ITT Reports Strong First-quarter Results, Raises 2021 Guidance
On May 7, 2021, ITT reported a 5% year-over-year sales increase for Q1 2021, with organic growth at 2%. Key drivers included strong performance in Friction and Connectors businesses, with a segment operating margin improvement of 530 basis points to 17.0%. Operating cash flow grew by 32% to $71 million and free cash flow surged 71% to $54 million. ITT also raised its 2021 earnings per share guidance to $3.80 to $4.00, anticipating a 19% to 25% increase over the prior year.
- Q1 2021 sales increased by 5% year-over-year.
- Operating cash flow rose 32%, reaching $71 million.
- Free cash flow surged by 71% to $54 million.
- Adjusted earnings per share increased 32.5% to $1.06.
- Segment operating margin improved by 530 basis points to 17.0%.
- Raised 2021 earnings per share guidance to $3.80-$4.00.
- Organic revenue growth of only 2% reflects some market challenges.
- Industrial Process segment saw a 12% organic revenue decline.
May 7, 2021-- ITT Inc. (NYSE: ITT) today reported first quarter 2021 financial results. The company reported first quarter year-over-year sales increase of
“ITT had an encouraging start to 2021,” said Luca Savi, Chief Executive Officer and President of ITT Inc. “We continue to win in the marketplace, as evidenced by the strong organic sales growth in Friction and
“ITT delivered adjusted earnings per share for the first quarter of
Savi concluded, “While we expect to face certain market and supply chain headwinds moving forward, I am confident in our team’s ability to outperform, which is reflected in our outlook for 2021. We have ample capital to deploy toward growth investments, M&A, dividends, and share repurchases to position ITT for future growth. We now expect adjusted earnings per share to grow 19 to 25 percent above prior year, a
Table 1. First Quarter Performance
|
1Q 2021 |
1Q 2020 |
Change |
||||||||||
Revenue |
$ |
698.4 |
|
$ |
663.3 |
|
5.3 |
% |
|||||
Organic Growth |
|
|
|
|
|
|
1.5 |
% |
|||||
Segment Operating Income |
$ |
118.8 |
|
$ |
77.9 |
|
52.5 |
% |
|||||
Segment Operating Margin |
|
17.0 |
% |
|
11.7 |
% |
530 |
bps |
|||||
Adjusted Segment Operating Income |
$ |
122.1 |
|
$ |
96.2 |
|
26.9 |
% |
|||||
Adjusted Segment Operating Margin |
|
17.5 |
% |
|
14.5 |
% |
300 |
bps |
|||||
Earnings Per Share |
$ |
0.99 |
|
$ |
0.95 |
|
4.2 |
% |
|||||
Adjusted Earnings Per Share |
$ |
1.06 |
|
$ |
0.80 |
|
32.5 |
% |
|||||
Operating Cash Flow |
$ |
70.8 |
|
$ |
53.5 |
|
32.3 |
% |
|||||
Note: all results unaudited
Organic revenue (defined as total revenue excluding impact of foreign currency, acquisitions and divestitures) increased
Adjusted segment operating income increased
Free cash flow was up
Table 2. First Quarter Segment Results
|
Revenue |
|
Operating Income |
||||||||||||||||||||
|
1Q 2021 |
Reported
|
Organic
|
|
1Q 2021 |
Reported
|
Adjusted
|
||||||||||||||||
Motion Technologies |
$ |
369.1 |
|
23.9 |
% |
17.1 |
% |
|
$ |
76.0 |
|
43.1 |
% |
43.1 |
% |
|
|||||||
Industrial Process |
202.3 |
|
(11.0) |
% |
(12.2) |
% |
|
31.0 |
|
248.3 |
% |
24.6 |
% |
|
|||||||||
Connect & Control Technologies |
127.3 |
|
(8.2) |
% |
(9.7) |
% |
|
11.8 |
|
(25.8) |
% |
(18.9 |
)% |
|
|||||||||
Total segment results |
698.4 |
|
5.3 |
% |
1.5 |
% |
|
118.8 |
|
52.5 |
% |
26.9 |
% |
|
|||||||||
Note: all results unaudited; excludes intercompany eliminations; comparisons to Q1 2020
Motion Technologies organic revenue increased
Industrial Process organic revenue decreased
Connect and Control Technologies organic revenue decreased
2021 Guidance
The company raised its 2021 guidance to reflect the strong first quarter results and a more favorable outlook than initially anticipated for the remainder of 2021. We now expect revenue growth of
Investor Conference Call Details
ITT's senior management will host a conference call for investors today at 9:00 a.m., Eastern time. The briefing can be monitored live via webcast at the following address on the company's website: www.itt.com/investors. A replay of the webcast will be available for 90 days following the presentation. A replay will also be available telephonically from two hours after the webcast until Friday, May 21, 2021, at midnight, Eastern time. Reconciliations of non-GAAP financial performance metrics to their most comparable U.S. GAAP financial performance metrics are defined and presented below and should not be considered a substitute for, nor superior to, the financial data prepared in accordance with U.S. GAAP.
Safe Harbor Statement
This release contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our business, future financial results and the industry in which we operate, and other legal, regulatory and economic developments. These forward-looking statements include, but are not limited to, future strategic plans and other statements that describe the company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future events and future operating or financial performance.
We use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “future,” “may,” “will,” “could,” “should,” “potential,” “continue,” “guidance” and other similar expressions to identify such forward-looking statements. Forward-looking statements are uncertain and to some extent unpredictable, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements.
Where in any forward-looking statement we express an expectation or belief as to future results or events, such expectation or belief is based on current plans and expectations of our management, expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that the expectation or belief will occur or that anticipated results will be achieved or accomplished.
Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation: impacts on our business due to the COVID-19 pandemic, including disruptions to our operations and demand for our products, increased costs, disruption of supply chain and other constraints in the availability of key commodities and other necessary services, government-mandated site closures, employee illness or loss of key personnel, the impact of travel restrictions and stay-in-place restrictions on our business and workforce, customer and supplier bankruptcies, impacts to the global economy and financial markets, and liquidity challenges in accessing capital markets; uncertain global economic and capital markets conditions, including due to COVID-19, trade disputes between the U.S. and its trading partners, and fluctuations in oil prices; uncertainties regarding our exposure to pending and future asbestos claims and related liabilities and insurance recoveries; risks due to our operations and sales outside the U.S. and in emerging markets; fluctuations in foreign currency exchange rates; fluctuations in demand or customers’ levels of capital investment and maintenance expenditures, especially in the oil and gas, chemical, and mining markets, or changes in our customers’ anticipated production schedules, especially in the commercial aerospace market; failure to compete successfully and innovate in our markets; the extent to which there are quality problems with respect to manufacturing processes or finished goods; risks related to government contracting, including changes in levels of government spending and regulatory and contractual requirements applicable to sales to the U.S. government; volatility in raw material prices and our suppliers’ ability to meet quality and delivery requirements; failure to manage the distribution of products and services effectively; loss of or decrease in sales from our most significant customers; fluctuations in our effective tax rate; failure to protect our intellectual property rights or violations of the intellectual property rights of others; the risk of material business interruptions, particularly at our manufacturing facilities; the risk of cybersecurity breaches; changes in laws relating to the use and transfer of personal and other information; failure of portfolio management strategies, including cost-saving initiatives, to meet expectations; risk of liabilities from past divestitures and spin-offs; changes in environmental laws or regulations, discovery of previously unknown or more extensive contamination, or the failure of a potentially responsible party to perform; failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation, export controls and trade sanctions, including recently announced tariffs; and risk of product liability claims and litigation. More information on factors that could cause actual results or events to differ materially from those anticipated is included in our reports filed with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2020 (particularly under the caption “Risk Factors”), our Quarterly Reports on Form 10-Q and in other documents we file from time to time with the SEC.
The forward-looking statements included in this release speak only as of the date hereof. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
| CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||
| (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) | |||||||||
| For the Three Months Ended March 31 | 2021 |
|
2020 |
|
|||||
| Revenue | $ | 698.4 |
|
$ | 663.3 |
|
|||
| Costs of revenue | 469.4 |
|
453.9 |
|
|||||
| Gross profit | 229.0 |
|
209.4 |
|
|||||
| General and administrative expenses | 52.1 |
|
57.1 |
|
|||||
| Sales and marketing expenses | 36.7 |
|
41.6 |
|
|||||
| Research and development expenses | 24.3 |
|
22.7 |
|
|||||
| Asbestos-related costs (benefit), net | 2.4 |
|
(40.7 |
) |
|||||
| Restructuring costs | 3.6 |
|
3.1 |
|
|||||
| Asset impairment charges | - |
|
16.3 |
|
|||||
| Operating income | 109.9 |
|
109.3 |
|
|||||
| Interest and non-operating (income) expenses, net | (1.3 |
) |
0.6 |
|
|||||
| Income from continuing operations before income tax expense | 111.2 |
|
108.7 |
|
|||||
| Income tax expense | 24.7 |
|
24.7 |
|
|||||
| Income from continuing operations | 86.5 |
|
84.0 |
|
|||||
| Income from discontinued operations, net of tax expense of respectively |
- |
|
1.1 |
|
|||||
| Net income | 86.5 |
|
85.1 |
|
|||||
| Less: Income attributable to noncontrolling interests | 0.3 |
|
0.3 |
|
|||||
| Net income attributable to ITT Inc. | $ | 86.2 |
|
$ | 84.8 |
|
|||
| Amounts attributable to ITT Inc.: | |||||||||
| Income from continuing operations, net of tax | $ | 86.2 |
|
$ | 83.7 |
|
|||
| Income from discontinued operations, net of tax | - |
|
1.1 |
|
|||||
| Net income attributable to ITT Inc. | $ | 86.2 |
|
$ | 84.8 |
|
|||
| Earnings per share attributable to ITT Inc.: | |||||||||
| Basic earnings per share: | |||||||||
| Continuing operations | $ | 1.00 |
|
$ | 0.96 |
|
|||
| Discontinued operations | - |
|
0.01 |
|
|||||
| Net income | $ | 1.00 |
|
$ | 0.97 |
|
|||
| Diluted earnings per share: | |||||||||
| Continuing operations | $ | 0.99 |
|
$ | 0.95 |
|
|||
| Discontinued operations | - |
|
0.01 |
|
|||||
| Net income | $ | 0.99 |
|
$ | 0.96 |
|
|||
| Weighted average common shares – basic | 86.3 |
|
87.4 |
|
|||||
| Weighted average common shares – diluted | 86.9 |
|
88.2 |
|
|||||
| CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) | |||||||||
| (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) | |||||||||
March 31, |
December
|
||||||||
2021 |
2020 |
||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 780.2 |
|
$ | 859.8 |
|
|||
| Receivables, net | 546.3 |
|
507.5 |
|
|||||
| Inventories, net | 374.7 |
|
360.5 |
|
|||||
| Other current assets | 190.8 |
|
189.5 |
|
|||||
| Total current assets | 1,892.0 |
|
1,917.3 |
|
|||||
| Plant, property and equipment, net | 501.2 |
|
525.1 |
|
|||||
| Goodwill | 933.4 |
|
944.8 |
|
|||||
| Other intangible assets, net | 100.3 |
|
106.4 |
|
|||||
| Asbestos-related assets | 330.8 |
|
353.7 |
|
|||||
| Deferred income taxes | 156.3 |
|
158.3 |
|
|||||
| Other non-current assets | 265.7 |
|
272.0 |
|
|||||
| Total non-current assets | 2,287.7 |
|
2,360.3 |
|
|||||
| Total assets | $ | 4,179.7 |
|
$ | 4,277.6 |
|
|||
| Liabilities and Shareholders’ Equity | |||||||||
| Current liabilities: | |||||||||
| Commercial paper and current maturities of long-term debt | $ | 61.2 |
|
$ | 106.8 |
|
|||
| Accounts payable | 327.0 |
|
306.8 |
|
|||||
| Accrued liabilities | 438.3 |
|
457.4 |
|
|||||
| Total current liabilities | 826.5 |
|
871.0 |
|
|||||
| Asbestos-related liabilities | 818.3 |
|
840.6 |
|
|||||
| Postretirement benefits | 222.8 |
|
227.5 |
|
|||||
| Other non-current liabilities | 204.2 |
|
210.6 |
|
|||||
| Total non-current liabilities | 1,245.3 |
|
1,278.7 |
|
|||||
| Total liabilities | 2,071.8 |
|
2,149.7 |
|
|||||
| Shareholders’ equity: | |||||||||
| Common stock: | |||||||||
| Authorized – 250.0 shares, |
|||||||||
| Issued and outstanding – 86.1 shares and 86.5 shares, respectively | 86.1 |
|
86.5 |
|
|||||
| Retained earnings | 2,329.4 |
|
2,319.3 |
|
|||||
| Total accumulated other comprehensive loss | (309.4 |
) |
(279.4 |
) |
|||||
| Total ITT Inc. shareholders’ equity | 2,106.1 |
|
2,126.4 |
|
|||||
| Noncontrolling interests | 1.8 |
|
1.5 |
|
|||||
| Total shareholders’ equity | 2,107.9 |
|
2,127.9 |
|
|||||
| Total liabilities and shareholders’ equity | $ | 4,179.7 |
|
$ | 4,277.6 |
|
|||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||
| (IN MILLIONS) | |||||||||
| For the Three Months Ended March 31 | 2021 |
2020 |
|||||||
| Operating Activities | |||||||||
| Income from continuing operations attributable to ITT Inc. | $ | 86.2 |
|
$ | 83.7 |
|
|||
| Adjustments to income from continuing operations: | |||||||||
| Depreciation and amortization | 28.5 |
|
27.4 |
|
|||||
| Equity-based compensation | 3.3 |
|
2.5 |
|
|||||
| Asbestos-related costs (benefit), net | 2.4 |
|
(40.7 |
) |
|||||
| Asset impairment charges | - |
|
16.3 |
|
|||||
| Other non-cash charges, net | 6.3 |
|
11.0 |
|
|||||
| Asbestos-related payments, net | (1.6 |
) |
(6.1 |
) |
|||||
| Changes in assets and liabilities: | |||||||||
| Change in receivables | (50.1 |
) |
(13.4 |
) |
|||||
| Change in inventories | (21.2 |
) |
0.6 |
|
|||||
| Change in accounts payable | 36.6 |
|
(6.4 |
) |
|||||
| Change in accrued expenses | (14.5 |
) |
(25.2 |
) |
|||||
| Change in income taxes | 10.4 |
|
16.5 |
|
|||||
| Other, net | (15.5 |
) |
(12.7 |
) |
|||||
| Net Cash – Operating Activities | 70.8 |
|
53.5 |
|
|||||
| Investing Activities | |||||||||
| Capital expenditures | (17.2 |
) |
(22.2 |
) |
|||||
| Acquisitions, net of cash acquired | - |
|
(4.7 |
) |
|||||
| Other, net | 0.1 |
|
0.7 |
|
|||||
| Net Cash – Investing Activities | (17.1 |
) |
(26.2 |
) |
|||||
| Financing Activities | |||||||||
| Commercial paper, net borrowings | (42.6 |
) |
(82.7 |
) |
|||||
| Short-term revolving loans, borrowings | - |
|
378.3 |
|
|||||
| Long-term debt, repayments | (0.1 |
) |
- |
|
|||||
| Repurchase of common stock | (61.0 |
) |
(83.4 |
) |
|||||
| Proceeds from issuance of common stock | 0.2 |
|
0.1 |
|
|||||
| Dividends paid | (19.1 |
) |
(0.2 |
) |
|||||
| Other, net | (0.2 |
) |
(0.1 |
) |
|||||
| Net Cash – Financing Activities | (122.8 |
) |
212.0 |
|
|||||
| Exchange rate effects on cash and cash equivalents | (10.4 |
) |
(11.7 |
) |
|||||
| Net cash – operating activities of discontinued operations | (0.1 |
) |
0.2 |
|
|||||
| Net change in cash and cash equivalents | (79.6 |
) |
227.8 |
|
|||||
| Cash and cash equivalents – beginning of year (includes restricted cash of respectively) |
860.6 |
|
612.9 |
|
|||||
| Cash and Cash Equivalents – End of Period (includes restricted cash of respectively) |
$ | 781.0 |
|
$ | 840.7 |
|
|||
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FAQ
What are ITT's Q1 2021 financial results?
ITT reported a 5% increase in sales for Q1 2021, with an organic growth of 2%.
How did ITT's operating cash flow perform in Q1 2021?
Operating cash flow for Q1 2021 increased by 32%, totaling $71 million.
What is ITT's adjusted earnings per share for Q1 2021?
ITT's adjusted earnings per share for Q1 2021 was $1.06, a 32.5% increase from the previous year.
Has ITT adjusted its earnings guidance for 2021?
Yes, ITT raised its earnings per share guidance for 2021 to a range of $3.80 to $4.00.
What factors contributed to ITT's revenue growth in Q1 2021?
Growth was primarily driven by strong performance in the Friction and Connectors businesses.
ITT Inc.
NYSE:ITTITT RankingsITT Latest NewsITT Stock Data
11.62B
80.90M
0.71%
92.06%
1.28%
Specialty Industrial Machinery
Pumps & Pumping Equipment
United States of America
STAMFORD
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