ITT Inc.

Good morning or good afternoon all and welcome to ITT's 2022 third quarter conference call. Today is Thursday, November 3rd, 2022. Today's call is being recorded and will be available for replay beginning at 12 p.m. ET. At this time, all participants have been placed in the listen-only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star followed by one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. If you should require operator assistance, please press star zero. We ask that you please pick up your handset to allow optimal sound quality. It is now my pleasure to turn the floor over to Mark Macaluso, Vice President, Investor Relations. You may begin.

Thank you and good morning. Welcome to ITT's third quarter 2022 earnings conference call. Joining me here this morning are Luca Savi, ITT's Chief Executive Officer and President, and Emmanuel Capre, Chief Financial Officer. Today's call will cover ITT's financial results for the three-month period ending October 1st, which we announced this morning. Today's remarks may contain forward-looking statements that are subject to certain risks and uncertainties, including comments related to company performance, strategic priorities, business mix, market conditions, and the effects of COVID-19 on ITT. These statements are not a guarantee of future performance or events and are based on management's current expectations. Actual results may vary materially due to, among other items, the factors described in our 2021 Annual Report on Form 10-K and other recent SEC filings. ITV is not under and expressly disclaims any obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise. Except for otherwise noted, the third quarter results we present this morning will be compared to the third quarter of 2021 and are based on non-GAAP financial measures. These adjusted results exclude certain non-operating and non-recurring items, including but not limited to charges related to the suspension of operations in Russia, restructuring, acquisition-related charges, and certain tax items, and in 2021, asbestos-related charges. All adjustments in the quarter are detailed, along with the reconciliation of such measures to the most comparable gap figures in our press release and presentation, both of which are available on our website. It is now my pleasure to turn the call over to Luca, who will begin on slide number three.

Thank you, Mark, and good morning. I would like to begin, as I always do, by thanking our shareholders our customers, and our IT tiers for their continued support and investment in ITT. As we continue to manage through this challenging environment, day in and day out, I am reminded about the tireless efforts of all 10,000 IT tiers. These efforts were exemplified at the beginning of Q3, with our WUSHI team rising to the challenge by voluntarily stealing off the site to continue to deliver for our customers. And this is also how the quarter continued, with our teams all around the world stepping up to deliver record margins in IP and CCT, and a 21% increase in EPS, the highest quarterly earnings on record for ITT. On the demand, Q3 demand for our products and services remained strong in most of our end markets. We drove 13% organic orders growth with all three businesses generating over double digit growth in orders. Let me share some highlights. 11% organic orders growth in industrial process driven by both pump projects and short cycle. 12% organic orders growth in CCT driven by 20% organic orders growth in commercial aerospace and defense. And in MT, 26 new electrified vehicle platforms now reaching 60 wins year to date, nearly doubling the total for all of 2021 through just nine months. Leveraging recent orders strength, we grew organic revenue by 15% because of stepped up pricing and higher sales volumes across all our businesses. We are continuing to accelerate and expand our value-based pricing strategies across the organization with good early signs of success. The benefits of this can be seen in IP's results this quarter, and we expect this to continue in IP and to ramp up in CCT. On profitability, motion technologies expanded margin sequentially by 130 basis points. CCT grew margin well over 100 basis points year over year and sequentially. But the highlight of the quarter once again was IP, our flow business. The team at IP expanded margin 550 basis points versus prior year and 430 basis points sequentially. We are encouraged by the continued progress at industrial process. IP's margin performance was driven by price recovery, productivity, and project execution. On top of this, the hybrid acquisition continues to exceed our expectations and was again accreted to segment margin in just its second quarter as part of ITT. The progress on the operational fundamentals can be seen most prominently in the expansion of the one-piece flow approach in AP. We began in Seneca Falls with a smaller high-volume ANSI pump line, which I mentioned in the past. And in Q3, expanded this approach to the larger pumps category. When Emmanuel and I spent time in Seneca Falls, we were really energized to see the teams continue to drive improvements and generate new ideas. As we ramp up our lean efforts throughout IP, we anticipate further improvement in safety, quality, on-time delivery, and competitiveness. Again in IP this quarter, we made progress on the foundry closure announcing Q1, which will further improve our cost structure at IP. and we successfully negotiated a new collective bargaining agreement with the labor union for the long-term future of the Seneca Falls facility. Moving to CCT, at 18.6%, this was the second consecutive quarter of sequential margin expansion, and this time at similar revenue levels to Q2. We drove aftermarket revenue growth, cost management, and improved price recovery. In Motion Technologies, we see signs that commodity pressures are easing. However, we are still working through higher price inventory, which will continue to negatively impact MT's margin in the fourth quarter. We expect to start seeing the benefits from the lower price commodities in 2023. Still in MT, I'm proud to announce the first market launch of our gold smart pad on the Picasso supercar, a true performance vehicle inspired by racing prototypes. The vehicle will be equipped with four smart pads that will provide safer braking and real-time performance data. When I sat in this machine and experienced the unique engineering that makes the car incredibly light and super fast, It was clear to me that God is the brake partner for the future and beyond. I look forward to more announcements as the commercialization of the smart pad continues. This quarter, like every other quarter, I spent a lot of time on the road working together with the teams around the globe. Let me share a few takeaways. At the Corny plant in Oudbeerland, the Netherlands, I saw firsthand how our investments in innovation and automation are driving growth at MT. This is certainly the case for KONIS HydroRide. We developed the HydroRide in 2015 and designed it to be a compact, lightweight shock absorber capable of delivering a smooth ride and improved handling capability for our defense customers. Jeroen de Haan, KONIS road and defense business leader, showed many of you at our investor day the value and advantages of this product. And this is why defense contractors like Patria have been selecting KONI as their trusted engineering partner. Still in KONI, we're expanding our patented FSD technology to the rail industry. The MK2 frequency selective dumping, which first launched in 2020, reduces wear and make a runoff caused by wheel and truck friction. We are now demonstrating these advantages to rail operators and OEMs across Europe. The investments we are making do not pertain just to our products. It's about having sustainable operations as well. In both Termoli and Barge in Italy, we are expanding the use of solar energy and reducing our reliance on fossil fuels. Last month, I was fortunate to see the completed solar lake in Barge that will support approximately 30% of the Innovation Center's energy needs going forward. You can read about these green capex investments in our forthcoming sustainability report. Lastly, I was very happy to bring the Board of Directors to MTC Lau Plant in Mexico this October. Our directors saw firsthand the investments we made in friction capacity, and our local team showcase their depth of knowledge and their safety and quality track record that makes the Silao plant truly exceptional. Thank you, Mathieu, and thank you, Silao team. Coming back to ITT as a whole, all of these and more deliver the sequential and year-over-year increase in EPS that exceeded 20% thanks to strong pricing recovery volume growth coming from share gains, and productivity. While the teams delivered outstanding results, we must not forget the challenges we have had to overcome. The impacts of the war in Ukraine, a stronger U.S. dollar, supply chain disruptions including the downstream effects on our customers, especially auto OEMs, continued high-cost inflation across materials and labor, the energy crisis in Europe and the China lockdown. Because of all of the above and the uncertainty we see, we remain agile to quickly adjust our cost structure as we did so effectively in 2020 and are taking steps today to smartly manage our spend. Let us now move to slide four to discuss the 2022 sustainability report, which we will publish tomorrow. Sustainability is a priority for everyone at ITT, and I'm proud to report the progress we have made since our last publication in 2021. As you will see in the report, we are advancing our ESG strategies through a development of innovative products, b investments in technology to engineer a more sustainable future, and c our social commitments to build a more diverse inclusive and talented workforce. Rather than issuing long-term inspirational targets, we are announcing credible and measurable near-term diversity, equity and inclusion goals and targets for greenhouse gas emissions reduction. On emissions, after a 32% reduction in 2021 versus pre-pandemic levels in 2019, We are targeting an incremental 10% reduction by 2026. ITT's emerging sustainability profile, our sustained differentiation that we demonstrated through our stepped-up execution, and our sound capital deployment strategy, such as with the acquisition of Habonim, will continue to drive long-term growth and value creation for all our stakeholders. Let me now turn the call over to Emmanuel to discuss the Q3 results in more detail.