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ITT Corporation (ITT - Analyst Report) reported strong second quarter 2012 results. Quarterly earnings from continuing operations of 50 cents, was 35.1% above the Zacks Consensus Estimate and was up 8.7% year over year. Profits were driven by momentum across the company business segments.  

On a GAAP basis earnings were 18 cents a share, 51.4% below the Zacks Consensus Estimate and down 10% year over year.

Total Revenue

Total revenue increased 2.7% to $567.5 million, compared to $552.4 million in the prior-year period. Organic revenue grew 6% for the quarter. Revenue was below the Zacks Consensus Estimate of $570 million. The top line was driven by 18% U.S. growth, strength in core markets such as mining, chemical and general industrial and share gains in the global automotive market.

Segment Results

Revenue at the Industrial Process segment was up 16% to $233 million while organic revenue grew 15% compared to the prior year. This increase reflects strength across all end-markets served in North America, global mining strength and a 19% increase in aftermarket revenue.

Revenue at Motion Technologies declined 6% year over year to $155 million. However, organic revenue increased 5%, when adjusted for foreign currency impact. The growth was driven by global share gains in both automotive and rail markets, which were more than offset by weakness in Europe.

Interconnect Solutions revenue for the second-quarter of 2012 was $100 million, reflecting an 8% decline, as strength in oil and gas connectors was more than offset by general weakness in the European market combined with a decrease in the communications connectors market. Organic revenue for the segment also declined 5% compared to the prior-year.

In Control Technologies, second-quarter total and organic revenue both declined 3% and 2%, respectively, to $81 million. However, excluding the impact of a prior-year rail project, revenue was up 4%, driven by growth in commercial aerospace in North America and global general industrial markets.

Income and Expenses

For the quarter, the company reported operating income of $57.7 million compared to $46.6 million in the prior-year quarter. This was driven by increased volume and strong operating productivity.

Balance Sheet & Cash Flow

At the end of the quarter, cash and cash equivalents was $739.1 million with long-term debt of $4 billion and shareowner’s equity of $690.7 million.

Outlook

Concurrent with the second quarter earnings release, the company reiterated guidance for fiscal 2012. The company expects earnings in the range of $1.62 to $1.72 per share. Total revenue is expected to grow 5% to 7%, including expected market share gains as well as the impact of late-cycle strength in oil & gas and mining.

The company also expects emerging markets to grow approximately 10% due to oil and gas in the Middle East and in South America, automotive gains in China and new global platforms and products.

The company currently holds a Zacks Rank of #4 which implies a short-term (1-3 months) Sell rating on the stock.

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