ITT (NYSE:ITT) raised its full-year earnings and cash flow outlook after third-quarter revenue rose 44%, helped by its acquisition of SPX FLOW and organic growth across all three business segments.
The company reported more than $1.4 billion in revenue for the quarter ended Oct. 3, with organic revenue growth of 8%. Adjusted earnings per share rose 20% to $2.26, while adjusted operating margin expanded 140 basis points to 21%.
Orders grew 58%, or 20% organically, as demand from aerospace, defense and industrial customers contributed to a book-to-bill ratio of 1.08. A ratio above 1 indicates that orders exceeded revenue during the quarter.
“Q3 was strong, and our backlog is healthy and growing,” CEO and President Luca Savi said. “This momentum gives us confidence for Q4 and entering 2027.”
Higher guidance and cash generation
ITT raised its full-year organic revenue growth forecast to a range of 7% to 9%. Interim Chief Financial Officer Mike Savinelli said the company expects adjusted operating margin of approximately 20.6% at the midpoint, representing more than 100 basis points of expansion.
The company increased the midpoint of its adjusted EPS outlook by $0.36 to $8.58, which would represent 19% growth from the prior year. Savinelli said the low end of the new range exceeds the high end of the previous range. ITT also raised the midpoint of its free cash flow guidance to $610 million, or approximately 11% of revenue.
Third-quarter free cash flow was $288 million, bringing the year-to-date total to $464 million. ITT paid down more than $200 million of debt during the quarter and reduced its leverage ratio to 2.3 times. Management now expects the ratio to reach approximately 2.1 times by year-end.
ITT repurchased $50 million of shares in the quarter and more than $150 million year to date. Savi said the company would continue to focus on cash generation, debt reduction and SPX FLOW integration before pursuing another large acquisition, potentially in 12 to 15 months. He said bolt-on acquisitions could occur in the meantime.
Defense orders lift CCT
Connect & Control Technologies, or CCT, posted 19% organic revenue growth and a record 22% operating margin, up 100 basis points. Organic orders rose 55%, including a 146% increase at defense business kSARIA and 37% growth in connectors.
Savi said kSARIA won work on submarine, tactical radio and F-35 programs. He added that CCT’s backlog for the fourth quarter and 2027 was more than 30% higher than at the same point a year earlier, while its longer-term platform backlog was up more than 100%.
Motion Technologies grew organic revenue 2%, and its operating margin expanded 70 basis points to 21%. Savi said the business had outperformed global vehicle production by 560 basis points year to date, but cautioned that the fourth quarter would have four fewer days than a year earlier and could face headwinds if automakers shut down production earlier in December.
Flow Technologies grew revenue 99%, including 6% organic growth, and reported a 22.4% operating margin, up 100 basis points sequentially. Savi said unfavorable mix and acquisition dilution weighed on the segment’s margin, although volume and pricing were positive.
SPX FLOW integration ahead of plan
ITT said SPX FLOW, acquired in March, contributed 35 percentage points of total revenue growth in the third quarter. SPX FLOW revenue grew 6% in the quarter and 8% year to date, and management expects high-single-digit growth for the business in 2026. The year-over-year SPX FLOW commentary includes financial information from before the acquisition closed.
Savi said the integration team expects more than $20 million in cost savings by year-end, above its $15 million target for 2026. Those savings would translate to an annual run rate of more than $30 million. He said the pipeline of potential savings exceeds ITT’s original $80 million target.
Revenue synergies will take longer to appear, Savi told analysts. ITT is working to localize operations for mixers and pumps in markets including Latin America, the Middle East and China.
Leadership change
Savi announced that Davide Barbon, president of Motion Technologies, will also take leadership of CCT. He said CCT has the largest growth and margin-expansion potential in ITT’s portfolio, citing opportunities in pricing, purchasing and operational improvements.
Savi also said ITT acquired Aerospace Contacts during the quarter to strengthen its supply chain and support CCT’s growth. The company is evaluating investments in additional machines at the acquired business and has invested in capacity in Germany and Mexico.
About ITT (NYSE:ITT)
ITT Inc (NYSE: ITT) is a global industrial manufacturer that designs and produces highly engineered components and technology solutions for transportation, industrial, energy, aerospace, defense and other specialized markets. The company serves original equipment manufacturers, distributors and end users through operations in North America, Europe, Asia and other international markets.
ITT operates through three primary business segments. Motion Technologies develops brake pads, shock absorbers, sealing products and other engineered components used in automotive, rail and related transportation applications.
