ITT Industries reports 15 percent rise in net income
ITT Industries, Inc. reported full year 2000 net income of $264.5 million and diluted earnings per share of $2.94, up 15 percent and 18 percent respectively over the full year 1999, excluding a non-recurring item reported in the fourth quarter of 1999.
WHITE PLAINS, N.Y., Jan. 23, 2001 (PRNewswire) — ITT Industries, Inc. (NYSE: ITT) today reported full year 2000 net income of $264.5 million and diluted earnings per share (EPS) of $2.94, up 15 percent and 18 percent respectively over the full year 1999, excluding a non-recurring item reported in the fourth quarter of 1999.
Full year revenues from ongoing segments rose 5 percent to $4.8 billion. Full year segment operating income for 2000 was $546.8 million, up $78.6 million or 17 percent from the year earlier, due to full year segment operating margin growth of 1.2 percentage points to 11.3 percent.
The full year performance was led by a 50 percent revenue growth in the Connectors and Switches segment and strong organic growth in the company's water and wastewater pump businesses, despite the negative impact of foreign currency translation.
"Our strong 2000 performance is a direct result of our strategies of building on our core strengths, continuously improving all facets of our operations, and aggressively managing our balance sheet," said Travis Engen, chairman and chief executive of ITT Industries. "For the full year, all of our businesses increased their profitability as we continued to invest in high growth segments."
"We are also seeing the benefits of our heightened emphasis on improving cash flow," Engen said. "I am especially pleased that our full year 2000 cash flow of $234 million was more than double 1999's free cash flow. The 2000 free cash flow figure represents almost 90 percent of our net income. Greater cash flow is instrumental to achieving our ongoing financial, operating and strategic objectives."
In the fourth quarter, net income rose 12 percent to $78.1 million, excluding a non-recurring item in the fourth quarter 1999. EPS for the quarter was $0.87, up $0.10 or 13 percent from the fourth quarter 1999, excluding the non-recurring item. Fourth quarter 2000 operating income from ongoing segments was up 9 percent or $12.5 million to $152.1 million, while operating margin increased 1.2 percentage points. Fourth quarter revenues declined 2 percent to $1.2 billion. The decline reflects scheduled wind-downs of several defense programs and continued softness in the industrial process pump market, offset by strong revenue growth in the water, wastewater and electronic components businesses.
Outlook for 2001
In looking ahead to the full-year 2001, Engen said he expects organic revenues to grow at a modest rate, with continued profitability gains and earnings growth.
"We remain positive in our outlook, despite some signs of softening in select U.S. end markets," Engen said. "However, we began 2001 with a record backlog within the Defense business, good momentum in the Connectors and Switches segment, and we anticipate ongoing solid performance in the water and wastewater markets we serve. Our broad geographic and product diversity are distinct advantages in periods such as this."
"In addition to continuing to deliver strong results, our priority for 2001 is to use our improved free cash flow to accelerate the growth of our core businesses," Engen added. "Furthermore, our Value Based Six Sigma initiative will help us achieve our long-term earnings growth targets."
Primary Business Results
Pumps and Complementary Products
ITT Industries' Pumps and Complementary Products segment reported fourth quarter revenues of $436.2 million, and full-year revenues of $1.75 billion, up 1 percent from the full year 1999. Continued strong revenue growth in the water and wastewater businesses was offset by ongoing softness in the industrial process pump sector and negative impact of foreign currency translation.
Excluding the impact of foreign currency translation, the Pumps and Complementary Products segment's full year revenues would have been up 6 percent. Operating income for the quarter was $51.2 million, up 7 percent or $3.2 million dollars from the fourth quarter last year, and full year operating income jumped 18 percent to $194.5 million. Fourth quarter and full year 2000 operating margins in this segment increased 1.1 and 1.6 percentage points respectively, driven by process and productivity improvements, and a more favorable product mix. Looking ahead to 2001, the water and wastewater businesses are expected to continue to perform well, with continued weakness in the industrial process pumps market.
Connectors and Switches
Revenue for ITT Industries' Connectors and Switches segment was $218.2 million for the quarter and $774.6 million for the full year, up 52 percent and 50 percent respectively. The sharp increases reflect strong growth in demand in the telecommunications, industrial and transportation markets, as well as the acquisitions of C&K Components and Man Machine Interface.
Excluding acquisitions and the unfavorable impact of foreign currency translation, revenues in this segment grew 30 percent in both the fourth quarter and the full year. Operating income grew 55 percent in the fourth quarter to $29.4 million and grew by nearly 60 percent for the year to $99 million. Operating margin increased 0.8 percentage points for the full year, driven mostly by revenue growth and new product introductions.
New products and market share gains in the communications, transportation and industrial sectors are expected to continue to drive double-digit revenue growth in this segment through 2001.
About ITT Industries
ITT Industries, Inc. (http://www.itt.com) is a global, multi-industry company with leading positions and advanced technologies in its served markets. The company reported revenues of $4.8 billion in 2000 from its four segments: Connectors & Switches, Defense Products & Services, Pumps & Complementary Products and Specialty Products. ITT Industries employs approximately 38,000 people around the world.