ITT Corporation (ITT) released its fourth quarter 2010 earnings results before the market opened today, reporting earnings per share from continuing operations of $1.36, outperforming the Zacks Consensus Estimate of $1.26. Earnings in the quarter increased by 42% year over year.
For FY10, earnings per share from continuing operations were $4.41, outperforming the Zacks Consensus Estimate of $4.32, up 18% year over year.
Total Revenue
Total revenue in the quarter was $3 billion compared with $2 billion in the prior-year period. The company delivered a strong operating performance in the quarter with increased productivity in all its businesses, leading to a top-line growth.
For full year, total revenue was reported at $11 billion compared with $10.7 billion in the prior year.
Segment Results
Defense & Information Solutions revenue in the quarter was $1.6 billion, an increase of 5% year over year, driven by increased demand for tactical radios and special purpose jammers. Fluid Technology revenue increased 16% year over year to $1.1 billion, resulting from acquisitions made by the company during the year. Motion & Flow Control revenue in the quarter was $333 million, up 4% organically. Motion & Flow Control revenue was aided by strong aerospace and connector markets, partially offset by decrease in automotive volume with the expiry of the prior-year automotive stimulus programs.
Income and Expenses
Operating income in the quarter was $363 million compared with $284 million. SG&A expense amounted to $435 million and R&D expense was $70 million.
Segment wise, operating income increased 18% in Defense & Information Solutions, 36% in Fluid Technology and 118% in Motion & Flow Control for the quarter.
Balance Sheet & Cash Flow
At the end of the year, cash and cash equivalents was $1,032 million with long-term debt of $1,354 million and shareowner’s equity of $4,505 million. The company had free cash flow of $937 million in the full year.
Outlook
The company expects adjusted earnings per share to be in the range of $4.62 to $4.82 per share in full-year 2011. Total revenue is expected to be $11.4 billion, up 2% organically.
In 1Q11, total revenue is expected to increase by approximately 3% and adjusted earnings per share are expected to be in the range of $0.88 to $0.92.
The company plays an important role in vital markets, including water and fluids management, global defense and security, and motion and flow control. It possesses industry-leading brands in its Fluid Technology and Motion & Flow Control businesses. The company is well diversified and serves attractive end markets with a broad geographic footprint.
ITT Corporation continues to make investments in attractive growth areas such as air traffic management, emerging market expansion, product innovation, defense adjacency, diversity strategy and analytical instrumentation.
The company develops proprietary technology in the industries in which it operates, and relies on intellectual property laws and a number of patents to protect such technology. In doing so, it incurs ongoing costs to enforce and defend its intellectual property. An inability to protect intellectual property could hurt its business. In addition, third parties may claim that it infringes on their intellectual property, and therefore it could suffer significant litigation or licensing expense.
ITT Corporation is a global multi-industry leader in high-technology engineering and manufacturing. It is engaged in the design, manufacture, and sale of a wide-range of engineered products and the provision of services. The company is headquartered in New York City. Major competitors of ITT are Lockheed Martin Corporation (LMT) and Raytheon Co. (RTN).
We currently maintain our Neutral rating on ITT Corporation with a Zacks #3 Rank (short-term Hold recommendation) over the next one-to-three months.
ITT CORP (ITT): Free Stock Analysis Report
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