itt corporation q2 2012 earnings
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ITT CorporationITT CorporationQ2 2012 Earnings CallAugust 3, 2012g ,
Safe Harbor
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes 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 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 operating or financial performance. Whenever used, words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target" and other terms of similar meaning are intended 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. Factors that could cause results to differ materially from those anticipated include, but are not limited to:
f O f• Uncertainties with respect to our estimation of asbestos liability exposures, third-party recoveries and net cash flow;
• Economic, political and social conditions in the countries in which we conduct our businesses;
• Changes in U.S. or International sales and operations;• Contingencies related to actual or alleged environmental contamination,
claims and concerns and related third party recoveries;D li i di
• Our ability to achieve stated synergies or cost savings from acquisitions or divestitures;
• The number of personal injury claims filed against the Company or the degree of liability;
• Our ability to effect restructuring and cost reduction programs and realize savings from such actions;
• Changes in our effective tax rate as a result in changes in the geographic i i l ti ll t i ti di t t th it• Decline in consumer spending;
• Sales and revenues mix and pricing levels;• Availability of adequate union and non-union labor, commodities, supplies
and raw materials;• Interest and foreign currency exchange rate fluctuations; changes in local
government regulations and compliance therewith;• Competition, industry capacity & production rates; declines in orders or
sales as a result of industry or geographic downturn;
earnings mix, valuation allowances, tax examinations or disputes, tax authority rulings or changes in applicable tax laws;
• Intellectual property matters;• Governmental investigations;• Potential future postretirement benefit plan contributions and other employment
and pension matters;• Susceptibility to market fluctuations and costs as a result of becoming a smaller,
more focused company after the spin off;sales as a result of industry or geographic downturn;• Ability of third parties, including our commercial partners, counterparties,
financial institutions and insurers, to comply with their commitments to us;• Our ability to borrow and availability of liquidity sufficient to meet our
needs;• Changes in the recoverability of goodwill or intangible assets;
more focused company after the spin-off;• Changes in generally accepted accounting principles; and• Other factors set forth in our Annual Report on Form 10−K for the fiscal year
ended December 31, 2011 and our other filings with the Securities and Exchange Commission.
The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
August 3, 2012 P2
Q2 2012 Overview
Q2 Results Exceeded Expectations
Maintaining Adjusted EPS of $1 62-$1 72 andMaintaining Adjusted EPS of $1.62 $1.72 and +5% to +7% Organic Revenue Guidance
+6% Organic Revenue Growth $233M – 3rd Consecutive Industrial Process Shipment Record
+36% Motion Technologies Emerging Market Organic Growth
+18% United States Growth
$0.50 Adjusted EPS Reflect Solid Operating Results +8% vs 2011 Adjusted Pro Forma EPS
+171% Adjusted Free Cash Flow ConversionSolid
171% Adjusted Free Cash Flow Conversion
$38M Gross Share Repurchases
P ti R t t i A ti I iti t d
Execution in Difficult
ConditionsProactive Restructuring Actions Initiated Conditions
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P3
Q2 2012 Execution Highlights
Operational Excellence Lean Improvements Processes
Establishing Efficient Infrastructure Post-Spin
Accelerated Cost Actions and Leverage
Facilities Launched Strategic Lean Initiative
Rebalancing and Optimizing Cost Structure
People Hired New Operational Excellence Facilitators
Premier Customer Experience Developed & Implemented Front-End Configurator Tools
for Advanced Applications
Driving Execution to
Deliver Implemented Inventory Scheduling Program with 3 Major Aerospace Customers
Interconnect Solutions Multiple Supplier Performance Awards Received
Deliver Long-Term
Shareholder Value
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P4
Q2 2012 ITT ResultsContinuing Operations (unaudited) Q2g p ( )
$ millions, except per share amounts 2012 vs 2011
Revenue $568 +3%
Adjusted Segment Operating Income $70 (-15%)
Q
Adjusted Segment Operating Income $70 (-15%)
Adjusted EPS $0.50 +8%*Orders $555 (-3%)
+6% Organic Revenue Global Mining Strength
Chemical & General Industry Process Pump Growth
Global Automotive Share Gains
(-15%) Adjusted Segment Operating Income Recurring Spin Dis-Synergy Costs
PY Gain on Sale of Product Line Global Automotive Share Gains
Oil & Gas Connectors
Communications Connectors
Unfavorable PY Compares
Connectors Volume & Mix
Negative Project Mix Shift at Industrial Process
Solid Net Operating Productivity
FLAT Organic Orders +4% Motion Technologies from Global Auto Wins
1.02x Book-to-Bill at Interconnect Solutions
+8% Adjusted Pro Forma EPS Lower Corporate Expense & Taxes
Lower Interest Expense
Timing of Project Orders and Change in Aerospace Customer Order Patterns
Negative FX
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
*Adjusted EPS growth rate includes pro forma adjustments in 2011 results. Pro Forma adjustments reflect the elimination of interest expense on debt extinguished in connection with the transformation and interest income on cash distribution to the spun-off companies as if the distribution occurred at beginning of the period. August 3, 2012 P5
Q2 2012 Revenue by Major Geographies
Emerging Markets+1%*
United States+18%
Western Europe(-4%)*
Industrial Pump Strength General Industry Chemical Oil & Gas Mining
Automotive Market Market Share Gains
European Auto Production Declines
Unfavorable PY Compares Oil & Gas (Brazil & E. Europe)
China Rail Seats +21% Excluding Oil & Gas
and China Rail SeatMining
Auto Market Gains (Ford) Large European Auto
Manufacturers Production Shift to Eastern Europe
and China Rail Seat Programs
Latin America Mining Process Pumps
Commercial Aerospace Components Connector Market
Conditions
Process Pumps
China Auto & Rail Shocks Market Share Gains
Industrial Strength Middle East Oil & Gas Connectors
Diversification Drives ResultsAugust 3, 2012 P6Q2 2012 Earnings – All Results are Unaudited
For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
*Excluding the Impact of Currency
Energy &
Q2 2012 Total Revenue Growth by Market
Organic +6%Total +3%
RevenueQ2 2012 vs Q2 2011
Energy & Mining
Industrial Processing
+20%
+16%
2011
+12%
Total +3% Processing+16%
+8%
201
2 vs
. Q2
2G
row
th
+4%
Q2
Auto, Rail & Other Transport
Emerging MarketsAerospace &
Defense
General Industrial
Q2 2012
$75M $100M $125M $200M$150M
0%
$25M
Other TransportDefense+1%
$175MAll
Other
$50M
Q2 2012 Revenue
(-10%) Other
End Markets Above Include Emerging Market Results and Exclude the Impact of CurrencyQ2 2012 Earnings – All Results are Unaudited
For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.August 3, 2012 P7
Q2 2012 Segment Operating Margins
+100 bps vs. Q1 2012
( 260) bps Decline vs Q2 2011Q2 2011 Adjusted Segment Operating Margin 14.9%
Volume, Mix, Operating Productivity & Other -0.9%
Growth Investments 0 5%
(-260) bps Decline vs. Q2 2011
Prior Year Gain on Sale
Connector Volume DeclinesGrowth Investments -0.5%
FX 0.3%
Recurring Spin Dis-Synergy Costs* -0.5%
Acquisition/Disposition 1 0%
Incremental Investments
Pricing: Large Industrial Projects G l I d t i lAcquisition/Disposition -1.0%
Q2 2012 Adjusted Segment Operating Margin 12.3%
General Industrial
+190bps Net Operating Productivity: Lean Six Sigma & Global Lean Six Sigma & Global
Sourcing Commodity Cost
Increases
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P8
*Recurring Spin Dis-Synergy Costs are Defined as Incremental Stand-Alone Costs, Resulting from the Spin Transformation
Second Half Tailwinds & Headwinds
Strong 1H Segment Momentum Unfavorable Foreign Currency Trends
HeadwindsTailwindsStrong 1H Segment Momentum
~$500M Backlog at Industrial Process
+7% YTD Orders in Motion Technologies
Unfavorable Foreign Currency Trends
US Uncertainty
Further Step-Down of European Positive Sequential Order Growth at
Interconnect Solutions in Key End Markets
US Strength in Key Markets
p pMarkets
Slowing of Infrastructure Spending in China
Proactive Restructuring Initiated
$50M Gross Productivity Savings in 1HGuidance Maintained
Organic Revenuey g
53% FY Adjusted EPS Mid-Point Already Achieved
Organic Revenue +5% to 7%
Adjusted EPS Range $1 62 $1 72
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P9
$1.62 - $1.72
Segment Financial Results
Q2 2012 Industrial ProcessContinuing Operations (unaudited)
$ millions 2012 vs 2011
Revenue $233 +16%
Q2
Revenue $233 6%
Adjusted Segment Operating Income $29 (-2%)
Q2 Comments
+15% Organic Revenue +32% North American Growth Driven by
All End Markets Served
Q2 Highlights 3rd Consecutive Quarter of Record Shipments
1 02x Book-to-Bill YTD
Q2 Comments
Significant Global Mining Strength
+19% Aftermarket Growth
PY Mega Project - Brazil Oil & Gas Shipment
(-2%) Adjusted Operating Income
1.02x Book to Bill YTD
Nearly $500M Backlog
Key Wins
$7M Chemical API Win(-2%) Adjusted Operating Income Recurring Spin Dis-Synergy Costs
Negative Project Mix Shift
Increased Volume
$7M Chemical API Win
$3M Canadian ANSI Process Pump Order
$2M Argentinean Gold Mining Win
Net Operating Productivity
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P11Book-to-Bill is defined as organic orders divided by organic revenue
Q2 2012 Motion TechnologiesContinuing Operations (unaudited)
$ millions 2012 vs 2011
Revenue $155 (-6%)
Q2
Revenue $155 ( 6%)
Adjusted Segment Operating Income $20 (-7%)
Q2 CommentsQ2 Comments
+5% Organic Revenue
+4% Global Automotive Due to Market Share Gains
( 3%) E A t ti D li
Q2 Highlights
+36% Emerging Market Topline Expansion Excluding Negative FX Impact
(-3%) European Automotive Declines
+25% Global Rail Shock Strength
(-7%) Adjusted Operating Income W i Chi F ilit St t i I t t
+28% North America Revenue Growth
+7% Organic Order Auto Growth
Key Platform Production Starts Wuxi, China Facility Strategic Investment
Reduced Aftermarket
Negative FX Impact
Net Operating Productivity
BMW S3 (Largest BMW Platform) – Europe & N. America
VW Shanghai for Skoda – China
Ford Fusion/Mondeo – Global
Toyota X86 – Japan
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P12
Increase in VolumesToyota X86 Japan
Q2 2012 Interconnect SolutionsContinuing Operations (unaudited)
$ millions 2012 vs 2011
Revenue $100 (-8%)
Q2
Revenue $100 ( 8%)
Adjusted Segment Operating Income $6 (-61%)
Q2 CommentsQ2 Comments
(-5%) Organic Revenue
+38% Oil & Gas Connectors
E S ft
Q2 Highlights
Sequential Improvement in Orders, Revenues & Segment Operating Income
European Softness
Communication Connectors
(-61%) Adjusted Operating Income
2nd Consecutive Quarter of Book-to-Bill >1.02x
Key Wins
$2.0M High-Speed Rail Connector Win Lower Volumes & Negative Mix Shift
PY Gain on Sale of Product Line
Net Operating Productivity
$1.6M Oil & Gas Connectors – Saudi Arabia
Downhole Exploration Equipment Project – China
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P13Book-to-Bill is defined as organic orders divided by organic revenue
Q2 2012 Control TechnologiesContinuing Operations (unaudited)
$ millions 2012 vs 2011
Revenue $81 (-3%)
Q2
Revenue $81 ( 3%)
Adjusted Segment Operating Income $15 (-4%)
Q2 Comments
(-2%) Organic Revenue Unfavorable PY Compares (China Rail Seats)
+7% Commercial Aerospace Components
Q2 Highlights +4% Revenue Growth Excluding Impact of
PY China Rail Seat Program
Q2 Comments
+7% Commercial Aerospace Components
+4% General Industrial Global Growth
(-4%) Adjusted Operating Income Lower Volumes
Implemented Inventory Scheduling Program with 3 Major Aerospace Customers
Key Wins
$5.0M Aerospace Actuator Win
Negative FX Impact
Strategic Incremental Growth Investments
Pricing & Positive Mix Shift
$5.0M Aerospace Actuator Win
$1.5M Aerospace Hydraulic Shutoff Valve Order
Net Operating Productivity
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P14
Q2 2012 ITT Segment Performance
Q2 2012 Total Revenue vs PY 16.2% -5.7% -8.0% -2.5% 2.7%
Motion Technologies
Industrial Process
Interconnect Solutions
Control Technologies
Total Segments
FX 2.9% 10.6% 2.4% 0.2% 4.7%
Acquisition/Disposition -4.0% 0.0% 1.0% 0.0% -1.2%
Q2 2012 O i R PY 1 1% 4 9% 4 6% 2 3% 6 2%Q2 2012 Organic Revenue vs PY 15.1% 4.9% -4.6% -2.3% 6.2%
Q2 2011 Adjusted Operating Margin 14.6% 13.2% 14.1% 19.0% 14.9%
Volume, Mix, Operating Productivity & Other -0.1% 0.5% -4.8% 1.0% -0.9%
Growth Investments -0.6% -1.1% 0.1% -0.5% -0.5%
FX 0.3% 0.5% 0.3% -0.6% 0.3%
Recurring Spin Dis-Synergy Costs -1.1% -0.1% 0.0% -0.2% -0.5%
Acquisition/Disposition -0.8% 0.0% -3.8% 0.0% -1.0%
Q2 2012 Adjusted Operating Margin 12.3% 13.0% 5.9% 18.7% 12.3%
Q2 2012 Earnings – All Results are Unaudited For non-GAAP reconciliations, refer to appendix and www.itt.com/ir.
August 3, 2012 P15
Appendix
Key Performance Indicators and Non-GAAP MeasuresManagement reviews key performance indicators including revenue, segment operating income and margins, earnings per share, orders growth, and backlog, among others. In addition, we consider certain measures to be useful to
t d i t h l ti ti f f th i d t d Thmanagement and investors when evaluating our operating performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and management of assets from period to period. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including, but not limited to, dividends, acquisitions and share repurchases. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for measures determined in accordance with GAAP. We consider the following non-GAAP measures which may not be comparable to similarly titled measures reported by other companies to be key performancemeasures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators for purposes of this REG-G reconciliation.
Organic Revenues and Orders are defined as revenues and orders excluding the impact of foreign currency fluctuations and contributions from acquisitions and divestitures made during the current year. Divestitures include sales of insignificant portions of our business that did not meet the criteria for presentation as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the p p g g g y g gprior period.
Adjusted Segment Operating Income and Adjusted Segment Operating Margin are defined as operating income, adjusted to exclude costs incurred in connection with the Transformation, restructuring charges and spin-related repositioning charges; and adjusted segment operating margin defined as adjusted segment operating income divided by total revenue. Spin-related repositioning charges are expenses to reposition the post-Transformation organization to its full operating structure and primarily consisting of transition services agreement exit costs advisory fees and otherfull operating structure and primarily consisting of transition services agreement exit costs, advisory fees and other redesign actions related to the new company structure.
Adjusted Pro Forma Income from Continuing Operations and Adjusted Pro Forma EPS from Continuing Operations are defined as income from continuing operations and income from continuing operations per diluted share, adjusted to exclude special items and include pro forma adjustments. Special items may include, but are not limited to, asbestos-related costs, transformation and repositioning costs, restructuring costs and asset impairment charges, income , p g , g p g ,tax settlements or adjustments and other unusual and infrequent non-operating items. Special items represent significant charges or credits that impact current results, but may not be related to the Company’s ongoing operations and performance. Pro Forma adjustments in 2011 reflect the elimination of interest expense as if repayment of $1,250M of long term debt occurred January 1 and elimination of interest income as if $400M of aggregate cash was distributed to the spun-off companies on January 1.
Adj t d F C h Fl i d fi d t h id d b ti ti iti l it l dit hAdjusted Free Cash Flow is defined as net cash provided by operating activities less capital expenditures, cash payments for transformation costs, repositioning costs, net asbestos cash flows and other significant items that impact current results which management believes are not related to our ongoing operations and performance. Due to other financial obligations and commitments, the entire free cash flow may not be available for discretionary purposes..
Q2 2012 Earnings – All Results are Unaudited August 3, 2012 P17
ITT Corporation Non-GAAP ReconciliationReported vs. Organic Revenue / Order GrowthReported vs. Organic Revenue / Order Growth
Second Quarter 2012 & 2011
($ 000's)
(A) (B) (C) (D) (E) = B+C+D (F) = E / A
Change % ChangeAcquisition / Divestitures FX Impact Change % Change
3M 2012 3M 2011 2012 vs. 2011 2012 vs. 2011 3M 2012 3M 2012 Adj. 12 vs. 11 Adj. 12 vs. 11
(As Reported - GAAP) (As Adjusted - Organic)
Revenues
ITT Corporation - Consolidated 567.5 552.4 15.1 2.7% (6.9) 25.9 34.1 6.2%
Industrial Process 233.0 200.5 32.5 16.2% (8.0) 5.8 30.3 15.1%Motion Technologies 155.1 164.4 (9.3) -5.7% 0.0 17.3 8.0 4.9%Interconnect Solutions 99.9 108.6 (8.7) -8.0% 1.1 2.6 (5.0) -4.6%Control Technologies 81.1 83.2 (2.1) -2.5% 0.0 0.2 (1.9) -2.3%Control Technologies 81.1 83.2 (2.1) 2.5% 0.0 0.2 (1.9) 2.3%
Orders
Total Segment Orders 555.4 572.0 (16.6) -2.9% (8.2) 22.7 (2.1) -0.4%
Industrial Process 227.1 225.3 1.8 0.8% (9.3) 3.4 (4.1) -1.8%Motion Technologies 151.6 161.0 (9.4) -5.8% 0.0 16.3 6.9 4.3%Interconnect Solutions 102.2 105.9 (3.7) -3.5% 1.1 2.8 0.2 0.2%Control Technologies 76.2 81.7 (5.5) -6.7% 0.0 0.3 (5.2) -6.4%
Note: Excludes intercompany eliminations Immaterial differences due to rounding
August 3, 2012 P18Q2 2012 Earnings – All Results are Unaudited
Immaterial differences due to rounding
ITT Corporation Reported vs Adjusted Segment Operating Income & OI Margin
S d Q t f 2012 & 2011Second Quarter of 2012 & 2011
3M 2012 3M 2012 3M 2012 3M 2012 3M 2011 3M 2011 3M 2011 3M 2011 % Change % Change
As Reported Special Items Restructuring As Adjusted As Reported Special Items Restructuring As AdjustedAs Reported 12
vs. 11As Adjusted
12 vs. 11
Revenue:
($ 000's)
Revenue:Industrial Process 233.0 233.0 200.5 200.5 16.2% 16.2%Motion Technologies 155.1 155.1 164.4 164.4 -5.7% -5.7%Interconnect Solutions 99.9 99.9 108.6 108.6 -8.0% -8.0%Control Technologies 81.1 81.1 83.2 83.2 -2.5% -2.5%Intersegment eliminations (1.6) (1.6) (4.3) (4.3) -62.8% -62.8% Total Revenue 567.5 567.5 552.4 552.4 2.7% 2.7%
Operating Margin:Industrial Process 11.9% 40 BP - BP 12.3% 14.6% - BP - BP 14.6% (270) BP (230) BPMotion Technologies 13.0% - BP - BP 13.0% 13.2% - BP - BP 13.2% (20) BP (20) BPInterconnect Solutions 5.5% 20 BP 20 BP 5.9% 14.1% - BP - BP 14.1% (860) BP (820) BPControl Technologies 17.9% - BP 80 BP 18.7% 18.5% (10) BP 60 BP 19.0% (60) BP (30) BP Total Operating Segments 12.0% 20 BP 10 BP 12.3% 14.7% 10 BP 10 BP 14.9% (270) BP (260) BP
Income:Industrial Process 27.7 1.0 0.0 28.7 29.2 0.0 (0.0) 29.3 -5.1% -1.9%Motion Technologies 20.2 0.0 0.0 20.2 21.7 0.0 0.0 21.7 -6.8% -6.8%Interconnect Solutions 5.5 0.1 0.2 5.9 15.3 0.0 (0.0) 15.3 -63.8% -61.5%Control Technologies 14.5 0.0 0.6 15.2 15.4 0.0 0.5 15.9 -5.4% -4.4% Total Segment Operating Income 67.9 1.1 0.9 69.9 81.6 0.1 0.5 82.2 -16.8% -14.9%
Note: Immaterial differences due to rounding.
August 3, 2012 P19Q2 2012 Earnings – All Results are Unaudited
ITT Corporation Non-GAAP ReconciliationReported vs. Adjusted Income from Continuing Operations & Adjusted EPS
S Q f &
Change Percent ChangeQ2 2012 Non-GAAP Q2 2012 Q2 2011 Non-GAAP Pro Forma Q2 2011 2012 vs. 2011 2012 vs. 2011
As Reported Adjustments As Adjusted As Reported Adjustments Adjustments As Adjusted As Adjusted As Adjusted
Second Quarter of 2012 & 2011(Unaudited)
($ Millions, except EPS and shares)
Segment Operating Income 67.9 2.0 #A 69.9 81.6 0.6 #A - 82.2
Interest Income (Expense) (2.0) - (2.0) (21.1) - 17.0 #D (4.1) Other Income (Expense) (1.4) - (1.4) 0.5 - - 0.5 Gain on sale of Assets - - - 2.4 - - 2.4 Corporate (Expense) (10.2) 8.8 #B (1.4) (35.0) 20.2 #C - (14.8)
Income (Loss) from Continuing Operations before Tax 54.3 10.8 65.1 28.4 20.8 17.0 66.2
Income Tax (Expense) Benefit (37.6) 19.2 #E (18.4) (9.7) (6.9) (6.4) (23.0)
Income (Loss) from Continuing Operations 16.7 30.0 46.7 18.7 13.9 10.6 43.2
EPS from Continuing Operations 0.18 0.32 #F 0.50 0.20 0.15 #F 0.11 #F 0.46 0.04 8%
Note: Amounts may not calculate due to roundingNote: Amounts may not calculate due to rounding.
#A - Segment operating income in 2012 includes Transformation costs ($1.1M) and Restructuring costs of ($0.9M) and 2011 includes Transformation costs ($0.1M) and Restructuring costs of ($0.5M).#B - Includes transformation costs ($3.4M); Quarterly asbestos provision ($9.6M); Repositioning ($2.1); Restructuring ($0.4); offset by Environmental insurance receivable $6.7.#C - Transformation costs ($4.6M); Quarterly asbestos provision ($15.6M)#D - Pro forma adjustment reflects elimination of interest expense as if repayment of $1,250M of long term debt occurred January 1 and elimination of interest income as if $400M of aggregate cash was distributed to Exelis and Xylem on January 1#E - Includes valuation allowance on US deferred tax assets.
#F - Adjustments to EPS from Continuing OperationsRestructuring net of related tax benefit 0 01 -Restructuring, net of related tax benefit 0.01 - Transformation costs, net of related tax benefit 0.03 0.03 Repositioning Costs, net of related tax benefit 0.01 Environmental insurance receivable (0.04) - Asbestos, net of related tax benefit 0.06 0.12 Valuation allowance on US deferred tax assets. 0.25 - Pro forma interest expense adjustments, net of tax benefit - 0.11
Adjustments to EPS from Continuing Operations 0.32 0.26
August 3, 2012 P20Q2 2012 Earnings – All Results are Unaudited
Note: Immaterial differences due to rounding
ITT Corporation Non-GAAP Reconciliation Net Cash - Operating Activities vs. Adjusted Free Cash Flow Conversion
Second Quarter 2012 & 2011
6M 2012 6M 2011
($ 000's)
Net Cash - Operating Activities 103.1 (169.2)
Capital Expenditures 29.7 37.1
Free Cash Flow, including Transformation 73.4 (206.3)
Transformation Capex 1.9 0.0
Transformation Cash Payments 40.3 57.4
Repositioning Cash Payments 0.9 0.0
Net Asbestos Cash Payments, Pre-Tax 16.3 12.0
Discretionary Pension Contributions, net of tax 9.5 0.0
Adjusted Free Cash Flow 142.3 (136.9)
Income from Continuing Operations 26.9 (2.8)
Special Items (including Transformation & Repositioning Costs) 56.1 88.2
Income from Continuing Operations, ExcludingS i l It 83 0 85 4
August 3, 2012 P21Q2 2012 Earnings – All Results are Unaudited
Special Items 83.0 85.4
Adjusted Free Cash Flow Conversion 171% NA
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