Core Insights - ITT Inc. is experiencing growth driven by strong demand in its short-cycle business within the energy and industrial markets, particularly in the Industrial Process and Connect and Control Technologies segments [1][2] Group 1: Business Performance - The Motion Technologies segment is expected to perform well due to strong demand for brake components, sealing solutions, shock absorbers, and damping technologies in OEM and rail transportation markets [2] - ITT anticipates organic sales growth of 3-5% for 2025 compared to the previous year [2] - Acquisitions are a key strategy for ITT, with the acquisition of kSARIA Parent, Inc. in September 2024 enhancing its connectivity solutions for defense and aerospace markets [3] - The acquisition of Svanehøj for approximately $395 million in January 2024 expanded ITT's offerings in the marine pumps industry, contributing 6.3% to sales in Q1 2025 [4] Group 2: Shareholder Value - ITT is focused on increasing shareholder value through dividends and share repurchases, paying out $28.7 million in dividends and repurchasing $100 million in shares in Q1 2025 [5] - Total dividend payments in 2024 were $104.7 million, with share repurchases amounting to $104.5 million, and a 10% increase in quarterly dividend rate was announced in February 2025 [5] Group 3: Cost and Expense Challenges - The company has faced rising operating costs, with a 9.6% year-over-year increase in cost of sales in 2024 due to higher raw material and labor costs [9] - Sales and marketing expenses rose 18.2% year-over-year in 2024, with a continued increase of 6.2% in Q1 2025, while general and administrative expenses increased by 19.3% [10] Group 4: Currency Impact - ITT's international operations expose it to foreign currency risks, with a $16 million revenue reduction in Q1 2025 attributed to foreign currency translation [11] Group 5: Market Performance - Over the past year, ITT's stock has gained 10.5%, outperforming the industry growth of 7.7% [8]

ITT FY Conference Summary Company Overview - **Company**: ITT - **Industry**: Engineering manufacturing, focusing on components for harsh environments across various sectors including automotive, rail, defense, chemical, mining, oil and gas, and energy transition [4][5] Key Financial Highlights - **Q1 Performance**: Generated over $1 billion in orders, with a strong capital deployment strategy including $100 million in share repurchases during Q1 and $500 million year-to-date [5][6] - **Long-term Targets**: - Organic revenue growth of over 5% through 2030 - Total growth target of 10% - Adjusted operating margin of approximately 23% - EBITDA above 25% - EPS target of $11 (organic) or over $12 (total) [8] Growth Strategy - **Organic Growth**: - Targeting 5-7% in Industrial Process (IP), 2-4% in Motion Technologies (MT), and 7-9% in Connect and Control Technologies (CCT) [9] - Emphasis on higher growth and margin businesses, particularly in flow and connectors [11] - **Market Outperformance**: Historically outperformed market growth by 300-400 basis points through execution and innovation [15] - **Margin Expansion**: Aiming for 500 basis points of margin expansion by 2030 through efficiency improvements, automation, and better supply chain management [16][19] Capital Allocation and M&A Strategy - **M&A Focus**: - Targeting high-growth, high-margin businesses with strong management teams - Recent acquisitions include Habony (LNG hydrogen), MicroMode (RF connectors), and Kisaria (aero and defense) [35][36][38] - **Criteria for M&A**: Must have a leading market position and align with ITT's strategic goals [36][37] Innovation and Product Development - **R&D Investment**: Over 4% of revenue allocated to R&D, focusing on continuous improvement and new product development [34] - **New Product Launch**: Introduction of Vida, an embedded motor drive technology aimed at reducing energy waste in industrial pumps, with a projected addressable market of $6 billion [57][61] Segment Performance Insights - **Motion Technologies**: - Friction OE business expected to achieve 400-500 basis points of outgrowth in 2025, with historical outperformance of 700-800 basis points [45][46] - Continuous improvement in productivity and quality is a key focus [51] - **Connect and Control Technologies**: - Recent acquisition of Kisaria expected to drive high single-digit growth and margin progression through synergies with ITT's existing connector business [64][66] Market Outlook - **Book-to-Bill Ratio**: Strong performance in the marine industry with a book-to-bill ratio of 2.0 in Q1, driven by market demand for cleaner energy solutions [54][55] - **Future Growth**: Confidence in double-digit growth for the Svanoy segment, supported by strong order quality and customer loyalty [55] Additional Considerations - **Working Capital Management**: Significant room for improvement in working capital across segments, particularly in IP and CCT, with a focus on inventory management [42][43] - **Intellectual Property Protection**: Strong emphasis on protecting innovations, particularly in new motor technologies, with a competitive edge expected to last several years [71]

Wolfe Research Global Transportation & Industrials Conference May 22, 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 webcast 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-l ...

Financial Performance & Targets - ITT's organic revenue grew at a CAGR of 9% from 2021 to 2024[16], surpassing the committed target of 5-7%[25] - Adjusted EPS grew at a CAGR of 13% from 2021 to 2024[16], exceeding the committed target of 10%+[25] - The company's average ROIC was 15%[16] - ITT aims for >5% CAGR in base business revenue growth and ~10% CAGR in total revenue growth including M&A[77] - The company projects adjusted EPS to be >$11 from the base business and >$12 with M&A by 2030[77] Business Segment Overview (2024) - Industrial Process generated $14 billion in revenue, representing 37% of total revenue[14] - Motion Technologies generated $14 billion in revenue, representing 37% of total revenue[14] - Connect & Control Technologies generated $09 billion in revenue, representing 26% of total revenue[14] M&A Strategy - ITT expects to deploy $500 million to $700 million annually for acquisitions[56] - The company targets acquisitions with HSD to LDD growth and gross margins between 30% and 40%[58] - ITT seeks acquisitions that can achieve a ROIC of >10% between year 3 and 5 and an IRR of ~15%[58]

ITT 2025 Investor Day Summary Company Overview - ITT is a global manufacturing leader specializing in critical components for harsh environments across various industries including energy, chemicals, automotive, and defense [6][12][18] Key Themes and Strategies - **Differentiation**: The company emphasizes differentiation through execution and innovation, aiming for scalable growth and long-term value creation [5][22][41] - **Organic Growth**: ITT has achieved over 9% organic revenue growth and more than 13% average earnings per share (EPS) growth over the past three years [13][14] - **Mergers and Acquisitions (M&A)**: ITT plans to invest $500 to $700 million annually in M&A to acquire market-leading companies in high-margin sectors [34][36] Financial Targets for 2030 - Revenue growth target of 10% total, with 5% organic growth - Adjusted operating margin target of 23% or EBITDA higher than 25% - Adjusted EPS target of more than $12 - Free cash flow margin target between 14-15% [40] Business Segments 1. **Industrial Process**: Focus on pumps and valves, with significant market share in North America and a backlog growth of 16% over the last four years [52][53] 2. **Motion Technologies**: Global leader in brake pads and shock absorbers, with a strategic focus on electric vehicles and high-performance markets [16][25] 3. **Connect and Control**: Specializes in connectors for aerospace and defense, with a strong emphasis on rapid prototyping and customer-centric solutions [84][93] Market Position and Growth - ITT has shifted its portfolio, reducing automotive business from 46% of revenue in 2018 to approximately 31% today, while focusing on higher growth sectors [23][24] - The company aims to maintain growth in Motion Technologies while expanding its Connect and Control and Industrial Process segments [25][26] Operational Excellence - ITT's operational strategy includes a relentless focus on continuous improvement, lean manufacturing, and customer-centricity, which has resulted in a 96% on-time delivery performance over the last four years [60][77] - The company has implemented a culture of safety and quality, with significant investments in employee training and development [74][75] Innovation and Technology - ITT is committed to innovation, with recent developments in green technologies and advanced materials, such as a new type of brake pad using an inorganic binder [43][44] - The company has established a new product team focused on solving complex customer challenges, leading to significant revenue opportunities [84][90] Conclusion - ITT is positioned for robust growth through a combination of organic expansion, strategic M&A, and a strong focus on operational excellence and innovation, aiming to achieve its ambitious 2030 targets while maintaining a competitive edge in the market [36][40][41]

Core Viewpoint - ITT Inc. reported strong first-quarter 2025 adjusted earnings of $1.45 per share, exceeding the Zacks Consensus Estimate of $1.44, with a year-over-year increase of 2.1% driven by sales growth in the Connect & Control Technologies segment [1] Financial Performance - Total revenues for ITT in Q1 2025 were $913 million, matching the consensus estimate and reflecting a 0.3% year-over-year increase. Organic sales remained flat, with growth in parts, service, and valves in the Industrial Process segment, connectors in the Connect & Control Technologies segment, and rail in the Motion Technologies segment [2] - Revenues from the Industrial Process segment were $333.3 million, down 0.2% year over year, impacted by unfavorable pump project shipment timing. Organic sales decreased by 1%, while adjusted operating income grew by 0.4% [2] - Motion Technologies segment revenues were $346.1 million, a decrease of 11.8% year over year, primarily due to reduced auto production in Europe and North America. Organic revenues increased by 0.5%, but adjusted operating income fell by 3.9% [3] - The Connect & Control Technologies segment reported revenues of $234.7 million, up 26.8% year over year, driven by favorable pricing and growth in defense and industrial connectors. Adjusted operating income increased by 13.1% [4] Margin Profile - ITT's cost of revenues decreased by 2% year over year to $596.7 million, while gross profit increased by 4.9% to $316.3 million. General and administrative expenses rose by 19.3% to $85.3 million, and sales and marketing expenses increased by 6.2% to $53.2 million. Research and development expenses decreased by 10.3% to $26.9 million. Adjusted operating income climbed by 2.3% to $159.3 million, with a margin expansion of 30 basis points to 17.4% [5] Balance Sheet and Cash Flow - At the end of Q1 2025, ITT had cash and cash equivalents of $439.8 million, slightly up from $439.3 million at the end of Q4 2024. Short-term borrowings increased to $732.6 million from $427.6 million at the end of December 2024 [6] - ITT generated net cash of $113.4 million from operating activities in Q1 2025, compared to $57.8 million in the same period last year. Capital expenditure was $36.8 million, up 32.9% year over year. Free cash flow reached $76.6 million, compared to $30.1 million in the prior-year period. The company paid dividends of $28.7 million, an increase of 8.3% year over year, and repurchased shares worth $100 million [7] Dividend Update - ITT's board approved a quarterly cash dividend of 35.1 cents per share, payable on June 30, 2025, to shareholders of record as of June 2 [8] 2025 Outlook - ITT reaffirmed its financial outlook for 2025, expecting adjusted earnings in the range of $6.10-$6.50 per share, indicating a 4-11% increase from the prior year. Revenue growth is projected at 2-4% (3-5% organically), with adjusted operating margin estimated between 18.1% and 19.0%. Free cash flow is anticipated to be between $450-$500 million, reflecting a free cash flow margin of 12-13% [9]

Core Insights - ITT reported revenue of $913 million for the quarter ended March 2025, reflecting a 0.3% increase year-over-year, with EPS at $1.45 compared to $1.42 in the same quarter last year [1] - The reported revenue met the Zacks Consensus Estimate, while the EPS exceeded expectations by 0.69% [1] Revenue Performance - Motion Technologies (MT) revenue was $346.10 million, down 11.8% year-over-year, and below the estimated $349.26 million [4] - Connect & Control Technologies (CCT) revenue reached $234.70 million, surpassing the $219.80 million estimate, marking a 26.8% increase year-over-year [4] - Industrial Process (IP) revenue was $333.30 million, slightly down 0.2% year-over-year, and below the $343.65 million estimate [4] Adjusted Operating Income - Adjusted Operating Income for Corporate was -$16.20 million, better than the estimated -$16.61 million [4] - CCT's Adjusted Operating Income was $38 million, closely matching the $38.06 million estimate [4] - MT's Adjusted Operating Income was $68.50 million, exceeding the $65 million estimate, while IP's was $69 million, slightly below the $71.28 million estimate [4] Stock Performance - ITT shares returned +2.7% over the past month, contrasting with a -0.7% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - ITT reported quarterly earnings of $1.45 per share, exceeding the Zacks Consensus Estimate of $1.44 per share, and showing an increase from $1.42 per share a year ago, indicating a positive earnings surprise of 0.69% [1] Group 1: Earnings Performance - Over the last four quarters, ITT has surpassed consensus EPS estimates four times [2] - The company posted revenues of $913 million for the quarter ended March 2025, aligning with the Zacks Consensus Estimate and showing a slight increase from $910.6 million year-over-year [2] - ITT has topped consensus revenue estimates two times over the last four quarters [2] Group 2: Stock Performance and Outlook - ITT shares have declined approximately 4.1% since the beginning of the year, while the S&P 500 has decreased by 5.3% [3] - The future stock price movement will largely depend on management's commentary during the earnings call [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.53, with expected revenues of $930.51 million, and for the current fiscal year, the estimate is $6.35 on $3.72 billion in revenues [7] Group 3: Industry Context - The Zacks Industry Rank places Diversified Operations in the top 38% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - ITT reported record orders exceeding $1 billion in Q1 2025, a 7% increase year-over-year, with a book-to-bill ratio of 1.15 and a backlog of $1.8 billion, up 21% year-over-year [6][10] - Adjusted EPS for Q1 was $1.45, reflecting a 7% increase, and free cash flow reached a record $77 million, up more than 150% [7][22] - Operating income grew 2% on flat sales, with margins expanding by 30 basis points to 17.4% [6][20] Business Line Data and Key Metrics Changes - Industrial Process (IP) orders grew 14%, with a 11% organic increase, driven by large project awards [7] - Connect and Control (CCT) saw nearly 40% growth, significantly influenced by large platform awards in defense [8] - Motion Technologies (MT) achieved a margin expansion of 160 basis points, reaching nearly 20% despite foreign exchange headwinds [8][20] Market Data and Key Metrics Changes - The backlog in IP reached a record $1 billion, up 15% year-over-year, indicating strong demand despite a slight slowdown in the funnel [52] - CCT experienced over 20% growth in defense connectors, while general industrial connectors grew 4% [19] - The marine pump shipments in Svenahoy contributed to strong performance in IP, offsetting lower pump shipments [20] Company Strategy and Development Direction - ITT is focusing on innovation, exemplified by the launch of Vida, which aims to revolutionize the flow industry by embedding variable speed technology into motors [11][12] - The company is maintaining its full-year adjusted guidance for 2025, despite macroeconomic uncertainties, and is committed to capital deployment through share repurchases [10][33] - ITT continues to invest in high-growth regions like Saudi Arabia and India to enhance market share [7][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong second quarter, with adjusted EPS growth expected to be around 8% at the midpoint [10][29] - The company is closely monitoring the impact of tariffs, estimating a cost exposure of $50 million to $60 million for the remainder of 2025, while implementing pricing actions to mitigate this [30][101] - Management noted that the backlog remains strong, and project execution margins are improving, providing confidence in revenue growth for 2025 [52][53] Other Important Information - ITT repurchased $300 million of shares in April 2025, in addition to $100 million in Q1, reducing the share count by 4% for the year [9] - The company is targeting $500 million to $700 million in M&A opportunities for the year, indicating a healthy pipeline despite market uncertainties [41] Q&A Session Summary Question: What drove the significant increase in orders? - Management indicated that the increase was not due to pre-buying but rather strong project orders in IP, which were up 47%, and successful acquisitions [39][40] Question: What is the rationale behind the large share buyback? - The buyback was to reaffirm confidence in ITT's long-term outlook, not due to a lack of M&A opportunities [41][42] Question: How does the company view the impact of tariffs? - The company expects to offset tariff costs through pricing actions and has not seen significant customer deferrals in capital investments [30][135] Question: What is the outlook for the IP segment? - Management remains confident in IP's performance, citing a strong backlog and project execution margins that are improving [52][53] Question: How is the company addressing potential risks in Saudi Arabia? - Management reported no change in customer tone and continued growth in orders from the oil and gas sector [60][61] Question: What are the pricing trends in Motion Technologies? - The pricing cost equation remains positive, with expectations to recover fluctuations in commodity costs through customer negotiations [110]

Financial Data and Key Metrics Changes - ITT reported record orders exceeding $1 billion in Q1 2025, a 7% increase year-over-year, with a book-to-bill ratio of 1.15 and a backlog of $1.8 billion, up 21% year-over-year [7][11] - Adjusted EPS for Q1 was $1.45, a 7% increase, and free cash flow reached a record $77 million, up more than 150% [8][22] - The company repurchased $100 million of shares in Q1 and an additional $300 million in April, reducing share count by 4% for the year [10][11] Business Line Data and Key Metrics Changes - Industrial Process (IP) orders grew 14%, with a 11% organic increase, driven by large project awards [8] - Connect and Control (CCT) saw nearly 40% growth, primarily due to large platform awards in defense [9] - Motion Technologies (MT) achieved a margin expansion of 160 basis points, reaching nearly 20% despite foreign exchange headwinds [22] Market Data and Key Metrics Changes - The backlog in IP reached a record $1 billion, up 15% year-over-year, indicating strong demand despite a slight slowdown in the funnel [55] - CCT experienced strong growth in defense connectors, up over 20%, while general industrial connectors grew 4% [20] - The marine pump shipments in Svenahoy contributed to strong performance in IP, offsetting lower pump shipments [21] Company Strategy and Development Direction - ITT is focusing on innovation, exemplified by the launch of Vida, which aims to revolutionize the flow industry by embedding variable speed technology into motors [12][14] - The company is maintaining its full-year guidance for 2025 despite macroeconomic uncertainties, with expectations for continued cash generation and margin expansion [11][27] - ITT plans to invest in fast-growing regions like Saudi Arabia and India to capture market share [8][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong second quarter, with adjusted EPS growth expected to be around 8% at the midpoint [11][29] - The company is closely monitoring tariff impacts, estimating a cost of $50 million to $60 million for the remainder of 2025, but expects to offset this through pricing actions [30][31] - Management noted that while there is some softness in the market, the backlog and project execution remain strong, providing confidence in revenue growth [55][141] Other Important Information - The company is actively pursuing M&A opportunities, with a healthy pipeline and a target of deploying $500 million to $700 million this year [42][73] - ITT's operational performance allowed for margin growth despite challenges from cost inflation and unfavorable foreign exchange [22][24] Q&A Session Summary Question: Why did orders pick up significantly? - Management indicated that the increase in orders was not due to pre-buying but rather strong project orders and market share gains from acquisitions [40][41] Question: What is the rationale behind the share buyback? - The buyback was to reaffirm confidence in ITT's long-term outlook, not due to a lack of M&A opportunities [42][43] Question: How does the company view the IP market amid potential softness? - Management acknowledged a slight slowdown in the funnel but emphasized a strong backlog and confidence in revenue growth for IP [55] Question: What are the expectations for the CCT segment regarding tariffs? - The majority of tariff impacts are expected in IP and CCT, but the company has pricing power to mitigate these effects [95][97] Question: How is the company addressing potential risks in Saudi Arabia? - Management reported no change in customer tone or spending plans in Saudi Arabia, with continued growth in oil and gas orders [63][64] Question: What is the outlook for the aerospace sector? - Aerospace orders are expected to improve in the second half of the year, with a recovery anticipated [132]