- 14% orders growth (13% organic) driven by pump project wins and
aftermarket demand, aerospace growth, and Friction OE and rail
share gains
- 14% revenue growth (12% organic) driven by higher volume and
pricing across all businesses
- 18.3% segment operating margin (18.7% adjusted), 270 basis
points expansion (280 basis points adjusted); segment operating
income increased 33%
- Raising 2023 full year margin and EPS guidance
August 3, 2023-- ITT Inc. (NYSE: ITT) today reported financial
results for the second quarter ended July 1, 2023. The company
reported a year-over-year revenue increase of 14%, primarily driven
by 23% growth in Industrial Process (IP) and 11% growth in Motion
Technologies (MT), and pricing actions across all segments. The
acquisition of Micro-Mode contributed 1% to total revenue growth
and foreign currency translation drove a 1% favorable impact.
Second quarter segment operating income of $153 million
increased 33% versus prior year (34% adjusted). The increase was
due to higher sales volume, productivity, pricing actions and a
gain on sale of a product line in CCT. This was partially offset by
unfavorable foreign currency impacts and higher raw material and
labor costs.
EPS for the second quarter of $1.31 increased 44% versus prior
year primarily due to segment operating income growth and benefits
from share repurchases, partially offset by higher interest
expense. Adjusted EPS of $1.33 increased 36% compared to prior
year. The difference between reported and adjusted EPS is primarily
related to distributions of non-U.S. taxable income.
Operating cash flow for the second quarter of $140 million
increased $83 million versus prior year primarily driven by higher
operating income and improved working capital management. Free cash
flow for the quarter of $122 million increased $83 million. On a
year-to-date basis, ITT generated free cash flow of $152 million,
up $145 million versus 2022.
Table 1. Second Quarter Performance
Q2
2023
Q2
2022
Change
Revenue
$
833.9
$
733.3
13.7
%
Organic Growth
12.5
%
Segment Operating Income
$
152.5
$
114.3
33.4
%
Segment Operating Margin
18.3
%
15.6
%
270
bps
Adjusted Segment Operating Income
$
156.2
$
116.5
34.1
%
Adjusted Segment Operating Margin
18.7
%
15.9
%
280
bps
Earnings Per Share
$
1.31
$
0.91
44.0
%
Adjusted Earnings Per Share
$
1.33
$
0.98
35.7
%
Operating Cash Flow
$
139.7
$
56.9
145.5
%
Free Cash Flow
$
122.1
$
39.4
209.9
%
Note: all results unaudited; dollars in
millions except for per share amounts
Management Commentary
“ITT delivered a strong second quarter with growth and margin
expansion across our businesses. Our teams drove double-digit
growth in orders and revenue, with a book-to-bill once again above
one. We expanded segment margins nearly 300 basis points, bolstered
by the performance in Industrial Process and Motion Technologies.
Our cash generation accelerated, which provides us the flexibility
to execute M&A, pay down debt and repurchase shares whilst
funding growth investments,” said ITT’s Chief Executive Officer and
President Luca Savi.
“With a stronger than anticipated top line, improved margin
outlook, an ending backlog of over $1.2 billion and orders up ten
percent year-to-date, we are raising the midpoint of our adjusted
EPS guidance by twenty-five cents to over $5. We are driving to a
new level of performance for ITT. We are executing on our financial
targets, investing in the business and deploying capital to sustain
ITT’s differentiation, long-term value creation and
outperformance,” concluded Savi.
Table 2. Second Quarter Segment Results
Revenue
Operating Income
Q2 2023
Reported Increase
(Decrease)
Organic Growth
Q2 2023
Reported Increase/
(Decrease)
Adjusted Increase
(Decrease)
Motion Technologies
$
368.8
11.3 %
9.7 %
$
57.7
22.8 %
22.2 %
Industrial Process
293.6
22.5 %
22.6 %
66.4
69.8 %
66.9 %
Connect & Control Technologies
172.2
5.5 %
3.1 %
28.4
0.7 %
7.5 %
Total Segment Results
833.9
13.7 %
12.5 %
152.5
33.4 %
34.1 %
Note: all results unaudited; excludes
intercompany eliminations of $0.7; comparisons to Q2 2022
Motion Technologies revenue increased $38 million
primarily due to higher sales volume in Friction OE, favorable
foreign currency translation impacts, and pricing actions.
Operating income increased $11 million primarily due to higher
sales volume and productivity and pricing actions, partially offset
by unfavorable foreign currency impacts and higher raw material and
labor costs.
Industrial Process revenue increased $54 million
primarily due to growth in projects, baseline pumps, parts and
service. Operating income increased $27 million primarily due to
higher volume and pricing and productivity actions, partially
offset by higher raw material costs and unfavorable sales mix.
Connect & Control Technologies revenue increased $9
million primarily driven by growth in aerospace and defense and the
acquisition of Micro-Mode. This was offset by lower connector
demand in Europe. Operating income was flat at $28 million as
pricing and productivity actions and the net M&A impact were
offset by higher raw material, labor and overhead costs and higher
strategic growth investment.
2023 Guidance
The company is updating its 2023 guidance. We now expect segment
operating margin of 17.4% to 18.2% and adjusted segment operating
margin of 17.7% to 18.5%, up 50 bps to 130 bps. We now expect EPS
of $4.85 to $5.05, and adjusted EPS of $4.95 to $5.15, up 11% to
16% for the full year. There is no change to the revenue guidance
of 7% to 9% and 6% to 8% on an organic basis, or free cash flow
guidance of $350 million to $400 million, representing free cash
flow margin of 11% to 12%.
It is not possible, without unreasonable efforts, to estimate
the impacts of foreign currency fluctuations, acquisitions and
certain other special items that may occur in 2023 as these items
are inherently uncertain and difficult to predict. As a result, we
are unable to quantify certain amounts that would be included in a
reconciliation of organic revenue growth and adjusted segment
operating margin to the most directly comparable GAAP financial
measures without unreasonable efforts and accordingly we have not
provided reconciliations for these forward-looking non-GAAP
financial measures.
Investor Conference Call Details
ITT’s management will host a conference call for investors on
Thursday, August 3 at 8:30 a.m. Eastern Time. The briefing can be
accessed live via a webcast, which is available on the company’s
website: https://investors.itt.com. A replay of the webcast will be
available for 90 days following the presentation. A replay will
also be available telephonically from two hours after the webcast
until Thursday, August 17, 2023 at midnight Eastern Time.
Reconciliations of non-GAAP financial performance metrics to their
most comparable U.S. GAAP financial performance metrics are defined
and presented below and should not be considered a substitute for,
nor superior to, the financial data prepared in accordance with
U.S. GAAP.
Safe Harbor Statement
This release contains “forward-looking statements” intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. In addition, the
conference call (including the financial results presentation
material) may include, and officers and representatives of ITT may
from time to time make and discuss, projections, goals,
assumptions, and statements that may constitute “forward-looking
statements”. These forward-looking statements are not historical
facts, but rather represent only a belief regarding future events
based on current expectations, estimates, assumptions and
projections about our business, future financial results and the
industry in which we operate, and other legal, regulatory, and
economic developments. These forward-looking statements include,
but are not limited to, future strategic plans and other statements
that describe the company’s business strategy, outlook, objectives,
plans, intentions or goals, and any discussion of future events and
future operating or financial performance.
We use words such as “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” “target,” “future,” “may,”
“will,” “could,” “should,” “potential,” “continue,” “guidance” and
other similar expressions to identify such forward-looking
statements. Forward-looking statements are uncertain and, by their
nature, many are inherently unpredictable and outside of ITT’s
control, and involve known and unknown risks, uncertainties and
other important factors that could cause actual results to differ
materially from those expressed or implied in, or reasonably
inferred from, such forward-looking statements.
Where in any forward-looking statement we express an expectation
or belief as to future results or events, such expectation or
belief is based on current plans and expectations of our
management, expressed in good faith and believed to have a
reasonable basis. However, we cannot provide any assurance that the
expectation or belief will occur or that anticipated results will
be achieved or accomplished.
Among the factors that could cause our results to differ
materially from those indicated by forward-looking statements are
risks and uncertainties inherent in our business including, without
limitation:
- volatility in raw material prices and our suppliers’ ability to
meet quality and delivery requirements;
- uncertain global economic and capital markets conditions, which
have been influenced by the COVID-19 pandemic, the Russia-Ukraine
war, inflation, changes in monetary policies, slowing growth and
the threat of a possible global economic recession, trade disputes
between the U.S. and its trading partners, political and social
unrest, instability in the global banking system and the
availability and fluctuations in prices of energy and commodities,
including steel, oil, copper and tin;
- impacts on our business stemming from continued supply chain
disruptions and raw material shortages, which have resulted in
increased costs and reduced availability of key commodities and
other necessary services;
- our inability to hire or retain key personnel;
- fluctuations in foreign currency exchange rates and the impact
of such fluctuations on our revenues, customer demand for our
products and on our hedging arrangements;
- failure to manage the distribution of products and services
effectively;
- fluctuations in interest rates and the impact of such
fluctuations on customer behavior and on our cost of debt;
- failure to compete successfully and innovate in our
markets;
- failure to protect our intellectual property rights or
violations of the intellectual property rights of others;
- the extent to which there are quality problems with respect to
manufacturing processes or finished goods;
- the risk of cybersecurity breaches or failure of any
information systems used by the Company, including any flaws in the
implementation of any enterprise resource planning systems, as well
as similar breaches or failures affecting our business partners or
service providers;
- loss of or decrease in sales from our most significant
customers;
- risks due to our operations and sales outside the U.S. and in
emerging markets, including the imposition of tariffs and trade
sanctions;
- fluctuations in demand or customers’ levels of capital
investment and maintenance expenditures, especially in the energy,
chemical and mining markets;
- the impacts on our business from Russia’s war with Ukraine, and
the global response to it;
- the risk of material business interruptions, particularly at
our manufacturing facilities;
- risk of liabilities from past divestitures and spin-offs;
- failure of portfolio management strategies, including
cost-saving initiatives, to meet expectations;
- risks related to government contracting, including changes in
levels of government spending and regulatory and contractual
requirements applicable to sales to the U.S. government;
- fluctuations in our effective tax rate, including as a result
of the passage of the Inflation Reduction Act of 2022 and other
possible tax reform legislation in the U.S. and other
jurisdictions;
- changes in environmental laws or regulations, discovery of
previously unknown or more extensive contamination, or the failure
of a potentially responsible party to perform;
- increased scrutiny from investors, lenders and other market
participants regarding our environmental, social and governance and
sustainability responsibilities, which could expose us to
additional costs and adversely impact our reputation, business,
financial performance and growth;
- failure to comply with the U.S. Foreign Corrupt Practices Act
(or other applicable anti-corruption legislation), export controls
and trade sanctions;
- risk of product liability claims and litigation; and
- changes in laws relating to the use and transfer of personal
and other information.
The forward-looking statements included in this release speak
only as of the date hereof. We undertake no obligation (and
expressly disclaim any obligation) to update any forward-looking
statements, whether written or oral or as a result of new
information, future events or otherwise.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Three Months Ended
Six Months Ended
July 1, 2023 July 2, 2022
July 1,
2023 July 2, 2022 Revenue
$
833.9
$
733.3
$
1,631.8
$
1,459.5
Cost of revenue
553.9
511.1
1,089.9
1,018.9
Gross profit
280.0
222.2
541.9
440.6
General and administrative expenses
68.4
57.0
136.7
117.4
Sales and marketing expenses
43.9
40.4
86.8
78.8
Research and development expenses
25.7
24.3
52.1
49.3
Operating income
142.0
100.5
266.3
195.1
Interest and non-operating expense, net
2.5
0.5
6.0
0.3
Income from continuing operations before income tax expense
139.5
100.0
260.3
194.8
Income tax expense
30.6
24.0
50.7
43.5
Income from continuing operations
108.9
76.0
209.6
151.3
Loss from discontinued operations, net of
tax benefit of $0.0, $0.4, $0.0 and $0.4, respectively
-
(1.2)
-
(1.2)
Net income
108.9
74.8
209.6
150.1
Less: Income attributable to noncontrolling interests
0.7
0.2
1.4
0.7
Net income attributable to ITT Inc.
$
108.2
$
74.6
$
208.2
$
149.4
Amounts attributable to ITT Inc.: Income from
continuing operations
$
108.2
$
75.8
$
208.2
$
150.6
Loss from discontinued operations, net of tax
-
(1.2)
-
(1.2)
Net income attributable to ITT Inc.
$
108.2
$
74.6
$
208.2
$
149.4
Earnings (loss) per share attributable to ITT Inc.:
Basic: Continuing operations
$
1.31
$
0.91
$
2.52
$
1.79
Discontinued operations
-
(0.01)
-
(0.01)
Net income
$
1.31
$
0.90
$
2.52
$
1.78
Diluted: Continuing operations
$
1.31
$
0.91
$
2.51
$
1.79
Discontinued operations
-
(0.02)
-
(0.02)
Net income
$
1.31
$
0.89
$
2.51
$
1.77
Weighted average common shares – basic
82.4
83.1
82.5
84.0
Weighted average common shares – diluted
82.6
83.4
82.8
84.3
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (IN
MILLIONS, EXCEPT PER SHARE AMOUNTS) As of the Period Ended
July 1, 2023 December 31, 2022
Assets Current assets:
Cash and cash equivalents
$
462.1
$
561.2
Receivables, net
689.3
628.8
Inventories
573.2
533.9
Other current assets
104.6
112.9
Total current assets
1,829.2
1,836.8
Non-current assets: Plant, property and equipment, net
528.7
526.8
Goodwill
1,009.3
964.8
Other intangible assets, net
136.2
112.8
Other non-current assets
382.0
339.1
Total non-current assets
2,056.2
1,943.5
Total assets
$
3,885.4
$
3,780.3
Liabilities and Shareholders’ Equity Current liabilities:
Commercial paper and current maturities of long-term debt
$
396.5
$
451.0
Accounts payable
406.3
401.1
Accrued and other current liabilities
371.3
333.4
Total current liabilities
1,174.1
1,185.5
Non-current liabilities: Postretirement benefits
137.5
137.2
Other non-current liabilities
216.2
200.2
Total non-current liabilities
353.7
337.4
Total liabilities
1,527.8
1,522.9
Shareholders’ equity: Common stock: Authorized – 250.0 shares, $1
par value per share Issued and outstanding – 82.1 shares and 82.7
shares, respectively
82.1
82.7
Retained earnings
2,614.0
2,509.7
Accumulated other comprehensive income (loss): Postretirement
benefit plans
2.9
3.6
Cumulative translation adjustments
(352.1)
(347.9)
Total accumulated other comprehensive loss
(349.2)
(344.3)
Total ITT Inc. shareholders’ equity
2,346.9
2,248.1
Noncontrolling interests
10.7
9.3
Total shareholders’ equity
2,357.6
2,257.4
Total liabilities and shareholders’ equity
$
3,885.4
$
3,780.3
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED) (IN MILLIONS) For the Six Months Ended
July 1, 2023 July 2, 2022
Operating Activities Income
from continuing operations attributable to ITT Inc.
$
208.2
$
150.6
Adjustments to income from continuing operations: Depreciation and
amortization
53.8
55.3
Equity-based compensation
10.1
8.7
Gain on sale of business
(7.2)
-
Other non-cash charges, net
16.6
17.3
Changes in assets and liabilities: Change in receivables
(58.6)
(77.6)
Change in inventories
(31.4)
(106.5)
Change in contract assets
(2.9)
(10.9)
Change in contract liabilities
12.0
18.7
Change in accounts payable
8.9
65.3
Change in accrued expenses
15.5
(33.0)
Change in income taxes
(8.1)
(3.5)
Other, net
(19.1)
(30.2)
Net Cash – Operating Activities
197.8
54.2
Investing Activities Capital expenditures
(46.3)
(47.5)
Proceeds from sale of business
10.5
-
Acquisitions, net of cash acquired
(79.3)
(146.9)
Payments to acquire interest in unconsolidated subsidiaries
(1.4)
(25.1)
Other, net
(3.3)
1.1
Net Cash – Investing Activities
(119.8)
(218.4)
Financing Activities Commercial paper, net borrowings
(61.0)
364.6
Share repurchases under repurchase plan
(60.0)
(240.9)
Payments for taxes related to net share settlement of stock
incentive plans
(6.4)
(8.5)
Dividends paid
(48.1)
(44.3)
Other, net
(0.8)
(0.4)
Net Cash – Financing Activities
(176.3)
70.5
Exchange rate effects on cash and cash equivalents
(0.4)
(28.1)
Net cash – operating activities of discontinued operations
(0.2)
-
Net change in cash and cash equivalents
(98.9)
(121.8)
Cash and cash equivalents – beginning of year (includes restricted
cash of $0.7 and $0.8, respectively)
561.9
648.3
Cash and Cash Equivalents – end of year (includes restricted cash
of $0.9 and $0.8, respectively)
$
463.0
$
526.5
Supplemental Disclosures of Cash Flow Information Cash paid
during the year for: Interest
$
8.5
$
2.6
Income taxes, net of refunds received
$
52.8
$
45.2
Key Performance Indicators and Non-GAAP Measures
Management reviews a variety of key performance indicators
including revenue, segment operating income and margins, earnings
per share, order growth, and backlog, some of which are calculated
on a non-GAAP basis. In addition, we consider certain measures to
be useful to management and investors when evaluating our operating
performance for the periods presented. These measures provide a
tool for evaluating our ongoing operations and management of assets
from period to period. This information can assist investors in
assessing our financial performance and measures our ability to
generate capital for deployment among competing strategic
alternatives and initiatives, including, but not limited to,
acquisitions, dividends, and share repurchases. Some of these
metrics, however, are not measures of financial performance under
accounting principles generally accepted in the United States of
America (GAAP) and should not be considered a substitute for
measures determined in accordance with GAAP. We consider the
following non-GAAP measures, which may not be comparable to
similarly titled measures reported by other companies, to be key
performance indicators for purposes of our reconciliation tables.
Organic Revenues and
Organic Orders are defined,
respectively, as revenue and orders, excluding the impacts of
foreign currency fluctuations and acquisitions. The
period-over-period change resulting from foreign currency
fluctuations is estimated using a fixed exchange rate for both the
current and prior periods. We believe that reporting organic
revenue and organic orders provides useful information to investors
by helping identify underlying trends in our business and
facilitating comparisons of our revenue performance with prior and
future periods and to our peers.
Adjusted Operating Income
and
Adjusted Segment Operating Income are defined,
respectively, as total operating income and segment operating
income, adjusted to exclude special items that include, but are not
limited to, restructuring, certain asset impairment charges,
certain acquisition-related impacts, and unusual or infrequent
operating items. Special items represent charges or credits that
impact current results, which management views as unrelated to the
Company's ongoing operations and performance.
Adjusted Operating
Margin and
Adjusted Segment Operating Margin are defined
as adjusted operating income or adjusted segment operating income,
respectively, divided by revenue. We believe these financial
measures are useful to investors and other users of our financial
statements in evaluating ongoing operating profitability, as well
as in evaluating operating performance in relation to our
competitors.
Adjusted Income from Continuing Operations is
defined as income from continuing operations attributable to ITT
Inc. adjusted to exclude special items that include, but are not
limited to, restructuring, certain asset impairment charges,
certain acquisition-related impacts, income tax settlements or
adjustments, and unusual or infrequent items. Special items
represent charges or credits, on an after-tax basis, that impact
current results, which management views as unrelated to the
Company’s ongoing operations and performance. The after-tax basis
of each special item is determined using the jurisdictional tax
rate of where the expense or benefit occurred.
Adjusted income
from continuing operations per diluted share (adjusted EPS) is
defined as adjusted income from continuing operations divided by
diluted weighted average common shares outstanding. We believe that
adjusted income from continuing operations and adjusted EPS are
useful to investors and other users of our financial statements in
evaluating ongoing operating profitability, as well as in
evaluating operating performance in relation to our competitors.
Free Cash Flow is defined as net cash provided by operating
activities less capital expenditures. Free Cash Flow Margin is
defined as free cash flow divided by revenue. We believe that free
cash flow and free cash flow margin provides useful information to
investors as it provides insight into a primary cash flow metric
used by management to monitor and evaluate cash flows generated by
our operations.
ITT Inc. Non-GAAP Reconciliation Reported
vs. Organic Revenue / Orders Second Quarter 2023 &
2022 (In Millions) (all amounts unaudited)
(As
Reported - GAAP) (As Adjusted - Organic) (A) (B)
(C) (D) (E) (F) = A-D-E (G) =C-D-E (H) = G / B $ Change % Change
Revenue / $ Change % Change 2023 vs.2022 2023 vs.2022 Acquisitions
FX Impact Orders Adj. 2023vs. 2022 Adj. 2023vs. 2022 Q2 2023 Q2
2022 Q2 2023 Q2 2023 Q2 2023
Revenue ITT Inc.
$
833.9
$
733.3
$
100.6
13.7
%
$
3.9
$
5.1
$
824.9
$
91.6
12.5
%
Motion Technologies
368.8
331.3
37.5
11.3
%
-
5.3
363.5
32.2
9.7
%
Industrial Process
293.6
239.6
54.0
22.5
%
-
(0.2
)
293.8
54.2
22.6
%
Connect & Control Technologies
172.2
163.2
9.0
5.5
%
3.9
0.1
168.2
5.0
3.1
%
Orders
ITT Inc.
$
917.5
$
807.1
$
110.4
13.7
%
$
4.7
$
4.4
$
908.4
$
101.3
12.6
%
Motion Technologies
376.7
327.7
49.0
15.0
%
-
5.6
371.1
43.4
13.2
%
Industrial Process
343.0
298.8
44.2
14.8
%
-
(1.4
)
344.4
45.6
15.3
%
Connect & Control Technologies
198.5
181.5
17.0
9.4
%
4.7
0.2
193.6
12.1
6.7
%
Note: Excludes intercompany eliminations Immaterial
differences due to rounding
ITT Inc. Non-GAAP
Reconciliation Reported vs Adjusted Segment Operating Income
& Segment Operating Margin Second Quarter 2023 &
2022 (In Millions) (all amounts unaudited) Q2 2023 Q2
2023 Q2 2023 Q2 2022 Q2 2022 Q2 2022 % Change % Change AsReported
SpecialItems AsAdjusted AsReported SpecialItems AsAdjusted As
Reported2023 vs. 2022 As Adjusted2023 vs. 2022
Revenue: Motion Technologies
$
368.8
$
368.8
$
331.3
$
331.3
11.3
%
11.3
%
Industrial Process
293.6
293.6
239.6
239.6
22.5
%
22.5
%
Connect & Control Technologies
172.2
172.2
163.2
163.2
5.5
%
5.5
%
Intersegment eliminations
(0.7
)
(0.7
)
(0.8
)
(0.8
)
Total Revenue
$
833.9
$
833.9
$
733.3
$
733.3
13.7
%
13.7
%
Operating Margin: Motion Technologies
15.6
%
40
BP
16.0
%
14.2
%
30
BP
14.5
%
140
BP
150
BP Industrial Process
22.6
%
30
BP
22.9
%
16.3
%
50
BP
16.8
%
630
BP
610
BP Connect & Control Technologies
16.5
%
100
BP
17.5
%
17.3
%
(10
)
BP
17.2
%
(80
)
BP
30
BP Total Operating Segments
18.3
%
40
BP
18.7
%
15.6
%
30
BP
15.9
%
270
BP
280
BP
Operating Income: Motion Technologies
$
57.7
$
1.2
$
58.9
$
47.0
$
1.2
$
48.2
22.8
%
22.2
%
Industrial Process
66.4
0.7
67.1
39.1
1.1
40.2
69.8
%
66.9
%
Connect & Control Technologies
28.4
1.8
30.2
28.2
(0.1
)
28.1
0.7
%
7.5
%
Total Segment Operating Income
$
152.5
$
3.7
$
156.2
$
114.3
$
2.2
$
116.5
33.4
%
34.1
%
Note: Immaterial differences due to rounding.
Special items include, but are not limited to, restructuring
costs, acquisition-related expenses, and other unusual or
infrequent items.
ITT Inc. Non-GAAP Reconciliation
Reported vs. Adjusted Income from Continuing Operations &
Adjusted EPS Second Quarter 2023 & 2022 (In
Millions, except per share amounts) (all amounts unaudited)
Q2 2023 Q2 2023 Q2 2022 Q2 2022 $ Change % Change AsReported
Non-GAAPAdjustments AsAdjusted AsReported Non-GAAPAdjustments
AsAdjusted As Adjusted2023 vs. 2022 As Adjusted2023 vs. 2022
Segment operating income
$
152.5
$
3.7
#A
$
156.2
$
114.3
$
2.2
#A
$
116.5
Corporate and other (income) costs
(10.5
)
(3.7
)
#B
(14.2
)
(13.8
)
2.0
#B
(11.8
)
Operating income
142.0
-
142.0
100.5
4.2
104.7
37.3
35.6
%
Operating margin
17.0
%
17.0
%
13.7
%
14.3
%
Interest income (expense), net
(2.5
)
-
(2.5
)
(0.9
)
-
(0.9
)
Other income (expense), net
-
-
-
0.4
-
0.4
Income from continuing operations before tax
139.5
-
139.5
100.0
4.2
104.2
Income tax expense
(30.6
)
1.6
#C
(29.0
)
(24.0
)
1.6
#C
(22.4
)
Income from continuing operations
108.9
1.6
110.5
76.0
5.8
81.8
Less: Income attributable to noncontrolling interests
0.7
-
0.7
0.2
-
0.2
Income from continuing operations - ITT Inc.
$
108.2
$
1.6
$
109.8
$
75.8
$
5.8
$
81.6
EPS from continuing operations
$
1.31
$
0.02
$
1.33
$
0.91
$
0.07
$
0.98
$
0.35
35.7
%
Note: Amounts may not calculate due to rounding. Total
Operating Margin is defined as reported operating income or
adjusted operating income divided by total revenue. Per share
amounts are based on diluted weighted average common shares
outstanding. #A - 2023 includes acquisition-related expenses
($1.8M) impacts related to the Russia-Ukraine war ($1.4M)
restructuring costs ($0.6M) and other income ($0.1M). #A - 2022
includes restructuring costs ($2.2M), severance costs ($0.7M), and
other costs ($0.1M), partially offset by the reversal of impacts
related to the Russia-Ukraine conflict ($0.8M). #B - 2023
includes income from a recovery of costs associated with the 2020
lease termination of a legacy site ($3.7M). #B - 2022 includes an
asset impairment charge ($1.7M) and severance and other costs
($0.3M). #C - 2023 includes the net tax benefit of special
items #A and #B ($0.4M) offset by tax expense related to
distributions of non-U.S. income ($1.2M) and other tax-related
special charges ($0.8M). #C - 2022 includes the net tax benefit of
special items #A and #B ($1.5M), more than offset by tax expense
related to a write-down of a tax receivable of ($2.1M), tax expense
for valuation allowance impacts of ($0.9M), and other tax-related
special items.
ITT Inc. Non-GAAP
Reconciliation Free Cash Flow and Free Cash Flow Margin
Three and Six Months Ended 2023 & 2022 (In Millions)
(all amounts unaudited)
Q2 2023 Q2 2022
6M 2023
6M 2022
Net Cash - Operating Activities
$
139.7
$
56.9
$
197.8
$
54.2
Less: Capital expenditures
17.6
17.5
46.3
47.5
Free Cash Flow
$
122.1
$
39.4
$
151.5
$
6.7
Revenue
$
833.9
$
733.3
$
1,631.8
$
1,459.5
Free Cash Flow Margin
14.6
%
5.4
%
9.3
%
0.5
%
ITT Inc. Non-GAAP Reconciliation GAAP vs. Adjusted
EPS Guidance Full Year 2023 (Per share amounts) (all
amounts unaudited)
2023 Full-Year Guidance Low
High EPS from Continuing Operations - GAAP
$
4.85
$
5.05
Estimated restructuring, net of tax
0.07
0.07
Other special items, net of tax
0.04
0.04
Other tax special Items
(0.01
)
(0.01
)
EPS from Continuing Operations - Adjusted
$
4.95
$
5.15
Note: The Company has provided forward-looking
non-GAAP financial measures for organic revenue growth and adjusted
segment operating margin. It is not possible, without unreasonable
efforts, to estimate the impacts of foreign currency fluctuations,
acquisitions and certain other special items that may occur in 2023
as these items are inherently uncertain and difficult to predict.
As a result, the Company is unable to quantify certain amounts that
would be included in a reconciliation of organic revenue growth and
adjusted segment operating margin to the most directly comparable
GAAP financial measures without unreasonable efforts and
accordingly has not provided reconciliations for these forward
looking non-GAAP financial measures.
ITT Inc. Non-GAAP
Reconciliation Free Cash Flow and Free Cash Flow Margin
Guidance Full Year 2023 (In Millions) (all amounts
unaudited)
2023 Full-Year Guidance Low
High Net Cash - Operating Activities
$
470
$
520
Less: Capital expenditures
120
120
Free Cash Flow
$
350
$
400
Adjusted Free Cash Flow
$
350
$
400
Revenue #A
$
3,225
$
3,225
Free Cash Flow margin
11
%
12
%
#A Represents expected revenue growth of 8%, reflecting the
mid-point of the 7% to 9% range.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803029713/en/
Investor Contact Mark Macaluso 1 914-641-2064
mark.macaluso@itt.com
Media Contact Phil Terrigno +1 914-641-2143
phil.terrigno@itt.com
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