ITT INC. Q4 FY2025 earnings call

• Expressed gratitude to shareholders for supporting the SPX Flow acquisition in December. • 2025 financial highlights: total revenue grew 8%/5% organic, EPS grew 14%, operating income grew 11% with a 18.2% margin. The fourth quarter had orders and revenue exceeding $1 billion, orders up 15%/9% organic, revenue 13%/9% organic, operating margin 90 basis points higher. Free cash flow over $550 million, up 27%. • Future growth drivers: orders grew 10% to $4 billion, backlog stood at $1.9 billion, up 18% year-over-year. The SPX Flow acquisition is expected to close in March. In 2025, SPX Flow had mid-teens orders, high teens backlog, and EBITDA margin in line with expectations. • Organic growth platforms: Bornemann multiphase pumps in Australia, BB3 pumps in Latin America, biopharma diaphragm valves for a GLP-1 drug maker; Enidine in defense, KONI Hydride in land defense, aerospace controls renewal with Boeing; the Friction business outperformed for the 13th year, with Geopad in trials with a European OEM. • Operational performance: Utilizing the SQDC framework, IP and CCT were below the injury frequency rate benchmark. IP had a 50% recordable incident reduction, IP had 20% fewer claims, CCT had a 60% TPM reduction, IP on-time performance increased by 600 basis points, and the NC pump product line rose 2,700 basis points in December, with improved cost position leading to margin expansion.

In 2025, ITT Inc. achieved an 8% total revenue growth and 5% organic revenue growth. EPS grew by 14%, with operating income rising by 11% and the operating margin expanding to 18.2%. The fourth quarter was remarkable as both orders and revenue surpassed $1 billion for the first time. Orders saw a 15% increase (9% organic), while revenue grew by 13% (9% organic). IP and CCT witnessed organic growth of over 11%. The operating margin in the fourth quarter climbed 90 basis points to 18.4%. Free cash flow soared to over $550 million, a 27% increase, with a free cash flow margin of 14%. Within segments, IP's Svanehøj grew over 50% and legacy pump projects had an 30% organic increase; CCT recorded an 11% organic growth, bolstered by strength in aerospace and defense; MT's KONI Defense grew by 13%; Friction OE outperformed global automotive production by 400 basis points, and aftermarket saw a 9% rise.

• 2026 Q1 guidance: approximately 115% organic total revenue growth, mid-single-digit growth in IP and CCT due to share gains, MT with low single-digit growth, margin expansion over 100 basis points, midpoint EPS of $1.70, up 29% excluding the impact of the December equity offer. • Full-year 2026: expects mid-single-digit organic revenue growth and at least 50 basis points margin expansion. • The SPX Flow acquisition is expected to close in March 2026 and is estimated to generate a net single-digit EPS accretion in the full year 2026.

Actual results may differ significantly from forward-looking statements due to various risks and uncertainties, including those described in ITT Inc.'s 2024 annual report on Form 10-Ks and other recent SEC filings.

Q: Jeffrey Hammond inquired about the IP order funnel and CCT orders.

A: Luca Savi stated that the funnel was slightly down compared to the prior year but the Q4 funnel was stable versus Q3 and still very healthy, with the funnel in the Middle East and Asia Pacific growing nicely; regarding CCT, orders across segments were nicely up with only a minor price adjustment from the Boeing contract renegotiation.

Q: Michael Halloran asked about the sustainability of SPX Flow and integration.

A: Luca Savi said that the teams are working closely with the SPX Flow team, SPX Flow is in a good position with customers in nutrition and health and mixers, and the teams are working to hit the ground running on day one.

Q: Joe Giordano asked about the scaling of Svanehøj and Kessler and SPX integration preparation.

A: Luca Savi said that Kessler orders are sustainable in the short and medium term, Svanehøj order growth would not be repeated but work is being done on innovation; the SPX teams are working closely, planning the organization and synergies.

Q: Nathan Jones asked about the SPX Flow organizational structure and the Boeing contract impact.

A: Luca Savi said that well-run SPX businesses are being integrated, focusing on G&A synergies; Emmanuel Caprais said that the Boeing contract price adjustment is mostly in the first two years with additional increases, improving aerospace profitability.

Q: Amit Mehrotra asked about the current state of SPX Flow and revenue synergies.

A: Luca Savi said that SPX has good profitability, working on $80M synergies over three years and focusing on growth momentum; Emmanuel Caprais said that revenue synergies are expected beyond 2026.

Q: Vladimir Bystricky asked about the IP competitive behavior and biopharma valves.

A: Luca Savi said that there was no change in the competitive landscape, and IP project execution was improving margins; Emmanuel Caprais said that the biopharma valves business was growing with recurring aftermarket and opportunities in Europe.

Q: Matt Summerville asked about price capture and Friction Aftermarket.

A: Emmanuel Caprais said that price capture was strong for IP and CCT in 2026, and MT was neutral; Friction Aftermarket was expected to be flat in 2026.

Q: Sabrina Abrams asked about the organic growth acceleration and Q1 deceleration.

A: Emmanuel Caprais said that growth was driven by aerospace/defense in CCT and pump projects in IP; Luca Savi said that there was no specific reason for deceleration, and project execution was improving margins.