28 Oct 11. ITT Corporation (NYSE:ITT – News) reported 2011 third-quarter revenue of $2.98bn and income from continuing operations of $71m. Excluding the impact of separation costs and other adjustments, income from continuing operations for the quarter was $218m, or $1.17 per share, compared with $200m or $1.08 per share, in the prior-year period.
“We are proud of our team for remaining focused on serving our customers to deliver this strong performance, even while executing on the separation of ITT into three strongly positioned, independent companies. I want to thank all of our employees for their diligence and hard work over the last several months,” said Steve Loranger, ITT’s chairman, president and chief executive officer. “The transformation of ITT and the launch of ITT Exelis and Xylem are on track to occur on October 31. The necessary costs to successfully separate into three companies are in line with our previous forecast, and all three new companies are nicely capitalized for future growth.”
Third-Quarter Segment Results
Defense and Information Solutions
Third-quarter 2011 revenue was $1.5bn, an increase of 12 percent compared with the third quarter of 2010. The increase reflects gains in exercised options in key Middle East service programs in the Mission Systems business and strong performance in non-Department of Defense programs in the Information Systems business. Organic orders increased 12 percent to $1.7bn from the comparable period in 2010. The increase was driven by two large Middle East programs which together comprised more than $500m in organic orders. Third-quarter operating income, which included $4m of separation-related costs, was $178m, flat compared with the same period in 2010. Adjusted operating margin for the period declined 110 basis points compared with the same period in 2010. The segment continued to experience operating income compression as a result of the mix of products and services.
Third-quarter 2011 Fluid Technology revenue of $1.1bn was up 17 percent on a year-over-year basis, driven by both acquisitions and organic growth across all businesses. Organic revenue (defined as total revenue excluding foreign exchange and acquisition impacts) was up 8 percent, driven by significant activity in the chemical, oil and gas, mining and emerging markets in the Industrial Process business, as well as strength in global dewatering. Organic orders for the segment were up 13 percent, largely driven by growth in the Industrial Process business, combined with strong dewatering orders. Third-quarter operating income, which included $22m of separation-related costs, was $144m, up 25 percent from the comparable prior-year period, driven by organic revenue growth, strong productivity performance and acquisitions, which more than offset direct material cost increases and strategic investments. Adjusted operating margin for the period increased 300 basis points compared with the same period in 2010.
Motion and Flow Control
Third-quarter 2011 revenue for the Motion and Flow Control segment grew 6 percent, to $386m, on a comparable prior-year basis, as the business experienced strong demand in the automotive, aerospace, medical and rail markets. These growth factors more than offset lower sales in the Interconnect Solutions business. Organic orders were up 1 percent, driven primarily by growth in aerospace, automotive, and oil and gas applications that offset weaker connectors demand.
Third-quarter operating income, which included $1m of separation-related costs, was $49m, up 7 percent from the same period in 2010, as productivity gains, volume and pricing more than offset increased commodity costs. Adjusted operating margin for the period showed a 30 basis point increase over the same period in 2010.
In addition to spinoff-related costs of $93m on an after-tax basis, as
previously disclosed ITT recognized a