ITT Inc. · NYSE:ITT

ITT — Q4 2014 Earnings Presentation

33 slides from ITT's earnings presentation, Feb 13, 2015

  1. Slide 1: ITT Corporation Q4 2014 Earnings Call & 2015 Guidance

    ITT Corporation Q4 2014 Earnings Call & 2015 Guidance February 13, 2015

  2. Slide 2: Safe Harbor

    Safe Harbor This presentation contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 (the “Act”). No forward-looking statement can be guaranteed, and actual results may differ materially from th

  3. Slide 3: 2014 FY Strong Execution

    2014 FY Strong Execution Organic Revenue Adjusted Segment Margins Adjusted Segment Op Income Adjusted EPS to $2.47 Q4 2014 Earnings – All Results are Unaudited February 13, 2015 P3 For non-GAAP reconciliations of adjusted results, refer to appendix and www.itt.com/ir.

  4. Slide 4: 2014 FY Strategic Highlights

    2014 FY Strategic Highlights Market +14% Emerging Market Growth Expansion +4% Developed Market Growth Organic Revenue Differentiated Improved 18 of 20 Delivery & Quality Metrics Customer Experience Expanded Auto Aftermarket Adjusted Segment Margins Accelerating ITT LEAN Transformation Operational Ad

  5. Slide 5: Q4 2014 ITT Results

    Q4 2014 ITT Results Continuing Operations (unaudited) Q4 $ millions except per share amounts 2014 vs. 2013 Total Revenue $660 +2% Adjusted Segment Operating Income $94 +14% Adjusted EPS $0.59 +20% Orders $622 +4% +6% Organic Revenue +14% Adjusted Segment Operating Income  Global Oil & Gas Project P

  6. Slide 6: 2015 Guidance Highlights

    2015 Guidance Highlights Organic Revenue Growth Adjusted Segment Margin Expansion Adjusted EPS Mid-Point Growth Adjusted EPS Mid-Point Growth, Ex FX Up to $100M in Repurchase; +7.5% Dividend Increase Q4 2014 Earnings – All Results are Unaudited February 13, 2015 P6 For non-GAAP reconciliations of ad

  7. Slide 7: 2015 Strategic Focus Areas

    2015 Strategic Focus Areas Optimizing Execution In Our Control Strategic Focus Effective Areas Market Capital Expansion Deployment Oil Modest Price Global Declines Emerging GDP Market Macro Forces: Deceleration Not In Our Control FX Headwinds Q4 2014 Earnings – All Results are Unaudited February 13,

  8. Slide 8: 2015 Strategic Focus Areas

    2015 Strategic Focus Areas  $23M - $33M Restructuring & Realignment Actions  Industrial Process Reorganization Optimizing  Advancing LEAN & Proactive Cost Actions Execution  +9% Transportation Growth  +4% Industrial Growth Market  +6% Emerging Market Growth Expansion  Focused Strategic Invest

  9. Slide 9: 2015 Adjusted Segment Operating Margins

    Optimizing Execution 2015 Adjusted Segment Operating Margins +60 to +80 bps Expansion  Optimizing Execution Benefits  LEAN Transformation Optimizing  Restructuring Benefits from Execution Vs. PY Footprint Optimization at FY 2014 Adjusted Segment ICS & IP Operating Margin 14.3%  Increased Volume

  10. Slide 10: Total ITT Oil & Gas Profile - 18% Revenue

    Optimizing Execution Total ITT Oil & Gas Profile - 18% Revenue % Expected Revenue % Change Key Considerations 2015 2015  Reduced Customer Cap Ex in High Cost Projects  Pricing Challenges & Project Delays Upstream 10%  (-20%) to (-25%)  Solid Backlog Visibility  Low Margin Profile  Solid Backlo

  11. Slide 11: 2015 Revenue Outlook by Market

    Market Expansion 2015 Revenue Outlook by Market 2015 vs. 2014 +16% Organic +1% to +3% Total (-1%) to (-3%) Transportation +9% +12% Industrial +4% Aero & Defense* Oil & Gas (-11%) Emerging 2015 vs. 2014 Growth Markets +8% +6% Auto, Rail & Chem & Ind’l Other Trans Pumps +4% General Other +0% Industria

  12. Slide 12: 2015 Adjusted EPS Walk

    2015 Adjusted EPS Walk +13% +5% $0.02 ($0.10) $0.08 ($0.18) $2.78 $0.50 $2.60 ($0.19) $2.47 Key Investments • China Auto Friction Expansion • Aerospace Aftermarket • LEAN Transformation • IT Infrastructure 2014 Adj EPS Volume / Price / Net Productivity Strategic Corp/Other/ Tax Rate 2015 Guidance FX

  13. Slide 13: 2015 Financial Guidance

    2015 Financial Guidance Revenue Guidance +1% to +3% Organic Revenue  Share Gains and Market Growth in Transportation & Organic +1% to +3% Industrial More Than Offset Oil & Gas Declines (-1%) to (-3%) Total Revenue; $2.56B to $2.60B Total (-1%) to (-3%)  (-10%) to (-12%) Declines in Oil & Gas  (-$

  14. Slide 14: Supplemental 2014 Financial Data

    Supplemental 2014 Financial Data

  15. Slide 15: Q4 2014 Revenue by Market

    Q4 2014 Revenue by Market +24% Oil & Gas Mining +20% Q4 2014 vs. Q4 2013 Chem & Ind’l Organic +6% +16% Total +2% Pumps Q4 2014 vs. Q4 2013 Oil & Gas +23% Emerging Growth Transportation (-6%) Markets +12% +14% Industrial +11% +8% +4% General Q4 2014 Industrial Revenue 0% Aero & Defense Auto, Rail & O

  16. Slide 16: Q4 2014 Total Revenue by Major Geographies

    Q4 2014 Total Revenue by Major Geographies US & Canada Europe Emerging Markets +6% Total (-12%) Total +9% Total  Oil & Gas Project Pumps and  Oil & Gas Project Pumps  +76% Latin America Oil & Gas Oil & Gas Connectors (Bornemann) Project Pumps 22%*  Defense Connectors  Auto Brake Pad Weakness in

  17. Slide 17: Q4 2014 Industrial Process

    Q4 2014 Industrial Process Q4 $ millions (unaudited) 2014 vs. 2013 Total Revenue $341 +15% Adjusted Segment Operating Income $46 +18% Q4 Results +19% Organic Revenue Q4 Highlights  +24% Oil & Gas Project Pumps Supported by Strong  +26% Organic Order Growth vs PY Backlog (Across All Sectors)  +52%

  18. Slide 18: Q4 2014 Motion Technologies

    Q4 2014 Motion Technologies Q4 $ millions (unaudited) 2014 vs. 2013 Total Revenue $157 (-13%) Adjusted Segment Operating Income $21 FLAT Q4 Results (-7%) Organic Revenue Q4 Highlights  (-9%) Auto Brake Pads  +180 bps Adjusted Operating Margin Expansion  Difficult Prior Year Comparison Due to  St

  19. Slide 19: Q4 2014 Interconnect Solutions

    Q4 2014 Interconnect Solutions Q4 $ millions (unaudited) 2014 vs. 2013 Total Revenue $91 (-10%) Adjusted Segment Operating Income $11 +21% Q4 Results (-7%) Organic Revenue Q4 Highlights  Weakness in Defense Connectors  +300 bps Adjusted Operating Margin Expansion  Expected Decline in Non-Strategi

  20. Slide 20: Q4 2014 Control Technologies

    Q4 2014 Control Technologies Q4 $ millions (unaudited) 2014 vs. 2013 Total Revenue $73 +5% Adjusted Segment Operating Income $16 +21% Q4 Results +6% Organic Revenue Q4 Highlights  +5% Aerospace & Defense Growth  +290 bps Adjusted Operating Margin Expansion  Commercial Aerospace Strength Due to 

  21. Slide 21: Q4 2014 ITT Segment Performance

    Q4 2014 ITT Segment Performance Industrial Motion Interconnect Control Total Process Technologies Solutions Technologies Segments Q4 2014 Total Revenue vs PY 14.8% -13.2% -9.8% 5.3% 2.2% FX 4.0% 5.8% 2.7% 0.5% 4.0% Acquisition/Disposition -0.3% 0.0% 0.0% 0.0% -0.1% Q4 2014 Organic Revenue vs PY 18.5

  22. Slide 22: FY 2014 ITT Results

    FY 2014 ITT Results Continuing Operations (unaudited) Full Year $ millions except per share amounts 2014 vs. 2013 Revenue $2,655 +6% Adjusted Segment Operating Income $379 +17% Adjusted EPS $2.47 +22% Orders $2,683 +4% +7% Organic Revenue +17% Adjusted Segment Operating Income  Global Oil & Gas Pro

  23. Slide 23: FY 2014 ITT Segment Performance

    FY 2014 ITT Segment Performance Industrial Motion Interconnect Control Total Process Technologies Solutions Technologies Segments FY 2014 Total Revenue vs PY 9.1% 6.6% -0.7% 4.4% 6.3% FX 1.9% -0.5% 0.3% 0.2% 0.7% Acquisition/Disposition -0.3% 0.0% 0.0% 0.0% -0.1% FY 2014 Organic Revenue vs PY 10.7%

  24. Slide 24: Appendix

    Appendix itt ENGINEERED FOR LIFE

  25. Slide 25: Key Performance Indicators and Non-GAAP Measures

    Key Performance Indicators and Non-GAAP Measures Management reviews key performance indicators including revenue, segment operating income and margins, earnings per share, order growth, and backlog, among others. In addition, we consider certain measures to be useful to management and investors when

  26. Slide 26: Non-GAAP Reconciliation: Reported vs. Organic Revenue / Order Growth Q4 2014

    ITT Corporation Non-GAAP Reconciliation Reported vs. Organic Revenue / Order Growth Fourth Quarter 2014 & 2013 (In Millions) (As Reported - GAAP) (As Adjusted - Organic) (A) (B) (C) (D) (E) = B-C-D (F) = E / A Acquisition / Change % Change Divestitures FX Impact Change % Change 3M 2014 3M 2013 2014

  27. Slide 27: Non-GAAP Reconciliation: Reported vs. Organic Revenue / Order Growth Full Year 2014

    ITT Corporation Non-GAAP Reconciliation Reported vs. Organic Revenue / Order Growth Full Year December 2014 & 2013 (In Millions) (As Reported - GAAP) (As Adjusted - Organic) (A) (B) (C) (D) (E) = B-C-D (F) = E / A Acquisition / Change % Change Divestitures FX Impact Change % Change 12M 2014 12M 2013

  28. Slide 28: Non-GAAP Reconciliation: Adjusted Segment Operating Income Q4 2014

    ITT Corporation Non-GAAP Reconciliation Reported vs Adjusted Segment Operating Income & Operating Margin Fourth Quarter of 2014 & 2013 (In Millions) 3M 2014 3M 2014 3M 2014 3M 2013 3M 2013 3M 2013 % Change % Change As Reported As Adjusted As Reported Special Items As Adjusted As Reported Special Ite

  29. Slide 29: Non-GAAP Reconciliation: Adjusted Segment Operating Income Full Year 2014

    ITT Corporation Non-GAAP Reconciliation Reported vs Adjusted Segment Operating Income & Operating Margin Full Year December 2014 & 2013 (In Millions) 12M 2014 12M 2014 12M 2014 12M 2013 12M 2013 12M 2013 % Change % Change As Reported As Adjusted As Reported Special Items As Adjusted As Reported Spec

  30. Slide 30: Non-GAAP Reconciliation: Adjusted Income and EPS Q4 2014

    ITT Corporation Non-GAAP Reconciliation Reported vs. Adjusted Income from Continuing Operations & Adjusted EPS Fourth Quarter of 2014 & 2013 (In Millions, except per share amounts) Percent Change Q4 2014 Non-GAAP Q4 2014 Q4 2013 Non-GAAP Q4 2013 2014 vs. 2013 2014 vs. 2013 As Reported Adjustments As

  31. Slide 31: Non-GAAP Reconciliation: Adjusted Income and EPS Full Year 2014

    ITT Corporation Non-GAAP Reconciliation Reported vs. Adjusted Income from Continuing Operations & Adjusted EPS Full Year 2014 & 2013 (In Millions, except EPS and shares) Percent Change 12M 2014 Non-GAAP 12M 2014 12M 2013 Non-GAAP 12M 2013 2014 vs. 2013 2014 vs. 2013 As Reported Adjustments As Adjust

  32. Slide 32: Non-GAAP Reconciliation: Operating Cash Flow vs. Adjusted Free Cash Flow

    ITT Corporation Non-GAAP Reconciliation Net Cash - Operating Activities vs. Adjusted Free Cash Flow Conversion Full Year 2014 & 2013 (In Millions) 12M 2014 12M 2013 Net Cash - Operating Activities 244.7 226.6 Capital Expenditures 118.8 122.9 Free Cash Flow 125.9 103.7 Transformation & Repositioning

  33. Slide 33: Non-GAAP Reconciliation: GAAP vs. Adjusted EPS Guidance 2015

    ITT Corporation Non-GAAP Reconciliation GAAP vs. Adjusted EPS Guidance Full Year 2015 2015 Full-Year Guidance Low High EPS from Continuing Operations - GAAP $ 1.80 $ 2.01 Asbestos Related Expense, Net of Tax 0.48 0.45 $ 2.28 $ 2.46 Restructuring and Realignment Costs, Net of Tax 0.27 0.19 EPS from C

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