ITT Industries Reports Net Q1 Income
21 April 1998
ITT Industries Reports Net Income Up 25.5 Percent in First Quarter -- Diluted EPS of $0.46 up 24.3 percent over 1997 period
WHITE PLAINS, N.Y., April 21 -- ITT Industries, Inc.
today reported first quarter 1998 net income of $55.6 million, up
25.5 percent over the period in 1997. Diluted EPS was $0.46, up $0.09 per
share, or 24.3 percent, from the $0.37 per share reported last year.
Operating income from ongoing segments reached $140.6 million, up 14.3 percent
or $17.6 million over the 1997 figure. Total sales of $2.14 billion were down
slightly from the period last year due to divestitures and foreign currency
translation.
"Our double digit earnings growth is a direct reflection of the positive
actions we've taken to improve performance over the last two years," said
Travis Engen, chairman, president and chief executive. "The profit
improvement plan within automotive is progressing on schedule and is
consistent with our overall effort to earn higher returns in all of our
business units. The assimilation of Goulds Pumps is complete within fluid
technology, with synergies being achieved. Businesses within our Defense &
Electronics unit also continue to perform well."
"The strategic review of our two major automotive businesses is proceeding
on schedule," Engen added. "As the review has progressed, management and
our financial advisors have refined the review to include our automotive
switch business (approximate annual sales - $275 million). We believe this
inclusion creates the best combination of synergies. Under our current
schedule, we expect to announce the results of the review this summer. I
am confident that this process will result in a stronger, more profitable
company."
The strategic review does not include the automotive fluid handling,
friction and shock absorber businesses.
During the first quarter, ITT Industries realized a one-time pre-tax gain
of $20 million from the sale of its Precision Die Casting (PDC) business,
which closed on January 26, 1998. Also in the first quarter, the company
recorded non-cash reserves of a comparable amount for anticipated legal
expenses and losses on divestitures of non-core businesses, and other
items.
Primary Business Results
Automotive
The automotive business recorded first quarter operating income of $75.5
million, up $1.5 million or 2 percent over the first quarter 1997, due
primarily to manufacturing cost reductions and increased sales volume.
This operating income figure does not include the one-time gain from the
sale of PDC. Sales for the quarter were $1.19 billion, down 14.4 percent
from the period last year, more than accounted for by divestitures and
foreign currency translation. The automotive business realized a margin
increase of 1.0 percentage point for the quarter, evidence of the successful
implementation of the profit improvement program. During the quarter, the
automotive business began production on its new Electronic Stability Program
(ESP) for several manufacturers. The company has recently received North
American contracts with a total annual value of more than $500 million for
brake and chassis systems starting in model year 1998, including a contract to
supply four-wheel anti-lock brakes systems (ABS) for Toyota's T150 pickup
trucks.
Defense & Electronics
The defense & electronics (D&E) business' operating income rose 19.5
percent to $30.0 million, on sales of $473.6 million. D&E's operating
margin improved by 0.2 percentage points. Sales rose 15.7 percent from the
period in 1997 due primarily to increased international sales and the
acquisition of the high technology services unit Kaman Sciences, now called
ITT Systems & Sciences, in the fourth quarter last year. In the defense
area, the company announced new contracts with eight foreign nations for
its military tactical radio system, known as Single Channel Ground and
Airborne Radio System (SINCGARS), totaling $48.3 million. Defense also had
double-digit sales increases in Night Vision and Avionics, while its
GaAsTek (Gallium Arsenide) unit's sales more than doubled over the first
quarter 1997. In the electrical connectors business, ITT Cannon's
operating margin increased 0.4 percentage points due to cost reduction
activities. The company's position in the mobile communications market was
strengthened by Alcatel's decision to select Cannon connectors for the next
generation of mobile telephones.
Fluid Technology
The fluid technology business reported first quarter operating income of
$35.1 million, up 46.9 percent from the same period last year. First
quarter sales of $472.4 million were up 53.6 percent resulting from the
acquisition of Goulds Pumps in the second quarter of 1997. While the
Industrial Pump Group is experiencing some market softness and demand is
down in Asia-Pacific, the business overall continues to grow market share
and has instituted a profit assurance program to control expenses. The
integration of Goulds' operations is now complete, with all units
generating significant synergy orders at an annualized rate of more than
$50 million. During the quarter, the company received a $14 million pump
contract for a flood control project in Jefferson Parish, Louisiana. The
fluid technology business also reached an agreement to sell its Barton
controls unit during the first quarter and closed the transaction on
April 14,1998.
ITT Industries First Quarter Financial Results
(in millions except EPS)
1998(a) 1997
Total Sales $2,143.5 $2,166.6
Operating Income from ongoing segments $140.6 $123.0
Net Income $55.6 $44.3
Shares Diluted 121.6 120.6
Diluted EPS $0.46 $0.37
(a) 1998 figures exclude $20 million pre-tax gain on sale of Precision Die
Casting business and other one-time items.
ITT Industries (http://www.ittind.com) is a leading global diversified
manufacturing company, with 1997 sales of $8.8 billion in its three primary
business segments: Automotive, Defense & Electronics, and Fluid Technology.
ITT Industries' automotive business is one of the world's largest independent
suppliers of systems and components to automotive manufacturers. In the
defense & electronics area, ITT Industries is a leader in the design,
manufacture and support of high technology electronic systems and components,
including Night Vision, tactical communications and mobile telecommunications.
In fluid technology, ITT Industries is the world's leading manufacturer of
pumps, systems and services for the movement, measurement and control of
fluids. Headquartered in White Plains, NY, ITT Industries employs more than
58,000 people around the world.
In addition to the New York Stock Exchange, ITT Industries' common stock
is traded under the symbol ("IIN") on the Midwest, Pacific, London, Frankfurt
and Paris exchanges.
Certain material presented herein consists of forward-looking statements
which involve known and unknown risks, uncertainties and other important
factors that could cause actual results to differ materially from those
expressed in or implied from such forward-looking statements. Such factors
include those set forth in Item 1. Business and Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Forward-Looking Statements in the ITT Industries, Inc. Form 10-K
Annual Report for the fiscal year ended December 31, 1997, and other of its
filings with the Securities and Exchange Commission.
ITT Industries and its subsidiaries' news releases are available at no
charge via fax and the Internet. For ITT Industries news and information
on the Internet, visit http://www.ittind.com. To receive releases by fax,
call 800-758-5804, extension 110006.
SOURCE ITT Industries, Inc.