ITT Reports 2023 Third Quarter Earnings Per Share (EPS) of $1.34, Adjusted EPS of $1.37
- 9% revenue growth (5% organic) driven by pump projects and aftermarket, aerospace and defense components, and Friction OE outperformance
- 19.1% segment operating margin (19.4% adjusted), 150 basis points expansion (120 basis points adjusted); segment operating income increased 19% (17% adjusted)
- Year-to-date operating cash flow of
$368 million , free cash flow of$299 million
- Raising 2023 full year guidance across all metrics
Third quarter segment operating income of
EPS for the third quarter of
Operating cash flow for the third quarter of
Table 1. Third Quarter Performance
|
Q3 2023 |
|
Q3 2022 |
|
Change |
||||||
Revenue |
$ |
822.1 |
|
$ |
753.6 |
|
9.1 |
% |
|||
Organic Growth |
|
|
|
|
5.4 |
% |
|||||
Segment Operating Income |
$ |
157.3 |
|
$ |
132.4 |
18.8 |
% |
||||
Segment Operating Margin |
|
19.1 |
% |
|
17.6 |
% |
150 |
bps |
|||
Adjusted Segment Operating Income |
$ |
159.7 |
|
$ |
136.8 |
16.7 |
% |
||||
Adjusted Segment Operating Margin |
|
19.4 |
% |
|
18.2 |
% |
120 |
bps |
|||
Earnings Per Share |
$ |
1.34 |
|
$ |
1.23 |
|
8.9 |
% |
|||
Adjusted Earnings Per Share |
$ |
1.37 |
|
$ |
1.20 |
|
14.2 |
% |
|||
Operating Cash Flow |
$ |
169.8 |
|
$ |
61.0 |
|
178.4 |
% |
|||
Free Cash Flow |
$ |
147.6 |
|
$ |
34.8 |
|
324.1 |
% |
|||
Note: all results unaudited; dollars in millions except for per share amounts |
Management Commentary
“In Q3, we continued to generate strong growth and execute on all fronts. Our teams drove share gains in automotive and rail, large project growth and aftermarket demand in pumps and valves, and growth in aerospace and defense. Once again, we delivered strong year-over-year and sequential segment margin expansion, and are accelerating towards our 20% long-term target. We also generated more than
Table 2. Third Quarter Segment Results
|
|
Revenue |
|
Operating Income |
|
||||||||||||
|
|
Q3 2023 |
Reported Increase |
Organic Growth |
|
Q3 2023 |
Reported Increase |
Adjusted Increase |
|
||||||||
|
Motion Technologies |
$ |
359.5 |
|
5.1 % |
|
0.6 % |
|
|
$ |
59.4 |
|
10.0 % |
|
12.8 % |
|
|
|
Industrial Process |
|
279.8 |
|
12.6 % |
|
10.9 % |
|
|
|
64.7 |
|
34.5 % |
|
24.4 % |
|
|
|
Connect & Control Technologies |
|
184.0 |
|
12.7 % |
|
7.7 % |
|
|
|
33.2 |
|
9.6 % |
|
10.6 % |
|
|
|
Total Segment Results |
|
822.1 |
|
9.1 % |
|
5.4 % |
|
|
|
157.3 |
|
18.8 % |
|
16.7 % |
|
|
Note: all results unaudited; excludes intercompany eliminations of |
Motion Technologies revenue increased
Industrial Process revenue increased
Connect & Control Technologies revenue increased
2023 Guidance
We now expect revenue growth of approximately 9%, up 7% to 8% on an organic basis; segment operating margin of 17.9% to 18.5% and adjusted segment operating margin of 18.3% to 18.9%, up 110 bps to 170 bps; EPS of
*It is not possible, without unreasonable efforts, to estimate the impacts of foreign currency fluctuations, acquisitions and certain other special items that may occur in 2023 as these items are inherently uncertain and difficult to predict. As a result, we are unable to quantify certain amounts that would be included in a reconciliation of organic revenue growth and adjusted segment operating margin to the most directly comparable GAAP financial measures without unreasonable efforts and accordingly we have not provided reconciliations for these forward-looking non-GAAP financial measures.
Investor Conference Call Details
ITT’s management will host a conference call for investors on
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. In addition, the conference call (including the financial results presentation material) may include, and officers and representatives of ITT may from time to time make and discuss, projections, goals, assumptions, and statements that may constitute “forward-looking statements”. These forward-looking statements are not historical facts, but rather represent only a belief regarding future events 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, by their nature, many are inherently unpredictable and outside of ITT’s control, 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, we cannot provide any 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:
- volatility in raw material prices and our suppliers’ ability to meet quality and delivery requirements;
- uncertain global economic and capital markets conditions, which have been influenced by the COVID-19 pandemic, the Israel-Hamas conflict, the ongoing
Russia -Ukraine war, inflation, changes in monetary policies, slowing growth and the threat of a possible global economic recession, trade disputes between theU.S. and its trading partners, political and social unrest, instability in the global banking system and the availability and fluctuations in prices of energy and commodities, including steel, oil, copper and tin;
- impacts on our business stemming from continued supply chain disruptions and raw material shortages, which have resulted in increased costs and reduced availability of key commodities and other necessary services;
- our inability to hire or retain key personnel;
- fluctuations in foreign currency exchange rates and the impact of such fluctuations on our revenues, customer demand for our products and on our hedging arrangements;
- failure to manage the distribution of products and services effectively;
- fluctuations in interest rates and the impact of such fluctuations on customer behavior and on our cost of debt;
- failure to compete successfully and innovate in our markets;
- failure to protect our intellectual property rights or violations of the intellectual property rights of others;
- the extent to which there are quality problems with respect to manufacturing processes or finished goods;
- the risk of cybersecurity breaches or failure of any information systems used by the Company, including any flaws in the implementation of any enterprise resource planning systems, as well as similar breaches or failures affecting our business partners or service providers;
- loss of or decrease in sales from our most significant customers;
- risks due to our operations and sales outside the
U.S. and in emerging markets, including the imposition of tariffs and trade sanctions;
- fluctuations in demand or customers’ levels of capital investment, including as a result of the tentatively-settled
United Automobile Workers (UAW) strike at the production facilities of some of our customers; and maintenance expenditures, especially in the energy, chemical and mining markets;
- the impacts on our business from Russia’s war with
Ukraine , and the global response to it;
- the risk of material business interruptions, particularly at our manufacturing facilities;
- risk of liabilities from past divestitures and spin-offs;
- failure of portfolio management strategies, including cost-saving initiatives, to meet expectations;
- 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;
- fluctuations in our effective tax rate, including as a result of the passage of the Inflation Reduction Act of 2022 and other possible tax reform legislation in the
U.S. and other jurisdictions;
- changes in environmental laws or regulations, discovery of previously unknown or more extensive contamination, or the failure of a potentially responsible party to perform;
- increased scrutiny from investors, lenders and other market participants regarding our environmental, social and governance and sustainability responsibilities, which could expose us to additional costs and adversely impact our reputation, business, financial performance and growth;
- failure to comply with the
U.S. Foreign Corrupt Practices Act (or other applicable anti-corruption legislation), export controls and trade sanctions;
- risk of product liability claims and litigation; and
- changes in laws relating to the use and transfer of personal and other information.
The forward-looking statements included in this release speak only as of the date hereof. We undertake no obligation (and expressly disclaim any obligation) to update any forward-looking statements, whether written or oral or as a result of new information, future events or otherwise.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||||
Revenue | $ |
822.1 |
$ |
753.6 |
$ |
2,453.9 |
$ |
2,213.1 |
|||||
Cost of revenue |
542.7 |
520.2 |
1,632.6 |
1,539.1 |
|||||||||
Gross profit |
279.4 |
233.4 |
821.3 |
674.0 |
|||||||||
General and administrative expenses |
66.9 |
47.5 |
203.6 |
164.9 |
|||||||||
Sales and marketing expenses |
44.4 |
39.5 |
131.2 |
118.3 |
|||||||||
Research and development expenses |
25.0 |
24.4 |
77.1 |
73.7 |
|||||||||
Operating income |
143.1 |
122.0 |
409.4 |
317.1 |
|||||||||
Interest and non-operating expense, net |
1.4 |
2.3 |
7.4 |
2.6 |
|||||||||
Income from continuing operations before income tax expense |
141.7 |
119.7 |
402.0 |
314.5 |
|||||||||
Income tax expense |
29.9 |
16.4 |
80.6 |
59.9 |
|||||||||
Income from continuing operations |
111.8 |
103.3 |
321.4 |
254.6 |
|||||||||
Loss from discontinued operations, net of tax benefit of |
- |
(0.1) |
- |
(1.3) |
|||||||||
Net income |
111.8 |
103.2 |
321.4 |
253.3 |
|||||||||
Less: Income attributable to noncontrolling interests |
1.0 |
0.8 |
2.4 |
1.5 |
|||||||||
Net income attributable to |
$ |
110.8 |
$ |
102.4 |
$ |
319.0 |
$ |
251.8 |
|||||
Amounts attributable to |
|||||||||||||
Income from continuing operations | $ |
110.8 |
$ |
102.5 |
$ |
319.0 |
$ |
253.1 |
|||||
Loss from discontinued operations, net of tax |
- |
(0.1) |
- |
(1.3) |
|||||||||
Net income attributable to |
$ |
110.8 |
$ |
102.4 |
$ |
319.0 |
$ |
251.8 |
|||||
Earnings (loss) per share attributable to |
|||||||||||||
Basic: | |||||||||||||
Continuing operations | $ |
1.35 |
$ |
1.24 |
$ |
3.87 |
$ |
3.03 |
|||||
Discontinued operations |
- |
- |
- |
(0.02) |
|||||||||
Net income | $ |
1.35 |
$ |
1.24 |
$ |
3.87 |
$ |
3.01 |
|||||
Diluted: | |||||||||||||
Continuing operations | $ |
1.34 |
$ |
1.23 |
$ |
3.86 |
$ |
3.02 |
|||||
Discontinued operations |
- |
- |
- |
(0.02) |
|||||||||
Net income | $ |
1.34 |
$ |
1.23 |
$ |
3.86 |
$ |
3.00 |
|||||
Weighted average common shares – basic |
82.1 |
82.7 |
82.4 |
83.6 |
|||||||||
Weighted average common shares – diluted |
82.5 |
83.0 |
82.7 |
83.9 |
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) | |||||||
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) | |||||||
2023 |
2022 |
||||||
As of the Period Ended | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ |
430.8 |
$ |
561.2 |
|||
Receivables, net |
674.0 |
628.8 |
|||||
Inventories |
574.3 |
533.9 |
|||||
Other current assets |
102.4 |
112.9 |
|||||
Total current assets |
1,781.5 |
1,836.8 |
|||||
Non-current assets: | |||||||
Plant, property and equipment, net |
523.2 |
526.8 |
|||||
1,001.1 |
964.8 |
||||||
Other intangible assets, net |
123.0 |
112.8 |
|||||
Other non-current assets |
373.5 |
339.1 |
|||||
Total non-current assets |
2,020.8 |
1,943.5 |
|||||
Total assets | $ |
3,802.3 |
$ |
3,780.3 |
|||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Commercial paper and current maturities of long-term debt | $ |
245.4 |
$ |
451.0 |
|||
Accounts payable |
408.1 |
401.1 |
|||||
Accrued and other current liabilities |
390.5 |
333.4 |
|||||
Total current liabilities |
1,044.0 |
1,185.5 |
|||||
Non-current liabilities: | |||||||
Postretirement benefits |
132.0 |
137.2 |
|||||
Other non-current liabilities |
207.1 |
200.2 |
|||||
Total non-current liabilities |
339.1 |
337.4 |
|||||
Total liabilities |
1,383.1 |
1,522.9 |
|||||
Shareholders’ equity: | |||||||
Common stock: | |||||||
Authorized – 250.0 shares, |
|||||||
Issued and outstanding – 82.1 shares and 82.7 shares, respectively |
82.1 |
82.7 |
|||||
Retained earnings |
2,705.8 |
2,509.7 |
|||||
Accumulated other comprehensive loss: | |||||||
Postretirement benefit plans |
3.8 |
3.6 |
|||||
Cumulative translation adjustments |
(382.6) |
(347.9) |
|||||
Total accumulated other comprehensive loss |
(378.8) |
(344.3) |
|||||
2,409.1 |
2,248.1 |
||||||
Noncontrolling interests |
10.1 |
9.3 |
|||||
Total shareholders’ equity |
2,419.2 |
2,257.4 |
|||||
Total liabilities and shareholders’ equity | $ |
3,802.3 |
$ |
3,780.3 |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
(IN MILLIONS) | |||||||
For the Nine Months Ended | 2023 |
2022 |
|||||
Operating Activities | |||||||
Income from continuing operations attributable to |
$ |
319.0 |
$ |
253.1 |
|||
Adjustments to income from continuing operations: | |||||||
Depreciation and amortization |
82.8 |
81.5 |
|||||
Equity-based compensation |
15.1 |
13.6 |
|||||
Gain on sale of business |
(7.2) |
- |
|||||
Other non-cash charges, net |
22.5 |
20.2 |
|||||
Changes in assets and liabilities: | |||||||
Change in receivables |
(54.7) |
(120.8) |
|||||
Change in inventories |
(40.9) |
(111.3) |
|||||
Change in contract assets |
0.5 |
(15.6) |
|||||
Change in contract liabilities |
11.1 |
24.4 |
|||||
Change in accounts payable |
16.5 |
54.0 |
|||||
Change in accrued expenses |
29.4 |
(30.6) |
|||||
Change in income taxes |
(2.1) |
(12.1) |
|||||
Other, net |
(24.4) |
(41.2) |
|||||
367.6 |
115.2 |
||||||
Investing Activities | |||||||
Capital expenditures |
(68.5) |
(73.7) |
|||||
Proceeds from sale of business |
10.5 |
- |
|||||
Acquisitions, net of cash acquired |
(79.3) |
(146.9) |
|||||
Payments to acquire interest in unconsolidated subsidiaries |
(1.4) |
(25.6) |
|||||
Other, net |
(3.3) |
1.4 |
|||||
(142.0) |
(244.8) |
||||||
Financing Activities | |||||||
Commercial paper, net borrowings |
(204.3) |
363.1 |
|||||
Share repurchases under repurchase plan |
(60.0) |
(245.6) |
|||||
Payments for taxes related to net share settlement of stock incentive plans |
(6.7) |
(8.5) |
|||||
Dividends paid |
(71.9) |
(66.1) |
|||||
Other, net |
(2.3) |
0.1 |
|||||
(345.2) |
43.0 |
||||||
Exchange rate effects on cash and cash equivalents |
(10.4) |
(46.3) |
|||||
Net cash – operating activities of discontinued operations |
(0.2) |
(0.1) |
|||||
Net change in cash and cash equivalents |
(130.2) |
(133.0) |
|||||
Cash and cash equivalents – beginning of year (includes restricted cash of |
561.9 |
648.3 |
|||||
Cash and Cash Equivalents – end of year (includes restricted cash of |
$ |
431.7 |
$ |
515.3 |
|||
Supplemental Disclosures of Cash Flow Information | |||||||
Cash paid during the year for: | |||||||
Interest | $ |
12.3 |
$ |
5.7 |
|||
Income taxes, net of refunds received | $ |
72.0 |
$ |
63.5 |
Key Performance Indicators and Non-GAAP Measures
Management reviews a variety of key performance indicators including revenue, segment operating income and margins, earnings per share, order growth, and backlog, some of which are calculated on a non-GAAP basis. In addition, we consider certain measures to be useful to management 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, acquisitions, dividends, and share repurchases. Some of these metrics, however, are not measures of financial performance under accounting principles generally accepted in |
|
Organic Revenues and Organic Orders are defined, respectively, as revenue and orders, excluding the impacts of foreign currency fluctuations and acquisitions. The period-over-period change resulting from foreign currency fluctuations is estimated using a fixed exchange rate for both the current and prior periods. We believe that reporting organic revenue and organic orders provides useful information to investors by helping identify underlying trends in our business and facilitating comparisons of our revenue performance with prior and future periods and to our peers. | |
Adjusted Operating Income and Adjusted Segment Operating Income are defined, respectively, as total operating income and segment operating income, adjusted to exclude special items that include, but are not limited to, restructuring, certain asset impairment charges, certain acquisition-related impacts, and unusual or infrequent operating items. Special items represent charges or credits that impact current results, which management views as unrelated to the Company's ongoing operations and performance. Adjusted Operating Margin and Adjusted Segment Operating Margin are defined as adjusted operating income or adjusted segment operating income, respectively, divided by revenue. We believe these financial measures are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors. | |
Adjusted Income from Continuing Operations is defined as income from continuing operations attributable to |
|
Free Cash Flow is defined as net cash provided by operating activities less capital expenditures. Free Cash Flow Margin is defined as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin provides useful information to investors as it provides insight into a primary cash flow metric used by management to monitor and evaluate cash flows generated by our operations. |
Reported vs. Organic Revenue / Orders | |||||||||||||||||||||||||
Third Quarter 2023 & 2022 | |||||||||||||||||||||||||
(In Millions) | |||||||||||||||||||||||||
(all amounts unaudited) | |||||||||||||||||||||||||
(As Reported - GAAP) | (As Adjusted - Organic) | ||||||||||||||||||||||||
(A) | (B) | (C) | (D) | (E) | (F) = A-D-E | (G) =C-D-E | (H) = G / B | ||||||||||||||||||
$ Change | % Change | Revenue / | $ Change | % Change | |||||||||||||||||||||
2023 vs. 2022 |
2023 vs. 2022 |
Acquisitions | FX Impact | Orders |
Adj. 2023 |
Adj. 2023 vs. 2022 |
|||||||||||||||||||
Q3 2023 | Q3 2022 | Q3 2023 | Q3 2023 | Q3 2023 | |||||||||||||||||||||
Revenue | |||||||||||||||||||||||||
$ |
822.1 |
$ |
753.6 |
$ |
68.5 |
9.1% |
$ |
6.0 |
$ |
21.6 |
$ |
794.5 |
$ |
40.9 |
5.4% |
||||||||||
Motion Technologies |
|
359.5 |
|
342.2 |
|
17.3 |
5.1% |
|
- |
|
15.3 |
|
344.2 |
|
2.0 |
0.6% |
|||||||||
Industrial Process |
|
279.8 |
|
248.5 |
|
31.3 |
12.6% |
|
- |
|
4.1 |
|
275.7 |
|
27.2 |
10.9% |
|||||||||
Connect & Control Technologies |
|
184.0 |
|
163.2 |
|
20.8 |
12.7% |
|
6.0 |
|
2.2 |
|
175.8 |
|
12.6 |
7.7% |
|||||||||
Orders | |||||||||||||||||||||||||
$ |
824.1 |
$ |
780.9 |
$ |
43.2 |
5.5% |
$ |
4.9 |
$ |
22.3 |
$ |
796.9 |
$ |
16.0 |
2.0% |
||||||||||
Motion Technologies |
|
366.6 |
|
342.3 |
|
24.3 |
7.1% |
|
- |
|
15.6 |
|
351.0 |
|
8.7 |
2.5% |
|||||||||
Industrial Process |
|
270.8 |
|
271.9 |
|
(1.1) |
(0.4%) |
|
- |
|
4.7 |
|
266.1 |
|
(5.8) |
(2.1%) |
|||||||||
Connect & Control Technologies |
|
187.4 |
|
167.4 |
|
20.0 |
11.9% |
|
4.9 |
|
2.0 |
|
180.5 |
|
13.1 |
7.8% |
|||||||||
Note: Excludes intercompany eliminations | |||||||||||||||||||||||||
Immaterial differences due to rounding |
Reported vs Adjusted Segment Operating Income & Segment Operating Margin | ||||||||||||||||||||||||||
Third Quarter 2023 & 2022 | ||||||||||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||||
(all amounts unaudited) | ||||||||||||||||||||||||||
Q3 2023 | Q3 2023 | Q3 2023 | Q3 2022 | Q3 2022 | Q3 2022 | % Change | % Change | |||||||||||||||||||
As Reported |
Special Items |
As Adjusted |
As Reported |
Special Items |
As Adjusted |
As Reported 2023 vs. 2022 |
As Adjusted 2023 vs. 2022 |
|||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Motion Technologies |
$ |
359.5 |
$ |
359.5 |
$ |
342.2 |
$ |
342.2 |
5.1% |
5.1% |
||||||||||||||||
Industrial Process |
|
279.8 |
|
279.8 |
|
248.5 |
|
248.5 |
12.6% |
12.6% |
||||||||||||||||
Connect & Control Technologies |
|
184.0 |
|
184.0 |
|
163.2 |
|
163.2 |
12.7% |
12.7% |
||||||||||||||||
Intersegment eliminations |
|
(1.2) |
|
(1.2) |
|
(0.3) |
|
(0.3) |
||||||||||||||||||
Total Revenue |
$ |
822.1 |
$ |
822.1 |
$ |
753.6 |
$ |
753.6 |
9.1% |
9.1% |
||||||||||||||||
Operating Margin: | ||||||||||||||||||||||||||
Motion Technologies |
|
16.5% |
|
50 |
BP |
|
17.0% |
|
15.8% |
|
- |
BP |
|
15.8% |
70 |
BP |
120 |
BP | ||||||||
Industrial Process |
|
23.1% |
|
20 |
BP |
|
23.3% |
|
19.4% |
|
170 |
BP |
|
21.1% |
370 |
BP |
220 |
BP | ||||||||
Connect & Control Technologies |
|
18.0% |
|
20 |
BP |
|
18.2% |
|
18.6% |
|
- |
BP |
|
18.6% |
(60) |
BP |
(40) |
BP | ||||||||
Total Operating Segments |
|
19.1% |
|
30 |
BP |
|
19.4% |
|
17.6% |
|
60 |
BP |
|
18.2% |
150 |
BP |
120 |
BP | ||||||||
Operating Income: | ||||||||||||||||||||||||||
Motion Technologies |
$ |
59.4 |
$ |
1.6 |
$ |
61.0 |
$ |
54.0 |
$ |
0.1 |
$ |
54.1 |
10.0% |
12.8% |
||||||||||||
Industrial Process |
|
64.7 |
|
0.5 |
|
65.2 |
|
48.1 |
|
4.3 |
|
52.4 |
34.5% |
24.4% |
||||||||||||
Connect & Control Technologies |
|
33.2 |
|
0.3 |
|
33.5 |
|
30.3 |
|
- |
|
30.3 |
9.6% |
10.6% |
||||||||||||
Total Segment Operating Income |
$ |
157.3 |
$ |
2.4 |
$ |
159.7 |
$ |
132.4 |
$ |
4.4 |
$ |
136.8 |
18.8% |
16.7% |
||||||||||||
Note: Immaterial differences due to rounding. | ||||||||||||||||||||||||||
Special items include, but are not limited to, restructuring costs, acquisition-related expenses, and other unusual or infrequent items. |
Reported vs. Adjusted Income from Continuing Operations & Adjusted EPS | |||||||||||||||||||||||
Third Quarter 2023 & 2022 | |||||||||||||||||||||||
(In Millions, except per share amounts) | |||||||||||||||||||||||
(all amounts unaudited) | |||||||||||||||||||||||
Q3 2023 | Q3 2023 | Q3 2022 | Q3 2022 | $ Change | % Change | ||||||||||||||||||
As Reported |
Non-GAAP Adjustments |
As Adjusted |
As Reported |
Non-GAAP Adjustments |
As Adjusted |
As Adjusted 2023 vs. 2022 |
As Adjusted 2023 vs. 2022 |
||||||||||||||||
Segment operating income |
$ |
157.3 |
$ |
2.4 |
#A |
$ |
159.7 |
$ |
132.4 |
$ |
4.4 |
#A |
$ |
136.8 |
|||||||||
Corporate and other (income) costs |
|
(14.2) |
|
- |
|
(14.2) |
|
(10.4) |
|
0.6 |
#B |
|
(9.8) |
||||||||||
Operating income |
|
143.1 |
|
2.4 |
|
145.5 |
|
122.0 |
|
5.0 |
|
127.0 |
|
18.5 |
14.6% |
||||||||
Operating margin |
|
17.4% |
|
17.7% |
|
16.2% |
|
16.9% |
|||||||||||||||
Interest income (expense), net |
|
(2.3) |
|
- |
|
(2.3) |
|
(2.4) |
|
- |
|
(2.4) |
|||||||||||
Other income (expense), net |
|
0.9 |
|
- |
|
0.9 |
|
0.1 |
|
- |
|
0.1 |
|||||||||||
Income from continuing operations before tax |
|
141.7 |
|
2.4 |
|
144.1 |
|
119.7 |
|
5.0 |
|
124.7 |
|||||||||||
Income tax expense |
|
(29.9) |
|
(0.2) |
#C |
|
(30.1) |
|
(16.4) |
|
(7.9) |
#C |
|
(24.3) |
|||||||||
Income from continuing operations |
|
111.8 |
|
2.2 |
|
114.0 |
|
103.3 |
|
(2.9) |
|
100.4 |
|||||||||||
Less: Income attributable to noncontrolling interests |
|
1.0 |
|
- |
|
1.0 |
|
0.8 |
|
- |
|
0.8 |
|||||||||||
Income from continuing operations - |
$ |
110.8 |
$ |
2.2 |
$ |
113.0 |
$ |
102.5 |
$ |
(2.9) |
$ |
99.6 |
|||||||||||
EPS from continuing operations |
$ |
1.34 |
$ |
0.03 |
$ |
1.37 |
$ |
1.23 |
$ |
(0.03) |
$ |
1.20 |
$ |
0.17 |
14.2% |
||||||||
Note: Amounts may not calculate due to rounding. | |||||||||||||||||||||||
Per share amounts are based on diluted weighted average common shares outstanding. | |||||||||||||||||||||||
#A - 2023 includes restructuring costs ( |
|||||||||||||||||||||||
#A - 2022 includes restructuring costs ( |
|||||||||||||||||||||||
#B - 2022 includes acquisition-related expenses ( |
|||||||||||||||||||||||
#C - 2023 includes the net tax benefit of special items #A ( |
|||||||||||||||||||||||
#C - 2022 includes the net tax benefit of special items #A and #B ( |
Free Cash Flow and Free Cash Flow Margin | ||||||||||||||||||
Three and Nine Months Ended 2023 & 2022 | ||||||||||||||||||
(In Millions) | ||||||||||||||||||
(all amounts unaudited) | ||||||||||||||||||
Q3 2023 | Q3 2022 |
|
9M 2023 |
|
9M 2022 |
|||||||||||||
$ |
169.8 |
$ |
61.0 |
$ |
367.6 |
$ |
115.2 |
|||||||||||
Less: Capital expenditures |
|
22.2 |
|
26.2 |
|
68.5 |
|
73.7 |
||||||||||
Free Cash Flow |
$ |
147.6 |
$ |
34.8 |
$ |
299.1 |
$ |
41.5 |
||||||||||
Revenue |
$ |
822.1 |
$ |
753.6 |
$ |
2,453.9 |
$ |
2,213.1 |
||||||||||
Free Cash Flow Margin |
|
18.0% |
|
4.6% |
|
12.2% |
|
1.9% |
||||||||||
GAAP vs. Adjusted EPS Guidance | |||||||
Full Year 2023 | |||||||
(Per share amounts) | |||||||
(all amounts unaudited) | |||||||
2023 Full-Year Guidance |
|||||||
Low |
High |
||||||
EPS from Continuing Operations - GAAP |
$ |
5.05 |
$ |
5.11 |
|||
Estimated restructuring, net of tax |
|
0.08 |
|
0.08 |
|||
Other special items, net of tax |
|
0.03 |
|
0.03 |
|||
Other tax special Items |
|
(0.01) |
|
(0.01) |
|||
EPS from Continuing Operations - Adjusted |
$ |
5.15 |
$ |
5.21 |
Note: |
The Company has provided forward-looking non-GAAP financial measures for organic revenue growth and adjusted segment operating margin. It is not possible, without unreasonable efforts, to estimate the impacts of foreign currency fluctuations, acquisitions and certain other special items that may occur in 2023 as these items are inherently uncertain and difficult to predict. As a result, the Company is unable to quantify certain amounts that would be included in a reconciliation of organic revenue growth and adjusted segment operating margin to the most directly comparable GAAP financial measures without unreasonable efforts and accordingly has not provided reconciliations for these forward looking non-GAAP financial measures. | |||||
Free Cash Flow and Free Cash Flow Margin Guidance | ||
Full Year 2023 | ||
(In Millions) | ||
(all amounts unaudited) | ||
2023 Full-Year Guidance | ||
Less: Capital expenditures | ||
Free Cash Flow | ||
Revenue #A | ||
Free Cash Flow margin | ~12% | |
#A Represents expected revenue growth of approximately ~9% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20231102095904/en/
Investor Contact
+1 914-641-2064
mark.macaluso@itt.com
Media Contact
+1 914-641-2143
phil.terrigno@itt.com
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