ITT Corp. Earnings Cheat Sheet: Increasing Costs Tighten Margins as Net Income Falls

S&P 500 (NYSE:SPY) component ITT Corporation (NYSE:ITT) reported its results for the second quarter. ITT Corporation is a global multi-industry company that designs and manufactures engineered products and related services.

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ITT Earnings Cheat Sheet for the Second Quarter

Results: Net income for the diversified machinery company fell to $168 million (90 cents per share) vs. $238 million ($1.28 per share) a year earlier. This is a decline of 29.4% from the year earlier quarter.

Revenue: Rose 10.4% to $3.02 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: ITT reported adjusted net income of $1.18 per share. By that measure, the company beat the mean estimate of $1.16 per share. It beat the average revenue estimate of $2.83 billion.

Quoting Management: “We are exceedingly pleased with our strong overall results and solid revenue across all our businesses this quarter,” said Steve Loranger, ITT’s chairman, president and chief executive officer. “We delivered robust growth in our commercial businesses, held defense revenue steady despite market uncertainty and continued to grow our global project pipeline. These impressive results were achieved while the organization successfully continued executing our strategic separation into three independent companies.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 5 cents in the first quarter, by 10 cents in the fourth quarter of the last fiscal year, and by 9 cents in the third quarter of the last fiscal year.

Gross margin shrank 0.7 percentage point to 27.8%. The contraction appeared to be driven by increased costs, which rose 11.5% from the year earlier quarter while revenue rose 10.4%.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 15.1% from the year earlier quarter.

Revenue has now gone up for three straight quarters. In the first quarter, revenue rose 4.7% to $2.76 billion while the figure rose 5.8% in the fourth quarter of the last fiscal year from the year earlier.

Competitors to Watch: General Dynamics Corp. (NYSE:GD), Raytheon Company (NYSE:RTN), Lockheed Martin Corp. (NYSE:LMT), Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), Northrop Grumman Corp. (NYSE:NOC), The Boeing Company (NYSE:BA), L-3 Communications Hldgs., Inc. (NYSE:LLL), Goodrich Corporation (NYSE:GR), FLIR Systems, Inc. (NASDAQ:FLIR).

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(Source: Xignite Financials)