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ITT Corporation (ITT)

Q1 2009 Earnings Call

April 24, 2009 10:30 am ET


Steven R. Loranger - President & Chief Executive Officer

Denise L. Ramos - Chief Financial Officer & Senior Vice President

Thomas Scalera - Director of Investor Relations


John Inch - Merrill Lynch

Shannon O’Callaghan - Barclays Capital

John Baliotti - FTN Equity Management

Jeffrey Sprague – Citi Investments

Michael Schneider - Robert W. Baird & Co.

Stephen Tusa - J.P. Morgan

Gautam Khanna - Cowen & Co.



Welcome to ITT Corporation’s first quarter 2009 earnings conference call. Hosting the call today from ITT headquarters is Steven Loranger, President and Chief Executive Officer. He is joined by Denise Ramos, Chief Financial Officer and additional speakers. Today’s call is being recorded and will be available for replay beginning at 1 p.m. EST. (Operator Instructions) It is now my pleasure to turn the floor over to Tom Scalera, Director of Investor Relations.

Thomas Scalera

Good morning and welcome to ITT’s first quarter 2009 investor review. Thank you for joining us on a very busy earnings release day. We do appreciate that this may be the third or fourth call for some of you this morning, and we appreciate your participation. Presenting this morning are Chairman and CEO Steve Loranger and Chief Financial Officer Denise Ramos. Today, Steve will highlight first quarter 2009 results and other important developments at ITT. Denise will provide a detailed review of the quarter’s performance and the 2009 earnings outlook.

I’d like to highlight that this morning’s presentation, press release, and all non-GAAP financial measures provided during the call can be found on our web site at Lastly, please note that any remarks we may make about future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provision. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in ITT’s Form 10K as well as our other public SEC filings.

Now, let me turn things over to Steve.

Steven R. Loranger

Thank you to all of you for joining us on a busy earnings day and week. In this economy, we are very pleased with our first quarter performance and the underlying resiliency of our portfolio. Across all three of our segments, our business leaders saw their way through challenging market conditions and they never lost sight of our long-term strategic goals. I’d like to highlight several important events in 2009 that demonstrate the long-term strategic value of ITT’s unique portfolio. I’m going to talk about some nice examples of our focus in critical enduring markets such as water, security, and air transportation.

Our ITT business in India was awarded its largest contract to date for $22 million to supply water pumps to India’s most expansive irrigation project. We’re all very proud to know that ITT pumps will help irrigate over 250,000 acres of farmland in an area known as the rice bowl of India. Our Night Vision business celebrated a milestone anniversary this quarter. For 50 years, Night Vision technology and advanced components and strong operating execution have made them a leader in this important field. Our Night Vision team is a trusted partner for the US military and allied militaries; a trust that’s been earned over decades of hard work, and as a world’s leader in optimal intensification, we’re all very excited about what this team can do over the next 50 years.

At Electronic Systems, we commemorated our shipment of 10,000 CREW IED jammers, and during that event, Capt. Mark Kavanaugh, the US Navy Program Manager, commented to our dedicated team, and I’ll quote him, “It’s truly incredible what you’ve done, and it’ll live forever. There are people walking around that are here today because of the work that you all have done.” In 2009, we celebrated South Florida becoming the first region to adapt ADSB technology, and you recall, the ADSB is the GPS biz cornerstone of the FAA mandated next generation air traffic control system, and this system will increase safety and efficiency leading the growing needs of air transportation.

ITT is the prime contractor on the initial development, deployment, and maintenance of the ADSB ground infrastructure, and I’m pleased that the ITT team has earned a 97% performance score for adhering to its schedule, and an above perfect score of 104% for being under budget. These are just a few examples of the many vital products and services that the ITT teams provide worldwide every day. Our portfolio is unique compared to our peers. It is focused on addressing enduring needs around the globe, and during these difficult economic times, this focus serves us well on a relative basis. I feel that our performance track record over the last several years speaks for itself. Simply stated, our strategy continues to work for us.

Turning to slide 3, you’ll see some nice highlights in the first quarter that illuminate the underlying resiliency of our business. In the first quarter, we delivered earnings per share performance that was $0.14 per share better than the midpoint of our previous guidance. We generated solid operating performance in all three of our business units compared to expectations, and these results which I’m most proud of were enabled by the terrific progress our teams made while executing ambitious productivity, working capital, and restructuring plans.

We made a nice strategic acquisition of Fluid Technology just after the quarter end that will leverage the power of ITT brand in key growing European markets and provide innovative energy efficient products for the Americans. What’s key to know about this Laing acquisition is that recent European regulation mandated high efficiency water circulators, and our new acquisition, Laing, has the technology in this area, which is a key addition for ITT.

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