that will drive sustainable growth," Loranger added.
For fiscal 2010, ITT raised its adjusted earnings guidance range to a range of $3.90 to $4.10 per share from the prior forecast of $3.85 to $4.05 per share. The Street is currently looking for full year 2010 earnings of $4.02 per share.
Stock Quote
ITT closed Tuesday's regular trading session at $50.45, up $1.50 on a volume of 3.81 million shares, sharply higher than the three-month average volume of 1.62 million shares. In the past 52-week period, the stock has been trading in a broad range of $31.94 to $56.95.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.