- 17% orders growth (14% organic) driven by pump project awards,
rail share gains and connectors demand
- 8% revenue growth (6% organic) driven by strength across all
segments
- 610 basis points operating margin expansion to 23.5%, including
$48 million preliminary gain on divestiture of Wolverine Advanced
Materials (Wolverine); 60 basis points adjusted operating margin
expansion to 18.3%
- 46% EPS growth primarily driven by the gain on the Wolverine
divestiture; 7% adjusted EPS growth driven by pricing actions,
volume and productivity
- Raising midpoint of full year EPS guidance given continued
outperformance
Oct. 29, 2024-- ITT Inc. (NYSE: ITT) today reported financial
results for the third quarter ended September 28, 2024. Revenue
increased 8% versus prior year (6% organic) primarily driven by
Friction and rail share gains in Motion Technologies (MT), short
cycle demand in Industrial Process (IP) and connectors growth in
Connect & Control Technologies (CCT). The Svanehøj and kSARIA
acquisitions contributed 7% to total revenue growth, while the
divestiture of Wolverine had a (4%) impact.
Third quarter operating income of $208 million increased 45%
versus prior year primarily due to the $48 million preliminary gain
on the divestiture of Wolverine in July. On an adjusted basis,
operating income increased 11% due to higher sales volume, pricing
actions and productivity, partially offset by higher material and
labor costs, temporary acquisition amortization and unfavorable
foreign currency impacts.
EPS for the third quarter of $1.96 increased 46% versus prior
year primarily due to the previously mentioned gain on sale.
Adjusted EPS of $1.46 increased 7% compared to prior year primarily
driven by higher operating income and partially offset by higher
interest expense due to acquisitions.
Net cash from operating activities for the third quarter of $124
million decreased 27% versus prior year primarily driven by higher
working capital, partially offset by higher operating income. Free
cash flow for the quarter of $87 million decreased 41% versus prior
year. On a year-to-date basis, operating cash flow is down $(28)
million and free cash flow is down $(47) million due to higher
working capital, higher interest payments and capital expenditures,
partially offset by higher segment operating income.
Table 1. Third Quarter Performance
Q3
2024
Q3
2023
Change
Revenue
$
885.2
$
822.1
7.7
%
Organic Growth
5.5
%
Operating Income
$
207.9
$
143.1
45.3
%
Operating Margin
23.5
%
17.4
%
610
bps
Adjusted Operating Income
$
161.6
$
145.5
11.1
%
Adjusted Operating Margin
18.3
%
17.7
%
60
bps
Earnings Per Share
$
1.96
$
1.34
46.3
%
Adjusted Earnings Per Share
$
1.46
$
1.37
6.6
%
Net Cash from Operating Activities
$
123.9
$
169.8
(27.0)
%
Free Cash Flow
$
87.3
$
147.6
(40.9)
%
Note: all results unaudited; dollars in millions except for per
share amounts
Management Commentary
“Our third quarter results demonstrate the strength of the ITT
businesses and of our people. Our teams once again outperformed
with strong profitable growth and continued margin expansion. This
quarter, once again, all of our businesses contributed: growth in
our short-cycle flow business was robust, Friction continued to
outperform, we took further share in rail and drove over twenty
percent growth in industrial connectors. Furthermore, our legacy
business surpassed our long-term margin target for the second
consecutive quarter. On top of this, we also deployed more than $1
billion of capital year to date.
As a result of our strong performance thus far, we are raising
the midpoint of our full year EPS outlook. Excluding the temporary
acquisition amortization, we are driving to over $6 of earnings in
2024 on the strength of our execution and outperformance. This
organic value creation should continue with mid-teens orders growth
this quarter, leading to a record ending backlog of $1.7 billion.
Our growing backlog and ramping contributions from acquisitions
give us a strong foundation for long term growth, whilst we keep on
building a robust M&A pipeline with higher growth and higher
margin businesses,” said ITT’s Chief Executive Officer and
President Luca Savi.
Table 2. Third Quarter Segment Results
Revenue
Operating Income
Operating Margin
Q3 2024
Reported Change
Organic Growth
Q3 2024
Reported Change
Adjusted Change
Q3 2024
Reported Change
Adjusted Change
Motion Technologies
344.9
(4.1)%
4.7%
110.0
85.2%
2.1%
31.9%
1,540 bps
110 bps
Industrial Process
333.8
19.3%
6.1%
69.8
7.9%
7.1%
20.9%
(220) bps
(240) bps
Connect & Control Technologies
207.2
12.6%
5.7%
38.1
14.8%
17.9%
18.4%
40 bps
90 bps
Note: all results unaudited; excludes
intercompany eliminations of $0.7; comparisons to Q3 2023
Motion Technologies revenue decreased $15 million primarily due
to the Wolverine divestiture in July 2024, partially offset by
higher sales volume from Friction and rail demand in KONI.
Operating income increased $51 million primarily due to the $48
million gain on sale, productivity actions and lower material and
overhead costs, partially offset by foreign currency impact and
higher labor costs.
Industrial Process revenue increased $54 million primarily due
to the acquisition of Svanehøj, which closed in January 2024, and
growth in baseline pumps, valves and aftermarket parts and service.
Operating income increased by approximately $5 million primarily
due to productivity actions, higher sales volume and pricing,
partially offset by higher material, labor and overhead costs,
foreign currency and Svanehøj temporary acquisition
amortization.
Connect & Control Technologies revenue increased $23 million
primarily driven by the acquisition of kSARIA, which closed in
September 2024, pricing actions and growth in defense and
industrial connectors. Operating income increased $5 million
primarily due to pricing, productivity actions and contributions
from kSARIA, partially offset by higher material, labor and
overhead costs.
Quarterly Dividend
The company announced today a quarterly dividend of $0.319 per
share on its outstanding common stock. ITT’s Board of Directors
approved the cash dividend for the fourth quarter of 2024, which
will be payable on Tuesday, Dec. 31, to shareholders of record as
of the close of business on Friday, Nov. 29.
2024 Guidance
The company is raising its full-year revenue and operating
margin guidance above the previous midpoint, while also raising the
midpoint of its adjusted EPS outlook despite the incremental
interest expense and purchase price amortization from the kSARIA
acquisition. We now expect revenue growth of 10% to 12%, up 5% to
7% on an organic basis; operating margin of 18.4% to 18.7% and
adjusted operating margin of 17.4% to 17.7%, up 50 to 80 bps (up
130 to 160 bps excluding acquisition dilution); full year EPS of
$6.16 to $6.22 and adjusted EPS of $5.80 to $5.86, up 11% to 12%
for the full year. We now expect free cash flow of ~$450 million,
representing ~12% 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.
Investor Conference Call Details
ITT’s management will host a conference call for investors on
Tuesday, Oct. 29 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
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Revenue
$
885.2
$
822.1
$
2,701.7
$
2,453.9
Cost of revenue
571.2
542.7
1,770.8
1,632.6
Gross profit
314.0
279.4
930.9
821.3
General and administrative expenses
74.8
66.9
223.1
210.8
Sales and marketing expenses
50.5
44.4
151.2
131.2
Research and development expenses
28.6
25.0
88.3
77.1
Gain on sale of businesses
(47.8
)
—
(47.8
)
(7.2
)
Operating income
207.9
143.1
516.1
409.4
Interest expense
10.0
4.2
25.1
15.4
Interest income
(1.6
)
(1.9
)
(5.0
)
(6.5
)
Other non-operating income, net
(0.2
)
(0.9
)
(1.9
)
(1.5
)
Income before income tax expense
199.7
141.7
497.9
402.0
Income tax expense
37.8
29.9
103.6
80.6
Income from continuing operations
161.9
111.8
394.3
321.4
Loss from discontinued operations, net of
income tax
(0.2
)
—
(0.2
)
—
Net income
161.7
111.8
394.1
321.4
Less: Income attributable to
noncontrolling interests
0.6
1.0
2.8
2.4
Net income attributable to ITT Inc.
$
161.1
$
110.8
$
391.3
$
319.0
Amounts attributable to ITT
Inc.:
Income from continuing operations
$
161.3
$
110.8
$
391.5
$
319.0
Loss from discontinued operations, net of
tax
(0.2
)
—
(0.2
)
—
Net income attributable to ITT Inc.
$
161.1
$
110.8
$
391.3
$
319.0
Earnings per share attributable to ITT
Inc.:
Basic:
Continuing operations
$
1.98
$
1.35
$
4.78
$
3.87
Discontinued operations
(0.01
)
—
—
—
Net income
$
1.97
$
1.35
$
4.78
$
3.87
Diluted:
Continuing operations
$
1.96
$
1.34
$
4.75
$
3.86
Discontinued operations
—
—
—
—
Net income
$
1.96
$
1.34
$
4.75
$
3.86
Weighted average common shares – basic
81.6
82.1
81.9
82.4
Weighted average common shares –
diluted
82.1
82.5
82.4
82.7
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
As of the Period Ended
September 28,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
460.9
$
489.2
Receivables, net
802.0
675.2
Inventories
620.5
575.4
Other current assets
127.4
117.9
Total current assets
2,010.8
1,857.7
Non-current assets:
Plant, property and equipment, net
578.8
561.0
Goodwill
1,498.3
1,016.3
Other intangible assets, net
462.9
116.6
Other non-current assets
393.7
381.0
Total non-current assets
2,933.7
2,074.9
Total assets
$
4,944.5
$
3,932.6
Liabilities and Shareholders’
Equity
Current liabilities:
Short-term borrowings
$
362.6
$
187.7
Accounts payable
460.4
437.0
Accrued and other current liabilities
451.7
413.1
Total current liabilities
1,274.7
1,037.8
Non-current liabilities:
Long-term debt
467.8
5.7
Postretirement benefits
135.0
138.7
Other non-current liabilities
311.3
211.3
Total non-current liabilities
914.1
355.7
Total liabilities
2,188.8
1,393.5
Shareholders’ equity:
Common stock:
Authorized – 250.0 shares, $1 par value
per share
Issued and outstanding – 81.5 shares and
82.1 shares, respectively
81.5
82.1
Retained earnings
2,993.2
2,778.0
Accumulated other comprehensive income
(loss):
Postretirement benefits
(5.2
)
(1.6
)
Cumulative translation adjustments
(320.3
)
(330.3
)
Total accumulated other comprehensive
loss
(325.5
)
(331.9
)
Total ITT Inc. shareholders’ equity
2,749.2
2,528.2
Noncontrolling interests
6.5
10.9
Total shareholders’ equity
2,755.7
2,539.1
Total liabilities and shareholders’
equity
$
4,944.5
$
3,932.6
CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(IN MILLIONS)
For the Nine Months Ended
September 28,
2024
September 30,
2023
Operating Activities
Income from continuing operations
attributable to ITT Inc.
$
391.5
$
319.0
Adjustments to income from continuing
operations:
Depreciation and amortization
100.7
82.8
Equity-based compensation
19.8
15.1
Gain on sale of business
(47.8
)
(7.2
)
Other non-cash charges, net
23.8
22.5
Changes in assets and liabilities:
Change in receivables
(93.5
)
(54.7
)
Change in inventories
(2.6
)
(40.9
)
Change in contract assets
(5.0
)
0.5
Change in contract liabilities
(1.6
)
11.1
Change in accounts payable
(11.4
)
16.5
Change in accrued expenses
(14.1
)
29.4
Change in income taxes
(15.4
)
(2.1
)
Other, net
(5.0
)
(24.4
)
Net Cash – Operating Activities
339.4
367.6
Investing Activities
Capital expenditures
(87.5
)
(68.5
)
Proceeds from sale of business
162.4
10.5
Acquisitions, net of cash acquired
(864.8
)
(79.3
)
Other, net
(4.7
)
(4.7
)
Net Cash – Investing Activities
(794.6
)
(142.0
)
Financing Activities
Commercial paper, net borrowings
174.7
(204.3
)
Long-term debt issued, net of debt
issuance costs
762.4
—
Long-term debt, repayments
(301.3
)
(1.2
)
Share repurchases under repurchase
plan
(104.0
)
(60.0
)
Payments for taxes related to net share
settlement of stock incentive plans
(13.2
)
(6.7
)
Dividends paid
(78.7
)
(71.9
)
Other, net
(7.9
)
(1.1
)
Net Cash – Financing Activities
432.0
(345.2
)
Exchange rate effects on cash and cash
equivalents
(4.4
)
(10.4
)
Net cash – operating activities of
discontinued operations
(0.4
)
(0.2
)
Net change in cash and cash
equivalents
(28.0
)
(130.2
)
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 Period
(includes restricted cash of $1.0 and $0.9, respectively)
$
461.9
$
431.7
Supplemental Disclosures of Cash Flow
and Non-Cash Information:
Cash paid for Interest
$
21.3
$
12.3
Cash paid for Income taxes, net of refunds
received
$
106.8
$
72.0
Capital expenditures included in current
liabilities
$
23.0
$
16.3
Key Performance Indicators and Non-GAAP
Measures
ITT 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, acquisitions, and divestitures that
may or may not qualify as discontinued operations. Current year
activity from acquisitions is excluded for twelve months following
the closing date of acquisition. The period-over-period change
resulting from foreign currency fluctuations is estimated using a
fixed exchange rate for both the current and prior periods. Prior
year revenue and orders are adjusted to exclude activity during the
comparable period for twelve months post-closing date for
divestitures that do not qualify as discontinued operations. We
believe that reporting organic revenue and organic orders provide
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 provide
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
MT
IP
CCT
Elim
Total
2024 Revenue
$
344.9
$
333.8
$
207.2
$
(0.7
)
$
885.2
Less: Acquisitions
—
40.0
15.3
(0.1
)
55.2
Less: Foreign currency translation
1.5
(3.1
)
—
(0.1
)
(1.7
)
2024 Organic revenue
$
343.4
$
296.9
$
191.9
$
(0.5
)
$
831.7
2023 Revenue
$
359.5
$
279.8
$
184.0
$
(1.2
)
$
822.1
Less: Divestitures
31.4
—
2.5
—
33.9
2023 Organic revenue
$
328.1
$
279.8
$
181.5
$
(1.2
)
$
788.2
Organic Revenue Growth - $
$
15.3
$
17.1
$
10.4
$
43.5
Organic Revenue Growth - %
4.7
%
6.1
%
5.7
%
5.5
%
Reported Revenue Growth - $
$
(14.6
)
$
54.0
$
23.2
$
63.1
Reported Revenue Growth - %
(4.1
)%
19.3
%
12.6
%
7.7
%
Reconciliation of Orders to
Organic Orders
MT
IP
CCT
Elim
Total
2024 Orders
$
353.3
$
407.8
$
205.5
$
(1.2
)
$
965.4
Less: Acquisitions
—
60.7
6.5
—
67.2
Less: Foreign currency translation
1.6
(5.0
)
—
(0.1
)
(3.5
)
2024 Organic orders
$
351.7
$
352.1
$
199.0
$
(1.1
)
$
901.7
2023 Orders
$
366.6
$
270.8
$
187.4
$
(0.7
)
$
824.1
Less: Divestitures
31.4
—
1.7
—
33.1
2023 Organic orders
$
335.2
$
270.8
$
185.7
$
(0.7
)
$
791.0
Organic Orders Growth - $
$
16.5
$
81.3
$
13.3
$
110.7
Organic Orders Growth - %
4.9
%
30.0
%
7.2
%
14.0
%
Reported Orders Growth - $
$
(13.3
)
$
137.0
$
18.1
$
141.3
Reported Orders Growth - %
(3.6
)%
50.6
%
9.7
%
17.1
%
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
Third Quarter 2024
Third Quarter 2023
MT
IP
CCT
Corporate
ITT
MT
IP
CCT
Corporate
ITT
Reported Operating Income
$
110.0
$
69.8
$
38.1
$
(10.0
)
$
207.9
$
59.4
$
64.7
$
33.2
$
(14.2
)
$
143.1
Gain on sale of Wolverine business
(47.8
)
—
—
—
(47.8
)
—
—
—
—
—
Restructuring costs
0.2
0.4
0.2
—
0.8
1.1
0.6
0.2
—
1.9
Acquisition-related expenses
—
(0.4
)
1.2
—
0.8
—
—
—
—
—
Impacts related to Russia-Ukraine war
(0.1
)
—
—
—
(0.1
)
0.5
—
—
—
0.5
Other special items
—
—
—
—
—
—
(0.1
)
0.1
—
—
Adjusted Operating Income
$
62.3
$
69.8
$
39.5
$
(10.0
)
$
161.6
$
61.0
$
65.2
$
33.5
$
(14.2
)
$
145.5
Change in Operating Income
85.2
%
7.9
%
14.8
%
(29.6
)%
45.3
%
Change in Adjusted Operating Income
2.1
%
7.1
%
17.9
%
(29.6
)%
11.1
%
Reported Operating Margin
31.9
%
20.9
%
18.4
%
23.5
%
16.5
%
23.1
%
18.0
%
17.4
%
Impact of special item adjustments
-1380 bps
0 bps
70 bps
-520 bps
50 bps
20 bps
20 bps
30 bps
Adjusted Operating Margin
18.1
%
20.9
%
19.1
%
18.3
%
17.0
%
23.3
%
18.2
%
17.7
%
Change in Operating Margin
1540 bps
-220 bps
40 bps
610 bps
Change in Adjusted Operating Margin
110 bps
-240 bps
90 bps
60 bps
Note: Immaterial differences due to
rounding.
ITT Inc. Non-GAAP
Reconciliation Statements
(In millions; all amounts
unaudited)
Reconciliation of Reported vs.
Adjusted Income from Continuing Operating and Diluted EPS
Income from Continuing
Operations
Diluted Earnings per Share
Q3 2024
Q3 2023
% Change
Q3 2024
Q3 2023
% Change
Reported
$
161.3
$
110.8
45.6
%
$
1.96
$
1.34
46.3
%
Special Items Expense / (Income):
Gain on sale of Wolverine business
(47.8
)
—
(0.58
)
—
Restructuring costs
0.8
1.9
0.01
0.03
Acquisition-related costs
0.8
—
0.01
—
Impacts related to Russia-Ukraine war
(0.1
)
0.5
—
0.01
Net tax benefit of pre-tax special
items
(0.7
)
(0.5
)
(0.01
)
(0.01
)
Other tax-related special items [a]
5.6
0.3
0.07
—
Adjusted
$
119.9
$
113.0
6.1
%
$
1.46
$
1.37
6.6
%
Note: Amounts may not calculate due to
rounding.
Per share amounts are based on diluted
weighted average common shares outstanding.
[a]
2024 includes a tax expense on
distributions of $4.6, tax expense from valuation allowance impacts
of $2.2, and a tax benefit on return to accrual adjustments of
($1.3).
ITT Inc. Non-GAAP
Reconciliation Statements
(In millions; all amounts
unaudited)
Reconciliation of GAAP vs
Adjusted EPS Guidance - Full Year 2024
2024 Full-Year
Guidance
Low
High
EPS from Continuing Operations - GAAP
$
6.16
$
6.22
Gain on sale of Wolverine business
(0.58
)
(0.58
)
Estimated restructuring
0.07
0.07
Other special items
0.06
0.06
Tax on special Items
0.09
0.09
EPS from Continuing Operations -
Adjusted
$
5.80
$
5.86
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.
ITT Inc. Non-GAAP
Reconciliation Statements
(In millions; all amounts
unaudited)
Reconciliation of Cash from
Operating Activities to Free Cash Flow
Three Months Ended
Nine Months Ended
FY 2024
9/28/2024
9/30/2023
9/28/2024
9/30/2023
Guidance
Net Cash - Operating Activities
$
123.9
$
169.8
$
339.4
$
367.6
$
600.0
Less: Capital expenditures
36.6
22.2
87.5
68.5
150.0
Free Cash Flow
$
87.3
$
147.6
$
251.9
$
299.1
$
450.0
Revenue
$
885.2
$
822.1
$
2,701.7
$
2,453.9
$
3,630.0
[a]
Free Cash Flow Margin
9.9
%
18.0
%
9.3
%
12.2
%
12.4
%
[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/20241029279489/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
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