ITT Inc.’s ITT third-quarter 2024 adjusted earnings of $1.46 per share surpassed the Zacks Consensus Estimate of $1.43. The bottom line jumped 7% year over year, aided by an increase in sales across most of its segments. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Total revenues of $885.2 million beat the consensus estimate of $876 million. The top line increased 7.7% year over year. Organic sales rose approximately 5.5% year over year, buoyed by higher friction original equipment volume and rail demand in KONI in the Motion Technologies segment.

Also, short cycle demand in the Industrial Process segment and industrial connectors growth in the Connect & Control Technologies segment aided the results. The acquisitions of Svanehøj and kSARIA contributed 7% to the top line, while the divestiture of Wolverine business had an adverse impact of 4%.

ITT’s Segmental Results

Revenues from the Industrial Process segment totaled $333.8 million, up 19.3% year over year. Strength in pump projects, solid demand for aftermarket parts and services and the buyout of Svanehøj drove the segment’s performance. Organic sales increased 6.1% and adjusted operating income grew 7.1% on a year-over-year basis. Our estimate for segmental revenues was pinned at $321.6 million.

Revenues from the Motion Technologies segment amounted to $344.9 million, implying a year-over-year decrease of 4.1%. The lower sales were attributable to the divestiture of the Wolverine unit in July 2024. Higher sales volume in friction original equipment and rail demand in the KONI business aided the segmental performance. Organic revenues grew 4.7%. Adjusted operating income increased 2.1%. Our estimate for segmental revenues was pinned at $360.6 million.

Revenues from the Connect & Control Technologies segment of $207.2 million rose 12.6% year over year on a reported basis and 5.7% organically. Our estimate was $195.5 million. The results were driven by positive contribution from the buyout of kSARIA in September 2024. Favorable pricing actions and growth defense and industrial connectors also aided the segment’s performance. Adjusted operating income increased 17.9% year over year.

ITT’s Margin Profile

ITT’s cost of revenues increased 5.3% year over year to $571.2 million. The gross profit jumped 12.4% to $314 million.

General and administrative expenses grew 11.8% year over year to $74.8 million. Sales and marketing expenses rose 13.7% to $50.5 million. Research and development expenses increased 14.4% year over year to $28.6 million.

Adjusted operating income climbed 11.1% year over year to $161.6 million. The margin expanded 60 basis points to 18.3%.

Balance Sheet and Cash Flow

Exiting the third quarter, ITT had cash and cash equivalents of $460.9 million compared with $489.2 million at the end of fourth-quarter 2023. The company’s short-term borrowings were $362.6 million compared with $187.7 million at the end of December 2023.

In the first nine months of 2024, ITT generated net cash of $339.4 million from operating activities compared with $367.6 million in the year-ago period. Capital expenditure totaled $87.5 million in the same period, up 27.7% year over year. Free cash flow was $251.9 million in the first nine months of the year compared with $299.1 million in the prior-year period.

During the first nine months of the year, ITT paid out dividends of $78.7 million, up 9.5% year over year. It repurchased shares worth $104 million compared with $60 million in the year-ago period.

ITT's 2024 Outlook

ITT has raised its financial outlook for 2024. The company expects adjusted earnings to be in the range of $5.80-$5.86 per share, higher than $5.65-$5.90 anticipated earlier. The guided range indicates an increase of 11-12% from the prior-year reported actuals.

Management projects revenue growth to be in the band of 10-12% (5-7% organically). Adjusted segment operating margin is estimated to be between 17.4% and 17.7%. Free cash flow is predicted to be about $450 million. This indicates a free cash flow margin of 12%.

Zacks Rank & Key Picks

ITT currently carries a Zacks Rank #3 (Hold). Some better-ranked companies are discussed below:

Markel Group Inc. MKL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MKL delivered a trailing four-quarter average earnings surprise of 35.4%. In the past 60 days, the Zacks Consensus Estimate for Markel’s 2024 earnings has increased 1.8%.

3M Company MMM presently carries a Zacks Rank of 2. 3M delivered a trailing four-quarter average earnings surprise of 9.6%.

In the past 60 days, the Zacks Consensus Estimate for MMM’s 2024 earnings has moved north 1.1%.

Crane Company CR currently carries a Zacks Rank of 2. CR delivered a trailing four-quarter average earnings surprise of 7.5%.

In the past 60 days, the consensus estimate for Crane’s 2024 earnings has inched up 0.4%.

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