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ITT INC. (ITT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was resilient with revenue $913M, GAAP EPS $1.33, and adjusted EPS $1.45; adjusted margin expanded 30 bps to 17.4% despite FX and M&A amortization headwinds .
  • Results modestly beat consensus: EPS $1.45 vs $1.44* and revenue $913M vs $907.5M*, aided by productivity and pricing; GAAP EPS declined YoY on higher interest and tax .
  • Management maintained full-year adjusted guidance (organic growth 3–5%, adj. operating margin 18.1–19.0%, adj. EPS $6.10–$6.50, FCF $450–$500M) while lowering GAAP EPS ($5.80–$6.20) and GAAP margin (17.5–18.4%) to reflect tariff and tax effects .
  • Catalysts: record orders >$1.0B (book-to-bill 1.15) and backlog $1.8B, $400M buybacks through April, and launch of VIDAR smart motor opening a $6B TAM; near-term watch items include tariff headwinds of $50–$60M and aerospace destocking .

What Went Well and What Went Wrong

What Went Well

  • Orders hit a record >$1.0B; backlog rose to $1.8B (+21% YoY, +10% seq.), with book-to-bill 1.15, supported by kSARIA and Svanehøj .
  • Margin execution: adjusted operating margin expanded to 17.4% and segment-level pricing/productivity offset FX and cost inflation; adjusted EPS grew 7% excluding the Wolverine divestiture .
  • Strategic momentum: VIDAR launch enters $6B industrial motor TAM; CEO: “VIDAR is a game-changing industrial motor… the only industrial motor of its kind on the market” .

What Went Wrong

  • GAAP EPS fell 1% YoY on higher interest and tax; GAAP operating margin flat YoY; aerospace demand weaker in CCT .
  • CCT reported margin compression (15.3%, -240 bps YoY) from M&A dilution and higher materials/overhead; aerospace inventory normalization persists .
  • Tariff headwind estimated at $50–$60M for the remaining 9 months of 2025, with potential margin/cash timing impact even if largely offset by price/sourcing actions .

Financial Results

Consolidated performance vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$885.2 $929.0 $913.0
GAAP EPS ($USD)$1.96 $1.55 $1.33
Adjusted EPS ($USD)$1.46 $1.50 $1.45
Operating Margin (%)23.5% 17.2% 16.5%
Adjusted Operating Margin (%)18.3% 17.5% 17.4%

Segment breakdown

SegmentQ3 2024 Revenue ($MM)Q3 2024 Op Margin (%)Q4 2024 Revenue ($MM)Q4 2024 Op Margin (%)Q1 2025 Revenue ($MM)Q1 2025 Op Margin (%)
Motion Technologies (MT)$344.9 31.9% $326.0 19.3% $346.1 19.5%
Industrial Process (IP)$333.8 20.9% $362.6 21.2% $333.3 19.1%
Connect & Control Tech (CCT)$207.2 18.4% $241.0 16.6% $234.7 15.3%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Orders ($USD Millions)$965.4 $914.8 $1,046.5
Backlog ($USD Billions)$1.7 $1.6 $1.8
Net Cash from Operating Activities ($USD Millions)$123.9 $223.2 $113.4
Free Cash Flow ($USD Millions)$87.3 $186.8 $76.6

Versus Wall Street consensus (S&P Global)

MetricQ4 2024 ConsensusQ4 2024 ActualQ1 2025 ConsensusQ1 2025 Actual
EPS ($USD)1.47*1.50 1.44*1.45
Revenue ($USD Millions)927.0*929.0 907.5*913.0
Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Feb 6)Current Guidance (May 1)Change
Revenue Growth (GAAP)FY 20252%–4% 2%–4% Maintained
Operating Margin (GAAP)FY 202518.0%–18.9% 17.5%–18.4% Lowered
EPS (GAAP)FY 2025$6.05–$6.45 $5.80–$6.20 Lowered
Organic Revenue GrowthFY 20253%–5% 3%–5% Maintained
Adjusted Operating MarginFY 202518.1%–19.0% 18.1%–19.0% Maintained
Adjusted EPSFY 2025$6.10–$6.50 $6.10–$6.50 Maintained
Free Cash Flow ($MM)FY 2025$450–$500 $450–$500 Maintained
FCF Margin (%)FY 202512%–13% 12%–13% Maintained
Dividend ($/share)Q2 2025$0.351 (run-rate) $0.351 declared Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Orders/BacklogMid-teens orders growth; backlog record $1.7B Orders >$1.0B; backlog $1.8B; book-to-bill 1.15 Improving
Pricing/ProductivityMargin expansion; raising EPS midpoint Pricing and productivity offset FX/costs; adj. margin +30 bps Consistent positive
Aerospace/CCTCCT growth; margins affected by mix/M&A Aerospace destocking; CCT margin down YoY; defense connectors strong Mixed/normalizing
IP projects/short-cycleIP organic growth; Svanehøj contribution IP project orders +47%; IP backlog $1B; short-cycle steady Strong pipeline
Tariffs/MacroLimited commentary pre-2025$50–$60M 2025 headwind; price/sourcing mitigation planned New risk intensifying
Capital deployment>$1B M&A; dividends up $400M repurchases through April; M&A capacity intact More aggressive buybacks
InnovationPortfolio shift to flow/connectors VIDAR launch; energy-saving smart motor, Q3’25 first shipments New growth vector

Management Commentary

  • “We surpassed $1 billion of orders in a quarter for the first time and entered Q2 with a $1.8 billion backlog, a 21% increase versus last year and up 10% sequentially… we expanded adjusted margin 30 basis points” – Luca Savi .
  • “We repurchased $300 million of ITT shares in April in addition to the $100 million we did in Q1, lowering our share count by 4% for the year… and still, our capacity to execute M&A remains” – Luca Savi .
  • “VIDAR is truly a game changer… a drop-in replacement… energy use decreased by 50%… entering a $6 billion addressable market” – Luca Savi .
  • “Our actions will offset the impact [of tariffs] from an operating income perspective… there may, however, be some impact on margin and timing that could affect cash flow” – Emmanuel Caprais .
  • “IP backlog is at $1 billion, a record… gives us confidence in our revenue number and our growth in 2025” – Emmanuel Caprais .

Q&A Highlights

  • Orders strength driven by multi-year project awards (IP up 47%) and acquisition contributions; not pre-buy ahead of price increases .
  • Buyback rationale: reaffirm confidence; M&A pipeline healthy with $500–$700M targeted in 2025 while net leverage remains low .
  • Guidance bridge: FX and share count tailwinds; higher tax/cost inflation; slower 2H macro; IP ~5% growth, MT ~flat; CCT just shy of 18% margin due to kSARIA amortization .
  • Tariffs: $50–$60M gross headwind in remaining nine months; largely offset via pricing and sourcing; largest exposure in CCT/IP; minimal in MT with USMCA compliance/regional production .
  • Aerospace: recovery expected sequentially through 2H; inventory excess at Tier 1s and airframers being addressed .
  • MT outlook: European/North American production weak in Q1; expect 400–500 bps OEM outperformance for full-year based on platform wins .

Estimates Context

  • Q1 2025 beat: EPS $1.45 vs $1.44*, revenue $913M vs $907.5M*, driven by pricing, productivity and defense/rail strength; GAAP EPS impacted by higher interest/tax .
  • Q4 2024 also modest beat: EPS $1.50 vs $1.47*, revenue $929M vs $927.0* .
  • Implications: 2Q guide implies adjusted EPS growth ~8% at midpoint and margin expansion; estimates may need to reflect Boeing ramp in CCT and IP project shipments, while embedding tariff pass-through and 2H macro caution .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Underlying execution solid: adjusted margin +30 bps and adjusted EPS +2% YoY, with stronger underlying +7% excluding Wolverine divestiture .
  • Order book/backlog strength de-risks near-term revenue (backlog $1.8B, IP backlog $1B), supporting 2Q mid-single-digit growth and margin expansion .
  • GAAP guidance trimmed (EPS and margin) due to tariffs/tax, but adjusted guide maintained; focus on price realization and productivity to defend margins .
  • CCT mix headwind (aerospace destocking, M&A amortization) is transitory; defense connectors growth and pricing renegotiations should improve margins sequentially .
  • VIDAR is a potential multi-year growth vector with clear customer ROI and energy savings; first shipments expected Q3 2025; watch Capital Markets Day for revenue targets .
  • Capital allocation is supportive: $400M buybacks through April and continued M&A capacity provide EPS and strategic upside .
  • Monitor tariff implementation and macro in 2H: management expects OI offset, but margin/cash timing could be volatile; pricing power strongest in distribution-heavy CCT/IP .