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ITT Corporation (ITT - Analyst Report) reported strong fourth-quarter and full-year 2013 earnings results on Feb 14, 2014. Following this, shares of the company gained 3.1% and closed at $42.64 on the same day.

For the fourth quarter, the company reported earnings of per share of 49 cents, which were 4.3% above the Zacks Consensus Estimate of 47 cents. Earnings were up 32% year over year. Profits were driven by strong volume gains and operational improvements.

Total Revenue

Total revenue in the quarter surged 16.5% to $645.5 million from $554.3 million in the prior-year period. Organic revenue for the quarter grew 13% for the quarter. Revenue growth during the quarter was due to gains in key geographies and strategic end markets. Revenues also surpassed the Zacks Consensus Estimate of $625 million.  

Segment Results

The Industrial Process segment reported revenues of $297 million, reflecting a 16% increase. Organic revenues grew 9%, on the back of strength in chemical project pumps in North America and emerging markets. The company’s Latin American mining and industrial pumps division also performed well. These increases were offset by weakness in the North American short-cycle base pumps and industrial valves markets. Organic orders grew 4.3% due to solid project activity, primarily in the oil and gas market.

Revenues in the Motion Technologies segment surged 29% to $180 million, while organic revenue was up 25%. The rise was caused by significant gains in the global automotive brake pad market and aftermarket expansion. This apart, growth in the global rail shock absorbers also contributed to the top line. Orders during the quarter were up 38.2% year over year.

Interconnect Solutions’ revenue for the quarter grew 9% to $101 million, driven by increase in global aerospace and defense markets and oil & gas market. Organic revenue grew 10%.

In the Control Technologies segment, revenues grew 2% to $70 million while organic revenue rose 3%. The progress was brought about by 14% growth in aerospace components and general industrial components which was partially offset by the impact of an end-of-life aerospace aftermarket program and weakness in defense markets.  

Income and Expenses

Exiting the quarter, the company reported operating income of $28 million compared to $21.1 million in the prior-year quarter. The increase was primarily due to by higher sales.

Operating margin expanded 52 basis points to 4.3% during the quarter, driven by net operating productivity and increased volume.

Balance Sheet & Cash Flow

At the end of the year, cash and cash equivalents were $507.3 million with no long-term debt. The company had shareholder’s equity of $1.2 billion. Net cash from operating activities was $227 million. Capital expenditures were $123 million.

Outlook

Concurrent with the full-year earnings release, the company provided guidance for fiscal 2014. ITT expects total and organic revenue to be up 4–6%, resulting in an increase of $2.6 billion to $2.65 billion. Adjusted earnings per share from continuing operations are expected in the range of $2.23 to $2.33 per share.

Revenue growth is expected to be driven by share gains and growth in global oil and gas pump as well as automotive markets, partially offset by non-strategic connector product lines and an aerospace program ramp down.

The company also expects strong adjusted segment operating margin expansion of 70–90 basis points, attributable to benefits from volume, productivity, proactive restructuring actions and lean transformation activities across its facilities, which will more than fund increased strategic investments.  

ITT currently carries a Zacks Rank #3 (Hold). Some other companies operating in the same sector that are worth considering at the moment are 3M Company (MMM - Analyst Report), Hutchison Whampoa Limited (HUWHY) and Marubeni Corporation , all of which hold a Zacks Rank #2 (Buy).

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