ITT INC

NOTE 3

SEGMENT INFORMATION

The Company’s segments are reported on the same basis used by our chief operating decision maker for evaluating performance and for allocating resources. Ourthree reportable segments are referred to as: Motion Technologies, Industrial Process, and Connect & Control Technologies.

Motion Technologies manufactures brake components and specialized sealing solutions, shock absorbers and damping technologies primarily for the global automotive, truck and trailer, public bus and rail transportation markets.

Industrial Process manufactures engineered fluid process equipment serving a diversified mix of customers in global industries such as chemical, energy, mining, and other industrial process markets and is a provider of plant optimization and efficiency solutions and aftermarket services and parts.

Connect & Control Technologies manufactures harsh-environment connector solutions, critical energy absorption, flow control components, and composite materials for the aerospace and defense, general industrial, medical, and energy markets.

Assets of our reportable segments exclude general corporate assets, which principally consist of cash, investments, deferred taxes, and certain property, plant and equipment. These assets are included within Corporate and Other, which is described further below.

Corporate and Other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, such as asbestos and environmental liabilities, that are managed at a corporate level and are not included in segment results when evaluating performance or allocating resources. In addition, Corporate and Other includes research and development-related expenses associated with a subsidiary that does not constitute a reportable segment.

The following table presents our revenue for each segment and reconciles our total segment revenue to total consolidated revenue.

The following table presents our operating income for each segment and reconciles our total segment operating income to income from continuing operations before income tax.

(a)The 2021 period includes a pre-tax gain of $88.8 resulting from the InTelCo divestiture transaction. See Note 19, Commitments and Contingencies, for further information.

The following table presents our operating margin for each segment. Segment operating margin is calculated as segment operating income divided by segment revenue.

The following table presents our assets as of December 31, 2023 and 2022, as well as our capital expenditures and depreciation and amortization expense for the years ended December 31, 2023, 2022, and 2021, by segment.

The following table displays consolidated revenue by geographic region. Revenue is attributed to individual regions based on the destination of the product or service delivery.

(a)Includes revenue of $1,075.8, $978.6, and $842.9 from the United States for 2023, 2022, and 2021, respectively.

(b)Includes revenue of $387.8, $404.7, and $418.3 from Germany for 2023, 2022, and 2021, respectively.

(c)Includes revenue of $351.8, $307.8, and $306.5 from China for 2023, 2022, and 2021, respectively.

The following table displays Plant, Property and Equipment (PPE), net by geographic region.

(a)Includes PPE, net of $127.1 and $125.2 in the United States as of December 31, 2023 and 2022, respectively.

(b)Includes PPE, net of $134.4 and $113.6 in Italy as of December 31, 2023 and 2022, respectively.

(c)Includes PPE, net of $63.2 and $52.8 in China as of December 31, 2023 and 2022, respectively.

NOTE 4

REVENUE

The following table represents our revenue disaggregated by end market.

During 2023, 2022, and 2021, a single external customer, Continental AG, accounted for 7.3%,8.4%, and 9.8% of consolidated ITT revenue, respectively. Revenue from this customer is reported within our Motion Technologies segment.

Revenue recognized related to our Industrial Process segment primarily consists of pumps, valves and plant optimization systems and related services which serve the general industrial, energy, chemical and petrochemical, pharmaceutical, mining, pulp and paper, food and beverage, and power generation markets. Many of Industrial Process’s products are highly engineered and customized to our customer needs and therefore do not have an alternative use. For these longer term design and build projects, if the contract states that we also have an enforceable right to payment, we recognize revenue over time using the cost-to-cost method as we satisfy the performance obligations identified in the contract. If no right to payment exists, revenue is recognized at a point in time, generally based on shipping terms. A majority of our design and build project contracts currently do not have a right to payment. For pumps that do have an alternative use to us, revenue is recognized at a point in time. Revenue on service and repair contracts, representing 4%,4%, and 3% of consolidated ITT revenue in 2023, 2022, and 2021, respectively, is recognized after the services have been rendered or over the service contract period.

Our Motion Technologies segment manufactures brake pads, shims, shock absorbers, and energy absorption components, and sealing technologies primarily for the transportation industry. Our Connect & Control Technologies segment designs and manufactures a range of highly engineered connectors and specialized control components for critical applications supporting various markets including aerospace and defense, industrial, transportation, medical, and energy. In both of these segments, most products have an alternative use. Therefore, revenue for those products is recognized at a point in time when control passes to the customer. In certain circumstances, we have concluded we do not have an alternative use for the component product. In these cases, due to the short-term nature of the production process we use a units-of-delivery method of revenue recognition.

Contract Assets and Liabilities

Contract assets consist of unbilled amounts where revenue recognized exceeds customer billings. Contract liabilities consist of advance payments and billings in excess of revenue recognized. The following table represents our net contract assets and liabilities.

Our net contract liability increased $25.9 during 2023, primarily due to timing of cash receipts relative to project performance within our IP segment. During 2023, we recognized revenue of $49.2 related to contract liabilities at December 31, 2022.

The aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations was $1,246.5 as of December 31, 2023. Of this amount, we expect to recognize approximately $1,030 to $1,050 of revenue during 2024 and the remainder thereafter.

As of December 31, 2023 and 2022, deferred contract costs, net were $3.8 and $4.5, respectively, primarily related to pre-contract costs. During 2023 and 2022, we amortized $0.7 and $1.0, respectively.

NOTE 5

RESTRUCTURING ACTIONS

From time to time, we initiate restructuring actions to optimize our cost structure, improve operational efficiencies, align our workforce with strategic business initiatives, or integrate acquired businesses. For the years ended December 31, 2023, 2022, and 2021, none of our restructuring activities were considered individually significant. Restructuring costs are recorded within General and administrative expenses in our Consolidated Statements of Operations.

The following table summarizes our restructuring costs by component and by segment.

The following table displays a rollforward of our total restructuring liability, which is included within Accrued and other current liabilities in our Consolidated Balance Sheets.