ITT Corp. Q3 Adj Profit Tops View, But Revenue Miss; Boosts 2014 EPS Outlook

(RTTNews) - Engineering and manufacturing company ITT Corp. (ITT) reported Wednesday a profit for the third quarter that plummeted from last year, due to the impact in 2013 of a significant tax benefit. However, adjusted earnings per share from continuing operations topped analysts' expectations, while quarterly revenues missed their estimates. The company also raised earnings guidance for the full-year 2014.

"I am pleased to report that in the third quarter, ITT once again delivered a strong performance driven by our solid organic revenue growth and net operating productivity gains, which resulted in significant adjusted segment operating margin expansion and earnings per share growth," Chairman, President and CEO Denise Ramos said in a statement.

The White Plains, New York-based company reported net income of $80.3 million or $0.86 per share for the third quarter, sharply lower than $430.7 million or $4.69 per share in the prior-year quarter.

Income from continuing operations for the quarter plunged to $80.6 million or $0.87 per share from $433.0 million or $4.71 per share in the year-ago quarter.

Results for the year-ago quarter included a $4.08 per share tax benefit from a valuation allowance release.

Excluding special items, income from continuing operations for the quarter was $61.7 million or $0.66 per share, compared to $49.9 million or $0.54 per share in the comparable quarter a year ago.

On average, ten analysts surveyed by Thomson Reuters expected the company to earn $0.60 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 3.6 percent to $657.1 million from $634 million in the same quarter last year, but missed nine Wall Street analysts' consensus estimate of $667.06 million. Excluding the impacts of foreign exchange and acquisitions, organic revenues for the quarter also was up 3.9 percent.

The company noted that revenue results reflect growth in key geographies and end markets, including 14 percent growth in emerging markets, 15 percent growth in energy and 6 percent growth in transportation. This was partially offset by a 4 percent decline in industrial markets due to a decline in communication and other non-strategic connectors.

Total segment orders for the quarter increased 1.7 percent to $688.7 million from $677.5 million in the year-ago quarter. Segment operating margins expanded 230 basis points to 14.4 percent from last year.

Industrial process revenues grew 2.7 percent to $292.7 million, motion technologies revenues increased 11.4 percent to $197.0 million over last year. Interconnect solutions revenues declined 5.5 percent to $98.4 million, while control technologies revenues edged up 1.1 percent to $70.7 million from last year.

Income tax expense for the quarter was $38.0 million, compared to an income tax benefit of $354.4 million last year.

Looking ahead to fiscal 2014, the company increased its adjusted earnings guidance to a range of $2.42 to $2.47 per share from its prior forecast of $2.38 to $2.46 per share. However, the company lowered total revenue growth forecast to 5 to 6 percent from the prior projection of 5 to 7 percent. Meanwhile, the company continues to project organic revenue growth of 5 to 6 percent.

Street is currently looking for full-year 2014 earnings of $2.44 per share on revenue growth of 6.6 percent to $2.67 billion.

"These results demonstrate the power of our portfolio - which is diversified and balanced across key end markets, geographies and customers - and a strategy that is keenly focused on long-term growth and value creation for stakeholders," Ramos added.

ITT closed Thursday's regular trading session at $42.93, up $0.38 on a volume of 1.23 million shares.