- 9% revenue growth (6% organic) driven by higher sales volumes
across all segments and the acquisition of Svanehøj
- 60 basis points operating margin expansion to 17.6%; 100 basis
points adjusted operating margin expansion to 18.0%
- 11% EPS growth (12% adjusted) driven by volume, productivity
and value pricing
- Signed definitive agreement to acquire kSARIA, leading provider
of highly engineered, mission critical interconnect solutions for
the defense and aerospace markets and divested Wolverine Advanced
Materials (Wolverine) business, manufacturer of automotive
components, in July
- Maintaining full year revenue, operating margin, EPS and cash
flow guidance despite $0.15 impact from divestiture
August 1, 2024-- ITT Inc. (NYSE: ITT) today reported financial
results for the second quarter ended June 29, 2024 and announced a
reshaping of its portfolio to shift focus to higher growth and
margin businesses.
In the second quarter, revenue increased 9% versus prior year
(6% organic) primarily driven by Friction original equipment (OE)
outperformance and aftermarket demand in Motion Technologies (MT),
short cycle demand in Industrial Process (IP) and industrial
connectors growth in Connect & Control Technologies (CCT). The
Svanehøj and Micro-Mode acquisitions contributed 4% to total
revenue growth while foreign currency translation was a 1% negative
impact.
Second quarter operating income of $159 million increased 12%
versus prior year (15% adjusted) primarily due to higher sales
volume and productivity actions, partially offset by higher labor
costs, strategic growth investments and the $7 million prior year
gain on a product line sale.
EPS for the second quarter of $1.45 increased 11% versus prior
year and 8% on a sequential basis primarily driven by higher
operating income, partially offset by higher interest expense and
acquisition amortization. Adjusted EPS of $1.49 increased 12%
compared to prior year and 5% on a sequential basis. The difference
between reported and adjusted EPS is primarily due to restructuring
charges and acquisition-related costs.
Net cash from operating activities for the second quarter of
$158 million increased 13% versus prior year primarily driven by
higher operating income and improved accounts receivable
collections, partially offset by higher tax payments. Free cash
flow for the quarter of $135 million increased 10% versus prior
year and increased $104 million on a sequential basis.
Table 1. Second Quarter Performance Q2 2024 Q2
2023 Change Revenue $
905.9
$
833.9
8.6
%
Organic Growth
6.0
%
Operating Income $
159.0
$
142.0
12.0
%
Operating Margin
17.6
%
17.0
%
60
bps Adjusted Operating Income $
163.2
$
142.0
14.9
%
Adjusted Operating Margin
18.0
%
17.0
%
100
bps Earnings Per Share $
1.45
$
1.31
10.7
%
Adjusted Earnings Per Share $
1.49
$
1.33
12.0
%
Operating Cash Flow $
157.7
$
139.7
12.9
%
Free Cash Flow $
134.5
$
122.1
10.2
%
Note: all results unaudited; dollars in millions except per
share amounts
Management Commentary
“Once again, ITT delivered a strong performance in the second
quarter, growing EPS both year-over-year and sequentially, driven
by 9% sales growth with each segment contributing. Our focus on
profitable growth generated 60 basis points of margin expansion
whilst free cash flow improved sequentially by more than $100
million. Our recent acquisition Svanehøj grew orders by nearly 40%
this quarter and won two significant awards, including pumps on the
first ammonia-fueled bulk carriers and on a large European carbon
capture project. Friction also continued to outperform in all
regions and, in China, we grew revenue double-digits for the fifth
consecutive quarter.
This quarter we have also taken a significant step in reshaping
the ITT portfolio, shifting towards attractive defense and
aerospace interconnect markets while reducing our automotive
exposure. Today we announced both the acquisition of kSARIA and the
divestiture of Wolverine. This follows three previous acquisitions
to expand our flow and connector portfolios and the sale of two
non-core product lines. In total, over the past two years, we have
committed over $1 billion towards acquisitions. On top of that, in
Q2 we repurchased $79 million of ITT shares and paid down nearly
$40 million of debt. With our strong execution, portfolio actions
and effective capital deployment, we continue to grow our core
businesses and enhance the ITT portfolio further through M&A,”
said ITT’s Chief Executive Officer and President Luca Savi.
Table 2. Second Quarter Segment Results
Revenue
Operating Income
Operating Margin
Q2 2024
Reported
Change
Organic
Growth
Q2 2024
Reported
Change
Adjusted
Change
Q2 2024
Reported
Change
Adjusted
Change
Motion Technologies $
384.5
4.3
%
6.3
%
$
71.2
23.4
%
22.9
%
18.5
%
290
bps
280
bps
Industrial Process
330.7
12.6
%
2.6
%
65.8
(0.9)
%
1.5
%
19.9
%
(270)
bps
(230)
bps
Connect & Control Technologies
191.8
11.4
%
11.1
%
35.4
24.6
%
19.5
%
18.5
%
200
bps
130
bps
Note: all results unaudited; excludes intercompany
eliminations of $1.1 million; comparisons to Q2 2023.
Motion Technologies revenue increased $16 million primarily due
to higher sales volume in Friction OE and rail demand in KONI,
partially offset by unfavorable foreign currency translation.
Operating income increased $14 million primarily due to higher
sales volume and lower materials cost.
Industrial Process revenue increased $37 million primarily due
to the acquisition of Svanehøj, which closed in January 2024, and
growth in baseline pumps and aftermarket parts and service. This
was partially offset by foreign currency translation. Operating
income decreased by approximately $0.6 million primarily due to
higher restructuring costs, partially offset by higher sales volume
and pricing.
Connect & Control Technologies revenue increased $20 million
primarily driven by higher sales volumes in connectors, components
for aerospace and defense, and pricing actions. Operating income
increased $7 million primarily due to higher sales volume, pricing
and productivity actions, partially offset by a prior year gain on
sale of $7 million and higher material costs.
Strategic Portfolio Actions
ITT today announced it has signed an agreement to acquire
privately held kSARIA Parent, Inc. (kSARIA) for a purchase
price of approximately $475 million. The acquisition is expected to
close during the third quarter of 2024, subject to the satisfaction
of customary closing conditions.
kSARIA is a leading producer and supplier of mission-critical
connectivity solutions for the defense and aerospace markets. The
company’s products support applications for avionics, sensors,
communications and networking on coveted platforms with defense
prime contractors and commercial aerospace leaders. The majority of
their positions are sole or primary source. kSARIA offers a
combination of ruggedized fiber optic and electrical solutions with
complementary service offerings. kSARIA’s proprietary engineering
and manufacturing capabilities in both fiber and electrical
interconnect technologies enable it to deliver mission-critical,
engineered products which must survive and function in harsh
environments.
“kSARIA is a great addition to CCT’s connector portfolio. The
company has leading positions on marquee defense programs and
long-standing relationships with its customers. kSARIA has a proven
history of high teens organic growth at attractive EBITDA margins,
and multiple tailwinds to drive long-term sustainable growth,
including defense modernization. Like ITT, kSARIA develops
customized solutions for harsh environments, which are highly
complementary to our existing connector portfolio. kSARIA is also
uniquely positioned to capitalize on the industry transition from
electrical to fiber required for high bandwidth data transmission
and weight reduction. On behalf of everyone at ITT, I’d like to
welcome kSARIA’s entire team to the ITT and Connect & Control
family,” said Luca Savi, Chief Executive Officer and President of
ITT.
Headquartered in New Hampshire, kSARIA has approximately 1,000
employees across six manufacturing sites in North America, and
generated approximately $175 million in sales in 2023.
ITT also announced it completed in July the sale of its
Wolverine business to private equity firm Center Rock
Capital Partners, LP for a cash purchase price of approximately
$171 million.
Wolverine, part of the Motion Technologies segment prior to the
divestiture, is a developer and manufacturer of high-performance
specialty coatings for critical damping and sealing applications in
the automotive market. Following the divestiture, ITT’s automotive
exposure will principally be in its Friction braking business, the
leading supplier of brake pads for internal combustion engine,
hybrid and electric vehicles worldwide, and will represent ~30% of
the total ITT portfolio.
“On behalf of all ITTers, I would like to thank the Wolverine
team for the value you delivered, and wish you great success in
your next chapter,” said Mr. Savi.
Quarterly Dividend
The company announced today a quarterly dividend of $0.319 per
share on the company’s outstanding common stock. ITT’s Board of
Directors approved the cash dividend for the third quarter of 2024,
which will be payable on Sept. 30, 2024, to shareholders of record
as of the close of business on Sept. 3, 2024.
2024 Guidance
The company is maintaining its revenue, margin, EPS and free
cash flow guidance despite the Wolverine divestiture. We continue
to expect revenue growth of 9% to 12%, up 4% to 7% on an organic
basis; operating margin of 16.9% to 17.5% and adjusted operating
margin of 17.1% to 17.7%, up 20 to 80 bps (up 100 to 160 bps
excluding acquisition dilution); full year EPS of $5.51 to $5.76
and adjusted EPS of $5.65 to $5.90, up 8% to 13% for the full year
including the ~($0.15) impact from the divestiture; and free cash
flow of $435 million to $475 million, representing 12% to 13% free
cash flow margin for the full year.
It is not possible, without unreasonable efforts, to estimate
the impacts of foreign currency fluctuations, acquisitions and
certain other special items that may occur in 2024 as these items
are inherently uncertain and difficult to predict. As a result, we
are unable to quantify certain amounts that would be included in a
reconciliation of organic revenue growth and adjusted segment
operating margin to the most directly comparable GAAP financial
measures without unreasonable efforts and accordingly we have not
provided reconciliations for these forward-looking non-GAAP
financial measures. Additionally, forward-looking GAAP operating
margin and EPS guidance exclude the impact of the gain on the July
2024 divestiture of the Wolverine business. Such impact will be
finalized during the third quarter of 2024.
Investor Conference Call Details
ITT’s management will host a conference call for investors on
Thursday, Aug. 1 at 8:30 a.m. Eastern Time. The briefing can be
accessed live via a webcast, which is available on the company’s
website: https://investors.itt.com. A replay of the webcast will be
available beginning two hours after the webcast. Reconciliations of
non-GAAP financial performance metrics to their most comparable
U.S. GAAP financial performance metrics are defined and presented
below and should not be considered a substitute for, nor superior
to, the financial data prepared in accordance with U.S. GAAP.
Safe Harbor Statement
This release 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
conference call (including the financial results presentation
material) 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-looking statements are not historical
facts, but rather represent only a belief regarding future events
based on current expectations, estimates, assumptions and
projections about our business, future financial results and the
industry in which we operate, and other legal, regulatory, and
economic developments. These forward-looking statements include,
but are not limited to, future strategic plans and other statements
that describe the company’s business strategy, outlook, objectives,
plans, intentions or goals, and any discussion of future events and
future operating or financial performance.
We use words such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “future,” “guidance,” “project,”
“intend,” “may,” “plan,” “potential,” “project,” “should,”
“target,” “will,” and other similar expressions to identify such
forward-looking statements. Forward-looking statements are
uncertain and, by their nature, many are inherently unpredictable
and outside of ITT’s control, and involve known and unknown risks,
uncertainties and other important factors that could cause actual
results to differ materially from those expressed or implied in, or
reasonably inferred from, such forward-looking statements.
Where in any forward-looking statement we express an expectation
or belief as to future results or events, such expectation or
belief is based on current plans and expectations of our
management, expressed in good faith and believed to have a
reasonable basis. However, we cannot provide any assurance that the
expectation or belief will occur or that anticipated results will
be achieved or accomplished.
Among the factors that could cause our results to differ
materially from those indicated by forward-looking statements are
risks and uncertainties inherent in our business including, without
limitation:
- uncertain global economic and capital markets conditions, which
have been influenced by heightened geopolitical tensions,
inflation, changes in monetary policies, the threat of a possible
regional or global economic recession, trade disputes between the
U.S. and its trading partners, political and social unrest, and the
availability and fluctuations in prices of energy and commodities,
including steel, oil, copper and tin;
- fluctuations in interest rates and the impact of such
fluctuations on customer behavior and on our cost of debt;
- fluctuations in foreign currency exchange rates and the impact
of such fluctuations on our revenues, customer demand for our
products and on our hedging arrangements;
- volatility in raw material prices and our suppliers’ ability to
meet quality and delivery requirements;
- impacts and risk of liabilities from recent mergers,
acquisitions, or venture investments, and past divestitures and
spin-offs;
- our inability to hire or retain key personnel;
- failure to compete successfully and innovate in our
markets;
- failure to manage the distribution of products and services
effectively;
- failure to protect our intellectual property rights or
violations of the intellectual property rights of others;
- the extent to which there are quality problems with respect to
manufacturing processes or finished goods;
- the risk of cybersecurity breaches or failure of any
information systems used by the Company, including any flaws in the
implementation of any enterprise resource planning systems;
- loss of or decrease in sales from our most significant
customers;
- risks due to our operations and sales outside the U.S. and in
emerging markets, including the imposition of tariffs and trade
sanctions;
- fluctuations in demand or customers’ levels of capital
investment, maintenance expenditures, production, and market
cyclicality;
- the risk of material business interruptions, particularly at
our manufacturing facilities;
- risks related to government contracting, including changes in
levels of government spending and regulatory and contractual
requirements applicable to sales to the U.S. government;
- fluctuations in our effective tax rate, including as a result
of changing tax laws and other possible tax reform legislation in
the U.S. and other jurisdictions;
- changes in environmental laws or regulations, discovery of
previously unknown or more extensive contamination, or the failure
of a potentially responsible party to perform;
- failure to comply with the U.S. Foreign Corrupt Practices Act
(or other applicable anti-corruption legislation), export controls
and trade sanctions; and
- risk of product liability claims and litigation.
More information on factors that could cause actual results or
events to differ materially from those anticipated is included in
our Annual Report on Form 10-K for the year ended December 31, 2023
(particularly under the caption "Risk Factors"), our Quarterly
Reports on Form 10-Q and in other documents we file from time to
time with the SEC.
The forward-looking statements included in this release speak
only as of the date hereof. We undertake no obligation (and
expressly disclaim any obligation) to update any forward-looking
statements, whether written or oral or as a result of new
information, future events or otherwise.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Three Months Ended
Six Months Ended
June 29,
2024
July 1,
2023
June 29,
2024
July 1,
2023
Revenue
$
905.9
$
833.9
$
1,816.5
$
1,631.8
Cost of revenue
589.8
553.9
1,199.6
1,089.9
Gross profit
316.1
280.0
616.9
541.9
General and administrative expenses
76.8
68.4
148.3
136.7
Sales and marketing expenses
50.6
43.9
100.7
86.8
Research and development expenses
29.7
25.7
59.7
52.1
Operating income
159.0
142.0
308.2
266.3
Interest expense
7.4
4.5
15.1
11.2
Interest income
(1.6
)
(2.0
)
(3.4
)
(4.6
)
Other non-operating income, net
(0.2
)
-
(1.7
)
(0.6
)
Income before income tax expense
153.4
139.5
298.2
260.3
Income tax expense
33.0
30.6
65.8
50.7
Net income
120.4
108.9
232.4
209.6
Less: Income attributable to noncontrolling interests
1.2
0.7
2.2
1.4
Net income attributable to ITT Inc.
$
119.2
$
108.2
$
230.2
$
208.2
Earnings per share attributable to ITT Inc.:
Basic
$
1.45
$
1.31
$
2.80
$
2.52
Diluted
$
1.45
$
1.31
$
2.79
$
2.51
Weighted average common shares – basic
82.0
82.4
82.1
82.5
Weighted average common shares – diluted
82.4
82.6
82.5
82.8
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (IN
MILLIONS, EXCEPT PER SHARE AMOUNTS) As of the Period Ended
June 29,
2024
December 31,
2023
Assets Current assets: Cash and cash equivalents
$
425.5
$
489.2
Receivables, net
706.3
675.2
Inventories
564.3
575.4
Other current assets
137.3
117.9
Current assets held for sale
92.5
-
Total current assets
1,925.9
1,857.7
Non-current assets:
Plant, property and equipment, net
543.8
561.0
Goodwill
1,200.9
1,016.3
Other intangible assets, net
296.9
116.6
Other non-current assets
382.8
381.0
Non-current assets held for sale
60.0
-
Total non-current assets
2,484.4
2,074.9
Total assets
$
4,410.3
$
3,932.6
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term borrowings
$
357.5
$
187.7
Accounts payable
430.9
437.0
Accrued and other current liabilities
423.6
413.1
Current liabilities held for sale
29.4
-
Total current liabilities
1,241.4
1,037.8
Non-current liabilities:
Long-term debt
190.0
5.7
Postretirement benefits
131.8
138.7
Other non-current liabilities
252.4
211.3
Non-current liabilities held for sale
5.5
-
Total non-current liabilities
579.7
355.7
Total liabilities
1,821.1
1,393.5
Shareholders’ equity:
Common stock:
Authorized – 250.0 shares, $1 par value per share
Issued and outstanding – 81.7 shares and 82.1 shares, respectively
81.7
82.1
Retained earnings
2,877.7
2,778.0
Accumulated other comprehensive loss:
Postretirement benefit plans
(3.3
)
(1.6
)
Cumulative translation adjustments
(379.5
)
(330.3
)
Total accumulated other comprehensive loss
(382.8
)
(331.9
)
Total ITT Inc. shareholders’ equity
2,576.6
2,528.2
Noncontrolling interests
12.6
10.9
Total shareholders’ equity
2,589.2
2,539.1
Total liabilities and shareholders’ equity
$
4,410.3
$
3,932.6
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS) For the Six Months Ended
June 29,
2024
July 1,
2023
Operating Activities Income from continuing operations
attributable to ITT Inc.
$
230.2
$
208.2
Adjustments to income from continuing operations: Depreciation and
amortization
66.0
53.8
Equity-based compensation
13.7
10.1
Gain on sale of business
-
(7.2
)
Other non-cash charges, net
15.7
16.6
Changes in assets and liabilities: Change in receivables
(60.4
)
(58.6
)
Change in inventories
(5.1
)
(31.4
)
Change in contract assets
(20.7
)
(2.9
)
Change in contract liabilities
15.5
12.0
Change in accounts payable
8.2
8.9
Change in accrued expenses
(26.1
)
15.5
Change in income taxes
(13.6
)
(8.1
)
Other, net
(7.9
)
(19.1
)
Net Cash – Operating Activities
215.5
197.8
Investing Activities Capital expenditures
(50.9
)
(46.3
)
Proceeds from sale of business
-
10.5
Acquisitions, net of cash acquired
(407.5
)
(79.3
)
Other, net
(2.2
)
(4.7
)
Net Cash – Investing Activities
(460.6
)
(119.8
)
Financing Activities Commercial borrowings, net borrowings
169.5
(61.0
)
Long-term debt, issued
299.1
-
Long-term debt issued, net of debt issuance costs
(109.3
)
(1.1
)
Share repurchases under repurchase plan
(79.0
)
(60.0
)
Payments for taxes related to net share settlement of stock
incentive plans
(12.8
)
(6.4
)
Dividends paid
(52.6
)
(48.1
)
Other, net
(1.1
)
0.3
Net Cash – Financing Activities
213.8
(176.3
)
Exchange rate effects on cash and cash equivalents
(17.2
)
(0.4
)
Net cash – operating activities of discontinued operations
(0.1
)
(0.2
)
Net change in cash and cash equivalents
(48.6
)
(98.9
)
Less: Cash classified within current assets held for sale
(14.9
)
-
Cash and cash equivalents – beginning of year (includes restricted
cash of $0.7 and $0.7, respectively)
489.9
561.9
Cash and Cash Equivalents – end of year (includes restricted cash
of $0.9 and $0.9, respectively)
$
426.4
$
463.0
Supplemental Disclosures of Cash Flow Information Cash paid
for interest
$
13.7
$
8.5
Cash paid for income taxes paid, net of refunds received
$
69.8
$
52.8
Capital expenditures included in accounts payable
$
22.4
$
14.0
Key Performance Indicators and Non-GAAP
Measures
Management reviews a variety of key performance indicators
including revenue, operating income and margin, earnings per share,
order growth, and backlog. In addition, we consider certain
measures to be useful to management and investors when evaluating
our operating performance for the periods presented. These measures
provide a tool for evaluating our ongoing operations and management
of assets from period to period. This information can assist
investors in assessing our financial performance and measures our
ability to generate capital for deployment among competing
strategic alternatives and initiatives, including, but not limited
to, acquisitions, dividends, and share repurchases. Some of these
metrics, however, are not measures of financial performance under
accounting principles generally accepted in the United States of
America (GAAP) and should not be considered a substitute for
measures determined in accordance with GAAP. We consider the
following non-GAAP measures, which may not be comparable to
similarly titled measures reported by other companies, to be key
performance indicators for purposes of our reconciliation
tables.
Organic Revenues and Organic Orders are defined,
respectively, as revenue and orders, excluding the impacts of
foreign currency fluctuations and acquisitions. The
period-over-period change resulting from foreign currency
fluctuations is estimated using a fixed exchange rate for both the
current and prior periods. We believe that reporting organic
revenue and organic orders provides useful information to investors
by helping identify underlying trends in our business and
facilitating comparisons of our revenue performance with prior and
future periods and to our peers.
Adjusted Operating Income is defined as operating income
adjusted to exclude special items that include, but are not limited
to, restructuring, certain asset impairment charges, certain
acquisition- and divestiture-related impacts, and unusual or
infrequent operating items. Special items represent charges or
credits that impact current results, which management views as
unrelated to the Company's ongoing operations and performance.
Adjusted Operating Margin is defined as adjusted operating
income divided by revenue. We believe these financial measures are
useful to investors and other users of our financial statements in
evaluating ongoing operating profitability, as well as in
evaluating operating performance in relation to our
competitors.
Adjusted Income from Continuing Operations is defined as
income from continuing operations attributable to ITT Inc. adjusted
to exclude special items that include, but are not limited to,
restructuring, certain asset impairment charges, certain
acquisition- and divestiture-related impacts, income tax
settlements or adjustments, and unusual or infrequent items.
Special items represent charges or credits, on an after-tax basis,
that impact current results, which management views as unrelated to
the Company’s ongoing operations and performance. The after-tax
basis of each special item is determined using the jurisdictional
tax rate of where the expense or benefit occurred. Adjusted
income from continuing operations per diluted share (adjusted
EPS) is defined as adjusted income from continuing operations
divided by diluted weighted average common shares outstanding. We
believe that adjusted income from continuing operations and
adjusted EPS are useful to investors and other users of our
financial statements in evaluating ongoing operating profitability,
as well as in evaluating operating performance in relation to our
competitors.
Free Cash Flow is defined as net cash provided by
operating activities less capital expenditures. Free Cash Flow
Margin is defined as free cash flow divided by revenue. We
believe that free cash flow and free cash flow margin provides
useful information to investors as it provides insight into a
primary cash flow metric used by management to monitor and evaluate
cash flows generated by our operations.
ITT Inc. Non-GAAP Reconciliation Statements (In millions;
all amounts unaudited)
Reconciliation of Revenue
to Organic Revenue Second Quarter 2024 MT IP CCT
Elim Total
Revenue
$
384.5
$
330.7
$
191.8
$
(1.1
)
$
905.9
Less: Acquisitions
-
33.4
1.6
-
35.0
Less: FX
(7.6
)
(3.9
)
(1.2
)
0.1
(12.6
)
CY Organic Revenue
392.1
301.2
191.4
(1.2
)
883.5
Less: PY Revenue
368.8
293.6
172.2
(0.7
)
833.9
Organic Revenue Growth - $
$
23.3
$
7.6
$
19.2
$
(0.5
)
$
49.6
Organic Revenue Growth - %
6.3
%
2.6
%
11.1
%
6.0
%
Reported Revenue Growth - $
$
15.7
$
37.1
$
19.6
$
72.0
Reported Revenue Growth - %
4.3
%
12.6
%
11.4
%
8.6
%
Reconciliation of Orders to Organic
Orders Second Quarter 2024 MT IP CCT Elim Total
Orders
$
386.6
$
350.8
$
192.4
$
(0.5
)
$
929.3
Less: Acquisitions
-
47.1
1.0
-
48.1
Less: FX
(7.2
)
(2.2
)
(1.1
)
-
(10.5
)
CY Organic Orders
393.8
305.9
192.5
(0.5
)
891.7
Less: PY Orders
376.7
343.0
198.5
(0.7
)
917.5
Organic Orders Growth - $
$
17.1
$
(37.1
)
$
(6.0
)
$
0.2
$
(25.8
)
Organic Orders Growth - %
4.5
%
(10.8
%)
(3.0
%)
(2.8
%)
Reported Orders Growth - $
$
9.9
$
7.8
$
(6.1
)
$
11.8
Reported Orders Growth - %
2.6
%
2.3
%
(3.1
%)
1.3
%
Note: Immaterial differences due to rounding.
ITT
Inc. Non-GAAP Reconciliation Statements (In millions; all
amounts unaudited)
Reconciliations of Operating
Income/Margin to Adjusted Operating Income/Margin Second
Quarter 2024 Second Quarter 2023 MT IP CCT Corporate ITT
MT IP CCT Corporate ITT
Reported Operating Income
$
71.2
$
65.8
$
35.4
$
(13.4
)
$
159.0
$
57.7
$
66.4
$
28.4
$
(10.5
)
$
142.0
Restructuring costs
1.6
1.6
0.7
-
3.9
0.1
0.4
0.1
-
0.6
Acquisition-related costs
-
0.7
-
-
0.7
-
-
1.8
-
1.8
Impacts related to Russia-Ukraine war
(0.4
)
-
-
-
(0.4
)
1.1
0.3
-
-
1.4
Other [a]
-
-
-
-
-
-
-
(0.1
)
(3.7
)
(3.8
)
Adjusted Operating Income
$
72.4
$
68.1
$
36.1
$
(13.4
)
$
163.2
$
58.9
$
67.1
$
30.2
$
(14.2
)
$
142.0
Change in Operating Income
23.4
%
(0.9
%)
24.6
%
27.6
%
12.0
%
Change in Adjusted Operating Income
22.9
%
1.5
%
19.5
%
(5.6
%)
14.9
%
Reported Operating Margin
18.5
%
19.9
%
18.5
%
17.6
%
15.6
%
22.6
%
16.5
%
17.0
%
Impact of special item adjustments 30 bps 70 bps 30 bps 40 bps 40
bps 30 bps 100 bps 0 bps
Adjusted Operating Margin
18.8
%
20.6
%
18.8
%
18.0
%
16.0
%
22.9
%
17.5
%
17.0
%
Change in Operating Margin 290 bps -270 bps 200 bps 60 bps Change
in Adjusted Operating Margin 280 bps -230 bps 130 bps 100 bps
Note: Immaterial differences due to rounding. [a]
2023 includes income from a recovery of costs associated with the
2020 lease termination of a legacy site.
ITT Inc. Non-GAAP
Reconciliation Statements (In millions, except earns per share;
all amounts unaudited)
Reconciliation of Reported vs.
Adjusted Income from Continuing Operating and Diluted EPS
Income from Continuing Operations Diluted Earnings per Share Q2
2024 Q2 2023 % Change Q2 2024 Q2 2023 % Change
Reported
$
119.2
$
108.2
10.2
%
$
1.45
$
1.31
10.7
%
Special Items Expense / (Income): Restructuring costs
3.9
0.6
0.04
0.01
Impacts related to Russia-Ukraine war
(0.4
)
1.4
-
0.02
Acquisition-related costs [a]
0.7
1.8
0.01
0.02
Other [b]
-
(3.8
)
-
(0.05
)
Tax impact of special items [c]
(0.9
)
(0.4
)
(0.01
)
-
Other tax special items [d]
-
2.0
-
0.02
Adjusted
$
122.5
$
109.8
11.6
%
$
1.49
$
1.33
12.0
%
Note: Amounts may not calculate due to rounding. Per share
amounts are based on diluted weighted average common shares
outstanding. [a] Acquisition-related costs for 2024 and 2023
are associated with the Svanehøj and Micro Mode acquisitions,
respectively. [b] 2023 primarily includes income from a recovery of
costs associated with the 2020 lease termination of a legacy site
($3.7M). [c] The tax impact of each adjustment is determined using
the jurisdictional tax rate of where the expense or benefit
occurred. [d] 2024 includes a tax benefit to record a net operating
loss deferred tax asset related to a prior year acquisition
($2.0M), tax expense on distributions of non-U.S. income ($1.0M),
and other tax-related special items ($1.0M).2023 includes tax
expense on distributions of non-U.S. income ($1.2M), and other
tax-related special items ($0.8M).
ITT Inc. Non-GAAP
Reconciliation Statements (In millions, except earns per share;
all amounts unaudited)
Reconciliation of GAAP vs
Adjusted EPS Guidance - Full Year 2024 2024 Full-Year
Guidance Low High EPS from Continuing Operations - GAAP [a]
$
5.51
$
5.76
Estimated restructuring
0.06
0.06
Other special items
0.06
0.06
Other tax on special Items
0.02
0.02
EPS from Continuing Operations - Adjusted
$
5.65
$
5.90
[a] This forward-looking information excludes the impact of
the gain on the July 2024 divestiture of the Wolverine business.
Such impact will be finalized during the third quarter of 2024.
Note: The Company has provided forward-looking non-GAAP
financial measures for organic revenue growth and adjusted
operating margin. It is not possible, without unreasonable efforts,
to estimate the impacts of foreign currency fluctuations,
acquisitions, and certain other special items that may occur in
2024 as these items are inherently uncertain and difficult to
predict. As a result, the Company is unable to quantify certain
amounts that would be included in a reconciliation of organic
revenue growth and adjusted operating margin to the most directly
comparable GAAP financial measures without unreasonable efforts and
accordingly has not provided reconciliations for these forward
looking non-GAAP financial measures. Additionally, forward-looking
GAAP operating margin guidance excludes the impact of the gain on
the July 2024 divestiture of the Wolverine business. Such impact
will be finalized during the third quarter of 2024.
Reconciliation of Cash from Operating Activities to Free Cash
Flow FY 2024 Guidance
3M 2024
3M 2023
6M 2024
6M 2023
Low
High
Net Cash - Operating Activities
$
157.7
$
139.7
$
215.5
$
197.8
$
590.0
$
630.0
Less: Capital expenditures
23.2
17.6
50.9
46.3
155.0
155.0
Free Cash Flow
$
134.5
$
122.1
$
164.6
$
151.5
$
435.0
$
475.0
Revenue
$
905.9
$
833.9
$
1,816.5
$
1,631.8
$
3,625.0
$
3,625.0
[a]
Free Cash Flow Margin
14.8
%
14.6
%
9.1
%
9.3
%
12
%
13
%
[a] Revenue included in the full year 2024 free cash
flow margin guidance represents the expected revenue growth
mid-point.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801471144/en/
Investor Contact Mark Macaluso +1 914-641-2064
mark.macaluso@itt.com
Media Contact Phil Terrigno +1 914-641-2143
phil.terrigno@itt.com
ITT (NYSE:ITT)
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