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DATE

Thursday, Aug. 6, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and President - Luca Savi
• Interim Chief Financial Officer - Mike Savinelli
• Vice President, Investor Relations and FP&A - Carleen Salvage

TAKEAWAYS

• Total Revenue -- $1.5 billion, representing 51.5% reported growth or 12.7% organic growth, driven by the acquisition of SPX FLOW and momentum in aerospace and defense markets.
• Adjusted EPS -- $2.08, increasing 18.2% from $1.76 in the prior-year period.
• Total Orders -- $1.64 billion, growing 53.0% reported or 13.3% organically, reflecting a book-to-bill ratio of 1.1 for the quarter.
• Connect & Control Technologies Revenue -- $295.7 million, with 17.3% organic growth led by a 16% increase in defense and 14% growth in commercial aerospace volume.
• Connect & Control Technologies Orders -- Grew 58.7% organically, highlighted by a 168% increase in kSARIA business bookings for fighter jet and night vision programs.
• Flow Technologies Revenue -- $792.5 million, up 122.7% reported or 20.7% organically, reflecting higher pump project shipments in energy transition and oil and gas markets.
• Flow Technologies Organic Orders -- Declined 2.9% year over year, due to deferred orders in the Middle East and a high prior-year comparison for oil and gas projects.
• Motion Technologies Revenue -- $386.0 million, increasing 1.6% organically driven by friction aftermarket demand and outperforming global vehicle production by over 300 basis points.
• SPX FLOW Performance -- Generated 9% order growth and 5% revenue growth on a pro forma basis, with nutrition and health and mixers as primary drivers.
• Adjusted Operating Margin -- 20.0%, expanding 40 basis points as legacy business pricing and productivity benefits offset dilution from the SPX FLOW acquisition.
• CCT Operating Margin -- 21.7%, a 100-basis-point expansion attributed to higher volumes and pricing power in aerospace and defense.
• MT Operating Margin -- 21.1%, an expansion of 90 basis points resulting from 110 basis points of net productivity.
• Free Cash Flow -- $162.0 million for the quarter, an 18.0% increase over the prior year.
• Full Year 2026 Guidance -- Organic revenue growth raised to 5% to 8% and adjusted EPS raised to a range of $8.12 to $8.32.
• Debt Repayment -- $124 million paid down in the second quarter, bringing the leverage ratio to 2.5x and reaching the company's target six months ahead of schedule.
• Svanehøj Multiples -- Management expects the acquisition multiple of 13 to decline to 6 by the end of 2026 based on 32% average annual revenue growth.
• kSARIA Backlog -- Projected to grow 180% from the acquisition date through the end of 2026 due to wins on large defense programs.
• SPX FLOW Accretion -- Management maintained its expectation for $0.10 to $0.14 of adjusted EPS accretion for the full year 2026.
• Tariff Refund Impact -- $500,000 net benefit recorded in the second quarter, with full-year guidance assuming no additional net benefits.
• Q4 Calendar Impact -- Management noted that the fourth quarter of 2026 will have four fewer days than the fourth quarter of 2025.
• Capital Expenditures -- $29.1 million for the quarter, totaling $55.2 million for the first six months of the year.
• Industrial Connectors -- Revenue grew 24% organically, led by demand in European and Asian markets.

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RISKS

• CEO Savi stated, "The orders in the Middle East have been delayed," noting this will likely impact regional growth in Saudi Arabia over the next few quarters.
• Interim CFO Savinelli noted that margin expansion in the Connect & Control Technologies segment was "partially offset by material inflation" during the second quarter.
• CEO Savi warned that Motion Technologies faces pressures related to cost inflation that is not fully recovered through pricing actions.

SUMMARY

ITT Inc. (ITT -0.37%) reported record revenue of $1.5 billion during the second quarter, driven by the integration of SPX FLOW and double-digit organic growth in the Connect & Control Technologies and Flow Technologies segments. Management increased full-year financial targets across revenue, margins, and earnings per share, citing commercial momentum in defense and aerospace along with operational execution in legacy businesses. The company reached its leverage target of 2.5x six months early through $124 million in debt repayment, while continuing to deploy capital for strategic bolt-on acquisitions.

• CEO Savi noted that the defense market provides a "powerful market tailwind" for the kSARIA business, where organic orders grew 168% due to wins on mission-critical fighter jet and night vision platforms.
• Management attributed a 300-basis-point outperformance of global vehicle production in the Friction business to market share gains in Europe and China.
• Project sales in the Flow Technologies segment increased 45% due to higher shipments in marine energy transition, oil and gas, and energy markets.
• Interim CFO Savinelli stated that the company expects "to expand margin sequentially throughout the year from cost synergy realization" related to the SPX FLOW integration.
• The company acquired Aerospace Contacts in July to secure its supply of high-precision contacts and enhance supply chain resilience for defense and aerospace customers.
• CEO Savi described the Seital factory in Italy as a "team that is ready to win and conquer more," highlighting the growth potential within the Nutrition & Health segment of SPX FLOW.
• The sales funnel in Flow Technologies increased 34% year over year despite order delays in the Middle East, indicating strong replenishment rates in North and Latin America.

INDUSTRY GLOSSARY

• kSARIA: A manufacturer of mission-critical fiber optic and electrical interconnect solutions for the aerospace and defense markets acquired by ITT.
• Svanehøj: A manufacturer of specialized deep-well pump solutions for the marine industry, specifically for gas carriers and energy transition applications.
• Book-to-bill: A ratio of orders received to units shipped and billed, where a ratio above 1.0 indicates strong future demand.
• Friction Technologies: ITT's business unit that manufactures brake pads and related components for automotive and transportation markets.
• 80/20: A management principle where 80% of results come from 20% of efforts; CEO Savi expressed a preference for pursuing the full scope of business opportunities rather than adhering to this framework.

Full Conference Call Transcript

Operator: Welcome to ITT's 2026 Second Quarter Conference Call. Today is Thursday, August 6, 2026. Today's call is being recorded and will be available for replay beginning at 12:00 p.m. Eastern Time. [Operator Instructions] It is now my pleasure to turn the floor over to Carleen Salvage, Vice President, Investor Relations and FP&A. You may begin.

Carleen Salvage: Thank you, Liz, and good morning. Joining me in Stamford today are Luca Savi, ITT's Chief Executive Officer and President; and Mike Savinelli, Interim Chief Financial Officer. Today's call will cover ITT's financial results for the 3-month period ended July 4, 2026, which we announced this morning. Please refer to Slide 2 of the presentation available on our website, 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 2025 annual report on Form 10-K and other recent SEC filings.

Except where otherwise noted, the second quarter results we present this morning will be compared to the second quarter of 2025 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. Today's earnings call includes year-over-year commentary on the performance of SPX FLOW that reflects financial information before the acquisition date of March 2, 2026. With that, it is now my pleasure to turn the call over to Luca, who will begin on Slide 3.

Luca Savi: Thank you, Carleen, and good morning. Before I begin, I would like to welcome our new Aerospace Contacts colleagues to the ITT family. I look forward to working with you to grow CCT more and faster. We would also like to recognize our ITTers all around the world for an outstanding performance in Q2 once again. And a particular thank you to our employees in Flow Technologies for their hard work that has enabled us to make significant progress on the integration of SPX FLOW whilst continuing to deliver strong operational and financial performance. In the second quarter, we accelerated the Q1 momentum.

Our ITT has delivered strong performance across the portfolio through flawless execution and the realization of benefits from our acquisitions, building a solid foundation for the remainder of 2026 and beyond. Now to the momentum. We grew orders 53%, 13% organically. We grew revenue 51%, 13% organically, reflecting a book-to-bill of 1.1 for the quarter. We expanded operating margin 40 basis points. We delivered adjusted EPS of $2.08, up 18% year-over-year, and we generated $176 million of free cash flow year-to-date, a truly record quarter. Let's dive now into the details. On orders, CCT was the highlight of our Q2 performance, growing 59% organically.

CCT's growth was fueled by large defense orders in our kSARIA business, which posted significant multiyear bookings across mission-critical platforms such as advanced night vision applications and fighter jet programs. kSARIA grew orders 168%, and it didn't end there. We continue to see strength in early Q3 with record order bookings in July. The Connectors business also posted record orders, increasing 38%, fueled by growth in North America, Europe and Asia. Motion Technologies continue to win new platform and conquer new awards in friction, feeding future market share gains. KONI orders were also strong with 9% growth, thanks mainly to China Rail and Defense. And lastly, in Flow Technologies, we delivered 91% orders growth.

Organic orders declined 3% year-over-year due to the impact of deferred orders in the Middle East and the strong prior year performance that included very large oil and gas orders. SPX FLOW grew orders 9% in Q2 versus their prior year numbers, 23% growth in mixers across North America and China, 10% growth in Waukesha Cherry-Burrell and 8% growth in Nutrition & Health, supported by strong systems orders in Europe. On revenue, this quarter's performance was fueled by organic growth across all our segments. CCT grew 17% organically, driven by strength across the portfolio. Commercial Aerospace grew 14% from increased volume, coupled with pricing benefits.

Defense grew 16%, driven by strong performance in kSARIA, which grew 28% versus the prior year. We also grew industrial connectors 24%, led mainly by Europe and Asia. Motion Technologies revenue increased 6%, 2% organic, led by friction aftermarket and outperformance of global vehicle production by more than 300 basis points, led by Europe and China, in addition to strength in China Rail. And finally, Flow Technologies revenue was up 21% organically or 123% in total. The team continues to deliver higher pump project sales, up 45%, driven by shipments in marine energy transition and oil and gas markets. And we also continue to grow our valves business, up 19% as we keep on winning in biopharma.

Well done, Kasturi, and the Lancaster team. SPX FLOW revenue grew 5% in Q2 and 9% year-to-date, in line with our full year guidance of high single-digit growth. On operating margin, CCT's margin expanded 100 basis points over the prior year and 240 basis points sequentially to 21.7%, primarily from higher volume and pricing. Motion Technologies margin of 21.1% grew 90 basis points as a result of net productivity. And Flow Technologies, 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 FLOW.

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. As a result of our outstanding operational execution, we delivered adjusted EPS of $2.08, up 18% versus the prior year. Turning now to capital allocation. As previously shared, we're prioritizing debt repayment. And in Q2, we paid down $124 million, bringing our leverage ratio to 2.5x, 6 months ahead of our original commitment. In July, we also deployed capital to acquire Aerospace Contacts.

Though small, this acquisition is highly strategic to enhance our supply chain resilience, secure supply of critical high-precision contacts and in doing so, support continued growth with our connectors defense and aerospace customers. As you see, our legacy businesses are firing on all cylinders and now are also taking advantage of some market tailwinds. And as we shared during our Capital Markets Day, we are compounding and creating more value with our recent acquisitions. Let's turn to Slide 4 to discuss these contributions. During the last few years, we worked hard to cultivate and execute the right acquisitions. We focus on high-quality companies with strong management teams and solid fundamentals. These acquisitions do more than add scale.

They strengthen ITT's portfolio by increasing our exposure to higher growth, higher-margin businesses where we can drive additional value through differentiation in execution and innovation. This is exactly the playbook with Svanehøj. We entered the marine energy transition market, a market that has a lot of growth potential today with LNG and in the future with ammonia. Svanehøj's products and team are leaders in their market, and the results speak for themselves. Since acquisition through the end of 2026, Svanehøj is expected to grow revenue 32% on average each year with a book-to-bill of 1.2. Our projected backlog at the end of 2026 will be up 40% since the acquisition.

As a result, the acquisition multiple of 13 is projected to be just 6 at the end of 2026. Thank you, Søren, Morten and Johnny for this excellent performance. And the marine energy transition end market expected to remain strong. Svanehøj is well positioned for future profitable growth. kSARIA, another bolt-on acquisition, is also a success story. The defense market, which represents roughly 80% of kSARIA provides a powerful market tailwind. kSARIA's leadership and flawless execution enable us to win larger portions of the prime programs we participate in. By the end of 2026, we are projecting to grow backlog 180% since the acquisition and orders 60% on average each year.

This positions us incredibly well for the future. kSARIA's acquisition multiple of 13 is expected to be 11 by the end of 2026. And we still have plenty of opportunities to expand margins with pricing actions and productivity initiatives. Thanks, DiPoto, and team for the quarter of results. On SPX, we are in the early innings, but we are encouraged by how we started, the progress we have made and the future potential. On the start, we are ahead of our plan, and the team is working hard to accelerate.

We have a path to our high single-digit growth commitment with orders in the first half of the year growing 7% and revenue growing 9% year-to-date, resulting in a book-to-bill of 1.05. We are progressing well and cost synergies are ahead of plan, whilst we are working hard to build a strong foundation for future revenue synergies. On future potential, we have plenty of growth prospects in each business, be it Nutrition & Health, Waukesha Cherry-Burrell, mixers or pumps, and the funnel of opportunities keeps on growing. I'm encouraged by what I experienced at Seital, a small factory and business in Italy that is part of Nutrition & Health.

I was fortunate to spend time with the local management, learn from their deep knowledge of the commercial and engineering teams, and observed the 5S of the well-run plant. This is a team that is ready to win and conquer more. Another site with great potential is our Xidu factory in China. We spent time with Bruce Wang and the local team exploring how we can grow faster and more profitably in APAC and China by adopting a more entrepreneurial mindset and a continuous improvement approach and continuing to invest in innovation. As you can see, our acquisition playbook is indeed working.

In summary, our legacy businesses will keep delivering value through above-market growth and continuous margin expansion, whilst the acquisitions will compound value by doing exactly the same. With that, let me now turn the call over to Mike Savinelli, who is joining us for his first earnings call to discuss Q2 results in detail on Slide 5.

Michael Savinelli: Thank you, Luca, and good morning. As Luca highlighted, we delivered a very strong quarter. In Q2, we achieved outstanding growth across the business in revenue, adjusted margin, EPS and cash. Our teams delivered a record $1.5 billion in revenue, growing 51% or 13% organically. CCT grew 17% organically, fueled by industrial connectors and aerospace and defense strength. CCT ended the quarter with a robust book-to-bill of 1.4. Motion Technologies grew 2% organically, a significant achievement in a down market, driven by friction aftermarket and OE outperformance together with KONI growth. And finally, Flow Technologies grew 21% organically, driven by strong project shipments and from strength in short cycle, which was up 10% year-over-year.

Our strong top line performance contributed to operating income growth of 55% and margin expansion of 40 basis points, supported further by the full quarter of SPX FLOW as well as strong execution across our legacy businesses. CCT delivered 23% operating income growth to a margin of 21.7%, a 100 basis point expansion, driven by increased volume, realization of pricing actions and productivity, partially offset by material inflation. Flow Technologies delivered a margin of 21.4%, a decline of 160 basis points, driven by the full quarter impact of SPX FLOW. We expect to expand margin sequentially throughout the year from cost synergy realization and other productivity initiatives.

And MT's operating margin grew 90 basis points to 21.1% as the team drove net productivity of 110 basis points over the prior year. As a result of our top line performance and margin expansion, EPS reached $2.08 for the quarter, increasing 18% versus the prior year. Lastly, year-to-date free cash flow of $176 million was impacted by $71 million of onetime acquisition-related expenses, which we highlighted in Q1. Excluding these impacts, free cash flow was up 15% year-over-year, and looking purely at Q2, our free cash flow margin was 11% for the quarter. Let's now turn to the Q2 EPS bridge on Slide 6.

The 18% EPS growth was primarily driven by strong operational performance delivered by all legacy businesses, compounded by our acquisitions. Our legacy businesses contributed $0.36 of growth, of which Svanehøj and kSARIA contributed $0.12 of that from market share gains, pricing and productivity actions. The full quarter of SPX FLOW contributed $0.68 of growth with the impacts of the incremental interest, share count and tax rate, mostly offsetting this contribution. We are maintaining SPX FLOW's EPS accretion expectation of $0.10 to $0.14 for the year. I want to also stress that the net impacts of the tariff refunds were immaterial to the quarter at just $0.5 million. Now let's move on to Slide 7 to discuss our updated 2026 outlook.

We are raising our full year organic revenue guidance range to 5% to 8% growth, driven by increased bookings in our CCT business, strength in both Flow Technologies projects and short cycle and continued friction OE outperformance, coupled with operational performance above our original expectations. On adjusted operating margin, we expect to deliver over 100 basis points of margin expansion to approximately 20.5% at the midpoint, fueled by top line growth, favorable price-to-cost ratio and productivity gains. As a result of the momentum we generated in the first half of the year, we are raising our adjusted EPS outlook for 2026 to $8.22 at the midpoint.

This represents a $0.37 increase and 14% growth at the midpoint, fueled by volume growth, pricing actions and productivity initiatives. The low end of our new range now exceeds the high end of our previous guidance range. This revised guidance does not consider any additional net benefits from tariff refunds above the $0.5 million from Q2. Finally, on cash and capital structure, we are raising the midpoint of our free cash flow guidance to $565 million, resulting in a free cash flow margin between 10% and 11%. We made good progress lowering our leverage ratio. We are ahead of target and are driving towards approximately 2.3x by year-end.

Now let me turn the call back over to Luca to wrap up on Slide 8.

Luca Savi: Thanks, Mike. Before we move to Q&A, let me reinforce a few points. What you see in Q2, as you saw in Q1, is ITT's strategy in action. Our entrepreneurial spirit is accelerating growth in our legacy businesses. Our relentless execution is accelerating margin expansion. Our acquisitions are compounding organic value creation more and more. And in Q2, the momentum towards our long-term targets is accelerating. As always, I appreciate your time and continued interest in ITT. Liz, please open the line for Q&A.

Operator: [Operator Instructions] Our first question comes from Scott Davis with Melius Research.

Scott Davis: Congrats on these numbers. There's really not much to pick on here at all. So I'm going to talk -- I'd like to talk a little bit about SPX FLOW because that's the newest asset that we need to learn here. Where -- can you give us a sense, Luca, kind of, where SPX FLOW is in their, kind of, lean and operational excellence journey, kind of, how you would compare them to, kind of, your legacy ITT businesses and such and where the upside is there?

Luca Savi: Sure. So I would say when we look at the plants, if it's Xidu, if it's our plant in Poland, if it is even the factory that I visited in Italy, those are well-run plants, I would say, and good 5S, Scott, and some good talent. I think though that the area for improvement that we have in SPX FLOW and in the lean is really to ensure that the lean is entrenched in the DNA in the cell. So today, I would say it's probably more linked to what were corporate initiatives, the A3 that you see stuck on the board, but not necessarily in improving the productivity in the cell or sometimes the material flow in the factory.

So there is work to be done, but there is a good level of talent and the plants tend to be in general with a good 5S.

Scott Davis: Okay. Good answer. Just a quick follow-up. Where are we on price versus cost in your 3 different segments?

Luca Savi: Yes. When you look at the price cost, it's pretty much the same dynamic. You have a price cost positive when it comes to Flow Technologies and in CCT because obviously, we got more price power in there. Different dynamic in Motion Technologies, where we are recovering some of the cost inflation, but not full. So there are pressures there. But at ITT level, we expect to be price/cost positive, probably neutral from a margin perspective for the full year.

Operator: Our next question comes from Jeff Hammond with KeyBanc Capital Markets.

Jeffrey Hammond: Great start here with SPX FLOW. Just wondering if you could maybe speak to just the underlying demand momentum in SPX FLOW. I guess that's what's driving the order growth and kind of any early wins you're seeing around maybe backing off 80/20 or synergies? And then maybe just expand on the funnel comment in SPX FLOW, which I think you said was expanding.

Luca Savi: Yes. So when you look at the funnel of -- so the orders is a great performance. If you think about up 9% in Q2, year-to-date, our orders are up 7%. And also our book-to-bill is above 1. Our book-to-bill in Q2 for SPX FLOW is 1.13. So good performance on there. What we see is really a good recovery on the chemicals. So if you think about the mixers dynamic, and we had a very good performance on the orders on the mixers. Good performance on Waukesha as well, 10% orders growth.

And in Nutrition & Health, I can tell you that just to give you a little bit more color, I participated to some very important bid reviews for large projects in Europe. So good orders, book-to-bill above 1, building backlog and the funnel of opportunities in SPX FLOW is growing. And this, I would say, is geographically across the board, both in North America as well as in Europe.

Jeffrey Hammond: Okay. That's good to hear. And then just on the -- I mean, the CCT orders were pretty eye-popping, and I think you mentioned record July. Can you just kind of spike out underlying demand versus kind of good lumpiness?

Luca Savi: Sure. Sure, Jeff. I mean CCT was simply outstanding in terms of the orders. Everything was up. So it's not just CCT up 58%. Controls were up 22%. Connectors were up 38%. kSARIA is true. You're right, Jeff, in terms of lumpiness. Probably you remember that Q1, we postponed some of the orders from Q1 to Q2. But if you look at kSARIA today, orders up 46%. So there is really a market tailwind, which I was referring to in the prepared remarks, but there is a lot of market share gains. So we are participating to some programs, and we know that we have rewon those programs and more. So this is good.

Some of this has got long-term visibility also to '28 and beyond. But I can tell you that the backlog that we have visible for Q3, Q4 and Q1 of next year compared to what we saw last year at the same time is considerably higher. So great growth for the midterm as well as long term.

Operator: Our next question comes from Mike Halloran with Baird.

Michael Halloran: So a couple of questions here. First, can you help with the back half of the year cadencing as you think about earnings, revenue and any of those metrics? But then maybe also put in context how your orders are tracking in terms of time line, how much visibility it's giving you. Essentially it feels with the strength in the orders, you're getting a little bit of longer-dated, longer cycle type orders coming through. Just curious how we should think about that order to revenue conversion.

Luca Savi: Sure. So if it's okay, Mike, do you address the full year '26 EPS guidance sequentially, and I talk about the orders?

Michael Savinelli: That will be fine. So I just want to mention that we had a significant step-up in performance in Q2. And for the balance of the year, for the second half, we expect to remain at that elevated level of performance. And then looking at each value center for Motion Tech, we expect some seasonality in the second half, expecting stable margins. For CCT, we're expecting consistent revenue and margin similar to Q2. And FT's margin expansion, we expect to expand from synergies.

Luca Savi: And talking about the orders, Mike, I think that different picture. If you think about CCT, as I said, incredible performance of the orders. There are some long-term programs so that gives us fantastic visibility in the future. But as I said, in the short term, our backlog is incredibly up for also the next few quarters. So very good visibility there. When you look at Flow Technologies, the orders up, of course, 91% in total. But if I look at the book-to-bill, Svanehøj's book-to-bill is 1.3.

Just to give you an example, -- so if you have a business like this, which is growing 39% in Q2, on top of that, you got a book-to-bill of 1.3 and you're building backlog. This is visibility in the short, medium term. The SPX FLOW, the revenue is up 5% and the book-to-bill is 1.13. So we are building backlog for the medium term. And then when you go to Motion Technologies, we are winning more and more awards that will feed market share gains. And then KONI orders were also up 9%, thanks to rail and defense. So great visibility for the long term, but also in the short and medium.

Michael Halloran: That makes sense. Appreciate that. And then maybe just state of the union on the legacy Flow assets, what you're seeing on a regional basis, maybe specific emphasis on directional dynamics in the Middle East, and what you're seeing in terms of project outlays?

Luca Savi: Of course. So let me address the Middle East first, and then we talk about the other regions. When you look at about the Middle East, I know that this sounds strange, but our business in the Middle East has been growing for the first 6 months incredibly well. And this is because of all the orders that we won in the last couple of years that we are delivering. We had a huge backlog, and we are delivering this backlog. So huge growth from a revenue perspective in Q1 and Q2. The orders in the Middle East have been delayed.

And this probably will impact the regional growth in that -- in Saudi Arabia and in the Middle East when it comes to the next few quarters. Now what we have seen is that some of the orders are being now given to the EPCs. So we have started seeing some moves in terms of the orders, which is good. The other thing that I want to highlight on the Middle East is Habonim performance. Despite the fact that they are in the middle of it, Habonim has an incredible performance with orders up 18% in the quarter, revenue up 19%. Year-to-date, both orders and revenue up double digit and the book-to-bill above 1. So great over there.

Now if you look at the funnel, the funnel is increasing year-over-year. As a matter of fact, the funnel is up 34% year-over-year and 6% sequentially. When you look at the region, your question, North America, Latin America and interestingly Middle East are up. Forget about the Middle East funnel up because mainly that is because the orders get delayed, but North America and Latin America funnel up highlights the strength of those regions because revenue is growing, book-to-bill above 1, so your orders are growing even more. And on top of that, your funnel is growing. So you're replenishing at a faster rate. So whereas Europe and Asia Pacific funnels are down a little bit.

Michael Halloran: That was great. Appreciate it. Congrats on the quarter.

Operator: Our next question comes from Daniel DiCicco with BMO Capital Markets.

Daniel DiCicco: So it looks like you're winning share literally everywhere. So I guess, we've talked about some of the drivers, but maybe where do you see the most opportunity still in the portfolio when we kind of look out to the medium term?

Luca Savi: Okay. So you're absolutely spot on, Dan. We are winning share across the board. Is it in KONI rail? Is it -- I was in China and the team was presenting the market share that we have with the China CRRC, fantastic. We are winning market share in China with the Chinese OEMs. And therefore, we expect to increase market share there. We increased market share. You see on the growth with a 21% revenue growth in Flow Technologies organic. You know that we're winning market share there as well, mainly because of our project management and also in connectors.

I would say we still have opportunities across the board, but probably more on the -- in the FT side on the Flow Technologies as well as CCT. So this is where we can even grow faster and more.

Daniel DiCicco: Great. And then just a quick follow-up. I know you've talked about it a little bit in the past, but just some of the commercial opportunities you see within SPX FLOW and then maybe specifically some pricing opportunities on the Nutrition & Health side would be great.

Luca Savi: Sure. So I think that when we look at SPX FLOW, let me give an example. A few weeks ago, I was in Xidu, China, where we have a very good plant in terms of SPX FLOW. But I think our approach in China could be probably be adapted a little bit more to the market. What I mean by that, invest more on the engineering side, on the local application engineering in some local R&D so that we are actually adapting and making decisions more closer to the market, closer to the customer.

This is what has generated a lot of success for our friction business in China, for our KONI business in China and for our connectors business in China in the last few years. So decentralized empowering, developing more the periphery and the markets like China will definitely be a great opportunity. Similar opportunities out at Seital, our plant in small plant in Italy. I mean, that team is eager to win and conquer more. We need to ensure that we have though managed a more decentralized and make decision closer to the customer and closer to the market. We are also working on revenue synergies, particularly in Latin America for mixers, I would say.

And the pause that we have in the Middle East presents an opportunity for us to get ready with mixers or the Bran+Luebbe pumps with localization in Saudi.

Daniel DiCicco: Great. Congratulations on a great quarter.

Operator: Our next question comes from Joe Giordano with TD Cowen.

Joseph Giordano: Just curious what the opportunity set is. You've been talking about winning valves market share for a while with the legacy portfolio in like pharma and health. And just curious what the potential is for you to like bring in and pull in some of the SPX FLOW into those discussions from the wins that you've had on the legacy in valves?

Luca Savi: Yes, that's -- you're absolutely right, Joe. It looks like you were listening to some of our meetings in our meetings is yes, we have a very good penetration in some of the biopharma with our Lancaster plant because of our proprietary technology with EnviZion, and we won incredibly well. This is a market where we can expand with some of the brands of SPX FLOW, but also with the mixers. So the conversations are happening, and we need -- it could be across sales synergies that we probably were underestimating during the due diligence. Very fair.

Joseph Giordano: Yes, that's kind of what I figured. And then can you talk about -- so what's going on in the Middle East, the implications of this, right? Like if we have to start moving around where LNG capacity goes and make new pipelines and have different shipping routes, like I'd imagine that you're a pretty big beneficiary from that across multiple elements of the firm. I mean Svanehøj, maybe and maybe on the infrastructure itself. Can you talk about what -- if that's what we ultimately have to do, kind of, rethink the, kind of, where some of this where some of this energy flows through, how does that impact you guys?

Luca Savi: Sure. There are always -- you're absolutely right. There are always 2 sides to the coin, right? So if our factory in Dammam gets penalized on one side in the short term, I mean, for the shipping perspective in terms of what the business could be for Svanehøj, could be a positive one. If there is more investment in pipelines, pipelines will use the BB3 pumps. And interesting enough, the BB3 is the pump that we went already completely the complete range through VA/VE, and we have a very good product, a product that has allowed us actually to win the Vaca Muerta project in Argentina.

And then as well, further investment in different regions could be also good for our Bornemann or Goulds Pumps. So for example, what's happening in Venezuela is probably going to be a great tailwind for our Bornemann pumps. Let's not forget that Venezuela was probably the largest market for Bornemann in the long past -- in the far past. So definitely great opportunities across the board.

Operator: Our next question comes from Nathan Jones with Stifel.

Nathan Jones: I'll follow up to Scott's question on Lean and ask you where you think SPX is on their 80/20 journey. And I guess I'm specifically interested in hearing where they are on value-based pricing, given that comes typically later in the cycle there. I know they've been on an 80/20 journey since about when they went private. But just any updates or thoughts that you have around that?

Luca Savi: Sure. You know that I'm not an 80/20 guy, right? It's -- listen, I -- 80/20 is a good tool. Do we use it in ITT? Of course, we do. We did it on the safety, on the quality, you 80/20, absolutely. But I'm not a fan of the 80/20. I'm a fan of the 100 and to go after. So if some of our competitors want to leave there the 20, I'm happily going after that 20. So to be honest with you, we are reversing that approach of the 80/20 and to have a much more rational and much more common sense. To be honest with you, what we are adopting is common sense and approach rigorously.

That's it. It could be 80/20, it could be 90/10, it could be 100. So we are reversing that to be much more business savvy. Now when it comes to the value-based pricing, the team is good at value-based pricing. When I look -- when I talk commercially to -- with Wendy or with Rudy, I mean, they definitely know their market, their customers, and they know exactly how to price different opportunities. And this is also in Nutrition & Health in some of those bids that I participated to, Silvia, the lead, the top salesperson and the management team are really able to push it to the right price and to the right value.

Nathan Jones: Interesting. Fair enough. I guess on the revenue synergy opportunities, you talked about some of the biopharma opportunities pulling SPX product through there. Are there opportunities that you've identified to pull legacy ITT products through to some of the end markets or to combine with some of the SPX products to generate revenue synergies there?

Luca Savi: Sure. I think that the largest one on that front will -- is the Bornemann hygienic pumps. If we look at the Bornemann, mainly in the oil and gas, the chemical, et cetera, but we have an application. We've got very good products for hygienic. Now having said that, we were nobody in hygienic. We didn't have the proper channels. And therefore, if you think about it, what Waukesha Cherry-Burrell had is really great channel on hygienic. So having Waukesha Cherry-Burrell to sell Bornemann pumps in the U.S. through their channel is really the greatest opportunity, I would say. And in some cases, they might have some strong distributor that we might not have in that region.

I'm talking about mixers, for example, with Goulds Pumps. And therefore, we might have the benefit of utilizing their distributor instead of ours and vice versa. That's really where we see the benefits.

Operator: Our next question comes from Vlad Bystricky with Citigroup.

Vladimir Bystricky: Nice results, obviously. Just on the SPX FLOW orders and revenue momentum, can you parse out a little how much of that is volume versus price driven? And then I guess, more broadly for ITT overall, how you're thinking about price contributing to organic growth this year and evolving going forward given lingering inflation?

Luca Savi: Sure. Thank you. So when it comes to SPX FLOW, the growth is mainly volume. There is a little price on that one. And then when also you look at our -- if you look, for example, our legacy short-cycle orders in Flow Technologies, they were up 5% in the quarter. Of that 5%, 4% is volume, is real growth, it's volume growth and 1% is price. So as you can see, we need to be much more surgical today when it comes to price. Having said that, our price/cost equation remains positive for Flow Technologies every quarter and for the full year.

Vladimir Bystricky: Got it. And then just shifting to CCT and I guess, specifically on kSARIA. Given the orders growth you're seeing there, I know some of it is longer cycle and extending out. But just -- how are you thinking about capacity at the kSARIA business and your ability to ramp to deliver versus these large orders and really supply chain ability to keep up as well?

Luca Savi: Sure. So you're absolutely right. I mean, great performance on the orders. I would say also great performance on the revenue side because if you look at also Q2, kSARIA pro forma revenue was up 28%. So great performance. As of today, we do not see any capacity constraint on the kSARIA front. As a matter of fact, when we look at the capacity, this is exactly why we made the acquisition of Aerospace Contacts, right? We were concerned of being able to feed the demand and the growth on the connector side, aero and defense.

And therefore, we purchased Aerospace Contacts, and now we have in-sourced that, and we are able to have a better secure and more resilient supply chain. But no real constraint from capacity from a kSARIA point of view.

Operator: Our next question comes from Andrew Obin with Bank of America.

Andrew Obin: Just a question on margin guide raise. Just a question in terms of -- I think second quarter was a little bit short -- the quarter was good. I'm not complaining. But the quarter came a little bit short on margin versus what we were modeling. But it seems that you raised on margins into the second half. And just trying to understand the dynamic, why do you feel better about margins into the second half?

Luca Savi: Absolutely. I think to be honest with you, Andrew, you're right. I mean every single place we go, we have plenty of opportunities for improvement, absolutely. Now I would say when you look at the margins, I think that Motion Technologies at 21.1% margin. They grew up 90 basis points. So great performance, I would say, if you think about where they play in the market that they play, the pressure they're in. And so what we are working in Motion Technologies is to consolidate and maintain this level of margin for the full year. So that this is in it. It's solid rock. When you look at CCT, CCT margin at 21.7% is actually a record margin for CCT.

And this is with the dilution of kSARIA. I mean without kSARIA, this margin will be higher than 23% so -- and improved sequentially more than 240 basis points. So those -- I think that what you might be referring to is the dilution that we had in Flow Technologies probably is a little bit higher than what we were expecting, okay? But having said that, at 21% the legacy business in Flow Technologies is up 70 basis points, and we're already probably a great benchmark when you look in the market. So you're right, a little bit of a higher dilution in Q2.

But as we move forward, you will see this margin improving more and more because the productivity ramp up through the year, and you will have the acquisition cost synergies really starting having an impact.

Andrew Obin: So it's really about FLOW?

Luca Savi: Yes, that is really more dilution by FLOW, absolutely right.

Andrew Obin: And then the opposite question. The second thing, if you sort of back into second half organic growth, I maybe -- the math may be incorrect, but I hope it is. Sort of we're getting sort of slightly down to plus 6% implied. And -- but the first half, you got 12% organic and orders, I think, were very, very impressive. So the opposite on the top line, very strong first half, but second half feels overly conservative. Any commentary there?

Luca Savi: Yes. Just a couple of things. So I would like to bring it back to the full year picture, right? When you look at the full year picture, we are posting is a really great growth, and we are raising the growth for the full year. Now when you look at the dynamics sequentially, I think that a couple of things. First, it gets a little bit of a tougher compare, right, year-over-year in terms of the -- for Q3 and Q4. Then what you have from a sequential point -- from a year-over-year growth, you have to think about it that Q4 of this year will have 4 days less than Q4 of last year.

So from a year-over-year, you've got that dynamic. And then, of course, there is always the Middle East, where we have been growing tremendously in the first half. And -- but because of the orders delay, there is going to be a little bit of a decrease when it comes to the next few quarters. Having said that, I would say, Andrew, if you look at sequentially, we are consistent. So we have raised -- if you look at Q3 and Q4 EPS guidance has been raised and stay at elevated level. And for a full year, which is going to be pretty much outstanding.

And there is, of course, also the MT top line seasonality that happens in Q4 with the market going down. In most of the cases, the customer tend to shut down early in December.

Operator: [Operator Instructions] Our next question comes from Joe Ritchie at Goldman Sachs.

Joseph Ritchie: Luca, your 80/20 comments had me laughing earlier. So I always thought of you guys as the 95-5 company, 5% proud, 95% never satisfied.

Luca Savi: That's true.

Joseph Ritchie: Yes. So -- but here, look, the -- just really exceptional performance across the board and incredible that you guys have been able to do all of this M&A, delever faster than expected. And the M&A seems to be really paying dividends for you guys. So maybe let's spend a minute just discussing like what the pipeline looks like, where the opportunities are from here, how you're thinking about potentially deploying future capital? Obviously, it's been a great way for you guys to compound over the last few years.

Luca Savi: Sure. So everything is working well. So as you can imagine, Joe, we're very busy cultivating the right companies. So the fact that we are delevering faster gives a little bit more flexibility, but let's not -- our priorities have not really changed. So the priorities today is really to pay down the debt, like Mike said in the prepared remarks, is really to execute on the synergies and deliver on SPX FLOW. Of course, there might be some bolt-on acquisitions that we are cultivating, and this goes across in FLOW as well as on the connector side of the business. You have seen Aerospace, a very small contact, a very small acquisition, but very strategic.

So small bolt-ons are in the pipeline and might be executed, but we are definitely busy cultivating as well as paying down debt and delivering the synergies.

Joseph Ritchie: Okay. Great to hear. And then I guess I may have missed it earlier. When you talked about the kSARIA orders and then specifically what you're seeing across your portfolio, I'm curious, is like the mix of your business shifting at all to maybe a little bit longer cycle than it has been historically. Maybe comment on that because you're booking these orders on like longer-term platforms. I'm just curious like how you're thinking about the maybe more visibility beyond just like 2026?

Luca Savi: I think that's a very fair point, Joe. But I would say is we are lucky to have both. And what I mean by that is kSARIA is winning important platforms and you have the visibility for '28. So if you look at jet programs, so we are winning our fair share and more because we're winning market share, you have that. But when you look at the backlog because every quarter, we look at the backlog for the next 4 quarters, and we compare to the backlog that we had 1 year ago for the future growth at that time.

And I can tell you that we -- our backlog that we have in our hands for the next few quarters is considerably higher. So for the next quarter, sometimes the backlog is higher by 30%, 2 quarters that allow by 20%. And for the next year, it's already 20% higher than what it was 1 year ago. So you've got great visibility in the long term, but also much more backlog for the short term.

Operator: Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.

Luca Savi: Thank you.