ITT (ITT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 9% year-over-year (6% organic), reaching $905.9M, with strong performance in connectors, aerospace & defense, friction, and contributions from acquisitions.

• Adjusted EPS increased 12% to $1.49, a new quarterly record, and free cash flow margin reached 14.8% with over $100M sequential improvement.

• Surpassed long-term margin targets, with adjusted operating margin up 100 bps to 18.0% and significant margin expansion in all segments.

• Announced acquisition of kSARIA for ~$475M and completed divestiture of Wolverine, shifting portfolio toward higher growth, higher margin businesses.

• Major project wins in Friction, KONI, Industrial Connectors, Svanehøj, and green energy transition, with over $900M in orders and a book-to-bill above 1.0.

Financial highlights

• Q2 2024 revenue: $905.9M (+9% year-over-year), with organic growth of 6% and Svanehøj contributing 4 points.

• Adjusted operating income: $163M (18.0% margin), up from $142M (17.0%) in Q2 2023.

• Adjusted EPS: $1.49, up from $1.33 in Q2 2023; net income: $119.2M (+10.2%).

• Free cash flow: $134.5M YTD, margin at 14.8%, driven by higher net income and improved inventory management.

• Repurchased $79M in shares and paid down ~$40M in debt in Q2.

Outlook and guidance

• Full-year 2024 guidance unchanged: revenue growth of 9–12% (4–7% organic), adjusted operating margin 17.1–17.7%, adjusted EPS $5.65–$5.90 (8–13% growth), and free cash flow $435M–$475M (12–13% margin).

• Maintaining guidance despite ~$0.15 EPS impact from Wolverine divestiture; raising EPS midpoint for ongoing operations.

• Q3 organic revenue growth expected in mid-single digits across all segments, with margins in line with Q2.

• Management expects sufficient liquidity to fund operations for at least the next 12 months and beyond.