ITT Inc. Q2 FY26 Earnings Analysis

- ITT expects 37% total revenue growth and 5% organic growth at the midpoint for 2026, driven by aerospace, defense demand, flow projects, and short cycle markets. - SPX FLOW is projected to deliver high single-digit revenue growth in 2026. - Flow Technologies has been growing at a 15% revenue CAGR since 2023, with 12% organic growth and 61% total revenue growth in Q1 2024. - Book-to-bill ratio is above 1.0 and expected to remain so, indicating continued strong order intake. - Friction OE outperformed global automotive production by over 1,400 basis points and continues to gain market share. - Market share gains in industrial connectors, especially in Asia Pacific, medical, and defense markets. - Continued growth expected from Hybrids and EV sectors despite overall automotive production decline. - The pipeline and funnel for industrial processes remain elevated, especially in North America, supporting future growth.

- ITT expects continued margin progression throughout 2026 due to productivity improvements and price actions fully impacting from Q2 onward. - SPX FLOW margin in Q1 was strong due to an unusually long March; margins expected to improve progressively through the year with productivity plans and growth initiatives. - Full-year revenue growth outlook: 37% total, 5% organic at midpoint, driven by aerospace, defense, Flow projects, and friction OE outperformance. - Operating margin expected to expand about 70 basis points to approximately 20% at midpoint. - SPX FLOW to deliver high single-digit revenue growth and low double-digit EPS accretion in 2026. - Cost synergies from SPX FLOW acquisition anticipated around $15 million in 2026. - EPS expected to grow around 9% at midpoint for the full year. - Q2 EPS projected to increase high single digits versus prior year; Q2-Q4 EPS roughly $1.90-$1.95 per quarter. - Free cash flow expected at about $560 million or 10%-11% margin.

- ITT continues to invest part of the incremental profit generated to fund long-term growth initiatives such as VIDAR, FLRAA, the Friction high-performance segment, and Geopad. (Page 3) - Emphasis on productivity improvements and growth initiatives in SPX FLOW to improve margins. (Page 6) - Localization efforts underway, e.g., localizing production of Bornemann twin screw pumps at Waukesha plant and Latin America decision-making to speed customer intimacy and revenue synergies. (Page 7) - Management mentions capacity to do small bolt-on acquisitions facilitated by keeping debt ratio at 2.7 for financial flexibility. (Page 11) - SPX FLOW team working to improve material flows and overall equipment efficiency at plants in Wisconsin, New York, and Pennsylvania. (Page 2) Overall, focus on productivity, strategic bolt-ons, facility improvements, and growth-driving platform investments.

- In March, ITT contracted $2.9 billion in debt related to the SPX Flow acquisition, resulting in higher interest expenses. - The company maintained a debt ratio of 2.7, preserving financial flexibility for potential future small bolt-on acquisitions. - ITT anticipates an increased interest expense going forward due to this debt but has not indicated plans for additional new fundraising through debt or equity at this time. - The share count is projected to rise to 90 million shares over the next three quarters, partly due to the December equity issuance and equity given to Lone Star in the acquisition. - There is ongoing share repurchase activity, with $100 million deployed towards repurchases in March. - Management emphasized maintaining financial flexibility and the capacity for small acquisitions but did not specify new large fundraising plans.

- ITT reported strong order growth in Q1 2026 with overall orders up 26% and 8% organically. - Flow Technologies segment delivered 44% orders growth and 7% organically, driven by market share gains. - SPX FLOW showed good order growth of 5% overall; Waukesha Cherry-Burrell and Agini pumps had double-digit order increases. - Nutrition & Health Solutions orders increased by 3%, mixers by 7%, and pumps by 2%. - Book-to-bill ratio for ITT was 1.09 in Q1; expected to stay above 1 for the full year. - Flow Technologies backlog has nearly doubled in the last 3 years and is expected to continue growing in 2026. - The SPX FLOW segment expects a book-to-bill ratio above 1 for the full year, indicating healthy demand pipeline. - The industrial process funnel is healthy and elevated year-over-year and sequentially, strongest in North America.