Engineered components manufacturer for critical industries ITT Inc. (NYSE: ITT) beat Wall Street’s revenue expectations in Q1 CY2025, but sales were flat year on year at $913 million. Its non-GAAP profit of $1.45 per share was 1% above analysts’ consensus estimates.
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ITT (ITT) Q1 CY2025 Highlights:
- Revenue: $913 million vs analyst estimates of $907.8 million (flat year on year, 0.6% beat)
- Adjusted EPS: $1.45 vs analyst estimates of $1.44 (1% beat)
- Adjusted EBITDA: $196.5 million vs analyst estimates of $193.4 million (21.5% margin, 1.6% beat)
- Management reiterated its full-year Adjusted EPS guidance of $6.30 at the midpoint
- Operating Margin: 16.5%, in line with the same quarter last year
- Free Cash Flow Margin: 8.4%, up from 3.3% in the same quarter last year
- Organic Revenue was flat year on year (9.5% in the same quarter last year)
- Market Capitalization: $11.84 billion
StockStory’s Take
ITT’s first quarter results were shaped by a sharp rise in orders and backlog, balancing a flat year-over-year sales performance. Management highlighted continued momentum from recent acquisitions, particularly kSARIA and Svanehøj, which drove strong new project awards and contributed to a record order book. CEO Luca Savi emphasized operational execution and ongoing productivity initiatives, noting that pricing actions and cost control offset volume declines in auto and aerospace segments. Additionally, ITT generated record free cash flow as working capital improved.
Looking ahead, management reiterated its adjusted EPS guidance for the year, citing confidence in margin expansion driven by price realization, productivity gains, and contributions from new products such as the VIDAR industrial motor. CFO Emmanuel Caprais acknowledged persistent macroeconomic uncertainty in the second half but stated that further actions—such as cost reductions and pricing adjustments—were already planned to address tariff-related headwinds. Savi maintained, “We continue to expand our margin with more opportunities still to capture,” signaling a disciplined approach to execution despite a fluid environment.
Key Insights from Management’s Remarks
ITT’s leadership attributed the flat sales in Q1 to market softness in auto and aerospace but pointed to strong order activity and successful integration of acquisitions as critical positives. Management focused on operational performance, margin expansion, and new product innovation as key themes impacting the quarter.
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Record Orders and Backlog: Orders exceeded $1 billion, supported by kSARIA and Svanehøj acquisitions, resulting in a 21% year-over-year backlog increase. Management cited large project wins, particularly in Industrial Process (IP), as evidence of market share gains and robust demand across energy and marine markets.
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Acquisition Performance: The kSARIA acquisition drove nearly 40% order growth in Connect & Control Technologies (CCT), while Svanehøj’s marine pump orders grew 70%. These deals were highlighted as enhancing ITT’s presence in defense, marine, and industrial sectors.
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Margin Expansion Despite Headwinds: Margins improved across all major segments, with operational productivity and price actions more than offsetting cost inflation, M&A-related dilution, and unfavorable foreign currency effects. Management emphasized that price realization, particularly in CCT, was a significant contributor.
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VIDAR Product Launch: The introduction of the VIDAR industrial motor—a drop-in replacement designed to improve pumping efficiency—was cited as a strategic move to enter a $6 billion addressable market, with initial customer pilots demonstrating substantial energy and cost savings.
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Capital Deployment and Share Buybacks: ITT repurchased $100 million in shares during Q1 and an additional $300 million after quarter-end, reducing share count by 4%. Management stated that these actions were not a function of reduced M&A opportunities but reflected confidence in future outlook and ongoing capital allocation discipline.
Drivers of Future Performance
Management’s outlook for the remainder of the year centers on the execution of its order backlog, continued integration of recent acquisitions, and successful mitigation of tariff-related costs. The company’s guidance assumes steady project conversion and ongoing margin expansion, with attention to external risks.
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Order Backlog Conversion: The large backlog in Industrial Process and CCT is expected to support revenue growth through project execution, especially in energy and marine applications, even if short-cycle order activity moderates.
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Tariff Mitigation and Pricing Actions: Management plans to offset $50–$60 million in anticipated tariff costs through a mix of price increases, cost controls, and sourcing flexibility. The company expects these actions to prevent a net impact on earnings, though there may be some margin timing effects.
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New Product and Market Expansion: The ramp-up of new products like VIDAR and further investments in regions such as Saudi Arabia and India are expected to contribute incremental growth, with management citing ongoing pilots and market share gains as supporting factors.
Top Analyst Questions
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Scott Davis (Melius Research): Asked if the surge in orders was due to customers accelerating purchases ahead of price increases; management clarified that most project orders were long in development, with no evidence of pre-buying.
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Mike Halloran (Baird): Sought details on the resilience of the business model and guidance bridge; management highlighted backlog strength and confidence in project execution, while acknowledging a cautious outlook for the second half.
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Vlad Bystricky (Citigroup): Inquired about exposure to oil price volatility in Saudi projects; management reported continued order growth and no change in customer tone, attributing success to high on-time delivery and execution.
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Jeff Hammond (KeyBanc): Pressed for specifics on tariff mitigation and price increases; management explained that most cost increases would be offset by commercial actions and sourcing adjustments, particularly in CCT and IP segments.
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Joe Ritchie (Goldman Sachs): Asked about the VIDAR launch and its integration with existing sales channels; management described VIDAR as a separate business unit with some cross-selling incentives but distinct from core pump operations.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) the pace and margin quality of backlog conversion, especially in Industrial Process and CCT; (2) the effectiveness of tariff mitigation strategies and their actual versus expected impact on profitability; and (3) early customer adoption and revenue contribution from the VIDAR motor launch. Additional scrutiny will be given to the ongoing integration of recent acquisitions, as well as any signs of changing demand in end-markets such as automotive, aerospace, and energy.
ITT currently trades at a forward P/E ratio of 22.9×. Should you load up, cash out, or stay put? Find out in our free research report.
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