|
|
||||
|
☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
|
State of Indiana
|
|
81-1197930
|
|
(State or Other Jurisdiction
of Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common Stock, par value $1 per share
|
ITT
|
New York Stock Exchange
|
|
☑
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
|
☐
|
Emerging growth company
|
|
|||||
|
|
||||
|
ITEM
|
|
PAGE
|
|
PART I – FINANCIAL INFORMATION
|
||
|
1.
|
Financial Statements (unaudited)
|
|
|
|
Consolidated Condensed Statements of Operations
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
|
2.
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
3.
|
||
|
4.
|
||
|
PART II – OTHER INFORMATION
|
||
|
1.
|
||
|
1A.
|
||
|
2.
|
||
|
3.
|
||
|
4.
|
||
|
5.
|
||
|
6.
|
||
|
|
||
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Revenue
|
$
|
719.9
|
|
|
$
|
696.8
|
|
|
$
|
1,415.4
|
|
|
$
|
1,386.1
|
|
|
Costs of revenue
|
487.9
|
|
|
470.8
|
|
|
964.6
|
|
|
935.9
|
|
||||
|
Gross profit
|
232.0
|
|
|
226.0
|
|
|
450.8
|
|
|
450.2
|
|
||||
|
General and administrative expenses
|
65.7
|
|
|
63.0
|
|
|
117.6
|
|
|
128.1
|
|
||||
|
Sales and marketing expenses
|
42.7
|
|
|
43.4
|
|
|
82.9
|
|
|
86.9
|
|
||||
|
Research and development expenses
|
25.8
|
|
|
25.8
|
|
|
49.3
|
|
|
50.5
|
|
||||
|
Asbestos-related costs (benefit), net
|
11.8
|
|
|
13.5
|
|
|
24.4
|
|
|
(6.2
|
)
|
||||
|
Operating income
|
86.0
|
|
|
80.3
|
|
|
176.6
|
|
|
190.9
|
|
||||
|
Interest and non-operating (income) expenses, net
|
(0.4
|
)
|
|
1.5
|
|
|
(0.9
|
)
|
|
3.3
|
|
||||
|
Income from continuing operations before income tax expense
|
86.4
|
|
|
78.8
|
|
|
177.5
|
|
|
187.6
|
|
||||
|
Income tax expense
|
19.3
|
|
|
8.9
|
|
|
39.0
|
|
|
16.5
|
|
||||
|
Income from continuing operations
|
67.1
|
|
|
69.9
|
|
|
138.5
|
|
|
171.1
|
|
||||
|
(Loss) income from discontinued operations, net of tax benefit of $0.0, $0.1, $0.0 and $0.0, respectively
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
||||
|
Net income
|
67.0
|
|
|
69.9
|
|
|
138.4
|
|
|
171.2
|
|
||||
|
Less: Income attributable to noncontrolling interests
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
|
0.3
|
|
||||
|
Net income attributable to ITT Inc.
|
$
|
66.8
|
|
|
$
|
69.7
|
|
|
$
|
138.1
|
|
|
$
|
170.9
|
|
|
Amounts attributable to ITT Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Income from continuing operations, net of tax
|
$
|
66.9
|
|
|
$
|
69.7
|
|
|
$
|
138.2
|
|
|
$
|
170.8
|
|
|
(Loss) income from discontinued operations, net of tax
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
||||
|
Net income attributable to ITT Inc.
|
$
|
66.8
|
|
|
$
|
69.7
|
|
|
$
|
138.1
|
|
|
$
|
170.9
|
|
|
Earnings per share attributable to ITT Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Basic:
|
|
|
|
|
|
|
|
||||||||
|
Continuing operations
|
$
|
0.76
|
|
|
$
|
0.80
|
|
|
$
|
1.58
|
|
|
$
|
1.95
|
|
|
Net income
|
$
|
0.76
|
|
|
$
|
0.80
|
|
|
$
|
1.58
|
|
|
$
|
1.95
|
|
|
Diluted:
|
|
|
|
|
|
|
|
||||||||
|
Continuing operations
|
$
|
0.75
|
|
|
$
|
0.79
|
|
|
$
|
1.56
|
|
|
$
|
1.93
|
|
|
Net income
|
$
|
0.75
|
|
|
$
|
0.79
|
|
|
$
|
1.56
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average common shares – basic
|
87.8
|
|
|
87.5
|
|
|
87.7
|
|
|
87.8
|
|
||||
|
Weighted average common shares – diluted
|
88.7
|
|
|
88.4
|
|
|
88.6
|
|
|
88.7
|
|
||||
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Net income
|
$
|
67.0
|
|
|
$
|
69.9
|
|
|
$
|
138.4
|
|
|
$
|
171.2
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
|
Net foreign currency translation adjustment
|
5.3
|
|
|
(47.1
|
)
|
|
2.9
|
|
|
(20.6
|
)
|
||||
|
Net change in postretirement benefit plans, net of tax benefits of $0.2, $0.4, $0.4 and $0.8, respectively
|
0.5
|
|
|
1.1
|
|
|
1.1
|
|
|
2.2
|
|
||||
|
Other comprehensive income (loss)
|
5.8
|
|
|
(46.0
|
)
|
|
4.0
|
|
|
(18.4
|
)
|
||||
|
Comprehensive income
|
72.8
|
|
|
23.9
|
|
|
142.4
|
|
|
152.8
|
|
||||
|
Less: Comprehensive income attributable to noncontrolling interests
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
|
0.3
|
|
||||
|
Comprehensive income attributable to ITT Inc.
|
$
|
72.6
|
|
|
$
|
23.7
|
|
|
$
|
142.1
|
|
|
$
|
152.5
|
|
|
Disclosure of reclassification adjustments to postretirement benefit plans
|
|
|
|
|
|
|
|
||||||||
|
Reclassification adjustments (see Note 15):
|
|
|
|
|
|
|
|
||||||||
|
Amortization of prior service benefit, net of tax expense of $(0.2), $(0.3), $(0.5) and $(0.5), respectively
|
$
|
(0.9
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
(1.7
|
)
|
|
Amortization of net actuarial loss, net of tax benefits of $0.4, $0.7, $0.9 and $1.3, respectively
|
1.4
|
|
|
1.9
|
|
|
2.8
|
|
|
3.9
|
|
||||
|
Net change in postretirement benefit plans, net of tax
|
$
|
0.5
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
$
|
2.2
|
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
Assets
|
|
|
|
||||
|
Current assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
531.9
|
|
|
$
|
561.2
|
|
|
Receivables, net
|
600.0
|
|
|
540.0
|
|
||
|
Inventories, net
|
421.4
|
|
|
380.5
|
|
||
|
Other current assets
|
149.1
|
|
|
163.4
|
|
||
|
Total current assets
|
1,702.4
|
|
|
1,645.1
|
|
||
|
Plant, property and equipment, net
|
534.1
|
|
|
518.8
|
|
||
|
Goodwill
|
931.0
|
|
|
875.9
|
|
||
|
Other intangible assets, net
|
128.1
|
|
|
136.1
|
|
||
|
Asbestos-related assets
|
287.5
|
|
|
309.6
|
|
||
|
Deferred income taxes
|
162.9
|
|
|
164.5
|
|
||
|
Other non-current assets
|
295.4
|
|
|
196.8
|
|
||
|
Total non-current assets
|
2,339.0
|
|
|
2,201.7
|
|
||
|
Total assets
|
$
|
4,041.4
|
|
|
$
|
3,846.8
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Commercial paper and current maturities of long-term debt
|
$
|
149.4
|
|
|
$
|
116.2
|
|
|
Accounts payable
|
347.4
|
|
|
339.2
|
|
||
|
Accrued liabilities
|
395.6
|
|
|
416.7
|
|
||
|
Total current liabilities
|
892.4
|
|
|
872.1
|
|
||
|
Asbestos-related liabilities
|
763.2
|
|
|
775.1
|
|
||
|
Postretirement benefits
|
204.0
|
|
|
208.2
|
|
||
|
Other non-current liabilities
|
244.4
|
|
|
166.5
|
|
||
|
Total non-current liabilities
|
1,211.6
|
|
|
1,149.8
|
|
||
|
Total liabilities
|
2,104.0
|
|
|
2,021.9
|
|
||
|
Shareholders’ equity:
|
|
|
|
||||
|
Common stock:
|
|
|
|
||||
|
Authorized – 250.0 shares, $1 par value per share
|
|
|
|
||||
|
Issued and outstanding – 87.9 shares and 87.6 shares, respectively
|
87.9
|
|
|
87.6
|
|
||
|
Retained earnings
|
2,218.8
|
|
|
2,110.3
|
|
||
|
Total accumulated other comprehensive loss
|
(371.5
|
)
|
|
(375.5
|
)
|
||
|
Total ITT Inc. shareholders’ equity
|
1,935.2
|
|
|
1,822.4
|
|
||
|
Noncontrolling interests
|
2.2
|
|
|
2.5
|
|
||
|
Total shareholders’ equity
|
1,937.4
|
|
|
1,824.9
|
|
||
|
Total liabilities and shareholders’ equity
|
$
|
4,041.4
|
|
|
$
|
3,846.8
|
|
|
For the Six Months Ended June 30
|
2019
|
|
2018
|
||||
|
Operating Activities
|
|
|
|
||||
|
Income from continuing operations attributable to ITT Inc.
|
$
|
138.2
|
|
|
$
|
170.8
|
|
|
Adjustments to income from continuing operations:
|
|
|
|
||||
|
Depreciation and amortization
|
53.0
|
|
|
55.2
|
|
||
|
Equity-based compensation
|
8.4
|
|
|
10.2
|
|
||
|
Asbestos-related costs (benefit), net
|
24.4
|
|
|
(6.2
|
)
|
||
|
Other non-cash charges, net
|
15.3
|
|
|
4.3
|
|
||
|
Asbestos-related payments, net
|
(15.8
|
)
|
|
(30.8
|
)
|
||
|
Changes in assets and liabilities:
|
|
|
|
||||
|
Change in receivables
|
(52.9
|
)
|
|
(15.2
|
)
|
||
|
Change in inventories
|
(27.4
|
)
|
|
(22.8
|
)
|
||
|
Change in accounts payable
|
11.4
|
|
|
(14.2
|
)
|
||
|
Change in accrued expenses
|
(28.1
|
)
|
|
(23.0
|
)
|
||
|
Change in income taxes
|
3.7
|
|
|
(11.7
|
)
|
||
|
Other, net
|
(29.1
|
)
|
|
2.7
|
|
||
|
Net Cash – Operating activities
|
101.1
|
|
|
119.3
|
|
||
|
Investing Activities
|
|
|
|
||||
|
Capital expenditures
|
(45.8
|
)
|
|
(46.3
|
)
|
||
|
Acquisitions, net of cash acquired
|
(87.3
|
)
|
|
—
|
|
||
|
Other, net
|
0.8
|
|
|
0.9
|
|
||
|
Net Cash – Investing activities
|
(132.3
|
)
|
|
(45.4
|
)
|
||
|
Financing Activities
|
|
|
|
||||
|
Commercial paper, net borrowings (repayments)
|
33.7
|
|
|
(162.4
|
)
|
||
|
Short-term revolving loans, borrowings
|
—
|
|
|
246.5
|
|
||
|
Short-term revolving loans, repayments
|
—
|
|
|
(23.5
|
)
|
||
|
Long-term debt, issued
|
7.1
|
|
|
—
|
|
||
|
Long-term debt, repayments
|
(2.0
|
)
|
|
(1.9
|
)
|
||
|
Repurchase of common stock
|
(20.0
|
)
|
|
(55.4
|
)
|
||
|
Proceeds from issuance of common stock
|
8.3
|
|
|
4.7
|
|
||
|
Dividends paid
|
(26.1
|
)
|
|
(12.0
|
)
|
||
|
Other, net
|
(0.6
|
)
|
|
(0.1
|
)
|
||
|
Net Cash – Financing activities
|
0.4
|
|
|
(4.1
|
)
|
||
|
Exchange rate effects on cash and cash equivalents
|
0.6
|
|
|
(8.6
|
)
|
||
|
Net Cash – Operating activities of discontinued operations
|
1.2
|
|
|
(1.4
|
)
|
||
|
Net change in cash and cash equivalents
|
(29.0
|
)
|
|
59.8
|
|
||
|
Cash and cash equivalents – beginning of year (includes restricted cash of $1.0 and $1.2, respectively)
|
562.2
|
|
|
391.0
|
|
||
|
Cash and cash equivalents – end of period (includes restricted cash of $1.3 and $1.2, respectively)
|
$
|
533.2
|
|
|
$
|
450.8
|
|
|
Supplemental Disclosures of Cash Flow Information
|
|
|
|
||||
|
Cash paid during the year for:
|
|
|
|
||||
|
Interest
|
$
|
1.7
|
|
|
$
|
1.1
|
|
|
Income taxes, net of refunds received
|
$
|
33.7
|
|
|
$
|
23.2
|
|
|
|
Common Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interest
|
|
Total Shareholders' Equity
|
|||||||||||||
|
|
(Shares)
|
|
(Dollars)
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
December 31, 2018
|
87.6
|
|
|
$
|
87.6
|
|
|
$
|
2,110.3
|
|
|
$
|
(375.5
|
)
|
|
$
|
2.5
|
|
|
$
|
1,824.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net income
|
—
|
|
|
—
|
|
|
71.3
|
|
|
—
|
|
|
0.1
|
|
|
71.4
|
|
|||||
|
Activity from stock incentive plans
|
0.6
|
|
|
0.6
|
|
|
8.9
|
|
|
—
|
|
|
—
|
|
|
9.5
|
|
|||||
|
Share repurchases
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(19.5
|
)
|
|
—
|
|
|
—
|
|
|
(19.9
|
)
|
|||||
|
Dividends declared ($0.147 per share)
|
—
|
|
|
—
|
|
|
(12.9
|
)
|
|
—
|
|
|
—
|
|
|
(12.9
|
)
|
|||||
|
Total other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|
—
|
|
|
(1.8
|
)
|
|||||
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||||
|
March 31, 2019
|
87.8
|
|
|
$
|
87.8
|
|
|
$
|
2,158.1
|
|
|
$
|
(377.3
|
)
|
|
$
|
2.7
|
|
|
$
|
1,871.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net income
|
—
|
|
|
—
|
|
|
66.8
|
|
|
—
|
|
|
0.2
|
|
|
67.0
|
|
|||||
|
Activity from stock incentive plans
|
0.1
|
|
|
0.1
|
|
|
7.1
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|||||
|
Share repurchases
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||||
|
Dividends declared ($0.147 per share)
|
—
|
|
|
—
|
|
|
(13.1
|
)
|
|
—
|
|
|
—
|
|
|
(13.1
|
)
|
|||||
|
Dividend to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
(0.7
|
)
|
|||||
|
Total other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
|
—
|
|
|
5.8
|
|
|||||
|
June 30, 2019
|
87.9
|
|
|
$
|
87.9
|
|
|
$
|
2,218.8
|
|
|
$
|
(371.5
|
)
|
|
$
|
2.2
|
|
|
$
|
1,937.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Common Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interest
|
|
Total Shareholders' Equity
|
|||||||||||||
|
|
(Shares)
|
|
(Dollars)
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
December 31, 2017
|
88.2
|
|
|
$
|
88.2
|
|
|
$
|
1,856.1
|
|
|
$
|
(348.2
|
)
|
|
$
|
1.7
|
|
|
$
|
1,597.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net income
|
—
|
|
|
—
|
|
|
101.2
|
|
|
—
|
|
|
0.1
|
|
|
101.3
|
|
|||||
|
Activity from stock incentive plans
|
0.3
|
|
|
0.3
|
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|||||
|
Share repurchases
|
(1.1
|
)
|
|
(1.1
|
)
|
|
(54.2
|
)
|
|
—
|
|
|
—
|
|
|
(55.3
|
)
|
|||||
|
Cumulative adjustment for accounting change
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
|||||
|
Dividends declared ($0.134 per share)
|
—
|
|
|
—
|
|
|
(11.9
|
)
|
|
—
|
|
|
—
|
|
|
(11.9
|
)
|
|||||
|
Total other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
27.6
|
|
|
—
|
|
|
27.6
|
|
|||||
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||||
|
March 31, 2018
|
87.4
|
|
|
$
|
87.4
|
|
|
$
|
1,891.8
|
|
|
$
|
(320.6
|
)
|
|
$
|
1.9
|
|
|
$
|
1,660.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Net income
|
—
|
|
|
—
|
|
|
69.7
|
|
|
—
|
|
|
0.2
|
|
|
69.9
|
|
|||||
|
Activity from stock incentive plans
|
0.2
|
|
|
0.2
|
|
|
9.7
|
|
|
—
|
|
|
—
|
|
|
9.9
|
|
|||||
|
Share repurchases
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||||
|
Dividends declared ($0.134 per share)
|
—
|
|
|
—
|
|
|
(11.8
|
)
|
|
—
|
|
|
—
|
|
|
(11.8
|
)
|
|||||
|
Total other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(46.0
|
)
|
|
—
|
|
|
(46.0
|
)
|
|||||
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||||
|
June 30, 2018
|
87.6
|
|
|
$
|
87.6
|
|
|
$
|
1,959.3
|
|
|
$
|
(366.6
|
)
|
|
$
|
2.0
|
|
|
$
|
1,682.3
|
|
|
|
December 31,
2018 |
|
Effect of Change
|
|
January 1,
2019 |
||||||
|
Other non-current assets
|
$
|
196.8
|
|
|
$
|
80.0
|
|
|
$
|
276.8
|
|
|
Accrued liabilities
|
416.7
|
|
|
18.7
|
|
|
435.4
|
|
|||
|
Other non-current liabilities
|
166.5
|
|
|
61.3
|
|
|
227.8
|
|
|||
|
|
Revenue
|
|
Operating Income
|
|
Operating Margin
|
||||||||||||||||
|
For the Three Months Ended June 30
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
|
Motion Technologies
|
$
|
317.7
|
|
|
$
|
330.3
|
|
|
$
|
52.0
|
|
|
$
|
55.5
|
|
|
16.4
|
%
|
|
16.8
|
%
|
|
Industrial Process
|
232.6
|
|
|
203.2
|
|
|
26.0
|
|
|
23.4
|
|
|
11.2
|
%
|
|
11.5
|
%
|
||||
|
Connect & Control Technologies
|
170.2
|
|
|
164.1
|
|
|
29.6
|
|
|
27.3
|
|
|
17.4
|
%
|
|
16.6
|
%
|
||||
|
Total segment results
|
720.5
|
|
|
697.6
|
|
|
107.6
|
|
|
106.2
|
|
|
14.9
|
%
|
|
15.2
|
%
|
||||
|
Asbestos-related costs, net
|
—
|
|
|
—
|
|
|
(11.8
|
)
|
|
(13.5
|
)
|
|
—
|
|
|
—
|
|
||||
|
Eliminations / Other corporate costs
|
(0.6
|
)
|
|
(0.8
|
)
|
|
(9.8
|
)
|
|
(12.4
|
)
|
|
—
|
|
|
—
|
|
||||
|
Total Eliminations / Corporate and Other costs
|
(0.6
|
)
|
|
(0.8
|
)
|
|
(21.6
|
)
|
|
(25.9
|
)
|
|
—
|
|
|
—
|
|
||||
|
Total
|
$
|
719.9
|
|
|
$
|
696.8
|
|
|
$
|
86.0
|
|
|
$
|
80.3
|
|
|
11.9
|
%
|
|
11.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Revenue
|
|
Operating Income
|
|
Operating Margin
|
||||||||||||||||
|
For the Six Months Ended June 30
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
|
Motion Technologies
|
$
|
632.9
|
|
|
$
|
672.5
|
|
|
$
|
112.9
|
|
|
$
|
117.4
|
|
|
17.8
|
%
|
|
17.5
|
%
|
|
Industrial Process
|
448.3
|
|
|
393.0
|
|
|
48.2
|
|
|
40.3
|
|
|
10.8
|
%
|
|
10.3
|
%
|
||||
|
Connect & Control Technologies
|
335.2
|
|
|
322.0
|
|
|
57.0
|
|
|
50.3
|
|
|
17.0
|
%
|
|
15.6
|
%
|
||||
|
Total segment results
|
1,416.4
|
|
|
1,387.5
|
|
|
218.1
|
|
|
208.0
|
|
|
15.4
|
%
|
|
15.0
|
%
|
||||
|
Asbestos-related (costs) benefit, net
|
—
|
|
|
—
|
|
|
(24.4
|
)
|
|
6.2
|
|
|
—
|
|
|
—
|
|
||||
|
Eliminations / Corporate and other costs
|
(1.0
|
)
|
|
(1.4
|
)
|
|
(17.1
|
)
|
|
(23.3
|
)
|
|
—
|
|
|
—
|
|
||||
|
Total Eliminations / Corporate and Other costs
|
(1.0
|
)
|
|
(1.4
|
)
|
|
(41.5
|
)
|
|
(17.1
|
)
|
|
—
|
|
|
—
|
|
||||
|
Total
|
$
|
1,415.4
|
|
|
$
|
1,386.1
|
|
|
$
|
176.6
|
|
|
$
|
190.9
|
|
|
12.5
|
%
|
|
13.8
|
%
|
|
|
Total Assets
|
|
Capital
Expenditures
|
|
Depreciation &
Amortization
|
||||||||||||||||||
|
For the Six Months Ended June 30
|
2019
|
|
2018(a)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
|
Motion Technologies
|
$
|
1,215.0
|
|
|
$
|
1,147.2
|
|
|
$
|
30.1
|
|
|
$
|
40.0
|
|
|
$
|
28.5
|
|
|
$
|
28.7
|
|
|
Industrial Process
|
1,137.6
|
|
|
1,000.1
|
|
|
5.6
|
|
|
1.8
|
|
|
12.6
|
|
|
13.7
|
|
||||||
|
Connect & Control Technologies
|
741.4
|
|
|
694.0
|
|
|
8.5
|
|
|
4.3
|
|
|
10.3
|
|
|
10.7
|
|
||||||
|
Corporate and Other
|
947.4
|
|
|
1,005.5
|
|
|
1.6
|
|
|
0.2
|
|
|
1.6
|
|
|
2.1
|
|
||||||
|
Total
|
$
|
4,041.4
|
|
|
$
|
3,846.8
|
|
|
$
|
45.8
|
|
|
$
|
46.3
|
|
|
$
|
53.0
|
|
|
$
|
55.2
|
|
|
(a)
|
Amounts reflect balances as of December 31, 2018.
|
|
For the Three Months Ended June 30, 2019
|
Motion Technologies
|
Industrial Process
|
Connect & Control Technologies
|
Eliminations
|
Total
|
||||||||||||||||||||
|
Automotive and rail
|
|
$
|
312.1
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(0.1
|
)
|
|
|
$
|
312.0
|
|
|
|
Chemical and industrial pumps
|
|
—
|
|
|
|
168.7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
168.7
|
|
|
|||||
|
Aerospace and defense
|
|
2.8
|
|
|
|
—
|
|
|
|
105.3
|
|
|
|
—
|
|
|
|
108.1
|
|
|
|||||
|
Oil and gas
|
|
—
|
|
|
|
63.9
|
|
|
|
10.1
|
|
|
|
—
|
|
|
|
74.0
|
|
|
|||||
|
General industrial
|
|
2.8
|
|
|
|
—
|
|
|
|
54.8
|
|
|
|
(0.5
|
)
|
|
|
57.1
|
|
|
|||||
|
Total
|
|
$
|
317.7
|
|
|
|
$
|
232.6
|
|
|
|
$
|
170.2
|
|
|
|
$
|
(0.6
|
)
|
|
|
$
|
719.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
For the Six Months Ended June 30, 2019
|
|
|
|
|
|
||||||||||||||||||||
|
Automotive and rail
|
|
$
|
622.1
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(0.1
|
)
|
|
|
$
|
622.0
|
|
|
|
Chemical and industrial pumps
|
|
—
|
|
|
|
330.2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
330.2
|
|
|
|||||
|
Aerospace and defense
|
|
5.1
|
|
|
|
—
|
|
|
|
204.8
|
|
|
|
—
|
|
|
|
209.9
|
|
|
|||||
|
Oil and gas
|
|
—
|
|
|
|
118.1
|
|
|
|
18.6
|
|
|
|
—
|
|
|
|
136.7
|
|
|
|||||
|
General industrial
|
|
5.7
|
|
|
|
—
|
|
|
|
111.8
|
|
|
|
(0.9
|
)
|
|
|
116.6
|
|
|
|||||
|
Total
|
|
$
|
632.9
|
|
|
|
$
|
448.3
|
|
|
|
$
|
335.2
|
|
|
|
$
|
(1.0
|
)
|
|
|
$
|
1,415.4
|
|
|
|
For the Three Months Ended June 30, 2018
|
Motion Technologies
|
Industrial Process
|
Connect & Control Technologies
|
Eliminations
|
Total
|
||||||||||||||||||||
|
Automotive and rail
|
|
$
|
322.5
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(0.1
|
)
|
|
|
$
|
322.4
|
|
|
|
Chemical and industrial pumps
|
|
—
|
|
|
|
153.2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
153.2
|
|
|
|||||
|
Aerospace and defense
|
|
2.7
|
|
|
|
—
|
|
|
|
96.1
|
|
|
|
—
|
|
|
|
98.8
|
|
|
|||||
|
Oil and gas
|
|
—
|
|
|
|
50.0
|
|
|
|
10.1
|
|
|
|
—
|
|
|
|
60.1
|
|
|
|||||
|
General industrial
|
|
5.1
|
|
|
|
—
|
|
|
|
57.9
|
|
|
|
(0.7
|
)
|
|
|
62.3
|
|
|
|||||
|
Total
|
|
$
|
330.3
|
|
|
|
$
|
203.2
|
|
|
|
$
|
164.1
|
|
|
|
$
|
(0.8
|
)
|
|
|
$
|
696.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
For the Six Months Ended June 30, 2018
|
|
|
|
|
|
||||||||||||||||||||
|
Automotive and rail
|
|
$
|
661.1
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(0.1
|
)
|
|
|
$
|
661.0
|
|
|
|
Chemical and industrial pumps
|
|
—
|
|
|
|
294.7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
294.7
|
|
|
|||||
|
Aerospace and defense
|
|
4.5
|
|
|
|
—
|
|
|
|
183.7
|
|
|
|
—
|
|
|
|
188.2
|
|
|
|||||
|
Oil and gas
|
|
—
|
|
|
|
98.3
|
|
|
|
19.1
|
|
|
|
—
|
|
|
|
117.4
|
|
|
|||||
|
General industrial
|
|
6.9
|
|
|
|
—
|
|
|
|
119.2
|
|
|
|
(1.3
|
)
|
|
|
124.8
|
|
|
|||||
|
Total
|
|
$
|
672.5
|
|
|
|
$
|
393.0
|
|
|
|
$
|
322.0
|
|
|
|
$
|
(1.4
|
)
|
|
|
$
|
1,386.1
|
|
|
|
|
June 30,
2019 |
December 31,
2018 |
Change
|
|||||||||||
|
Current contract assets
|
|
$
|
28.3
|
|
|
|
$
|
21.8
|
|
|
|
29.8
|
%
|
|
|
Non-current contract assets
|
|
—
|
|
|
|
0.7
|
|
|
|
(100.0
|
)%
|
|
||
|
Current contract liabilities
|
|
(55.8
|
)
|
|
|
(61.0
|
)
|
|
|
(8.5
|
)%
|
|
||
|
Net contract liabilities
|
|
$
|
(27.5
|
)
|
|
|
$
|
(38.5
|
)
|
|
|
(28.6
|
)%
|
|
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
Income tax expense
|
$
|
19.3
|
|
|
$
|
8.9
|
|
|
116.9
|
%
|
|
$
|
39.0
|
|
|
$
|
16.5
|
|
|
136.4
|
%
|
|
Effective tax rate
|
22.3
|
%
|
|
11.3
|
%
|
|
1100bp
|
|
|
22.0
|
%
|
|
8.8
|
%
|
|
1320bp
|
|
||||
|
|
Three Months
|
|
Six Months
|
||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
Basic weighted average common shares outstanding
|
87.8
|
|
|
87.5
|
|
|
87.7
|
|
|
87.8
|
|
|
Add: Dilutive impact of outstanding equity awards
|
0.9
|
|
|
0.9
|
|
|
0.9
|
|
|
0.9
|
|
|
Diluted weighted average common shares outstanding
|
88.7
|
|
|
88.4
|
|
|
88.6
|
|
|
88.7
|
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||||||
|
Trade accounts receivable
|
|
$
|
585.0
|
|
|
|
|
$
|
531.7
|
|
|
|
Notes receivable
|
|
6.6
|
|
|
|
|
3.7
|
|
|
||
|
Other
|
|
20.5
|
|
|
|
|
22.9
|
|
|
||
|
Receivables, gross
|
|
612.1
|
|
|
|
|
558.3
|
|
|
||
|
Less: Allowance for doubtful accounts
|
|
(12.1
|
)
|
|
|
|
(18.3
|
)
|
|
||
|
Receivables, net
|
|
$
|
600.0
|
|
|
|
|
$
|
540.0
|
|
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||||||
|
Finished goods
|
|
$
|
68.3
|
|
|
|
|
$
|
64.2
|
|
|
|
Work in process
|
|
103.2
|
|
|
|
|
83.1
|
|
|
||
|
Raw materials
|
|
249.9
|
|
|
|
|
233.2
|
|
|
||
|
Inventories, net
|
|
$
|
421.4
|
|
|
|
|
$
|
380.5
|
|
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||||||
|
Asbestos-related assets
|
|
$
|
67.1
|
|
|
|
|
$
|
67.1
|
|
|
|
Advance payments and other prepaid expenses
|
|
37.9
|
|
|
|
|
44.5
|
|
|
||
|
Current contract assets
|
|
28.3
|
|
|
|
|
21.8
|
|
|
||
|
Prepaid income taxes
|
|
13.5
|
|
|
|
|
19.6
|
|
|
||
|
Other
|
|
2.3
|
|
|
|
|
10.4
|
|
|
||
|
Other current assets
|
|
$
|
149.1
|
|
|
|
|
$
|
163.4
|
|
|
|
Other employee benefit-related assets
|
|
$
|
109.8
|
|
|
|
|
$
|
104.7
|
|
|
|
Operating lease right-of-use assets (see Note 2)
|
|
93.6
|
|
|
|
|
—
|
|
|
||
|
Capitalized software costs
|
|
32.3
|
|
|
|
|
35.3
|
|
|
||
|
Environmental-related assets
|
|
23.6
|
|
|
|
|
23.4
|
|
|
||
|
Equity method investments
|
|
8.8
|
|
|
|
|
7.7
|
|
|
||
|
Other
|
|
27.3
|
|
|
|
|
25.7
|
|
|
||
|
Other non-current assets
|
|
$
|
295.4
|
|
|
|
|
$
|
196.8
|
|
|
|
|
Useful life
(in years)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||||||
|
Machinery and equipment
|
2 - 10
|
|
|
$
|
1,096.6
|
|
|
|
|
$
|
1,056.9
|
|
|
|
Buildings and improvements
|
5 - 40
|
|
|
284.1
|
|
|
|
|
265.3
|
|
|
||
|
Furniture, fixtures and office equipment
|
3 - 7
|
|
|
81.1
|
|
|
|
|
69.1
|
|
|
||
|
Construction work in progress
|
|
|
|
65.0
|
|
|
|
|
67.9
|
|
|
||
|
Land and improvements
|
|
|
|
29.7
|
|
|
|
|
27.8
|
|
|
||
|
Other
|
|
|
|
10.3
|
|
|
|
|
10.3
|
|
|
||
|
Plant, property and equipment, gross
|
|
|
|
1,566.8
|
|
|
|
|
1,497.3
|
|
|
||
|
Less: Accumulated depreciation
|
|
|
|
(1,032.7
|
)
|
|
|
|
(978.5
|
)
|
|
||
|
Plant, property and equipment, net
|
|
|
|
$
|
534.1
|
|
|
|
|
$
|
518.8
|
|
|
|
|
Motion
Technologies |
|
Industrial
Process
|
|
Connect & Control
Technologies
|
|
Total
|
||||||||||||||
|
Goodwill - December 31, 2018
|
|
$
|
294.5
|
|
|
|
|
$
|
315.8
|
|
|
|
|
$
|
265.6
|
|
|
|
$
|
875.9
|
|
|
Acquired
|
|
—
|
|
|
|
|
54.6
|
|
|
|
|
—
|
|
|
|
54.6
|
|
||||
|
Foreign exchange translation
|
|
0.1
|
|
|
|
|
0.6
|
|
|
|
|
(0.2
|
)
|
|
|
0.5
|
|
||||
|
Goodwill - June 30, 2019
|
|
$
|
294.6
|
|
|
|
|
$
|
371.0
|
|
|
|
|
$
|
265.4
|
|
|
|
$
|
931.0
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Net Intangibles
|
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Net Intangibles
|
||||||||||||||||||||||||
|
Customer relationships
|
|
$
|
164.2
|
|
|
|
|
$
|
(92.8
|
)
|
|
|
|
$
|
71.4
|
|
|
|
|
$
|
164.1
|
|
|
|
|
$
|
(86.2
|
)
|
|
|
|
$
|
77.9
|
|
|
|
Proprietary technology
|
|
53.6
|
|
|
|
|
(27.2
|
)
|
|
|
|
26.4
|
|
|
|
|
53.7
|
|
|
|
|
(25.6
|
)
|
|
|
|
28.1
|
|
|
||||||
|
Patents and other
|
|
12.8
|
|
|
|
|
(9.7
|
)
|
|
|
|
3.1
|
|
|
|
|
12.3
|
|
|
|
|
(9.4
|
)
|
|
|
|
2.9
|
|
|
||||||
|
Finite-lived intangible total
|
|
230.6
|
|
|
|
|
(129.7
|
)
|
|
|
|
100.9
|
|
|
|
|
230.1
|
|
|
|
|
(121.2
|
)
|
|
|
|
108.9
|
|
|
||||||
|
Indefinite-lived intangibles
|
|
27.2
|
|
|
|
|
—
|
|
|
|
|
27.2
|
|
|
|
|
27.2
|
|
|
|
|
—
|
|
|
|
|
27.2
|
|
|
||||||
|
Other intangible assets
|
|
$
|
257.8
|
|
|
|
|
$
|
(129.7
|
)
|
|
|
|
$
|
128.1
|
|
|
|
|
$
|
257.3
|
|
|
|
|
$
|
(121.2
|
)
|
|
|
|
$
|
136.1
|
|
|
|
|
June 30,
2019 |
December 31,
2018 |
||||||||
|
Compensation and other employee-related benefits
|
|
$
|
136.3
|
|
|
|
$
|
152.2
|
|
|
|
Contract liabilities and other customer-related liabilities
|
|
76.6
|
|
|
|
82.2
|
|
|
||
|
Asbestos-related liability
|
|
72.6
|
|
|
|
74.2
|
|
|
||
|
Accrued income taxes and other tax-related liabilities
|
|
25.7
|
|
|
|
33.7
|
|
|
||
|
Operating lease liabilities (see Note 2)
|
|
19.3
|
|
|
|
—
|
|
|
||
|
Accrued warranty costs
|
|
16.2
|
|
|
|
16.2
|
|
|
||
|
Environmental liabilities and other legal matters
|
|
15.0
|
|
|
|
24.0
|
|
|
||
|
Other
|
|
33.9
|
|
|
|
34.2
|
|
|
||
|
Accrued liabilities
|
|
$
|
395.6
|
|
|
|
$
|
416.7
|
|
|
|
Environmental liabilities
|
|
$
|
56.2
|
|
|
|
$
|
59.5
|
|
|
|
Operating lease liabilities (see Note 2)
|
|
78.5
|
|
|
|
—
|
|
|
||
|
Compensation and other employee-related benefits
|
|
35.1
|
|
|
|
34.2
|
|
|
||
|
Deferred income taxes and other tax-related accruals
|
|
23.8
|
|
|
|
25.0
|
|
|
||
|
Other
|
|
50.8
|
|
|
|
47.8
|
|
|
||
|
Other non-current liabilities
|
|
$
|
244.4
|
|
|
|
$
|
166.5
|
|
|
|
2019
|
$
|
11.6
|
|
|
2020
|
19.5
|
|
|
|
2021
|
15.3
|
|
|
|
2022
|
12.6
|
|
|
|
2023
|
10.0
|
|
|
|
2024 and thereafter
|
60.7
|
|
|
|
Total lease payments
|
129.7
|
|
|
|
Less: amount of lease payments representing interest
|
(31.9
|
)
|
|
|
Present value of future lease payments
|
$
|
97.8
|
|
|
|
|
||
|
Short-term lease liability
|
$
|
19.3
|
|
|
Long-term lease liability
|
78.5
|
|
|
|
Present value of future lease payments
|
$
|
97.8
|
|
|
2019
|
$
|
22.2
|
|
|
2020
|
16.8
|
|
|
|
2021
|
12.6
|
|
|
|
2022
|
10.2
|
|
|
|
2023
|
8.1
|
|
|
|
2024 and thereafter
|
46.4
|
|
|
|
Total minimum lease payments
|
$
|
116.3
|
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||||||
|
Commercial paper
|
|
$
|
148.0
|
|
|
|
|
$
|
114.4
|
|
|
|
Current maturities of long-term debt and finance leases
|
|
1.4
|
|
|
|
|
1.8
|
|
|
||
|
Commercial paper and current maturities of long-term debt
|
|
149.4
|
|
|
|
|
116.2
|
|
|
||
|
Long-term debt and finance leases
|
|
14.3
|
|
|
|
|
8.8
|
|
|
||
|
Total debt and finance leases
|
|
$
|
163.7
|
|
|
|
|
$
|
125.0
|
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||||||
|
For the Three Months Ended June 30
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||||||||||||||
|
Service cost
|
|
$
|
0.3
|
|
|
|
|
$
|
0.1
|
|
|
|
|
$
|
0.4
|
|
|
|
|
$
|
0.4
|
|
|
|
|
$
|
0.2
|
|
|
|
|
$
|
0.6
|
|
|
|
Interest cost
|
|
3.2
|
|
|
|
|
1.0
|
|
|
|
|
4.2
|
|
|
|
|
2.8
|
|
|
|
|
1.1
|
|
|
|
|
3.9
|
|
|
||||||
|
Expected return on plan assets
|
|
(3.4
|
)
|
|
|
|
—
|
|
|
|
|
(3.4
|
)
|
|
|
|
(3.4
|
)
|
|
|
|
(0.1
|
)
|
|
|
|
(3.5
|
)
|
|
||||||
|
Amortization of prior service cost (benefit)
|
|
0.2
|
|
|
|
|
(1.3
|
)
|
|
|
|
(1.1
|
)
|
|
|
|
0.2
|
|
|
|
|
(1.3
|
)
|
|
|
|
(1.1
|
)
|
|
||||||
|
Amortization of net actuarial loss
|
|
1.3
|
|
|
|
|
0.5
|
|
|
|
|
1.8
|
|
|
|
|
1.5
|
|
|
|
|
1.1
|
|
|
|
|
2.6
|
|
|
||||||
|
Total net periodic benefit cost
|
|
$
|
1.6
|
|
|
|
|
$
|
0.3
|
|
|
|
|
$
|
1.9
|
|
|
|
|
$
|
1.5
|
|
|
|
|
$
|
1.0
|
|
|
|
|
$
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||||||
|
For the Six Months Ended June 30
|
Pension
|
|
Other
Benefits |
|
Total
|
|
Pension
|
|
Other
Benefits |
|
Total
|
||||||||||||||||||||||||
|
Service cost
|
|
$
|
0.7
|
|
|
|
|
$
|
0.3
|
|
|
|
|
$
|
1.0
|
|
|
|
|
$
|
0.8
|
|
|
|
|
$
|
0.4
|
|
|
|
|
$
|
1.2
|
|
|
|
Interest cost
|
|
6.3
|
|
|
|
|
2.0
|
|
|
|
|
8.3
|
|
|
|
|
5.6
|
|
|
|
|
2.2
|
|
|
|
|
7.8
|
|
|
||||||
|
Expected return on plan assets
|
|
(7.2
|
)
|
|
|
|
—
|
|
|
|
|
(7.2
|
)
|
|
|
|
(6.8
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(7.0
|
)
|
|
||||||
|
Amortization of prior service cost (benefit)
|
|
0.4
|
|
|
|
|
(2.6
|
)
|
|
|
|
(2.2
|
)
|
|
|
|
0.4
|
|
|
|
|
(2.6
|
)
|
|
|
|
(2.2
|
)
|
|
||||||
|
Amortization of net actuarial loss
|
|
2.6
|
|
|
|
|
1.1
|
|
|
|
|
3.7
|
|
|
|
|
3.0
|
|
|
|
|
2.2
|
|
|
|
|
5.2
|
|
|
||||||
|
Total net periodic benefit cost
|
|
$
|
2.8
|
|
|
|
|
$
|
0.8
|
|
|
|
|
$
|
3.6
|
|
|
|
|
$
|
3.0
|
|
|
|
|
$
|
2.0
|
|
|
|
|
$
|
5.0
|
|
|
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Equity-based awards
|
$
|
3.9
|
|
|
$
|
5.7
|
|
|
$
|
8.4
|
|
|
$
|
10.2
|
|
|
Liability-based awards
|
0.7
|
|
|
0.7
|
|
|
1.4
|
|
|
0.8
|
|
||||
|
Total share-based compensation expense
|
$
|
4.6
|
|
|
$
|
6.4
|
|
|
$
|
9.8
|
|
|
$
|
11.0
|
|
|
|
# of Awards Granted
|
Weighted Average Grant Date Fair Value Per Share
|
||||
|
Restricted stock units (RSUs)
|
0.2
|
|
$
|
58.35
|
|
|
|
Performance stock units (PSUs)
|
0.1
|
|
$
|
65.28
|
|
|
|
|
Postretirement Benefit Plans
|
|
Cumulative Translation Adjustment
|
|
Accumulated Other Comprehensive Loss
|
||||||
|
December 31, 2018
|
$
|
(131.6
|
)
|
|
$
|
(243.9
|
)
|
|
$
|
(375.5
|
)
|
|
|
|
|
|
|
|
||||||
|
Net change during period
|
0.6
|
|
|
(2.4
|
)
|
|
(1.8
|
)
|
|||
|
March 31, 2019
|
(131.0
|
)
|
|
(246.3
|
)
|
|
(377.3
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
Net change during period
|
0.5
|
|
|
5.3
|
|
|
5.8
|
|
|||
|
June 30, 2019
|
$
|
(130.5
|
)
|
|
$
|
(241.0
|
)
|
|
$
|
(371.5
|
)
|
|
|
|
|
|
|
|
||||||
|
|
Postretirement Benefit Plans
|
|
Cumulative Translation Adjustment
|
|
Accumulated Other Comprehensive Loss
|
||||||
|
December 31, 2017
|
$
|
(137.6
|
)
|
|
$
|
(210.6
|
)
|
|
$
|
(348.2
|
)
|
|
|
|
|
|
|
|
||||||
|
Net change during period
|
1.1
|
|
|
26.5
|
|
|
27.6
|
|
|||
|
March 31, 2018
|
(136.5
|
)
|
|
(184.1
|
)
|
|
(320.6
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
Net change during period
|
1.1
|
|
|
(47.1
|
)
|
|
(46.0
|
)
|
|||
|
June 30, 2018
|
$
|
(135.4
|
)
|
|
$
|
(231.2
|
)
|
|
$
|
(366.6
|
)
|
|
Pending claims – Beginning
|
24
|
|
|
New claims
|
2
|
|
|
Settlements
|
(1
|
)
|
|
Dismissals
|
(1
|
)
|
|
Pending claims – Ending
|
24
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
For the Six Months Ended June 30
|
Liability
|
|
Asset
|
|
Net
|
|
Liability
|
|
Asset
|
|
Net
|
||||||||||||
|
Beginning balance
|
$
|
849.3
|
|
|
$
|
376.7
|
|
|
$
|
472.6
|
|
|
$
|
877.2
|
|
|
$
|
368.7
|
|
|
$
|
508.5
|
|
|
Asbestos provision(a)
|
30.6
|
|
|
6.2
|
|
|
24.4
|
|
|
32.0
|
|
|
6.1
|
|
|
25.9
|
|
||||||
|
Insurance settlement agreement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32.1
|
|
|
(32.1
|
)
|
||||||
|
Net cash activity(a)
|
(44.1
|
)
|
|
(28.3
|
)
|
|
(15.8
|
)
|
|
(50.4
|
)
|
|
(19.6
|
)
|
|
(30.8
|
)
|
||||||
|
Ending balance
|
$
|
835.8
|
|
|
$
|
354.6
|
|
|
$
|
481.2
|
|
|
$
|
858.8
|
|
|
$
|
387.3
|
|
|
$
|
471.5
|
|
|
Current portion
|
$
|
72.6
|
|
|
$
|
67.1
|
|
|
|
|
$
|
77.2
|
|
|
$
|
64.7
|
|
|
|
||||
|
Noncurrent portion
|
$
|
763.2
|
|
|
$
|
287.5
|
|
|
|
|
|
$
|
781.6
|
|
|
$
|
322.6
|
|
|
|
|||
|
(a)
|
Includes certain administrative costs such as legal-related costs for insurance asset recoveries.
|
|
For the Six Months Ended June 30
|
2019
|
|
2018
|
||||
|
Environmental liability - beginning balance
|
$
|
66.8
|
|
|
$
|
73.9
|
|
|
Change in estimates for pre-existing accruals
|
0.3
|
|
|
3.3
|
|
||
|
Accruals added during the period for new matters
|
—
|
|
|
2.0
|
|
||
|
Payments (a)
|
(3.6
|
)
|
|
(12.2
|
)
|
||
|
Foreign currency
|
—
|
|
|
0.1
|
|
||
|
Environmental liability - ending balance
|
$
|
63.5
|
|
|
$
|
67.1
|
|
|
(a)
|
Includes cash payments of $7.9 for the six months ended June 30, 2018 related to the sale of a former operating location.
|
|
Cash
|
$
|
4.7
|
|
|
Receivables
|
9.7
|
|
|
|
Inventory
|
13.3
|
|
|
|
Plant, property and equipment
|
21.5
|
|
|
|
Goodwill
|
54.6
|
|
|
|
Other assets
|
3.2
|
|
|
|
Accounts payable and accrued liabilities
|
(6.7
|
)
|
|
|
Other liabilities
|
(5.3
|
)
|
|
|
Net assets acquired
|
$
|
95.0
|
|
|
|
Three Months
|
|
Six Months
|
||||||||||||||
|
|
2019
|
2018
|
Change
|
|
2019
|
2018
|
Change
|
||||||||||
|
Revenue
|
$
|
719.9
|
|
$
|
696.8
|
|
3.3
|
%
|
|
$
|
1,415.4
|
|
$
|
1,386.1
|
|
2.1
|
%
|
|
Gross profit
|
232.0
|
|
226.0
|
|
2.7
|
%
|
|
450.8
|
|
450.2
|
|
0.1
|
%
|
||||
|
Gross margin
|
32.2
|
%
|
32.4
|
%
|
(20
|
)bp
|
|
31.8
|
%
|
32.5
|
%
|
(70
|
)bp
|
||||
|
Operating expenses
|
146.0
|
|
145.7
|
|
0.2
|
%
|
|
274.2
|
|
259.3
|
|
5.7
|
%
|
||||
|
Operating expense to revenue ratio
|
20.3
|
%
|
20.9
|
%
|
(60
|
)bp
|
|
19.4
|
%
|
18.7
|
%
|
70
|
bp
|
||||
|
Operating income
|
86.0
|
|
80.3
|
|
7.1
|
%
|
|
176.6
|
|
190.9
|
|
(7.5
|
%)
|
||||
|
Operating margin
|
11.9
|
%
|
11.5
|
%
|
40
|
bp
|
|
12.5
|
%
|
13.8
|
%
|
(130
|
)bp
|
||||
|
Interest and non-operating (income) expenses, net
|
(0.4
|
)
|
1.5
|
|
(126.7
|
%)
|
|
(0.9
|
)
|
3.3
|
|
(127.3
|
%)
|
||||
|
Income tax expense
|
19.3
|
|
8.9
|
|
116.9
|
%
|
|
39.0
|
|
16.5
|
|
136.4
|
%
|
||||
|
Effective tax rate
|
22.3
|
%
|
11.3
|
%
|
1,100
|
bp
|
|
22.0
|
%
|
8.8
|
%
|
1,320
|
bp
|
||||
|
Income from continuing operations attributable to ITT Inc.
|
66.9
|
|
69.7
|
|
(4.0
|
%)
|
|
138.2
|
|
170.8
|
|
(19.1
|
%)
|
||||
|
Net income attributable to ITT Inc.
|
66.8
|
|
69.7
|
|
(4.2
|
%)
|
|
138.1
|
|
170.9
|
|
(19.2
|
%)
|
||||
|
Summary of Key Performance Indicators for the Second Quarter of 2019
|
|||||
|
Revenue
|
Orders
|
Segment
Operating Income
|
Segment
Operating Margin |
EPS
|
Operating Cash Flow
|
|
$720
|
$693
|
$108
|
14.9%
|
$0.75
|
$101
|
|
3% Increase
|
7% Decrease
|
1% Increase
|
30bp Decrease
|
5% Decrease
|
15% Decrease
|
|
Organic Revenue
|
Organic Orders
|
Adjusted Segment Operating Income
|
Adjusted Segment Operating Margin
|
Adjusted
EPS |
Adjusted Free Cash Flow
|
|
$735
|
$706
|
$116
|
16.1%
|
$0.93
|
$82
|
|
5% Increase
|
5% Decrease
|
7% Increase
|
60bp Increase
|
13% Increase
|
10% Decrease
|
|
•
|
Revenue of $719.9 increased $23.1, or 3.3%. Excluding an unfavorable foreign currency impact of $22.7 and revenue of $7.9 from our second quarter acquisition of Rheinhütte, organic revenue increased 5.4% driven by share gains and growth across all three segments. The strength of our diversified portfolio powered our growth as oil and gas grew 29%, industrial grew 5%, and transportation grew 3%.
|
|
•
|
Orders of $692.8 decreased $48.9, or 6.6%. Excluding unfavorable foreign currency of $23.0, and orders of $10.2 from the Rheinhütte acquisition, organic orders decreased 4.9% driven mainly by a 27% decline in oil and gas due to project delays and a large prior year upstream oil and gas pump project. Industrial orders declined 6% on project and short-cycle demand weakness. Transportation orders were flat as 39% growth in rail was offset by global automotive.
|
|
•
|
Operating income of $86.0 increased $5.7, or 7.1%, driven by a reduction in corporate costs of $4.3 as well as segment operating income growth of $1.4, or 1.3%. The increase in segment operating income was driven by sales volume leverage, continued productivity and supply chain initiatives, and cost containment actions. These were partially offset by higher commodity costs and tariffs, as well as strategic investments, unfavorable product mix and $7 of foreign currency impacts. Segment operating income was additionally impacted by $6 of acquisition, restructuring, and legal costs.
|
|
•
|
Income from continuing operations of $0.75 per diluted share decreased $0.04, primarily due to favorable prior year tax items, partially offset by improvements in operating income and a reduction in interest and non-operating expense. Adjusted income from continuing operations was $0.93 per diluted share, reflecting a $0.11, or 13.4% increase from the prior year.
|
|
For the Three Months Ended June 30
|
2019
|
|
2018
|
|
Change
|
|
Organic Growth(a)
|
||||||
|
Motion Technologies
|
$
|
317.7
|
|
|
$
|
330.3
|
|
|
(3.8
|
)%
|
|
1.3
|
%
|
|
Industrial Process
|
232.6
|
|
|
203.2
|
|
|
14.5
|
%
|
|
12.6
|
%
|
||
|
Connect & Control Technologies
|
170.2
|
|
|
164.1
|
|
|
3.7
|
%
|
|
4.8
|
%
|
||
|
Eliminations
|
(0.6
|
)
|
|
(0.8
|
)
|
|
|
|
|
||||
|
Total Revenue
|
$
|
719.9
|
|
|
$
|
696.8
|
|
|
3.3
|
%
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
For the Six Months Ended June 30
|
|
|
|
|
|
|
|
||||||
|
Motion Technologies
|
$
|
632.9
|
|
|
$
|
672.5
|
|
|
(5.9
|
)%
|
|
—
|
%
|
|
Industrial Process
|
448.3
|
|
|
393.0
|
|
|
14.1
|
%
|
|
14.1
|
%
|
||
|
Connect & Control Technologies
|
335.2
|
|
|
322.0
|
|
|
4.1
|
%
|
|
5.4
|
%
|
||
|
Eliminations
|
(1.0
|
)
|
|
(1.4
|
)
|
|
|
|
|
||||
|
Total Revenue
|
$
|
1,415.4
|
|
|
$
|
1,386.1
|
|
|
2.1
|
%
|
|
5.2
|
%
|
|
For the Three Months Ended June 30
|
2019
|
|
2018
|
|
Change
|
|
Organic Growth (Decline)(a)
|
||||||
|
Motion Technologies
|
$
|
311.9
|
|
|
$
|
327.6
|
|
|
(4.8
|
)%
|
|
0.3
|
%
|
|
Industrial Process
|
212.7
|
|
|
237.4
|
|
|
(10.4
|
)%
|
|
(12.8
|
)%
|
||
|
Connect & Control Technologies
|
169.5
|
|
|
177.2
|
|
|
(4.3
|
)%
|
|
(3.3
|
)%
|
||
|
Eliminations
|
(1.3
|
)
|
|
(0.5
|
)
|
|
|
|
|
||||
|
Total Orders
|
$
|
692.8
|
|
|
$
|
741.7
|
|
|
(6.6
|
)%
|
|
(4.9
|
)%
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
For the Six Months Ended June 30
|
|
|
|
|
|
|
|
||||||
|
Motion Technologies
|
$
|
643.4
|
|
|
$
|
697.5
|
|
|
(7.8
|
)%
|
|
(1.7
|
)%
|
|
Industrial Process
|
431.7
|
|
|
447.5
|
|
|
(3.5
|
)%
|
|
(3.8
|
)%
|
||
|
Connect & Control Technologies
|
358.6
|
|
|
359.0
|
|
|
(0.1
|
)%
|
|
1.2
|
%
|
||
|
Eliminations
|
(2.0
|
)
|
|
(1.1
|
)
|
|
|
|
|
||||
|
Total Orders
|
$
|
1,431.7
|
|
|
$
|
1,502.9
|
|
|
(4.7
|
)%
|
|
(1.7
|
)%
|
|
(a)
|
See the section titled “Key Performance Indicators and Non-GAAP Measures” for a definition and reconciliation of organic revenue and organic orders.
|
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
Motion Technologies
|
$
|
52.0
|
|
|
$
|
55.5
|
|
|
(6.3
|
)%
|
|
$
|
112.9
|
|
|
$
|
117.4
|
|
|
(3.8
|
)%
|
|
Industrial Process
|
26.0
|
|
|
23.4
|
|
|
11.1
|
%
|
|
48.2
|
|
|
40.3
|
|
|
19.6
|
%
|
||||
|
Connect & Control Technologies
|
29.6
|
|
|
27.3
|
|
|
8.4
|
%
|
|
57.0
|
|
|
50.3
|
|
|
13.3
|
%
|
||||
|
Segment operating income
|
107.6
|
|
|
106.2
|
|
|
1.3
|
%
|
|
218.1
|
|
|
208.0
|
|
|
4.9
|
%
|
||||
|
Asbestos-related (costs) benefit, net
|
(11.8
|
)
|
|
(13.5
|
)
|
|
12.6
|
%
|
|
(24.4
|
)
|
|
6.2
|
|
|
(493.5
|
)%
|
||||
|
Other corporate costs
|
(9.8
|
)
|
|
(12.4
|
)
|
|
21.0
|
%
|
|
(17.1
|
)
|
|
(23.3
|
)
|
|
26.6
|
%
|
||||
|
Total corporate and asbestos-related costs
|
(21.6
|
)
|
|
(25.9
|
)
|
|
16.6
|
%
|
|
(41.5
|
)
|
|
(17.1
|
)
|
|
(142.7
|
)%
|
||||
|
Total operating income
|
$
|
86.0
|
|
|
$
|
80.3
|
|
|
7.1
|
%
|
|
$
|
176.6
|
|
|
$
|
190.9
|
|
|
(7.5
|
)%
|
|
Operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Motion Technologies
|
16.4
|
%
|
|
16.8
|
%
|
|
(40
|
)bp
|
|
17.8
|
%
|
|
17.5
|
%
|
|
30
|
bp
|
||||
|
Industrial Process
|
11.2
|
%
|
|
11.5
|
%
|
|
(30
|
)bp
|
|
10.8
|
%
|
|
10.3
|
%
|
|
50
|
bp
|
||||
|
Connect & Control Technologies
|
17.4
|
%
|
|
16.6
|
%
|
|
80
|
bp
|
|
17.0
|
%
|
|
15.6
|
%
|
|
140
|
bp
|
||||
|
Segment operating margin
|
14.9
|
%
|
|
15.2
|
%
|
|
(30
|
)bp
|
|
15.4
|
%
|
|
15.0
|
%
|
|
40
|
bp
|
||||
|
Consolidated operating margin
|
11.9
|
%
|
|
11.5
|
%
|
|
40
|
bp
|
|
12.5
|
%
|
|
13.8
|
%
|
|
(130
|
)bp
|
||||
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
Interest and non-operating (income) expenses, net
|
$
|
(0.4
|
)
|
|
$
|
1.5
|
|
|
(126.7
|
)%
|
|
$
|
(0.9
|
)
|
|
$
|
3.3
|
|
|
(127.3
|
)%
|
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||
|
Income tax expense
|
$
|
19.3
|
|
|
$
|
8.9
|
|
|
116.9
|
%
|
|
$
|
39.0
|
|
|
$
|
16.5
|
|
|
136.4
|
%
|
|
Effective tax rate
|
22.3
|
%
|
|
11.3
|
%
|
|
1,100
|
bp
|
|
22.0
|
%
|
|
8.8
|
%
|
|
1,320
|
bp
|
||||
|
For the Six Months Ended June 30
|
2019
|
|
2018
|
||||
|
Operating activities
|
$
|
101.1
|
|
|
$
|
119.3
|
|
|
Investing activities
|
(132.3
|
)
|
|
(45.4
|
)
|
||
|
Financing activities
|
0.4
|
|
|
(4.1
|
)
|
||
|
Foreign exchange
|
0.6
|
|
|
(8.6
|
)
|
||
|
Total net cash flow (used in) provided by continuing operations
|
(30.2
|
)
|
|
61.2
|
|
||
|
Net cash provided by (used) in discontinued operations
|
1.2
|
|
|
(1.4
|
)
|
||
|
Net change in cash and cash equivalents
|
$
|
(29.0
|
)
|
|
$
|
59.8
|
|
|
•
|
“Organic revenue” and “organic orders” are defined as revenue and orders, excluding the impacts of foreign currency fluctuations, acquisitions, and divestitures. Divestitures include sales of portions of our business that did not meet the criteria for presentation as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations is estimated using a fixed exchange rate for both the current and prior periods. Management believes that reporting organic revenue and organic orders provides useful information to investors by helping identify underlying trends in our business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. Reconciliations of organic revenue and orders for the three and six months ended June 30, 2019 are provided below.
|
|
Three Months Ended June 30
|
Motion Technologies
|
Industrial
Process |
Connect & Control
Technologies
|
Eliminations
|
Total
ITT
|
|||||||||||||||||||
|
2019 Revenue
|
|
$
|
317.7
|
|
|
|
$
|
232.6
|
|
|
|
$
|
170.2
|
|
|
|
$
|
(0.6
|
)
|
|
|
$
|
719.9
|
|
|
Acquisitions
|
|
—
|
|
|
|
(7.9
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(7.9
|
)
|
|||||
|
Foreign currency translation
|
|
16.8
|
|
|
|
4.2
|
|
|
|
1.7
|
|
|
|
—
|
|
|
|
22.7
|
|
|||||
|
2019 Organic revenue
|
|
$
|
334.5
|
|
|
|
$
|
228.9
|
|
|
|
$
|
171.9
|
|
|
|
$
|
(0.6
|
)
|
|
|
$
|
734.7
|
|
|
2018 Revenue
|
|
$
|
330.3
|
|
|
|
$
|
203.2
|
|
|
|
$
|
164.1
|
|
|
|
$
|
(0.8
|
)
|
|
|
$
|
696.8
|
|
|
Organic growth
|
|
4.2
|
|
|
|
25.7
|
|
|
|
7.8
|
|
|
|
0.2
|
|
|
|
37.9
|
|
|||||
|
Percentage change
|
|
1.3
|
%
|
|
|
12.6
|
%
|
|
|
4.8
|
%
|
|
|
|
|
|
5.4
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Six Months Ended June 30
|
||||||||||||||||||||||||
|
2019 Revenue
|
|
$
|
632.9
|
|
|
|
$
|
448.3
|
|
|
|
$
|
335.2
|
|
|
|
$
|
(1.0
|
)
|
|
|
$
|
1,415.4
|
|
|
Acquisitions
|
|
—
|
|
|
|
(7.9
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(7.9
|
)
|
|||||
|
Foreign currency translation
|
|
39.3
|
|
|
|
8.0
|
|
|
|
4.1
|
|
|
|
(0.1
|
)
|
|
|
51.3
|
|
|||||
|
2019 Organic revenue
|
|
$
|
672.2
|
|
|
|
$
|
448.4
|
|
|
|
$
|
339.3
|
|
|
|
$
|
(1.1
|
)
|
|
|
$
|
1,458.8
|
|
|
2018 Revenue
|
|
$
|
672.5
|
|
|
|
$
|
393.0
|
|
|
|
$
|
322.0
|
|
|
|
$
|
(1.4
|
)
|
|
|
$
|
1,386.1
|
|
|
Organic growth
|
|
(0.3
|
)
|
|
|
55.4
|
|
|
|
17.3
|
|
|
|
0.3
|
|
|
|
72.7
|
|
|||||
|
Percentage change
|
|
—
|
%
|
|
|
14.1
|
%
|
|
|
5.4
|
%
|
|
|
|
|
|
5.2
|
%
|
||||||
|
•
|
“Adjusted segment operating income” is defined as operating income, adjusted to exclude special items that include, but are not limited to, restructuring costs, realignment costs, certain asset impairment charges, certain acquisition-related expenses, and unusual or infrequent items. Special items represent significant charges or credits that impact current results, which management views as unrelated to the Company’s ongoing operations and performance. “Adjusted segment operating margin” is defined as adjusted segment operating income divided by revenue. We believe that adjusted segment operating income and margin are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.
|
|
Three Months Ended June 30, 2019
|
Motion
Technologies |
Industrial
Process
|
Connect & Control
Technologies |
Total
Segment
|
||||||||||||
|
Segment operating income
|
|
$
|
52.0
|
|
|
$
|
26.0
|
|
|
$
|
29.6
|
|
|
$
|
107.6
|
|
|
Restructuring costs
|
|
3.1
|
|
|
0.1
|
|
|
(0.2
|
)
|
|
3.0
|
|
||||
|
Acquisition-related expenses
|
|
—
|
|
|
2.9
|
|
|
0.8
|
|
|
3.7
|
|
||||
|
Realignment costs and other(a)
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
||||
|
Adjusted segment operating income
|
|
$
|
56.4
|
|
|
$
|
29.0
|
|
|
$
|
30.2
|
|
|
$
|
115.6
|
|
|
Adjusted segment operating margin
|
|
17.8
|
%
|
|
12.5
|
%
|
|
17.7
|
%
|
|
16.1
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Six Months Ended June 30, 2019
|
||||||||||||||||
|
Segment operating income
|
|
$
|
112.9
|
|
|
$
|
48.2
|
|
|
$
|
57.0
|
|
|
$
|
218.1
|
|
|
Restructuring costs
|
|
3.8
|
|
|
0.4
|
|
|
(0.1
|
)
|
|
4.1
|
|
||||
|
Acquisition-related expenses
|
|
—
|
|
|
2.9
|
|
|
0.8
|
|
|
3.7
|
|
||||
|
Realignment costs and other(a)
|
|
1.3
|
|
|
0.5
|
|
|
0.3
|
|
|
2.1
|
|
||||
|
Adjusted segment operating income
|
|
$
|
118.0
|
|
|
$
|
52.0
|
|
|
$
|
58.0
|
|
|
$
|
228.0
|
|
|
Adjusted segment operating margin
|
|
18.6
|
%
|
|
11.6
|
%
|
|
17.3
|
%
|
|
16.1
|
%
|
||||
|
(a)
|
Realignment costs and other includes costs associated with a legal matter at MT, a management reorganization at IP, as well as costs associated with a resolved DOJ civil matter at CCT.
|
|
Three Months Ended June 30, 2018
|
Motion
Technologies |
Industrial
Process |
Connect & Control
Technologies |
Total
Segment |
||||||||||||
|
Segment operating income
|
|
$
|
55.5
|
|
|
$
|
23.4
|
|
|
$
|
27.3
|
|
|
$
|
106.2
|
|
|
Restructuring costs
|
|
0.9
|
|
|
(0.1
|
)
|
|
0.4
|
|
|
1.2
|
|
||||
|
Acquisition-related expenses
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
||||
|
Adjusted segment operating income
|
|
$
|
57.3
|
|
|
$
|
23.3
|
|
|
$
|
27.7
|
|
|
$
|
108.3
|
|
|
Adjusted segment operating margin
|
|
17.3
|
%
|
|
11.5
|
%
|
|
16.9
|
%
|
|
15.5
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Six Months Ended June 30, 2018
|
||||||||||||||||
|
Segment operating income
|
|
$
|
117.4
|
|
|
$
|
40.3
|
|
|
$
|
50.3
|
|
|
$
|
208.0
|
|
|
Restructuring costs
|
|
1.3
|
|
|
—
|
|
|
0.8
|
|
|
2.1
|
|
||||
|
Acquisition-related expenses
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
||||
|
Adjusted segment operating income
|
|
$
|
120.2
|
|
|
$
|
40.3
|
|
|
$
|
51.1
|
|
|
$
|
211.6
|
|
|
Adjusted segment operating margin
|
|
17.9
|
%
|
|
10.3
|
%
|
|
15.9
|
%
|
|
15.3
|
%
|
||||
|
•
|
“Adjusted income from continuing operations” is defined as income from continuing operations attributable to ITT Inc. adjusted to exclude special items that include, but are not limited to, asbestos-related costs, restructuring costs, realignment costs, certain asset impairment charges, certain acquisition-related expenses, income tax settlements or adjustments, and unusual or infrequent items. Special items represent significant charges or credits, on an after-tax basis, that impact current results, which management views as unrelated to the Company’s ongoing operations and performance. The after-tax basis of each special item is determined using the jurisdictional tax rate of where the expense or benefit occurred. “Adjusted income from continuing operations per diluted share” is defined as adjusted income from continuing operations divided by diluted weighted average common shares outstanding. We believe that adjusted income from continuing operations and adjusted income from continuing operations per diluted share are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.
|
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
For the Periods Ended June 30
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Income from continuing operations attributable to ITT Inc.
|
$
|
66.9
|
|
|
$
|
69.7
|
|
|
$
|
138.2
|
|
|
$
|
170.8
|
|
|
Net asbestos-related costs (benefit) net of tax (benefit) expense of $(2.7),($3.1), $(5.7) and $1.5, respectively
|
9.1
|
|
|
10.4
|
|
|
18.7
|
|
|
(4.7
|
)
|
||||
|
Tax-related special items(a)
|
0.6
|
|
|
(9.0
|
)
|
|
(0.5
|
)
|
|
(27.2
|
)
|
||||
|
Restructuring costs, net of tax benefit of $0.9, $0.2 $1.2, and $0.4, respectively
|
2.2
|
|
|
1.0
|
|
|
3.0
|
|
|
1.7
|
|
||||
|
Realignment (benefit) costs, net of tax expense (benefit) of $0.0, $0.1, ($0.1), and $0.1, respectively
|
—
|
|
|
(0.2
|
)
|
|
0.5
|
|
|
(0.2
|
)
|
||||
|
Expense (income) related to sale of a former operating location, net of tax expense of $0.1, $0.0, $0.1, and $0.0, respectively
|
0.1
|
|
|
—
|
|
|
(0.3
|
)
|
|
(0.2
|
)
|
||||
|
Acquisition-related costs, net of tax benefit of $0.9, $0.3, $0.9 and $0.4, respectively
|
2.8
|
|
|
0.6
|
|
|
2.8
|
|
|
1.1
|
|
||||
|
Other unusual or infrequent items, net of tax benefit of $0.3, $0.0, $0.3 and $0.0, respectively(b)
|
1.0
|
|
|
(0.1
|
)
|
|
1.3
|
|
|
(0.1
|
)
|
||||
|
Adjusted income from continuing operations
|
$
|
82.7
|
|
|
$
|
72.4
|
|
|
$
|
163.7
|
|
|
$
|
141.2
|
|
|
Income from continuing operations attributable to ITT Inc. per diluted share
|
$
|
0.75
|
|
|
$
|
0.79
|
|
|
$
|
1.56
|
|
|
$
|
1.93
|
|
|
Adjusted income from continuing operations per diluted share
|
$
|
0.93
|
|
|
$
|
0.82
|
|
|
$
|
1.85
|
|
|
$
|
1.59
|
|
|
(a)
|
Tax-related special items during the three and six months ended June 30, 2019 primarily relate to the favorable valuation allowance impacts, partially offset by tax expense on undistributed foreign earnings. Tax-related special items during the second quarter of 2018 primarily relate to a tax benefit on undistributed foreign earnings. Tax-related special items during the six months ended June 30, 2018 are due to favorable valuation allowance impacts on deferred tax assets in Germany and adjustments to our provisional tax estimate associated with the Tax Act.
|
|
(b)
|
Other unusual or infrequent items in 2019 include a legal matter at MT and costs associated with a resolved DOJ civil matter.
|
|
•
|
“Adjusted free cash flow” is defined as net cash provided by operating activities less capital expenditures, adjusted for cash payments for restructuring costs, realignment actions, net asbestos cash flows and other significant items that impact current results which management views as unrelated to the Company’s ongoing operations and performance. Due to other financial obligations and commitments, including asbestos expenses, the entire adjusted free cash flow may not be available for discretionary purposes. “Adjusted free cash flow conversion” is defined as adjusted free cash flow divided by adjusted income from continuing operations. We believe that adjusted free cash flow and adjusted free cash flow conversion provide useful information to investors because they are the additional cash flow metrics used by management to monitor and evaluate cash flows generated by our operations.
|
|
For the Six Months Ended June 30
|
2019
|
|
2018
|
||||
|
Net cash provided by operating activities
|
$
|
101.1
|
|
|
$
|
119.3
|
|
|
Capital expenditures
|
(45.8
|
)
|
|
(46.3
|
)
|
||
|
Net asbestos cash flows
|
15.8
|
|
|
30.8
|
|
||
|
Insurance settlement agreement
|
—
|
|
|
(16.9
|
)
|
||
|
Restructuring cash payments
|
5.5
|
|
|
4.2
|
|
||
|
Legal settlements, net
|
4.0
|
|
|
—
|
|
||
|
Acquisition and other
|
1.5
|
|
|
(0.1
|
)
|
||
|
Adjusted free cash flow
|
$
|
82.1
|
|
|
$
|
91.0
|
|
|
Adjusted free cash flow conversion
|
50.2
|
%
|
|
64.4
|
%
|
||
|
EXHIBIT NUMBER
|
|
DESCRIPTION |
|
|
|
|
|
(10.1)*
|
|
|
|
|
|
|
|
(10.2)*
|
|
|
|
|
|
|
|
(10.3)*
|
|
|
|
|
|
|
|
(31.1)
|
|
|
|
|
|
|
|
(31.2)
|
|
|
|
|
|
|
|
(32.1)
|
|
|
|
|
|
|
|
(32.2)
|
|
|
|
|
|
|
|
(101)
|
|
The following materials from ITT Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Operations, (ii) Consolidated Condensed Statements of Comprehensive Income, (iii) Consolidated Condensed Balance Sheets, (iv) Consolidated Condensed Statements of Cash Flows, (v) Consolidated Condensed Statements of Changes in Shareholders’ Equity, and (vi) Notes to Consolidated Condensed Financial Statements
|
|
|
|
|
|
|
|
ITT Inc.
|
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
By:
|
|
/s/ John Capela
|
|
|
|
John Capela
|
|
|
|
Chief Accounting Officer
|
|
|
|
(Principal accounting officer)
|
|
Annual Retainer (cash)
|
$100,000 (paid annually)
|
|
|
|
|
Committee Chair Annual Retainer
|
|
|
• Audit Committee
|
$20,000 (paid annually)
|
|
• Compensation Committee
|
$15,000 (paid annually)
|
|
• Nominating and Governance Committee
|
$15,000 (paid annually)1
|
|
|
|
|
Non-Executive Chairman Annual Retainer
|
$125,000 (50% cash; 50% restricted stock units) (paid annually)
|
|
|
|
|
Expenses
|
Reimbursed for travel and director education.
|
|
|
|
|
Annual Equity Awards
|
Annual grant with a present value of $125,000 made on the date of the Annual Meeting of Shareholders (vests one business day prior to subsequent annual meeting). The award is in restricted stock units, valued at the fair market value of the underlying stock on the date of grant. This award may be deferred by prior election. Taxable event occurs on vesting date, unless grant is deferred. The number of shares is rounded up to the nearest share.
|
|
|
|
|
New Directors
|
All annual compensation is pro-rated for new directors.
|
|
•
|
is a full-time salaried employee of ITT or of any subsidiary company that is wholly owned, directly or indirectly, by ITT (collectively or individually as the context requires, the “Company”),
|
|
•
|
is paid under a payroll of the Company, and
|
|
•
|
is an executive who, at any time within the two year period immediately preceding the date the Company selects as the Executive’s last day of active employment (“Scheduled Termination Date”), meets both of the following criteria: (i) is at the level of Senior Vice President or above and (ii) has been designated by the Board of Directors as an “officer” of the Company for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.
|
|
•
|
is terminated for cause,
|
|
•
|
accepts employment or refuses comparable employment with a purchaser as provided in Section 8, “Divestiture”, or
|
|
•
|
voluntarily terminates employment with the Company prior to the Scheduled Termination Date.
|
|
•
|
voluntarily resigning,
|
|
•
|
voluntarily retiring, or
|
|
•
|
failing to return from an approved leave of absence (including a medical leave of absence).
|
|
1.
|
the specific reason or reasons for the denial;
|
|
2.
|
reference to the specific Plan provisions on which the denial is based;
|
|
3.
|
a description of any additional material or information necessary for the Executive to perfect the claim and an explanation as to why such information is necessary; and
|
|
4.
|
an explanation of the Plan’s claims procedure and the time limits applicable to such procedures, including a statement of the Executive’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on appeal.
|
|
1.
|
request a review upon written notice to the Plan Administrator within sixty (60) days after receipt of a notice of the denial of a claim for benefits;
|
|
2.
|
submit written comments, documents, records, and other information relating to the claim for benefits; and
|
|
3.
|
examine the Plan and obtain, upon request and without charge, copies of all documents, records, and other information relevant to the claim for benefits.
|
|
1.
|
the specific reason or reasons for the decision;
|
|
2.
|
reference to the specific Plan provisions on which the decision is based;
|
|
3.
|
the Executive’s right to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits; and
|
|
4.
|
a statement of the Executive’s right to bring a civil action under Section 502(a) of ERISA.
|
|
1.
|
Purpose
|
|
2.
|
Covered Employees
|
|
3.
|
Definitions
|
|
4.
|
Severance Benefits Upon Termination of Employment
|
|
5.
|
Severance Benefits
|
|
•
|
Accrued Rights. The Special Severance Executive’s base salary through the date of termination of employment, any annual bonus earned but unpaid as of the date of termination for any previously completed fiscal year, reimbursement for any unreimbursed business expenses properly incurred by the Special Severance Executive in accordance with Company policy prior to the date of the Special Severance Executive’s termination of employment and such employee benefits, if any, as to which the Special Severance Executive may be entitled under the employee benefit plans of the Company, including without limitation, the payment of any accrued or unused vacation under the Company’s vacation policy.
|
|
•
|
Severance Pay. The sum of (x) three (3) times the current annual base salary rate paid (whether or not deferred) to the Special Severance Executive at the time of the Special Severance Executive’s termination of employment, and (y) three (3) times the greater of (i) the Special Severance Executive’s target bonus for the year in which the Acceleration Event occurs, or (ii) the actual bonus that was most recently paid to the Special Severance Executive before his or her termination of employment.
|
|
•
|
Benefits and Perquisites
|
|
▪
|
COBRA Subsidy. In the absence of any other determination by the Company, if the Special Severance Executive is enrolled in one of the Company’s medical and/or dental or vision plans immediately prior to his or her termination date, the Special Severance Executive will receive a COBRA Subsidy if he or she elects COBRA Continuation Coverage under the plan(s) and signs the Release to receive the severance payments described herein. The COBRA Subsidy is paid as follows: during the first six months of COBRA Continuation Coverage, which begins on the first day of the month following the Special Severance Executive’s termination date, the Company will pay the portion of the Special Severance Executive’s COBRA premium for the medical, dental and/or vision coverage under COBRA, if any, that exceeds the premium the Special Severance Executive would have paid for such coverage if his or her employment had not been terminated.
|
|
▪
|
Savings Plan Payment. Payment of a lump sum amount (“Savings Plan Lump Sum Amount”) equal to three (3) times the following amount: the highest annual base salary rate determined above under “Severance Pay” times the highest percentage rate of Company Contributions (not to exceed seven percent (7%)) with respect to the Special Severance Executive under the ITT Retirement Savings Plan and/or ITT Supplemental Retirement Savings Plan (or corresponding savings plan arrangements outside the United States) (“Savings Plans”) (including matching contributions and core contributions) at any time during the three (3) year period immediately preceding the Special Severance Executive’s termination of employment or the three (3) year period immediately preceding the Acceleration Event. This provision shall apply to any Special Severance Executive who is a member of any of the Savings Plans at any time during either such three (3) year period.
|
|
▪
|
Outplacement. Outplacement services for one (1) year.
|
|
•
|
Accrued Rights. The Special Severance Executive’s base salary through the date of termination of employment, any annual bonus earned but unpaid as of the date of termination for any previously completed fiscal year, reimbursement for any unreimbursed business expenses properly incurred by the Special Severance Executive in accordance with Company policy prior to the date of the Special Severance Executive’s termination of employment and such employee benefits, if any, as to which the Special Severance Executive may be entitled under the employee benefit plans of the Company, including without limitation, the payment of any accrued or unused vacation under the Company’s vacation policy.
|
|
•
|
Severance Pay. The sum of (x) two (2) times the current annual base salary rate paid (whether or not deferred) to the Special Severance Executive at the Special Severance Executive’s termination of employment, and (y) two (2) times the greater of (i) the Special Severance Executive’s target bonus for the year in which the Acceleration Event occurs, or (ii) the actual bonus that was most recently paid to the Special Severance Executive before his or her termination of employment.
|
|
•
|
Benefits and Perquisites.
|
|
§
|
COBRA Subsidy. In the absence of any other determination by the Company, if the Special Severance Executive is enrolled in one of the Company’s medical and/or dental or vision plans immediately prior to his or her termination date, the Special Severance Executive will receive a COBRA Subsidy if he or she elects COBRA Continuation Coverage under the plan(s) and signs the Release to receive the severance payments described herein. The COBRA Subsidy is paid as follows: during the first six months of COBRA Continuation Coverage, which begins on the first day of the month following the Special Severance Executive’s termination date, the Company will pay the portion of the Special Severance Executive’s COBRA premium for the medical, dental and/or vision coverage under COBRA, if any, that exceeds the premium the Special Severance Executive would have paid for such coverage if his or her employment had not been terminated.
|
|
§
|
Savings Plan Payment. Payment of a lump sum amount (“Savings Plan Lump Sum Amount”) equal to two (2) times the following amount: the highest annual base salary rate determined above under “Severance Pay” times the highest percentage rate of Company Contributions (not to exceed seven percent (7%)) with respect to the Special Severance Executive under the ITT Retirement Savings Plan and/or the ITT Supplemental Retirement Savings Plan (or corresponding savings plan arrangements outside the United States) (“Savings Plans”) (including matching contributions and core contributions) at any time during either the three (3) year period immediately preceding the Special Severance Executive’s termination of employment or the three (3) year period immediately preceding the Acceleration Event. This provision shall apply to any Special Severance Executive who is a member of any of the Savings Plans at any time during either such three (3) year period.
|
|
§
|
Outplacement. Outplacement services for one (1) year.
|
|
6.
|
Form of Payment of Severance Pay and Lump Sum Payments
|
|
7.
|
Termination of Employment — Other
|
|
8.
|
Administration of Plan
|
|
9.
|
Termination or Amendment
|
|
10.
|
Offset
|
|
11.
|
Excise Tax
|
|
12.
|
Miscellaneous
|
|
13.
|
Notices
|
|
14.
|
Adoption Date
|
|
15.
|
Section 409A
|
|
1.
|
the specific reason or reasons for the denial;
|
|
2.
|
reference to the specific Plan provisions on which the denial is based;
|
|
3.
|
a description of any additional material or information necessary for the Special Severance Executive to perfect the claim and an explanation as to why such information is necessary; and
|
|
4.
|
an explanation of the Plan’s claims procedure and the time limits applicable to such procedures, including a statement of the Special Severance Executive’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on appeal.
|
|
1.
|
request a review upon written notice to the Plan Administrator within sixty (60) days after receipt of a notice of the denial of a claim for benefits;
|
|
2.
|
submit written comments, documents, records, and other information relating to the claim for benefits; and
|
|
3.
|
examine the Plan and obtain, upon request and without charge, copies of all documents, records, and other information relevant to the claim for benefits.
|
|
1.
|
the specific reason or reasons for the decision;
|
|
2.
|
reference to the specific Plan provisions on which the decision is based;
|
|
3.
|
the Special Severance Executive’s right to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits; and
|
|
4.
|
a statement of the Special Severance Executive’s right to bring a civil action under Section 502(a) of ERISA.
|
|
/S/ Luca Savi
|
|
Luca Savi
|
|
Chief Executive Officer
|
|
/S/ Thomas M. Scalera
|
|
Thomas M. Scalera
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
|
/S/ Luca Savi
|
|
Luca Savi
|
|
Chief Executive Officer
|
|
/S/ Thomas M. Scalera
|
|
Thomas M. Scalera
|
|
Executive Vice President and
|
|
Chief Financial Officer
|