Earnings call transcript: ITT Q2 2025 beats EPS and revenue forecasts

ITT Inc. (NYSE:ITT) reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $1.64 against a forecast of $1.61. Revenue also exceeded projections, coming in at $972.4 million compared to the anticipated $948.2 million. These results led to a pre-market stock price increase of 1.5%, reflecting positive investor sentiment. According to InvestingPro data, ITT maintains strong financial health with a "GOOD" overall score, supported by robust profitability metrics and consistent dividend payments for 55 consecutive years.

Key Takeaways

• ITT’s Q2 2025 EPS of $1.64 exceeded the forecast by $0.03.
• Revenue reached $972.4 million, surpassing expectations by $24.2 million.
• Pre-market trading saw ITT shares rise by 1.5%.
• The company raised its full-year EPS outlook to $6.45.
• ITT’s operating margin expanded to 18.4%.

Company Performance

ITT demonstrated robust performance in Q2 2025, with revenue growing by 7% year-over-year, building on its impressive 5-year revenue CAGR of 5%. The company achieved significant growth in its operating margin, which expanded by 30 basis points to reach 18.4%. Notably, ITT’s strong performance in the energy and aerospace sectors contributed to its positive results. The company also reported a free cash flow of $214 million year-to-date, with a free cash flow margin of 14% for the quarter. InvestingPro analysis indicates the company is currently trading above its Fair Value, with 8 additional exclusive insights available to subscribers.

Financial Highlights

• Revenue: $972.4 million, up 7% year-over-year.
• Earnings per share: $1.64, representing a 10% increase from the previous year.
• Free Cash Flow: $214 million year-to-date.
• Share Repurchases: $500 million, reducing the share count by 3%.

Earnings vs. Forecast

ITT’s EPS of $1.64 surpassed the forecasted $1.61, resulting in a positive earnings surprise of 1.86%. The revenue surprise was 2.55%, with actual revenue of $972.4 million compared to the expected $948.2 million. This marks a continuation of ITT’s trend of exceeding market expectations, indicating effective management and strategic execution.

Market Reaction

Following the earnings announcement, ITT’s stock price increased by 1.5% in pre-market trading, reaching $162. This rise reflects investor confidence in the company’s performance and outlook. The stock’s movement places it near its 52-week high of $167.71, showcasing strong market sentiment. InvestingPro reveals the stock has delivered impressive returns, with a 13.87% total return over the past year and operates with a moderate level of debt. Get access to the comprehensive Pro Research Report, part of the extensive analysis available for 1,400+ top US stocks, to uncover more valuable insights about ITT’s market position and growth potential.

Outlook & Guidance

ITT raised its full-year adjusted EPS outlook to $6.45, indicating a 10% growth. The company anticipates organic revenue growth of 3-5% and targets an operating margin of approximately 18.4%. ITT also aims for close to $500 million in free cash flow by the end of the year. Looking further ahead, the company has set a 2030 target for over 5% organic revenue growth and a 23% margin. With a strong Altman Z-Score of 7.24 and analyst consensus showing high confidence, ITT demonstrates solid financial stability and growth potential.

Executive Commentary

CEO Luca Savi emphasized ITT’s strategic focus on innovation and execution, stating, "We expect to drive more than 5% organic revenue growth and approximately 10% growth in total on an average annual basis." CFO Emmanuel Capre highlighted improved visibility for the second half of the year, noting, "Our visibility to a strong second half is improving given the Q2 execution and the better than expected backlog position."

Risks and Challenges

• Supply Chain Issues: Potential disruptions could impact production and delivery.
• Market Saturation: Increasing competition may affect market share.
• Macroeconomic Pressures: Economic downturns could slow growth.
• Tariff Implications: Trade policies may influence cost structures.
• Currency Fluctuations: Exchange rate volatility could impact earnings.

Q&A

During the earnings call, analysts inquired about ITT’s performance in pumps, aerospace, and defense. Executives discussed strategies for mitigating tariffs and emphasized their acquisition strategy, focusing on companies with $200-400 million in revenue. Additionally, margin expansion across various segments was highlighted as a key area of focus.

Full transcript - ITT Inc (ITT) Q2 2025:

Bella, Conference Call Operator: Welcome to ITT’s twenty twenty five Second Quarter Conference Call. Today is Thursday, 07/31/2025. Today’s call is being recorded and will be available for replay beginning at twelve p. M. Eastern Time.

At this time, all participants have been placed in a listen only mode and the floor will be open for your questions following the presentation. Session. It is now my pleasure to turn the floor over to Mark Macaluso, Vice President, Investor Relations and Global Communications. You may begin.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT: Thank you, Bella, and good morning. Joining me in Stanford today are Luca Savi, ITT’s Chief Executive Officer and President and Emmanuel Capre, Chief Financial Officer. Today’s call will cover ITG’s financial results for the three month period ended 06/28/2025. Please refer to Slide two of the presentation available on our website where we note that today’s comments will include forward looking statements that are based on our current expectations. Actual results may differ materially due to several risks and uncertainties, including those described in our 2024 annual report on Form 10 ks and other recent SEC filings.

Except or otherwise noted, the second quarter results we present this morning will be compared to the 2024 and include certain non GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures are detailed in our press release and in the appendix of our presentation, both of which are available on our website. With that, it’s now my pleasure to turn the call over to Luca, who will begin on Slide three.

Luca Savi, Chief Executive Officer and President, ITT: Thank you, Mark, and good morning. I’d like to begin as always with a heartfelt thank you to all our IT tiers. We could not have delivered these results without each and every one of you and your hard work. I’m humbled by our team’s ability to achieve such strong performance once again. In May, we were fortunate to see many of you at our Capital Markets Day in New York City.

There, we showcased ITT’s enterprise strategy and value creation pillars. First, organic growth and margin expansion. Second, the compounding with M and A. And when you look at our second quarter results, you see all of these value creation in action. Let me share some highlights.

In Q2, we delivered $1,000,000,000 of orders, up 16% total and 13% organic, as all our businesses delivered a strong order intake, bolstered by the Kesaria and Savannio acquisitions. We generated record quarterly revenue of more than $970,000,000 up 7% total and 4% organic with all segments contributing. Operating income grew more than twice the organic sales growth rate and operating margin expanded over 100 basis points excluding M and A. Our profitable growth and continued operational improvement resulted in adjusted EPS growth of 10% or 16% excluding the WorldVerlin divestiture. Finally, we grew free cash flow to $214,000,000 year to date, making significant progress to nearly $05,000,000,000 for the full year.

Furthermore, free cash flow margin was 14% in Q2. To round out the highlights, we repurchased $500,000,000 of ITT shares year to date, reaffirming our confidence in the long term outlook of ITT and lowering our weighted average share count by 3%. As you can see, a strong performance in Q2, built on ITT’s pillars of value creation, organic growth and margin expansion, compounding now with M and A, as we laid out at Capital Markets Day. Now, let’s get into the details. Orders, definitely one of the highlights of the quarter.

Industrial Process grew 22% driven by strength in Gulps Pumps and Svanohoi. Notably in the first six months of 2025, Svanohoi orders of nearly $200,000,000 were above their full year 2024 revenue, a strong first half to say the least. Furthermore, Boleman won large awards on leading energy projects with two oil majors in Australia and The Middle East. The former in one of the world’s largest LNG fields, where Boeneman won again, thanks to our superior technology, our customer service and our execution on the current pump project. The latter, at an onshore oil field in The UAE, where our customers standardize on Boeneman’s twin screw pumps based on the performance track record of our existing solution.

And this is despite aggressive pricing by our competition during the bidding phase. Well done, Yaron and Bonne and team. Moving to Connect and Control, we grew 9% organic driven by Defense and Commercial Aerospace awards and grew total orders 36%. Kisari continued to secure content on coveted defense platform such as the Abrams tank and the Battlefield Communications program. As a result, their orders grew more than 25% this quarter.

I was fortunate to be at Kisaria headquarters in New Hampshire with Michael and the leadership team to work together on executing our commercial synergies. The team successfully replaced a competitor’s connector with our Canon HD X on an important existing Kesaria platform, and there are many more still to capture. In Motion Technologies, the Friction team won 49 new electrified platform awards with leading OEMs in China, Europe and North America, including Zika, Chery, BYD and Mercedes AMG. And in Coney, once again, we saw strong orders across the board, mainly driven by rail and defense, including a notable win on a prominent U. S.

Battle vehicle. All in, our book to bill of 1.1 resulted in ending backlog of nearly $2,000,000,000 up 34 versus prior year and up 9% sequentially. On revenue, we saw broad based organic growth across all segments as we work to convert our robust backlog. IP grew 5% organically on project strength. Svanoy also delivered strong top line performance, growing 43%.

CCT grew 4% organically as defense momentum continues and aerospace demand improves. And in MT, Friction OE grew 7% organically, continued to outperform global auto production in all geographies. On profitability, we continue to expand margin, growing 30 basis points after overcoming headwinds from temporary M and A amortization and foreign currency transaction costs. IP grew margin 100 basis points to nearly 22%, driven by volume, productivity and price. This Van Nuy team also drove improvements in profitability as they are efficiently ramping up production capacity.

MT grew margin by 140 basis points driven by productivity savings and this after offsetting 100 basis points of unfavorable FX impact. And finally, CCT grew margin two seventy basis points excluding M and A dilution. This was driven mainly by strategic pricing actions with two additional customer price negotiations closed this quarter. On capital deployment, an incredibly strong cash performance, which put us in a position to act quickly to repurchase $400,000,000 of ITT shares in April and May alone. And on M and A, we continue to progress several acquisition targets of size through the funnel, building our M and A muscle that will drive the next leg of value creation for ITT.

Lastly, on the outlook. Given our strong first half performance, ramping contribution from acquisition and the less volatile environment, we are raising our full year adjusted EPS outlook to $6.45 at the midpoint, amounting to 10% growth versus prior year or 13% growth if we exclude the lost earnings from our twenty twenty four Wolverine divestiture. This is a testament to our team’s ability to deliver day in and day out for our customers and our shareholders, no matter the environment. Emmanuel will talk more about our revised guidance shortly. Now, let’s spend a few moments discussing our twenty twenty five Capital Markets Day and a few examples of how in Q2 we differentiated through execution, innovation and M and A.

First, on execution. In our engineered valves business, thanks to the value of our patented Envision technology and the impeccable service we are providing to a large biopharma customer, our team is expected to double the size of a previous VAPS order to roughly $50,000,000 Next, Friction China. To industrialize the new award that Xulai and the China team won in the last eighteen months, we performed more than 150 process validations in Q2. This means that the team had to stop production lines two times per day to run small test batches of the newly awarded brake pads. And despite all these, our overall plant efficiency in Wushi was more than 90% in Q2.

Well done, Friction. Next on innovation. At Capital Markets Day, you heard us talk about the Geopolymer, the next breakthrough material size in brake pads at ITT. In Barge, Italy, I was fortunate to see the production line we designed that will make the Geopolymer. We have the product, we have the manufacturing technology, and we have a customer.

Today, we are one step closer to the commercialization of this unique and patented technology. Then in Svanahoy, we recently launched our new high pressure fuel pump. The lab testing demonstrated this new pump will outlast our competitors’ product. It has been running on an operating vessel since March, and the second pump will be installed on another vessel in August. This type of innovation for harsh environments will sustain Svania Oil’s share gain momentum.

Last but not least, Vidar, a revolutionary compact motor that embeds variable speed capabilities to deliver energy efficiency and better reliability for our customers. At our launch event in June in Houston, we secured strategic wins and now we have deployed Beidar in trials at two of the world’s largest oil companies. The team already secured more than $1,000,000 in orders and last week we started shipping. Finally, on M and A, we are still early on our M and A journey, but the success with Habanem, Vannoy and Kesaria is promising as Bartek shared their Capital Markets Day. We continue to progress acquisition targets through the funnel with rigor and a disciplined framework for deal selection, execution and integration.

Now with all of these in mind, let me reiterate our 2030 financial targets on slide four. We expect to drive more than 5% organic revenue growth and approximately 10% growth in total on an average annual basis. Margin is expected to reach 23%, representing over 500 basis points of expansion compared to 2024. This will drive more than $11 of adjusted EPS from our existing businesses and more than $12 including anticipated M and A. And free cash flow margin should reach 14% to 15%.

As you can see, we have now started our journey towards this target, and Q2 was a very good first step in that direction. Now, let me turn the call over to Emmanuel to discuss our Q2 results in more detail.

Emmanuel Capre, Chief Financial Officer, ITT: Thank you, Luca, and good morning. As you can see, ITT delivered another strong performance in the second quarter. We saw a step up in nearly every financial metric, while also putting a significant amount of capital to work earlier in the quarter. Let’s talk about some of the many highlights. On revenue, all segments contributed to the performance, growing 7% in total and 4% organically.

Industrial Process led the way with 5% organic growth on the strength of the project business. And from an orders perspective, we saw growth in every short cycle product category this quarter, leading to a book to bill of 1.2. CCT grew 4% organically with strength in both Aerospace and Defense and grew revenue over 30% in total, including Kesaria. Organic orders growth was also strong at 9%, led by Commercial Aerospace and Defense awards on coveted platforms. Finally, in Motion Technologies, our Rail business grew 10% driven by share gains in KONI.

Friction OE outperformed global auto production by over 500 basis points growing 7% led once again by our differentiation in China and strong execution in Europe and North America. Friction’s performance has been remarkable in what continues to be a highly competitive global automotive market. On profitability, we grew operating margin 30 basis points to 18.4% on higher volumes, pricing actions including related to tariffs and continued operational improvement, More than offset, the unfavorable foreign currency transaction impact stemming from a weaker U. S. Dollar and the impact of temporary acquisition amortization from Kassaria.

At this point, the temporary amortization from Svenoy has ceased and it will end for Kesaria in Q4. Notably in MT, Yaron and the Kony team delivered outstanding profitability, which is driving MT above 20% margin. The revenue growth and continued margin expansion drove adjusted EPS to $1.64 up 10% year over year and up 13% sequentially. If you exclude the loss of earnings from our 2024 divestiture of Wolverine, EPS growth in Q2 would be 16% year over year. Finally, on cash, the teams drove strong cash collections, while making progress on managing inventory and executing customer advances in the project business.

These actions pushed free cash flow margin in the quarter to 14%, while still funding further strategic CapEx toward innovation and productivity to ensure performance will continue. We are driving improvements in working capital, especially in MT, and leveraging the learnings from Svenhoi, whose working capital as a percentage of sales is just 9%. We also repurchased $500,000,000 of ITT shares through May, which lowered our weighted average share count by 3%. All in, a very strong high quality performance across the board. Let’s quickly turn to the Q2 adjusted EPS bridge on slide six.

The key takeaway here is that the strong operational performance across our businesses, contributions from acquisitions and a lower share count enabled us to grow EPS while overcoming temporary M and A amortization impacts and favorable foreign currency transaction costs, higher interest expense and the lost earnings from the Wolverine divestiture. Excluding the divestiture, adjusted EPS would be up 16%. Now let’s move to slide seven to discuss our revised 2025 guidance. After a strong first half performance during which we grew revenue, expanded margin, repurchased $500,000,000 of ITT shares, we are raising our total revenue and adjusted EPS outlook for 2025. On revenue, our total growth is now expected to be slightly higher to 5% to 7%, given the tailwind from foreign currency compared to our assumptions at the beginning of the year, while organic revenue remains within our original range of 3% to 5%.

Our visibility to a strong second half is improving given the Q2 execution and the better than expected backlog position. We expect continued growth in the Project business in IP, firm demand in Aerospace and Defense and outperformance in Friction OE and Rail to continue in the second half. On margin, we are narrowing adjusted operating margin to approximately 18.4% at the midpoint, up 60 basis points versus prior year. We expect this improvement will be driven by continued productivity businesses and significant margin expansion in our acquisitions through year end. In addition, we are driving considerable pricing, particularly in CCT.

Excluding M and A, we expect margin expansion to be more than 100 basis points for the year. On EPS, we are raising the midpoint of our guidance by $0.15 to $6.45 a step change in our EPS outlook for the year, with a $0.25 increase at the low end and $05 improvement at the high end. This is due to improved productivity and FX benefits, partially offset by unfavorable mix and higher M and A related costs. On cash, higher operating income and improving working capital puts us in a position to deliver close to $05,000,000,000 of free cash flow this year. Next, I would like to spend a moment addressing our updated assumptions on tariffs.

Given the current economic landscape and status of negotiations with key U. S. Trade partners, we now estimate the gross tariff costs before mitigation to be approximately $25,000,000 in 2025, half our previous estimate. We are offsetting this with pricing and productivity actions, As such, there is no material impact expected in 2025. Briefly looking ahead to Q3, we expect double digit growth in revenue or low single digit growth on an organic basis, led by Industrial Process and Connect and Control.

Friction will once again outperform global auto production, while strength in real should continue driving MT to end roughly flat for the quarter. Operating margin will be up slightly year over year, led by continued margin expansion at IP and MT. In CCT, pricing and productivity will only partially offset temporary amortization from Kesaria, while total corporate costs will increase slightly compared to Q2 due to anticipated M and A related costs. All this should result in EPS representing low teens growth year over year, slightly above the second quarter. Let me now turn the call back to Luca to wrap up.

Luca Savi, Chief Executive Officer and President, ITT: Thanks, Emmanuel. A few points before Q and A. Our Q2 performance is a great first step towards our long term commitments. We keep on driving the organic value creation through growth and margin expansion. All our businesses grew organically and we saw strong margin expansion in many parts of the portfolio.

And as I said at Capital Markets Day, this is here to stay. On the inorganic front, our acquisitions are performing well and over delivering on their commitments. Cash continues to ramp towards an expected $05,000,000,000 of free cash flow this year, with a 14% free cash flow margin in Q2. And lastly, as a result of all of this, we raised the midpoint of our full year EPS outlook by $0.15 It is ITT’s differentiation through execution, innovation and now M and A that will ensure the value creation continues. As you can see, it was a strong quarter on all fronts, fully aligned to the value creation pillars we laid out at Capital Markets Day.

Thank you for joining ITT today. As always, it has been my pleasure to speak with you. Bella, please open the line for Q and A.

Bella, Conference Call Operator: The floor is now open for questions. Session. Our first question comes from the line of Mike Halloran with Baird. Please go ahead. Your line is now open.

Mike Halloran, Analyst, Baird: Thanks for taking the questions. So first, maybe just get some thoughts on what you’re seeing on the capital side of things, capital equipment, larger projects, not specifically to any segment. Did you see any pauses in the second quarter? Obviously, orders are pretty good. I know the short cycle piece was up across all segments.

Any signs of hesitancy or push outs or any change in the forward thought process from your customers anywhere?

Luca Savi, Chief Executive Officer and President, ITT: Hi, Mike. Thanks for the question. Yes, when you look at our performance in terms of orders, it’s been remarkable. And of course, there is a lot of market share gains in there when you look at the projects, even of the legacy business going up 22% year over year, and was not an easy compare when you look at 2024. And then you look at Svaniahoi performance of the orders year to date for the six months, which is equivalent to their twenty twenty four full year revenue.

So definitely a great performance on the orders front. Now when we look at the funnel, the funnel is still elevated, is down year over year, but this is because of really a tough compare. So we haven’t seen any major shift, and we have seen probably just a couple of orders that shifted to the right, but no major change that will make us concerned right now. So when we look at the orders, strong, you were talking about market, very strong on the oil and gas, very strong also in the general industrial.

Mike Halloran, Analyst, Baird: That’s helpful. And then maybe can you just give your view latest view on what you see the auto landscape developing is? And obviously, the outperformance in this quarter and well, as long as I’ve shown So stock really has been maybe talk about what you’re assuming on that side as well.

Luca Savi, Chief Executive Officer and President, ITT: Sure. So let me start with the market first. So the market in Q2, the production was up 2.6%, so that was a nice figure. And if you look at the forecast for the full year, it’s a little bit better than what we thought three months ago. So we think that the full year production will be roughly flat or slightly positive to 90,000,000 vehicles produced that will be produced in 2025.

Granted, the story here is mainly a China story. Both Europe and North America will be down, but this is the market. Now when you look at our outperformance, the outperformance was spread across all the three different regions. You’re talking about outperforming in Europe, outperforming in China by a lot, and outperforming in North America, and also outperforming across all the three different type of powertrain, internal combustion engine, hybrid and EV. So the outperformance, I’m happy to see, is continuing.

Mike Halloran, Analyst, Baird: Thank you. Really appreciate it.

Luca Savi, Chief Executive Officer and President, ITT: Thank you, Mike.

Emmanuel Capre, Chief Financial Officer, ITT: Operator, I think we can go to the next question.

Bella, Conference Call Operator: Your next question comes from the line of Nathan Jones with Stifel. Please go ahead.

Emmanuel Capre, Chief Financial Officer, ITT: Good morning, Nathan. Hi, Nathan.

Adam Farley, Analyst, Stifel: Hey, good morning, guys. This is Adam Farley on for Nathan.

Emmanuel Capre, Chief Financial Officer, ITT: Hey, Adam.

Adam Farley, Analyst, Stifel: So maybe starting on CCT orders, really strong orders growth. I know you’re getting a lot of price. Maybe you could help us think about how the differences in share gains versus just overall market growth.

Emmanuel Capre, Chief Financial Officer, ITT: Yes. Thank you, Adam. So yes, you’re right. We saw a significant growth, 9% from an order standpoint in the quarter. And a lot of that growth was fueled by aerospace and defense, specifically defense where both our legacy business and our Kesaria business continues to do really well.

Our legacy business was up 25%, Kesaria was up 36%. So on the Defense, we are pretty confident that we continue to make the difference and differentiate for our customers. And as a result, we’re gaining share on some really good platforms. We talked about in Q1 about the large award that Kesaria had on the F-thirty five. And then we have more awards this quarter on coveted platforms.

Aerospace is doing well as well at plus 12%. And here, frankly, we are doing the best we can to support Boeing in their ramp up plans, on the seven thirty seven MAX.

Adam Farley, Analyst, Stifel: All right. Thank you for that. Then shifting gears a little bit to Motion Technologies margins. The FX impact on margins kind of stood out. What is the FX relationship there that’s causing the margin compression?

Emmanuel Capre, Chief Financial Officer, ITT: Sure. So we’ve seen during the first half a depreciation of the dollar compared to the euro. And so while this helps from a translation standpoint, it hurts us from a transaction standpoint. And so what we’re seeing here is the transaction impact that has an outsized impact on Motion Tech’s margins.

Adam Farley, Analyst, Stifel: All right. Makes sense. Thank you for taking my questions.

Emmanuel Capre, Chief Financial Officer, ITT: Thanks Adam.

Luca Savi, Chief Executive Officer and President, ITT: Thanks Adam.

Bella, Conference Call Operator: Your next question comes from the line of Joe Ritchie with Goldman Sachs. Please go ahead.

Emmanuel Capre, Chief Financial Officer, ITT: Good morning Joe. Hi Joe.

Joe Ritchie, Analyst, Goldman Sachs: Hey guys. Hey good morning. Can we double click on Santa Hoy for a second? Growing greater than 40% this quarter, you can’t imagine that the end market is growing that quickly. Like just maybe just give us a little bit more color what’s happening there?

What’s where are you really seeing the strength in that business?

Emmanuel Capre, Chief Financial Officer, ITT: Sure.

Luca Savi, Chief Executive Officer and President, ITT: Probably you remember that when we communicated this acquisition, we always expected this business to grow substantially in the years to come. I think that what is driving this outperformance of the market is really flawless execution by our team when it comes to project and also service as well as the differentiation on the product side. Differentiation on the product side, they keep on feeding with R and D investment and with new products like the one that I shared in the prepared remarks, the new high pressure fuel pumps. And it is across the board when you think about LNG, LPG, ammonia and also large carriers.

Emmanuel Capre, Chief Financial Officer, ITT: And Joe, if I can complement what Luca was saying with some numbers. So in the first half, Zenohoit grew orders by more than 80%. We expect for the full year for them to be a little bit above 20%. And this is because we have anticipated a lot of the orders that we were expecting in the second half in the first half. So really strong performance even for the full year.

And from a revenue standpoint, also for the full year, we expect them to be up 30% because we are converting all those orders that we got in 2024. We’re now converting them in terms of revenue. So obviously from a book to bill standpoint, the picture is really strong. For the first half, we’re over two times and then we’ll be largely over one for the full year. And Joe, it’s

Luca Savi, Chief Executive Officer and President, ITT: not just a question of orders and growth. I mean, if I can credit Stor and Johnny and the entire team, they generated year to date in terms of cash almost the same amount of cash that they generated in full year 2024. And their working capital is a single digit. So great performance across the board.

Joe Ritchie, Analyst, Goldman Sachs: Yes. That’s amazing. That’s great color and congrats so far on that acquisition. The maybe just my second question, really focusing on the pumps business, clearly really good order growth this quarter. You did mention a couple project delays.

There’s been other peers that have also been mentioning some things kind of slipping to the side. And at the same time, Luca, you had some comments around aggressive pricing as well. So just maybe just give a it’s hard to kind of like totally square the fact that your orders have been really good. You guys are executing really well. But at the same time, there’s some gyrations in the market.

We’re just trying to understand that a little bit better.

Luca Savi, Chief Executive Officer and President, ITT: Sure. So I would say, when you look at the funnel, the funnel is down year over year, but was exceptionally high last year. So it’s still a very healthy funnel, what we see. And really, the move that we saw to the right were just a couple of examples. I think that the story here is really a story of share gains, Joe.

And even when you look at the Boardman, mean, the rate that we were able to win those orders because the service that the team has provided, the project execution with the customer. And therefore, in one case, customer came straight to us, no competition at all. In the second case, despite incredible competition from a price point of view, they stayed loyal because of the performance and the service. So it’s really a market share gain story.

Joe Ritchie, Analyst, Goldman Sachs: Great to hear. Thanks guys.

Emmanuel Capre, Chief Financial Officer, ITT: Thank you, Joe.

Bella, Conference Call Operator: Next question comes from the line of Jeff Hammond with KeyBanc Capital Markets. Please go ahead.

Jeff Hammond, Analyst, KeyBanc Capital Markets: Good morning, Jeff. Hey, good morning,

Emmanuel Capre, Chief Financial Officer, ITT: guys. Hi, Jeff.

Jeff Hammond, Analyst, KeyBanc Capital Markets: So I think you said third quarter low single digit organic. I’m just trying to understand the cadence in the fourth quarter. It seems like you’d have to have a step up. Just as you look at this order strength, how much is kind of giving you the visibility for second half versus giving you longer dated visibility into 2026?

Emmanuel Capre, Chief Financial Officer, ITT: Yes. So I would say that for the projects that we’re getting today, those are going to be delivered in 2026. So from a project standpoint, our backlog is full and we are secured in terms of delivering the revenue. It’s a little bit different for the short cycle that we still need to get mostly in pumps and also in connectors. But other than this, I think from an order standpoint when it relates to project, we are covered.

We expect in Q4 similar growth rate organic growth rate from a revenue standpoint than in Q3. And yes, so in the low to the mid single digit.

Jeff Hammond, Analyst, KeyBanc Capital Markets: Okay, great. I think you called out a healthy funnel, some acquisitions of size. I think you called out a step up in corporate around M and A. Just speak to I guess, maybe put a frame around what you consider an acquisition of size and just a little more color on that on the funnel.

Luca Savi, Chief Executive Officer and President, ITT: Sure. When we look at the funnel, majority of the company that we are cultivating and that we see in the funnel have a revenue between 200,000,000 and $400,000,000 So this is the bulk of the opportunity that we have in the funnel. And if you look at this is also the last couple of acquisitions that we made, Espana and Kesaria, that are executing and over delivering, have approximately that size. So the majority are around that size.

Jeff Hammond, Analyst, KeyBanc Capital Markets: Okay. Thanks a lot.

Luca Savi, Chief Executive Officer and President, ITT: Thanks, Jeff.

Bella, Conference Call Operator: Your next question comes from the line of Brad Hewitt with Wolfe Research. Please go ahead.

Brad Hewitt, Analyst, Wolfe Research: Good morning, Brad. Good morning, guys. Thanks taking my questions.

Emmanuel Capre, Chief Financial Officer, ITT: Hi, Brett.

Brad Hewitt, Analyst, Wolfe Research: So you mentioned Santa Anahoi and Kisaria trending ahead of expectations, and I think that’s pretty visible in the order numbers. But as we think about next year, is there any help you can give us in terms of thinking about the building blocks of the incremental year over year accretion from the two deals in 2026?

Emmanuel Capre, Chief Financial Officer, ITT: Yes. So thank you, Brad for the question. So when you look at from a profitability standpoint, both Senehoi and Kassaria are progressing well compared to our plans. So when Luca is saying they are outperforming, they are performing from an orders, sales profitability and cash. And so we saw some really strong year over year EBITDA margin improvement in Svanhoe as well as in Kesaria.

So we’re very pleased with that. I think that as to have in mind kind of a guideline for what we expect out of acquisitions, we probably expect around 100 basis points of margin improvement every year. Maybe in some years it be a little bit more, maybe in others it will be a little less, but that’s the average we expect.

Brad Hewitt, Analyst, Wolfe Research: Okay, great. That’s helpful. And then maybe switching over to the short cycle side of IP. So you mentioned that orders inflected from negative in Q1 to positive in Q2. I’m curious if you saw any change in order activity on the short cycle side as you progressed through the quarter or maybe even July?

Luca Savi, Chief Executive Officer and President, ITT: Not through the quarter, Brad. I think that Q2 was a very good quarter across the board, both the baseline parts, service and valves, with service and valves growing double digit when you look at the orders. As a matter of fact, Q2 was probably the second highest quarterly orders performance in short cycle when you look at the weekly rate. Now, July was a little bit softer, but that tends to be the thing, July, the first week is always a little bit softer. So that happened last year and happened again this year.

So no different trend, I would say, in quarter.

Brad Hewitt, Analyst, Wolfe Research: Great. Thanks, Luca.

Luca Savi, Chief Executive Officer and President, ITT: Thank you, Brad.

Bella, Conference Call Operator: Your next question comes from the line of from Vlad Bistriqui with Citigroup. Please go ahead.

Adam Farley, Analyst, Stifel: Good morning, Vlad. Good morning, guys. Thanks for taking my call.

Emmanuel Capre, Chief Financial Officer, ITT: Hi, Brad.

Vlad Bistriqui, Analyst, Citigroup: Good morning. So I just wanted to ask you about the IP projects a little more. You mentioned the price competition you saw in Borneman. It sounds like you were able to hold margins despite that. But can you talk in general about margins you’re booking into backlog on project wins in IP today versus and segment how we should think about mix going forward?

Luca Savi, Chief Executive Officer and President, ITT: Sure. So very good point, because when you look at our mix in the backlog, you go back two years and the mix was 60% short cycle, 40% project. Now you look at the backlog today, it’s the reverse, 58% project, 42% short cycle. So this makes the improvement that you see in the margin of IP even more remarkable when you see that this big headwind that they have in terms of mix. And the reason for that is because the team is able, A, to improve the margin in the project when we are booking, when we are winning, thanks to the execution, thanks to the performance that we have with those customers.

And the second point, Vlad, very important, is that when we look at this project, when we close the project, when we ship everything, the margin of that project tends to be higher than the margin of when we booked the project, when we won the order, which is a testimony to the great execution of the team, of the project manager, so well done, Max, and the project management team. So mix is a headwind, but we’re able to compensate through the continuous improvement in execution.

Emmanuel Capre, Chief Financial Officer, ITT: And then so if you look at the year over year margin progression on all the projects that we shipped, we’re in the neighborhood of 400 basis points improvement versus the prior year.

Vlad Bistriqui, Analyst, Citigroup: That’s really helpful color. Appreciate that. And then just shifting to CCT. Can you just talk about shorter cycle visibility at CCT and how you’re thinking about the durability of growth momentum there?

Luca Savi, Chief Executive Officer and President, ITT: Sure. When we look at the short cycle in CCT, we’re mainly talking about connectors. And I would say connectors orders in Q2 was the second highest quarter order performance ever. And after a growth in orders in Q1 of 11%, the orders grew 12%. I’m just talking about connectors without Kesaria here, so without the acquisition.

And so very good performance on the orders front, And granted, a lot of that comes from aero and defense, but we will expect for the full year also continue to grow double digit.

Vlad Bistriqui, Analyst, Citigroup: Got it. That’s helpful, Luca. Appreciate it. I’ll get back in queue.

Luca Savi, Chief Executive Officer and President, ITT: Thank you.

Bella, Conference Call Operator: Your next question comes from the line of Sabrina Abrams with Bank of America. Please go ahead.

Jeff Hammond, Analyst, KeyBanc Capital Markets: Morning,

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT0: Sabrina. Hey, good morning, everyone. Good morning. Thanks for the question. So I just want to be clear.

I think you trimmed the so I’ll ask this as a two parter. So I guess you trimmed the high end of margin guide. Just want to understand, what the driver of that is. And then I think because of the cadence of the 3Q year over year comments, you need to have a bigger year over year margin expansion in 4Q. So just want to understand that dynamic a little bit better.

Thank you.

Emmanuel Capre, Chief Financial Officer, ITT: Sure. So I mean, it’s really a small adjustment. And we like to be precise. So I would say that the headwinds we’re facing is a little bit of a higher M and A cost than what we were expecting. And then from a mix standpoint, those numbers that we talked about for Svenhoi, them growing really fast.

Their margin, even though it’s improving, it’s still dilutive to the overall ITT margin. And so as a result, we take a little bit of a hit there. And then from a 4Q performance, yes, I mean, we’re expecting not a big difference between 3Q and 4Q from a margin standpoint. So we’re pretty confident that our outlook from a margin standpoint is achievable and realistic.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT0: Thank you. And I think looking at the CCT, I guess if I take the core earnings, excluding the temporary amortization, you have really strong incrementals. I think the core incrementals are over 80%. And I think in the slides, there was some mention about pricing actions. I know this has been a big focus for you, particularly on the aero side.

Just can you talk about what’s going so well here, like the strong execution in CCT? And yes, would just love to know what’s driving the really strong incrementals, whether it’s more aero or a short cycle side? Thank you.

Emmanuel Capre, Chief Financial Officer, ITT: Yes. Thank you, Sabrina. So, I think we’re really happy with the way CCT is performing even the legacy CCT. We are at 21.5% margin if you exclude Kassaria, which is a really, really strong number. And so the incrementals are around 70% as you mentioned, so really strong performance.

We have a really good contribution from pricing. And here pricing is on two aspects. One is to make sure that we get compensated for inflation on some of the old contracts we had. And as we mentioned, we closed another two contracts this quarter. And the second one is strategic pricing and that’s more around the aftermarket and the repair and overhaul.

And so that is generating four fifty basis points of margin improvement just due to pricing. Some of that is offset by inflation, but it’s a net positive. I would say the last point I would make about CCT is that we talked for a long time about automation and we’re getting those projects in action right now. So we have implemented automation project in our Orchard Park facility and they’re now up and running, especially in the machining area, which is causing a lot of productivity. And then we are about to kick off automation also in our Valencia plant for valves and switches, which should continue to help us expand margins.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT0: Thank you. I’ll pass it on.

Bella, Conference Call Operator: Your next question comes from the line of Damian Karas with UBS. Please go ahead.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT1: Hey, good morning, everyone.

Emmanuel Capre, Chief Financial Officer, ITT: Hi, Damian. Good morning.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT1: Hi. Sorry if I missed this earlier, but I was wondering if you could maybe talk to us a little bit about the pricing actions that you’ve taken since last quarter and is there any additional price that you think you’ll need to take in the second half, just thinking about some of the updated tariffs and maybe just to fill us in on what your updated assessment is of your tariff exposure as well? Thanks.

Luca Savi, Chief Executive Officer and President, ITT: Sure. When you look at tariffs, the exposure for 2025 today is half of what we thought a quarter ago, so roughly twenty five million dollars And this is mainly for some of the things that we’re importing from Asia, some exposure on product that for Coneyshock absorbers from Europe to North America, and a small portion of non USMCA compliant products in CCT. But when you look at that twenty twenty five million dollars impact, are able to mitigate it through price and actions together with the supplier, and productivity actions also ourselves. So zero impact when it comes to income. Now if you look at the pricing, I would say price cost has been positive for Q2 for ITT, both from an income point of view and also margin.

We expect that to be the same for the full year and across all the three different businesses. And I would say no major difference in terms of our pricing actions from Q2 to Q3. Strategic pricing and pricing to cover for inflation and tariffs.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT1: That’s helpful. Luca, there’s been a lot of deal activity industrial process out there. It seems, for example, Baker Hughes has been involved in a couple of transactions. From your perspective, are you starting to see a riper deal environment in IP space? And I’d be curious to hear your thoughts on where you think some of these deals are pricing.

Luca Savi, Chief Executive Officer and President, ITT: Sure. So when we look at our funnel, the majority of the opportunity that we are going after in terms of the funnel in the connector specifically on the air and defense and inflow. And therefore, when we’re looking at the funnel, those are the area where we are focusing and it’s fair to say that the majority of opportunities are actually in the flow area. So we are actively working the funnel, we are cultivating, And as you can see, our M and A costs are probably ramping up. Two of the past acquisitions that we made, Habonim and SvanEoy, are in flow.

So, it’s still very fragmented market. So, for sure, more acquisitions there will happen.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT1: Sounds good. Looking forward to see what that ends up looking like. Good luck.

Emmanuel Capre, Chief Financial Officer, ITT: Me too. Thank you. Thanks, Damian.

Bella, Conference Call Operator: Our final question comes from the line of Joe Giordano with TD Cowen. Please go ahead.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT2: Hi, good morning. This is Chris on for Joe. Most of my questions have been addressed, but maybe when you look at the strength on pumps, what types of applications are driving that strength? Is it greenfields versus expansions of existing sites? And how would you characterize customer urgency versus a normal level?

Emmanuel Capre, Chief Financial Officer, ITT: Yes. Thanks, Chris. So yes, we got some fantastic orders in IP in Q2, up 23%. And we saw some real strength in oil and gas, so energy, as well as in general industrial. And then on the green type of projects, we are also very happy with that because if you look at our year to date green orders, they’re almost in line with what we got for the full year in 2024.

So that’s very positive obviously. Luca mentioned an order for Australia that we got and this is a decarbonization order with a major oil company. And we got the first project in 2023, which was for more than $20,000,000 And we got a follow on order as we executed perfectly from a project management standpoint with that same customer for that same field. So we were happy with the way the green projects are developing and the market share we’re able to make.

Mark Macaluso, Vice President, Investor Relations and Global Communications, ITT2: Thanks very much.

Emmanuel Capre, Chief Financial Officer, ITT: Thank you, Chris.

Bella, Conference Call Operator: Thank you. This does conclude today’s teleconference. Please disconnect your lines at this time and have a wonderful day.

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