ITT Benefits From Business Strength & Acquisitions Amid Risks

Core Viewpoint - ITT Inc. is experiencing growth driven by strong demand in its short-cycle product categories, particularly in pump projects and the Habonim valves business, alongside solid aftermarket momentum and strategic acquisitions [1]. Group 1: Revenue Growth - Revenues from the Industrial Process segment increased by 19.3% in the third quarter of 2024, while the Connect and Control Technologies segment saw a 12.6% increase [2]. - The acquisitions of Svanehøj and kSARIA contributed 7% to the company's sales growth in the third quarter of 2024 [4]. Group 2: Acquisitions - ITT acquired kSARIA Parent, Inc. in September 2024, enhancing its connectivity solutions for defense and aerospace markets, which is expected to drive growth and operational efficiency [3]. - The acquisition of Svanehøj for approximately $395 million in January 2024 expanded ITT's offerings in the marine pumps industry [4]. Group 3: Shareholder Value - ITT is committed to increasing shareholder value through dividend payments and share repurchases, having paid out $78.7 million in dividends and repurchased shares worth $104 million in the first nine months of 2024 [5]. - The quarterly dividend rate was increased by 10% in February 2024 [5]. Group 4: Cost and Expenses - The cost of sales rose by 8.5% year over year in the first nine months of 2024, with sales and marketing expenses increasing by 15% and general and administrative expenses by 5.7% [8]. - High operating costs and expenses may impact margins and profitability in the upcoming quarters if not controlled [8]. Group 5: Foreign Currency Impact - ITT's substantial international operations expose it to foreign-currency risks, which adversely affected sales by 0.2% in the third quarter due to foreign currency translation [9].