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ITT INC. (ITT)·Q3 2025 Earnings Summary

Executive Summary

  • ITT delivered a clean beat and another step-up in profitability: revenue $999.1M (+12.9% y/y, +2.7% q/q) and adjusted EPS $1.78 (+21% y/y), with adjusted operating margin up 20 bps to 18.5% . Versus S&P Global consensus, ITT beat on revenue ($999.1M vs $974.3M*) and EPS ($1.78 vs $1.67*); EBITDA also topped ($218.8M vs $214.4M*) (12 estimates) (Values retrieved from S&P Global).
  • Operating cash flow and free cash flow were standouts: CFO $173.9M and FCF $154.1M (15.4% margin) in Q3; YTD FCF $368.0M (+46% y/y) .
  • Guidance raised again: FY25 GAAP EPS to $6.16–$6.22 (from $5.95–$6.15) and adjusted EPS to $6.62–$6.68 (from $6.35–$6.55); total revenue growth nudged to 6–7%; FCF now $500M (~13% margin) .
  • Catalysts: clear beat on EPS/revenue/EBITDA*, margin resilience (ex-M&A), and another FY guide raise. Medium-term narrative centers on robust ~$2B backlog entering Q4/2026, project momentum in IP, and pricing actions in CCT .

What Went Well and What Went Wrong

What Went Well

  • Strong beat and quality growth: adjusted EPS rose 21% y/y to $1.78 on 6% organic revenue growth and 20 bps adjusted margin expansion to 18.5% . CEO: “Adjusted operating income grew nearly twice the rate of organic sales growth thanks to productivity actions and pricing” .
  • Cash conversion accelerated: Q3 FCF $154.1M (+77% y/y), FCF margin 15.4%; YTD FCF $368.0M (+46%), supporting debt paydown and investments .
  • Segment execution and accretive M&A: IP margin ~21.4% (+30 bps y/y), Svanehøj >30% revenue growth and >20% EBITDA; CCT +25% total revenue (kSARIA), aero up double-digits, defense growing; MT above 20% margin for the second consecutive quarter (KONI strength) .

What Went Wrong

  • Reported operating income/margin down y/y due to prior-year gain on WAM sale: operating income $179.8M (-13.8% y/y) and margin 18.0% (-560 bps), though adjusted OI +13.8% and adjusted margin +20 bps .
  • Orders softness headline in the quarter: total organic orders down 3.6% y/y (IP -9.9%) with phasing vs tough PY project comps; management still expects FY book-to-bill >1 and EOY backlog higher .
  • CCT reported margin pressure from temporary acquisition amortization (down 60 bps y/y to 17.8%); management expects amortization headwind to end in Q4 and negotiations with Boeing to support 2026 margins .

Financial Results

Headline metrics vs prior quarters

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$913.0 $972.4 $999.1
Diluted EPS ($)$1.33 $1.52 $1.62
Adjusted EPS ($)$1.45 $1.64 $1.78
Operating Margin (%)16.5% 18.0% 18.0%
Adjusted Operating Margin (%)17.4% 18.4% 18.5%

Q3 actuals vs S&P Global consensus*

MetricActual (Q3 2025)Consensus*Surprise
Revenue ($M)999.1 974.3*+2.5%
Adjusted EPS ($)1.78 1.67*+6.6%
EBITDA ($M)218.8214.4*+2.1%
# of Estimates—12*—
Values retrieved from S&P Global.

YoY comparison (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025YoY Change
Revenue ($M)$885.2 $999.1 +12.9%
Diluted EPS ($)$1.97 $1.62 -17.8% (WAM gain in PY)
Adjusted EPS ($)$1.47 $1.78 +21.1%
Operating Margin (%)23.6% 18.0% -560 bps (PY gain)
Adjusted Operating Margin (%)18.3% 18.5% +20 bps

Segment breakdown (revenue and margins)

SegmentRevenue Q2 2025 ($M)Op Margin Q2 2025Revenue Q3 2025 ($M)Op Margin Q3 2025
Motion Technologies365.7 19.5% 355.6 19.6%
Industrial Process355.9 21.5% 383.9 21.4%
Connect & Control Technologies251.9 17.8% 259.2 17.8%

KPIs

KPIQ1 2025Q2 2025Q3 2025
Orders ($M, reported)$1,046.5 $1,074.2 $991.0
Backlog$1.8B ~ $2.0B ~ $2.0B
Net Cash from Ops ($M)$113.4 $153.7 $173.9
Free Cash Flow ($M)$76.6 $137.3 $154.1
Free Cash Flow Margin (%)8.4% 14.1% 15.4%

Guidance Changes

MetricPeriodPrevious Guidance (7/31)Current Guidance (10/29)Change
Total Revenue GrowthFY 20255%–7% 6%–7% Raised (midpoint)
Organic Revenue GrowthFY 20253%–5% 3%–5% Maintained
Operating Margin (GAAP)FY 202517.5%–18.1% 17.7%–18.0% Tightened/raised low end
Adjusted Operating MarginFY 202518.1%–18.7% 18.2%–18.5% plug Tightened
EPS (GAAP)FY 2025$5.95–$6.15 $6.16–$6.22 Raised
Adjusted EPSFY 2025$6.35–$6.55 $6.62–$6.68 Raised
Free Cash Flow ($M)FY 2025$450–$500 $500 Raised to high end
FCF Margin (%)FY 202512%–13% ~13% Maintained at high end
DividendQ4 2025$0.351/sh Q3 declared $0.351/sh Q4 declared Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
VIDAR industrial motorLaunched Q1; positioned as “game-changing,” pilots underway; continued investment and FY target reiterated at CMD context .Investments continue; funding via robust FCF; implied growth investments in Q4; expectation to support customer energy savings .Steady execution; commercial pilots expanding.
IP projects & funnelQ1 backlog record (~$1B in IP) and robust orders; Q2 revenue led by projects, Svanehøj strong .Active quotes up 22% sequentially; green projects funnel up; Middle East funnel +21%; book-to-bill for FY >1; backlog ~ $2B .Strengthening pipeline; healthy conversion expected.
Automotive (MT) & outperformanceQ1: KONI strong; market softness EU/NA; plan to outperform 400–500 bps for FY .MT OE outperformed global auto by 360 bps in Q3; MT margin >20% for second straight quarter; China platform wins continue .Sustained outperformance and margins.
Tariffs & pricingQ1: $50–$60M gross headwind (9 months), plan to offset via price/cost; largest exposure in IP & CCT .CCT pricing actions continue; management negotiating with Boeing; pricing/productivity offset inflation and amortization .Mitigation on track; limited net EPS impact.
Aerospace & DefenseQ1: Aero orders to recover in 2H; defense robust; kSARIA awards .Aero orders up high teens; defense mid-single digits; Q4 growth ~20% expected in both; CCT price negotiations progressing .Strengthening through 2H and into 2026.
M&A pipelineQ1: capacity maintained post buybacks; target deals aligned to strategy .Funnel “rich,” focused on pumps/valves and connectors in aero/defense; disciplined financial/strategic filters .Active cultivation; disciplined execution.

Management Commentary

  • “We generated $999 million in revenue powered by the execution of our large pump project backlog, growth in aerospace and defense and compounded by our kSARIA and Svanehøj acquisitions.” – Luca Savi, CEO .
  • “Adjusted operating income grew nearly twice the rate of organic sales growth thanks to productivity actions and pricing, leading to adjusted earnings growth of over twenty percent.” .
  • “We enter Q4 and look ahead to 2026 with a ~$2 billion backlog… raising our EPS guidance once again.” .
  • CFO: “We grew operating margin 20 basis points to 18.5%… This more than offset the impact of inflation and temporary acquisition amortization… MT… above 20% margin for the second consecutive quarter.” .
  • “Given our strong performance to date, ramping contributions from acquisitions, and the lower effective tax rate, we are raising our full year adjusted EPS outlook.” – CFO .

Q&A Highlights

  • Auto production/outlook: Global auto up 2% in 2025 led by China; ITT outperformed by 360 bps in Q3 and expects continued outperformance into 2026 .
  • IP funnel/order phasing: Active project quotes up 22% q/q; green projects and regional funnels (NA, APAC, LatAm) improving; FY book-to-bill “comfortably above 1” despite tough Q3 comps .
  • CCT margins 2026: Widebody recovery and pricing with Boeing are tailwinds; manufacturing efficiencies and end of temporary amortization >$0.10 accretion next year .
  • Incrementals: Excluding acquisitions, Q3 incrementals ~40%; expecting similar in Q4; 2026 framework 30–35% .
  • Regional strength: Middle East IP momentum; sequential funnel up 21% in region; expansion of Saudi operations to support growth .

Estimates Context

  • Q3 beat across the board vs S&P Global: revenue $999.1M vs $974.3M*, adjusted EPS $1.78 vs $1.67*, and EBITDA $218.8M vs $214.4M* (12 estimates). Management also raised FY adjusted EPS to $6.62–$6.68, implying upward estimate revisions . Values retrieved from S&P Global.
  • Potential revisions: upward to FY EPS and margins given Q3 beat and guidance raise; CCT amortization roll-off and price negotiations suggest 2026 consensus margin uplift .

Key Takeaways for Investors

  • Beat-and-raise quarter: Q3 revenue/EPS/EBITDA beat and a higher FY guide* underscore momentum into Q4/2026 .
  • Cash engine accelerating: FCF margin 15.4% in Q3 with $500M FY target (~13%) supports deleveraging, buybacks, and growth capex .
  • Structural drivers intact: IP project cycle/Svanehøj strength, CCT aero/defense ramp with pricing, and MT’s >20% margin profile position ITT for multi-year EPS compounding .
  • Watch orders phasing: Q3 orders softer on tough comps; management calls out FY book-to-bill >1 and rising active funnel, reducing 2026 revenue risk .
  • Tariff/pricing risk mitigated: Largest exposures in IP/CCT are being offset by pricing and sourcing actions; minimal net EPS impact planned .
  • 2026 setup: End of CCT amortization, Boeing pricing progress, and backlog conversion point to continued margin expansion; incrementals guided ~30–35% .
  • Tactical: Positive near-term sentiment catalysts include Q4 growth/margin expansion, aero/defense acceleration, and potential M&A updates; any IP project delays or aero destocking would be the key watch items .

Notes:

  • All document figures and quotes are cited in brackets.
  • Asterisked items (*) are based on S&P Global consensus and actuals from the same source. Values retrieved from S&P Global.