ITT Inc. (NYSE: ITT) announced its second-quarter 2024 financial results, highlighting a strategic portfolio reshaping. The company reported EPS of $1.45 and adjusted EPS of $1.49. Significant moves included the acquisition of kSARIA, a provider of interconnect solutions, and the divestiture of Wolverine Advanced Materials, an automotive components supplier.
Key Highlights:
- 9% revenue growth (6% organic) driven by higher sales volumes across all segments.
- 60 basis points operating margin expansion to 17.6%; 100 basis points adjusted operating margin expansion to 18.0%.
- 11% EPS growth (12% adjusted) driven by volume, productivity, and value pricing.
- Acquisition of kSARIA for $475 million, enhancing the portfolio in defense and aerospace markets.
- Divestiture of Wolverine Advanced Materials for $171 million, reducing automotive exposure.
- Maintaining full-year revenue, operating margin, EPS, and cash flow guidance despite the $0.15 impact from divestiture.
Business Performance:
Motion Technologies (MT):
- Revenue increased $16 million due to higher sales volume in Friction OE and rail demand in KONI.
- Operating income increased by $14 million primarily due to higher sales volume and lower materials cost.
Industrial Process (IP):
- Revenue increased $37 million, driven by the acquisition of Svanehøj and growth in baseline pumps and aftermarket parts and service.
- Operating income decreased by $0.6 million due to higher restructuring costs.
Connect & Control Technologies (CCT):
- Revenue increased $20 million due to higher sales volumes in connectors, components for aerospace and defense, and pricing actions.
- Operating income increased by $7 million due to higher sales volume, pricing, and productivity actions.
Strategic Portfolio Actions:
ITT announced the acquisition of kSARIA, a leading producer and supplier of mission-critical connectivity solutions for the defense and aerospace markets. This acquisition, valued at approximately $475 million, is expected to close in the third quarter of 2024.
“Wolverine, part of the Motion Technologies segment prior to the divestiture, is a developer and manufacturer of high-performance specialty coatings for critical damping and sealing applications in the automotive market,” said ITT’s CEO and President Luca Savi. Following the divestiture, ITT’s automotive exposure will be primarily in its Friction braking business, representing ~30% of the total ITT portfolio.
The company also announced a quarterly dividend of $0.319 per share on its outstanding common stock, payable on Sept. 30, 2024, to shareholders of record as of Sept. 3, 2024.
2024 Guidance:
ITT maintains its guidance for revenue growth, operating margin, EPS, and free cash flow for the full year despite the Wolverine divestiture. The company expects revenue growth of 9% to 12%, operating margin of 16.9% to 17.5%, full-year EPS of $5.51 to $5.76, and free cash flow of $435 million to $475 million.
Investor Conference Call:
ITT’s management will host a conference call for investors on Aug. 1 at 8:30 a.m. Eastern Time. The webcast will be available on the company’s website, with a replay accessible two hours after the briefing.
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