ITT Corporation (ITT) reported first quarter 2012 earnings per share from continuing operations of 39 cents, which was 21.8% above the Zacks Consensus Estimate.
However, earnings were down 13.3% year over year from 45 cents. The decline was primarily attributable to lower segment operating income due to post-spin incremental recurring costs, expected lower connectors volume and increased large project mix in the Industrial Process business.
On a GAAP basis, the company reported earnings of 11 cents, compared to a loss of 23 cents in the year ago quarter.
Total revenue increased 8.3% to $577 million, compared to $533 million in the prior-year period. Organic revenue grew 9% for the quarter. Revenue was above the Zacks Consensus Estimate of $557 million.
The top line was driven by a 22% growth in emerging markets and 11% growth in North America, as well as gains in core markets such as oil and gas, mining, chemical and general industrial.
The Industrial Process segment reported revenue growth of 35% to $226 million, driven by growth in project shipments across all regions and markets, particularly in Latin America where revenue increased 71%. Quarterly revenue also included a $7 million benefit from Industrial Process' Blakers Pump Engineers, which ITT acquired in October 2011. Organic revenue was up 30% compared to the prior year.
Revenue at Motion Technologies contracted 2% year over year to $180 million due to weakness in the shock absorbers product lines. However, organic growth was up 2% thanks to gains in Europe and growth in emerging markets and North America. A strong performance from the automotive segment also contributed.
Interconnect Solutions' revenue for the year was $93 million, declining 1% from the prior year, primarily due to general weakness in the global connector industry combined with a decrease in the communication market due to a customer's loss of market share. Organic revenue contracted 12% year over year.
In Control Technologies, revenue increased 1% to $79 million compared to the prior year, driven by growth in the aerospace and industrial segments which was almost fully offset by expected declines in defense and a lack of revenue from a prior-year rail seat project.
Income and Expenses
For the quarter, the company reported operating income of $37 million compared to a loss of $10 million in the prior-year quarter. This was driven by increased volume and strong operating productivity, partially offset by negative project mix shift and post-spin incremental recurring costs.
Balance Sheet & Cash Flow
At the end of the quarter, cash and cash equivalents was $728 million with long-term debt of $4 million and shareowner’s equity of $723 million.
Concurrent with the full year earnings release, the company reiterated guidance for fiscal 2012. The company expects earnings in the range of $1.62 to $1.72 per share. Total revenue is expected to grow 5% to 7%, including expected market share gains as well as the impact of late-cycle strength in oil & gas and mining. The company also expects emerging markets to grow approximately 10% due to oil and gas in the Middle East and in South America, automotive gains in China and new global platforms and products.
The company currently holds a Zacks Rank # 3 which implies a short-term (1-3 months) ‘Hold’ rating on the stock.Read the Full Research Report on ITT
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