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    ITT
    Earnings call· Jun 2026(Q2 FY26)

    ITT Q2 FY26 earnings call ITT

    Aug 6, 2026 Source

    Executive summary

    ITT Q2 FY26 — Strong Organic Growth and Margin Expansion, Debt Repayment Ahead of Schedule

    ITT delivered a strong Q2 FY26, accelerating momentum with robust organic growth across all segments and significant margin expansion in CCT and Motion Technologies. Strategic acquisitions like SPX FLOW and kSARIA are compounding value, with SPX FLOW integration ahead of plan and contributing to growth. The company also deleveraged faster than committed, setting a solid foundation for continued performance and future strategic capital deployment.

    Highlights

    5

    • Orders grew 53% overall, with 13% organic growth, reflecting a book-to-bill of 1.1.

    • Revenue grew 51% overall, with 13% organic growth across all segments.

    • Adjusted EPS increased 18% year-over-year to $2.08.

    • Generated $176 million of free cash flow year-to-date, with Q2 free cash flow margin at 11%.

    • Leverage ratio reduced to 2.5x, 6 months ahead of original commitment.

    Concerns

    3

    • Flow Technologies organic orders declined 3% year-over-year due to strong prior year performance and delayed orders in the Middle East.

    • Flow Technologies operating margin diluted by 160 basis points due to the full quarter impact of SPX FLOW.

    • Motion Technologies is recovering cost inflation but not fully, indicating pricing pressures.

    Guidance & targets

    6
    CategoryTargetConfidence
    SPX FLOW EPS accretion
    $0.10 to $0.14
    medium materiality
    High
    Full-year organic revenue growth
    5% to 8% growth
    high materiality
    High
    Adjusted operating margin
    approximately 20.5%
    high materiality
    High
    Adjusted EPS outlook
    $8.22 at the midpoint
    high materiality
    High
    Free cash flow
    $565 million
    high materiality
    High
    Leverage ratio
    approximately 2.3x
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Connect and Control Technologies (CCT)
    Strong organic growth driven by large defense orders in kSARIA and record connector orders. Record operating margin for the segment, even with kSARIA dilution.
    Orders growth: 59% organickSARIA orders growth: 168%Connector orders growth: 38%Commercial Aerospace revenue growth: 14%Defense revenue growth: 16%kSARIA revenue growth: 28%Industrial connectors revenue growth: 24%Operating margin expansion: 100 bps YoY, 240 bps sequentiallyBook-to-bill: 1.4
    		—17% organic—21.7%
    Motion Technologies
    Organic growth achieved in a down market, driven by friction aftermarket and OE outperformance. Margin expansion due to net productivity.
    Total revenue growth: 6%KONI orders growth: 9%Operating margin growth: 90 bpsNet productivity: 110 bps over prior yearOutperformance of global vehicle production: >300 bps
    		—2% organic—21.1%
    Flow Technologies
    Strong organic revenue growth driven by project shipments and short cycle. Organic orders declined due to Middle East delays and tough prior-year comps. Operating margin diluted by full quarter impact of SPX FLOW, but legacy business expanded margins.
    Total revenue growth: 123%Total orders growth: 91%Organic orders decline: 3% YoYLegacy FT margin expansion: 70 bpsSPX FLOW revenue growth: 5% in Q2, 9% YTDSPX FLOW orders growth: 9% in Q2SPX FLOW mixers orders growth: 23%SPX FLOW Waukesha Cherry-Burrell orders growth: 10%SPX FLOW Nutrition & Health orders growth: 8%SPX FLOW book-to-bill: 1.13 in Q2, 1.05 YTDPump project sales growth: 45%Valve business growth: 19%Short cycle growth: 10% YoY
    		—21% organic—21.4%

    Operational metrics

    20
    Adjusted EPS
    $2.08up 18% year-over-year
    Q2 FY26
    Free Cash Flow Margin
    11%
    Q2 FY26
    Debt repayment
    $124 million
    Q2 FY26

    Prioritizing debt repayment.

    Leverage ratio
    2.5x
    Q2 FY26 end

    Achieved 6 months ahead of original commitment.

    SPX FLOW EPS accretion expectation
    $0.10 to $0.14
    FY26

    Maintaining full-year expectation.

    Tariff refunds net impact
    $0.5 million
    Q2 FY26

    Immaterial impact to the quarter. Revised guidance does not consider additional benefits above this amount.

    Svanehøj revenue growth
    32%
    average each year

    Projected growth since acquisition.

    Svanehøj acquisition multiple
    6from 13 at acquisition
    end of 2026

    Projected multiple reduction due to performance.

    kSARIA orders growth
    60%
    average each year

    Projected growth since acquisition.

    kSARIA acquisition multiple
    levelfrom 13 at acquisition
    end of 2026

    Expected to be level by end of 2026.

    SPX FLOW orders growth
    7%
    H1 FY26

    Orders growth in the first half of the year.

    SPX FLOW revenue growth
    9%
    H1 FY26

    Revenue growth in the first half of the year.

    Legacy businesses EPS contribution
    $0.36
    Q2 FY26

    Contribution to EPS growth.

    Svanehøj and kSARIA EPS contribution
    $0.12
    Q2 FY26

    Contribution to EPS growth from market share gains, pricing, and productivity.

    SPX FLOW EPS contribution
    $0.68
    Q2 FY26

    Contribution to EPS growth, mostly offset by incremental interest, share count, and tax rate.

    Flow Technologies short cycle orders volume growth
    5%
    Q2 FY26

    Real growth in short cycle orders.

    Flow Technologies short cycle orders price contribution
    1%
    Q2 FY26

    Price contribution to short cycle orders growth.

    Habonim orders growth
    18%
    Q2 FY26

    Strong performance in the Middle East.

    Habonim revenue growth
    19%
    YTD Q2 FY26

    Strong performance in the Middle East.

    Flow Technologies total funnel growth
    34%YoY
    Q2 FY26

    Overall funnel growth for Flow Technologies.

    Industry KPIs

    3
    MetricValueDetails
    Tariff cost impact$0.5million
    Incremental margin operating leverage110basis points
    Order backlog order intake by segment1.1

    Orderbook & backlog

    10
    Company-wide book-to-bill1.1Q2 FY26 end
    CCT book-to-bill1.4Q2 FY26 end
    SPX FLOW book-to-bill1.13Q2 FY26 end
    SPX FLOW book-to-bill1.05H1 FY26 end
    Svanehøj book-to-bill1.2average since acquisition
    Svanehøj projected backlog growth40%end of 2026

    since acquisition

    kSARIA projected backlog growth180%end of 2026

    since acquisition

    Company-wide backlog for next quarter30% higherQ2 FY26 end

    YoY

    Company-wide backlog for next two quarters20% higherQ2 FY26 end

    YoY

    Company-wide backlog for next year20% higherQ2 FY26 end

    YoY

    Deals & partnerships

    1
    aerospace contactsSmall, strategic acquisition to enhance supply chain resilience and secure supply of critical high-precision contacts.

    Acquired in July. Addresses concerns about feeding demand and growth in the connector side, particularly for defense.

    Risks & headwinds

    5
    Delayed orders in the Middle EastNext few quarters

    Flow Technologies organic orders declined 3% year-over-year

    Mitigation: Some orders are now being given to EPCs.

    Pricing pressures in Motion Technologies

    Recovering some of the cost inflation but not full

    Mitigation: Achieved net productivity of 110 basis points over the prior year.

    Margin dilution from SPX FLOW integrationQ2 FY26

    Flow Technologies operating margin declined 160 basis points

    Mitigation: Cost synergies from integration and other productivity actions are expected to expand margin throughout the remainder of 2026.

    Tougher year-over-year comparisonsQ3 and Q4 FY26

    Q3 and Q4 face tougher comparables

    Mitigation: Sequential EPS guidance has been raised and maintained at elevated levels.

    Fewer operating days in Q4Q4 FY26

    Q4 of this year will have 4 days less than Q4 of last year

    Mitigation: Management expects to maintain elevated performance levels despite this.

    What to watch in Q3 FY26

    4

    SPX FLOW Margin Improvement

    H2 FY26
    CurrentFlow Technologies margin 21.4% (diluted by 160 bps due to SPX FLOW in Q2)
    TargetSequential expansion

    Why it matters

    Critical for overall margin expansion and successful integration of SPX FLOW.

    Flow Technology, excluding SPX Flow, expanded margins 70 basis points fueled by market share gains and pricing. Total flow margin of 21.4% was diluted by the full quarter contribution of SPX loan. Nevertheless, cost synergies from the integration together with other productivity actions in the second half of the year are expected to expand margin throughout the remainder of 2026.

    Q&A highlights

    7

    How does SPX FLOW's lean journey compare to legacy ITT businesses, and where is the upside?

    SPX FLOW plants are well-run with good talent, but lean principles need to be more entrenched in the cell-level DNA, rather than just corporate initiatives, indicating room for productivity improvement.

    “I think though that the area for improvement that we have in SPX FLOW and the lean is really to ensuring that the lean is entrenching the DNA in the cell.”

    asked by Scott Davis · answered by Luca Savi

    2 min read6 chapters

    Detailed Narrative

    01

    Acquisition Integration Success

    ITT highlighted the successful integration and performance of recent acquisitions, particularly SPX FLOW, Svanehøj, and kSARIA. Svanehøj is expected to grow revenue 32% annually with a 1.2 book-to-bill, and kSARIA's backlog is projected to grow 180% since acquisition, demonstrating the value creation from these strategic moves. SPX FLOW integration is ahead of plan, contributing to overall growth and margin expansion.

    02

    CCT Segment Outperformance

    The Connect and Control Technologies (CCT) segment was a significant highlight, growing orders 59% organically, fueled by large defense orders in kSARIA (168% growth) and record connector orders (38% growth). This performance, coupled with 17% organic revenue growth, led to a record operating margin of 21.7% for the segment, driven by higher volume and pricing.

    03

    Flow Technologies Dynamics

    Flow Technologies saw 91% total orders growth but a 3% organic decline due to strong prior-year comparables and delayed Middle East orders. However, SPX FLOW within this segment grew 9% year-to-date, with a book-to-bill of 1.13, and the legacy Flow Technologies business expanded margins by 70 basis points. Management expects sequential margin improvement in H2 from synergies.

    04

    Capital Allocation and Deleveraging

    The company prioritized debt repayment, reducing $124 million in Q2 and achieving a leverage ratio of 2.5x, six months ahead of schedule. This financial discipline provides flexibility for future strategic bolt-on acquisitions while maintaining focus on debt reduction and delivering on SPX FLOW synergies. A small, strategic acquisition of aerospace contacts was made in July to enhance supply chain resilience.

    05

    Operational Excellence and Margin Expansion

    Across the legacy businesses, ITT demonstrated strong operational execution, contributing to an 18% adjusted EPS growth. Motion Technologies expanded its margin by 90 basis points to 21.1% through net productivity, while CCT's margin expansion was driven by increased volume and effective pricing actions. The company expects to be price/cost positive overall for the full year.

    06

    Strategic Market Tailwinds and Funnel Growth

    Management noted benefiting from market tailwinds, particularly in defense for kSARIA and marine energy transition for Svanehøj. The overall Flow Technologies funnel is growing 34% year-over-year, with strong growth in North America and Latin America. The company is actively pursuing opportunities in emerging markets like China and Latin America by decentralizing decision-making and leveraging local engineering.

    AI-generated summary of the company’s earnings call. Not investment advice.