ITT - Earnings call transcript Q1 2024

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Operator

Welcome to ITT's 2024 First Quarter Conference Call. Today is Thursday, May 2, 2024. Today's call is being recorded and will be available for replay beginning at 12:00 p.m. Eastern Time. [Operator Instructions].

pleasure Investor the Relations my Macaluso, to now President, Vice and is to floor turn Mark It Global Communications. begin. may you Please,

Mark Macaluso

Thank morning. good you, Victor, and

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

comments we will refer please Slide of note to are that where on today's forward-looking Before current we begin, based include today's X that statements expectations. presentation, our

reconciliation Actual present non-GAAP and or and measures. Except turn results XXXX morning of website. financial begin to our it's compared measures over this certain GAAP other described quarter in most the detailed my With of may annual The presentation, differ including our are who Luca, Slide appendix we to filings. SEC otherwise materially and call on will of figures XXXX to X. on due be pleasure our such noted, to several in and first the now are XX-K available include our recent release comparable the press uncertainties, the risks the that, to will report first of Form on in which results those both quarter

Luca Savi

invested the acquisition, Mark, profitable awards. and Svanehøj new, grew We year. revenue, to to sustain good very expectations, gain margin and start closed continue you, Thank EPS with active good morning. a our ITT and share and above differentiation had to

of best-in-class on rate an we incidents, our important of reduction leading frequency milestone on to focus delivered We X.X, in multiyear safety, year-over-year our journey. an approaching also Because recordable safety performance. reached a injury XX% unrelenting

and safer more are plants efficient day. every Our

on for results for heartfelt ITT-ers all delivered a the focus I thank your you. you to safety, want thank and So

contributed to In orders, EPS all this in businesses the revenue, QX, on performance. built to and on of margin and results. our Now we XXXX momentum

Here orders a total, billion growth X% million the total revenue organic in for leading nearly XX% of $XXX quarter the to highlights: X% book-to-bill XX% $X organic first or order time. surpassing or sales of are the X.XX, in in very growth

of businesses progress to long-term no margin points expansion longer be points making And basis total on we adjusted our significant although target. all targets. just on that basis with will XX% XXX long-term XXXX report XXX our segment margin, shy of basis, operating we

all adjusted of As result of ITT. to over level growth another a drove EPS new for we XX% of earnings this,

and with through record managed on of growth, CCT details, XX% connectors. after encouraging by distributor destocking. the year led a aerospace orders performance fueled in way The business the Now the orders recovering connectors was demand

strong winning On awards Xiaomi, with of points hybrid and million And revenue whilst of project in among Tesla, to growth X driven others. percentage short awards, $XX IP's XX XX% Mercedes leading book-to-bill nearly grew of strong delivered revenue, sequentially, all growth X volume. segments by a electric X.XX. with rail. also MT won new vehicle business and Friction cycle Geely X% grew

in pump whilst rail, delivered by drove we which MT led double-digit This profitable outperformance a X% was the recovery led growth growth continue industrial Friction in strong see process, to XX% in by growth friction and OE aftermarket. projects.

Defense. Finally, with growth Aerospace CCT X% and grew in XX%

expect will and beyond. a continue seen throughout the XXXX ramp sense multi-quarter have We in we that

a X.Xx profitable operating revenue resulting in driving income, our in rate. increase growth, XX% organic We growth are nearly

than [indiscernible] improving quarter delivered by by after at also XX% in margin in KONI average, by driven segment. more highlighted margin above every XXXX, pricing. CCT empty sequentially KONI, Looking segment in drove surpassed margin, done part margin which QX the MT XX% china. well

CCT drive XX% experience operational already President, work Goody, ITW CCT from Michael hard at his to leveraging margin its new Parker-Hannifin towards target. is Our and

Finally, the as to mix IP's a revenues projects. of basis, up on shift even was points margin basis XXX like-for-like

above XX%. X% XX% target. a midpoint momentum or EPS midpoint, now was $X.XX to range margin our midpoint growth as And above this at to well. our $X.XX orders, performance our in at given EPS top-line guidance IP with the performance, our expect we $X.XX end we acquisitions, increase the the including Because in point a basis XX of And long-term strong and are of still new organic low raising by raising $X.XX. of guidance the We are growth the outlook to at of

to see in some was quarter, capabilities. continue drive teams investments making first businesses. of expand strong that investment the is investing testing our These IP and this Saudi. Our and I in for and and saw this India performance, returns will capacity shareholders, I the delivered whilst to to fortunate last

installing to Saudi capacity and pump share and test gain times nearly to in current their ability to Middle Khalid customers testing in Similarly, the sustaining team our able are availability. shorten be and India, Lala to power will Xx larger packages, East. improve lead team the

these share As we expand growing to to expects our in-region-for-region strategy, in markets. continue IP gain

will the also world companies the in At segment. X also We're conditions Germany, to of large Bornemann replicate upgrading are in investing be high-performance this in our capabilities are we penetrating with site progress on our to [indiscernible] testing field capability. our We execute few projects. pump packages. making facility decarbonization ITT

our production later capabilities. in R&D million new expansion investment running Termoli, plant upgraded year of We part for this the Italy to be and expect EUR and as XX lines up

is team low-emission break Friction facility already won this has on even vehicles awards platform high-performance construction the Notably, before complete.

closely $XX secured which for the team cash our in outlay in over the automotive the well significantly working Europe, reduced market OEMs, incentives local again, facility done Friction XX% in substantial team. the expansion. Friction world, outperformance largest in with And China, drove a government for addition, Friction we In million in OE, in we approval of growth

over EMD results positive trials. customer XX% significant COX is to average, and And continued finally, reduction. emissions compared motor drive field a standard of motor embedded in delivering On on innovation, savings energy the EMD or delivers

coming EMD We commercialization XXXX, quarters. you more in the start expect to we product share and in with on

these over of sustain growth. the will differentiation investments term through ITT's profitable long All

come orders significant A we of of that quarter. growth will booked this nearly from the $X portion billion

me XXXX you in orders businesses. on momentum, we about X. this and tell Let all performances on in our sequentially grew Slide strong Building total XX% more XX% with

focused on opportunity are means We look each This we an clients and with growing the of growing and strategic selectivity. profitably. opportunity level at

the By weight Envision leveraging are loss Here drug. of of a engineered won few IP than support examples. an more proprietary valve technology, to valves, our $XX production groundbreaking million award a

our pharmaceutical on winning vehicles global not green in revenue approximately With large ITT's also annually. company. We're now with AP partnership decarbonization battery hybrid with XX% with The electric and but of just strategic Friction represent these awards leading award and also other with applications connectors. in this orders, awards, and reinforces in CCT with Green projects,

forward, Moving clean will be its transition. Svanehøj, applications exposure and this part carbon with of bolstered to the low fuel energy by as green

[ team next this ] XX% by Soren and double-digit the quarter, growth than years. several grew expect more year-over-year, orders This revenue for delivered will and have we

CCT. to Moving

the recovery good this is in distribution, order We Whilst of year. especially we full North second America. half are expect encouraging, Connectors don't Connected momentum until the in in seeing

its components Defense orders and And recorded ever. Aerospace XX%. rev, in finally, quarter orders up highest Additionally were

Svanehøj, X%. with And is grew orders growth in ITT's a see, from orders can of with total. you organic accelerating we performance growth strong As XX%

Our again grow positioned ITT profitably. QX the is performance demonstrated once well to

over Now me to X. let Slide the call on turn Emmanuel

Emmanuel Caprais

Volume CCT, segments above organic up Thank basis contributing. Defense historical growth up generated XX%. and components average. We drove and most quarter. morning. OE this and were well growth XXX the Aerospace XX% X% point good you, with were sales IT Luca, XX% Beginning outperformance Friction all revenue. up of the an with was with projects

X orders compared surpass want XX% than Svanehøj reemphasize -- points ]. the grew added XXX total points And the revenue driven was to more faster year MT, XX% prior I X% On were primarily growth. profitability, [ basis its we expansion up to than which that to margin to by anticipated. also over

part over up This basis Excluding continue as M&A, of execution. basis driven projects, expansion points. XXX points margin in we to improve by XXX margin on IP's was was

XX investments in points and product Collectively, basis redesigns basis IP points productivity, of XX more strategic product offset our to and formulations Friction than drove CCT. new of related businesses which

EPS growth was driven On of earnings, XX% volume, adjusted by price productivity. and

slightly In a addition, and higher rate. higher interest tax effective we expense absorbed

Finally, free our on all after generating cash cash flow of prior year, grew for versus million quarter, $XXX increased XXXX, profit. we X% driven by by this

AR stronger for We generation continue and improve. significant cash opportunities inventory to see as to

confidence All XXXX new to in, that in outlook. delivering midpoint strong a gives our start of EPS us the

earlier, bar is price quarter quarter. $X.XX. And $X.XX drove grew amortization to net the Slide had Let's bridge Strong productivity M&A EPS described growth impact review of Micro-Mode. and volume an roughly million higher X for and of Svanehøj move Included the contributed leverage, for intangible XX% from another both $X operating $X.XX. to investments, of record net in a the while coming QX. Adjusted Luca the $X.XX this EPS to

purchase to up of Once paper a XX finalize backlog $X the term Of tail quarter. headwind drove will and million that to on more for is bridge, be next this over color. off. amortization then provide the recognized loan and price Wrapping the million, months $X we approximately related will we interest Svanehøj, the allocation the XX commercial $X.XX

further. anticipate picks up, generation our debt outstanding paying cash As we down

to X our discuss Slide XXXX to guidance. turn Let's

Today, backlog performance, X% midpoint the are organically this the to business, we revenue, On margin the at dilution. organic M&A we approximately eclipsed strong MT is in margin, driving higher the increasing are To raising Friction and CCT year-over-year. quarter for is improvement revenue begin, XX.X% IP organic connector end XX% our and up first both performance. in operating margin core out of which midpoint, we of XX% our orders mitigating we accumulated quarter, operating given expect and EPS, at guidance QX, our to and due guide the

to The previous and is growth adjusted margin expected revenue the guidance. EPS from at improvement growth the higher XX% drive $X.XX of midpoint, operating

quarter. move to wanted the color provide on some what Before on, also I in I expect we second

mid-single Organic revenue should while year navigate growth. digits, revenue orders and CCT prior will by and MT, on led grow a in tough compare IP the

We growth year. single-digit range expect total compared high to EPS in will margin points, XX the XX the of drive which basis to expansion prior

capital Let's turn to X discuss to Slide allocation.

organically invest growth that organic me given always can we're intensifying will the start M&A. we saying and now focus on we by returns generate. our proven And Let

this on so We that light companies manufacture be significant flow thought core with In highly connectors. we and would M&A, driver primary are capital and creation value for our fees. framework. will management targets it in more engineered We ITT positions a have strong focus component acquisitions market deployment beneficial shed our to expect be leading close to on and

deal the strategic always but These potential, starts with rationale a targets present may also margin expansion fit.

have we to review strengthen Along the intend We strategy. dry capital we also effectively powder order our to deploy with and own ensure existing businesses acquisitions, portfolio that businesses. in significant our regularly to to aligned our longer-term further we

capital targets our $X to for share we After M&A, benefit returning share billion share through repurchase ITT's we the program. to of M&A, we With me the allowing ramp on dividends from right let strong that, don't up back call repurchases. financial shareholders pace focus If the buybacks, to to Luca. and and find turn shareholders intend position

Luca Savi

Thank you, Emmanuel.

wrap I organically In value why to continue makers we the continue? Emmanuel the we points created M&A experienced as this I a build will leadership the strengthen Now inorganically value past made team our muscle. and reemphasize few few Historically, our added M&A up, expect deal And our business. expanding and M&A. margins. years, to on Before in teams we further to drive we growing through also want to

have the success by result, area we our a acquisitions and last in is X as X capabilities As in growing years. stronger evidenced this the

more X. our encouraging. conversion Habonim, than are metrics, expectations business cash size in our too exceeded early of initial in EPS for XXXX year Svanehøj, generated adding Among these more and the And was valves while by $X.XX which in XXX% all XX%, expanded than it's

it manner. And We capabilities and continue of in Emmanuel pace said, a M&A all fit. accelerate strategic as our starts disciplined to with a investing expect the in

margin with wrap Q&A. guidance. before sales, Now few our up a EPS quarter a and let we for ITT, was and me QX another points as milestone result, raised

to Defense, markets, Our outperforming and of their businesses billion $X.X $X above and Transportation book-to-bill it billion leading nearly are X, orders backlog. Air or end Energy, record a generating a be

strong our this We value to have are create financial enhanced still growth with opportunities M&A many we working with and to performance. organically position, compound

As the with has always, a it Q&A. you been Victor, Thank you speaking for pleasure today. for please line joining. open

Operator

Callon. the from come will from Giordano question Joe first line Our Instructions] of [Operator TD

Joseph Giordano

margins that kind see the than of talking mean, I of being of the new got where what there with slides Like frame just -- XQ. you how maybe kind MT, were you -- you full about up roughly full year on and really price? with that in you in like It feels of I are of So in the much you guessing than year you're conservative platforms good. Can kind thought put higher XQ, in ramping you've did in light I'm you guide? XQ. have similar

So maybe the through there. takes just walk and us puts

Luca Savi

Sure. Joe. Thank you,

first very So more of than happy we put performance QX, that all, are the with XX%. in MT

that working the for on I are Now we full this think Joe. consolidating year,

roughly Motion comes cost price for the the it well. dynamic full the of for and neutral roughly will see, when to be be it you to Now when as as will the comes cost, year Technologies price ITT can neutral,

a of that And we SOP lot of in programs are that will while a in is impacting the and this it's a there line. happening of in future, efficiency course, process the validation sometimes won, also lot line. lot help there and Of the therefore, are the

Joseph Giordano

Perfect. just is going market. our by seeing of specifically, you ITT? what's mean kind generally, it than like connector Aerospace maybe, this see just the seems on very market we order well guys side, But end IT and CCT, how Connectors of of you it on this different only goes seeing with the on here to so we're I on And with centers, kind can are company-specific what markets others. And right data doing at end you are where strength? now X on and

Luca Savi

Sure. the on When at were high $XXX record the was but The it The connectors. Aero where sure, specifically orders up. they as industrial up, of the for orders at saw roughly were in comes only to EV up, ] and were also growth CCT, total, record orders some well. declines we was were [ the connectors million a line Defense they were there actually

of the the at if on growth you had the Connectors the another and OEM OEMs look side distribution to want dimension we side. good Now also in and distribution, both between on

connectors it's order probably was that, for had. highest record that This quarter. the X on we just Having said

Operator

And our will next KeyBanc the Hammond Capital. question line of from from Jeff come

Jeffrey Hammond

the yes, I So want to with stay orders.

little the in just what's CCT, destock more orders And terms the I'm just that in just And how MT. of of there. side? orders, impressive wondering So clearly know I a and quarter-to-quarter. kind growth? through is aftermarket that any any of can then particularly color the Aero inflecting much on on lumpiness in change

Luca Savi

I definitely of at QX the highlights picture, of quarter. orders orders the Jeff, say you X when look the are would

and forget in right now, and good is when ITT, China. and don't in is For good center And both in billion. total tremendously, and Europe market then Technologies, each each Rail the about rail. a you look almost a a is record, at -- the value picture in outperforming every $X X was In business Motion business in there.

awards XX% Aero, about our are award, of XX some also from we you're down, award give orders don't record terms highest terms coming the the pushed to On are on it production Friction components of the hybrid, target. the EV distribution there talking in mean and the comes eye we Defense. the an of easy When customers. year highest the out CCT, Jeff. news are there sure, on production total I obviously that and connectors, rate The of keeping on of for in tend target, we full more And in the of already when to than those some

things customers, the on eye. changed, last far in talking IP, an cycle well not have keeping sequentially. And we're but X% well our as and growth very year-over-year short performed with So growth to X%

on So overall, orders. a picture good very

Jeffrey Hammond

Okay. on slide Great. then And capital the appreciate allocation.

do have wondering support as is? leverage of X you a balance couple what or a we there of a think pipeline can the sheet look getting think year optimal kind period? And Just over that you year out, do you

Emmanuel Caprais

Yes, Jeff.

definitely, sheet. the So of with health we're happy balance our very

debt. We have no almost

make is value standpoint, it investments. to a line When from Thanks really to you margin clearly, worked M&A prospects we the a way discussed, lot have organically, from those both an about think as the of hard and top a it I We created standpoint. organic today.

look fact, expansion, since at margin you our if In basis was it points XXX XXXX.

And that. been we've obviously, But M&A. the we're we Luca M&A. mentioned had muscle We continue with as on said, -- that will I accelerating on building

and talented team. a built have We experienced

a strategy. have and We clear effective

And so targets. build of and pipeline we've rich as a to been really actionable result, a able

average company more disciplined really We to revenue of $XXX each as a have doing Luca is each size grow obviously, $XXX than get in The And year $XXX a goal manner, targets $XXX million I million to like deploy of our XX. to ITT million. mentioned, think serious to to today roughly around million try on internally, to pipeline is to average inorganically. it to -- get of

flowing targets still Our That changed. are hasn't connectors.

yes, -- our we're so so building on patiently M&A. And execution

Operator

will next from Halloran come line of question Our Baird. Mike from the

Michael Halloran

So a here. couple

the the maybe Following just year production and just side, on levels MT the on thinking inventory basis about about channel. specifically, how auto talk piece a order you're up in and full

Luca Savi

Thanks, Mike. Sure.

So a X.X%. roughly different worldwide And was was the when declining at little quarter, it than look the quarter bit what you expected.

North I'm up digits. Europe was much weaker. And of X.X%, Europe of production car about In more whereas America down than China low here, terms up was single was X%. And was talking surprisingly course.

year, we low-single-digits. Mike, to So Europe down we the be full look when at expecting are

on -- China than of projection year. beginning the China the the is expect better at actually, We

well. we all as of you outperformance the and low-single-digit North in XX low-single-digit, million Overall, amazing was as it XXXX, expect QX We outperformed, quarter. we this, roughly around -- the for a up On know, expect to up be vehicles. whereas America production

And X.X%, X the grow to to there. Europe, year-over-year. I outperformed, is One data And growing even that declined, want not XX%, grew outstanding an the I market able mean, China business was points. performance but mention market business our the despite though only

exceptional an So team. from performance Friction the

Michael Halloran

side of IP on cycle side the you're about then the business, specifically And any there general of that. the business just areas. seeing doing industrial Appreciate side the what X maybe Svanehøj way of things, organic changes chemical there, the on short kind goes One, there? talk dynamics seeing underlying either how of is trend as momentum as as you're and well as far business, the

Luca Savi

Sure.

really digital about service. short leave talk at look market. the you the they maybe Emmanuel. cycle, X% me components And X%. baseline short of sequentially, I'll Let the volume. I cycle for up were ]. orders, mainly and that they up When you volume. and When the thanks BATS is said, valves up to quarter in were at all that And it all X% is And look were that as was sequentially, [ of the only and year-over-year, service cycle parts, mainly the

you the million highest recorded If that per second we probably at at we when is the ever show week. dollars that of orders look look cycle

market, side, industrial when see I would say to we chemical -- say if probably I Now would but it to the on comes strong. the general don't you some it that weakness say want was -- I know, that

and I in basis, on a North on America. geographical would -- the say strength is Now mainly the --

Emmanuel Caprais

prospects gas, lot chemical, mining funnel, when even strong the of orders. from oil would East, Middle for and I a our coming look we at add, just activity And really

very healthy and the IP, in for it you market very, moment book-to-bill. the see So for

was book-to-bill XXX. Our

on also I you had a think question Mike, Svanehøj.

bit QX we of line expectations, income. and sales you just closed so little update to give with on And so in this, both on a

we registered Luca had top growth strong orders. on really on as And They XX% orders. that, mentioned of

They you a continue continue about true. a they market active fit, when we are continue so to strategic built energy they to And to the they leader. transition. They're in build And that -- very, see long-term very think backlog. ring player

XXXX well. into progressing The integration now. well is really orders booking also we're So

say is this I our would started always all already then they So which is rationale. cash, And reinforcing finally, generating strategic good.

Operator

Davis from the will from of question Melius next line Our Scott Research. come

Scott Davis

fun on the tail the some the year, start few over guys you been to to watch and Congrats years. kick last it's

flow been you've I'm of but consolidating anyway, consolidation. been commentary, on for in generous been decades a about there X So curious, the particular, we've kind now, lot very M&A and hasn't talking just of

appetite? already? are timing? big perhaps I'm been has What Luca, some lot to that haven't niche why it hasn't curious seen maybe a and function more just things of of transactions it we price? of just Is assets more these this, picture Is main the barrier occurring consolidation a Is already. else. there the you're been of kind it of working an much just on anything than more not

Luca Savi

sure. Yes,

question. market, I In think plenty the very there that I do good have are answer, -- I'm not a sure so Scott. the it's of fragmented opportunities. question this

probably play the think in to they've lot there but house sometimes do in they cleaning that your -- and -- of house courtyard is I order acquisition, in your first. proper therefore, made know, tend the to they putting a in people things haven't also is

when that performance is flow, it's think at the be to look in many where to up before supposed not M&A. starting I probably So companies I

very a you're asking ago, Scott, for it to on If now. would IP. been story X It's different difficult in acquisition have example, bullish be years me,

Scott Davis

cleanup are auto? item, are Or they helpful. than just a That's guys, margins higher rail similar? Okay. And pretty

Emmanuel Caprais

business, we So higher look backlog. KONI a when such at been the the on is offset at our low than the we had still And when in because margin you -- a longer Axtone, par clearly really teens. this still rail And for look we're cost little friction business. then to taking long has expected inflation. driving than cost pricing reason And you the inflation are is Axtone because

sight in really good KONI rail trending mid- to to But have year. say would Axtone are bring especially high-teens line the I we this to So of well. margins,

Operator

of will Sachs. from line question next come from Ritchie Goldman the Our Joe

Joseph Ritchie

focusing maybe the Let's just question on first IP.

you're has the saw been margins business what been margins and given that's So the business. there's on foundry that us year that give the on north margins the mark-to-market projects still reap as well? of you're last what you update you Can just mix of seeing occurred can the have that project business on starting business? And but just historically those to pretty XX%, incredible, that up that XX%, whether an you closure kind then and on benefits the

Luca Savi

Joe, the that of margin a despite And result improved mix, than reason basis, basis in the the on and other the an we think that big I is Sure. -- the selectivity of have. headwinds project we the more points acquisition execution that XXX like-for-like. on had spotted Well really organic and the good rigor

and we Joe. that to this -- Just expect continue,

that we I done not think here. are

an give our business a So that is to on up margin. just year-over-year And a basis, very you we XXX points. backlog basis example, healthy in the it's today have project

So basis. margin on the That in will acquisition IP and organic continue as that an we for the got in this continue, as improvement both is in project of execution. well

when were closed. is about think we the foundry, Now -- foundry the you

in from Seneca we North to improve today -- able or We successfully. because are the able getting and region to our our of closing also foundry, of also the have the the quality now close safety either from improve low-cost we America performance and headcount Mexico. been been we've Falls reduce it So castings that the

and gone completed. So it has well

Joseph Ritchie

the to margin just and this super Tech incremental strong helpful then, guess, and That's continuing maybe quarter. question Motion earlier I and margins hear. on on front, obviously, other great And the

trajectory of And look the off the that number? from move maybe here? Do the year? the understand does what margins XX.X% of of like kind us for of we help the higher rest Just

Emmanuel Caprais

Joe. Thanks, Yes.

strong first So you're were Motion quarter. in right, Technologies incrementals in over the XX% super

We similar expect rest the the well. as a for number year of

from There done and excited lot as performance. very towards this was that of managing that a of at for in was and commodity cost reduction the advance the book year from been advantage prices, pricing well end trying and the of standpoint, the work the beginning last taking seeing we've we're of year. to a with So a steel instance,

Tech expect margin for say I remain standpoint, confidently that think Motion but full think a If year. from range, the we XX% you we can within right, its improve still about sequentially I would margin that quarter-after-quarter, say,

to of a we not to this. So of we're we're that And higher do -- than going able profitability. to basis, that is very to on deliver sustaining want was a business long as lower than much a that is Luca level level on said, This what consistent work higher margin. make lower sure ago

Operator

line And our from Karas the will question Damian from of UBS. come next

Damian Karas

I'm bit kind as call late could here, just region already in I little auto if the how us anything a OE you little Apologies, sorry Any on as joining walk business. globe thought feeling maybe each the so of aftermarket? discussed. across rehashing side updates the a your for you've a But European bit give well of you're about

Luca Savi

Emmanuel. I'll European aftermarket, Maybe with start the

you QX. at market market, X.X%. when production, roughly So look the the Damian, was down in I'm talking about

vehicles beginning of -- million to from a full overall XX bit different produced the was we at expected year the market the what little at be the for expect We flat beginning. picture

-- Europe be down Europe, we In are for year. to terms in down was QX, was worse, X.X% of and expecting in full the low-single-digit

up something about we the was expect to resilience And was which to tells actually which the be be you year market. the of for low-single-digit. X.X%, expected up China, flat, full

well. And great year. the actually then XX%. every North decline America and full up will also quite be So it grew. news. Europe, was we we China, outperformed this each grew up this we X market, the In of low-single-digit, is despite for And region, and low-single-digit the of

to it Emmanuel? aftermarket, awards already So an QX. of won We incredible number comes When outperformance. in an the incredible

Emmanuel Caprais

aftermarket. continue revenue So for aftermarket, the pattern we we where the little see are on showing same a bit to increased saw we in QX,

really we we growth QX we're Friction revenue business. demand. prior our destocking year, But the X% with for in versus done So customer that to continue plus We monitor to closely. think modest, end continue monitor and

Damian Karas

up helpful. of really that Svanehøj maybe That's you can be on color Svanehøj outperforming out. you acquired just And very stood the part could business that company? that the you your -- say would XX%, any expectations, since is share order then the Would And if you appreciated.

Emmanuel Caprais

Sure.

said revenue we that years, able this of that in in low the mind, for keep should to double-digit company terms deliver Damian, growth. be next X So

especially implies an long-term a that growth significant obviously, So business. standpoint, order is from because this

lot being much weren't said, XX% as long-term we a QX. there's So expecting year-over-year backlog. of as growth That for order

it's So quarter. only X

take happy. we for what is, we're it So very it but

demonstrates I leadership that think really they have. it the

from Luca mentioned, positive. good then business, line as mentioned delivered that revenue think expectations. was very a in a it standpoint, Cash, and I was our really financial income with I really

expect deliver it, they will They if -- a XX% you as that EBITDA delivered for XX% business. currently year think roughly So full about that that the and this QX, we is well. in

So yes, the things, it's of beginning. positive lot but a good really just

Operator

from next the Our Bystricky come will of Vladimir line Citigroup. from question

Vladimir Bystricky

So guys XX% that about ask orders strength strong. quite Obviously, rail you're in rail was growth to I XQ wanted the you seeing.

So double-digit thinking or you expected also these orders about rail And the whether in you how of timing can the you're going forward growth delivery rail can and then lumpiness about orders? of talk in year? duration sustained think you potential in through orders

Emmanuel Caprais

some So this. let's context put around

to main on improving in all XX rail, direct is investing China, think back we I that regions, we you U.S., in continuously of And billion. billion In is are. both In as X massive the infrastructure because programs number know know, is and Europe, is prepandemic in well. in where So around rail level, government we're around in cars. there XX government this the as investment ridership

benefits backdrop rail of of favorable for signs government executed. those seeing we're the very programs the early a our have And business. being we So

lot of On market share. of gaining a top we're that,

that train instance, and China, lot we think the that happening market. leader you now a high-speed if of right clearly there's investment is are So about for for in

strong So that's and then demand the market, outperformance. the Strong context.

we if is you usually later. way the will I our works business orders deliver X between that to book months XX about rail that think think

continuously we're at now, deliver backlog also in that the at will XXXX. we XXXX right end booking and of beginning So -- then of the

Luca Savi

this I can plan. about reason XX% an of incredible like if the And top to of market have that, you on And of think in we that amount when add market visibility. you is aftermarket rail that, because this

to to for of the the we're years. going that are winning Some next award XX last XX

to business So be it's in. a good very

Vladimir Bystricky

your for time And color. helpful rail exciting really business. That's clearly an

the That you mentioned that the on there separately allocation portfolio Just helpful had capital you as on review regularly was a slide. topic. And well.

thinking whether about divestitures just for here? go-forward the any time? portfolio over thinking talk potential should be you can you're about So Or we how about from meaningful

Luca Savi

on that regular Sure. something This Vlad. a do is basis, we

what In by the this right, end terms were the when the in able year sell half of we also we matrix the year. doing year, and to last is last started of business of [indiscernible] first

have this board, doing more. very on Bartek is been made we our something and So and crisp Since strategy focused. more we that came

assessing a that. We long looked And are therefore, we at term.

to the more anymore. So are in of more probably say. adding in leaders business, businesses pieces well critical components, be business, And some that the as the technology. are and their through owner market, core, might parts we rightful M&A that of be we other close proprietary It I will terms there and not technology would underperforming

Operator

question from Bank will Obin of Andrew And our from last come America.

Sabrina Abrams

between should how cadence we you balance online. we the reinvestment. have capacity Sabrina through about Andrew. and And think for the productivity You have margin coming Abrams more think year, on about think I When the

year? we the reinvestment plan. ramped think through sequentially You the that have Termoli Should

Emmanuel Caprais

Yes.

So for the thank question. you

the For us us, underperforming drivers productivity that in the been that allows is has reinvesting We businesses. an And really improvement. of drove was lot of a KONI our asset. the business. drive story X of to operational

in for thing Same modernizing invested the we in reinvested so R&D. IP. factories, And

the you we increasing If tremendously. ] activity about [ possible started were drove, initiatives that we because think VAV profit those

significantly drive continue expect to you to us be businesses. that. this think to -- points do continue And In margin expansion. when our to of about we basis gave to able productivity So we we through expect XX QX, year, productivity

expect of around or, margin and say, those points, basis investments, this quarter XX to the for the the let's terms impact along contribution investment, the was of we on year. the also of lines rest In be

driving of are to productivity. impact we make be driving So that a to and material that profitable reinvest to long-term sure to going drive growth. offset pricing we're some We're able

Sabrina Abrams

such U.S. market OE, the the really share what strong this particular really region? and Friction And and in are What is do the of performance then driving visibility in gains relative China you impressive. Europe impressive that's is outgrowth to a on have this ITT doing and And sort question

Luca Savi

We for China. a got asking eye on special Sabrina, this Thanks, question.

roughly China auto. business Our China of Motion business, at And is well. look performing is you XX% is rail $XXX our and made when which incredibly million, Technologies,

It's market. rail we It's the and comes big big team execution. it about don't to is China. rail growing, When forget has So well, flawless outperforming because in a market. the are listen, auto, performing been exceptionally

ppm. You on-time quality in of than have XXX%, in China delivery an QX, X less

XX production. QX, of look you they in If start had

production started XX QX. in new programs So

be of future that all not think those but which XXX validations, more process are SOP. successful, about than Now will

the you more the So that the look the think And at that, is OTD efficiency of of disruption about all XXX%. and when XX% than all line. you in this, despite have of line overall the of OE,

you have is this to Sabrina. you, company If that's like a loyal. Thank you're performing and what be see. And for you customer tend you, this a we

Operator

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

ITT (ITT) 2 May 242024 Q1 Earnings call transcript