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ITT Q1 Earnings & Revenues Surpass Estimates, Decline Y/Y

Zacks Equity Research

ITT Inc. ITT reported better-than-expected results in first-quarter 2020, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

In the quarter, the company pulled off a positive earnings surprise of 8.1%. Quarterly adjusted earnings were 80 cents per share, outpacing the Zacks Consensus Estimate of 74 cents. However, the bottom line declined 12.1% from the year-ago figure.

Revenues of $663.3 million were down 4.6% year over year. However, the top line surpassed the consensus mark of $623 million by 6.4%. Also, revenues fell 5% on an organic basis.

ITT Inc. Price, Consensus and EPS Surprise

 

ITT Inc. Price, Consensus and EPS Surprise

ITT Inc. price-consensus-eps-surprise-chart | ITT Inc. Quote

Segmental Breakup

First-quarter revenues of Industrial Process were $227 million, up 5% year over year. Organic sales climbed 1%, driven by an increase in pump projects.

Quarterly revenues of Motion Technologies declined 5% year over year to $298 million. Organic sales decreased 3% in the quarter mainly due to lower Friction sales on account of soft demand in China and Europe, owing to the coronavirus outbreak.

Connect & Control Technologies generated $139 million revenues, down 16% year over year. Organic sales dipped 17% due to temporary plant shutdowns in China and Europe, owing to the coronavirus outbreak, lower commercial and defense components sales.

Costs/Margins

Cost of sales in the first quarter was $453.9million, down 4.8% year over year. Sales and marketing expenses were $41.6 million compared with $40.2 million in the year-ago quarter.

Gross profit margin was 31.6%, up 10 basis points (bps).

Income tax expenses were $24.7 million, up from $19.7 million.

Balance Sheet/Cash Flow

Exiting the first quarter, ITT had cash and cash equivalents of $839.9 million, up from $612.1 million as of Dec 31, 2019.

In the first three months of 2020, the company generated $53.5 million in cash from operating activities, higher than $42.1 million recorded in the year-ago comparable period. Capital expenditure totaled $22.2 million, declining from $29.2 million spent in the year-ago comparable period. Free cash flow was $31.3 million, up from $12.9 million reported a year ago.

2020 Guidance

On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, ITT has now withdrawn its previously announced guidance for 2020.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks are Acco Brands Corporation ACCO, CECO Environmental Corp. CECE and Intellicheck, Inc. IDN. All the companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Acco Brands delivered a positive earnings surprise of 19.04%, on average, in the trailing four quarters.

CECO Environmental delivered a positive earnings surprise of 26.98%, on average, in the trailing four quarters.

Intellicheck delivered a positive earnings surprise of 36.91%, on average, in the trailing four quarters.

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