ITT Inc.

Welcome to the ITT's 2023 first quarter conference call. Today is Thursday, May 4th, 2023. 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 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 one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. If you should require operator assistance, please press star zero. We ask that you 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 and Global Communications. You may begin.

Thank you, Elliot, and good morning. 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 April 1, 2023, which we announced this morning. Before we begin, please refer to slide two of today's presentation, where we note that today's comments will include forward-looking statements that are based on our current expectations. Actual results may differ materially due to several risks and uncertainties, including those described in our 2022 Annual Report on Form 10-K and other recent SEC filings. Except where otherwise noted, the first quarter results we present this morning will be compared to the first quarter of 2022 and include non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures are detailed in our press release and on the appendix of our 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 three.

Thank you, Marc, and good morning. As always, I would like to begin by thanking our shareholders and our customers for their continued support and investment in ITT. And again, I also want to recognize our employees around the world. It is thanks to your efforts that we were able to deliver such a strong first quarter. If there is one thing about ITT's Q1 results I would like you to remember, it's our performance on both growth and execution. We delivered solid starts to 2023 on all accounts. 10% organic revenue growth leading to ITT's highest quarterly revenue ever. 7% organic orders growth. 150 basis points of segment margin expansion, 21% EPS growth, and a more than $60 million improvement in free cash flow. We also signed a strategic aftermarket agreement in friction with our partner Continental, repurchased $30 million of ITT shares, and deployed $80 million toward the acquisition of MicroMod in May. Now, let's get into the details. On growth. industrial process orders grew 22% as a result of continued share gains. We generated significant commercial momentum in the green energy space, with large project awards and market share gains related to decarbonization. Project orders in IP grew an outstanding 54%, while on the short cycle, orders for aftermarket baseline pumps and valves grew 13%. The order's momentum drove IP's revenue growth above 25% this quarter, and added to an already large, and most importantly, profitable backlog entering Q2. In Motion Technologies, we won 41 electrified vehicle platforms awards, with leading OEMs including BYD in China, and Ford and Chrysler in North America. Continuing with electrification, Orders in our EV connector business grew over 15%, with sales growth eclipsing 20% as electrification investments continue. Moving to execution. Once again, industrial process led the way with 850 basis points of margin expansion to end above 21% for the third consecutive quarter. We are continuing the push on shop floor improvements and the lean-out of IP's manufacturing sites. accelerating strategic pricing actions across the short cycle portfolio and driving increased profitability on pump projects in backlog. Together with the ITT leadership team, I spent time at our Seneca Falls campus and reviewed our progress on the new lean layout. When it's completed in Q3, every single pump will be built using a one-piece flow process. By eliminating excess movements, we will accelerate throughput, reduce lead time, and improve our on-time delivery. We are on a journey of continuous improvement, and we have no finish line. Also this quarter, I finally returned to China and spent time with our Wuxi team. We reviewed the investments that were made on the shop floor and plans for the future. You may remember that our Wuxi employees achieved amazing feats last year by operating in isolation throughout the pandemic and working through a mass infection wave in December, all while adding new capacity and maintaining 99% on-time delivery. As our WUSHI plant continues to gain market share, especially in EVs, we're adding two new production lines and increasing capacity beyond what we initially thought was achievable. It was wonderful to be in person with such a high-performance team to discuss the vision for the new plant layout and how it will support EV growth in the region. We are making similar growth investments in IP, which I saw firsthand. Saudi Arabia had the perfect on-time delivery performance and impressive orders growth last year. This is why we are expanding their testing capabilities. In India, a market with great opportunity, we are also expanding our design center to support growth in the region. And in Germany, Bornemann is gaining share in decarbonization projects, which is driving the further expansion of its testing center. All of these sites have earned the right for investment. We also executed on cash and capital deployment. Free cash flow is rebounding with a $62 million increase versus prior year. This is a continuation of the positive trend we saw last quarter. And in the coming quarters, as supply chain disruptions begin to subside and we free up working capital, we expect cash generation will continue to ramp. We also repurchased $30 million of ITT shares and paid down roughly $70 million of outstanding commercial paper. Finally, yesterday, we announced the acquisition of specialty connectors manufacturer Micromode for approximately $80 million. Micromode has held a leading position in defense and space connectors for more than 30 years and brings a complementary technology portfolio to our profitable North America connectors platform. Each quarter, I'd like to highlight the progress ITT is making with our sustainability investments. As you hopefully saw last month, we announced a $25 million investment in green energy and sustainable projects, including solar panel installations and other energy efficiency initiatives. Together, these installations will reduce ITT's CO2 emissions by more than 6,000 tons annually once completed. Moving to our 2023 outlook. We are raising the midpoint of our adjusted EPS range by 5 cents after a strong first quarter. We have renewed confidence in our ability to deliver the midpoint of our updated guidance range due to our more than $1 billion backlog and exposure to growing aero, auto, and energy markets. In Q1, we delivered growth and execution. Double digit organic revenue and EPS growth, 150 basis points of segment margin expansion, and an over $60 million increase in free cash flow. So now, let me share some of our commercial wins this quarter on slide four. In March, we signed a 10-year $1 billion agreement with Continental to supply aftermarket brake pads in Europe. Our friction team consistently provides the highest level of quality and service for our auto customers, and this helped us secure this important partnership. Under the contract, Motion Technologies will continue to provide copper-free braille pads for ATE, Continental's premium braille pad brand. Additionally, Continental will market and sell highly trusted braille pads from Gaffer, an ITT brand, to help expand our aftermarket presence in Europe. The agreement contains improved volume incentives that will likely elevate the total value of the agreement to over $1 billion over the 10-year term. It also preserves ITT's ability to expand our aftermarket business in China. Congratulations to Vincenzo and the Friction team on this exciting next chapter. We are delighted to continue serving Continental and help them win in the car aftermarket. In industrial process, our Bornemann twin screw pumps are leading the way on large-scale green projects thanks to their multi-phase boosting technology. In Q1, We were awarded anti-flaring projects at two oil and gas sites in Nigeria. Thanks to our Boneman pumps, our customers will eliminate roughly 350,000 tons of CO2 per year and avoid environmental fines. In early April, we won another decarbonization project at the largest LNG field in Australia and one of the largest sites in the world. This carbon capture project, the largest in the world, is expected to reduce CO2 emissions by 100 million tons over the system's lifetime. I want to thank Jeroen and the entire Bornemann team for developing these opportunities, establishing an incredible customer intimacy, and working hard to share the value of our Bornemann pumps with our customers. The technology of our Bornemann pumps plays, and will continue to play, a pivotal role in the decarbonization of the energy industry. Decarbonization is good for ITT. Let's turn to slide five to discuss the MicroMODE acquisition. Yesterday, we announced the acquisition of MicroMODE products for approximately $80 million, and the company is now part of CCT. The effective purchase multiple was approximately 11 times EBITDA, and we expect it will improve from here as the value creation accelerates. MicroMODE is a leading designer and manufacturer of high bandwidth radio frequency connectors for HASH applications in radar, satellite, and smart defense systems. Micro-mode connectors are the product of choice on mission-critical applications, and they've been qualified on space programs for more than 30 years. With this acquisition, ITD gains further entry into niche defense and space markets with significant long-term potential, as this is a total addressable market of approximately $4 billion. MicroMod's customers love their performance, their responsiveness, and attention to their needs. Like Habonim, our recent VALS acquisition, which has been a great success, MicroMod has strong, long-lasting intimacy with its customers. Mike, Gerald, Brian, and the entire MicroMod team, welcome to ITT. I look forward to growing our business together. With that, I turn the call over to Emmanuel to discuss our first quarter results in more detail.