ITT INC. [ITT] Filings

10-Q 1 itt-20240629.htm 10-Q itt-20240629

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from to

Commission File Number: 001-05672

ITT INC.

(Exact name of Registrant as specified in its charter)


Indiana						81-1197930
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

100 Washington Boulevard, 6th Floor, Stamford, CT 06902

(Address of Principal Executive Offices)

(914) 641-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	ITT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

☑

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 31, 2024, there were 81.7 million shares of Common Stock (par value $1.00 per share) of the issuer outstanding.

TABLE OF CONTENTS


ITEM		PAGE
PART I – FINANCIAL INFORMATION
1.	Financial Statements (unaudited)
	Consolidated Condensed Statements of Operations	1
	Consolidated Condensed Statements of Comprehensive Income	2
	Consolidated Condensed Balance Sheets	3
	Consolidated Condensed Statements of Cash Flows	4
	Consolidated Condensed Statements of Changes in Shareholders’ Equity	5
	Notes to Consolidated Condensed Financial Statements:
	Note 1. Description of Business and Basis of Presentation	7
	Note 2. Recent Accounting Pronouncements	8
	Note 3. Segment Information	9
	Note 4. Revenue	10

	Note 5 . Income Taxes	12
	Note 6 . Earnings Per Share Data	12
	Note 7 . Receivables, Net	13
	Note 8 . Inventories	13
	Note 9 . Other Current and Non-Current Assets	14
	Note 1 0 . Plant, Property and Equipment, Net	14
	Note 1 1 . Goodwill and Other Intangible Assets, Net	15
	Note 12. Accounts Payable, Accrued Liabilities and Other Non-Current Liabilities	16
	Note 1 3 . Debt	17

	Note 14. Long-Term Incentive Employee Compensation	18
	Note 15. Capital Stock	19

	Note 16. Commitments and Contingencies	19
	Note 17. Derivative Financial Instruments	20
	Note 18. Acquisitions and Divestitures	22

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Overview	24
	Discussion of Financial Results	27
	Liquidity and Capital Resources	31
	Key Performance Indicators and Non-GAAP Measures	34
	Recent Accounting Pronouncements	39
	Critical Accounting Estimates	39
3.	Quantitative and Qualitative Disclosures about Market Risk	39
4.	Controls and Procedures	39
PART II – OTHER INFORMATION
1.	Legal Proceedings	40
1A.	Risk Factors	40
2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
3.	Defaults Upon Senior Securities	40
4.	Mine Safety Disclosures	40
5.	Other Information	41
6.	Exhibits	42
	Signature	43

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the SEC). The SEC maintains a website at www.sec.gov on which you may access our SEC filings. In addition, we make available free of charge at investors.itt.com copies of materials we file with, or furnish to, the SEC as soon as reasonably practical after we electronically file or furnish these reports, as well as other important information that we disclose from time to time. Information contained on our website, or that can be accessed through our website, does not constitute a part of this Quarterly Report on Form 10-Q (this Report). We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website.

Our corporate headquarters are located at 100 Washington Boulevard, 6th Floor, Stamford, CT 06902 and the telephone number of this location is (914) 641-2000.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

Some of the information included herein includes forward-looking statements within the meaning of the Securities Exchange Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather represent only a belief regarding future events based on current expectations, estimates, assumptions and projections about our business, future financial results and the industry in which we operate, and other legal, regulatory and economic developments. These forward-looking statements include, but are not limited to, future strategic plans and other statements that describe the company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future events and future operating or financial performance.

We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “future,” “guidance,” “project,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “target,” “will,” and other similar expressions to identify such forward-looking statements. Forward-looking statements are uncertain and, by their nature, many are inherently unpredictable and outside of ITT’s control, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements.

Where in any forward-looking statement we express an expectation or belief as to future results or events, such expectation or belief is based on current plans and expectations of our management, expressed in good faith and believed to have a reasonable basis. However, we cannot provide any assurance that the expectation or belief will occur or that anticipated results will be achieved or accomplished.

Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:

•uncertain global economic and capital markets conditions, which have been influenced by heightened geopolitical tensions, inflation, changes in monetary policies, the threat of a possible regional or global economic recession, trade disputes between the U.S. and its trading partners, political and social unrest, and the availability and fluctuations in prices of energy and commodities, including steel, oil, copper and tin;

•fluctuations in interest rates and the impact of such fluctuations on customer behavior and on our cost of debt;

•fluctuations in foreign currency exchange rates and the impact of such fluctuations on our revenues, customer demand for our products and on our hedging arrangements;

•volatility in raw material prices and our suppliers’ ability to meet quality and delivery requirements;

•impacts and risk of liabilities from recent mergers, acquisitions, or venture investments, and past divestitures and spin-offs;

•our inability to hire or retain key personnel;

•failure to compete successfully and innovate in our markets;

•failure to manage the distribution of products and services effectively;

•failure to protect our intellectual property rights or violations of the intellectual property rights of others;

•the extent to which there are quality problems with respect to manufacturing processes or finished goods;

•the risk of cybersecurity breaches or failure of any information systems used by the Company, including any flaws in the implementation of any enterprise resource planning systems;

•loss of or decrease in sales from our most significant customers;

•risks due to our operations and sales outside the U.S. and in emerging markets, including the imposition of tariffs and trade sanctions;

•fluctuations in demand or customers’ levels of capital investment, maintenance expenditures, production, and market cyclicality;

•the risk of material business interruptions, particularly at our manufacturing facilities;

•risks related to government contracting, including changes in levels of government spending and regulatory and contractual requirements applicable to sales to the U.S. government;

•fluctuations in our effective tax rate, including as a result of changing tax laws and other possible tax reform legislation in the U.S. and other jurisdictions;

•changes in environmental laws or regulations, discovery of previously unknown or more extensive contamination, or the failure of a potentially responsible party to perform;

•failure to comply with the U.S. Foreign Corrupt Practices Act (or other applicable anti-corruption legislation), export controls and trade sanctions; and

•risk of product liability claims and litigation.

More information on factors that could cause actual results or events to differ materially from those anticipated is included in Part II, Item 1A, “Risk Factors” herein, as well as in our reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2023 (particularly under the caption “Risk Factors”), our Quarterly Reports on Form 10-Q and in other documents we file from time to time with the SEC.

The forward-looking statements included in this Report speak only as of the date of this Report. We undertake no obligation (and expressly disclaim any obligation) to update any forward-looking statements, whether written or oral or as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Revenue	$	905.9	$	833.9	$	1,816.5	$	1,631.8
Cost of revenue	589.8		553.9		1,199.6		1,089.9
Gross profit	316.1		280.0		616.9		541.9
General and administrative expenses	76.8		68.4		148.3		136.7
Sales and marketing expenses	50.6		43.9		100.7		86.8
Research and development expenses	29.7		25.7		59.7		52.1

Operating income	159.0		142.0		308.2		266.3
Interest expense	7.4		4.5		15.1		11.2
Interest income	(1.6)		(2.0)		(3.4)		(4.6)
Other non-operating income, net	(0.2)		—		(1.7)		(0.6)
Income before income tax expense	153.4		139.5		298.2		260.3
Income tax expense	33.0		30.6		65.8		50.7


Net income	120.4		108.9		232.4		209.6
Less: Income attributable to noncontrolling interests	1.2		0.7		2.2		1.4
Net income attributable to ITT Inc.	$	119.2	$	108.2	$	230.2	$	208.2






Earnings per share attributable to ITT Inc.:
Basic	$	1.45	$	1.31	$	2.80	$	2.52

Diluted	$	1.45	$	1.31	$	2.79	$	2.51

Weighted average common shares – basic	82.0		82.4		82.1		82.5
Weighted average common shares – diluted	82.4		82.6		82.5		82.8

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Operations.

ITT Inc. | Q2 2024 Form 10-Q | 1

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(IN MILLIONS)


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net income	$	120.4	$	108.9	$	232.4	$	209.6
Other comprehensive (loss):
Net foreign currency translation adjustment	(17.1)		(10.2)		(49.2)		(4.2)
Net change in postretirement benefit plans, net of tax impacts of $0.3, $0.3, $0.6, and $2.1, respectively	(0.7)		(1.1)		(1.7)		(0.7)

Other comprehensive (loss)	(17.8)		(11.3)		(50.9)		(4.9)
Comprehensive income	102.6		97.6		181.5		204.7
Less: Comprehensive income attributable to noncontrolling interests	1.2		0.7		2.2		1.4
Comprehensive income attributable to ITT Inc.	$	101.4	$	96.9	$	179.3	$	203.3

Disclosure of reclassification adjustments and other adjustments to postretirement benefit plans:
Amortization of prior service benefit, net of tax expense of $0.4, $0.4, $0.7, and $0.7, respectively	$	(1.1)	$	(1.1)	$	(2.2)	$	(2.3)
Amortization of net actuarial loss, net of tax benefit of $—, $—, $—, and $—, respectively	—		0.1		0.1		0.2
Other adjustments to postretirement benefit plans:

Net actuarial gain, net of tax expense of $(0.1), $—, $(0.1), and $—, respectively	0.4		—		0.4		—
Deferred tax asset valuation allowance reversal	—		(0.1)		—		1.4
Net change in postretirement benefit plans, net of tax	$	(0.7)	$	(1.1)	$	(1.7)	$	(0.7)

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Comprehensive Income.

ITT Inc. | Q2 2024 Form 10-Q | 2

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)


As of the Period Ended	June 29, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	425.5	$	489.2
Receivables, net	706.3		675.2
Inventories	564.3		575.4
Other current assets	137.3		117.9
Current assets held for sale	92.5		—
Total current assets	1,925.9		1,857.7
Non-current assets:
Plant, property and equipment, net	543.8		561.0
Goodwill	1,200.9		1,016.3
Other intangible assets, net	296.9		116.6
Other non-current assets	382.8		381.0
Non-current assets held for sale	60.0		—
Total non-current assets	2,484.4		2,074.9
Total assets	$	4,410.3	$	3,932.6
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term borrowings	$	357.5	$	187.7
Accounts payable	430.9		437.0
Accrued and other current liabilities	423.6		413.1
Current liabilities held for sale	29.4		—
Total current liabilities	1,241.4		1,037.8
Non-current liabilities:
Long-term debt	190.0		5.7
Postretirement benefits	131.8		138.7
Other non-current liabilities	252.4		211.3
Non-current liabilities held for sale	5.5		—
Total non-current liabilities	579.7		355.7
Total liabilities	1,821.1		1,393.5
Shareholders’ equity:
Common stock:
Authorized – 250 shares, $1 par value per share
Issued and outstanding – 81.7 shares and 82.1 shares, respectively	81.7		82.1
Retained earnings	2,877.7		2,778.0
Accumulated other comprehensive loss:
Postretirement benefits	(3.3)		(1.6)
Cumulative translation adjustments	(379.5)		(330.3)
Total accumulated other comprehensive loss	(382.8)		(331.9)
Total ITT Inc. shareholders’ equity	2,576.6		2,528.2
Noncontrolling interests	12.6		10.9
Total shareholders’ equity	2,589.2		2,539.1
Total liabilities and shareholders’ equity	$	4,410.3	$	3,932.6

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Balance Sheets.

ITT Inc. | Q2 2024 Form 10-Q | 3

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN MILLIONS)


For the Six Months Ended	June 29, 2024		July 1, 2023
Operating Activities
Income from continuing operations attributable to ITT Inc.	$	230.2	$	208.2
Adjustments to income from continuing operations:
Depreciation and amortization	66.0		53.8
Equity-based compensation	13.7		10.1
Gain on sale of business	—		(7.2)



Other non-cash charges, net	15.7		16.6

Changes in assets and liabilities:
Change in receivables	(60.4)		(58.6)
Change in inventories	(5.1)		(31.4)
Change in contract assets	(20.7)		(2.9)
Change in contract liabilities	15.5		12.0
Change in accounts payable	8.2		8.9
Change in accrued expenses	(26.1)		15.5
Change in income taxes	(13.6)		(8.1)
Other, net	(7.9)		(19.1)
Net Cash – Operating Activities	215.5		197.8
Investing Activities
Capital expenditures	(50.9)		(46.3)
Proceeds from sale of business	—		10.5

Acquisitions, net of cash acquired	(407.5)		(79.3)


Other, net	(2.2)		(4.7)
Net Cash – Investing Activities	(460.6)		(119.8)
Financing Activities
Commercial paper, net borrowings	169.5		(61.0)


Long-term debt issued, net of debt issuance costs	299.1		—
Long-term debt, repayments	(109.3)		(1.1)
Share repurchases under repurchase plan	(79.0)		(60.0)
Payments for taxes related to net share settlement of stock incentive plans	(12.8)		(6.4)
Dividends paid	(52.6)		(48.1)
Other, net	(1.1)		0.3
Net Cash – Financing Activities	213.8		(176.3)
Exchange rate effects on cash and cash equivalents	(17.2)		(0.4)
Net cash – operating activities of discontinued operations	(0.1)		(0.2)
Net change in cash and cash equivalents	(48.6)		(98.9)
Less: Cash classified within current assets held for sale	(14.9)		—
Cash and cash equivalents – beginning of year (includes restricted cash of $0.7 and $0.7, respectively)	489.9		561.9
Cash and Cash Equivalents – End of Period (includes restricted cash of $0.9 and $0.9, respectively)	$	426.4	$	463.0
Supplemental Disclosures of Cash Flow and Non-Cash Information:
Cash paid for interest	$	13.7	$	8.5
Cash paid for income taxes, net of refunds received	$	69.8	$	52.8
Capital expenditures included in accounts payable	$	22.4	$	14.0

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Cash Flows.

ITT Inc. | Q2 2024 Form 10-Q | 4

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)


As of and for the Three Months Ended June 29, 2024	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Shareholders' Equity
	(Shares)	(Dollars)
March 30, 2024	82.3	$	82.3	$	2,857.4	$	(365.0)	$	11.5	$	2,586.2
Net income	—	—		119.2		—		1.2		120.4
Shares issued and activity from stock incentive plans	—	—		6.7		—		—		6.7
Shares repurchased under repurchase plan	(0.6)	(0.6)		(79.0)		—		—		(79.6)
Shares withheld related to net share settlement of stock incentive plans	—	—		(0.3)		—		—		(0.3)
Dividends declared ($0.319 per share)	—	—		(26.2)		—		—		(26.2)
Dividends to noncontrolling interest	—	—		—		—		(0.1)		(0.1)

Net change in postretirement benefit plans, net of tax	—	—		—		(0.7)		—		(0.7)
Net foreign currency translation adjustment	—	—		—		(17.1)		—		(17.1)
Other	—	—		(0.1)		—		—		(0.1)
June 29, 2024	81.7	$	81.7	$	2,877.7	$	(382.8)	$	12.6	$	2,589.2

As of and for the Six Months Ended June 29, 2024
December 31, 2023	82.1	$	82.1	$	2,778.0	$	(331.9)	$	10.9	$	2,539.1
Net income	—	—		230.2		—		2.2		232.4
Shares issued and activity from stock incentive plans	0.3	0.3		13.7		—		—		14.0
Shares repurchased under repurchase plan	(0.6)	(0.6)		(79.0)		—		—		(79.6)
Shares withheld related to net share settlement of stock incentive plans	(0.1)	(0.1)		(12.7)		—		—		(12.8)
Dividends declared ($0.638 per share)	—	—		(52.5)		—		—		(52.5)
Dividends to noncontrolling interest	—	—		—		—		(0.5)		(0.5)

Net change in postretirement benefit plans, net of tax	—	—		—		(1.7)		—		(1.7)
Net foreign currency translation adjustment	—	—		—		(49.2)		—		(49.2)



June 29, 2024	81.7	$	81.7	$	2,877.7	$	(382.8)	$	12.6	$	2,589.2

ITT Inc. | Q2 2024 Form 10-Q | 5


As of and for the Three Months Ended July 1, 2023	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Shareholders' Equity
April 1, 2023	82.4	$	82.4	$	2,554.7	$	(337.9)	$	10.0	$	2,309.2
Net income	—	—		108.2		—		0.7		108.9
Shares issued and activity from stock incentive plans	—	—		5.4		—		—		5.4
Share repurchases under repurchase plan	(0.3)	(0.3)		(30.2)		—		—		(30.5)
Shares withheld related to net share settlement of stock incentive plans	—	—		(0.1)		—		—		(0.1)
Dividends declared ($0.290 per share)	—	—		(24.0)		—		—		(24.0)
Dividends to noncontrolling interest	—	—		—		—		(0.1)		(0.1)

Net change in postretirement benefit plans, net of tax	—	—		—		(1.1)		—		(1.1)
Net foreign currency translation adjustment	—	—		—		(10.2)		—		(10.2)
Other	—	—		—		—		0.1		0.1
July 1, 2023	82.1	$	82.1	$	2,614.0	$	(349.2)	$	10.7	$	2,357.6

As of and for the Six Months Ended July 1, 2023
December 31, 2022	82.7	$	82.7	$	2,509.7	$	(344.3)	$	9.3	$	2,257.4
Net income	—	—		208.2		—		1.4		209.6
Shares issued and activity from stock incentive plans	0.2	0.2		10.3		—		—		10.5
Share repurchased under repurchase plan	(0.7)	(0.7)		(59.8)		—		—		(60.5)
Shares withheld related to net share settlement of stock incentive plans	(0.1)	(0.1)		(6.3)		—		—		(6.4)
Dividends declared ($0.580 per share)	—	—		(48.1)		—		—		(48.1)
Dividends to noncontrolling interest	—	—		—		—		(0.1)		(0.1)

Net change in postretirement benefit plans, net of tax	—	—		—		(0.7)		—		(0.7)
Net foreign currency translation adjustment	—	—		—		(4.2)		—		(4.2)

Other	—	—		—		—		0.1		0.1
July 1, 2023	82.1	$	82.1	$	2,614.0	$	(349.2)	$	10.7	$	2,357.6

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Changes in Shareholders’ Equity.

ITT Inc. | Q2 2024 Form 10-Q | 6

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLARS AND SHARES (EXCEPT PER SHARE AMOUNTS) IN MILLIONS, UNLESS OTHERWISE STATED)

NOTE 1

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

ITT Inc. is a diversified manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and energy markets. Unless the context otherwise indicates, references herein to “ITT,” “the Company,” and such words as “we,” “us,” and “our” include ITT Inc. and its subsidiaries. ITT operates through three reportable segments: Motion Technologies (MT), consisting of friction and shock and vibration equipment; Industrial Process (IP), consisting of industrial flow equipment and services; and Connect & Control Technologies (CCT), consisting of electronic connectors, fluid handling, motion control, composite materials and noise and energy absorption products. Financial information for our segments is presented in Note 3, Segment Information.

Business Combination

On January 19, 2024, we completed the acquisition of Svanehøj Group A/S (Svanehøj) for a purchase price of $407.6, net of cash acquired. Subsequent to the acquisition, Svanehøj’s results are reported within our IP segment. Refer to Note 18, Acquisitions and Divestitures, for more information.

Divestiture of Wolverine Business

On July 22, 2024, the Company completed the sale of its Wolverine business to an unrelated third party for approximately $171.

The disposal group met the criteria for classification as held for sale in accordance with Accounting Standards Codification (ASC) 360, “Property, Plant, and Equipment”. Accordingly, we presented the assets and liabilities associated with the disposal group separately as held for sale within our Consolidated Balance Sheet for the period ended June 29, 2024.

The Company evaluates all disposal transactions to determine whether such disposal qualifies as discontinued operations in accordance with ASC 205-20, “Discontinued Operations”. We concluded that the divestiture does not qualify as a discontinued operation.

Refer to Note 18, Acquisitions and Divestitures, for more information.

Basis of Presentation

The unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the SEC and, in the opinion of management, reflect all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions) necessary to state fairly the financial position, results of operations, and cash flows for the periods presented. The Consolidated Condensed Balance Sheet as of December 31, 2023, presented herein, has been derived from our audited balance sheet included in our Annual Report on Form 10-K (2023 Annual Report) for the year ended December 31, 2023, but does not include all disclosures required by accounting principles generally accepted in the United States (GAAP). We consistently applied the accounting policies described in the 2023 Annual Report in preparing these unaudited financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in our 2023 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, revenue recognition, unrecognized tax benefits, deferred tax valuation allowances, projected benefit obligations for postretirement plans, accounting for business combinations, goodwill and other intangible asset impairment testing, environmental liabilities and assets, allowance for credit losses, inventory valuation, and assets held for sale. Actual results could differ from these estimates.

ITT Inc. | Q2 2024 Form 10-Q | 7

ITT’s quarterly financial periods end on the Saturday that is closest to the last day of the calendar quarter, except for the last quarterly period of the fiscal year, which ends on December 31st. ITT’s second quarter for 2024 and 2023 ended on June 29, 2024 and July 1, 2023, respectively.

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2

RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, the Financial Accounting Standards Board (FASB) or other standards setting bodies issue new accounting pronouncements. Updates to the FASB's accounting standards are communicated through issuance of an Accounting Standards Update (ASU). The Company considers the applicability and impact of all ASUs on our business and financial results.

Recently issued accounting pronouncements not yet adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. This ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact that this guidance will have on the disclosures within our financial statements, and will adopt this ASU for the year ending December 31, 2024.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendment also includes other changes to improve the effectiveness of income tax disclosures, including further disaggregation of income taxes paid for individually significant jurisdictions. This ASU is effective for annual periods beginning after December 15, 2024. Adoption of this ASU should be applied on a prospective basis. Early adoption is permitted. We are currently evaluating the impact that this guidance will have on the disclosures within our financial statements, and expect to adopt this ASU for the year ending December 31, 2025.

During 2024, there were no other new accounting standards issued, or that are pending issuance, which are expected to have a material impact on our consolidated condensed financial statements upon adoption.

ITT Inc. | Q2 2024 Form 10-Q | 8

NOTE 3

SEGMENT INFORMATION

The Company’s segments are reported on the same basis used by our Chief Executive Officer, who is also our CODM, for evaluating performance and for allocating resources. Our three reportable segments are referred to as Motion Technologies, Industrial Process, and Connect & Control Technologies.

Motion Technologies manufactures brake components and specialized sealing solutions, shock absorbers and damping technologies primarily for the global automotive and rail transportation markets.

Industrial Process manufactures engineered fluid process equipment serving a diversified mix of customers in global industries such as chemical, energy, mining, and other industrial process markets and is a provider of plant optimization and efficiency solutions and aftermarket services and parts.

Connect & Control Technologies manufactures harsh-environment connector solutions, critical energy absorption, flow control components, and composite materials for the aerospace and defense, general industrial, medical, and energy markets.

Assets of our reportable segments exclude general corporate assets, which principally consist of cash, investments, deferred taxes, and certain property, plant and equipment. These assets are included within Corporate and Other, which is described further below.

Corporate and Other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, including environmental liabilities, that are managed at a corporate level and are not included in segment results when evaluating performance or allocating resources. In addition, Corporate and Other includes research and development-related expenses associated with a subsidiary that does not constitute a reportable segment.

The following table presents our revenue for each segment and reconciles our total segment revenue to total consolidated revenue.


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Motion Technologies	$	384.5	$	368.8	$	776.9	$	733.6
Industrial Process	330.7		293.6		664.6		560.1
Connect & Control Technologies	191.8		172.2		376.9		339.8
Total segment revenue	907.0		834.6		1,818.4		1,633.5
Eliminations	(1.1)		(0.7)		(1.9)		(1.7)
Total consolidated revenue	$	905.9	$	833.9	$	1,816.5	$	1,631.8

The following table presents our operating income for each segment and reconciles our total segment operating income to income from continuing operations before income tax.


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Motion Technologies	$	71.2	$	57.7	$	141.8	$	111.1
Industrial Process	65.8		66.4		129.6		121.7
Connect & Control Technologies	35.4		28.4		68.1		57.8

Total segment operating income	172.4		152.5		339.5		290.6
Other corporate costs	(13.4)		(10.5)		(31.3)		(24.3)



Interest and non-operating expense, net	(5.6)		(2.5)		(10.0)		(6.0)


Income from continuing operations before income tax	$	153.4	$	139.5	$	298.2	$	260.3

ITT Inc. | Q2 2024 Form 10-Q | 9

The following table presents our operating margin for each segment. Segment operating margin is calculated as segment operating income divided by segment revenue.


	Three Months Ended	Six Months Ended
			June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Motion Technologies			18.5	%	15.6	%	18.3	%	15.1	%
Industrial Process			19.9	%	22.6	%	19.5	%	21.7	%
Connect & Control Technologies			18.5	%	16.5	%	18.1	%	17.0	%

The following table presents our total assets, capital expenditures, and depreciation & amortization expense for each segment.


As of and for the Six Months Ended	Total Assets				Capital Expenditures				Depreciation & Amortization
	June 29, 2024		December 31, 2023		June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Motion Technologies	$	1,359.4	$	1,366.6	$	34.4	$	29.9	$	31.3	$	32.3
Industrial Process	1,844.8		1,323.2		10.8		7.1		23.0		11.1
Connect & Control Technologies	820.1		834.6		5.3		8.3		10.4		9.2
Corporate and Other	386.0		408.2		0.4		1.0		1.3		1.2
Total	$	4,410.3	$	3,932.6	$	50.9	$	46.3	$	66.0	$	53.8

NOTE 4

REVENUE

The following tables present our revenue disaggregated by end market.


For the Three Months Ended June 29, 2024	Motion Technologies		Industrial Process		Connect & Control Technologies		Eliminations		Total
Auto and rail	$	375.9	$	—	$	—	$	—	$	375.9
Chemical and industrial pumps	—		230.4		—		—		230.4
Energy	—		100.3		13.1		—		113.4
Aerospace and defense	2.0		—		114.7		—		116.7
General industrial	6.6		—		64.0		(1.1)		69.5
Total	$	384.5	$	330.7	$	191.8	$	(1.1)	$	905.9

For the Six Months Ended June 29, 2024
Auto and rail	$	759.8	$	—	$	—	$	(0.1)	$	759.7
Chemical and industrial pumps	—		449.3		—		—		449.3
Energy	—		215.3		26.5		—		241.8
Aerospace and defense	3.7		—		218.8		—		222.5
General industrial	13.4		—		131.6		(1.8)		143.2
Total	$	776.9	$	664.6	$	376.9	$	(1.9)	$	1,816.5

ITT Inc. | Q2 2024 Form 10-Q | 10


For the Three Months Ended July 1, 2023
Auto and rail	$	360.0	$	—	$	—	$	—	$	360.0
Chemical and industrial pumps	—		226.5		—		—		226.5
Energy	—		67.1		13.9		—		81.0
Aerospace and defense	2.0		—		94.1		—		96.1
General industrial	6.8		—		64.2		(0.7)		70.3
Total	$	368.8	$	293.6	$	172.2	$	(0.7)	$	833.9

For the Six Months Ended July 1, 2023
Auto and rail	$	716.0	$	—	$	—	$	—	$	716.0
Chemical and industrial pumps	—		444.5		—		—		444.5
Energy	—		115.6		24.1		—		139.7
Aerospace and defense	3.9		—		181.0		—		184.9
General industrial	13.7		—		134.7		(1.7)		146.7
Total	$	733.6	$	560.1	$	339.8	$	(1.7)	$	1,631.8

Contract Assets and Liabilities

Contract assets consist of unbilled amounts where revenue recognized exceeds customer billings, net of allowances for credit losses. Contract assets are included in other current assets and other non-current assets in our Consolidated Condensed Balance Sheets. Contract liabilities consist of advance customer payments and billings in excess of revenue recognized. Contract liabilities are included in accrued liabilities and other non-current liabilities in our Consolidated Condensed Balance Sheets.

The following table represents our net contract assets and liabilities.


As of the Period Ended	June 29, 2024		December 31, 2023
Current contract assets	$	47.5	$	25.8
Non-current contract assets	1.5		1.6
Current contract liabilities(a)	(137.1)		(95.9)
Non-current contract liabilities	(4.5)		(4.5)
Net contract liabilities	$	(92.6)	$	(73.0)

(a)The increase in current contract liabilities from December 31, 2023 to June 29, 2024 was primarily driven by the acquisition of Svanehøj. Refer to Note 18, Acquisitions and Divestitures, for further information.

During the three and six months ended June 29, 2024, we recognized revenue of $36.0 and $84.0 related to contract liabilities as of December 31, 2023, respectively. The aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of June 29, 2024 was $1,423.1. Of this amount, we expect to recognize approximately $840 to $860 of revenue during the remainder of 2024.

ITT Inc. | Q2 2024 Form 10-Q | 11

NOTE 5

INCOME TAXES

The following table summarizes our income tax expense and effective tax rate (ETR).


	Three Months Ended						Six Months Ended
	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Income tax expense	$	33.0		$	30.6		$	65.8		$	50.7
Effective tax rate	21.5		%	21.9		%	22.1		%	19.5		%

The decrease in the ETR for the three months ended June 29, 2024 was due to the recognition of a U.S. federal deferred tax asset as part of a prior year acquisition. The increase in the ETR for the six months ended June 29, 2024 was due to prior year benefits of $16.3 from valuation allowance reversals on deferred tax assets in Germany and $4.9 from filing an amended 2017 consolidated federal tax return. These benefits were partially offset by a prior year expense of $14.1 relating to an Italian tax audit settlement covering tax years 2016-2022.

In October 2021, more than 135 countries and jurisdictions agreed to participate in a “two-pillar” international tax approach developed by the Organisation for Economic Co-operation and Development (OECD), which includes establishing a global minimum corporate tax rate of 15 percent. The OECD published Tax Challenges Arising from the Digitalisation of the Economy — Global Anti-Base Erosion Model Rules (Pillar Two) in December 2021 and subsequently issued additional commentary and administrative guidance clarifying several aspects of the model rules. Since the model rules have been released, many countries have now enacted Pillar Two-related laws, some of which became effective January 1, 2024, and it is anticipated that many more will follow suit throughout 2024. As of June 29, 2024, the Company does not expect Pillar Two taxes to have a significant impact on its 2024 financial statements.

The Company operates in various tax jurisdictions and is subject to examination by tax authorities in these jurisdictions. The Company is currently under examination in several jurisdictions including China, Czechia, Germany, India, Italy, and the U.S. The estimated tax liability calculation for unrecognized tax benefits considers uncertainties in the application of complex tax laws and regulations in various tax jurisdictions. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liability for unrecognized tax benefits in foreign and domestic jurisdictions could decrease by approximately $0.5 due to changes in audit status, expiration of statutes of limitations and other events.

NOTE 6

EARNINGS PER SHARE DATA

The following table provides a reconciliation of the data used in the calculation of basic and diluted earnings per share from continuing operations attributable to ITT.


	Three Months Ended		Six Months Ended
	June 29, 2024	July 1, 2023	June 29, 2024	July 1, 2023
Basic weighted average common shares outstanding	82.0	82.4	82.1	82.5
Add: Dilutive impact of outstanding equity awards	0.4	0.2	0.4	0.3
Diluted weighted average common shares outstanding	82.4	82.6	82.5	82.8

Anti-dilutive shares(a)	0.1	0.2	0.1	0.2

(a) Anti-dilutive shares related to equity stock unit awards excluded from the computation of diluted earnings per share.

ITT Inc. | Q2 2024 Form 10-Q | 12

NOTE 7

RECEIVABLES, NET

The following table summarizes our receivables and associated allowance for credit losses.


As of the Period Ended	June 29, 2024		December 31, 2023
Trade accounts receivable	$	679.2	$	641.3
Notes receivable	21.2		25.5
Other	20.0		22.6
Receivables, gross	720.4		689.4
Less: Allowance for credit losses	(14.1)		(14.2)
Receivables, net	$	706.3	$	675.2

The following table displays a rollforward of our total allowance for credit losses.


	June 29, 2024		July 1, 2023
Total allowance for credit losses - January 1	$	14.2	$	12.2

Charges to income	2.2		3.6
Write-offs	(2.2)		(0.4)
Foreign currency and other	(0.1)		0.7
Total allowance for credit losses - ending balance	$	14.1	$	16.1

NOTE 8

INVENTORIES

The following table summarizes our inventories.


As of the Period Ended	June 29, 2024		December 31, 2023
Raw materials	$	354.9	$	366.6
Work in process	112.1		111.8
Finished goods	97.3		97.0
Inventories	$	564.3	$	575.4

Government Assistance (ASU 2021-10)

ASU 2021-10 requires entities to provide information about the nature of transactions, related policies and effect of government grants on an entity’s financial statements. In particular, in Italy, to qualify for an energy subsidy a company must apply for and receive a certificate attesting that the company is an "energy and gas consuming company" (high energy consumption connected to the production cycle). The amount of subsidies granted is calculated based on a percentage of actual consumption, ranging from 25% to 40%. One of our Italian subsidiaries within our MT segment obtained this certificate and was granted energy subsidies from the Italian government beginning in April 2022. This program concluded in the second quarter of 2023. Accordingly, no energy subsidies were granted for the three or six months ended June 29, 2024. For the three and six months ended July 1, 2023, we recognized a benefit of $2.4 and $6.3, respectively, related to energy subsidies, which we recorded within Costs of revenue in our Consolidated Condensed Statements of Operations. There was no other material government assistance received by the Company or any of our subsidiaries during the periods.

ITT Inc. | Q2 2024 Form 10-Q | 13

NOTE 9

OTHER CURRENT AND NON-CURRENT ASSETS

The following table summarizes our other current and non-current assets.


As of the Period Ended	June 29, 2024		December 31, 2023

Advance payments and other prepaid expenses	$	53.0	$	55.3
Current contract assets, net	47.5		25.8
Prepaid income taxes	20.4		16.9

Other	16.4		19.9
Other current assets	$	137.3	$	117.9
Other employee benefit-related assets	$	132.9	$	128.6
Operating lease right-of-use assets	88.5		87.4
Deferred income taxes	75.6		76.0
Equity-method and other investments	47.4		46.6
Environmental-related assets	7.7		6.0
Capitalized software costs	5.7		7.9
Other	25.0		28.5
Other non-current assets	$	382.8	$	381.0

NOTE 10

PLANT, PROPERTY AND EQUIPMENT, NET

The following table summarizes our property, plant, and equipment, net of accumulated depreciation.


	Useful life (in years)	June 29, 2024		December 31, 2023
Machinery and equipment	2 - 10	$	1,270.2	$	1,317.9
Buildings and improvements	5 - 40	296.2		298.4
Furniture, fixtures and office equipment	3 - 7	75.6		83.7
Construction work in progress		82.2		78.1
Land and improvements		25.9		29.5
Other		1.9		1.7
Plant, property and equipment, gross		1,752.0		1,809.3
Less: Accumulated depreciation		(1,208.2)		(1,248.3)
Plant, property and equipment, net		$	543.8	$	561.0

The following table summarizes our depreciation expense.


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Depreciation expense	$	22.0	$	20.4	$	44.3	$	41.1

ITT Inc. | Q2 2024 Form 10-Q | 14

NOTE 11

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following table provides a rollforward of the carrying amount of goodwill by segment.


	Motion Technologies		Industrial Process		Connect & Control Technologies		Total
Goodwill - December 31, 2023	$	292.3	$	403.0	$	321.0	$	1,016.3
Acquired(a)	—		215.4		—		215.4
Adjustments to purchase price allocations	—		—		0.6		0.6
Allocated to assets held for sale	(16.0)		—		—		(16.0)
Foreign exchange translation	(2.0)		(12.6)		(0.8)		(15.4)
Goodwill - June 29, 2024	$	274.3	$	605.8	$	320.8	$	1,200.9

(a) Goodwill acquired for our Industrial Process segment is related to our acquisition of Svanehøj and represents the preliminary calculation of the excess purchase price over the net assets acquired. Refer to Note 18, Acquisitions and Divestitures, for further information.

Other Intangible Assets, Net

The following table summarizes our other intangible assets, net of accumulated amortization.


	June 29, 2024						December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Intangibles		Gross Carrying Amount		Accumulated Amortization		Net Intangibles
Customer relationships	$	245.0	$	(83.7)	$	161.3	$	202.4	$	(138.4)	$	64.0
Proprietary technology	107.0		(20.7)		86.3		61.5		(32.5)		29.0
Patents and other	39.2		(24.3)		14.9		22.0		(17.5)		4.5
Finite-lived intangible total	391.2		(128.7)		262.5		285.9		(188.4)		97.5
Indefinite-lived intangibles	34.4		—		34.4		19.1		—		19.1
Other intangible assets	$	425.6	$	(128.7)	$	296.9	$	305.0	$	(188.4)	$