Q1 2025 Earnings May 1, 2025 SAFE HARBOR AND NON-GAAP DISCLOSURES Safe Harbor This presentation contains "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. In addition, the accompanying conference call may include, and officers and representatives of ITT may from time to time make and discuss, projections, goals, assumptions, and statements that may constitute "forward-looking statements". These forward-loo ...

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering ITT (ITT) , which belongs to the Zacks Diversified Operations industry.This supplier of parts and services to a wide variety of industries has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 2.07%.For the most recent quarter, ITT was e ...

Financial Performance - ITT reported preliminary Q1 2025 revenue of over $900 million, flat on a GAAP and organic basis, driven by strength in pumps aftermarket and connectors, offset by lower aerospace demand[6]. - The company anticipates earnings per share (EPS) between $1.29 and $1.35, with adjusted EPS ranging from $1.43 to $1.45[6]. - ITT's operating margin for Q1 2025 was reported at 16.5%, with an adjusted operating margin of 17.4%[25]. - Net cash from operating activities is estimated to be between $107 million and $117 million, with free cash flow projected at $70 million to $80 million[30]. - Organic revenue growth for Q1 2025 was $871.5 million, showing a slight increase of 0.4 million compared to the previous year[22]. - Organic orders growth for Q1 2025 was $959.7 million, reflecting a 2.5% increase compared to the prior year[22]. Orders and Guidance - Orders for Q1 2025 totaled $1.0 billion, reflecting a growth of 7% or 2% on an organic basis[6]. - ITT will discuss its full year outlook and further details on its Q1 financial results during a conference call on May 1, 2025[3]. Share Repurchase and Acquisitions - The company plans to repurchase up to $500 million of its shares, with $875 million remaining under the existing $1 billion share repurchase authorization[4]. - The company maintains its commitment to executing further acquisitions while preserving its investment grade credit rating[4].

Financial Performance - The company reported $3.6 billion in sales across approximately 125 countries, with 67% of revenue generated outside the U.S.[21] - Sales to distributors represented approximately 30% of ITT's 2024 revenue, indicating strong relationships and distribution channels[70] - The Motion Technologies segment's sales to Continental, its largest customer, represented 17% of MT's revenue and approximately 7% of ITT's total revenue in 2024[54] - The Industrial Process segment's aftermarket solutions accounted for 43% of its revenue in 2024, providing customers with replacement parts and services[59] - In 2023, kSARIA generated approximately $175 million in sales, enhancing ITT's connector product portfolio for defense and aerospace markets[67] Workforce and Corporate Structure - The workforce consists of approximately 11,700 employees located in 39 countries[21] - As of December 31, 2024, ITT had approximately 11,700 employees across 39 countries, with 3,400 employees in the U.S. and 13% of U.S. employees represented by unions[41] - The company has not experienced any material strikes or work stoppages in recent years, indicating stable labor relations[41] - The company emphasizes competitive compensation and benefits programs, including performance-based bonuses and stock awards for employees[45] - The company is focused on talent development through effective strategies for recruiting, onboarding, and professional growth[44] Environmental and Sustainability Initiatives - The company aims to reduce global Scope 1 and 2 GHG emissions by 10% by the end of 2026 compared to 2021 levels[31] - The company is expanding its pilot program for GHG emissions measurement to include sites in Italy and China in 2024[32] - The company is investing in solar energy installations at its Orchard Park, New York, and Lancaster, Pennsylvania sites in 2024[32] - The company continues to enhance its ESG efforts to create additional value for employees, customers, and communities[39] - The company emphasizes environmental, social, and governance (ESG) practices as integral to its operations and long-term growth strategy[29] Strategic Priorities and Market Expansion - The company focuses on customer centricity, operational excellence, effective capital deployment, and sustainability as its strategic priorities[24] - The company seeks to expand into new markets and invest in new products that leverage its engineering capabilities[26] - The company has a balanced and diversified portfolio across various sectors including automotive, energy, and aerospace[22] - The company has a diverse portfolio that includes brands with strong international presence in emerging markets such as China, India, and Brazil[27] - The company continues to evaluate investments for strategic capital deployment, including close-to-core acquisitions with unique products and technologies[26] Acquisitions and Divestitures - ITT acquired Svanehøj Group A/S in January 2024, which had sales of approximately $148 million in 2023, enhancing its portfolio in cryogenic applications for the marine sector[56] - ITT acquired kSARIA Parent, Inc. in September 2024, generating approximately $175 million in sales in 2023[67] - The company divested Wolverine Advanced Materials in July 2024, focusing on core business areas and reducing automotive exposure[83] - The divestiture of Wolverine Advanced Materials and Matrix Composites, Inc. reflects a strategic shift to enhance the ITT portfolio towards pump applications and defense markets while reducing automotive exposure[83] Challenges and Risks - The company faced supply disruptions in 2024, which adversely affected product delivery and financial results due to rising demand for raw materials[74] - The company anticipates ongoing challenges related to supply chain disruptions and inflation, impacting future operations and material costs[74] - The challenges from supply chain disruptions and inflation are expected to persist into 2025, with no clear resolution in sight[74] - The company mitigated inflation impacts through fixed-price supply contracts, price increases to customers, and productivity savings[74] - The company evaluates hedging opportunities to mitigate risks associated with commodity price volatility[74] Innovation and R&D - ITT invests approximately 3% of revenue annually in research and development, focusing on innovative products like the Embedded Motor Drive and new brake pad formulations[79] - Research and Development (R&D) accounts for approximately 3% of annual revenue, focusing on innovative products like the Embedded Motor Drive (EMD) and new brake pad formulations for electric vehicles[79] - ITT is recognized as an industry leader in developing brake pads specifically for electric vehicles, winning multiple awards from OEMs[48] - The company operates under two primary manufacturing methods: build-to-order and engineer-to-order, aimed at improving delivery performance and minimizing inventory holding periods[75] Governance and Corporate Practices - The company emphasizes strong corporate governance and has implemented various governance practices over the last two decades[37] - The company recognizes the importance of ESG practices in driving long-term growth and shareholder value[29] - ITT's commitment to cybersecurity is aimed at protecting employee, customer, and partner data against evolving threats[38] - ITT's Environmental, Safety, Health and Security Council drives continuous improvement in workplace safety and health protocols[42]

Core Insights - ITT Inc. reported fourth-quarter 2024 adjusted earnings of $1.50 per share, exceeding the Zacks Consensus Estimate of $1.47, marking an 11.9% year-over-year increase driven by sales growth across most segments [1][2] - Total revenues for the quarter reached $929.0 million, surpassing the consensus estimate of $927 million, and reflecting a 12% year-over-year increase [2] Financial Performance - For the full year 2024, ITT's net revenues were $3.6 billion, a 10.6% increase year over year, with adjusted earnings of $5.86 per share, up 12.5% [3] - The Industrial Process segment generated revenues of $326.0 million, a 25% year-over-year increase, supported by strong pump projects and aftermarket demand [4] - The Motion Technologies segment reported revenues of $326 million, an 11% decrease year over year, primarily due to the divestiture of the Wolverine unit [5] - The Connect & Control Technologies segment saw revenues of $241.0 million, a 37.2% year-over-year increase, driven by favorable pricing and growth in defense and industrial connectors [6] Margin and Cost Analysis - ITT's cost of revenues increased by 12.8% year over year to $612.6 million, while gross profit rose 10.6% to $316.4 million [7] - Adjusted operating income climbed 15.5% year over year to $162.8 million, with a margin expansion of 50 basis points to 17.5% [7] Cash Flow and Capital Management - At the end of the fourth quarter, ITT had cash and cash equivalents of $439.3 million, down from $489.2 million a year earlier, with short-term borrowings increasing to $427.6 million [8] - In 2024, ITT generated net cash from operating activities of $562.6 million, up from $538.0 million in the previous year, with free cash flow at $438.7 million [9] Dividend and Future Outlook - The board of directors approved a 10% increase in the quarterly dividend rate to 35.1 cents per share, payable on March 31, 2025 [10] - For 2025, ITT expects adjusted earnings in the range of $6.10-$6.50 per share, indicating a 4-11% increase from the prior year, with revenue growth projected at 2-4% [11]

Financial Data and Key Metrics Changes - Orders grew by 10% or 5% organically, resulting in an ending backlog of $1.6 billion, up 34% year over year [6][44] - Revenue increased by 11% or 7% organically, with a strong performance across all businesses [6][44] - Operating margin expanded by 80 basis points to almost 18% [6][44] - Free cash flow generated was nearly $440 million, with EPS growth of 12% following over 17% growth in 2023 [7][45] Business Line Data and Key Metrics Changes - Connect and Control Technologies (CCT) grew 9% organically, driven by defense, industrial connectors, and aerospace [10][47] - Industrial Process (IP) grew 8% organically, with high teens growth in pump projects [10][47] - Motion Technologies (MT) grew 5% organically, with friction outperforming global automotive production by 730 basis points [10][47] Market Data and Key Metrics Changes - IP projects grew 19% organically after a 31% increase in 2023 [18] - CCT's growth was supported by strong defense and industrial connected delivery, both exceeding 40% in the quarter [18] - Friction in MT outperformed global automotive production by 410 basis points [19] Company Strategy and Development Direction - The company is transforming its portfolio through the divestiture of Wolverine and acquisitions of Vanooy and Qesaria [5][43] - The M&A strategy is expected to continue driving growth, with Vanooy orders growing 26% for the full year [12][49] - The company plans to invest in strategic areas such as geopolymer brake pads and high-performance brake pads [60][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive organic growth and margin expansion, indicating a robust backlog for 2025 [25][62] - The company anticipates revenue growth of over $3.7 billion in 2025, with organic growth of 3% to 5% [26][63] - Management noted that the first quarter of 2025 is expected to be soft, with a recovery anticipated in the second half of the year [81][84] Other Important Information - The company returned more than $200 million to shareholders in 2024 [12][50] - The M&A pipeline remains active, with ongoing cultivation of relationships for future acquisitions [119] - The company is preparing for potential tariff impacts and is developing action plans to mitigate risks [141] Q&A Session Summary Question: Guidance for 2025 and Q1 impacts - Management indicated that Q1 is expected to be soft, with EPS roughly flat to 2024 due to the Wolverine divestiture and organic revenue declines of 1% to 2% driven by MT [81][82] Question: Price renegotiations in CCT - Management confirmed that price is a significant lever in CCT, with ongoing renegotiations showing positive signs for 2025 [87][88] Question: Order patterns in IP - Orders grew 12% in Q4, with projects up 25% and short cycle up 8%, indicating strong backlog and order patterns [95][96] Question: Temporary intangible amortization - Management clarified that the temporary intangible amortization will remain similar in 2025, impacting earnings growth [107][108] Question: Motion Technologies guidance - Management expects low single-digit growth in Motion Technologies, with friction projected to outperform the market by approximately 400 basis points [122][124]

Group 1 - ITT reported revenue of $929 million for the quarter ended December 2024, reflecting a 12.1% increase year-over-year and a surprise of +0.23% over the Zacks Consensus Estimate of $926.84 million [1] - Earnings per share (EPS) for the quarter was $1.50, compared to $1.34 in the same quarter last year, resulting in an EPS surprise of +2.04% against the consensus estimate of $1.47 [1] - ITT's stock has returned +4.6% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change, and currently holds a Zacks Rank 3 (Hold) [3] Group 2 - Motion Technologies (MT) revenue was reported at $326 million, which is -10.6% year-over-year and below the average estimate of $353.21 million [4] - Connect & Control Technologies (CCT) revenue reached $241 million, exceeding the average estimate of $222.69 million, marking a +37.2% year-over-year increase [4] - Industrial Process (IP) revenue was $362.60 million, surpassing the average estimate of $353.10 million, with a +25.2% change compared to the previous year [4] Group 3 - Adjusted Operating Income for Corporate was reported at -$19.70 million, worse than the average estimate of -$14.22 million [4] - Adjusted Operating Income for Connect & Control Technologies (CCT) was $42.10 million, exceeding the average estimate of $38.53 million [4] - Adjusted Operating Income for Motion Technologies (MT) was $62.90 million, below the average estimate of $66.44 million, while Industrial Process (IP) reported $77.50 million, above the average estimate of $72.21 million [4]

ITT (ITT) Q4 2024 Earnings Call February 06, 2025 09:30 AM ET Company Participants Mark Macaluso - Vice President of Investor Relations & Global CommunicationsLuca Savi - CEO and PresidentEmmanuel Caprais - Senior VP & CFOMichael Halloran - Associate Director of ResearchJeffrey Hammond - Managing DirectorScott Davis - CEO & ChairmanDamian Karas - Executive DirectorNathan Jones - Managing DirectorJoseph Giordano - Managing DirectorBrad Hewitt - VP - Equity Research Conference Call Participants Joseph Ritchie ...

Group 1: Earnings Performance - ITT reported quarterly earnings of $1.50 per share, exceeding the Zacks Consensus Estimate of $1.47 per share, and up from $1.34 per share a year ago, representing an earnings surprise of 2.04% [1] - The company posted revenues of $929 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.23%, compared to year-ago revenues of $829.1 million [2] - Over the last four quarters, ITT has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - ITT shares have increased approximately 4.7% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the coming quarter is $1.48 on revenues of $953.52 million, and for the current fiscal year, it is $6.48 on revenues of $3.82 billion [7] Group 3: Industry Context - The Zacks Industry Rank indicates that the Diversified Operations sector is currently in the bottom 36% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

Financial Performance - ITT reported Q4 2024 EPS of $1.55, a 38% increase year-over-year, and full year EPS of $6.30, up 26.8% from the previous year[1][4][15]. - Q4 2024 revenue reached $929 million, reflecting a 12% year-over-year increase, with organic growth of 6% driven by higher volume and pricing actions[2][6][15]. - Operating income for Q4 2024 was $160 million, a 35% increase compared to the prior year, resulting in an operating margin of 17.2%, up 290 basis points[3][6][15]. - Full year revenue for 2024 was $3.63 billion, a 10.6% increase, with an organic growth rate of 6.9%[15]. - Gross profit for the year ended December 31, 2024, was $1,247.3 million, up 12.7% from $1,107.3 million in 2023[26]. - Operating income for the twelve months ended December 31, 2024, increased to $676.0 million, representing a 28.0% rise from $528.2 million in 2023[26]. - Net income attributable to ITT Inc. for the year was $518.3 million, a 26.3% increase compared to $410.5 million in 2023[26]. - Total Revenue for Q4 2024 is $326.0 million, with a full year total of $3,630.7 million, showing a reported revenue growth of 10.6%[36]. - Organic Revenue for 2024 is $836.6 million, with a year-over-year growth of 6.9%[36]. - Total Orders for Q4 2024 amount to $914.8 million, with a full year total of $3,785.7 million, reflecting an overall growth of 9.7%[37]. - The company experienced a reported revenue decline of 10.6% in the MT segment, while the IP segment grew by 25.2%[36]. - The CCT segment reported a revenue growth of 37.2%, contributing significantly to the overall performance[36]. Cash Flow and Capital Management - Operating cash flow for Q4 2024 was $223 million, a 31% increase year-over-year, with a free cash flow of $187 million, up 42%[5][6]. - The company deployed $1.2 billion in capital, more than double the full year free cash flow, focusing on high growth and high margin segments[5][9]. - The company generated $562.6 million in net cash from operating activities for the year, compared to $538.0 million in 2023[29]. - Free Cash Flow for the year is defined as net cash from operating activities minus capital expenditures, providing insight into cash flow management[34]. - Free cash flow for FY 2024 is projected at $438.7 million, with a free cash flow margin of 12.1%[54]. - The company reported a net cash from operating activities of $223.2 million for Q4 2024, up from $170.4 million in Q4 2023[54]. Guidance and Future Outlook - ITT initiated 2025 EPS guidance of $6.05 to $6.45, with adjusted EPS guidance of $6.10 to $6.50[5][17]. - The company expects 2025 revenue growth of 2% to 4%, with an operating margin of 18.0% to 18.9%[17]. - The company anticipates capital expenditures of $125 million for FY 2025[54]. - Full year 2025 guidance for EPS from continuing operations (GAAP) is projected between $6.05 and $6.45, with adjusted EPS expected between $6.10 and $6.50[49]. Dividends and Shareholder Returns - The company announced a 10% increase in its quarterly dividend to $0.351 per share, continuing a trend of annual dividend growth[16]. Assets and Liabilities - Cash and cash equivalents at the end of 2024 were $440.0 million, down from $489.9 million at the end of 2023[29]. - Total assets increased to $4,710.7 million in 2024, compared to $3,932.6 million in 2023, reflecting a growth of 19.7%[28]. - Total liabilities rose to $1,941.1 million in 2024, up from $1,393.5 million in 2023, marking a 39.4% increase[28]. Research and Development - Research and development expenses for the year were $116.3 million, an increase from $102.6 million in 2023[26]. Special Items and Adjustments - The impact of special item adjustments on Operating Margin for Full Year 2024 was -310 basis points[39]. - Adjusted Operating Margin for Full Year 2024 was 18.6%, reflecting a change of 590 basis points from the previous year[39]. - Q4 2024 tax benefits include valuation allowance impacts of ($8.9 million) and undistributed foreign earnings of $7.6 million, with total tax expenses for the full year 2024 amounting to $12.5 million[47]. Strategic Initiatives - The company plans to focus on market expansion and new product development to drive future growth[36]. - Strategic acquisitions and divestitures are being evaluated to enhance operational efficiency and market presence[37]. - The company experienced a divestiture of Wolverine in Q3 2024 and Matrix in Q4 2023, impacting financial results[46].