ITT Q3 2026 earnings call transcript, November 5, 2026

Hi, Jake.

I appreciate it. Pass it on.

Thank you, Jay.

Okay, great. And then just on flow, can you just speak to pipeline? I think you covered Middle East pretty well, but there seemed to be some concerns about orders, which turned out pretty good, but just pipeline and flow. And then just as you think about revenue synergies on SPX flow, you listed a lot of opportunities. Just how do you think that's coming from? Coming along versus expectation where that starts to deliver differentiation in 27. Thanks. Sure. So when you look at the pipeline, the funnel is healthy, and it continues to grow. It was up in Q1. It was up in Q2. It's up again in Q3, roughly 6% year over year. So you have to think about it. I mean, this is really a powerful flywheel. The way that I see Jeff, because you have a good revenue growth when you look at the business, right? On top of this good revenue growth, you have a book to build, which is above one. So orders are coming in faster than your revenue growth. And the funnel of opportunities is actually increasing 6% in the quarter year over year. So the funnel gets replenished. At a faster rate that you're booking the orders. So it's a powerful flywheel. It's fair to say that when you look at geography, the most powerful region is North America. And this is really the best growth engine that we have within flow technology. Latin America is good as well. But North America is definitely where the growth is. Going to the second part of your question, revenue synergies.

You know, it. It takes time in terms of revenue synergy. This is really why we didn't put them in the model. Now, having said that, Waukesha has done an outstanding job. You know, Rudy and the team to move super fast, to localize the inventory, to start selling these Bornemann pumps. We are proceeding quite fast on the localization also of the assembly and eventually of the machining. So I'm feeling very positive about that. And as a matter of fact, we had just recently a touch. based with Wendy on the localization of mixers both in the Middle East and in Latin America. So I think it's progressing quite well, I would say. But it takes time to get the revenue synergies in the books. Okay.

Thanks so much.

We'll be patient.

Thank you, Seth.

And the one for the long term, you know, the big platform is up more than 100%, which gives you extreme visibility. So this is really a good platform for growth for the future, Mike.

Thanks, Mike.

Hi, Joe.

Hey, Luca.

Hey, Colleen.

This is Anvi on for Joe.

Good morning and congrats on the quarter. Thank you. I just wanted to touch upon the 2026 guide and the puts and takes around it. So I recognize you took up the organic growth guide, but, you know, you've had a really strong order growth as well as organic year to date. Q4 kind of implies a low. Go to low to mid single digit growth in the quarter. And I know you've, you know, spoken about the four extra days coming out of Q4. So I just wanted to understand the puts and takes on, you know, what we should keep in mind and how you're thinking about it versus your initial guide. Okay. I think that when we look at the Q4, I think that our guidance is having a Q4, which is pretty much aligned with our Q3. I think that what... What we need to pay attention here, as you rightly said, is in Q4, we're going to have four days less on a year-over-year basis. And then also probably some headwind when it comes to the automotive market. And what we see is that because of the dynamic in the market, there is the potential that several OEMs might decide to share. But down earlier in December that originally forecasted. And for that reason, specifically, when you look at motion technologies, it will be on a year-over-year and more of a challenging compare. Even though they're growing on a yearly basis, but Q4 will be a little bit more challenging for them.

Got it. That's helpful. And just as my follow-up, since you mentioned motion technology as well, the margins in that segment have really been a standout and have now... ...sustained for 21% at the 21% for the last three quarters. I just wanted to understand how repeatable that productivity performance is and what kind of volume assumptions you're baking in to achieve your 2030 margin targets, given some of the softness that we're seeing in the auto-OEM space and also the price-cost environment. Sure. You're spot on. 21% now is the new... new floor. And really, the team is doing an exceptional job in really consolidating this 21% and then to continue to improve. I would say that when you think about the...we are targeting our long target by 2030, we've got 23% independently from the growth in the market. And the reason for that is because we still have several opportunities to improve. In our cost, in our plant, let me give you a couple of examples. If you think about our high-performance plant, which we started in 2025. Now, we are making money this year, but Q3 was just double-digit profitability and much dilutive to the profitability of several of the plants in friction. And as we are ramping up, that margin will go up. There are plenty of opportunities still to improve productivity. In the plant, the eliminative waste. And then the introduction of new formulation, like the GeoPad, which will start production for a European OEM in Q1, 2028. That will give us some room, as it's going to be a much more cost-competitive product.

Got it.

Thanks for that detail, Luca.

I'll get back in queue.

Thank you, Dan.

Spot on. We acquired aerospace contacts in July and actually spent a couple of days with Art and the team in Phoenix with them the other week. It's a good plant. We've got good machines for the high-mix, low-volume contacts. Ed and Melissa are doing a fantastic job, the management over there, and we are talking to... Ed and Melissa to invest in new machines also to address the high-volume, low-mix contacts, which completely different type of machine and therefore setting up a different shop floor close by. We also invested in new machines, and this has been a process that started more than 12 months ago in Weinstadt, Germany, for our... building, for our machining, and also in Nogales, Mexico. And this is really to be able to supply this level of growth. And these analyses continue on a monthly basis, I would say. Great. Thank you. And just, like, the Casaria numbers are huge. And so I know you mentioned the F-35, but just, what are some of the other platforms you're seeing there? And then what is really driving those wins for you all? Thanks. Sure. Mike Stravos, Mike, the team in Casaria team are doing a fantastic job in execution. They're really well known in the market for doing a consistent, good job and for delivering on time. This was a feedback that we got loud and clear also during the due diligence. And therefore, because of this consistent execution, they're able to win market share. And they know it might not sound particularly sexy. There are not cool words saying it, but it's just, you know, great at execution and they're differentiating in executing. So they are able to win in the submarines, the Virginia and Columbia class, the fighters,

the effort. And they are also on the, on the missile programs. So it's a broad, it's broad based. I would say great.

Thank you so much.

Thank you Dan.

Well, you mentioned earlier. Um, the industrial pump piece of SPX needs to be closer to customers. Talk about like opening up in China and India and, um, probably reducing exposure in Europe. Um, you know, that all makes sense, but it's my first thought is that could take a ton of time to do, um, of all the qualities you have patients maybe isn't one of the primary. Uh, so can you maybe talk to us about like how realistic it is to do that quickly? Sure. Sure. So, um, so if you think about it, uh, the, when I was in Shidu a couple of months ago, the team was already setting up the assembly operation for the Brian Lube pumps in, uh, in China. And let's not forget Brian Lube is a very. The well known brand is, um, is really, uh, well known in the market. Uh, we do not need it to, to sell or spend time in, uh, in selling the brand. It's just that, uh, we need to localize it so that we can reduce the lead time so that we can make it more cost competitive. It doesn't make any sense this day to make these pumps in Germany and thinking that you're cost competitive and the lead time and price and sell it in, in China. Do, St. Sons are gone. So setting the assembly in China is, I wouldn't say it's easy peasy, but it's not that complicated. The same thing is in the Middle East. So we are setting up the assemble of O'Brien Lube also in the Middle East. And the resizing in Europe is happening and it's happening right now. So now it's a good plant in Europe, don't get me wrong, but obviously the chemical market in Europe has been

declining, and therefore we need to just adjust the supply to the demand for that region. Did I answer your question, John? You did. Thank you.

Thank you, John.

Thank you, Andrew.

And it's a very pertinent question because when you look at historically, every single time there is a technological change, being the copper-free breakpad, being the electric vehicles or the European, the Euro 7 regulation, and eventually will be the new... breaks, this is where we leapfrog and when we gain a sizable amount of market share because our R&D is how we differentiate. You have seen it, Andrew, in Italy when you went to Barge, is a powerhouse. So that is going to play in our playground. It's really good for us. Now, I think that when you look at those breaks, you start seeing those breaks. In China, and I would say you will start seeing more and more, but I will expect China to be probably the most, the region that will see them faster and with faster adoption. And when you look at the GeoPad, we will start seeing the GeoPad entering the market in Q1, 2028. And after that, many of the new platforms that we will either try to conquer or that we will re-win will be based. on a formulation that might be in the GeoPad family. Thank you. And maybe a follow-up question on Joe Giordano's question on sort of learnings from motion tech. You know, it seems you guys are firmly in a very, very unique facility. You're sort of doing cutting-edge stuff there. What's the opportunity to take manufacturing processes that you use? And look, as I said, Joe sort of talked about the fact that it's, you know, what the nature of the process is. But what's the nature? Can you take what you take in Termoli and take it to, you know, maybe Kaysaria, take it to your other businesses? Because, you know, what you're doing there is very unique in my understanding. You've guys been quite successful.

Yeah. So, yeah, what you saw internally, Andrew, is... And that level of automation, I think that similar, you need to adapt it, could be probably adapted to some of the controls and some of the connector business. So, automation is definitely an area where we can improve in those two areas. Different, I would say, for Kaysaria. Can we improve the automation in Kaysaria? Sure. But that would be a little bit more tricky. But controls and connectors...

Yeah, this is an example.

Sorry, Luca. Yeah. No, no, no, no, no. But connectors and controls, absolutely. And now with David being in charge of CCT, I think that it will be also easier to expand the responsibility and doublehead some more people in motion technologies too.

Thank you very much.

Thank you, Andrew.

Thanks, Robert.

When you look at the price cost, I think that the dynamic is consistent. It's not particular. It's not changed. And it's still very much the same. So what you have is a price cost positive in flow technologies. So the team is acting very quickly. And we are ahead of the game here. And therefore, that dynamic is positive. On CCT, it's even more positive, I would say, in terms of price and cost. And this is also the comment I made earlier. This is the segment where we got more pricing leverage. And this dynamic... is happening. And that would be price cost positive for the full year. Obviously, when you look at pricing, the dynamic is different in Moshe Technologies. This is where you have to give price and efficiency to the customer. Now, having said that, three, four years ago, we were able to work with our customers to ensure that the major commodities and energies get indexed in the contract. So what you have... is that if the commodities goes up, copper, tin, steel or energy cost goes up, you are getting some price or some compensation. You only have a time lag on that one. But don't forget, you always need to give efficiency in this market. Having said that, if you look at between those changes in the contract, the move of the commodities as well, the efficiency that we are delivering in the business, you see the demand. Keeps on improving in motion technologies and was 70 basis points in the quarter. And we are really flooring at 21 today. Thank you. And then the M&A. Sorry, I was forgetting, Robert. Sorry. On the M&A front, I would say, yes, we are active on the M&A front. I mean, we are cultivating. Bart and myself and the business leader. And I mean, we are spending time cultivating.

Now, the area, the sectors that we are spending time are really on CCT, on the connectors, particularly on aero and defense, and on the flow technologies. These are really the areas where we are spending time and cultivating. Now, we are also looking, but this probably is a little bit still early, on the SPX flow business unit, if you think. If you think about mixer, if you think about nutrition and health, there might be areas where there are technology gaps or product gaps where we might need to add and make some acquisitions, but those acquisitions will not be, today, large. It will be just to cover a product gap, also because we want to ensure that we consolidate the performance of SPX flow.

Got it. That's helpful, Luca. And then I guess just stepping back, if I think about the bigger picture here, you know, obviously very strong organic growth on the revenue side this year, strong organic orders growth, you know, but there's still obviously some macro. Cross currents out there in the broader economy. So can you just talk about how you're thinking about, you know, some of the puts and takes heading into next year and how that could influence or impact your ability to continue to grow organic top line sort of at an accelerated pace versus, you know, the longer term 5% plus target you have out there? Sure. So thanks, Vlad. So I would say we need to talk about the market in all the different segments, right? If you look at motion technologies, listen, the automotive market is what it is. Can we change the market? No, we can't. What we can do is continue to outperform. So I can tell you that we think that we will be able to outperform the market for the next two, three years because we saw the award. We won the award last year and this year and therefore we know what is going to start. The one that we conquer. So that is, you should expect, you know, enough performance in 27 and the next couple of years similar to what you had here in 2026. The rail, the rail will be growing and I think that that trend is continuing. And when you look at Coney, you've got also the tailwind of the fans. So that is a positive tailwind in that business when it comes to MT.

Thanks, Vlad.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day. Thank you.