ITT Corporation hopes its customers are pumped, moved, and energized about its products. A diversified manufacturer, ITT makes a range of industrial products through four operating segments: industrial process (pumping systems though
, valves, and services for oil and gas and chemical companies); motion technologies (brake pads and friction materials for transportation markets); interconnect solutions (ICS, connectors for fiber optic, RF, power, and other electronic products); and control technologies (hydraulic valves, actuators, and switches for aerospace companies).
The industrial process segment's diversified customer base -- ranging from individual end users to large multinational companies -- includes such markets as oil and gas, mining, power generation, and chemicals. Offering aftermarket services, the segment operates eight Pump Repair and Overhaul outlets in the US, as well as facilities in Argentina, Australia, Brazil, Canada, Chile, China, Columbia, Saudi Arabia, Singapore, Thailand, the UK, and Venezuela. Industrial process also provides services for plant optimization and efficiency improvement. The segment accounts for about 45% of sales.
Motion technologies, accounting for 31% of sales, serves the automotive, truck, trailer, bus, and rail sectors. Customers include
Shanghai General Motors
-owned Mercedes in China. Aftermarket sales are also an important element of this segment's business. The segment is itself divided into two businesses, Friction Technologies (brake pads) and KONI (shock absorbers and damping equipment).
Interconnect Solutions (ICS), 13% of sales, serves the aerospace, industrial, defense, and oil & gas markets with products that allow the transfer of signal and power in electronic devices. Brands include Cannon, VEAM, and BIW. The products are focused primarily on two applications, harsh environments and telecom, computer, and consumer technologies. The company's smallest segment, control technologies, (11% of sales), supplies the military and industrial markets, as well as aerospace, with fluid handling, motion control, and shock isolation products.
ITT does about 35% of its business in the US, but it operates through 150 locations in 35 countries and generates sales in 125 countries.
Sales and Marketing
The company sells a broad mix of products through a network of more than 750 distributors, agents, and value-added resellers. Marketed channels include direct, commissioned representation, and buy-resell distributors.
The company's revenues fell 6% from $2.65 billion in 2014 to $2.49 billion in 2015. The drop in revenue was fueled by decreases across most of its segments, including connectors equipment (16%), CT industrial products (22%), shock absorber equipment (9%), and pump support services (9%).
Industrial process segment revenue decreased due to unfavorable foreign currency fluctuations and lower organic revenue reflecting the challenging oil and gas and industrial market conditions which have impacted customers' capital spending levels and led to project delays in 2015.
Interconnect solutions segment revenue decreased due to unfavorable foreign currency translation impacts and organic revenue, reflecting a decline in the transportation and industrial markets primarily due to weak demand in the heavy vehicle and industrial markets during 2015.
ITT's profits almost doubled from $185 million in 2014 to $352 million in 2015. The significant rise was due to changes in asbestos-related (benefit) costs and additional tax benefits, principally related to the settlement of a US income tax audit. ITT's operating cash flow decreased by 6% from 2014 to 2015, mainly due to changes in working capital as a result of fluctuations in inventories and accrued expenses.
ITT's six-pronged growth strategy is focused on improving the customer experience, investing in technology and research and development, expanding in growth markets, growing aftermarket sales, expanding margin through operations improvements, and using capital to grow organically and inorganically. To improve customer relationships the company uses the Value-Based Commercial Excellence (VBCE) process, which is used to price products and help customers resolve challenges. Most of ITT's products are made to withstand harsh conditions.
Mergers and Acquisitions
The company adds additional revenue to its balance sheet through the use of acquisitions. In 2015 it bought Hartzell Aerospace for a purchase price of $53 million. Hartzell is a designer and manufacturer of products to support aerospace applications and is now included as part of ITT's control technologies segment.
Augmenting its motion technologies segment, the company also in 2015 completed the acquisition of Wolverine Automotive Holdings Inc., the parent company of Wolverine Advanced Materials LLC, for $298 million.