ITT (ITT) Baird 2024 Global Industrials Conference summary

Business overview and recent performance

• Operates in engineering and manufacturing, focusing on components for harsh environments, with major segments in motion technologies, industrial process, and connect and control technologies.

• Achieved significant value creation over the past five years, tripling market cap from $4B to over $12B, driven by organic growth and margin expansion.

• Q3 results showed orders up 14% organically, revenue up 6%, and continued margin expansion.

• Recent M&A activity includes acquisitions in valves, connectors, and cryogenic pumps, strengthening the portfolio in flow and connectors.

• Portfolio reshaping included the sale of Wolverine, reducing auto exposure to 30%.

Capital deployment and M&A strategy

• Capital deployment prioritizes internal investment for best returns, with a focus on organic growth and margin expansion.

• Cleared pension liabilities and legacy investor obligations to create a strong balance sheet, enabling increased M&A activity.

• Built a programmatic M&A strategy with a rich, actionable pipeline, especially in connectors and flow.

• Retained management teams in recent acquisitions, ensuring smooth integration and execution.

• Targets M&A in fragmented markets where operational expertise can drive value.

Organic growth, innovation, and market outperformance

• Outperformance driven by consistent execution, innovation, and high on-time delivery rates, especially in auto and industrial segments.

• Maintains 99.95% on-time delivery in auto for six years, supporting market share gains.

• Invests about 4% of revenue in R&D, with additional venture-style investments in new products.

• Growth expectations are volume-driven, with additional gains from price and market share, consistently outperforming global auto production.

• Connector and flow businesses have shown resilience and growth even in challenging market conditions.