ITT Corporation (ITT) reported fourth quarter 2009 earnings from continuing operations of 97 cents per share, exceeding the Zacks Consensus Estimate of 93 cents. The company reported revenue of $2.9 billion for the quarter.
Segment Information
ITT Defense & Information Solutions revenue was $1.6 billion, down 1% compared to the year-ago period, as lower tactical radio volumes offset growth in service contracts and international Night Vision revenues. Fourth-quarter operating income for the segment grew to $207 million, up 10% on a comparable basis, driven by strong productivity actions.
At the close of 2009, the Defense segment had a funded backlog of $5.2 billion that was nearly flat to the prior year with little change in the mix of products and services.
Fluid Technology reported fourth-quarter 2009 revenue of $924 million, down 6% on a year-over-year basis, and a 13% decline in organic revenue (defined as total revenue excluding the impacts of foreign exchange and acquisition and divestiture activity), due primarily to global weakness in Residential and Commercial Water and lower revenues in North America from the Industrial Process business that offset continued strength in the municipal market.
Fourth-quarter segment operating income was $104 million, up 9% from the comparable prior-year period, driven by strong productivity, lower restructuring and realignment costs and favorable foreign exchange that more than offset lower volume.
Motion & Flow Control revenue grew 2% on a comparable basis to $332 million. Organic revenue was down 1%, as growth driven by the European auto stimulus, solid rail growth in emerging markets and growth in beverage were offset by declines in the aerospace and industrial markets. The segment reversed a year-ago loss with fourth-quarter operating income of $17 million, driven by strong productivity and lower realignment costs.
Balance Sheet and Cash Flow
Cash and equivalents were $1.2 billion with long-term debt of $1.4 billion and shareowners’ equity of $3.8 billion. Accounts receivable at the end of 2009 compared to the corresponding prior-year period signifying collection efficiency. Accounts payable was flat year over year.
Cash from operations for 2009 was $1.3 billion and free cash flow was $1.1 billion, a 146% conversion of income from continuing operations adjusted for non-cash special items.
Guidance
The company raised its full-year 2010 adjusted earnings per share guidance from its previously announced forecast of $3.85 to $4.05 to a new forecast of $3.90 to $4.10.
ITT Corporation manufactures engineered products and related services worldwide. The company’s Defense Electronics and Services segment provides systems integration, communications, engineering, and technical support solutions; and research, technologies, and engineering support services to the government, industrial, and commercial customers. Major competitors are Raytheon Company (RTN) and Lockheed Martin Corporation (LMT).
We currently have a Neutral recommendation on ITT.
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