ITT - Earnings call transcript Q2 2024

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Operator

Welcome to ITT's 2024 Second Quarter Conference Call. Today is Thursday, August 1, 2024. Today's call is being recorded and will be available for replay beginning at 12:00 p.m. Eastern. [Operator Instructions]. pleasure President, the Communications. Investor my Mark over now Vice Macaluso, Relations is to floor turn to It and Global

may begin. You

Mark Macaluso

Thank good and you, morning. Amy,

Sanford Officer Joining we Savi, . Today's announced XXXX, X-month call financial Caprais, me period morning these me Officer. from this provide for this Chief Financial morning. Chief President; and which results Executive will and ending Emmanuel joining XX, Luca the June

this comments please refer Actual we to Slide forward-looking today's XXXX Quarter based measures. recent report noted, Quarter include of are where Otherwise today's materially XXXX morning results described Form XX-K due compared expectations. begin, X note presented to and financial and presentation on that Second annual several to we those the include differ will SEC current in that of certain statements be Second filings. risks and other non-GAAP the Before our including our we on uncertainties, results may

such on comparable attendance of to of the both which of The most presentation, website. and are available are GAAP detailed our release our reconciliation measures our in press figures

. With to now my X. call the to who it's will on Slide turn Luca, begin that, over pleasure

Luca Savi

begin Thank the exceptional morning. would you, support by ITT. our ongoing for of Quarter I Mark, stakeholders tiers thanking and performance like and ITT Second to all in good an again for their

performance capital a ITT, effective with of aligned financial was and our for quarter milestone priorities second and The operational deployment. strategic

ITT higher margin and utilize to capital took return This reshape steps and quarter, commercial sheet portfolio balance growth we our to strong to towards significant businesses. continue the expansion, won higher-margin awards shareholders deliver to

a few with start highlights on QX. Let's

in expand and our achievements. several businesses grow record core to continue with margin We

industrial as and growth solidified in long-term our growth generated at We We in friction in friction further drove performances both with and aerospace expansion expanded line Technologies flow. we trajectory. quarter. margin cycle XX% connectors won close Svanehoj significant levels strong above-market our Motion our to backlog reached and significant CCT this new and awards acquisition, top latest We defense, margin and show on

EPS XX% $X.XX adjusted acceleration cash dropped whilst significant new flow. we in quarterly Collectively, record to free growth driving of EPS a a

pause details, get level, like-for-like we surpassed into our XXXX want the date. X we at of margin to aggregate ITT the I have target acknowledge basis, on the that and long-term years a target in ahead Before now

growth. digits get of the all into across let's by and we organically, X%, details. strong XX% helped segments contributed by to sequentially defense Now the revenue. Svanehoj, connectors, by revenue, for higher acquisition record On driven industrial a X% and double and quarter grew quarterly CCT and grew Connectors points of connectors which new another driven X volumes grew components. aero

XXX outperformed over basis Welldone organically. Technologies And art nearly outcome X% points. China, grew Motion Dictionary by the and points. was basis in XXX team.

its XX long-term We the future start-up expansion executed we was nearly On again was expect XX%, XX%. target basis this will point just half. XXX sequentially. basis a as XXX above first delivered in to XX and margin, we in quarter production SOPs points continue it China in IT the up and of this

is friction XX% MT pressure year, productivity put drive the services. This drive MT relentless XXXX. sequentially. a to and XX to an points expanded basis to will our continue led and margin above the exceptional basis margin generate testament us XXX we for and by recovery Kony, value points for products and This which

price. by driven margin rapidly volume finally this ITT with a basis And margin, approaching XX% XX% and XXX in was connector also point improvement Included is in incrementals.

closed divestiture an we approximately announced the having wagering, $XXX of Cesare, agreement ITT also million the signing interconnect and which deployment acquire the for solutions whilst capital July. Moving to Today, of in automotive completed to supplier portfolio. provider,

will on are the leading customized position defense environment reshaping customer exposure mission-critical with sole and platforms, of aerospace. high portfolio foundation solutions interconnect applications. connectivity provider source intimacy harsh expertise Cesare products the leading acquired ITT's for transactions in and of With Cesare, ITT These expand strategy. a to our fast

a I'll Wolverine last other discuss this transaction and businesses This ITT's acquisition executed allow more moment. to X year. higher divestitures growth, structurally higher-margin shift in inflow noncore The follows will to us connectors. portfolio

and portfolio, of will business. result automotive the this ITT highly this of differentiated, reshaping, total friction, and a only unique XX% represent high-margin our is As braking

our results. to Back

divestiture. and be teams of show for performance Wolverine results for we strong are guidance the customers sticking our to each the commitment from our continue roughly our in despite year income by QX, to day deliver shareholders. humbled full of to $X.XX Given I the loss our a dedication these

our exciting ITT's awards secured a quarter, of again commercial distribution up teams also demonstrating profitable This CCT, In connector orders several second quarter growth. differentiation. once XX%, consecutive were

connector critical secured OE combat already the for communications to of Net soldier critical awareness in a situational On application side, We final we for in system. are provide Warrior, the DoD this content war operations. approval stages

macro This to SES growing the trend is modernization more reinforced Cesare. example by exposed X the we're the of acquisition of

target, nearly Moving team our expected well China, full won in has and awards Friction XX% done China. XX% its [indiscernible] to the of year of full surpassed also in MT. already year

with penetrate presence, third OEM. platform India, steps but a We local to have where manufacturing are recently no won we leading a also taking

from up at up sequentially. pump they're slightly In were Legacy decarbonization A due and QX to in IP, elevated Svanehoj project orders XXXX. despite X% a orders large awards levels continue tough compare

funnel in with progress our Germany I strong. was again Bornemann to together, fortunate green project up driven in be and penetration. to we be market green June, review team, in QX, continue on part was by Our projects, In which

multiphase Svanehoj. major of of level, book-to-bill of summarize, won is we technology a Decarbonization over as deploy $XXX this on wins pump ITT Bornimer we To and for large million opportunity we our This quarter, is customers. with delivered at the orders building previous X.XX. energy part a

trajectory. about and more Svanehoj our further talk to X exciting X long-term that awards Slide to move let's commercial So growth support

acquisition transition. leadership green we our the energy Svanehoj in previously, bolsters As the shared

This X company. a for bulk pumps quarter, growth deep up strong European for with shipping Svanehoj Svanehoj orders well cryogenic were nearly cargo once selected again delivered XX%. fuel major

are the vessels powered Today, first use crude mixture. is by type ammonia. These oil to merchant designed vessel of commercial this

However, transitioning fuels. commercial anticipation this. like vessels to lower Svanehoj will the in the vessels on pump is of for carbon pumps future leading Svanehoj prove way ammonia

Additionally, in COX capture Svanehoj will liquefied systems Lights Northern provide Norway. for X serving carbon cargo pump carriers project the

pumped This won on in decarbonization awards project carriers is in world, beneath transport The to has carbon of from carriers Europe's the terminal is a the North than and COX X a also industrial climate elsewhere element solution mile COX liquefied capture Svanehoj efforts. before more Sea. the including will emitters major China.

to of I After The in such see with command In with spent rapid an it growth time predicting customers has the how technical expertise, analytics through Denmark. together, we response. team deep incredible these projects flawless built and and have drivers May, the trust is [indiscernible] execution exciting aftermarket. business' reviewing around

become the envisioned to of poised onset growth for the the is at we deal. platform Svanehoj

Now to Page X to ITT's turn allocation. and let's discuss reshaping strategic portfolio capital

where higher higher we value. our and more On business the to growth front, have working to can we deliver segments been margin shift M&A

from grew RF our connectors, businesses This with expectations Aromatics honor noncore day connector core our of Habana our expand In result divesting and portfolio from the XXXX, NCCT MicroMo, on we business. to portfolio of DAS acquisition XX%. XXXX The while began X. in acquisition exceeded which the to acquired to nearly by the focus

transition. clean Finally, the products energy we engineered highly at Pam for complementary flow the cryogenic added acquired Svanehoj a XXXX, which manufacturers marine of beginning of portfolio

business. and And on announced blue to capabilities in sensors, on networking defense key like support today, and we an relationships prime marquee solutions about defense avionics, to with and platforms content platforms Cesare. acquire customized long-standing solutions aerospace contractors The and communications, to lot Cesare's agreement is interconnect customers. interconnect a OEMs. There with chip applications for led company's this

on Cesare's of growth wide leading range outlook which sold of by are is First, or positions. positions source A&D programs, after roughly supported primary XX% sought a

operates a that expected assembly primarily through billion $X defense single-digit grow CAGR XXXX. in cable American nearly The at high North market is to company

ash leader the application, to environment and also benefit a is we Cesare fiber. Second, cabling shift in from

budget for to are In macro rising and related modernization the defense addition, demand global expected defense solutions. systems rapid tailwinds Cesare's drive to of

revenue company at average on ITT. which X we Third, believe attractive can we has over XX% years. EBITDA enhance over part of the past margins, grown the as further

synergies realizing a gains. ITT anticipate Cesare that we will from commercial and solution market combined further Finally, go-to-market canon share drive

we to work continue of the and capital cultivate Cesare, deployment other targets, priorities. on pipeline actionable connectors, sheet Beyond also to while inflow balance a putting rich

In in QX, of cash fact, paid strong and of down thanks nearly the ITT shares $XX to generation. repurchased million we $XX debt, million --

shareholders. our portfolio the expansion will In value summary, executed generated for the enhance and growth in organic continue margin and we to shift QX

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

Emmanuel Caprais

good and Luca, you, Thank morning.

price and drove Volume by CCT of improvements distribution. Let's the and drove up revenue. CCT quarter supply were nearly start point with the by were components ITT. team productivity. this XX% roughly Aerospace of driven most led growth connectors In industrial largely as with up defense CCT, XX% and X in chain

slight commercial very continues Boeing, to whereas activity starting strong. we're However, equipment be aftermarket slowdown to see in a original from demand

gains basis grew outperformance In our especially global grew with auto XXX production. and X% versus Friction on Eastern OE we share in of XX% MT, China points Europe, over

service, X%, short-cycle in Finally, projects pump while on X% grew were flat. the aftermarket was and growth up bolstered strong frictions IP, and parts by building QX. baseline In roughly revenue

in resulting expansion XX% On XX% and this in incremental was profitability, margin. nearly on quarter primarily significant driven pricing CCT and higher volume productivity, reached MT, margin margin. progress by particularly made

XXX from product inflation XXX operating above point level, Finally, sale legacy for than year. XX in and which implies gain We productivity on a impact points XX%. was of the line basis of basis XX%. and quarter which of IP the exceeded a this XX% points ITT more again points offset prior labor the basis At overcoming XX drove Svanehoj the margin, XX approximately margin basis Svanehoj IP excluding point leverage, margin a basis acquisition,

higher expansion. was volume Svanehoj more tax interest On related adjusted to rate margin by higher a than offset acquisition the effective earnings, of expense and and

net cash driven Working higher by flow inventory was significant driven capital we Finally, reductions grew inventory ITT by source CCT. free improved a year-to-date, management. cash, and and income of in X%

path for point. the continue We $XXX a momentum million approximately on expect to this to

confidence the All results impact the the of in us cash deploying for Wolverine proceeds QX to half, in, achieving debt. outlook we're strong give considering our second divestiture. even divestiture, pay the in As Wolverine down the

to quarters to several of price and the on bridge have a a speaks earnings results. for make seen points while X. productivity $X.XX. incremental want Slide on I net of the contributed few we and Let's just quality EPS consecutive dynamic the $X.XX this Volume an slide. turn adjusted to This is drove

amortization and a to from for year overcome We also of allowed from the benefit acquisition prior realized $X.XX us $X.XX This performance temporary $X.XX dilution gain. M&A.

Wrapping of amounted up a bridge, higher adjusted this higher expense rate, interest tax to foreign share $X.XX count currency, the lower quarter. net a headwind

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

We sticking the EPS full revenue, our operating free margin, and first our cash to in flow half. results year guidance strong are after

the impact to divestiture, ITC. We expect which is the resilience the testament to of a the overcome Wolverine from

We projects expect aftermarket be driven in outperformance frictional continued a short and recovery in revenue and continued growth Industrial by Connect. cycle IP to

NCCP sequential operating expected in On increase margin, XX%. remain continued to above we expect a is

a we Lastly, to full cash too the capital. bridge. due improvements second working performance, expect is in further half year quickly EPS strong at It mainly

half. our EPS, ongoing back first In performance are our half our improving raising the EPS and divestiture, can Wolverine we our strong see, midpoint. the given with operations, is for essence, expectation a you for As strong excluding

addition raise ability and to execute. the to in portfolio is the a of first quarter. This testament This to is core the $X.XX our the in strength

briefly our hand Before back discuss to third quarter. I the for to I it outlook wanted Luca,

margins We line organic will in growth the segments range mid-single-digit roughly be all with in should and be expect revenue across QX.

low we EPS which Cesare Walgreen impact in expected the single-digit be result, to acquisition, expect the QX. including impact a of not This divestiture. growth of to the is does the the include in As later range close

wrap Luca up. call to Let to . back me Slide on XX the turn

Luca Savi

Emmanuel. you, Thank

Tuesday until a Cesare. As see, exciting it we when night at ITT time can busy was signed and you up very

CCT we and core to MTN our achieved years We target Now date. points. and our the above a in outperform approaching ahead before X moving markets. In to with grew IP QX, XX% ITT Q&A, long-term of few margin many XX% continue end target

grow our drive and portfolio are greater higher-growth and creation we reshaping ITT's We deploy higher-margin to businesses. to and value capital business

today's joining interest. always, each support like your thank call. would for As I appreciate continued you to of We and

open the line Amy, . for Q&A. please

Operator

[Operator of Instruction] And question the our UBS. first at Damian from line comes Karas

Damian Karas

Yes.

impacts year. fitting top But Luca require And hear good already love So standards? mind deal. the are to way? the to you way Or basis. some conversion of see you up we helping to line in unpack the interconnection that how maybe annualized is business? kind gave that just from of open you to can with about going the from wouldn't Emmanuel, kind dilution maybe the Casare to know ITT kind A&D your sale up of I this down $X.XX if on a they EPS the with . And just of impact Would like year the think on financial X the to transactions. full what's a to Wolverine kind an existing

Luca Savi

Okay. Damien. Thanks,

look we Cesare. this when at the of So rationale

customer the flawless contractors. the that fact in solutions team really cable from is So that like could with customers. as definitely, Cesare it's and as We that with gain intimacy the position through trends. they the well a leader execution the growing got sole-source comes aligned they've defense with the develop with fiber prime that application they the

complementarity the is a Canon product Cesare. There lot of between and

also, You cable we assembly the Cesare, have cabling to competitors' always many go And you operation connectors at our and their for plants, able are cases receive in Damian, connectors. follow not to fiber and we and to -- cabling the through. we see bid connectors the opportunity end, the and

are great standards, will really with together very look It run. higher a to comes well for when plants Cesare the market actually the portfolio higher and it of strategic the the app growth, M&A very be the is So priorities When shifting Canon Canon, businesses. fit you at synergistic.

I to a business the been X plants . to Tony, team Mike was very Emmanuel? and well management and Mike their those indeed. able able of meet plants competent have visit run and very

Emmanuel Caprais

a to give standpoint, a from context, then financial And bit little just of Damian.

a above be X. in top since So terms to has also is expect have XXXX, a of really strong. a on year that average They grown expect largely to this business XXXX line. XX% They book-to-bill

terms $XXX for so expectation of around an EBITDA of XXXX, in million And XX%. the is with revenue around

to what's So standpoint, Svanehoj all those XX%. similar the growth profile be the financial Then look if a with this from you happening will is year an that in EBITDA of a large around something and transactions. with at

financial no in guidance. obviously, So now right the first there's Cesare, impact our

We the deal, be have closed the deal to September. and by will the close of end

get. right? EPS the and the us, impact so at Wolverine, that, second talked you're XXXX about Second, to that's what if it for mostly annualize you that And you by driven we -- productivity. the think about much $X.XX impact volume then half, price for guidance, that's look means So the pretty going so if our and

negative And little by to and have really commodity the half. those we're costs, are for drive aided despite going maintain guidance full we able year items because were second bit we able the XXXX that lower a the impact so in to to

Damian Karas

up you and good a there. Okay. last Orders X%, just be That's momentum tougher ask year. I and to guys seem comp friction then about from really helpful. could seeing And growth maybe on MP that's

of, the some you're auto a broader bit take globe, you into like there, . of the and rest I about the how what of Could just little market heading feeling like bucking us think, trends. you're seeing maybe looks of a around business walk that So what XXXX. year kind the

Luca Savi

XXXX. Damian, Sure. about talk me let

worse a Europe probably because said were probably is can than to People continue will X vehicles. is is XX we to more, you vehicles outperform. quarter. ago. around XXXX projecting The quarter production that, probably million were what last XX difference going of production bit market see, forecasting be As down Europe. million little the That mainly having about in people be

year outperformance be for to what the than to say going is ago. X that fair it's forecasted we better probably quarter our And

So we our friction not outperformed fact X.X%, we performance focus for despite by and changed. year-to-date, at that basis XXX the has Europe Look points. the year-to-date performance grew declined

North the year-to-date In more America. China, points X,XXX basis outperformance performance in also so was and than

probably are market worse, with be the than that and why performance expected. a So friction the higher will little is outperformance bit sticking we

Emmanuel Caprais

going if in In at production levels, so inventory was are I under saying, check. can levels, to as Luca are North down. addition this, and America Europe least add,

because this customers not is dealership. building so least the positive at our . are And at inventory

Operator

comes from Davis question Melius. the of next Our line Scott at

Scott Davis

kind this wondering, don't sourced been something color of and was wanted imagine other who is on would be have that I looks Congrats but I share folks finding I financial Inc. for follow for to little I the know that buyer. there this the there that getting interested Cesare all you up there . kind price around of on why Is chosen working bit. that was you asset. And well, guys to purchase a really have out some were attractive on business that profile. this the you as can in were time? the any

Luca Savi

we Scott. And Cesare been we've were Well, Cesare a known while. ours. in Sure, a customer with for able of been work They've to the past.

follow have for We long meet quite time, a process. and to through we this with Cesare during able been

very established I has the think there a team. been relationship together good with

And with the the putting Cesare -- us and saw Canon team, I Cesare team the together think benefit together. that ITT of

working of this synergies of get EBITDA closely XX.X% a that all Cesare. a fast multiple. that enabled with which a And and are $XXX in to roughly position going to the with us represents And because revenue enabled to out this can we're we there million the price, in of deal, keep us to dealing get team. of get good has So synergies. lot

Scott Davis

Revenue.

year? this Okay. you exceeded targets Interesting. XXXX know, looking should you've something up. for new issuing And your mentioned targets. be . you is already Will I then just Luca, be following we

Luca Savi

are Mark. me This Emmanuel is and something between that and debating we

we . targets. new of of or think I our going to either issue end beginning year is the this year next so when that were And towards

Operator

comes Our the Cowen. next Joe TD of Giordano question from with line

Joseph Giordano

customers, expires negotiating you're and your new know not contract of you're I I that get to going soon discussions specific a into there's but our Boeing know one.

when of and So economics? timing seeing kind like we might new on start any that wrapping be of when up would kind of update results of

Emmanuel Caprais

Joe.

able right, we haven't that with important in because our renegotiation of prices are So you're is for the XXXX. increase negotiations a start is been really we us the This since Boeing. to

long-term locked customary suppliers. very aerospace we contract, So in for which this is were a

extract good a being And back so now supply opportunity with to have product. we the to go our to we value also and performer that Boeing the

we're negotiations right swings And be in now full in QX Those of we'll continue be lengthy XXXX, we'll will in those the pretty to the so negotiations. are XXXX. negotiations. probably And close able

And so as result, that. see after the a impact we should

Joseph Giordano

ask Perfect. on And a to One X this probably quick is answer. then I'm question. going very

the is we're to industrial I elsewhere. like close So plus is That's nowhere seeing what even significantly connectors? mean on going real connectors question what is, XX% in just better.

I I'd to to you're earnings have consistently, are that where love ask know how on M&A strength. I'm So to amortization? now thoughts going with the then that you're you're to getting what updated ask, And question seeing the more present obliged your going

Emmanuel Caprais

So on right. you're connectors,

industrial the in encouraged we're but also very by are overall. connectors, growth We seeing in connectors

growth If we've this in given general you but price. medical first the orders especially which And up, driving in the distribution, quarter. industrial, seen growth XX% is up really instance, quarter, for distribution was aero, also defense, we're were strong,

the is good. really So picture

know really of ended. mark the this distribution. the I don't terms think of We has a if destocking there's in still question

and to time. focusing talking we customers which long our sure we a been provide is for we're Luca on really making has that that can about time on But delivering the differentiation what control,

market . So to We very dynamics. alert the understand stay positive.

Luca Savi

terms Art and think have prototype, If to Dan, working customer Engineering, the in has products job to of fast developing of Joe, and in tremendous of that very awards the I done one, being a orders developing with because led new I Head can . add the that that. in that and new and new

Emmanuel Caprais

question. second the On

a come a yet. is this So have we not matter conclusion to that

M&A, we're the and is standpoint an really to control outcome. step M&A thing this what we to in able you execution. difficult I that is think a want terms because best, And up at show in M&A very of wanted XX% we of

so $XXX Cesare, are we've we're of progress the And of done very with deployed cash. we Svanehoj. happy million $XXX We cash. With deploy million going with to

really that so that. it's executing then And strategy. treatment the about And follow will accounting

Operator

Mike next Halloran, comes Our of from Robert the Baird. question line .

Michael Halloran

things, It specifically trends looking On are the any of like between backlog, on thinking how sound just you're there? conversion it, change any like cycle any order side front context would what but the markets. signs in some doesn't changes you're perspective, thought demand from about log, maybe in IP on really of that an on seeing thoughts underlying any love the underlying the

Luca Savi

Sure. Mike. Thanks,

X%, when big all, Svanahoj tough IP year of IP, short and stayed orders were look First cover had is at level. the short mainly prior When thanks elevated up this to decarbonization cycle, more at at look a we when than project. you the compare you that versus a cycle

And of when the for exactly year you look full at the same rate in the had we QX that XXXX. rate is

Now year-over-year. project, for up the they legacy project sequentially were IP, X%

Mike, is that, shifted projects of longer. the no to these just taking major having saw, bit second concern It's we that. a little Now a It's negotiation. what that some half, said of

closing the project from as we And order what see both the projects matter cycle. QX July on on strong the of as very of we of shifted saw to QX the a some in well July where a as short is performance fact, that

funnel, We is for think, have not The XXXX. year and single and the roughly year-over-year. January very we I'm digit is funnel since up, expect the I still full orders healthy. the up legacy if see XX% X% to mistaken, that

improving, and and is that is improve, our supply on-time the chain time. this reducing helps to continue the think this competition in lead delivery also what differentiating help us I see we the from is and that

Michael Halloran

lean was at Wolverine about that. from revenue And certainly Appreciate portfolio on the continue side of a short One, secondarily, that for to horizon some love with balance capacity lot the of should the in just understand base how ability you Second I'd in, what sheet since X you're have a we parter. the thinking perspective. transactions. And then question then Helpful. risk did Great. the the Ingrid things, to use? of to

pipeline it portfolio? about as as . things type looks thinking thoughts are other there well And any the like? then So from in what on the a whether perspective personnel Wolverine

Luca Savi

Okay.

me that never latter. start saying, have on you off a me Emmanuel, will operate than team. let Mike, capacity first. can acquisition our a the start with we chew, then and go to okay? addressing regarding bite Hanim for basis. let . They So stand-alone more more And the we do deals Svanahoj largely Well, Now very strong leadership

you acquired today. As the that And the was team, of Habonim start. remember, intact X are team, them. why Svanehoj deals to reasons we a off they and practically are great

work So business that we We we acquired. say with is we this would the the spend we operate resource the and to manageable. them team. But that amount visit I time stay to leadership of facilities, close

very when acquired continue and them good They're business we as such today.

be I financial that But chew. a do so never can really don't are this more acquisition there think we made. in With from M&A. as . capacity limitation I mind, standpoint, we off to for the to will bite more So than we have certainly further said,

Emmanuel Caprais

EUR Wolverine a on Yes. the million yearly from financial And basis. a is standpoint, revenue . around XXX

Luca Savi

divestiture, today, you Mike. terms in emminent of And see I don't large other any also said further divestiture then

Just final to question. follow up on . your

Operator

Stifel. of Jones . comes from the Nathan at Our line next question

Nathan Jones

of I to am on Cesare. couple ask going follow-ups a

for out about rate . at I'll there. rate You growth would X-year lay XX%. what there forward growth the the can you start any be. talked Is expectation

Emmanuel Caprais

Yes.

went the through on. we are is that synergies. commercial -- we in platform order review they're platform reviewed to in we addition -- we we potential so on identify this, to we process reviewed the every And So

the line the range. the to expect years, we for high X So top for single-digit Cesare growth in X next

seen what they've the realistic fact to think less since XXXX I of we and prudent. due want is to it So than some be that

And increase And be I like probably not it's then I significant fair . this it's to going to there's defense mean, in things think say that been a forever. also, budget.

Nathan Jones

I revenue mean when on like could platforms. seems more synergy the you you talking say it about also maybe you're get to with competitors then fairly approved maybe And defense that's opportunities. Canon, some where but replace difficult color

a kinds dated. those bit synergies maybe So longer of are

you color on Just any could synergies. revenue give expected us

Luca Savi

Thanks. Sure.

are couple of things. So really, They a both on sides.

First among of very we fiber of when our for capabilities, we Cesare are made address all very, companies, okay? opportunities our and be cable. little. where system system connectors sometimes will and cable is pass interconnect just And our requests fiber able is now is quotation of by. sometimes very to receiving Today, with those small, we

So one. that is

take of you you having plants, as Second, but systems, Cesare connectors work our I around of the in of -- it more opportunities those mean, see the will time, course. but expand that the good. is very can penetration where on They and then customers are versa. our customers. strong the some product They side. we is there very And vice are with

to similar very So mode. what has been Micro with also

Operator

from Bystricky Citi. at comes Vlad . question next of the Our line

Vladimir Bystricky

I'll obviously, margin that just business mentioned, MT. And the XX% start question, XQ. incremental in my for you in first with Maybe

somewhere XX% you I think were up XQ. in

pricing business first in here, margins about into that and what's just incrementals thinking half you're in how So in the coming just half can additional XXXX. whether about those back talk more incremental really you elevated the driving And through? it's

Emmanuel Caprais

Yes. Vlad. Thanks,

competence MT core to So is the productivity. of drive

the expansion that when margin so A it our is think of you we're And driven seeing. significant about internal portion by productivity.

to our we've growth, and that convert ability awards our a into share revenue. production timely all the gains -- ability the use had to asset and the Our base, product

reason this as price part, lot good the prices gone because well. has the So commodity this our for have driving is really have with And margin for very expansion. customers. is been down, maintain most Price we while the of been a to able

the But 'XX. always in to discussed inflation a And from to was times we standpoint, playbook executing cycle. may the able in have we this of cost us, been for that that our matter the able it is being several on a from and that compensation the 'XX which past, customers is get over not get compensation

in many when to And the not to and starts the of structurally, are are also portfolio from didn't all prices addition what And you're there we're prior profitability for are And see regions. increased getting get of platforms standpoint production. year that of platforms start in then seeing much in. Luca is a where other commodity compensation compensation were in in as but fully new production cost able starting base that are get new the that is we now, with reflect we new the then mentioned the you productions so the China, as the kicking right this, all platforms it. exiting improving

Vladimir Bystricky

X appreciate X they to are just well, deliver manufacturing Can Okay. factory it. you obviously, Emmanuel. you in orders investment for capacity these seems very me. growth they're future just Maybe That's very be in color, for talk where about Svanehoj, other and and highlighted. utilization whether growth the . orders XX% that's see booking. I you of embedded incremental helpful need on terms the meaningful performing their

Luca Savi

really of very Vlad, look in the the at is and we outlook in whereas when France. site, main Denmark. you also is the north site Svanehoj Singapore in site a site a then small And have

Denmark. in look and Now pump at Singapore for the when you main Asia as really side in Alborg,

many of roughly need for is terms and shifts. further Now investment are these X.X at a operations that there between actually of no X operating in

So this require footprint investments. really doesn't growth

Operator

at Our KeyBanc comes the Hammond Jeff next from Markets. . of line question Capital

Jeffrey Hammond

on top under I -- of line, Cesare, I they've see deals, X mentioned love you private I done to that to were good like but they the XX%, XX% think, friction just it piece but follow-ups ownership. deals. getting looks think auto a the equity business, couple the

that Wolverine, bounced And about kind the bit. talk it know maybe business? run . organic. of of rate on set level then us a these pipeline some the Just it's bolt-ons then that around doing? they've margin of on a of with comes And been maybe just I if

Emmanuel Caprais

Yes.

So Yes, Jeff, you're right.

think over strip that done that CAGR So at I of they're the out if still you terms acquisitions they've year-on-year. years, growing than XX% in more the

with about at a share gains presence obviously, was growth when seen these marquee So growth their looked I really strong on all we've definitely talking gains. And -- but the -- platforms from, that also earlier. market I was share the talking platforms benefiting we that

add Svanehoj we're be to as growth. to going confident connector growth business. and complement was poised Cesare them And for think So able very assembly their for I that cable to our expertise is we're poised

Luca Savi

this side, we best margin improved what to start that substantially the Wolvering the really and timing really in terms portfolio. the time that On the I was in think of

the was high-margin that something reshaping to terms the businesses. share do. high It's focusing on in in of and right we growth it really strategy, So thing terms of portfolio,

was the it. this So to time right do

Jeffrey Hammond

a supply you that if and Okay. I the not seeing maybe then slowing, able Emmanuel, just OE expand Maybe OEs, maybe commercial but just seems Great. you're like heard I ramp, to what chain And that unpack It there. comment. aero more right. mentioned think . on

Emmanuel Caprais

Yes.

in is growing Aftermarket up So saying quarter. was revenue start strong. the OE pretty by this We let that commercial endpoint from still up a me were double. X%

production because issues a So aerospace on we know the overall have slowdown had. And business as a the some horizon, if think in that What is we're seeing growth. is it, that sense well. seeing about makes you OEMs doing we're the

see And that going to orders continue forever. so that to and growth to realistic expect we grow, that it to were going that our wasn't were

from we we the really have to concerning, keep expect from standpoint, year really, as really because compared wide-body have to this, to an us. that's grow. And a to hit OEM mind On industry And we more recovered basis, are we continue So know, customer the in standpoint, from addition commercial full you still especially platforms. and aero which levels nothing volume pre-pandemic in not really aftermarket the level. a standpoint. towards these a oriented that pre-pandemic strong not for the be

Operator

the next Goldman question from line Sachs. at comes Joe Ritchie of Our

Joseph Ritchie

to you cost steel you answer steel or Obviously, through -- coming lot deflation around MT. your this earlier results on the prices so said can blood far basically down on elaborate Emmanuel, year. been maybe have a

of give the So are bit into just year. maybe far just these continue purchasing a in commodities? half you expect color, how to you the like guys more your incrementals we advance second Should can little us above-average

around would be help helpful. that any . Just

Emmanuel Caprais

Sure.

in manage advance. So we we roughly X the terms of commodities, months book way in

booked essentially steel, the copper of now, So the year everything right until have for and end we that's tin.

very communicate with thing customers. So is our we the secure. we're very this good about that openly And

the very price transparent at. buy we So in we're

have negotiation from a the solidifies standpoint. price with them that compensation so And we

me. In terms for of reminding you the Thank incremental.

quarter. with incrementals XX%. happy very were This we first So QX, the in in the follows XX%

to XX%. For -- the incrementals deliver expect above year, largely above MP we full

incremental So year. the a in of the little bit less half second

to we is of this type is so which And well. don't everything long incrementals. from recovery talking the that a price about, of growth term, it's this as were result productivity, think have the it's this standpoint and sustainable volume I

achievement at the the so to drive Being improve year been standpoint. we be not going to We're that drive we a quickly, from fact so them beginning continue they is continue it largely But QX have productivity. that margin something really expecting order fact margins over-delivered to be going the to they strong the to of able and recovery points. have a as by we're to of recovering entity, were XX.X% at in the to for to to do continue in -- are

Joseph Ritchie

my hear, follow-up and this. I all, to then the in of with great That's first visit team But if friction missed it Varsa on And June. great my side, apologies to was Emmanuel. the in question,

One of couple on years out platforms over the was the you won? me what to of visibility next how the have spread based that into you've just really much things already

the the share of from your curious, the set, friction go? feel just do how year? quarter gains the for rest for around trajectory just did visibility into level I'm And order -- you me And help how about how Luca, potential just What's here? the the increasing like

Luca Savi

Sure.

was team First of for well. very and and as team the taking time all, visiting Joe, excited the the thanks

awards target an than incredibly This is This already the is was perspective, China. from Year-to-date, in that the more awards performing team well. for the we is also think XX% full year. I worldwide. have

for platforms new well positioned are next We X months. coming in also out the

well on for project market think XX% the amount awards of above that be first start-up to gain we the we team market I and number probably is now, time. So production performing as incredible the feeding share that keep the XXXX very these right as share in

with came winning internal leading that OEM. winning last good. of market on our So the side, a market the because combustion market Indian expertise this you about talking EV we're are the can we -- And It was I both is on share. things share it's share they share the also but we're on us and an electric engine. hybrid there, we're to winning vehicle and platform,

it across is So board. the

Operator

America. line comes at of question of Andrew the final Obin from Our Bank

Andrew Obin

cycle bit Svanehoj bit So has a does towards the business and the of business think shifted portion you forward, gets to more long little CCT also thinking have portfolio a historically. larger impact How is been little you backlog, defense the the and portfolio about how gets businesses. so when skewed going longer-cycle motion a portfolio the than it that smaller. the a about changes more

are Clearly, if changes team. you longer business on management just how and algorithm have for become as the to visibility. and hands very it top-tier performer But and the guys better understand want cycle you

Luca Savi

a couple So things. of

a for have the XX long visibility First in this aerospace. an about OEM, you of these a years. we -- when cycle. it about rail same really long-term look you with like all, win same projects, the XX you -- also the in businesses when term think the long it's And to these the next platform

we So definitely that. like we like --

it's higher comes portfolio, to of when towards shift the really Now and it businesses. the higher-margin growth

is So ability second outperform dimension. last the market. the And is X the the to in this

LPG, markets the LNG. for in So are when we Svanehoj leaders in play where terms example the look at this they the of acquisition, the

of look us all they you fiber -- will will outperformance, at applications keep enable are to and third the cable feed dimension. that's Cesare, leader and the this the When in

Andrew Obin

earlier mixed just questions. little other were from suppliers. a a you there bit Aero Can And think of then about supply the on that feedback follow-up you mentioned heard I X aerospace talk chain? improvements. We've

what's constraint understand . still want better? to what's and Just getting a

Emmanuel Caprais

Yes.

what seeing little a from we're seeing finally -- think side. of the improvement I bit supplier So

mentioned, customers. in range to because compared And managed I fact the our teams good result ITT to able effectively. we've very reduced We've been to As is our is to this delivery control. on-time this able we differentiates of have what can our the the further of And . And is that this competition. falling also inventory. a more increase been our that suppliers

difficult think what very customer I remains is that Order still demand. are very end volatile. patterns

focused is best to team lot is has our can and an end is market this slowly. the an so we we're industry, trying on of challenges. improving But a this that our And for customers, do

Operator

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

ITT (ITT) 1 Aug 242024 Q2 Earnings call transcript