We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ITT Corp. (ITT) Gains on Q2 Earnings and Revenue Beat
Read MoreHide Full Article
ITT Corp. (ITT - Free Report) posted adjusted earnings of 67 cents per share in the second quarter of 2016, beating the Zacks Consensus Estimate of 60 cents by 11.7% but down 2.9% from the year-ago tally of 69 cents.
The company’s earnings beat drove share prices by 3.3% to $32.70 on Aug 4.
Factors including lower operating income and higher effective tax rate weighed down on the bottom-line performance. Moreover, tepid sales proved to be a drag.
Inside the Headlines
ITT Corp.’s second-quarter revenues came in at $626.2, relatively flat on a year-over-year basis. However, the metric surpassed the Zacks Consensus Estimate of $623 million. While contributions from the previously acquired Germany-based advanced material manufacturer, Wolverine, proved beneficial, waning projects in the oil & gas and mining industry and softness in the chemical & industrial markets played spoilsport. Moreover, currency fluctuations added to the challenges.
On an adjusted basis, organic revenues decreased 6% year over year due to softness across global flow markets.
Segment-wise, Industrial Process revenues were down 25.6% year over year to $214.2 million. Weakness in the oil & gas and mining markets hampered the project pumps and aftermarket businesses at this segment, resulting in the sales drop. Also, currency fluctuations compounded the fall.
Revenues at the Interconnect Solutions segment were down 4.7% year over year to $78.8 million. Improvements in aerospace and defense markets were more than offset by sluggishness in the oil and gas markets and currency fluctuations.
Control Technologies revenues stood at $74.8 million, flat on a year-over-year basis. While impressive performance of the aerospace and defense businesses acted as a tailwind, this was offset by weakness in global industrial markets.
Motion Technologies revenues were up 40.8% year over year to $259.6 million on the back of significant share gains and market growth from stellar sales of automotive brake pads to both OEM and aftermarket customers. The company witnessed robust OEM market share gains in key geographies including Europe, China and North America. Furthermore, strong aftermarket activity and automotive market growth acted as tailwinds.
ITT Corp.’s adjusted segment operating income declined about 3.5% year over year to $92 million, mainly hit by lower high-margin, declining aftermarket volumes and higher investments.
Liquidity and Cash Flow
As of Jun 30, 2016, the company had cash and cash equivalents of $433.3 million, up from $430.9 million at end of Mar 31, 2016.
For the six months ended Jun 30, 2016, net cash from operating activities totaled $71.6 million compared with $89.5 million in the year-ago period.
Share Repurchase
During the second quarter, ITT Corp. repurchased shares worth $20 million and announced up to an additional $50 million of discretionary repurchases by the end of the year, depending on the status of the pending acquisitions.
Guides Down
Concurrent with the second-quarter earnings release, ITT Corp. lowered its top- and bottom-line guidance. Also, the company currently expects adjusted EPS in the range of $2.34 to $2.46, flat at midpoint of $2.40, instead of the earlier guidance of $2.42–$2.68. The downcast outlook is a result of lackluster volume expectations from Industrial Process during the second half of the year.
For 2016, the company expects total revenue decline in the range of 3% to 5% as against the previous guidance of flat to 4% decline. Also, organic revenue decline is forecasted in the range of 7%–9%.
The downward revision in the revenue outlook is primarily attributable to weaker-than-expected aftermarket activities and customer project deferrals at Industrial Process owning to macroeconomic sluggishness. However, an uptick in activities in the automotive sector, owing to greater visibility in aftermarket, is expected to offset this decline to some extent.
There is no denying the fact that ITT Corp.’s prospects remain challenged in the short run on account of prolonged macroeconomic woes that has been severely maligning its key end-markets including oil and gas, mining and general industrial businesses. For the past few quarters, the company’s Industrial Process segment is bearing the brunt of weak oil and gas and mining project activity, combined with extended delays in maintenance spending. With such conditions expected to continue in the near term, no immediate respite is in sight.
Despite the broader weaknesses, ITT Corp.’s diversified portfolio is expected to cushion the company against a lot many adverse factors. Especially, the company’s thriving transportation businesses, stellar growth in automotive brake pad business and the benefits from strategic acquisitions are expected to drive growth. Also, the diligent restructuring activities and capital allocation strategies look promising.
ITT Corp. currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Crane Co. (CR - Free Report) , Leucadia National Corp. and Swire Pacific Ltd. (SWRAY - Free Report) . All the three stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
ITT Corp. (ITT) Gains on Q2 Earnings and Revenue Beat
ITT Corp. (ITT - Free Report) posted adjusted earnings of 67 cents per share in the second quarter of 2016, beating the Zacks Consensus Estimate of 60 cents by 11.7% but down 2.9% from the year-ago tally of 69 cents.
The company’s earnings beat drove share prices by 3.3% to $32.70 on Aug 4.
Factors including lower operating income and higher effective tax rate weighed down on the bottom-line performance. Moreover, tepid sales proved to be a drag.
Inside the Headlines
ITT Corp.’s second-quarter revenues came in at $626.2, relatively flat on a year-over-year basis. However, the metric surpassed the Zacks Consensus Estimate of $623 million. While contributions from the previously acquired Germany-based advanced material manufacturer, Wolverine, proved beneficial, waning projects in the oil & gas and mining industry and softness in the chemical & industrial markets played spoilsport. Moreover, currency fluctuations added to the challenges.
On an adjusted basis, organic revenues decreased 6% year over year due to softness across global flow markets.
Segment-wise, Industrial Process revenues were down 25.6% year over year to $214.2 million. Weakness in the oil & gas and mining markets hampered the project pumps and aftermarket businesses at this segment, resulting in the sales drop. Also, currency fluctuations compounded the fall.
Revenues at the Interconnect Solutions segment were down 4.7% year over year to $78.8 million. Improvements in aerospace and defense markets were more than offset by sluggishness in the oil and gas markets and currency fluctuations.
Control Technologies revenues stood at $74.8 million, flat on a year-over-year basis. While impressive performance of the aerospace and defense businesses acted as a tailwind, this was offset by weakness in global industrial markets.
Motion Technologies revenues were up 40.8% year over year to $259.6 million on the back of significant share gains and market growth from stellar sales of automotive brake pads to both OEM and aftermarket customers. The company witnessed robust OEM market share gains in key geographies including Europe, China and North America. Furthermore, strong aftermarket activity and automotive market growth acted as tailwinds.
ITT Corp.’s adjusted segment operating income declined about 3.5% year over year to $92 million, mainly hit by lower high-margin, declining aftermarket volumes and higher investments.
Liquidity and Cash Flow
As of Jun 30, 2016, the company had cash and cash equivalents of $433.3 million, up from $430.9 million at end of Mar 31, 2016.
For the six months ended Jun 30, 2016, net cash from operating activities totaled $71.6 million compared with $89.5 million in the year-ago period.
Share Repurchase
During the second quarter, ITT Corp. repurchased shares worth $20 million and announced up to an additional $50 million of discretionary repurchases by the end of the year, depending on the status of the pending acquisitions.
Guides Down
Concurrent with the second-quarter earnings release, ITT Corp. lowered its top- and bottom-line guidance. Also, the company currently expects adjusted EPS in the range of $2.34 to $2.46, flat at midpoint of $2.40, instead of the earlier guidance of $2.42–$2.68. The downcast outlook is a result of lackluster volume expectations from Industrial Process during the second half of the year.
For 2016, the company expects total revenue decline in the range of 3% to 5% as against the previous guidance of flat to 4% decline. Also, organic revenue decline is forecasted in the range of 7%–9%.
The downward revision in the revenue outlook is primarily attributable to weaker-than-expected aftermarket activities and customer project deferrals at Industrial Process owning to macroeconomic sluggishness. However, an uptick in activities in the automotive sector, owing to greater visibility in aftermarket, is expected to offset this decline to some extent.
ITT INC Price, Consensus and EPS Surprise
ITT INC Price, Consensus and EPS Surprise | ITT INC Quote
To Conclude
There is no denying the fact that ITT Corp.’s prospects remain challenged in the short run on account of prolonged macroeconomic woes that has been severely maligning its key end-markets including oil and gas, mining and general industrial businesses. For the past few quarters, the company’s Industrial Process segment is bearing the brunt of weak oil and gas and mining project activity, combined with extended delays in maintenance spending. With such conditions expected to continue in the near term, no immediate respite is in sight.
Despite the broader weaknesses, ITT Corp.’s diversified portfolio is expected to cushion the company against a lot many adverse factors. Especially, the company’s thriving transportation businesses, stellar growth in automotive brake pad business and the benefits from strategic acquisitions are expected to drive growth. Also, the diligent restructuring activities and capital allocation strategies look promising.
ITT Corp. currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Crane Co. (CR - Free Report) , Leucadia National Corp. and Swire Pacific Ltd. (SWRAY - Free Report) . All the three stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>