ITT Inc.’s ( ITT Quick Quote ITT - Free Report) first-quarter 2022 earnings came in line with the Zacks Consensus Estimate of 97 cents while sales beat the same by 4.1%. ITT’s adjusted earnings in the reported quarter were 97 cents per share, matching the consensus mark. The bottom line declined 8. 5% from the year-ago figure of $1.06. Inflation in raw material and overhead costs had adverse impacts. Image Source: Zacks Investment Research
ITT’s shares have lost 17.9% compared with the
industry’s decline of 9.3%. Revenue Details
In the quarter under review, ITT’s net sales were $726.2 million, reflecting a year-over-year increase of 4%. The upside was primarily attributable to a 6.8% increase in organic sales. In the reported quarter, total orders were $812.1 million, increasing 11% year over year. The metric increased 14% on an organic basis.
ITT’s revenues beat the Zacks Consensus Estimate of $698 million. ITT currently reports under three business segments: Industrial Process, Motion Technologies, and Connect and Control Technologies. The segmental information is briefly discussed below: Revenues from Industrial Process totaled $202.2 million, almost flat with $202.3 million reported in the previous year’s quarter. This was primarily attributable to a 2% increase in organic sales. Supply-chain challenges adversely impacted ITT’s energy and chemical business in the quarter. Orders increased 23% year over year on an organic basis. Revenues from Motion Technologies totaled $370.1 million, reflecting year-over-year growth of 0.3%. The results grew from a 4% increase in organic sales. Supply-chain constraints affected the operations of the automotive OEM businesses. Orders grew 3% from the year-ago quarter’s level on an organic basis. Revenues from Connect and Control Technologies totaled $154.6 million, up 21.4% year over year and up 23%, organically. Results benefited from strength in the industrial, defence and commercial aerospace end markets. Orders expanded 28% year over year on an organic basis. Margin Profile
In the quarter, ITT’s cost of revenues increased 8.2% year over year to $507.8 million. The same represented 70% of the quarter’s sales compared with 67.2% in the year-ago quarter. Gross profit decreased 4.6% to $218.4 million, and as a percentage of sales, it was 30.1%.
General and administrative expenses increased 4% year over year to $60.4 million while sales and marketing expenses rose 4.6% to $38.4 million. Research and development expenses inched up 2.9% to $25 million. Adjusted segmental operating income in the quarter decreased 5% year over year to $116 million. Margin decreased 150 basis points (bps) to 16%. Supply-chain woes, inflation in raw material costs and expenses were a spoilsport. However, results benefited from higher sales volume and pricing actions. Balance Sheet and Cash Flow
Exiting first-quarter 2022, ITT had cash and cash equivalents of $710.4 million, up 9.7% from $647.5 million in the previous quarter. Its commercial paper and current maturities of long-term debt were $487.0 million, while total non-current assets were $1,821.1 million.
In the first three months of 2022, ITT used $2.7 million for its operating activities compared to net cash generation of $70.8 million in the previous year’s quarter. Capital expenditure was $30 million, up from $17.2 million in the previous year’s quarter. Free cash outflow was $32.7 million against an inflow of $53.6 million a year ago. In the first three months, ITT paid out dividends of $22.4 million, up from $19.1 million in the previous year’s quarter. Share repurchases were $163.9 million, up from shares worth $50 million bought back in the first three months of 2021. Outlook
For 2022, ITT anticipates adjusted earnings of $4.30-$4.70 per share. The projection suggests growth of 6-16% from the year-ago reported figure.
Revenues are expected to increase 7-9% year over year and 9-11% organically. Adjusted segmental operating margin is predicted to increase 40-130 bps year over year to 17.6-18.5%. Free cash flow is expected to be $250-$300 million. Zacks Rank & Stocks to Consider
With a market capitalization of $6.4 billion, ITT currently carries a Zacks Rank #4 (Sell).
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