ITT (US:ITT)2025-10-29 13:30Financial Data and Key Metrics Changes - ITT reported total orders of nearly $1 billion for the third consecutive quarter, up 3% year-over-year, supported by strong order intake from recent acquisitions [7] - Revenue grew 13% in total and 6% organically, reaching $999 million, with operating income growing nearly twice the organic sales growth rate [8][17] - Adjusted EPS increased by 21%, and free cash flow rose 46% to $368 million year-to-date, with expectations to reach the high end of the previous range at $500 million for the full year [8][11] - Operating margin expanded over 100 basis points, excluding M&A impacts, with free cash flow margin in the quarter exceeding 15% [8][11] Business Line Data and Key Metrics Changes - Industrial Process (IP) grew 11% organically, driven by a projects business that grew over 50% [9][17] - Connect and Control Technologies (CCT) delivered 25% total growth, with 6% organic growth, bolstered by defense momentum and aerospace demand [10][17] - Motion Technologies (MT) grew 4% organically, outperforming global auto production by 360 basis points, with significant contributions from China [10][17] Market Data and Key Metrics Changes - Orders in the defense and aerospace sectors were strong, with CCT orders up 27% and 6% organic growth [12] - The market share in China for ITT has increased from 31% to above 34% [12] - Svanehøj secured over $250 million in orders year-to-date, representing 59% growth compared to the previous year [14] Company Strategy and Development Direction - The company is focused on organic growth and margin expansion, compounded with M&A activities, aiming for a strong performance towards its 2030 targets [7][25] - ITT continues to invest in innovations like Vidar, which is being installed with major energy companies in North America [8][11] - The company expects to maintain a book-to-bill ratio above one for the full year, indicating a strong position for growth in 2026 [15][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational performance and the ability to deliver for customers and shareholders despite market challenges [11][20] - The outlook for 2026 is cautiously optimistic, with expectations for low double-digit growth driven by a strong backlog and project wins [50][92] - Management noted that while auto production is expected to be up 2% year-over-year, challenges remain in Europe and North America [37][89] Other Important Information - The company is raising its full-year adjusted EPS outlook, with the low end of the revised guidance now above the previous high end, reflecting strong operational performance [11][21] - The effective tax rate is expected to be lower than planned, contributing positively to the EPS outlook [20][22] Q&A Session Summary Question: What is the outlook for global auto production? - Management indicated that global auto production is expected to be up 2% year-over-year, with China showing significant growth while Europe and North America may see slight declines [37][89] Question: Can you provide insights on the funnel and order conversion in Industrial Process? - The funnel for active projects is up 22% year-over-year, indicating strong potential for order conversion [39] Question: What factors contributed to the $0.20 guidance raise? - The guidance raise is attributed to improved profitability, better performance from acquisitions, and a favorable tax rate [47] Question: How is the pricing environment evolving? - The pricing environment varies by business segment, with CCT showing more pricing power, while IP requires a more strategic approach [113] Question: What are the prospects for improving growth in Aerospace and Defense? - Management expects continued growth in Aerospace and Defense, with orders anticipated to accelerate in Q4 [123]