ITT Corporation (ITT) reported third quarter 2013 earnings per share of 54 cents, which were 11.1% above the Zacks Consensus Estimate of 48 cents. Earnings were up 21% year over year. Profits during the quarter were driven by strong performance in high-growth energy, transportation and industrial end markets.
Total revenue in the quarter surged 15.8% to $634.0 million compared to $547.5 million in the prior-year period. Organic revenue for the quarter grew 9% for the quarter. Revenue growth during the quarter was driven by gains in key geographies and strategic end markets, which include a 56% growth in energy, 14% growth in transportation and 1% growth in Industrial.
The Industrial Process segment reported revenues of $285 million, reflecting 19% increase. Organic revenues grew 6% driven by a 50% increase in global oil and gas project shipments. In addition, organic growth also surged due to a 12% increase in North American Chemical pumps project. These gains were partially offset by weakness in North American short-cycle base pumps and in the global mining and general industrial markets. Organic orders grew 7% due to solid project activity, primarily in the oil and gas market. The total backlog increased 24% in 2013.
Revenues in the Motion Technologies increased 17% to $177 million, while organic revenue was up 13%. The increase was driven by significant gains in the global automotive brake pad market. Revenue growth reflects strong performance across geographies which include a 21% contribution from Western Europe and 31% growth in China. This increase was partially offset by weakness in the company’s global rail shock absorber business.
Interconnect Solutions revenue for the quarter grew 14% to $104 million, driven by a 36% increase in the North American aerospace and defense markets and a 14% increase in the general industrial market, as well as connector strength in emerging markets. Organic revenue grew 15%.
Control Technologies, revenue grew 3% to $70 million while organic revenue increased 4%. The increase was driven by a 14% growth in aerospace components, partially offset by expected declines pertaining to the fulfillment of an aerospace program, weakness in the global defense market and the impact of a large prior-year infrastructure project.
Income and Expenses
Exiting the quarter, the company reported operating income of $77.0 million compared to $36.7 million in the prior-year quarter. The increase was primarily driven by higher sales.
Operating margin expanded 540 basis points to 12.1% during the quarter driven by net operating productivity and increased volume.
Balance Sheet & Cash Flow
At the end of the quarter, cash and cash equivalents were $480.6 million with no long-term debt. The company had shareowner’s equity of $1.1 billion.
Capital expenditures were $58.2 million during the quarter while dividends paid during the quarter amounted to $18.3 million.
Concurrent with the full year earnings release, the company raised its 2013 guidance. ITT expects adjusted earnings per share to increase in the range of $1.97 to $2.00 a hare compared to $1.86 to $1.92 per share, mentioned earlier.
Total revenue is expected to grow 11% to 12% compared to 10% to 11% mentioned earlier. 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 revenue is expected to grow in the range of 5% to 6% from 3% to 4% mentioned earlier.
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