ITT Inc. · NYSE:ITT
ITT — Q2 2015 Earnings Presentation
22 slides from ITT's earnings presentation, Jul 31, 2015
Slide 1: ITT Corporation Q2 2015 Earnings Call
ITT Corporation Q2 2015 Earnings Call July 31, 2015
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
Slide 3: Q2 2015 Overview
Q2 2015 Overview Delivering Results in Challenging Environment Auto Brake Pad Market Share Gains and Aftermarket Growth +1% Organic Revenue Strong Oil & Gas Due to Solid Backlog Entering 2015 Weak Connector Deliveries Across All Markets Weak O&G and Project Orders at Industrial Process (-6%)
Slide 4: Strategic Execution Update
Q2 2015 Strategic Execution Update 2nd Consecutive Quarter of Record Adjusted Segment Operating Margins of 15.2% Advancing Industrial Process Optimization Optimizing Execution Proactive Cost Containment Actions, Including Corporate $101M Asbestos Benefit Driven by New Defense Strategy Stro
Slide 5: ITT Results
Q2 2015 ITT Results Continuing Operations (unaudited) Q2 $ millions except per share amounts 2015 vs. 2014 Total Revenue $628 (-5%) Adjusted Segment Operating Income $96 +2% Adjusted EPS $0.69 +15% Orders $586 (-13%) +1% Organic Revenue +2% Adjusted Segment Operating Income +12% Global Automotive
Slide 6: Adjusted Segment Operating Margins
Q2 2015 Adjusted Segment Operating Margins +110 bps Expansion to 15.2% Vs. PY Maintaining Record Margins Q2 2014 Adjusted Segment Optimizing Execution Benefits Operating Margin 14.1% LEAN Transformation Momentum Restructuring Benefits from Volume, Mix, Productivity +120 bps Optimization Action
Slide 7: 2015 Guidance Update
2015 Guidance Update 2015 Revenue Guidance Previous Revised Comments Total (-8.5%) to (-5.5%) (-9%) to (-7%) Weaker 2H Markets ICS Operational Disruption Impacts Organic (-2%) to +1% (-3%) to (-1%) Improved Project Execution at IP 2015 Adjusted EPS Guidance Previous 2015 Adjusted EPS Guidance
Slide 8: Supplemental Financial Data
Supplemental Financial Data
Slide 9: Q2 Asbestos Defense Strategy Benefit
Q2 Asbestos Defense Strategy Benefit $101M* Pre-Tax Benefit Net Asbestos Liability Reduction Due to Leveraging of Benefits from Single Firm Strategy • Fixed Fee Structure • Streamlined Case Management • Concentration of Expertise No Change to Any Other Asbestos Assumptions • Annual Update and
Slide 10: Industrial Process
Q2 2015 Industrial Process Q2 $ millions (unaudited) 2015 vs. 2014 Total Revenue $288 (-1%) Adjusted Segment Operating Income $41 +49% Q2 Results +4% Organic Revenue Q2 Highlights +13% Aftermarket Growth Driven by LAR & MEA +470 bps Adjusted Operating Margin Expansion +33% Project Pumps (-15
Slide 11: Motion Technologies
Q2 2015 Motion Technologies Q2 $ millions (unaudited) 2015 vs. 2014 Total Revenue $184 (-7%) Adjusted Segment Operating Income $37 +6% Q2 Results +9% Organic Revenue Q2 Highlights +12% Auto Brake Pads +250 bps Adjusted Operating Margin Expansion +15% OEM Driven by All Major Geographies Stron
Slide 12: Interconnect Solutions
Q2 2015 Interconnect Solutions Q2 $ millions (unaudited) 2015 vs. 2014 Total Revenue $83 (-20%) Adjusted Segment Operating Income $5 (-67%) Q2 Results (-14%) Organic Revenue Q2 Highlights Delayed Shipments Driven by Disruption Impacts (-9%) Organic Order Decline Due to the Relocation of Certain
Slide 13: Control Technologies
Q2 2015 Control Technologies Q2 $ millions (unaudited) 2015 vs. 2014 Total Revenue $75 +1% Adjusted Segment Operating Income $13 (-22%) Q2 Results (-10%) Organic Revenue Q2 Highlights (-9%) Aerospace & Defense Decline Completed Acquisition of Hartzell Aerospace, Commercial Aerospace Timing & I
Slide 14: Revenue by Market Growth
Q2 2015 Revenue by Market +15% 10% Auto, Rail & Other Trans Oil & Gas Q2 2015 vs. Q2 2014 5% Emerging Mining Markets Q2 2015 Growth +7% Revenue 0% $50M $100M Chem & Ind’l $150M $200M $250M Pumps Q2 2015 vs. Q2 2014 (-5%) Organic +1% Total (-5%) Oil & Gas +7% (-10%) Transportation +3% Aero & Defense
Slide 15: ITT Segment Performance
Q2 2015 ITT Segment Performance Industrial Motion Interconnect Control Total Process Technologies Solutions Technologies Segments Q2 2015 Total Revenue vs PY -0.7% -6.9% -20.3% 1.1% -5.2% FX 4.7% 16.1% 6.1% 0.7% 7.8% Acquisition/Disposition 0.0% 0.0% 0.0% -11.8% -1.3% Q2 2015 Organic Revenue vs PY 4
Slide 16: Appendix
Appendix itt ENGINEERED FOR LIFE
Slide 17: 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
Slide 18: Reported vs. Organic Revenue / Order Growth
ITT Corporation Non-GAAP Reconciliation Reported vs. Organic Revenue / Order Growth Second Quarter 2015 & 2014 (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 2015 3M 2014 2015
Slide 19: Reported vs Adjusted Segment Operating Income & Margin
ITT Corporation Non-GAAP Reconciliation Reported vs Adjusted Segment Operating Income & Operating Margin Second Quarter 2015 & 2014 (In Millions) 3M 2015 3M 2015 3M 2015 3M 2014 3M 2014 3M 2014 % Change % Change As Reported As Adjusted As Reported Special Items As Adjusted As Reported Special Items
Slide 20: Reported vs. Adjusted Income from Continuing Operations & EPS
ITT Corporation Non-GAAP Reconciliation Reported vs. Adjusted Income from Continuing Operations & Adjusted EPS Second Quarter of 2015 & 2014 (In Millions, except per share amounts) Percent Change Q2 2015 Non-GAAP Q2 2015 Q2 2014 Non-GAAP Q2 2014 2015 vs. 2014 2015 vs. 2014 As Reported Adjustments As
Slide 21: Net Cash Operating Activities vs. Adjusted Free Cash Flow
ITT Corporation Non-GAAP Reconciliation Net Cash - Operating Activities vs. Adjusted Free Cash Flow Conversion Second Quarter 2015 & 2014 (In Millions) 6M 2015 6M 2014 Net Cash - Operating Activities 89.5 84.3 Capital Expenditures 46.0 45.7 Free Cash Flow 43.5 38.6 Transformation, Repositioning & Re
Slide 22: GAAP vs. Adjusted EPS Guidance Full Year 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 $ 2.32 $ 2.50 Estimated Asbestos Related (Benefit), Net of Tax (0.24) (0.28) $ 2.08 $ 2.22 Estimated Restructuring and Realignment Costs, Net o