ITT Inc. · NYSE:ITT
ITT — Q3 2008 Earnings Presentation
15 slides from ITT's earnings presentation, Oct 24, 2008
Slide 1: Third Quarter 2008 Investor Review
Third Quarter 2008 Investor Review October 24, 2008
Slide 2: Q3 Highlights
Q3 Highlights +8% Organic Revenue Growth • All Segments Contribute – Led by Defense and Fluid • Double-digit Organic Order Growth +26% EPS Growth • Acquisitions Contributing 127% Free Cash Flow Conversion • $759 Million Year-to-Date Proactively Addressing Market Conditions Q3 2008 Earnings Presentat
Slide 3: ITT Q3 Results
ITT Q3 Results 3Q 07 3Q 08 Revenues $2,879 +8% Organic Growth $2,181 • Defense +9%; Fluid +8%; Motion +6% +32% • ITT Organic Orders +13% Segment Operating Strong Acquisition Performance Income $376 • EDO and IMC Continue to Deliver $292 Segment Operating Margin -30 bps +29% • Productivity, price, FX
Slide 4: ITT Q3 Financial Position
ITT Q3 Financial Position Free Cash Flow * +127% Free Cash Flow Conversion $759 • Improved Working Capital $432 • Strong Acquisition Performance +76% • ~50% of Revenue with U.S. Federal Agencies 3Q 07 3Q 08 Net Debt to Net Capital +600 bps Reduction in Net Debt to Net 27.2% Capital Ratio 21.2% • $95
Slide 5: Fluid Technology
Fluid Technology 3Q 07 3Q 08 Revenues Operating Performance $949 + 8% Organic Revenue • +7% North America; +8% International $858 + 6% Organic Orders +11% +100 bps Operating Margin • Price, FX, pension & lower restructuring more than offset higher material costs and investments Operating Income $132
Slide 6: Motion & Flow Control
Motion & Flow Control 3Q 07 3Q 08 Revenues Operating Performance +6% Organic Revenue $394 +4% Organic Orders $315 +10 bps Operating Margin +25% • Productivity, FX & pension, partially offset by acquisitions, investments and footprint actions Operating Income Organic Revenue +11% Aerospace Controls $
Slide 7: Defense Electronics & Services
Defense Electronics & Services 3Q 07 3Q 08 Revenues Operating Performance $1,540 +9% Organic Revenue +21% Organic Orders $1,012 • Strong product orders +52% -140 bps Operating Margin • Favorable pension and net cost productivity offset by EDO acquisition and mix impact Operating Income $188 Organic
Slide 8: ITT 2008 EPS Guidance Roll-Forward
ITT 2008 EPS Guidance Roll-Forward * Low Mid High Previous Full Year 2008 Guidance $ 4.11 $ 4.14 $ 4.17 Q3 Operating Performance ~ $ 0.03 Q3 Interest, Taxes ~ $ 0.04 Total Change vs Mid-point ~ $ 0.07 Revised EPS Before Incremental FX and Restructuring Actions $ 4.18 $ 4.21 $ 4.24 Q4 Incremental FX
Slide 9: ITT 2008 Earnings Outlook
ITT 2008 Earnings Outlook ($ in Millions except EPS) Full Year 2008 Guidance yr/yr # 2008 Growth** Segment Guidance Fluid Technology - Revenues $ 3,745 - $ 3,785 7% OI Margin # 12.5% - 12.7% 30 bps Defense Electronics - Revenues $ 6,130 - $ 6,170 47% OI Margin # 11.6% - 11.8% -30 bps Motion & Flow C
Slide 10: Defense Electronics & Services
Defense Electronics & Services Backlog Wins 7/1/08 to 10/21/08 $6,000 Night Vision $5,000 $153M Omni VII Orders $4,000 $24M Enhanced Night Vision Sole Source ($560M ID/IQ) $3,000 Communication Systems JTRS Team w/GD $2,000 $117M Soldier Radio Waveform development $490M Foreign Military Sal
Slide 11: ITT Actions & Current Market Conditions
ITT Actions & Current Market Conditions What We’ve Done: Resource Optimization Repositioned Portfolio What We’re Doing: 9 Reduced consumer exposure 9 Reduced North American auto exposure Focused on Execution 9 Increased long-cycle, macro-growth focus 9 Accelerating restructuring actions 9 Conservati
Slide 12: Appendix
Appendix ¥ itt Engineered for life
Slide 13: ITT Q3 2008 Segment Performance
ITT Q3 2008 Segment Performance Fluid Motion & Flow Defense ITT Q3 '08 Organic Rev Growth 7.5% 5.5% 8.7% 7.7% FX 2.8% 4.5% 0.0% 1.8% Acquisition 0.3% 15.2% 43.5% 22.5% Q3 '08 Total Rev Growth 10.6% 25.2% 52.2% 32.0% Q3 '07 Margin 12.9% 14.1% 13.6% 13.4% Operational, Investments, Other 0.0% -0.3% -0.
Slide 14: ITT Non-GAAP Reconciliation - EPS
ITT Non-GAAP Reconciliation - EPS 3Q07 3Q08 Reported EPS $ 1.25 $ 1.18 Discontinued Ops. $ 0.33 $ 0.07 Reported EPS from Continuing Ops. $ 0.92 $ 1.11 Tax Settlement/Other $ 0.03 $ (0.01) Adjusted EPS from Continuing Ops. $ 0.89 $ 1.12 Q3 2008 Earnings Presentation October 24, 2008 12
Slide 15: Safe Harbor
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