ITT INC. Q4 FY2024 earnings call

2024 Highlights

• Orders grew 10% (5% organic) with ending backlog $1.6B, up 34% y/y.
• Revenue grew 11% (7% organic), margin expanded 80 basis points to ~18%, free cash flow ~$440M, EPS grew 12%.
• Fourth quarter: 12% revenue growth (6% organic), operating margin 17.5%, EPS $1.50 up 12%.

Acquisitions

• Deployed $865M in 2024 for Vanooy (cryogenic pan manufacturer) and Qesaria (sales interconnect specialist); Vanooy orders up 26%, Qesaria contributing meaningfully.

Profitability

• Strong volumes and price cost actions drove 16% operating income growth; MT and IP margins strong, with MT at almost 19% and IP near 21%, surpassing long-term targets.

Shareholder Returns

• Returned >$200M to shareholders.

Connect and Control Technologies (CCT) grew 9% organic in 2024, driven by defense, industrial connectors, and aerospace; Qesaria added ~15 points to growth in 2025. Industrial Process (IP) grew 8% organic in 2024, with pump projects in high teens, and Vanooy orders grew 26% in 2024. Motion Technologies (MT) grew 5% organic in 2024, with friction outperforming global automotive by 730 basis points and Connie rail growing 20%; MT margin finished at almost 19%.

2025 Outlook

• Revenue expected over $3.7B, organic growth 3%-5%; EPS midpoint 8% growth.
• Q1 expected flat to slightly up, revenue decline low single-digit in MT, IP/CTT flat; margin expansion 90 basis points to ~18%.
• Free cash flow ~$475M, 12%-13% margin.

Business Segments

• CCT: Strong demand from defense modernization and Boeing ramp; Qesaria to add ~15 points to growth.
• IP: Project backlog conversion for mid-single-digit growth; Vanooy to contribute double-digit revenue growth.
• MT: Friction to outperform auto, rail growth; high-performance business to drive profitable growth.

• Tariffs: Working on action plans to mitigate potential impacts on operations in Mexico and other regions; need to address case by case for different products and contracts.
• Geopolitical Uncertainties: Impact on international operations and acquisitions, but M&A pipeline remains active.

Q: Joe Ritchie asked about 2025 guidance cadence and price renegotiations in CCT.

A: Emmanuel Caprais discussed Q1 softness and margin expansion; Luca Savi talked about price as a lever in CCT.

Q: Mike Halloran asked about IP order patterns.

A: Luca Savi discussed Q4 orders, Vanooy book to bill, and strong opportunities in regions.

Q: Jeff Hammond asked about temporary intangible amortization and margins.

A: Emmanuel Caprais explained intangible amortization and margin expectations by segment.

Q: Scott Davis asked about M&A muscle.

A: Luca Savi talked about cultivation and due diligence in M&A.

Q: Damian Karas asked about Motion Technologies and high-performance market.

A: Luca Savi and Emmanuel Caprais discussed auto production, friction outperformance, and high-performance ramp.

Q: Nathan Jones asked about tariffs and CCT.

A: Luca Savi and Emmanuel Caprais discussed tariff impact analysis and actions.

Q: Joe Giordano asked about tariffs and acquisitions.

A: Luca Savi talked about successful international acquisitions and strategy.

Q: Brad Hewitt asked about IP margin and CCT margins.

A: Luca Savi and Emmanuel Caprais discussed IP margin drivers and CCT margin outlook.

Q: Vlad Bystricky asked about backlog conversion and Boeing ramp.

A: Luca Savi and Emmanuel Caprais discussed backlog composition and Boeing ramp impact.