ITT (ITT) D.A. Davidson's 23rd Annual Diversified Industrials & Services Conference 2024 summary

Strategic Priorities and Portfolio Management

• Focus remains on organic growth and margin expansion, with increasing emphasis on M&A, particularly in flow and connector businesses.

• Recent divestiture of Wolverine and acquisitions like kSARIA align with a shift toward higher-growth, higher-margin segments.

• Portfolio rebalancing is driven by changing market conditions and operational efficiencies.

• M&A funnel is robust, with future deals likely in 2025, targeting pumps, valves, and connectors, especially in aero and defense.

• Capital allocation prioritizes organic investment, followed by M&A and share repurchases, maintaining flexibility.

Financial Performance and Outlook

• Q2 2024 revenue reached $906M, up 9% year-over-year, with 6% organic revenue growth and 12% adjusted EPS growth.

• Adjusted operating margin expanded by 100 basis points to 18.0% in Q2 2024.

• Q3 orders expected to show significant growth, led by pump projects, connectors, and strong performance in the Middle East.

• Adjusted EPS growth expected to be low single digits in Q3, factoring in dilution from divestitures and M&A costs; M&A pipeline remains active.

• Year-to-date free cash flow grew 9% to $165M.

Market Share, Innovation, and Operational Excellence

• Motion Technologies has grown market share in China (29%), North America (26-27%), and Europe (over 50%).

• Outperformance in both ICE and EV segments is driven by R&D, high quality, and operational efficiency.

• On-time performance and product quality are key differentiators, with defect rates reduced to 0.2 PPM.

• Standardized, highly automated plants support efficiency and customer confidence.

• Productivity improvements and pricing strategies are supporting margin expansion in Motion Technologies.