ITT REPORTS 2022 SECOND QUARTER EARNINGS PER SHARE (EPS) OF $0.91, ADJUSTED EPS OF $0.98
ITT REPORTS 2022 SECOND QUARTER EARNINGS PER SHARE (EPS) OF$0.91, ADJUSTED EPS OF $0.98
▪ Revenue growth of 6% (10% organic) driven by strong demand in Connect & Control Technologies (CCT) and Industrial Process (IP), and pricing actions across all businesses
▪ Orders up 10% (13% organic) on strong pump, connectors and aerospace components demand
▪ Deployed ~$275 million, including over $60 million for share repurchases, $172 million to M&A and ITT Ventures investments
▪ Raising organic sales guidance and tightening full year EPS guidance ranges
Stamford, Conn., Aug 4, 2022 – ITT Inc. (NYSE: ITT) today reported financial results for the second quarter ended July 2, 2022. The company reported a year-over-year revenue increase of 6.0%, up 9.6% on an organic basis, primarily driven by demand in connectors and components in CCT, short-cycle in IP, growth in Motion Technologies (MT) Friction, and pricing actions in all businesses. This was partially offset by a 5.8% unfavorable impact from U.S. dollar appreciation and
reduced volumes stemming from the war in Ukraine. The acquisition of Habonim also contributed 2.2% to revenue growth.
Segment operating income was flat compared to prior year. Segment operating margin of 15.6% for the second quarter declined 90 basis points versus prior year primarily resulting from higher raw material and overhead costs, and restructuring, which was mitigated through pricing, productivity, and higher sales volumes in IP and CCT.
Earnings per share for the second quarter of $0.91 increased 102% versus prior year primarily due to a $37.2 million after-tax loss in 2021 stemming from the asbestos divestiture. Adjusted earnings per share of $0.98 for the second quarter of 2022 increased 4% compared to prior year driven primarily by higher sales and benefits from share repurchases.
Operating cash flow for the year-to-date period increased $285.8 million versus prior year to $54.2 million, compared to an outflow in the prior year of $231.6 million which included a $398.0 million payment to fund the asbestos divestiture. Excluding the impact of the asbestos payment, operating cash flow declined $112.2 million driven by an increase in working capital investments to support volume growth and to mitigate continued supply chain disruptions. Operating cash flow for the
second quarter improved $59.6 million sequentially.
“ITT delivered solid results in the second quarter. We grew organic revenue by 10%, including 25% growth in Connect & Control Technologies. The strong demand and share gains in Industrial
Process and in CCT drove 26% and 17% organic orders growth, respectively, in the second quarter.
We grew adjusted earnings per share sequentially and year over year thanks to strong sales growth and margin expansion at IP and CCT despite a 60 basis point decline in adjusted segment margin driven by supply chain challenges and inflation. And, we deployed nearly $275 million this quarter, bringing our total capital deployed for the first half of 2022 to over $500 million.
As we demonstrated at our investor day, we are well positioned to drive long-term growth and value creation. Motion Technologies continues to win new EV platform awards thanks to our differentiation in innovation and execution and we are making significant progress on pricing. CCT is seeing robust demand for connectors and components, leveraging our strength in aerospace and defense. Lastly, our IP team is driving strong growth in its short-cycle business while leveraging the differentiation of
our portfolio to capture pricing benefits. I am also encouraged by the performance of our recent acquisition, Habonim, in its first quarter as part of ITT,” continued Savi.
Savi concluded, “We keep on delivering and investing in growth and innovation. We ramped up investments in Friction to support new EV awards, and accelerated the product redesigns in IP and CCT to sustain our differentiation. We delivered strong sequential and year-over-year margin improvements in IP and CCT. As we committed, we are executing on capital deployment on all fronts, and stepped up M&A activities and ITT Ventures investments. Collectively, we are building on
our solid foundations, and I am confident in our ability to deliver our long-term financial targets in any environment.”
Motion Technologies revenue decreased primarily due to unfavorable foreign currency translation of $28.6 million. Organic revenue increased 5% due to growth in Friction, strength in Wolverine sealings, and pricing actions. Operating income decreased from $64.7 million to $47.0 million
primarily due to higher raw material inflation, partially offset by pricing and productivity.
Industrial Process revenue increased primarily driven by growth in our short-cycle business within the general industrial and chemical markets, partially offset by a decline in pump projects. Operating income increased from $31.5 million to $39.1 million driven by productivity, pricing, and favorable product mix, partially offset by higher raw material costs.
Connect & Control Technologies revenue increased primarily driven by a strong performance in industrial connectors and strength in aerospace components. Operating income increased from $17.9 million to $28.2 million driven by productivity, higher sales volume and pricing, partially offset by higher raw material costs and unfavorable sales mix.
There is no change to the company’s total revenue, margin, and free cash flow guidance. We continue to expect revenue growth of 7% to 9%, and now expect growth of 10% to 12% on an organic basis; segment operating margin of 17.5% to 18.4%, and adjusted segment operating margin of 17.6% to 18.5%, up 40 to 130 bps; and free cash flow of $250 million to $300 million, representing free cash flow margin of 8% to 10% for the full year. We now expect EPS of $4.12 to $4.45, and adjusted EPS of $4.35 to $4.65, up 7% to 15% for the full year.
The company’s 2022 guidance assumes continued disruptions in the global supply chain stemming from labor shortages, supplier delays, and high raw material prices, which we anticipate will persist throughout 2022. The guidance also assumes a significant reduction in sales in Russia stemming from the war in Ukraine, which we currently estimate will impact revenue by approximately $80 million for the full year.
Investor Conference Call Details ITT’s management will host a conference call for investors on Thursday, August 4 at 8:30 a.m.,
Eastern Time. The briefing can be accessed live via webcast which is available on the company’s website: https://investors.itt.com. 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 Thursday, August 18, 2022, 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.
For more information download the full report here.