ITT Corporation (
reported second-quarter 2013 earnings per share of 51 cents,
improving 15% year over year and outpacing the Zacks Consensus
Estimate of 45 cents by 11.8%. Earnings were up 15% year over
year. Profits during the quarter were driven by stronger
operational performance, improved volumes and a favorable
Total revenue in the quarter surged 9.2% to $609.2 million
from $557.9 million in the prior-year period. Organic revenue for
the quarter grew 2%. Revenue growth during the quarter was driven
by a 13% increase in Western Europe and a 12% increase in
emerging markets. In addition, gains in key global end-markets
with 19% growth in energy and 12% growth in the global automotive
breakpad market and a solid performance from the recently
acquired Bornemann Pumps business contributed to the top-line
growth. These were offset by a 35% decline in global mining.
segment reported revenues of $268.7 million, reflecting a 15.3%
increase. Organic revenues contracted 1% due to decline in global
mining. Overall revenue growth was driven by 40% increase in
organic global oil and gas shipments and the impact from the
company's successful acquisition of Bornemann Pumps. Organic
orders for the segment grew 8% driven by strong project activity
particularly in the oil & gas markets. The total backlog for
the segment grew 10% in 2013.
Revenues in the
segment increased 10.5% to $171.4 million, driven by significant
gains in the global automotive brake pad market. Revenue growth
reflects strong performance in Western Europe with revenues
increasing 9% despite difficult markets and 70% growth in China.
These gains were partially offset by unfavorable automotive
shipment timing in North America and weakness in the global rail
shock absorber market. Organic revenues for the segment grew 9%
year over year.
revenues in the quarter grew 0.4% to $100.3 million, driven by
growth in defense and general industrial connectors, which was
offset by a difficult comparison in oil and gas connectors.
Organic revenues grew 1%.
revenues decreased 1.8% to $70.2 million as growth in the North
American and European aerospace was fully offset by anticipated
declines related to the fulfillment of an aerospace program and
weakness in the global general industrial and defense
Income and Expenses
Exiting the quarter, the company reported an operating income
of $41.4 million compared with $57.0 million in the prior-year
quarter. The decline was primarily attributable to higher costs
of revenues and higher selling, general & admistrative
Operating margin expanded 70 basis points during the quarter
driven by net operating productivity and increased volume,
partially offset by the Bornemann Pumps operations and the
funding of strategic investments.
Balance Sheet & Cash Flow
At the end of the quarter, cash and cash equivalents were
$517.7 million with no long-term debt. The company had
shareowners' equity of $660.5 million.
Concurrent with the earnings release, the company raised its
2013 guidance. ITT expects adjusted earnings per share to be in
the range of $1.86 to $1.92 compared with $1.80 to $1.90
Total revenue is now expected to grow 10% to 11%, up from
prior expectations of a 9% to 11% increase. The increased
guidance is driven by growth in the oil and gas, chemical and
industrial markets, share gains in the global automotive market,
the impact of the Bornemann Pumps acquisition and emerging market
growth, partially offset by weakness in the mining and defense
end markets. Organic revenues are expected to grow in the range
of 3% to 4%, up from 2% to 4% mentioned earlier.
ITT currently has a Zacks Rank #3 (Hold). Here are some other
companies operating in the same sector that you might consider at
the moment -
AO Smith Corp.
), having a Zacks Rank #1 (Strong Buy),
Plug Power Inc. (
Rexnord Corporation (
carrying a Zacks Rank #2 (Buy).
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