ITT
Q2
| ITT
Q2
|
| (FOOL
CONFERENCE
CALL
SYNOPSIS)* By Marina McClelland (MF Trad) ITT Corporation ALEXANDRIA, V.A., July 24, 1996/FOOLWIRE/-- Today, ITT Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:ITT)") else Response.Write("(NYSE:ITT)") end if %> announced strong operational improvement in each of its business during the second quarter. ITT Corporation is a leading hotel, gaming, entertainment and information services company. ITT reported that net income rose to $96 million from $67million in the second quarter of 1995, and earnings per share rose to $0.81from $0.56 in the second quarter of 1995. This is an increase of 45% in net income and 56% in earnings per share. Second quarter earnings before interest, taxes, depreciation and amortization (EBITDA) increased 18% in the 1996 second quarter to $297 million from $252 million in 1995.
For the first six months of 1996 net income increased to $116 million or $0.87 per share from $73 million or $0.61 per share in 1995. Revenues increased to $3,140,000 from $3,016,000 billion in 1995. EBITDA for the six months of 1996 rose 22% to $466 million.
The company's core businesses, hotels and gaming, were the driving factors behind this quarters growth. These two businesses are the biggest sources of cash flow. Revenue growth in hotels and gaming increased by 12% and 9%, respectively, resulting in an overall second quarter revenues of $1.8 billion, a 5% increase year over year.
Hotel Business
The hotel business reported record Q2 earnings with the North American and European markets contributing the most to this growth. The success of the company's objective to optimize average daily rates (ADR) and increase margins has been realized in this quarters results. ADR was up 12% worldwide and margins were up over 30%, well over what the company expected. North America had a ADR improvement of 14% and Europe had an ADR improvement of 12%. ITT Sheraton generated EBITDA of $140 million, a 35% increase year over year. Sheraton in New York city generated $6 million in cash flow alone this quarter. EBITDA from owned hotels in Q2 was $110 million, up 38% year over year. While revenues from the Asia Pacific market dragged this quarter, ITT continues to develop its interests in the Asia Pacific market through acquisitions, mergers and twelve new hotel projects.
Gaming Business
The gaming business is a "Caesars story" according to ITT management. In addition, the gaming market is strong and ITT has many expansion projects on the way. In gaming, EBITDA increased 32% to $87 million. Caesars Palace in Las Vagas, Caesars Atlantic City and Caesars Tahoe had revenues of $254 million and generated $74 million EBITDA.
Information Services Business
The information services business consist of ITT World Directories and ITT Educational Services (ESI) operations. EBITDA for the information services business increased 8% year over year to $104 million. The increase in EBITDA reflects the company's bullish operations in the European telephone directory market. ESI revenues were up 16% this quarter.
Madison Square Garden
ITT's investment in Madison Square Gardens has proven to be successful. EBITDA improved 50% year over year to $18 million. The driving factor behind this growth was the performance of MSG Network.
Highlights
ITT announced that it will postpone its previously announced equity offering due to current market conditions. In addition, the company responded negatively to rumors regarding any future announcements of acquisitions and mergers. * A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. | |
Copyright 1996,
The Motley Fool |