ITT (ITT) - 2025 Q2 - Quarterly Results

Financial Highlights 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] - 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] - Year-to-date free cash flow reached $214 million, a 30% increase compared to the prior year[5] Management Commentary 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 $2 billion[8] - Over half a billion dollars of capital was deployed, which is nearly three times the company's free cash flow[8] - Acquisitions are performing well, securing large awards and showing strong profitable growth in the energy transition and defense sectors[8] Segment Performance All segments contributed to Q2 2025 organic revenue growth, with Industrial Process showing strong gains and Connect & Control Technologies boosted by acquisition Q2 2025 Segment Performance Overview | Segment | Revenue ($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) 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] - 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] Industrial Process (IP) 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] - Operating income rose by $10 million, with margin expansion driven by pricing, productivity, and volume[10] Connect & Control Technologies (CCT) 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] - Operating margin declined due to temporary acquisition amortization, higher labor and material costs, and strategic investments[11] Shareholder Returns ITT's Board of Directors approved a quarterly cash dividend for Q3 2025, demonstrating continued commitment to shareholder capital returns - A quarterly dividend of $0.351 per share was announced[12] - The dividend is payable on September 29, 2025, to shareholders of record as of September 2, 2025[12] 2025 Full-Year Guidance ITT raised its full-year 2025 guidance for total revenue and EPS, now expecting higher revenue growth and an 8% to 11% increase in adjusted EPS Updated Full-Year 2025 Guidance | Metric | Previous Guidance | Updated Guidance | | :--- | :--- | :--- | | Total Revenue Growth (%) | Not specified | 5 to 7 | | Organic Revenue Growth (%) | 3 to 5 | 3 to 5 (unchanged) | | Adjusted Operating Margin (%) | Not specified | 18.1 to 18.7 | | EPS ($) | 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 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 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 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 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 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 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] - Adjusted Operating Income and Adjusted EPS exclude special items like restructuring and certain acquisition-related costs to better reflect ongoing profitability[29][30] - 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] Reconciliation of Revenue and Orders 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 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 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 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 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][18][19] - Key risks that could affect future results include uncertain economic conditions, geopolitical tensions, inflation, trade disputes, supply chain volatility, and cybersecurity breaches[21] - The company directs investors to its Annual Report on Form 10-K for a more complete discussion of risk factors[20]