ITT Inc.

May 2, 2024. Today's call is being recorded and will be available for replay beginning at 12 p.m. Eastern Time. At this time, all participants have been placed in a 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 1-1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 1-1 again. 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 Micheluso, Vice President, Investor Relations and Global Communications. Please, you may begin.

Thank you, Victor, and good morning. Joining me this morning in Stanford are Lucas Avi, 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 March 30, 2024, 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 2023 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 2023 and include certain non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures are detailed in our press release and in the appendix of our presentation, both of which are available on our website. With that, it's now my pleasure to turn the call over to Luca, who will begin on slide three.

Thank you, Mark, and good morning. ITT had a very good and active start to the year. We grew revenue, margin, and EPS above expectations, closed this Vanehoy acquisition, invested to sustain our differentiation, and continued to gain share with new, profitable awards. We also reached an important milestone on our multi-year safety journey. Because of our unrelenting focus on safety, we delivered a 40% year-over-year reduction in recordable incidents, leading to an injury frequency rate of 0.5, approaching best-in-class performance. Our plans are safer and more efficient every day. So for the results you delivered and for your focus on safety, I want to thank all IT tiers. A heartfelt thank you. Now, on to the results. In Q1, we built on 2023 momentum in orders, revenue, margin, and EPS. And all of our businesses contributed to this performance. Here are the highlights. 7% organic orders growth or 13% in total. nearly $1 billion in order leading to a book to bill of 1.07. 9% organic revenue growth or 14% total, surpassing $900 million of sales in a quarter for the very first time. 120 basis points of adjusted operating margin expansion to 17% with all businesses making significant progress on our long-term targets. And although we no longer report total segment margin. On that basis, we would be just 100 basis points shy of our 2026 long-term target. As a result of all of this, we drove over 20% adjusted EPS growth to another new level of earnings for ITT. Now the details. On orders, CCT led the way with 23% growth fueled by record aerospace orders and recovering demand in connectors. The connectors' performance was encouraging after the business managed through a year of distributor destocking. MT grew 11% with strong growth in rail. Friction also won 47 new hybrid and electric vehicle awards with Tesla, Xiaomi, Geely, and Mercedes, among others. And IP's short cycle business grew 9% sequentially, whilst winning nearly $70 million of project awards. leading to a book-to-bill of 1.06. On revenue, all three segments deliver strong revenue growth, driven by 8 percentage points of volume. This was led by industrial process, which drove 64% growth in profitable pump projects. MT delivered 8% growth, led by strong friction or outperformance. and double-digit growth in rail whilst we continue to see a recovery in the friction aftermarket. Finally, CCT grew 7% with 13% growth in aerospace and defense. We have seen a multi-quarter ramp in defense that we expect will continue throughout 2024 and beyond. We are driving profitable growth, resulting in a 23% increase in operating income nearly 2.5 times our organic revenue growth rate. Looking at margin by segment, MT surpassed 18% margin in Q1 after improving sequentially every quarter in 2023, highlighted by Coney, which drove margin above the MT segment average. Well done, Jeroen and Coney China. CCT also delivered more than 18% margin, driven in part by pricing. Our new CCT president, Michael Goody, is already hard at work leveraging his operational experience from Park & Hennepin and ITW to drive CCT towards its 22% margin target. Finally, on a like-for-like basis, IP's margin was up 140 basis points even as the mix of revenues shifted to projects. And including acquisitions, IP was still above 20%. Because of this performance, we are raising the low end of our EPS guidance by 20 cents, or 10 cents at the midpoint, to a new range of $5.65 to $5.90. We now expect EPS growth of 11% at the midpoint, above our long-term target, and given the strong top-line performance and momentum in orders, we are raising our organic growth guidance to 6% at the midpoint, with a 20 basis points increase in our margin outlook as well. Our teams deliver this performance while investing in the businesses. These investments will continue to drive strong returns for our shareholders, and I was fortunate to see some of this firsthand last quarter. In India and Saudi, I saw the investments that IP is making to expand testing capacity and capabilities. Khaled and the Saudi team will be able to test larger pump packages, sustaining our ability to gain share in the Middle East. Similarly, in India, Lala and team are installing nearly four times their current power capacity to shorten lead times to customers and improve testing availability. As we expand our in-region-for-region strategy, IP expects to continue to gain share in these growing markets. We are also investing in our capabilities to execute decarbonization projects. At our Bornemann site in Germany, we are upgrading our testing facility to replicate field conditions on large sump packages. ITT will be one of few companies in the world with this capability. We're also making progress penetrating the high-performance BRAPAC segment. We expect the new production lines in Termoli, Italy to be up and running later this year as part of our €50 million investment for plant expansion and upgraded R&D capabilities. Notably, the friction team has already won low-emission brake platform awards on high-performance vehicles even before the facility construction is complete. In addition, the team secured approval for over $20 million of government incentives in Europe, which will significantly reduce our cash outlay for the facility expansion. And again, in friction in China, working closely with local OEMs, we drove 38% growth in friction OE, a substantial outperformance in the largest automotive market in the world. Well done, friction team. And finally, on innovation, the Embedded Motor Drive, or EMD, is delivering continued positive results in customer field trials. On average, EMD delivers energy savings of over 50% compared to a standard motor and significant CO2 emissions reduction. We expect to start product commercialization in 2025, and we share more with you on EMD in the coming quarters. All of these investments will sustain ITT's differentiation over the long term through profitable growth. A significant portion of that growth will come from the nearly $1 billion of orders we booked this quarter. Let me tell you more about this on slide four. Building on our 2023 momentum, we grew orders 13% in total and 16% sequentially with strong performances in all businesses. We are focused on growing and growing profitably. This means we look at each opportunity with a strategic lens and an opportunity level of selectivity. Here are a few examples. By leveraging our proprietary Envision Valve technology, IP Engineer Valves won an award of more than $20 million to support the production of a groundbreaking weight loss drug. This strategic award reinforces our partnership with this leading global pharmaceutical company. We're also winning on green orders, not just in IP with larger carbonization projects, but also in friction with awards with hybrid electric vehicles and in CCT with battery connectors. With this and other awards, Green applications now represent approximately 16% of ITT's revenue annually. Moving forward, this will be bolstered by Svanehoi with its exposure to low-carbon and green fuel applications as part of the clean energy transition. This quarter, Sorin and team grew orders by more than 30% year over year, and we expect this will help deliver double-digit revenue growth for the next several years. Moving to CCT, we are seeing good orders momentum in connectors distribution, especially in North America. Whilst this is encouraging, we don't expect full recovery in connectors until the second half of the year. Additionally, aerospace and defense components recorded its highest orders quarter ever. And finally, in rail, orders were up 37%. As you can see, ITT's growth is accelerating with organic orders growth of 7%. and with a strong performance from Svanehoi, we grew over 13% in total. Our Q1 performance demonstrated once again that ITT is well positioned to grow profitably. Now, let me turn the call over to Emmanuel on slide five.