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 Goulds Pumps, 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).
ITT does about 40% of its business in the US, but it operates through 145 locations in 35 countries and generates sales in 125 countries.
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 Australia, Brazil, Chile, Saudi Arabia, Thailand, and Venezuela. Industrial process also provides services for plant optimization and efficiency improvement. The segment accounts for about 43% of sales.
Motion technologies, accounting for 28% of sales, serves the automotive, truck, trailer, bus, and rail sectors. Customers include Shanghai General Motors and Daimler-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), 17% 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 VIW. The products are focused primarily on two applications, harsh environments and telecom, computer, and consumer technologies. The company's smallest segment, control technologies, (12% of sales), supplies the military and industrial markets, as well as aerospace, with fluid handling, motion control, and shock isolation products.
Year-over-year 2012 sales for ITT as a whole rose from $2.1 billion to $2.23 billion. After suffering a net loss of $125 million in 2011, the company posted $125 million in positive net income for 2012. ITT in restated its 2012 annual financial report for all periods reflecting its former Exelis and Xylem subsidiaries as discontinued operations. (In 2010, these operations accounted for almost 90% of its total revenue.)
As the global industrial pump and automotive markets rebound, the company enjoyed double digit growth from its industrial process segment as well as double digit growth from the Middle East, Africa, and other emerging growth markets in 2012.
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.
To meet more demand from emerging markets, which accounted for nearly 30% of ITT's 2012 revenue, the company has sited half of its manufacturing base outside the US and is developing more operations in the developing world, such as a new R&D center in China that will concentrate on braking technologies for the local market. The aftermarket accounted for 35% of 2012 revenue. Through end user sales channels and service personnel the company is seeking more opportunities for that business while also developing technologies that reduce aftermarket costs for customers.
The company's capital deployment strategy also calls for the acquisition of companies that make unique and differentiated products. In 2012 it purchased Germany-based Bornemann Pumps, a pump and pumping systems maker catering to new markets in the oil and gas industry.
In 2011, ITT spun off two of its other key segments -- defense and fluid -- into independent, publicly-traded operating companies: Exelis and Xylem. The 2011 transformation, which effectively split the company into three separate operating companies, significantly reduced ITT's operational size (In 2010, its Defense and Fluid segments accounted for almost 90% of its total revenue.), but preserved the company's presence in the aerospace, automotive, rail, energy, and industrial markets.