ITT - Earnings call transcript Q2 2022

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Operator

Welcome to ITT's 2022 Second Quarter Conference Call. Today is Thursday, August 4th, 2022. Today's call is being recorded. [Operator Instructions] It is now my pleasure to turn the floor over to Mark Macaluso Vice President, Investor Relations, you may begin.

Mark Macaluso

Thank you, Chris and good morning. welcome ITT to earnings quarter pleasure call. conference my you second to XXXX It's

call July mix, company certain may uncertainties, release of we risks It be this three. to otherwise Luca Financial forward-looking X, of morning including this information, Executive here ending available and slide our and charges. results XX-K All statements market me not the over press most Joining are measures performance, the These are on our and results that future the otherwise. month certain Luca, Annual this for in three reconciliation statements among disclaims Actual but comments or the of quarter end President; to a remarks pleasure and to will noted, GAAP ITT's my XXXX on tax present which we the period and XXXX in forward-looking compared Emmanuel and limited our will on recent results for effects detailed of call performance Russia, related the whether the website. of are Officer is are new to Savi future morning and to of will ITT Today's other announced expectations. to who on obligation Form Caprais XXXX items, measures. Except COVID current are may the certain to Today's Chief XX Officer. in of strategic vary both and second These business cover financial a based including under priorities, on and guarantee Chief quarter quarter are conditions are first turn items filings. which relating any in morning. begin any contain subject SEC figures to charges expressly management's statements is Report as factors ITT. result in materially restructuring, a financial asbestos-related update such in other the to ITT's now events or due second described on non-recurring and non-GAAP adjustments events comparable not quarter items, along not with and acquisition-related non-operating, presentation, a based adjusted operations results and exclude the charge suspension to,

Luca Savi

ITT, by in at believe China. you Thank you, topic, minutes, in made and good Mark, I for thanking shareholders, difference as firmly would and customers when few our their our ITT. people to our people, do, I I mean talk investment in this like visit and support a morning. of that the begin our ITTers and on I what always about show I resilience our a will continued I

I'm QX Let's are with we very results that pleased environment considering now the this operating today. discuss ITT's challenging quarter, results. the in

we our we this and in resilience in demonstrated team announced Our demand our where and as electrified generation future XX% services platforms. evidence Demand the And XX% vehicle business organically. want organic growth. targets, Control Collectively, that long-term IP In chemical orders this new the outperformance XX% the remains again verticals Connect grew confident orders ITT's products by and aerospace in be potential XX ITT's this XXXX of orders in saw grew our Day. short-cycle I once quarter. organically. Continue businesses and strong. growth financial in our Investor where defense, friction We strength industrial for where to drove and and

and businesses. XXX and pricing sequentially disruptions XX year expanded aided IP adjusted XXX while the in by points profitability, prior grew margin coinciding organic CCT was grew volume COVID. sequentially. both On basis XXX of strength points of our across with basis year China reemergence the revenue the On we This XX% and versus points this despite prior demand basis margin points versus basis by

We should to fourth in in especially, are quarter. up which are begin signs commodity MT's results, that slowing show inflation also pressures the seeing

Process the terms several In the the on IP and was Seneca Emmanuel orders in the site profitability of performance driving and highlight. exceptional I quarter together results Industrial demand. spend showed days Falls, with team.

is quarter a team's especially North share gains, moment the the XXXX this in to were short discuss highest the since Let's in achievements. America. cycle orders IP's coming growth and take from

growth to that for upwards ago of We in into where orders now won only wins. project orders, including are large seeing beginning translate are engineering years two LNG, we strategically

pumps We baseline benefit are second will that also on capturing aftermarket results. and price half

benefits in cost go Seneca Falls, competitiveness Our while IT. generating significant to of announced long-term of sites. and for initiatives Earlier have year, closure after and we in at the Seneca Falls tough other also more key is this we this foundry the is the IP decision, here leading a

to quarter. Habonim and he off a strong will a earnings you and contributing this as is sales growth already from perspective ITT's Lastly, hear to margin is start

Pricing, all strong the that per long sequential list Dave IP a adjusted in team IP and well love and and volume Process, overcome. contribution an on quarter macro the had Back share adjusted a done we earnings productivity and highest Senior despite VP of acquisition of QX Industrial delivered pump. to we in year-over-year to of increase call this a ITT, Steblein, you. record. drove growth, headwinds As of result David thank margin these, there To was

in half in X% as well a investing Regarding our action coupled continue enabled We to year-to-date XXXX solid first growth divest rationalizations fund in IP. footprint MT to us business. capital liabilities, expenditures deployed in asbestos to sales XXXX over the capital deployment, our of to as of and results the legacy with the

we manufacturing commitment. acquisitions QX $XX $XXX in ITT million XX% composite CRP. first raising are expand we a to we in, full XD guidance in also science. we of large and adjusted Because and All the June, minority third to XXX sales investment ITT developing of reinforced industry times Venture performance, new we new ITT our momentum our the a for and In year the and and first pricing repurchased the we to especially the bringing an X.X XXXX. leader million midpoint. Additionally, over are range our in over range CRP of shares towards ITT solid accumulated, we have XX% CCT, executing prior with EPS or investments. maintaining stakes our guidance backlog million of to organic $XXX to of deployed tightening half year-to-date deployed million and enabled closed $XXX XXX total performance Venture's at half printing our of materials In IP in material our and we its position original over capture roughly is are

moving China. the next I Before wanted to touch slide, situation to the in on

XXX manufacturing bags team on soap to team situation ordered down about directly Overnight by In both and to production further life ground join supply enable to the uncertainty operate of in other were essential WUXI take meals. COVID as China teams In spread the tell story. beginning our entirely WUXI the demand, essential time on full total, WUXI of want market. the to the as headwinds, in decides lockdowns of in sleeping large differentiates us China the in QX compound the mandatory the a OE and prepare performance be and maintaining Which Companies ITT during the and shut to in As hit in house in there country. perform side. continue was production July which to you volunteered drove customers. team are and Despite and All amazing significant water, side sell QX, these purchase were decided that allowed serve at outside they for the the nearly and our on-time as an employees staff R&D order was feat. well impacted weeks, a delivery entire quality team variance the our to two put the demonstrated volumes cities, know, WUXI XX,XXX you their now off, across and were volatility customer continuing the at by moment plant. XX-X to This to effort. the approximately to to deteriorated items

team and well-being. safety XX In to and staff nearly in-direct everyone's actions volunteered the [indiscernible] our effort. leaders join addition, preserve took to several

production Let and some games plus PCR highlights. to me other social the share nights. replace morale. for on The exercise, XXX shop maintain workers test All employees dinners every leaders had and We to team cooked some activities day.

operation region such a what and team to send and media and support team world-class there came our mate, on was with out the quality. celebrities the WUXI Locally, and Finally, being words WUXI to feat. all maintained in ultimately at of cases WUXI. learn other story both delivery was and The part covered say these, Zero government became COVID on they viral Through side XXX% officials wish newspapers videos amazing companies of of our WeChat. China by team to encouragement and the TikTok pulled time how deemed and were in in ITT us went

ITT To Our and I everyone among is say of and the challenge that embrace are employees statement. the team at WUXI delivered. proudly proud

you a may display work and cannot employees true all. I have team is thank sacrifices never you it values WUXI to Our before. core we with seen ITT enough, honor

Day. Investor investors hosted to leadership creation. a event few consisted consistent Let's first reiterate presentations want five for innovators demonstrations with ITT the with Day we by analysts and targets Capital recap long-term to engineers interactive the growth XXXX of its today. from are value issued June. key technology ITT's There financial and now slide continued that our I takeaways and and in Markets The event turn to team, the

and First defense, ITT including industrial and commercial and has and vehicles. rail in market-leading positions end chemical aerospace attractive pumps, markets electric growing

or at at in three center and pad, that highlighted innovation we And technology everything together through Worship. we the everything display Innovation customer pillars, embedded who as demonstrated our smart full on motor Execution differentiation Second, our as a Industrial execution, we for keeps process the CCT's drive glue in is how team by with well our EMD offering as fair ITT including the of was the our in do. program. starts culture, sustain culture. demonstrations the

capacity. Fourth, ton have and initiatives expected of we would to generation deploy. earlier our report regarding billion making our ESG, this and progress flow EEO $X a year. leverage we on reduction capital first emissions based we're our published Third, one with cash Upwards of

hard long-term financial work issued to target our of Investor ITT a deliver. we Finally capital deployment, The which element Day. key

XXXX. our now progress Let's in continued discuss

Following about accelerating capital deployment. divestiture last liabilities of asbestos our we pace the legacy year spoke

to and our in additive and CRP, First Habonim we to Pioneer. of acquisition announced materialize. see today an June, we have started in QX, these forward announced In investment manufacturing

minimize to new automotive system, dust company we technology accelerate green the for emissions solutions in will fine development braking Second, a of in invested breakthrough Rotocoating that the industry.

line Third, in we Automation, line is Industrial closed factory applications quarter. product product to complementary the safety high more the verticals. and CCT's second and absorption for offering workplace e-commerce automation The energy is serve acquired cycle in which

continued line production new friction. invest growth capacity There convert support awards to our vehicles EV revenue. to in gains CapEx for we We into in electrified share

to-date, share pace With the electrified by count OE global to date, on of X%. ITT finally, are And we all vehicle nearly with repurchased reduce will XXXX. full-year of which wins our $XXX volume million we by XX% shares share

we are are that outpacing all growth of marketplace summarize the our rate the in this quarter and peers. to So, winning

route driving pricing the a continuing We productivity and shifting on more portfolio and we we expand are are through are grow Habonim offsetting with inflation paradigm capital the We're our in to in to our and ESG deploying inorganically plans cost on organically both margin, as to becoming auto. journey ITT. sustainable our pricing

to turn let Now detail. our outlook Emmanuel the and call discuss results me over in to

Emmanuel Caprais

Thank good Luca, and morning. you,

organic X% to demand CCT the after in our the with quarter in charge. XX% all We continued first We drove strong again businesses. leading see growth sales

quarter is Demand and we As we approached perspective. across continues CCT revenue defense short XX% aerospace and a a strong, organic in both driving and to growth. IP connectors be anticipated great and from a growth this cycle margin in components performance

grew quarter. this organically are projects share We where also orders XX% gaining in

to All the increase by continues funnel continued up to moving of In XX% driven FID QX. this projects in similar X% IP momentum drove aftermarket in orders stage. increase the MT, us to with Friction at organically larger and dollar the multimillion was

realization negotiations complete X% organically the relentless business The customers ship ongoing driving team in MT with up almost time. price has OE was with shortage. friction despite our at been Our partnership this the customers in in are and

disruptions with We Adjusted basis Habonim. top growth saw the to points growth most supply XXX also cost points points impact the We pronounced XXX chain over ongoing from an us in CCT approximately was impact IP. and quarter. segment margin estimate this line roughly basis quarter with reported line saw of basis that margin revenue XXX XX in from basis in sales flat points. income higher and last businesses. and in Adjusted operating pricing was benefits XX.X% declining all IP expectations with operating volumes We our productivity

from the impact year-over-year China However, strategic the you inflation. points by to slide higher to From free on XXX of tax interest FX roughly basis teams Floor delivered despite our in see roughly on productivity points On euro benefit The weigh and cash, $X.XX. of and cost pricing XXX to significant and a as will the requirements were from volume rates actions of actions. Sourcing headwind Ukraine. continue a outweighed repurchases, hedging chain XX of estimated share expense perspective, and netted drive through sequentially The basis, a war an an basis combination cash benefit. inflation, and impacts from Further our capital Shop adjusted point $X.XX increased XXX lockdowns generation. basis working productivity on flow disruptions, earnings cost a EPS higher supply

are delivery sequentially Improved investing we're we inventory first the ensure below to QX, are Cash secure from still to in through half. but difficult our this purposefully in customers We expectations able our time. to

continue half. the this However, to should performance in improve second

make protect ITT green today from sustainable and efficiency $X company. scarcity energy and have million projects committed more for inflation Additionally, will renewable a and projects. energy we These us

Finally, foreign generation. want at make impacted look the currency earnings And now further performance. points on key, a to our translation flow slide. cash it's I negatively just few this

volume pricing businesses. on strong productivity First, we by building now are and XXXX, IP and this was across drive our and performance. to growth, MT capture MT's continue CCT led In

orders made friction secured our almost benefits pricing of to in are we Today we more the help customers drove lagging this realized which to On in These we inflation. on driving MT. are will for impact-fully We still supply productivity a and what is ton expect deliver lagging customers deliver creation anticipated. benefits lingering we efforts contemplated second actions contributed through growth and of in labor to and decision quarter was pricing drive strategic lock completed. total pressures overcome long-term. in prominently us In our our of $X.XX in volume negotiations are due time. growth The most ensure to And in productivity $X.XX. foreign second and slowing to to previous realization while the material, year seeing The flow in in will amount will IP, agreement earnings progress QX. pace and QX which currency is not which steel, the the earlier in copper of We value are our OE zinc the of below will fourth we're a with headwinds, half, overhead in the half. we the total inflation ladder and improvements initially already seeing The commodity of of $X.XX begin outlook. of in pricing, the could

know you in our Ukraine. the Russia, in QX As majority suspended we given war the operations of in

EPS supply or equates in us that are well approximate the million In revenue earnings. auto XXXX, $XX We this from in to by impact $X.XX continued IP mainly expect headwind impacts as approximately an MT quarter. into $X.XX as sell impacts indirect OEM cost This approximately will seeing we customers to and which to direct second cents Russia. of

strong to contributing Habonim of acquisition the earnings, is start. Our given already

EBITDA XX strategic strength times further adjusted the purchase As that decline and for effective multiple continue to demonstrating of less the deal. rationale than the should continues,

of for throughout Finally, game value formulations. brake pumps as product that pad we at our done This drive XXXX changing groundbreaking have our ramp value display to further of engineering Day. generation strategic is XXXX This up all Investor and analysis investment and capital. use best we continued of technology next was fund redesign the to on the will the

the result. review to Slide segment turn X Let's to

outstanding lockdowns Technologies. that volatility Motion in supply to alluded Luca with begin effectively maintain disruptions, managing Friction global and OE me China, Auto earlier. delivery on-time Let chain production the its the quality performance and

the strong adjusted of in continued new made than progress We the quarter second improve commitments product was price mainly performance customers, this chain trough we for partially categories, We greater for from the the OE saw MT's significant was project short the offset and given most which quarter disruptions consecutive level half. most pace constraints Its see despite and by order Xth labor inflation. On MT cycle segment actions. that We quarter continued vehicle margin aftermarket here. hamper the demand at orders. XXX XXXX. will exceptional. to of industry. and and enhanced securing both cycle productivity We begin the in saw higher also should this IP's was strength profitability basis across results MT short in quarter order believe points, supply low pricing to highest realize since from This benefits of sale. expected a and in growth Industrial was material sequential declined resulting growth This

impressive backlog sequential organic start year. prior is a margin in and since basis and Our after the a X.XX up XX% improved IP's was a book-to-bill on QX. an slow year-over-year both

in profitability segment captured execution at to impact inflation. including IP's purchase after and pricing XX% to of the We adjusted amortization. margin accretive benefit are The we're manufacturing improving IP's result the seeing even Habonim QX. incremental was offset price margin was throughput and of the Furthermore,

stemming strong verticals, driven. defense the by and over revenue growth sales this well shop in expanded CCT revenue driven industrial up as On recovery another drove the continued quarter volume Connect distribution. continued growth margin in impressive face we the and was orders in productivity. commercial while organically to an on was as across inflationary Notably components Control higher XXX delivered connectors, primarily aerospace over continued saw of increment margin we Distribution points Lastly CCT's from aerospace, of more the and XX% XX% quarter. XX% headwinds. basis floor and

in guidance. first backlog XX% demand CCT XX raising our and strong our discuss updated Let's growth to to slide now are turn outlook financial our we growth strong relating. sales and the are to given XX%, performance, to we pricing the organic half IP Today and

is of approximately currency total Our X% foreign headwinds growth points. by and impacted revenue

and our at productivity. Nevertheless, low end and offset strong We saw we continue are margin QX. in maintaining sequential continued headwinds inflation is of and through and adjusted IP pricing segment margin year-over-year which from QX in stemming and expect will be likely we CCT will working range. the to the are cost This we that improvements

should full and Industrial the above CCT's and chain For XX%. Process ongoing margin above year, supply overcoming margin expand will XX% disruptions

MT's in foreign I currency We stronger the the to to continue and margin of through likely inflation overcoming earnings expect doing we're the discussed, we count CCT, points margin and lower XXX what to cost addition higher and sales end Russia. the decline are full around including QX share To basis Habonim. close this lockdowns, headwinds in pricing, better the year. recap will for lost XX%

full-year confidence to prior in $X.XX of This have We to us expect $X.XX pricing and in commodity growth we slow adjusted or tighter firmed benefits is for QX EPS reflected the up greater which outlook. versus of year. our for remainder our the gives XXXX, of pressures XX% X% range achieving will in

to flow the X% and XX% XX%. will free will $XXX term, be margin Lastly, we expect will to to free path cash approximately we to margin million free improve our cash expect flow of XX%. that million cash target flow this on to Longer continue $XXX be

recover. growth Thanks quarter, will range. volumes benefits where Looking organic to and MT, the growth CCT, as up QX be to low in XX% China the lesser pricing ramp a the third revenue in in should and materialize is sequentially degree approach at expected sales in to teens we

the segment IP organic with QX. in led by to an CCT. QX around range increase with up XX% We expect ITT's expansion will high-teen QX adjusted improve and margin margin in IP step sequentially in to sales additional

up. This We to expect to let the adjusted MT pass me easing firming EPS our will in year-over-year. With margins cost. roughly growth given Luca benefits drive and it from QX, that, back QX inflect of XX% to commodity of pricing wrap

Luca Savi

Thanks, Emmanuel.

into points. recap I want jumping key Q&A to few a Before

the portfolio XXXX. robust to ability a by pricing. across team's encouraged by the performance, that XXXX and are demand and built to Thanks our for On we ITT growth in customers We all runway our in the deliver provide outperform businesses. backlog strong for and our this

actions are friction. in with Our strength ramping particular

that We growth we IP of have to OE the our begin agreements visibility reached half over And with good progress provide majority profitable long term. to we which making XXXX. the second at of significant the accelerate and in customers are CCT,

the un-weathering replicate executing to on we at MT in while improvement deployment are remains, daily continuous Our improve success business. our the continuing segments. we all And elements plan, and our working finally, of to invest focus operations two our are in capital

As morning ever, this we happily my you open for now. questions it with pleasure Please take been will line the all speaking Q&A. your and has

Operator

Mike [Operator first comes question Baird. Instructions] Halloran Our with from

open. line Your is

Mike Halloran

you guys you're gave the at auto So great and context looking market. how Luca

more always line conservative been little than there. So the trend a we've bit

a there talk color it for would could for this see year? how what cadence bit means ITT recovery of the could you year, end Obviously be look give means you you markets maybe what next those So differentiation versus but little great. it what any going, like,

Luca Savi

Sure.

in XXXX in in was So about was after the that the North if Different market QX seeing a growth you expect growth -- resilient in flat flat is outperformed Mike, in America. down. vehicle QX produced. have XX done different China the year-over-year let flattish Europe, market. last was QX picture double-digit positive this for market years. probably for to quite But X% at talking to at really actually we specifically that And projection reasons We're XX the the interesting looking me also XX.Xmillion year. outperform What the -- like China for that A region regions, slightly in the start and year ITT of and in saying look we the market market are XX, we're of X.X% the to we

for to the in the and also Still, of the If the government you happened April not the QX year think market, resilience full May, what's has of incentive Thanks particularly there. changed. focus the

Let me reiterate the also continuous outperformance.

If to projected keep you look to in the market ITT return probably maybe that was on happening.\ XXXX passed at sort pre-COVID pre-COVID so in will XXXX, keep level level is of XXXX, will on that outperformance

Mike Halloran

markets you're share just pricing obviously the and new going coming there, concerning appreciate and Really things, Maybe with projects Thanks. log playing some there secondarily, the these two in getting competitively of the of then marketplace on Obviously, on key follow-up would start that backlog visibility side with good competitive about right you're I'm are IP dynamics the the the forward. conversations pressures color, anything be, the and things. really clients talk grant. some curious front seeing as of one, now and

Luca Savi

Asia look Particularly, Europe, comes we area this are in can pricing, funnel, Then you deliver of orders no don't and as opportunities. strength good in we that particularly the Middle at Sure. When what probably Latin is trends to in terms do in in very not see see we the general where in we're America, when you terms North in do must. Mike, markets we margins pricing pricing looking market delivering orders, orders about industrial. chemical, see are see the in of particularly the of you're all funnel and in key you oil discipline, discipline that see We of Mike, And you're the know projects. when that is is the the today. terms there we Probably, that gas, is as that strength across funnel price and geographically, America the talking in if it about East. you a the the in have flow, Where we talking see way that Pacific, a not well that.

on So not front, and I we keep will executing this on change. simply

Operator

KeyBanc. The next Jeff with question from is Hammond

line Your is open.

Jeff Hammond

XQ. are questions cost XQ snap In half, then So should or connected, back? XQ gap think just in and in that maybe these second in just back just and at to XQ to how MT levels price the $X.XX think was cost And similarly look bounce we in and to margin we gap got how $X.XX into the trajectory do price your kind XQ trying of about but XQ

Emmanuel Caprais

yes, right. you're heavily, by cost price So, were were heavily We margins gap. our the impacted

when discussed is seeing picture. I on negotiations we and think that We're QX is, the, seeing that's better MT we're QX. as moving all closing much We're a into price finally and with our while was this relationship business auto term a with that long think we growing wanted especially everything maintain I customers. And healthy we get compromise, them. didn't good to

And it's lot in so, are we that impact lot And driving pricing remains seeing from a we is in for and opportunities position a QX strong also impact sales mentioned into standpoint. a so QX in CCT, and orders price all price as IP nice a be standpoint. that of a will-should IP a advanced, MT cost from then there of, convert little less CCT the commodities is but price going to a will better a lessen about And QX.

and So I QX to be be very what on impact for going look little think is going seen a in QX. cost the that when probably change negative we're to you at no compared half, impact, positive so flat, we've second big par which price to

Jeff Hammond

was recall But performance And in supply great. in IP. then, of great issues there XQ, Okay, a with chain. lot I

have I in the guide. half think you into still shown seem mentioned results or supply chain being doesn't a But problem through in it the second to IP.

think we just kind or chain should of So, you them some are how just supply challenges Thanks. of you and about seeing some overcoming are improvement. elsewhere the

Luca Savi

slightly. is On improving The Jeff. short it is, Thanks, chain. answer supply

share some some data let you color. So me give and

at in QX, look supply from impact basis between points basis chain is QX you basis was points. XXX the XXX If revenue and roughly In XXX QX points.

that data improvement. is obviously Most in a actually the that of So was shows IP.

lead times little. the have probably But Now bottlenecks as remaining. also there reduced commodities still a you give the some have and colors, are going to reduced know, slightly

So time still above when lead back electronic those motors, the paint to about are supplier electric raisings, quite are we pre-pandemic talk lead still they times, bottlenecks. plastic, And have components slightly, level. they reduced going or why

are we on in on are improve plant. more control the focusing what is in the and and looking are the production what internal velocity we which So, bottlenecks, the line really

Operator

is with Nathan next from question The Jones Stifel.

open. is line Your

Adam Farley

Farley Hi, This morning. Nathan. is good Adam for on

in this of of likelihood talk of automation some customers and been there's Europe the production the your ramp half, what view saying? is in So are second what

Emmanuel Caprais

Adam, out it? of in mind question, Please. you cut would you part first the your repeating

Adam Farley

Yes.

of So an what there's customers in of talk view saying. been production ramp of second automotive are likelihood what and In this half, is the your the Europe, some

Luca Savi

Okay.

So, for chip, seeing the positive. supply we situation know, about you slightly But about, easing really we know at full for really talking are chain production changed, are has talking the we when the are shortage. you look better the in customers and challenges is dramatically not the forecast at Europe undergone chip that year

but there growth know know, So, is see low low single-digit growth. there, but still This We on you still, forecast front, book is is good for order the Europe. that Europe. single-digit outperformance we for our

year. full the For

Adam Farley

robust, for you and And Okay, orders, IP and strong especially to just that. Overall, the really turning in then thank CCT.

in of Thanks. on also if the what provide July can was you and quarter the any business? cadence color So each orders through

Emmanuel Caprais

Sure.

which month a seen in even, the quarter. the was in of seen we've what was for cadence from pretty that we from during the of due the first was the not was orders there numbers every IT, July And -- were in accumulated out quarter in June. we've really But what really June pre-even different lot in projects there in was strength it strong across month QX project, So had growth two board a month which and and orders in is pretty overall was QX. of in no good phase to the the

the not what July are it's would CCT, that of different QX. same and terms say thing In from seen we've orders that also I in

a the lot of the and of July. moment in like like doesn't ground QX in much strength the end looks there's year. cover there to for it So before different it for continued is But the moment the look

number very and attentive the that, to So says about to we it market. what order that remain

Luca Savi

if we thing particularly leveling future swap also, expect short to expect you the And of for look like probably the more we today have XX Adam, momentum usually projects, be. it that project the gaining more in backlog eventually where at expect, be is comes cycle cycle to XX% short IP that IP, is is projects when our we short will cycle it this One and that that off. XX should backlog would to XX

Operator

Citigroup. with Bystricky Vlad from is question next The

line open. Your is

Vlad Bystricky

guys, my for Good thanks taking question here. morning,

the much short is So out to just how seeing? XX% IP end you -- when for going cycle demand about, Can that that on should we talk up how quarter, comments and see of orders about maybe channel inventory any think field the following versus might market we in you actual be stocking

Emmanuel Caprais

Sure.

mentioned, is of not customers. don't for that's increase moment were for inventory distributors, inventory type of are a going our moment, So inventory. their Luca in business of those reported order But type really I short monitor we which the see don't any we, we the anywhere, strong cycle think are as the is buildup growth any Well, lot our numbers. really at

expect over leveling sustain as we so level cycle this we'll so And said. see short orders that cannot and of off a time Luca

the that we, are highlight to want is pricing important think I because I that thing one benefits. I here is pricing we very encouraged well, that, think by

at in differentiation the We lot beginning bring I renewed products our on a to is I our journey that to cycle the compared from is we going and that the benefit with to the I only have approach really think a focus of seen flow that are short-cycle pricing IP, we short peers. think in think going

Vlad Bystricky

color, helpful shifting share so, it. been. really that's just the share allocation, into leaning Okay, repurchases appreciate And you've where obviously been price here has maybe then given more capital to

versus talk to about So also for macro appetite of And maybe just larger I obviously lean sheet then health share your balance there. the given concerns out the repurchases, thoughts scale where given can you on guess continuing similarly, M&A, share into just the some prices.

Luca Savi

it the money inorganic the being returns. it comes priority in are less have these when CCT. has same, in These investment, best Vlad changed. seen the where are capital goes investments have we Technologies not The So or all we IP Motion to the deployment risky first and this being

going XX% goes first money and the where growth CapEx is this of productivity. really that and So into is

all and you And M&A capital share like than to When them. all continued XXX And a in is are we already very good dividend the these do. we'll or comes and range. use deploy goes there revenue. $XX of acquisitions first where or a half to then the few between and a funnel WECODUR it is In acquisition have and the the this money And course, to this there opportunity of there. be Second in be million is is And this opportunities that of that that in great of of the three ventures in bulk Habonim. have opportunities business, it that already applied of seen have $XXX is we adjacencies million year to with to M&A today this are bulk That is CRP, to what of that, second. is are story might the our course anything the of larger million ready and opportunities Cuts repurchases. of good works but accretive the

Operator

from is next The with Damian Karas question UBS. the

open. Your line is

Damian Karas

WUXI. Congrats on hard morning. Good accomplishments work and the on

Luca Savi

Thank you, Damian

Damian Karas

on mean, help demand, from at a high much IP it So how rates CCT, of just and those us every in talk single-digit, double-digit a us robust that unpack I When unpack follow-up versus inflationary bit. you we price just question order on maybe orders. is The price. effects kind help underlying order low rest relates on just could to unit at look as

Emmanuel Caprais

Sure.

through of in the the growth So, IP volume. majority is

we is baseline the into still on driven We And and this here are the cycle seeing backlog, moment, pumps building our is talking of short the so, I'm pricing parts. for but growth the mainly spare specifically by volume. majority the

CCT exception would say where of of may also would bit CCT, from less volume flattish a that because we over gets little a is what is majority us terms say the that advance type only is I large it industrial and volume In will, pricing are standpoint. connectors be pricing. seeing is The

Damian Karas

And expectations your lucky guide investors the into going a lot guess -low about your to end all even just Okay. XXX be the of thinking helpful. I EPS there quarter, you'd I out markets. That's considering from were issues hit of think, concerned the exogenous

about is this would hitting guidance, thinking Just you guidance where the say the that not of year? biggest updated risk

Emmanuel Caprais

demand seen the type some disruption biggest risks, we've backlog have in external say probably QX IP we CCT. with is the really to of an would in The for risk and like lockdowns. I China rest strong

in above was organically volumes, up We million to have you've was CCT and above as proven that seen also. QX, roughly XX QX, million the XX we're IP able ramp QX then

So we been our these additional through we've costs a how products from being all to cost know control expenses. tightening our And through and flow and very attentive facilities. then to

I So the to external is say potential downside the me, impact would to due or mainly factors.

Luca Savi

team the job the did Damian, And quarter. in amazing an

being execution and been that the reiterated the backlog, remarks the many face the actually If the the been all the piece headwinds prepared about the you been shop together, Emmanuel in have we to had on of floor WUXI. puzzle think coming pricing, that

we is and really reason the So, this tightened range. the why

things know, coming You together. are

Operator

Joe is Giordano question from Cowen. with next The

line Your is open.

Joe Giordano

Yes, little a a asked question maybe just I that, on had differently. similar

you And on here. worse. guidance incrementally, was Day now end qualitatively, Investor that a So I based little guess, getting at bit I lower And it statement towards were talking like you part the guys like had think quarter last when then, a major point raising the did guidance. is the bullet the low of the sound just

in of today? commentary between So curious of anything Investor kind just your changed mind I'm Day actually and

Emmanuel Caprais

so volatile our very out there. is you'll seeing we're what this appreciate us that think think So that's, impacting on I for I visibility the environment and is

for all really so and and were were especially And appropriately of advantage that been think pricing, in execution we you've I terms pricing at execution got June on-time seeing we've think And May feel that driving or cautious performance same going now same our in businesses. that so parallel focus the making our we've was QX after, of terms is going versus when then out almost April some and now commodities our progress on done. that really the which that so in we're within I time strong May, done --we about you more improving less in price quality MT, we saw think description performance, that biggest there of And think we the seen down in sure and April in versus at I we and were what confident this that we all segments. take to the more we of in and delivery

Luca Savi

you And Joe, volatility. about if think

WUXI, down here example, mean, the Just are coming Independence an to you these of to the give their together you said Xth I the so pieces an that is and amazing you're volatility where idea describing that before, you have we shutting US you're and just nicely companies as But celebrating gives far. team deal feed with. were you I so are Day on July putting the with on in call know

Joe Giordano

business. on about Again know I lot I appreciate a that. orders, talked we've

your I some just are of think inflation. numbers it's just become or because and price challenging and to, is on the hard comparison the weird year

see see that I'm dollar the care you in If or do its we like progression MT sequential from about XQ were strip unless still of just How per that's that? because orders here. and about if per thinking level, it a going do kind I much. animal, Orders IP year-on-year get think a it to out think you don't unlike terms going the day about How from about if is basis CCT but we day that. dollar you up. own so about something think

Luca Savi

those that in the the So, if year. you the talked So sequential in when But really what So the stronger you up also a short and good order I half different to connector, see the at I either off IP, for IP. indicator, well we valves orders manner a in aerospace of would a as markets. showed sequentially. is short-cycle every tops, of and some some very we and are some look, We also sequentially. week, from Joe mainly or QX strong those at to Did so, expect those was expect level depending and exactly was numbers That talking these very question. in the we QX different are in sign. short-cycle on in say, answer But project very connectors second service, cycle some you and we in saying. good the baseline that about, is coming little of compensating I components are quarter a strong Was actually, would the bit industrial day are that your say, every for picture, you was example, and weakness look as the Joe, defense which looking there about a -- come

Operator

The next Andrew from question America. Bank is of with Obin

open. line Your is

Sabrina Abrams

Abrams Sabrina Hi, you you are How for on guys? Obin. have Andrew

Emmanuel Caprais

Good Sabrina. morning,

Sabrina Abrams

How a working much of you issue. of golden just think the you the you times balance when and capital own your with please, normalized lead sort start Can when is do talk, think structure normalize? sheet issue line about levels inventory potential of how Bulwark down sort to the about on of do the of screw fact and dealing

Emmanuel Caprais

Yes.

you been one. half working for Working issue a and use us. see the capital is a has huge of large cash capital in So, first really

would part and collecting it's screw, more to like a I And I say something to we that in of half. think the large collecting I good on is haven't than description. be some it then we little dues agreed our AR that by going pricing to inventory. past are is a now, right that your golden description a collected yet the million think function the the reduce and And capital working roughly second going XXX this we and of so have targeting be And of of bit

finished to and the missing we we're because our time dock give making our saying, And or us terms not XX% I the sure the of is velocity going supply improve lot in some same these a chain missing and are, have leaving that's, projects second was factories. we're casting in we motor, this a we're capital. improved at We so our so through a on working Luca and that that focusing half-finished think half as the are, of significant benefits

Sabrina Abrams

gas Great, related how Russian about getting the disruptions European the to for potential fall/winter? business are in thinking And you thank you. ready

Emmanuel Caprais

Okay.

two short-term things everywhere are we're the in globally. that the board we're in Things there and we that doing. So, short term are doing across the

attention on paying electrical to heavily the, consumption we energy and reduce is are order energy in are the our then of are our We that investing with consumption. the really really And to business in renewables. medium working we over long-term

have the are committed first of we second the going facilities those that globally. And projects quarter come between projects, $X mentioned I So, to our million renewable online in solar of half and projects, XXXX.

own And produce so project solar that of for typical as energy help a that needed in when the produce our result, consumption panel, a portion, significant for external XX% instance like the in-house. we we're really to the energy should energy of reduce and going XX% to facilities our us between this

those terms we So term. help out medium this to energy in our is think consumption. projects we're us the And rolling for of going

Operator

Our with from Matt D.A. is final Davidson. Summerville question

Your line open. is

Matt Summerville

will taken be future to raw But MT. pass have look what is you priced coverage how the contract up on might fully this a would structure looking about cost inflation, the inflation or may questions material on actually previously ratio coverage than is there like anything different then different the when structurally of you've contracts be is new forward. in and MT follow What look that then able actions and will complete Couple like. all Thanks. And these the process in negotiation

Luca Savi

Thanks, Matt. Okay.

obtain of equation, has price. proud you the be able etcetera. result look team of shift the price at the has and very been entire because I'm said costs the auto inflationary of paradigm been team in price at price we the by able look including First that all, if giving we that done energy, to the to cost When

cover to able not still are everything. We

as up be you going the again is the hit, you table they be it it if So, going Better inflation. of for also the, you would negotiation it look shared and the picture, trying material the in only we being the then to the get a at be When will direction. the we've to coal other XXXX at then side advantage. to be cost -- to once is forward, on on team the you look in when side. just share as moving other will pain, our negotiation, when move But look to

the opportunity timely man will come this for probably side, the of be will an months. we than next will present more And would these a positive as this So I other is always XXmonths,XX us. out think described, and in But that one. thing a

Matt Summerville

be are a Got of MT, you wins mentioned what it. that rate suggests. that EV thinking tracking And late. that think the forth then how new platform with as forward, just quarter. Sticking you kind is to as XX And I we Analyst about of in set Thank the How you. laid should Day win plan follow-up. you your at

Luca Savi

Sure. Thanks, Matt.

platform. of are electrified these First all,

So you're talking and EV about both hybrid.

customers in electrified mean quarter And new the like these these, part give examples, you Tesla. XX is massive. So of if are I BYD a or platforms some

global very than share market win good in our are rate our these ability successful. is So awards five higher considerably all platforms today. With

than And combustion so XXXX like XXXX, electrified higher in internal market be share in in already will our engine. platforms

remarks, the market out on share us Day XX% thing we to a the other is in the that during path Investor perfectly to and we there. is we that the this that get for aligned are and good discussed So, that prepared set

Operator

Please does day. teleconference. at wonderful you. a time lines conclude have and Thank This disconnect this your today's

ITT (ITT) 7 Aug 222022 Q2 Earnings call transcript