ITT Q2 2025 presentation: Raises guidance as margins expand, orders top $1B

Introduction & Market Context

ITT Inc. (NYSE:ITT) shares rose 1.5% in premarket trading after the industrial technology company released its Q2 2025 earnings presentation on July 31, 2025, revealing stronger-than-expected performance and raised full-year guidance. The stock had closed at $159.61 on July 30, and was trading at $162.00 in the premarket session.

The company reported $972 million in revenue for the second quarter, representing 4% organic growth and 7% total growth when including acquisitions and divestitures. This marks a significant acceleration from the flat revenue reported in Q1 2025, suggesting improving business momentum across ITT’s segments.

Quarterly Performance Highlights

ITT achieved over $1 billion in orders for the second consecutive quarter, building a backlog of approximately $2 billion. The Industrial Process segment led with 22% organic order growth, driven by a 62% increase in pump projects, while the Connect & Control Technologies segment posted 9% organic order growth powered by defense and aerospace awards.

As shown in the following summary of Q2 results:

Adjusted operating income reached $179 million with an 18.4% margin, representing a 30 basis point expansion compared to the prior year. Adjusted earnings per share grew 10% to $1.64, continuing the acceleration from the 7% growth seen in Q1. Free cash flow for the first half of 2025 totaled $214 million, a 30% increase year-over-year and a 79% sequential improvement from Q1.

Segment performance was particularly strong, with all three business units delivering margin expansion:

Motion Technologies achieved a 20.2% adjusted operating margin, up 140 basis points, while outperforming the broader market in Friction OE by 520 basis points. Industrial Process reached a 21.8% margin, improving 100 basis points, and Connect & Control Technologies expanded margins by 270 basis points excluding acquisition dilution.

Strategic Initiatives

ITT’s strategic focus on profitable growth and effective capital deployment was evident in the quarter’s results. The company has repurchased $500 million of shares year-to-date, reducing share count by 3% and contributing to EPS growth.

The following bridge illustrates the drivers behind ITT’s 10% adjusted EPS growth:

Excluding the impact of the Wolverine divestiture, adjusted EPS would have grown by 16%, with operational performance contributing $0.15 per share. The company’s recent acquisitions, Svanehøj and kSARIA, are performing ahead of expectations and beginning to contribute to the bottom line despite temporary amortization impacts.

The margin expansion was driven by multiple factors as detailed in this breakdown:

Productivity actions contributed 150 basis points to margin improvement, while operational leverage added another 20 basis points. These gains were partially offset by strategic investments (-20 bps), foreign exchange impacts (-30 bps), and M&A dilution (-90 bps), resulting in the net 30 basis point improvement.

Forward-Looking Statements

Based on the strong first-half performance, ITT raised its full-year 2025 guidance:

The company now expects revenue growth of 5% to 7% (up from 2% to 4% previously), with organic growth of 3% to 5%. The adjusted EPS guidance was raised to a range of $6.35 to $6.55, increasing the midpoint by 15 cents to $6.45, which represents 10% growth year-over-year or 13% excluding the 2024 Wolverine divestiture.

Looking further ahead, ITT outlined ambitious targets for 2030:

For its base business, the company aims to achieve greater than 5% compound annual revenue growth, with adjusted operating margins reaching approximately 23% and adjusted EPS exceeding $11. With M&A contributions, ITT targets approximately 10% revenue CAGR and adjusted EPS exceeding $12.

Detailed Financial Analysis

ITT’s Q2 performance reflects a company executing effectively across multiple fronts. The strong order intake of over $1 billion provides visibility into future quarters, while the margin expansion demonstrates the company’s ability to drive operational improvements despite inflationary pressures.

The quarterly highlights underscore the company’s momentum:

Free cash flow generation has been particularly impressive, with the $214 million year-to-date representing a 30% increase over the prior year. This cash generation supports ITT’s balanced capital allocation strategy, including strategic acquisitions and share repurchases.

The company’s segment-level performance shows strength across the portfolio. Motion Technologies continues to outperform the broader market in Friction OE, Industrial Process is seeing strong demand for pump projects, and Connect & Control Technologies is benefiting from growth in aerospace and defense.

As ITT moves into the second half of 2025, management expects continued margin expansion with Motion Technologies reaching 20% margins and sequential improvements in both Industrial Process and Connect & Control Technologies segments. The contributions from recent acquisitions are expected to ramp up, further supporting the company’s growth trajectory toward its 2030 targets.

Full presentation:

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