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]

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]