ITT Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

Revenue: $1.2 billion, up 33% year-over-year; 11% organic growth.
Orders: Grew 26% overall; 8% organic growth.
Adjusted EPS: $1.98, reflecting a 25% increase from the prior year.
Operating Income: Increased 42%, with margin expansion of 130 basis points to 20%.
Free Cash Flow: $14 million, impacted by $71 million in one-time acquisition-related expenses; excluding these, free cash flow was up 10% year-over-year.
Book-to-Bill Ratio: 1.09.

2. Strategic Updates and Business Highlights

Strong performance attributed to disciplined execution and benefits from the recent SPX FLOW acquisition, which was completed ahead of schedule.
Newly formed Flow Technologies segment reported a 61% revenue increase, with 12% organic growth.
Significant contributions from various segments: CCT (17% organic growth), Aerospace and Defense (20% growth), and Motion Technologies (5% organic growth).
SPX FLOW integration is progressing well, with early revenue synergies and a focus on capturing $80 million in cost synergies.
Continued investment in strategic programs, including defense contracts and high-performance segments.

3. Forward Guidance and Outlook

Full-year adjusted EPS guidance set at $7.70 to $8.00, reflecting a 9% increase at the midpoint.
Expected total revenue growth of 37% and organic growth of 5% for 2026.
SPX FLOW anticipated to contribute low-teens net adjusted EPS accretion.
Free cash flow projected at approximately $560 million, with a margin between 10% and 11%.

4. Bad News, Challenges, or Points of Concern

Free cash flow was negatively impacted by acquisition-related expenses.
Increased interest expense and a higher tax rate (24.9%) due to the SPX FLOW acquisition.
Potential headwinds from geopolitical tensions in the Middle East, although current exposure is limited (4% of total revenue).
Concerns about the automotive market's decline impacting Motion Technologies, despite friction business outperforming.

5. Notable Q&A Insights

SPX FLOW Integration: Positive surprises included strong employee engagement and growth potential; however, challenges remain in realizing full revenue synergies.
Defense Business: Management does not foresee a downturn despite potential global hospitality trends; defense modernization is expected to continue.
Selling Days Impact: Additional selling days contributed approximately 5% to revenue and $0.10 to EPS in Q1; future quarters will see a normalization.
Market Dynamics: Organic growth outlook remains stable, with no significant changes since the last quarter; the Middle East conflict has minimal current impact.
Future M&A: ITT remains open to small bolt-on acquisitions, with management capacity and financial flexibility to pursue opportunities.

Overall, ITT demonstrated robust growth in Q1 2026, driven by strong operational performance and successful integration of SPX FLOW, while managing challenges related to market conditions and geopolitical risks.

ITT — ITT Inc.