Full Transcript: ITT Q2 2026 Earnings Call

ITT (NYSE: ITT ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

The full earnings call is available at Summary ITT Inc. 08, up 18% year-over-year. The company experienced significant order growth, notably in its CCT segment, which grew 59% organically, driven by defense orders and a robust performance across North America, Europe, and Asia. ITT's strategic acquisition of SPX Flow has begun contributing positively, with a 5% revenue growth in Q2 and integration synergies progressing ahead of plan.

5 times, well ahead of its schedule. 22, and a free cash flow margin between 10% and 11%. Full Transcript OPERATOR Welcome to ITT's 2026 Second Quarter Conference Call. Today is Thursday, August 6, 2026.

Today's call is being recorded and will be available for replay beginning at 12:00 pm 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. If you'd like to ask a question at that time, please press star 1-1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing 1-1.

Again we ask that you please pick up your handset to allow optimal sound quality. It is now my pleasure to turn the floor over to Carlene Salvage, Vice President, Investor Relations and FP&A. You may begin. Carlene Salvage, Vice President, Investor Relations and FP&A Thank you, Liz, and good morning.

Joining me in Stamford today are Luca Savi, ITT's Chief Executive Officer and President, and Mike Savinelli, Interim Chief Financial Officer. Today's call will cover ITT's financial results for the three-month period ended July 4, 2026, which we announced this morning. Please refer to slide 2 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 2025 Annual Report on Form 10-K and other recent SEC filings.

Except where otherwise noted, the second quarter results we present this morning will be compared to the second quarter of 2025 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. Today's earnings call includes year-over-year commentary on the performance of SPX Flow that reflects financial information before the acquisition date of March 2, 2026. With that, it is now my pleasure to turn the call over to Luca, who will begin on slide three.

Luca Savi, President and Chief Executive Officer Thank you, Carlene, and good morning. Before I begin, I would like to welcome our new Aerospace Contacts colleagues to the ITT family. I look forward to working with you to grow CCT more and faster. We would also like to recognize our ITT colleagues all around the world for an outstanding performance in Q2 once again, and a particular thank you to our employees in Flow Technologies for their hard work that has enabled us to make significant progress on the integration of SPX Flow whilst continuing to deliver strong operational and financial performance.

In the second quarter we accelerated the Q1 momentum. Our ITT delivered strong performance across the portfolio through flawless execution and the realization of benefits from our acquisitions, building a solid foundation for the remainder of 2026 and beyond. Now to the momentum. We grew orders 53%, 13% organically.

1 for the quarter. We expanded operating margin 40 basis points. 08, up 18% year over year, and we generated $176 million of free cash flow year to date. A truly record quarter.

Let's dive now into the details on orders. CCT was the highlight of our Q2 performance, growing 59% organically. CCT's growth was fueled by large defense orders in our kSARIA business, which posted significant multi-year bookings across mission-critical platforms such as advanced night vision applications and fighter jet programs. kSARIA grew orders 168%, and it didn't end there.

We continue to see strength in early Q3 with record order bookings. In July the Connectors business also posted record orders, increasing 38% fueled by growth in North America, Europe and Asia. Motion Technologies continue to win platform and conquer new awards, feeding future market share gains. Connector orders were also strong with 9% growth thanks mainly to China Rail and Defense.

And lastly, in Flow Technologies, we delivered 91% orders growth. Organic orders declined 3% year over year due to the impact of deferred orders in the Middle East and the strong prior year performance that included very large oil and gas orders. SPX Flow grew orders 9% in Q2 versus their prior year numbers: 23% growth in mixers across North America and China, 10% growth in Waukesha Cherry-Burrell, and 8% growth in Nutrition and Health supported by strong systems orders in Europe. On revenue, this quarter's performance was fueled by organic growth across all our segments.

CCT grew 17% organically, driven by strength across the portfolio. Commercial Aerospace grew 14% from increased volume coupled with pricing benefits. Defense grew 16% driven by strong performance in kSARIA, which grew 28% versus the prior year. We also grew Industrial Connectors 24% versus LY mainly by Europe and Asia.

Motion Technologies revenue increased 6%, 2% organic, led by Friction aftermarket and outperformance of global vehicle production by more than 300 basis points, led by Europe and China, in addition to strength in China Rail. And finally, Flow Technologies revenue was up 21% organically, or 123% in total. The teams continue to deliver higher pump project sales, up 45% driven by shipments in marine, energy transition and oil and gas markets, and we also continue to grow our valves business, up 19%, as we keep on winning in BioPharma. Well done, Kasturi and the Lancaster team.

SPX Flow revenue grew 5% in Q2 and 9% year to date, in line with our full-year guidance of high single-digit growth. 7% primarily from higher volume and pricing. 1% grew 90 basis points as a result of net productivity. In Flow Technologies, excluding SPX Flow, we expanded margins 70 basis points fueled by market share gains and pricing.

4% was diluted by the full-quarter contribution of SPX Flow. Nevertheless, cost synergies from the integration, together with other productivity actions in the second half of the year, are expected to expand margin throughout the remainder of 2026. 08, up 18% versus the prior year. Turning now to capital allocation.

5 times, six months ahead of our original commitment. In July we also deployed capital to acquire Aerospace Contacts. This acquisition is highly strategic to enhance our supply chain resilience, secure supply of critical high-precision contacts, and in doing so support continued growth with our Connectors defense and aerospace customers. As you see, our legacy businesses are firing on all cylinders and now are also taking advantage of some market tailwinds.

And as we shared during our Capital Markets Day, we are compounding and creating more value with our recent acquisitions. Let's turn to slide 4 to discuss these contributions. During the last few years we worked hard to cultivate and execute the right acquisitions. We focus on high-quality companies with strong management teams and solid fundamentals.

These acquisitions do more than add scale. They strengthen ITT's portfolio by increasing our exposure to higher-growth, higher-margin businesses where we can drive additional value through differentiation in execution and innovation. This is exactly the playbook. With Svanehøj we enter the marine energy transition market, a market that has a lot of growth potential today with LNG and in the future with ammonia.

Svanehøj's products and team are leaders in their market, and the results speak for themselves. 2. Our projected backlog at the end of 2026 will be up 40% since the acquisition. As a result, the acquisition multiple of 13 is projected to be just 6 at the end of 2026.

Thank you, Søren, Morten and Johnny, for this excellent performance, and with the marine energy transition end market expected to remain strong, Svanehøj is well positioned for future profitable growth. kSARIA, another bolt-on acquisition, is also a success story. The defense market, which represents roughly 80% of kSARIA, provides a powerful market tailwind. kSARIA's leadership and flawless execution enable us to win larger portions of the prime programs we participate in.

By the end of 2026, we are projecting to grow backlog 180% since the acquisition and orders 60% on average each year. This positions us incredibly well for the future. kSARIA's acquisition multiple of 13 is expected to be 11 by the end of 2026, and we still have plenty of opportunities to expand margins with pricing actions and productivity initiatives. On SPX Flow, we are in the early innings, but we are encouraged by how we started, the progress we have made, and the future potential.

On the start, we are ahead of our plan, and the team is working hard to accelerate. We have a path to our high single-digit growth commitment, with orders in the first half of the year growing 7% and revenue growing 9%. 05. We are progressing well, and cost synergies are ahead of plan, whilst we're working hard to build a strong foundation for future revenue synergies.

On future potential, we have plenty of growth prospects in each business, be it Nutrition and Health, Waukesha Cherry-Burrell, mixers or pumps, and the funnel of opportunities keeps on growing. I'm encouraged by what I experienced at Cetal, a small factory and business in Italy that is part of Nutrition and Health. I was fortunate to spend time with the local management, learn from their deep knowledge of the commercial and engineering teams, and observe the 5S of the well-run plant. This is a team that is ready to win and conquer more.

Another site with great potential is our Shidu factory in China. We spent time with Bruce Wang and the local team, exploring how we can grow faster and more profitably in APAC and China by adopting a more entrepreneurial mindset and a continuous improvement approach and continuing to invest in innovation. As you can see, our acquisition playbook is indeed working. In summary, our legacy businesses will keep delivering value through above-market growth and continuous margin expansion, whilst the acquisitions will compound value by doing exactly the same.

With that, let me now turn the call over to Mike Savinelli, who will be joining us for his first earnings call to discuss Q2 results in detail on slide 5. Michael Savinelli, Chief Financial Officer (interim) Thank you, Luca, and good morning. As Luca highlighted, we delivered a very strong quarter in Q2. We achieved outstanding growth across the business in revenue, adjusted margin, EPS and cash.

5 billion in revenue, growing 51% or 13% organically. CCT grew 17% organically, fueled by industrial connectors and aerospace and defense strength. 4. Motion Technologies grew 2% organically, a significant achievement in the down market driven by friction aftermarket and OE outperformance together with KONI growth.

And finally, Flow Technologies grew 21% organically, driven by strong project shipments and from strength in short cycle, which was up 10% year over year. Our strong top-line performance contributed to operating income growth of 55% and margin expansion of 40 basis points, supported further by the full quarter of SPX Flow as well as strong execution across our legacy businesses. 7%, a 100 basis point expansion driven by increased volume, realization of pricing actions and productivity, partially offset by material inflation. 4%, a decline of 160 basis points driven by the full-quarter impact of SPX Flow.

We expect to expand margin sequentially throughout the year from cost, synergy realization and other productivity initiatives. 1% as the team drove net productivity of 110 basis points over the prior year. 08 for the quarter, increasing 18% versus the prior year. Lastly, year to date, free cash flow of $176 million was impacted by $71 million of one-time acquisition-related expenses which we highlighted in Q1.

Excluding these impacts, free cash flow was up 15% year over year, and looking purely at Q2, our free cash flow margin was 11% for the quarter. Let's now turn to the Q2 EPS bridge on slide 6. The 18% EPS growth was primarily driven by strong operational performance delivered by all legacy businesses compounded by our acquisitions. 12 of that from market share gains, pricing and productivity actions.

68 of growth, with the impacts of the incremental interest, share count and tax rate mostly offsetting this contribution. We are maintaining SPX Flow's EPS accretion expectation of 10 to 14 cents for the year. I want to also stress that the net impacts of the tariff refunds were immaterial to the quarter at just a half million dollars. Now let's move on to slide seven to discuss our updated 2026 outlook.

We are raising our full-year organic revenue guidance range to 5% to 8% growth, driven by increased bookings in our CCT business, strength in both Flow Technologies projects and short cycle, and continued friction OE outperformance coupled with operational performance above our original expectations. 5% at the midpoint, fueled by top-line growth, favorable price-to-cost ratio and productivity gains. 22 at the midpoint. 37 increase and 14% growth at the midpoint, fueled by volume growth, pricing actions and productivity initiatives.

The low end of our new range now exceeds the high end of our previous guidance range. This revised guidance does not consider any additional net benefits from tariff refunds above the half million dollars from Q2. Finally, on cash and capital structure, we are raising the midpoint of our free cash flow guidance to $565 million, resulting in a free cash flow margin between 10% and 11%. We made good progress lowering our leverage ratio.

3 times by year end. Now let me turn the call back over to Luca to wrap up on slide 8. Luca Savi, President and Chief Executive Officer Thanks, Mike. Before we move to Q&A, let me reinforce a few points.

What you see in Q2, as you saw in Q1, is ITT's strategy in action. Our entrepreneurial spirit is accelerating growth in our legacy businesses. Our relentless execution is accelerating margin expansion. Our acquisitions are compounding organic value creation more and more, and in Q2 the momentum towards our long-term targets is accelerating.

As always, I appreciate your time and continued interest in ITT. Liz, please open the line for Q&A. OPERATOR The floor is now open for questions at this time. If you have a question or comment, please press star 1-1 on your touchtone phone.

If at any point your question has been answered, you may remove yourself from the queue by pressing 1-1 again. Again, we do ask that while you pose your question, you pick up the handset to provide optimal sound quality. Please limit your questions to one question and one follow-up. Thank you.

Our first question comes from Scott Davis with Melius Research. Scott Davis, Analyst at Melius Research Good morning. Thanks, operator. And good morning, Luca, Mike and Carlene.

Luca Savi, President and Chief Executive Officer Hi, Scott. Scott Davis, Analyst at Melius Research Congrats, congrats on these numbers. There's really not much to pick on here at all. So I'd like to talk a little bit about SPX Flow because that's the newest asset that we need to learn here.

Can you give us a sense, Luca, kind of where SPX Flow is in their kind of lean and operational excellence journey? Kind of how you would compare them to your legacy ITT businesses and such, and where the upside is there?