[Financial Highlights](index=1&type=section&id=Financial%20Highlights) ITT reported strong Q2 2025 results, with revenue up 7% to $972 million and adjusted EPS up 10%, prompting raised full-year guidance Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue ($M) | $972.4 | $905.9 | +7.3% | | Organic Growth (%) | 4.3 | - | - | | Operating Income ($M) | $175.1 | $159.7 | +9.6% | | Adjusted Operating Income ($M) | $179.0 | $163.9 | +9.2% | | Adjusted Operating Margin (%) | 18.4 | 18.1 | +30 bps | | EPS ($) | $1.52 | $1.45 | +4.8% | | Adjusted EPS ($) | $1.64 | $1.49 | +10.1% | | Net Cash from Operating Activities ($M) | $153.7 | $157.7 | -2.5% | | Free Cash Flow ($M) | $137.3 | $134.5 | +2.1% | - Orders grew **16%** (**13% organic**), surpassing **$1.0 billion** for the second consecutive quarter, driven by pump projects, aerospace and defense awards, and rail[6](index=6&type=chunk) - Revenue growth was driven by pump project shipments in Industrial Process (IP), aerospace and industrial connectors demand in Connect & Control Technologies (CCT), and market share gains in automotive and rail in Motion Technologies (MT)[2](index=2&type=chunk) - Year-to-date free cash flow reached **$214 million**, a **30% increase** compared to the prior year[5](index=5&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO Luca Savi highlighted strong Q2 performance driven by execution, innovation, and M&A, leading to increased 2025 revenue and EPS guidance - The company entered Q3 with a backlog of **nearly $2 billion**[8](index=8&type=chunk) - **Over half a billion dollars** of capital was deployed, which is **nearly three times** the company's free cash flow[8](index=8&type=chunk) - Acquisitions are performing well, securing large awards and showing strong profitable growth in the energy transition and defense sectors[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) All segments contributed to Q2 2025 organic revenue growth, with Industrial Process showing strong gains and Connect & Control Technologies boosted by acquisition Q2 2025 Segment Performance Overview | Segment | Revenue ($M) | Reported Change (%) | Organic Growth (%) | Operating Income ($M) | Adjusted Change (%) | Adjusted Margin (%) | Adjusted Margin Change (bps) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Motion Technologies | $365.7 | (4.9) | 3.0 | $71.2 | +1.9 | 19.5 | +140 | | Industrial Process | $355.9 | 7.6 | 5.5 | $76.6 | +12.6 | 21.5 | +100 | | Connect & Control Tech | $251.9 | 31.3 | 4.5 | $44.9 | +24.9 | 17.8 | (90) | [Motion Technologies (MT)](index=2&type=section&id=Motion%20Technologies) Motion Technologies reported a 4.9% revenue decrease due to divestiture, but achieved 3.0% organic growth and a 100 basis point margin improvement - Organic revenue increased by **$10 million** due to strength in Friction OE and KONI rail demand[9](index=9&type=chunk) - The divestiture of Wolverine was the primary reason for the decrease in reported revenue and offset gains from productivity and volume in operating income[9](index=9&type=chunk) [Industrial Process (IP)](index=3&type=section&id=Industrial%20Process) Industrial Process revenue grew 7.6% to $355.9 million with 5.5% organic growth, and operating income increased 15.2% with significant margin expansion - Revenue increased by **$25 million**, driven by strength in pump projects and pricing[10](index=10&type=chunk) - Operating income rose by **$10 million**, with margin expansion driven by pricing, productivity, and volume[10](index=10&type=chunk) [Connect & Control Technologies (CCT)](index=3&type=section&id=Connect%20%26%20Control%20Technologies) Connect & Control Technologies revenue surged 31.3% to $251.9 million, driven by the kSARIA acquisition and 4.5% organic growth, despite a 70 basis point margin decrease - The kSARIA acquisition, which closed in September 2024, was the main driver of the **$60 million** revenue increase[11](index=11&type=chunk) - Operating margin declined due to temporary acquisition amortization, higher labor and material costs, and strategic investments[11](index=11&type=chunk) [Shareholder Returns](index=3&type=section&id=Shareholder%20Returns) ITT's Board of Directors approved a quarterly cash dividend for Q3 2025, demonstrating continued commitment to shareholder capital returns - A quarterly dividend of **$0.351 per share** was announced[12](index=12&type=chunk) - The dividend is payable on September 29, 2025, to shareholders of record as of September 2, 2025[12](index=12&type=chunk) [2025 Full-Year Guidance](index=3&type=section&id=2025%20Full-Year%20Guidance) ITT raised its full-year 2025 guidance for total revenue and EPS, now expecting higher revenue growth and an 8% to 11% increase in adjusted EPS Updated Full-Year 2025 Guidance | Metric | Previous Guidance | Updated Guidance | | :--- | :--- | :--- | | Total Revenue Growth (%) | Not specified | 5 to 7 | | Organic Revenue Growth (%) | 3 to 5 | 3 to 5 (unchanged) | | Adjusted Operating Margin (%) | Not specified | 18.1 to 18.7 | | EPS ($) | Not specified | $5.95 to $6.15 | | Adjusted EPS ($) | Not specified | $6.35 to $6.55 (8% to 11% growth) | | Free Cash Flow ($M) | $450 to $500 | $450 to $500 (unchanged) | [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q2 and the first six months of 2025, prepared in accordance with U.S. GAAP [Consolidated Condensed Statements of Operations](index=8&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Q2 2025 revenue was $972.4 million, up from $905.9 million in Q2 2024, with net income attributable to ITT Inc. at $121.0 million or $1.52 diluted EPS Q2 2025 vs Q2 2024 Statement of Operations Highlights | Account | Q2 2025 ($M) | Q2 2024 ($M) | | :--- | :--- | :--- | | Revenue | $972.4 | $905.9 | | Gross Profit | $346.8 | $316.8 | | Operating Income | $175.1 | $159.7 | | Net Income attributable to ITT Inc. | $121.0 | $119.7 | | Diluted EPS ($) | $1.52 | $1.45 | [Consolidated Condensed Balance Sheets](index=9&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) As of June 28, 2025, ITT's total assets increased to $5.02 billion from $4.73 billion, driven by receivables and inventories, with total liabilities rising to $2.45 billion Balance Sheet Highlights | Account | June 28, 2025 ($M) | Dec 31, 2024 ($M) | | :--- | :--- | :--- | | Total Current Assets | $2,060.5 | $1,885.8 | | Total Assets | $5,015.2 | $4,731.3 | | Total Current Liabilities | $1,421.8 | $1,333.2 | | Total Liabilities | $2,451.6 | $1,945.5 | | Total Shareholders' Equity | $2,563.6 | $2,785.8 | [Consolidated Condensed Statements of Cash Flows](index=10&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 28, 2025, net cash from operating activities was $267.1 million, with $57.0 million used in investing and a $208.6 million financing outflow Six Months Ended Cash Flow Highlights | Activity | June 28, 2025 ($M) | June 29, 2024 ($M) | | :--- | :--- | :--- | | Net Cash – Operating Activities | $267.1 | $215.5 | | Net Cash – Investing Activities | $(57.0) | $(460.6) | | Net Cash – Financing Activities | $(208.6) | $213.8 | | Net change in cash | $28.9 | $(48.6) | [Non-GAAP Financial Measures and Reconciliations](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines key non-GAAP measures such as organic revenue, adjusted operating income, and free cash flow, providing reconciliations to U.S. GAAP for operational insight [Definitions of Non-GAAP Measures](index=11&type=section&id=Definitions%20of%20Non-GAAP%20Measures) Management utilizes non-GAAP measures including Organic Revenue/Orders, Adjusted Operating Income, Adjusted EPS, and Free Cash Flow to evaluate performance and identify underlying business trends - Organic Revenues and Orders exclude the impacts of foreign currency, acquisitions, and divestitures to help identify underlying trends[28](index=28&type=chunk) - Adjusted Operating Income and Adjusted EPS exclude special items like restructuring and certain acquisition-related costs to better reflect ongoing profitability[29](index=29&type=chunk)[30](index=30&type=chunk) - Free Cash Flow is defined as net cash from operating activities less capital expenditures and is a primary metric used by management to monitor cash generation[31](index=31&type=chunk) [Reconciliation of Revenue and Orders](index=12&type=section&id=Reconciliation%20of%20Revenue%20and%20Orders) Q2 2025 reported revenue growth was 7.3% (4.3% organic), and reported orders grew 15.6% (12.5% organic), with Industrial Process showing strong 22.2% organic order growth Q2 2025 Organic vs. Reported Growth | Metric | Reported Growth (%) | Organic Growth (%) | | :--- | :--- | :--- | | Total Revenue | 7.3 | 4.3 | | Total Orders | 15.6 | 12.5 | [Reconciliation of Operating Income and Margin](index=13&type=section&id=Reconciliation%20of%20Operating%20Income%20and%20Margin) ITT's reported Q2 operating income was $175.1 million, adjusted to $179.0 million after special items, resulting in an 18.4% adjusted operating margin, a 30 basis point improvement Q2 2025 Operating Income Reconciliation | Metric | Amount ($M) | | :--- | :--- | | Reported Operating Income | $175.1 | | Special Item Adjustments | $3.9 | | Adjusted Operating Income | $179.0 | [Reconciliation of EPS](index=14&type=section&id=Reconciliation%20of%20EPS) Q2 2025 reported diluted EPS was $1.52, adjusted to $1.64 (10.1% increase), with full-year GAAP EPS guidance of $5.95-$6.15 reconciling to adjusted EPS of $6.35-$6.55 Q2 2025 EPS Reconciliation | Metric | Per Share Amount ($) | | :--- | :--- | | Reported Diluted EPS | $1.52 | | Special Items Adjustments | $0.12 | | Adjusted Diluted EPS | $1.64 | [Reconciliation of Free Cash Flow](index=16&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) Q2 2025 free cash flow was $137.3 million, with year-to-date free cash flow at $213.9 million, and full-year guidance remaining $450-$500 million Free Cash Flow Reconciliation | Period | Net Cash - Operating Activities ($M) | Capital Expenditures ($M) | Free Cash Flow ($M) | | :--- | :--- | :--- | :--- | | Q2 2025 | $153.7 | $(16.4) | $137.3 | | Six Months 2025 | $267.1 | $(53.2) | $213.9 | | FY 2025 Guidance | $575.0 - $625.0 | $(125.0) | $450.0 - $500.0 | [Safe Harbor Statement](index=6&type=section&id=Safe%20Harbor%20Statement) This section provides a legal disclaimer for forward-looking statements, cautioning investors that future performance is subject to various risks and uncertainties detailed in SEC filings - The report contains forward-looking statements based on current expectations and beliefs, which are inherently uncertain and subject to change[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - Key risks that could affect future results include uncertain economic conditions, geopolitical tensions, inflation, trade disputes, supply chain volatility, and cybersecurity breaches[21](index=21&type=chunk) - The company directs investors to its Annual Report on Form 10-K for a more complete discussion of risk factors[20](index=20&type=chunk)

Company Overview - ITT is expected to report quarterly earnings of $1.62 per share, reflecting a year-over-year increase of +8.7% [3] - Revenues are anticipated to reach $946.88 million, which is a 4.5% increase from the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for July 31, and positive results could lead to a stock price increase, while negative results may cause a decline [2] - The consensus EPS estimate has been revised 1.64% higher in the last 30 days, indicating a more optimistic outlook from analysts [4] Earnings Surprise Potential - ITT has an Earnings ESP of +0.51%, suggesting a likelihood of beating the consensus EPS estimate [12] - The company holds a Zacks Rank of 2, which further supports the expectation of an earnings beat [12] Historical Performance - In the last reported quarter, ITT exceeded the expected earnings of $1.44 per share by delivering $1.45, resulting in a surprise of +0.69% [13] - Over the past four quarters, ITT has consistently beaten consensus EPS estimates [14] Industry Context - Markel Group, a peer in the Zacks Diversified Operations industry, is expected to report earnings of $24.74 per share, indicating a year-over-year decline of -4.7% [18] - Markel Group's revenues are projected to be $3.99 billion, up 4.2% from the previous year [18] - Markel Group has an Earnings ESP of -0.76% and a Zacks Rank of 3, making it challenging to predict an earnings beat [19]

Core Viewpoint - Federal Signal (FSS) has outperformed its peers in the Conglomerates sector this year, with a year-to-date return of 17.3% compared to the sector average of 6.3% [4]. Company Performance - Federal Signal is currently ranked 4 in the Zacks Sector Rank among 16 companies in the Conglomerates group [2]. - The Zacks Rank for Federal Signal is 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3]. - The consensus estimate for Federal Signal's full-year earnings has increased by 1.7% over the past quarter, reflecting improved analyst sentiment [3]. Industry Context - Federal Signal belongs to the Diversified Operations industry, which includes 16 companies and is currently ranked 85 in the Zacks Industry Rank [5]. - Stocks in the Diversified Operations industry have gained approximately 6.3% year-to-date, indicating that Federal Signal is performing better than its industry peers [5]. - ITT, another stock in the Conglomerates sector, has also shown strong performance with a year-to-date return of 12% [4].

Core Viewpoint - ITT is a strong candidate for investors looking for stocks that consistently beat earnings estimates and may continue this trend in the upcoming quarterly report [1]. Company Performance - ITT has a solid track record of exceeding earnings estimates, particularly in the last two quarters, with an average surprise of 1.37% [2]. - In the last reported quarter, ITT achieved earnings of $1.45 per share, surpassing the Zacks Consensus Estimate of $1.44 per share, resulting in a surprise of 0.69% [3]. - In the previous quarter, ITT was expected to report earnings of $1.47 per share but delivered $1.50 per share, yielding a surprise of 2.04% [3]. Earnings Estimates and Predictions - Earnings estimates for ITT have been trending upward, influenced by its history of earnings surprises [5]. - The stock has a positive Zacks Earnings ESP of +0.11%, indicating that analysts have recently become more optimistic about the company's earnings prospects [8]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a potential for another earnings beat in the upcoming report, expected on July 31, 2025 [8]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7].

Core Insights - ITT Inc. is an industrial compounder that is integrating mission-critical hardware with high-margin service and software offerings, indicating a strategic shift towards higher profitability [1] - The company’s legacy business is subject to cyclicality, but its growth potential is primarily in its service and software segments, which are expected to drive future revenue [1] Company Overview - ITT Inc. operates in the industrial sector, focusing on blending hardware with software and services to enhance its product offerings [1] - The company is positioned to capitalize on high-margin opportunities, suggesting a focus on improving profitability through diversification [1] Market Position - Despite challenges from its traditional business model, ITT Inc. is leveraging its capabilities to create a more resilient and growth-oriented business structure [1] - The shift towards software and services reflects a broader trend in the industrial sector, where companies are increasingly seeking to enhance value through technology integration [1]

Core Insights - ITT Corporation is experiencing growth across its segments, particularly in the Industrial Process, Connect and Control Technologies, and Motion Technologies segments, driven by strong demand and strategic acquisitions [1][2][7]. Segment Performance - The Industrial Process (IP) segment is benefiting from solid momentum in short-cycle business within energy and industrial markets, with growth in demand for parts, services, and valves [1]. - The Connect and Control Technologies (CCT) segment is supported by increased sales of components and connectors in defense and industrial markets, bolstered by the acquisition of kSARIA [1][2]. - The Motion Technologies (MT) segment is expected to perform well due to strong demand for brake components, specialized sealing solutions, and damping technologies in OEM and rail transportation markets [1]. Acquisitions and Growth - Acquisitions contributed 6.3% to ITT's sales in Q1 2025, with significant deals including kSARIA and Svanehøj, enhancing capabilities in defense, aerospace, and marine markets [2][7]. - The acquisition of Micro-Mode Products in May 2023 expanded ITT's product portfolio and customer base, particularly for long-term defense programs [2]. Financial Performance - In Q1 2025, ITT paid out dividends of $28.7 million and repurchased shares worth $100 million, with a 10% increase in the quarterly dividend rate announced in February 2025 [3]. - ITT's sales rose 6.3% in Q1 2025, driven by strength across its segments, although higher costs and foreign exchange translation negatively impacted revenues [7][9]. Cost 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 [8]. - Sales and marketing expenses rose 18.2% year-over-year in 2024, continuing into Q1 2025 with a 6.2% increase [8].

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]