ITT (ITT) Q2 EPS Jumps 10%

ITT (ITT -3.48%), a diversified industrial engineering company, reported its financial results on July 31, 2025. The headline news: adjusted earnings per share reached $1.64, topping the $1.61 analyst forecast (non-GAAP), and revenue (GAAP) hit $972.4 million, exceeding the consensus GAAP estimate of $948.47 million. Orders again surpassed $1 billion, pushing the backlog to nearly $2 billion at the end of the quarter. Overall, the quarter outperformed Wall Street expectations, with broad-based revenue growth and improved profitability, although margin expansion remained modest in some segments.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

What ITT Does and Where It Wins

ITT operates in the industrial sector, specializing in engineering solutions and components for transportation, industrial process, and aerospace markets. Its main segments are Motion Technologies (MT), which focuses on brakes and shock absorbers for vehicles and rail; Industrial Process (IP), covering pumps and valves for fluid handling; and Connect & Control Technologies (CCT), which provides components and connectors for aerospace, defense, and industrial applications. By serving a range of sectors, ITT aims to smooth out fluctuations in any single market and maintain growth.

The company's current focus is on global diversification, expanding in high-growth markets, and consistent investment in research and development (R&D). Recent years have emphasized innovation--such as energy-saving industrial motor drives--and targeted acquisitions to enhance exposure to aerospace and sustainability-linked markets. Success depends on integrating new businesses, growing its high-margin portfolio, and maintaining operational discipline.

Performance Review: Quarter Highlights and Segment Trends

During the period, ITT exceeded expectations on both profit and sales. Adjusted EPS grew 10.1% from the prior year, outpacing the 7.3% revenue increase. CEO Luca Savi noted, “Once again, we surpassed $1 billion of orders and entered Q3 with nearly $2 billion in backlog. Both top-line gains and profitability improvements reflected growth across all major segments and positive effects from past acquisitions.

By segment, Motion Technologies reported $365.7 million in sales--a reported drop of 4.9% but organic growth of 3.0%. The negative headline number primarily reflected the sale of the Wolverine Advanced Materials business last year, while the underlying organic growth benefited from strong demand for Friction original equipment products and increased activity in European rail. Industrial Process delivered $355.9 million in revenue, up 7.6% reported (5.5% organically) with large project shipments and continued pricing gains, especially in marine pumps through the Svanehøj acquisition. Connect & Control Technologies saw sales jump 31.3% to $251.9 million, although most of this came from the kSARIA acquisition; Organic growth was 4.5%, driven by both new product momentum and price increases.

Profitability advanced, though unevenly. Company-wide operating income rose nearly 10%, and the operating margin (GAAP) improved to 18.0%. The Motion Technologies segment’s adjusted operating margin was 20.2%, while Industrial Process reached an adjusted operating margin of 21.8%. CCT, however, experienced a margin drop to 17.9% on an adjusted basis--a decline attributed to “temporary acquisition amortization” from integrating kSARIA. Across ITT, price increases and productivity measures helped offset rising material and labor costs, though cost inflation remains a watch-point for upcoming quarters.

Orders remained robust. Total orders grew 16% year over year and 13% organic orders growth, keeping book-to-bill above 1 (meaning incoming orders continued to outpace revenue). The inflow pushed ITT’s backlog to about $2 billion, a record high entering Q3 and giving visibility to future sales. Management reported strength in key sectors, highlighting strong demand for new energy and defense products, and continued innovation in areas like VIDAR, its new energy-saving embedded motor drive--a product aimed at saving industrial energy and cutting greenhouse emissions. The company noted that the kSARIA and Svanehøj acquisitions are contributing “double-digit growth,” and project execution margins are running above originally booked levels.

ITT’s capital allocation included $400 million in share repurchases year-to-date. Free cash flow edged up to $137.3 million--up 2.1% from a year ago. The company declared a quarterly dividend of $0.351 per share, consistent with its ongoing capital return approach.

Looking Forward: Guidance and What to Watch

ITT management raised its full-year guidance alongside this earnings release. Revenue is now expected to rise 5–7% (organic growth 3–5%), with adjusted operating margin targeted between 18.1% and 18.7%--a 30 to 90 basis-point increase over last year. Adjusted EPS is now expected at $6.35–6.55, representing year-over-year growth of 8–11%. Free cash flow is projected in the $450–500 million range, or 12–13% of revenue. Forecasts for the second half of the year account for about $50–60 million in tariff cost exposures, which management expects to offset with pricing actions and supply chain adjustments.

Investors watching ITT in the coming quarters should monitor progress in raising segment-level margins, especially in Connect & Control Technologies as acquisition integration continues. Other key areas include tracking order trends in large projects, ongoing cost inflation, the ultimate effect of tariff-related cost increases, and the ramp-up of recent innovations like VIDAR energy-saving industrial motors. Management’s raised outlook signals confidence in converting the record backlog into sales, but the company also noted caution on potential demand shifts and price sensitivity as further price increases are implemented in response to tariffs and cost pressures.

The quarterly dividend was $0.351 per share for Q3.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.