Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the ITT's 2023 First Quarter Conference Call. Today is Thursday, May 4, 2023. Today's call is being recorded and will be available for a replay beginning at 12 p.m. ET [Operator Instructions].

It's now my pleasure to turn the floor over to Mark Macaluso, Vice President, Investor Relations and Global Communications.

begin. may You

Mark Macaluso

and Elliot, Thank good you, morning.

for here ITT's Savi, me Officer. XXXX, call financial which are April this period Caprais, Luca Executive Officer Today's results ITT's cover morning we Chief will three and X, Financial month ending Joining Chief this the morning. President; announced Emmanuel and

first The differ note quarter non-GAAP are begin, we will may presentation, will or include the comments Form press quarter both please X of due based SEC are of Before this Actual recent today's reconciliation our appendix website. first XXXX materially are noted, to in we otherwise on expectations. of our in our filings. and today's figures report and measures release comparable financial XX-K GAAP results risks and our most including statements that several include that Slide refer the presentation available on current to to Except other detailed our the on measures. where present and we morning described those of such to the be forward-looking which XXXX compared results uncertainties, of annual in

my Luca, Slide now turn is over begin X. to to It call who the pleasure on will

Luca Savi

and morning. Thank you, Mark, good

ITT's the first As about free ever, one accounts, our expansion, cash I on such and a on again, also in organic to always, thanking customers and million It orders by and there XXX to margin you than we QX quarter. deliver I and thanks growth in would solid our If We is a points organic quarterly to growth, basis were is improvement XX% efforts ITT. growth, remember, I leading And that all want around revenue EPS like our start for revenue employees execution. support segment more highest shareholders world. to strong to thing both ITT's $XX begin to would able of our X% recognize investment their results, flow. your continued delivered is performance XXXX XX% like growth, to

strategic million in with our million $XX acquisition in We partner towards of also deployed of agreement Continental, $XX the shares ITT and Micro-Mode signed a repurchased May. Friction aftermarket

North OEMs, growth leading [Chrysler] China growth, IP added Now into result In XX% in grew orders over above valves short QX. an with for and growth We this with most awards electrified Motion Process importantly, Continuing already the orders grew get in continue. America. business vehicle including our let's investments significant details. on market gains electrification, momentum backlog XX platforms the of project grew XX% On BYD green eclipsing with Ford to as space and and awards and sales decarbonization. commercial profitable Industrial The Technologies, as and electrification while share quarter share entering a energy XX% orders momentum Project generated in gains. grew IP's large outstanding cycle, orders XX%. drove related connector won XX% and and pumps in baseline in the to EV XX%, we with large orders an continued aftermarket revenue

end Process points the XXX expansion third way execution. margin quarter. of for led Industrial Once to with to the Moving again, basis XX% consecutive above

IP's in improve one-piece our will every accelerate lead reduce movements, QX, I campus, and leadership on eliminating time of delivery. we be with Seneca short progress profitability it increased floor team, By portfolio and our When across pricing on is the using process. shop to pump We cycle will are and improvements projects manufacturing in built actions layout. the strategic time on size, Falls push the reviewed excess lean spent throughput, new flow accelerating completed single at ITT our and the backlog. continuing lean pump out Together driving on-time

finish have team. this We for We quarter, floor on investments improvement, that shaft we reviewed continuous future. the China I the line. Wuxi Also and finally time of were a are and journey spent made our on and with the no returned plans to

You may year while December, and operating throughout remember infection amazing by through pandemic in Wuxi maintaining that new our achieved isolation delivery. wave feats employees capacity on-time in the mass working XX% and all last a adding

production such for lines to achievable. It how what a initially Wuxi EVs, capacity plant share, market support beyond region. will EV vision adding wonderful X discuss gain continues to team plant in in was new high-performance to in we the the the person thought and As and with it we're was especially increasing new growth be layout

similar in Saudi the share investments why a region. gaining is is making market growth saw also of projects, Germany, to IP, in their We impressive center testing last opportunity, performance a design with perfect further is in great growth In And which growth testing firsthand. center. expanding delivery capabilities. on-time I had This Arabia expanding we we're which driving support in and the orders Bornemann expansion are India, are our decarbonization its year.

sites earned right the these for have investment. of All

as ramp. generation year. executed working also capital, on subside of the and quarters, in And we $XX continue This begin trend supply saw is free increase a cash We flow quarter. million will to chain cash to and rebounding versus cash is Free positive a deployment. capital disruptions coming we expect we with the last prior continuation up

paid repurchased of $XX and of down million shares also commercial roughly We outstanding $XX paper. ITT million

$XX held and brings connectors platform. connectors space million. yesterday, announced and position to investments. our profitable our than leading America specialty I North acquisition the progress quarter, to is connectors defense in more sustainability making XX Finally, like we years has for for a of portfolio complementary technology the ITT with Each highlight a Micro-Mode manufacturer, Micro-Mode approximately

efficiency you initiatives. annually tons and by ITT's energy $XX than other Together, investment completed. million once sustainable we reduce a projects, emissions green more installations installations last saw month, panel solar will these hopefully X,XXX As and in including announced COX energy

Moving outlook. our XXXX to

We are of first by midpoint EPS a raising range quarter. strong $X.XX our adjusted the after

of the updated exposure and execution, due $X QX, growing markets. our midpoint free over organic double-digit energy We In and a growth, to cash margin $XX revenue segment XXX points we million have to and range and renewed and than our confidence backlog growth delivered aero, more expansion, billion EPS auto of in deliver guidance ability basis in to flow. increase an

Slide some me in X. with let now wins Continental quarter Europe. a share March, brake to So $X In this billion pads on XX-year aftermarket commercial signed we supply our of agreement

brand. auto level contract, copper-free and secure customers, premium Motion provides Under important for helped the consistently team quality highest this of will partnership. continue pads brake Friction us to brake Our the Technologies this and for Continental's service our ATE, pad provide

also over to serving win the China. and Friction incentives elevate contains Continental The value XX-year Additionally, the in that and pads from to and preserves It business likely aftermarket. improved our them in trusted Congratulations help the continue sell exciting We're Galfer, the of aftermarket ITT market brake to will brand, Continental Vincenzo agreement ITT's an help aftermarket volume ability billion car delighted team to expand will expand the next highly this in Europe. to presence agreement our total $X over term. chapter. on

an XXX to COX tons anti-flaring of I pivotal to our good over the share in Bornemann and our Decarbonization will The pump, and carbon largest want project in our sites the play screw in environmental This is our decarbonization X and value were team gas system's projects the thank technology. the for COX boosting role to avoid for In In a we of are capture the In at industry. and plays Bornemann ITT. pumps at year by multiphase awarded working world. developing X way entire twin the won Australia hard roughly continue Industrial customer their opportunities, our decarbonization project, green pumps in Thanks world, million is large-scale QX, eliminate field technology on LNG oil the these Bornemann emissions customer incredible early in leading projects, the we to energy of tons per and and largest to our the the XXX,XXX pumps to intimacy Bornemann Bornemann [Yaron] expected April, sites Process, reduce establishing lifetime. of will largest Nigeria. fines. another the thanks of with customers.

Yesterday, will from radio and radar, creation it harsh is Let's discuss acquisition. value is the as smart turn for we a improve acquisition here to connectors we The of was and the high-bandwidth XXx of part multiple and purchase designer now satellite the in approximately applications manufacturer Micro-Mode company Micro-Mode Products announced CCT. the effective for expect X leading accelerates. systems. frequency Slide to defense million, EBITDA, approximately and of $XX Micro-Mode

With than and markets approximately entry our I business customers has team, its Brian love together. to which mission-critical of choice programs of addressable product ITT. gains has this with market acquisition, been Micro-Mode like Gerald, look entire strong, the further ITT valve billion. our the this on responsiveness space more to attention significant and and are Habonim, $X as years. space great defense their for intimacy growing niche recent their qualified Micro-Mode total to a of needs, connectors Micro-Mode's their Micro-Mode success, welcome is potential a applications, acquisition, long-term they've forward XX performance, customers. been and long-lasting with into Mike,

more Emmanuel to detail. our first turn I results the that, to With quarter in over discuss call

Emmanuel Caprais

Thank good morning. and Luca, you,

begin a XX% In double-digit organic sales revenue this on all at organic We CCT. strong was book-to-bill given generated impressive, more performance and X.XX Let's led growth, IP Slide our the X. growth. our by XX% by XX% IP, quarter,

strength growth projects quarter commercial top up in CCT, were our April, this orders outgrowth significant seeing the line continuing continue are and recovery. the drive In on we to We aftermarket into with aero awards XX%. of and

this XX%, the X% market. discuss in More a strong we deceleration of our outlook. and this industrial XXXX Controls position platforms, result on despite key Connectors As when grew the on our grew

lower pricing MT, in volumes gains share offset aftermarket. actions OE in the in and Finally, Friction

of As revenue in share. X business. see and to with quarter a half and quarters. in highlighted the overcome upcoming be headwind, improved Axtone occurring in in continue expect future businesses freight continued This KONI and saw Ukraine. growth in we would Ukraine. into the orders coupler last quarter, delivered a development war for partially result, correction quarter the indirect they related from times continue impacts Axtone And technology to car mid-single-digit a we the initially the aftermarket, due digital is in year. growth there the the in invest second will Axtone a European but XX% last is as growth now in believed deployment We fully to inventory as it Nevertheless, the gain of in will lead year-over-year rail, execute In we its this ahead we headwind to to loss automated of QX come the rail its European continue More to Russia the XXXX. war also of

ITT, contributed organic of of all the growth XX points this roughly half of For quarter. pricing sales

We also QX. IP. outstanding expanded performance in On XX% segment's to basis impressive an detail. Overall, are minute expansion over pricing through more solid value-based a model margin basis an points. CCT XX bit in strengthening by actions incremental in a discuss Industrial of deployment a margins take to was I profitability, the margins Process XX.X%. across outperformance margin want to points was the a by organization. driven XXX pricing in Its expanded Notably,

and generating we're and the projects, volume parts spare businesses. demand across service First, strong growth

to XX% In pricing. volume efficiency of processes QX, growth is and will with Second, support pricing mentioned, actions Falls throughput in increasing we're IP's from the team approximately Seneca top ITT. Luca And share drove the that line best-in-class creating making are improvements progress Back growth. gains. good

nearly basis partially In QX, some drove points points inflation of which XXX nearly relief XXX initial margin in our offset cost productivity improvement, basis despite of commodities.

driven approximately basis pricing. operations Growth our QX, by this was headwind and XX of cost mainly currency hedge XX% EPS in points driven by exceeded instruments. mainly in quarter, Foreign the

a thanks flow, higher we capital Finally, a lower strong a impact. income net year, last QX and on to drove working weak cash improvement versus

improve teams higher generate unwinding the our inventory will flow We capital. of working from cash as

supply on capital. working particularly continued suppliers chain, weigh However, aerospace, to challenges with in the in our

We strong of generation, cash which also million paid time. given down outstanding commercial will $XX reduce paper interest our over expense

organically delivering million a CapEx in, drove invest of which business energy renewed capacity All and IP quarter. in EPS $XX XXXX that outlook. midpoint Friction, the lean in improvements to XXXX expansions our gives start to investments, continue green in We through us confidence of strong collectively our for updated in the

at Let's to a turn Slide now drivers. to earnings X have the look QX

given inflation cost in Habonim offsetting repurchases actions As We and and contributed deployed seeing driving see $X.XX of in impact interest the volume acquisition to in we're lost $XX QX want and you price capital currency, of Russia persistent pullback. of point we're still million I are amount here, labor to of business. from share overcame that higher and the growth repurchases inflation, negative The $X.XX. productivity. roughly each foreign $X.XX share $X.XX share we our earnings rates out strong also from although from Pricing energy.

we're on range As X, $X.XX $X.XX, of Slide is increasing And to our you a result, can the the of guidance see by thanks start low the strong midpoint. up the year. as EPS at the end

continuing Friction both projects. in pump on ICEs EVs are gain as in to well share We and as

despite million XX% this grew revenue nearly backlog a and ending $XX $X Our in over QX. quarter billion increase at remains

strong, and On to the next IP be different two service On two. quarter the we of or expect for valves one for portion hand, in short-cycle see demand to we parts, and continues this last business, our dynamics.

other will slowdown reductions. and aftermarket the closely half. persist deceleration connectors demand into and with hand, monitoring in actions and brake connectors the We're pricing patterns second industrial On the for of mitigating the the cost likely demand pads

outlook the conversion We be flow. do slowing of we Revenue this cash demand. of be for impact tempered by not see any or incremental for margin free acquisition, our that expect notable earnings the Micro-Mode's will Regarding driven combination but other and segment will growth year. sales, a backlog, share gains by short-cycle of negligible changes

organic across we aftermarket. car and with Industrial Friction expected range, by led and expected continued between industrial XXX down QX. revenue MT commercial should OE is aftermarket. mid-single-digit sales to up to QX is and grow MT, For expect projects by margin Process In expected growth the be the margin operating projected partially second thanks will CCT's the demand year-over-year. strong are see single-digit strong the in be rail, defense. connectors growth slowdown XXX MT sales to in outpacing aerospace quarter, high expansion both growth and Segment slightly decline in offset in the IP basis in points sequentially to in year-over-year Both and improve with and

will anticipated approximately that decline. given flat expect We margin CCT year-over-year revenue the be

adjusted and EPS first result, roughly a As QX with grow in be will the in essentially quarter. line XX%

Our elevated interest remains and XX%, tax rate will expense an at remain at level.

to back call on Luca X. the turn now Slide me Let

Luca Savi

Thanks, Emmanuel.

a the to points. the few of move Before the part we best call, Q&A, just

cash in and deployment performance, growth. wins line share through This delivered long-term on quarter, we strong we Through our project us awards and everything orders, operational XX% delivered XX% did, on focused plus the and on X% growth awards give top XX% execution. capital performance, a growth green home and The our execution bringing increased margin, to we our EPS confidence and improvements, we growth, execution large and margin. target, segment deliver energy free flow gains and on we cash delivered we're

We our are never and this proud quarter of satisfied. performance

stakeholders open of this ITT. has their our to all Elliot, continues. for all the thank continued for journey with questions. my morning. pleasure It speaking been like you please our So would line I support

Operator

Instructions] [Operator from comes from Jeff question Hammond today KeyBanc Our Capital first Markets.

Jeff Hammond

the segments your to about growth Can maybe differently start, Just there to around in how softness IP guidance, Friction organic and I speak thinking better, moving for organic seems an some the of within year? be just standpoint CCT. of you're in some pieces destock to this growth guess you coming kind unchanged from

Luca Savi

I think you got it, Jeff.

the cycle I and in come in the stronger also and has in projects QX. think we strength short IP in that the QX, out see strength

year. will the IP probably be better So for

business, then connectors of is to than we in Friction. the We will side the And outperformance will last year probably see aftermarket OE The is -- it the last in continue what connector be will Motion year. plays. Technologies destocking comes destocking for probably of entire expected. the the to when for automotive, the the XXXX. full how slower say it I really also of This the But in the

Jeff Hammond

then what What kind destocks makes that usually, destocks then and you're kind year? sharper And of these the -- just the on through are carry settled. you think of destock, these

Luca Savi

is to example, of When to the but the look to customers bit talking little their see the it last really level we the we still is you comes them. high. automotive, distribution think the how When bookings distributors, the point we going we getting the sales, connectors, our This we the inventory at we longer. see that and the When inventory look is talk level, that really and to our this we for simulation, from orders, that. in our decline got we're a do at feedback on still it and

Jeff Hammond

CCT? on And

Luca Savi

about on connector was side, talking CCT, that the That Jeff. was on distributors -- I the

Operator

question comes from next from Research. Scott Melius Our Davis

Scott Davis

Presentation pretty clear. is really

So would really back help is it and I that little that. a And I or doing out I'll wanted is there, about technology. address talk us to but take differentiated you of types anti-flaring if let a lot interesting a technology guys little are that bit projects perhaps you this whatever, What of step means. different? just or there's bit what understand those your imagine a guys maybe

Luca Savi

Let couple carbon it's is me give because decarbonization you flaring, stop a but anti-flaring, the the the also the capture. examples of

flaring, example, wells Permian the when also the Basin. you So in in normal have for

it you flare the then, out usually And happens, gas. and oil extract oil, oil, and comes water you water and what the from You you separate and separate gas. there and

and the COX which The you with the then major is put and we the the you pump the pump water actually have you pumps, the multiphase offshore gas and that take is the the and the where the so together stop COX. something in in separate similar take then separated instance, will for the push down take, practically -- kilometers you multiphase What is gas gas the field that our by pumps, sense what This and pumps, liquids all twin-screw XX, do, Bornemann you that twin-screw have, down pumps that are line, capture. technology, carbon -- all X that pump you what your is -- our boosting site gas pump That plant gas mixed flaring. can gas distribution. XX at ground, that with Now in decarbonization we in water, that you in are we mix, COX, containing produces where this below that it Australia, is mixes. different the use kilometers can for it you that

Scott Davis

I didn't at the the actually the pump time. could liquid know gas you both and same

So Continental both thanks I The little those access me brand? And do understand under yourself you're do question. you how guess, then of -- the Is is cannibalize market, deal. Why for need do just brands, of the how and you kind you works. need that. question of that it a bit, why because to them? but perhaps different help a going channel dynamics that,

Emmanuel Caprais

we do deliver is aspect us we is how do. crucial is distribution, we of with material as great our the producing for that Continental you parts and products and and don't The focus high-quality business. have partnership we time. because also Continental distribute marketing really Friction deliver know that science. they know, Friction, this know is we What And And so market to at why and in our we on for to on what branding, excel At aftermarket. key how

between with strengths really -- and agreement. the combination it's our -- this respective to to so our playing And perfect strength

So key partnership. a strategic really

have XX-year a in future. we more and we for partnership We the much renewed, that look

Luca Savi

of the where with you go it, Continental also, pad. going think can them that only about are if thousands brake offer Scott, distributor, you we products And have you with there

a So proposition. have they good value

Operator

Vlad from from comes Bystricky question next Citigroup. Our

Vlad Bystricky

potential business, channel hearing or sort talk that So and in your baseline the the sort perform IP business can confidence on emerge distributors of pumps in from just your business? you're visibility of about destocking the in to and continuing any of to here well you level concerns about what about inventory there

Emmanuel Caprais

excess driven was bit So The baseline little than I in down, check positively it of baseline though up, were but business with report And was situation. more price don't even bit was were inventory Volume have say a we much by a order we actually little rate the they than what any volume. to when that QX, business. we by surprised expecting. our our better distributors,

distributors So are say that reliable looks pumps which to times swappable I compared customers. and differentiating our is it the our would in that providing customers moment, competition, really good their our for and the like that know easily what's differentiation, lead is for

pretty year of a So the start for baseline. good

Luca Savi

And well orders if were to to QX short also what another cycle, that our is add look sign. at a point QX, said up you over sequentially Emmanuel is positive which as

Vlad Bystricky

shifting just to maybe then Motion Tech. And

specifically, wins the again You gains quarter talk OEMs? drive your Can in share OEMs versus with share OE the to foreign in you highlighted time. China wins and just over about, China

Luca Savi

from I'm Vlad in many X I drive recognize I was and tell electric. cars you the on you were that this from newspaper new it Wuxi. years the these are And I OEMs to them any OEMs don't the when reading on is glad you because QX. it, until of you asked everybody don't can get They ago. different shares. couldn't were question, there highway. Pudong touch completely there really All that China in gaining was of that actually, smell Yes, Chinese And you I the But that you

the produce the you OEM in XX% OEMs. Chinese in above Chinese China importance really that share our the were brake the of When for OEMs. XXXX, the is you in of look market touch Chinese XXXX So the XX%. data, we market And at of the pads

all of with it's Li So we them, it many is with them, positioned are them. NIO, of or if if XPENG, very if it's if Auto BYD, it's well

give is off. ago, to customer. customer team paying the I X, we we and go years went China when Western because to China the the X the all Chinese, went with with reduced differentiated -- X, XX years to We this want team risk several X decided and we So credit to ago, Western

Operator

with comes Halloran next Baird. question Our Mike from

Mike Halloran

I that's you is the appreciate on destock as market last the auto Luca, side. think think good really you perform. auto context happening, but quarter, said to give Certainly how you going on the always stick Let's holistically

If you thoughts some region great. be would give and could you're seeing, what by that

Luca Savi

I that way So market the really, IHS would QX, the performed say forecasted. in

look was and you the quarter. have in you North X% XX%. China was when performed well, down So America up market, Europe very XX% at that the plus almost

Now overall. we in market than outperformed the roughly more basis XXX QX points by

Now the America for America, probably way flattish the forecast are, around that single Europe grow is China, mid-single-digit low is North worldwide. million are still the vehicles. digits, is North forecasting and for Mike, will IHS growth Europe They XX.X digits China. positive What our flattish. assumptions mid-single market and

Now always with more those assumptions, we conservative. are

The by going we also always expect roughly up little because the seeing bit. level XXX to little bit inventory be reason conservative to start why outgrow points. is We basis a a XXX the and more tend we of market

Mike Halloran

and is the embedded how And by normalize the about to That's backlog, tied year still as obviously, guidance? question, -- the really work a strong. how that's just you Motion. just to way, talk in expecting Maybe through not holistic not that you're

Emmanuel Caprais

both entered if no, at No, that And for even then another million the versus but QX quarter. -- we and pretty sequentially, that grew had. we is record we year, backlog were of CCT, fact, we look a backlog grow by you did. IP we year. stable grew grew backlog up two main XX% XX% thing backlog in further businesses our prior our had where thinking sure. above prior And sequentially businesses in terms able even to no, that key XX% turn. weren't one largely We backlog metric. when a above book-to-bill this We're versus really $XX One

in standpoint. have backlog projects of is backlog, IP our profitable. from as of news good really in presence more a a also getting lot mentioned, that and more you projects, growing So especially And where a Luca backlog the

Operator

Our with UBS. Damian comes next from question Karas

Damian Karas

manufacturers wanted and first there. see remains pump the impressive, ask I on to other what the of that performance compare quite you out from to guys, especially you when valve margin, some IP we

I'd about a Luca, this market you to how are result? on any the any actions? potential thoughts you So your how sustainable of Have as hear profitability like impacts pushback thinking And on is. customer some pricing share gotten

Luca Savi

When -- it to the comes the action pricing me let first. address

diligent. a in pricing are we when markets. thing. the very we we first We -- This project, is But are win are pricing

managing of what point the IP changes, are et of terms top the is view, business. obviously project from really the very which are And is well profitability finding this cetera, an in execution you of So of notch. we that competitiveness cost improved

are are to I at many So pushback value no customers we to customer, approach And of are that value-based, comes really pricing. say, would is the to company. value we today the are the when And it is that having all we delivering the to delivering the willing the this pay. that what

the is performing a VA/VE, make improve, performing third it of to row. business. more Seneca Falls, Obviously, a in business continuously in are the on sites also more this re-layout so The we are systems. investments there of that's side, well. well. So product on is the lot quarter to the that but The need investment is this first point. When the comes to sustainability, opportunities in There listen,

will So mind. this for. to to those And something is be need investments bear paid we in need

Damian Karas

question on follow-up a have the agreement. Conti I

pretty You Could mentioned mean, partnering market. there? that? competitive with the you little a what's aftermarket about opportunity it's assuming I China. them tell I'm in bit maybe a more us

So thinking are about what there? you angle playing

Luca Savi

that what China Continental. is China we and not are flexibility saying is -- really is with gives Actually, the us is

things market, European very for a different market. different it's entrepreneurial, over we in Continental we and is Continental, the have because with to also And test go very agreement European the agreement So and ourselves to to need the flexibility mainly a try there. things, different

Operator

Nathan with Our next Jones question Stifel. comes from

Unidentified Analyst

Jones. This is Nathan Matt on for

expectations longer-cycle and guys I lot could orders talk opportunities -- project if short-cycle just to kind you for a mentioned you potential your pump XXXX? wanted the of about of So funnel talk in about orders.

Emmanuel Caprais

is when and really, the Obviously, single at on growing or so basically it's the IP back to on Europe industry, But $X is then you look half still sequential seeing we have growing much stuff. other half the So funnel basis, -- energy increasing a for And America funnel rest it's And pretty funnel. it's so by billion and digits. total everywhere. is gas today, The growth mining and going that's -- path. a even we're an chemical, is around North increasing oil fastest. the and And of high is ever-growing year-over-year.

that In terms are increase growth. where largest industrial chemical, is we into but and industry, gas, the around mining, participating general even of see oil

So funnel we're we've the seeing keeps acquiring, a all the that very dynamic on funnel. been orders growing. Despite

us, it's good a really sign. for So

Unidentified Analyst

then talk the the in And of kind different the could dynamics any you -- price-cost about business? pieces of

Emmanuel Caprais

let start standpoint. quarter, from a And were saying pricing neutral IP. standpoint, in from good by a seeing So that we're from me what standpoint continued we is dollar price-cost that this performance a

the is points we that Friction where did of progressing in than get -- we progressing, So covers that's total covered. with inflation of But last our MT, we're what value-based inflation. especially pricing. a small And don't XXX% in starting really but year. matter our more very then In cost percentage situation still over we're difficult, CCT, it's the

value-based quarters change the this price/cost little execute in but negative, seeing plan. that's to we the expect we few equation our as to are we're towards tilted able on next So really bit a pricing

Operator

Our comes Sachs. Ritchie next with Goldman question from Joe

Joe Ritchie

already. mix XX% I And it's think your number business. So about your are, quarter. impact projects clearly, not moving a right about questions an I a Process negative, up than two the over greater two, this Typically, have row. on baseline now three business quarters we like in I as The asked this number is wanted Industrial think it being we've having margins, to forward? would one, but this was questions start know I few XX% with

your about that talk the them. dynamics getting just maybe how through some on So why of margins you're you're and of managing project still leverage kind

Luca Savi

So let Emmanuel, jump me start and in. please

XX%. the yes, QX compare up growth project easy because the business, by of the one, an And are was not So was projects last the way, the orders XX%. year

So in it's of terms really value. good

the never to a profitability it's short the the sales Now very The result level execution. this in course, we Not acquisition. projects have rigorous cycle, been. very very the been. we projects is these of the highest highest profitability. ever also good is have seen the the backlog of ever and order are of it's of but that disciplined process The comparable And of a is that profitability

you delivery, negotiation Arabia that delivering with If your very this about the on-time are means customer well. Saudi going XXX% think

can You ask the changes.

You positive, customer changes. very experience and have you also a price negotiation on have that on facilitates which any

a roughly a Now that little a this if terms headwind the bigger future, will in And the XX% bit quarter, we today, even we had XX% headwind, probably it small in of basis because we points was projects, cycle. mix, actually headwind. backlog Joe, become the have short see this is XX one do

short year to I the expect XX% with the projects, cycle, XX-XX, and XX% XX-XX XX% be year remember, You being projects. do last was of end by

that but will So probably be not that headwind, a cannot one a we manage.

Joe Ritchie

with Luca. area Is mix that but to follow-up, so way And probably rate going off being right it? about that XX%, potentially helpful, point, forward the around impact. just that in not and think was the a an But the dipping

Emmanuel Caprais

Yes, Joe, we're for think to back right XX%. it. the not sure, We to way -- going about that's

of continuously we're in Luca there's that And also So have the vicinity, terms are lot is to said, lot improve. that in in XX%. in We And sites a IP, that a to opportunities go to sure that make work after. we needed, want that of couple as there's still losing that we need a XX% we IP money after. more investment more to go of

and that's IP think anticipating than standpoint faster has from situation I were for -- the much really, so expansion we us margin a And a been standpoint. what positive margin very really from

Operator

from Davidson. Our Summerville D.A. next Matt comes from question

Matt Summerville

quick quick a questions. -- of just couple a couple Just

progression of MT, Is margin look Just like matter of the what that of that it to to timing back be kind get cost? of walk margins pathway business? it Is should on you price XXXX in Can the either how where more gap we in teens? high firmly between closing thinking normalization? matter into kind mix talk about the does and about were XXXX, a a through

Emmanuel Caprais

let's was margin. MT say, XX% around So 'XX,'XX around

would a still I get of being that at than to a say would I confident XX% pretty think go. XXXX. us margin XX% around level about. now, quite able have couple to being of to less to So right say in in we're of little But bit a we things

pricing cover The we first much as we're as is, can to driving cost. obviously, our one

a that enter of next that few the that years pricing, priced one to seeing are going with are have we're We in slew the is today. been material raw new platforms production into that have -- level a that of

then supply And something disruptions. difficult be expect much has MT. don't the we the by to equation. during productivity the central chain And impacted that price-cost to productivity, pandemic is been this and is as So

on We are track. firmly back

expect And the so that productivity I margin expansion. to Tech contribute will Tech Motion Motion

Matt Summerville

How Well, Seneca realized? if that? to margin pretty for of just the driven there follow-up. of a is still respect is quarters as is by benefit obviously, incremental strong initiatives there Lean IP, Falls to performance a quick so, a much of being margin that way quantify now. handful be to out And and With

Emmanuel Caprais

a would I So of XXX, obviously and been And say contributing nowhere Seneca outside best has to quite -- Falls Seneca is what's we're it that points. done. Falls bit, XXX about and be in between basis near that lean

more would a I So also really there. say a been has large contributor. potential price lot

a -- had of mentioned, As about. quarter, obviously, Luca which right, that a XXX and of this positive we in mix standpoint, points talking to impact over negative the was us from basis inflation cost price margin offset, allows the terms

tank continuously margin for in more a to the lot a expand So from standpoint. IP

Operator

comes from with question next Bryan Blair Our Oppenheimer.

Bryan Blair

on focused aftermarket. back haven't really quickly quite China agreement We flexibility to on in I in that on affords own that much. circle the the as opportunity your the wanted to Continental go you

recall, going small may still in the the pre-pandemic, million run Can little I million that looking I you over guys. for but maybe to a was hold while, back -- there, in think it size rate forward? aftermarket current stream revenue a revenue it's that point. $XX potential relatively of $XX future what and China a scale you at speak revenue

Emmanuel Caprais

business in million year. aftermarket in our of So China is revenue for a little $X than the less terms

We've Europe, years. bit XX quite are a smaller than been So new there we are it's it's what China. for also because in we relatively in but player understandable a

So maybe we don't we for that have then been people portfolio do have we there Europe. as in that don't the also, longer distribution have. have product have it And the

that in that we I great the think us is So about frees it the want go the China. thing agreement up way to really

been business something to marketing to that is us. the several for aftermarket. the was thing case We're business work business, trying strength. a This is to for going the to distribution to So the is our we that be partners really the China build see But really have have they important would think option do to I and play the on to if still evolving. model that us, for talking to and to like able

Bryan Blair

offer Micro-Mode, deal and Okay, a background margin And they rates. I definitely more rather implies expected around please confirm makes profile. that on sense. And EBITDA believe little unique a attractive valuation. technology perhaps said offer trailing Luca, our that growth you XXx

Luca Savi

Bryan. So yes, EBITDA. That's correct, it's XXx

see to hermetic connectors do They from but where highly point and one Micro-Mode application complementary site their we that visited they we're is focus we that a can a California, what simple have that space of I is vertically play, the on defense and harsh were And the when have. Emmanuel a that that we products site -- very investment there about manufacturing the they not customized integrated. nice in and and for they also We strong. we -- radio the have made have of very where the offer. set like in The Now frequency market view. pleased is to

product fit very and team the got well. process good as well expand. that very way So there that we has with to will want The expertise on

synergistic. was on the team very, of I So day talking night, first together last opportunities yesterday tell the Micro-Mode a grow. they're I will was already that couple to allow you can and And working very to

good acquisition for we organically the and a connector very to So want grow that inorganically. business, platform

Operator

Anastasiou with comes question last from Our Michael Cowen. TD

Michael Anastasiou

but growth on the side? specifically provide you cadence saw So from seems increases, weakness side. market year-over-year kind Any the color would throughout industrial order on like was end maybe just CCT of it helpful. the Can some be commentary there there on quarter offset industrial order

Emmanuel Caprais

The side really one our growth right. connector the we're Defense. Aero good all of and So declined industrial seeing business has offset the in and is has you're that

and an instance. the business periphery And our connector is caused in our in what's by declined standpoint the So connector as industrial medical, for quarter order such to by decline industrial by also of from business which this XX%. XX%, industrial driven

has I inventory Luca monitoring gone we're So think mentioned distributors that at that down. our that, the not

the today data we many to as seeing We're improvement they're reflecting we're is their don't what don't seeing components, so yet chain, need supply and So the that the stabilizing. preorder but see is declining. in some POS that inventory they of

started -- we makes haven't that So a really an us But that we inventory from reduction reduction inventory inventory. standpoint, little reducing hopeful. an haven't terms bit in they where think from --

side, And the is market supply our connectors and the to to and on checked to -- we them. I so it's really not wanted also point market-driven by checked driven share last we make it's event, that really ability a

Operator

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

ITT (ITT) 4 May 232023 Q1 Earnings call transcript