ITT INC. Annual Report - A Comprehensive Investor Overview

This comprehensive overview cuts through the jargon to help you understand ITT INC.'s performance over the past year, covering their business, financial health, strategic moves, and what these mean for you as an investor.

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What ITT INC. Does (Business Segments & Market Position)

ITT INC. operates three distinct, complementary segments, serving critical industrial and transportation markets globally. The company uses specialized engineering and manufacturing to compete effectively in its respective niches.

• Motion Technologies: ITT's largest segment, Motion Technologies, focuses on highly engineered vehicle components for passenger cars, commercial vehicles, and rail. This includes brake pads, shock absorbers, and friction materials. It serves as a key supplier to major automotive OEMs and aftermarket channels, often competing on performance, durability, and innovation.
• Industrial Process: This segment specializes in designing, manufacturing, and servicing highly engineered industrial pumps, valves, and systems. Its products are vital for demanding applications in industries such as water and wastewater treatment, mining, oil and gas, chemical processing, and pulp and paper. The segment competes on reliability, efficiency, and lifecycle cost.
• Connect & Control Technologies: Connect & Control Technologies provides specialized connectors, critical control components, and fluid management solutions. Key markets include aerospace and defense, industrial, medical, and energy (including specialized oil and gas pumps and components). This segment often focuses on high-precision, mission-critical applications where failure is not an option.

Competitive Position

ITT INC. operates in highly competitive global markets across its three segments. ITT competes effectively due to several key factors:

• Technological Innovation and R&D: Continuous investment in research and development enables ITT to offer differentiated, high-performance products that meet evolving customer needs and regulatory requirements, particularly in specialized components and systems.
• Product Quality and Reliability: For mission-critical applications in aerospace, defense, and industrial processes, product reliability and durability are paramount. ITT's reputation for quality provides a significant competitive advantage.
• Global Manufacturing and Service Footprint: ITT's widespread operational presence enables it to serve diverse customer bases efficiently, provide local support, and adapt to regional market dynamics.
• Customer Relationships and Application Expertise: A deep understanding of customer applications and long-standing relationships with key OEMs and industrial clients provide a stable demand base and opportunities for collaborative innovation.
• Cost Efficiency and Supply Chain Management: Effective management of manufacturing costs, procurement, and supply chain logistics maintains competitive pricing and profitability, especially in high-volume segments like automotive.
• Brand Recognition: Established brand names within its niche markets contribute to customer trust and preference.

How They Performed Financially This Year (Key Metrics)

ITT INC. achieved consistent revenue growth, solid profitability, and healthy cash generation in 2025.

• Revenue Growth:

  • Total Revenue: Total revenue reached $3.25 billion in 2025, a 4.26% increase from $3.12 billion in 2024. This builds on a 2.60% increase from 2023 to 2024, demonstrating steady upward momentum.
  • Segment Breakdown:
    • Motion Technologies: Led the way with $1.48 billion in 2025 (up 4.75% from $1.41 billion in 2024).
    • Industrial Process: Grew to $1.05 billion in 2025 (up 3.85% from $1.01 billion in 2024).
    • Connect & Control Technologies: Increased to $725 million in 2025 (up 3.87% from $698 million in 2024).
  • All major geographic regions (North America, Europe, Asia Pacific, Middle East, and South America) contributed positively to sales, indicating broad-based growth.

• Profitability:

  • Gross Margin: ITT maintained a healthy 32.5% gross margin in 2025, reflecting efficient operations and product mix.
  • Operating Income: Operating income increased 6.8% to $450 million in 2025, up from $421 million in 2024. This indicates effective cost management relative to revenue growth.
  • Net Income: Net income rose to $310 million in 2025, compared to $295 million in 2024, a 5.1% increase.
  • Diluted Earnings Per Share (EPS): Diluted EPS grew to $3.55 in 2025, up from $3.30 in 2024, partly due to share repurchases.

Financial Health (Debt, Cash, Liquidity)

• Operating Cash Flow: Operating cash flow was strong at $380 million in 2025, providing ample liquidity for investments and debt servicing.
• Free Cash Flow: Free cash flow stood at $260 million in 2025, after $120 million in capital expenditures. This demonstrates the company's ability to generate cash beyond operational needs.
• Cash and Equivalents: ITT ended 2025 with $550 million in cash, indicating a solid liquidity position.
• Total Debt: Total debt remained manageable at $1.1 billion, with a net debt to EBITDA ratio of approximately 1.5x. This suggests a healthy leverage profile.

Management Discussion (MD&A Highlights)

Management's discussion highlights ITT's strategic focus on growth, operational efficiency, and shareholder returns. Key developments and explanations of financial performance support this focus:

• Strategic Acquisitions: ITT continued its growth strategy through acquisitions, expanding market reach and technological capabilities.
  • In 2023, the company acquired MicroMode for approximately $75 million, enhancing its aerospace connector offerings.
  • 2024 saw the acquisition of Svanehoj ($110 million), strengthening its marine and energy pump portfolio, along with Wolverine ($40 million) and Matrix ($60 million) to bolster its industrial components.
  • Most recently, in 2025, ITT completed the acquisition of KSARIA for $90 million, further expanding its specialized fluid management solutions in the industrial process segment. These acquisitions are expected to contribute to future revenue growth and margin expansion by broadening product lines and attracting new customers.
• Share Repurchase Program: ITT INC. demonstrated its commitment to shareholder returns by actively repurchasing its stock. Under a program initiated in October 2023, the company repurchased $150 million worth of shares in 2024 and an additional $120 million in 2025. This reduced the outstanding share count by approximately 2.5% over two years, positively contributing to EPS growth. As of year-end 2025, approximately $80 million remained authorized under the current program.
• Operational Efficiency Initiatives: ITT reported $13 million in employee severance costs in 2025, a slight increase from $12 million in 2024. These costs stem from ongoing operational efficiency initiatives and targeted workforce adjustments designed to streamline operations and optimize the cost structure across various segments. Management anticipates these actions will generate future cost savings and improved productivity.
• Addressing Financial Restatements: Management addressed the restatement of previously reported financial results for 2024 and 2023. This primarily resulted from re-evaluating certain revenue recognition policies. ITT has implemented enhanced internal controls and processes to prevent future occurrences, emphasizing its commitment to financial reporting integrity.

Risk Factors

While ITT's performance was strong, investors should be aware of specific challenges and ongoing matters that could impact future results.

• Financial Restatements: ITT INC. restated its previously reported financial results for both 2024 and 2023. This primarily stemmed from re-evaluating certain revenue recognition policies related to long-term contracts in the Industrial Process segment. The restatement reduced net income by $15 million for 2024 and $10 million for 2023. ITT has implemented enhanced internal controls and processes to prevent future occurrences, and the restatement is now complete.
• Customer Concentration Risk: ITT INC. actively monitors customer concentration. While diversified, its top 5 customers collectively accounted for approximately 18% of total revenue in 2025. While considered manageable, ITT continues to expand its customer base and product offerings to mitigate potential risks associated with any single customer.
• Environmental, Social, and Governance (ESG) Matters: ITT is addressing several ongoing environmental compliance matters, including remediation efforts at legacy sites and emissions management. These efforts led to $8 million in environmental-related expenses in 2025, primarily for compliance and remediation. ITT INC. commits to sustainable practices and continues to invest in reducing its environmental footprint and ensuring regulatory adherence.
• Supply Chain Volatility and Inflation: While effectively managed in 2025, ITT acknowledges ongoing risks from global supply chain disruptions and inflationary pressures on raw materials and logistics. These could impact future costs and margins.
• Economic and Geopolitical Conditions: Global economic downturns, geopolitical instability, trade policies, and currency fluctuations could negatively impact demand for ITT's products, disrupt operations, and affect profitability.
• Cybersecurity Risks: ITT relies on information technology systems for its operations. A significant cybersecurity breach could lead to data loss, operational disruption, reputational damage, and financial costs.

Future Outlook (Guidance, Strategy)

ITT INC. appears as a financially sound company with a clear growth strategy. Consistent revenue and profit growth, healthy cash flow, and strategic acquisitions demonstrate a well-managed business operating in essential industrial markets. The share repurchase program further underscores ITT's commitment to shareholder value.

However, the past financial restatements, though addressed and explained, highlight the importance of robust internal controls and warrant continued investor scrutiny. Ongoing operational adjustments (severance costs) and environmental obligations also require monitoring.

Looking Ahead: Management projects 2026 revenue growth of 3-5% and Diluted EPS in the range of $3.70 - $3.90. This outlook suggests continued positive momentum, driven by market demand in ITT's core segments and the integration of recent acquisitions. Investors should weigh ITT's strong operational performance and strategic initiatives against the need for continued vigilance regarding financial reporting integrity and broader macroeconomic risks.