WHITE PLAINS, N.Y.--(BUSINESS WIRE)--ITT Inc. (NYSE: ITT) today reported 2019 third-quarter financial results that reflected the company’s strong operational execution and share gain strategies in key global markets. The company is also raising its 2019 earnings per share guidance and announcing a $500 million share repurchase program.

Revenue	SegmentOI Margin	EPS	Operating Cash Flow
+5%	-90 bps	+7%	-10%
OrganicRevenue	AdjSegment OI Margin	AdjEPS	AdjFree Cash Flow
+4%	+90 bps	+18%	-9%
*Performance relative to comparable three months ended September 30, 2018.

• Revenue of $712 million +5%; Organic Revenue +4%
• Segment OI Margin of 15.0%; Adj Segment OI Margin of 16.6%
• EPS of $1.34 up 7%; Adj EPS of $0.97 up 18%
• Adj EPS Full Year Guidance Midpoint Increased to $3.74
• New $500 Million Share Repurchase Program

“I am proud of the hard work ITTers all around the world delivered with an intense focus on meeting our customers’ needs and generating productivity improvements. As a result of their efforts in the quarter, we grew revenue, expanded margins, and raised our adjusted full year EPS guidance midpoint to $3.74,” said ITT Inc. Chief Executive Officer and President Luca Savi. “Our diversified and resilient businesses delivered 5 percent revenue growth and 18 percent adjusted EPS growth to a record 97 cents per share. And our proactive cost containment actions and war chest of opportunities will help us continue to drive exceptional performance in increasingly uncertain global markets. In addition, the two close-to-core strategic acquisitions that we completed this year are already accretive to earnings and we will continue to pursue similar value creating acquisitions going forward. Lastly, consistent with our strong balance sheet and track record of solid returns to shareholders, we are announcing a new $40 million increase to our share repurchase authorization and a new $500 million indefinite term share repurchase program.”Revenue and OrdersRevenue grew 5 percent, including a 2-point unfavorable impact from foreign exchange and 3-point benefit from our strategic Rheinhütte Pumpen and Matrix Composites acquisitions. Organic revenue (defined as total revenue excluding foreign exchange, acquisitions and divestitures) increased 4 percent, driven by the strength of our diversified portfolio as our industrial businesses grew 10 percent and transportation grew 2 percent, more than offsetting a 5 percent decline in oil and gas.

Organic orders declined 4 percent, due to pump project delays and difficult comparisons, along with slower industrial demand. Transportation orders were flat as growth in rail and commercial aerospace was offset by the timing of defense programs. Compared to the second quarter of 2019, the company’s third quarter organic orders were flat.

Segment Operating Income

Segment operating income declined 1 percent to $107 million and generated a margin of 15.0 percent, which included higher acquisition-related costs and restructuring charges. Adjusted segment operating income grew 10 percent to $118 million and produced a record margin of 16.6 percent. This improvement was driven by continued productivity and supply chain improvements and cost containment actions, as well as increased volume. These gains were partially offset by higher commodity costs and tariffs, and strategic investments.

Earnings Per Share

GAAP EPS grew to $1.34, compared to $1.25 in the prior year, primarily due to a $52 million increase in net asbestos benefit driven by effective insurance recovery strategies, partially offset by a $38 million gain on sale of a former connector operating location in the third quarter of 2018 and higher acquisition, restructuring, and legal costs. Adjusted EPS grew 18 percent to a record $0.97, reflecting the increase in adjusted segment operating income, a 21 percent reduction in corporate costs, and a lower tax rate.

Third-Quarter 2019 Business Segment Results

All quarterly results are compared to the respective prior-year period.

Motion Technologies

• Total revenue decreased 2 percent to $305 million, including a 4-point unfavorable impact from foreign exchange. Organic revenue increased 2 percent, reflecting global rail share gains and Friction OEM growth that outpaced the global market by 1,200 basis points1 with significant outperformance in North America, Europe, and China. These improvements were partially offset by weakness in the Wolverine business.

• Operating income decreased 3 percent and adjusted operating income increased 1 percent to $57 million, primarily reflecting operational improvements and the benefit of restructuring actions, offset by higher commodity costs, tariffs, strategic investments, and $2 million of unfavorable foreign exchange.

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1 Based on recognized auto industry data as of October 16, 2019

Industrial Process

• Total revenue increased 17 percent to $240 million, including a 9-point benefit from our Rheinhütte Pumpen acquisition and a 2-point unfavorable impact from foreign exchange. Organic revenue increased 10 percent reflecting pump project growth of 38 percent from strength in chemical and mining. The short-cycle portion of our business grew 2 percent on baseline pump strength, partially offset by lower service and industrial valves sales.

• Operating income decreased 7 percent to $22 million due to higher restructuring and acquisition-related costs. Adjusted operating income increased 31 percent to $31 million, primarily reflecting supply chain and productivity improvements, project execution, and the accretive impact from our Rheinhütte Pumpen acquisition, which was partially offset by unfavorable project mix, higher commodity costs, and incremental strategic investments.

Connect and Control Technologies

• Total revenue increased 1 percent to $168 million, including a 3-point benefit from our Matrix Composites acquisition and a 1-point unfavorable impact from foreign exchange. Organic revenue decreased 1 percent driven by lower defense components due to strong prior year program activity, as well as declines in industrial and oil and gas sales, partially offset by 7 percent growth in commercial aerospace.

• Operating income increased 9 percent to $28 million and adjusted segment operating income increased 11 percent to $30 million, driven by benefits from productivity and supply chain improvements and restructuring actions, which were partially offset by an increase in commodity costs and negative mix.

Annual Asbestos Remeasurement

The company recognized a $68 million pre-tax net benefit in the third quarter reflecting the annual remeasurement of its asbestos liability and related insurance assets. This benefit was driven by effective insurance recovery strategies and is excluded from the adjusted results and adjusted guidance. During 2019, the company has reduced the net asbestos liability by 11 percent. The company also forecasts no change in the net annual average after-tax cash flow projections compared to the prior year’s projection.

Guidance

Based on the strong third quarter performance and incremental productivity gains and cost actions expected for the fourth quarter of 2019, ITT is raising and tightening its Adjusted EPS guidance to a range of $3.73 to $3.75 from the previous range of $3.58 to $3.68. The raise represents an 11 cent increase to the mid-point from our prior guidance and a 16 percent increase compared to the prior year. The company is also raising its previously announced 2019 full-year GAAP EPS guidance to a range of $3.63 to $3.67. There is no change to the previous revenue or organic revenue guidance of up 3 to 5 percent.

Share Repurchase Update

On October 30, 2019, the company’s Board of Directors approved a $40 million share repurchase authorization to effectively close out our $1 billion share repurchase program. In addition, the Board approved a new $500 million share repurchase program with an indefinite term. The company’s capital deployment priorities are focused on funding strategic organic investments and close-to-core acquisitions, while also returning value to shareholders.