ITT Corporation ((ITT)) has held its Q1 earnings call. Read on for the main highlights of the call.
ITT Corporation’s recent earnings call conveyed a generally positive sentiment, underscored by robust order growth, an expanding backlog, and effective margin management. Despite challenges such as flat revenue growth and tariff impacts, the introduction of VIDAR highlights ITT’s dedication to innovation and future growth prospects.
Record Orders Achieved
ITT Corporation reported a milestone achievement with over $1 billion in orders, marking the highest for any quarter in its history. This record-breaking performance was bolstered by strategic acquisitions, including kSARIA and Svanehøj, which have significantly contributed to the company’s order book.
Strong Backlog Growth
The company experienced substantial backlog growth, with a book-to-bill ratio of 1.15. This resulted in a backlog of $1.8 billion, reflecting a 21% increase year-over-year and a 10% rise sequentially, indicating strong demand and future revenue potential.
Margin Expansion
ITT successfully expanded its margin by 30 basis points to 17.4%, driven by operational leverage, productivity improvements, and strategic price increases. This margin expansion demonstrates the company’s ability to enhance profitability even in challenging market conditions.
Free Cash Flow and Share Repurchase
The company generated a record Q1 free cash flow of $77 million, marking an increase of over 150%. In addition, ITT repurchased $100 million of shares in Q1, followed by an additional $300 million in April, reflecting a strong commitment to returning value to shareholders.
Industrial Process and Connect & Control Growth
ITT’s Industrial Process segment saw a 14% increase in orders, with 11% organic growth, while the Connect & Control segment grew nearly 40%, driven by large platform awards. These segments are pivotal to ITT’s growth strategy, showcasing their resilience and market demand.
VIDAR Innovation
The launch of VIDAR, a groundbreaking motor technology, positions ITT at the forefront of innovation. Targeting a $6 billion market, VIDAR promises significant energy savings and emission reductions, aligning with global sustainability trends and expanding ITT’s market reach.
Flat Revenue Growth
Despite the positive developments, ITT reported flat revenue growth on both total and organic bases. This stagnation was primarily due to lower volumes in the automotive and aerospace sectors, highlighting areas that require strategic attention.
Aerospace Volume Challenges
The Connect & Control Technologies (CCT) segment faced challenges with lower aerospace volumes, mainly due to reduced demand from Boeing. This decline offset some of the growth achieved in other segments, indicating a need for diversification and risk management.
Exposure to Tariffs
ITT is facing a potential tariff cost impact of $50 to $60 million for the remainder of 2025. The company plans to mitigate these costs through price increases and stringent cost control measures, aiming to protect its margins and financial health.
Forward-Looking Guidance
Looking ahead, ITT provided comprehensive guidance for the fiscal year. The company maintained its full-year adjusted guidance, projecting an 8% growth in adjusted EPS for the second quarter and anticipating nearly $0.5 billion in free cash flow for the year. The launch of VIDAR is expected to contribute significantly to ITT’s growth, tapping into a new $6 billion market with promising results in energy savings and environmental impact.
In conclusion, ITT Corporation’s earnings call reflected a positive outlook, driven by record orders, strong backlog growth, and strategic innovations like VIDAR. While challenges such as flat revenue growth and tariff impacts persist, ITT’s proactive measures and forward-looking strategies position it well for future success.