ITT INC

Previous wording

Our product and service offerings are organized into three reportable segments: Motion Technologies (MT), Industrial Process (IP), and Connect & Control Technologies (CCT). See Note 3, Segment Information, in this Report for a summary description of each segment. Additional information is also available in our 2023 Annual Report within Part I, Item 1, “Description of Business.”

Current wording

Our product and service offerings are organized into three reportable segments: Motion Technologies (MT), Industrial Process (IP), and Connect & Control Technologies (CCT). See Note 3, Segment Information, to the Consolidated Condensed Financial Statements for a summary description of each segment. Additional information is also available in our 2023 Annual Report within Part I, Item 1, “Description of Business.”

Previous wording

All comparisons included within Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to the comparable three months ended April 1, 2023, unless stated otherwise.

Current wording

All comparisons included within Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to the comparable three and six months ended July 1, 2023, unless stated otherwise.

Previous wording

During the first quarter of 2024, there has been continued uncertainty in the global economy, which has been, and will continue to be, influenced by a number of external factors, which are described below.

Current wording

During the second quarter of 2024, there has been continued uncertainty in the global economy, which has been, and will continue to be, influenced by a number of external factors, which are described below.

Previous wording

Throughout the first quarter of 2024, the Israel-Hamas conflict, which escalated in October 2023, has been ongoing. Our operations in Israel are limited to Habonim Industrial Valves and Actuators Ltd. (Habonim), which we acquired in April 2022. Habonim is part of our IP segment and had sales of $12.7 during the three months ended March 30, 2024. While the current impact on our business has not been material, further escalation of this conflict could result in supply chain disruptions, inflation, workforce disruptions, demand fluctuations, or the inability to fulfill customer requests in the region. We are closely monitoring this developing situation, and are unable to reasonably estimate any future impacts on our business and financial results at this time.

Current wording

Throughout 2024, the Israel-Hamas conflict, which escalated in October 2023, has been ongoing. Our operations in Israel are limited to Habonim Industrial Valves and Actuators Ltd. (Habonim), which we acquired in April 2022 and is part of our IP segment. While there has been no material impact on our business to date, further escalation of this conflict, or an escalation of the conflict between Israel and Hezbollah in southern Lebanon, could result in supply chain disruptions, inflation, workforce disruptions, demand fluctuations, or the inability to fulfill customer requests in the region. We are closely monitoring this developing situation, and are unable to reasonably estimate any future impacts on our business and financial results at this time.

Previous wording

Since 2020, the cost of energy and of raw materials we use in our production processes, including commodities such as steel, oil, copper, and tin, have significantly increased. The rising prices are mainly a result of reduced supply caused by supply chain disruptions primarily as a result of the COVID-19 pandemic and the ongoing Russia-Ukraine and Israel-Hamas conflicts.

Current wording

Since 2020, the cost of energy and of raw materials we use in our production processes, including commodities such as steel, oil, copper, and tin, have significantly increased. The rising prices are mainly a result of supply chain disruptions primarily caused by the COVID-19 pandemic and the ongoing Russia-Ukraine and Israel-Hamas conflicts.

Previous wording

The following table provides a summary of key performance indicators for the first quarter of 2024 as compared to the first quarter of 2023.

Current wording

The following table provides a summary of key performance indicators for the second quarter of 2024 as compared to the second quarter of 2023.

Previous wording

Further details related to these results are contained elsewhere in the Discussion of Financial Results section. Refer to the section titled “Key Performance Indicators and Non-GAAP Measures” for definitions and reconciliations between GAAP and non-GAAP metrics.

Current wording

Further details related to these results are contained elsewhere in the Discussion of Financial Results section. Refer to the section titled “Key Performance Indicators and Non-GAAP Measures” for definitions and reconciliations between GAAP and non-GAAP metrics, including organic revenue, adjusted operating income, adjusted operating margin, and adjusted EPS.

Previous wording

Our first quarter 2024 results are summarized below:

Current wording

Our second quarter 2024 results are summarized below:

Previous wording

•Revenue of $910.6 increased by $112.7 due to higher sales volume, particularly within IP’s pump projects business, MT’s Friction original equipment (OE) business, and CCT’s components and connectors businesses. In addition, the acquisitions of Svanehøj and Micro-Mode contributed $41.4 to total revenue growth. The increase in revenue during the period was partially offset by unfavorable foreign currency translation of $4.3.

Current wording

•Revenue of $905.9 increased by $72.0 due to higher sales volume, particularly within MT’s Friction original equipment (OE) and KONI businesses, CCT’s connectors and components businesses, and IP’s aftermarket business. In addition, the acquisitions of Svanehøj and Micro-Mode contributed $35.0 to total revenue growth. The increase in revenue during the period was partially offset by unfavorable foreign currency translation of $12.6.

Previous wording

•Operating income of $149.2 increased by $24.9 due to higher sales volume and productivity savings. The increase in operating income was partially offset by higher labor and overhead costs, stemming from continued supply chain challenges and cost inflation, and higher strategic growth investments.

Current wording

•Operating income of $159.0 increased by $17.0 due to higher sales volume and productivity savings. The increase in operating income was partially offset by higher material, labor and overhead costs, stemming from continued supply chain challenges and cost inflation, higher strategic growth investments, and one-time prior period benefits of $7.2 and $3.7, respectively, related to the sale of a product line and the recovery of lease termination costs.

Previous wording

•Income from continuing operations was $1.34 per diluted share, an increase of $0.14 as compared to the prior year, primarily due to higher operating income, as discussed above. Adjusted income from continuing operations was $1.42 per diluted share, an increase of $0.25 as compared to the prior year.

Current wording

•Income from continuing operations was $1.45 per diluted share, an increase of $0.14 as compared to the prior year, primarily due to higher operating income, as discussed above. Adjusted income from continuing operations was $1.49 per diluted share, an increase of $0.16 as compared to the prior year.

Previous wording

MT revenue increased by $27.6 for the three months ended March 30, 2024, primarily driven by higher sales volume in our Friction OE and KONI businesses of 9% and 10%, respectively. The increase during the period was partially offset by unfavorable foreign currency translation of $2.3. Excluding the impact of foreign currency translation, organic revenue during the period increased by $29.9.

Current wording

MT revenue for the three and six months ended June 29, 2024 increased by $15.7 and $43.3, respectively. The increases in both periods were primarily driven by higher sales volume in our Friction OE business of 5% and 7%, respectively, and in our KONI business of 18% and 15%, respectively. The increases during the three and six month periods were partially offset by unfavorable foreign currency translation of $7.6 and $9.9, respectively. Excluding the impact of foreign currency translation, organic revenue during the three and six month periods increased by $23.3 and $53.2, respectively.

Previous wording

IP revenue for the three months ended March 30, 2024 increased by $67.4. primarily driven by higher sales volume due to growth in pump projects of 64%, which was primarily attributable to the energy market. In addition, the acquisition of Svanehøj, which occurred in January 2024, contributed $35.8 to total revenue growth. The increase in revenue during the period was partially offset by unfavorable foreign currency translation of $1.8. Excluding the impacts from the acquisition and foreign currency translation, organic revenue increased by $33.4.

Current wording

IP revenue for the three and six months ended June 29, 2024 increased by $37.1 and $104.5, respectively, primarily driven by the acquisition of Svanehøj, which occurred in January 2024 and contributed $33.4 and $69.2, respectively, to total revenue growth. In addition, both periods benefited from higher sales volume and pricing actions. The three month period saw growth in our aftermarket business of 7%, which was primarily attributable to the general industrial and energy markets. The six month period saw growth in pump projects of 26%, primarily attributable to the energy market. The increases in revenue during the three and six month periods were partially offset by unfavorable foreign currency translation of $3.9 and $5.7, respectively. Excluding the impacts from the acquisition and foreign currency translation, organic revenue for the three and six month periods increased by $7.6 and $41.0, respectively.

Previous wording

CCT revenue for the three months ended March 30, 2024 increased by $17.5 primarily driven by pricing actions and higher sales volume which drove growth in component and connector sales of 15% and 8%, respectively, particularly within the aerospace and defense markets. In addition, the acquisition of Micro-Mode, which occurred in the second quarter of 2023, contributed $5.6 to total revenue growth. The increase in revenue during the period was partially offset by unfavorable foreign currency translation of $0.1. Excluding the impacts from the acquisition and foreign currency translation, organic revenue increased by $12.0.

Current wording

CCT revenue for the three and six months ended June 29, 2024 increased by $19.6 and $37.1, respectively, primarily driven by higher sales volume and pricing actions. Both periods saw growth in connector sales of 16% and 12%, respectively, and component sales of 6% and 10%, respectively, particularly within the aerospace and defense markets. In addition, the acquisition of Micro-Mode, which occurred in May 2023, contributed $1.6 and $7.2, respectively, to total revenue growth. The increases in revenue during both periods were partially offset by unfavorable foreign currency translation of $1.2 and $1.3, respectively. Excluding the impacts from the acquisition and foreign currency translation, organic revenue for the three and six month periods increased by $19.2 and $31.2, respectively.

Previous wording

Gross profit for the three months ended March 30, 2024 and April 1, 2023 was $300.8 and $261.9, respectively, reflecting a gross margin of 33.0% and 32.8%. The increases in gross profit for both periods was primarily driven by increases in revenue, as described above, and productivity savings. The increases in gross profit and margin were partially offset by increases in material, labor and overhead costs, which were driven by inflationary pressures as discussed above. See section titled, “Macroeconomic Conditions”, for further information.

Current wording

Gross profit for the three months ended June 29, 2024 and July 1, 2023 was $316.1 and $280.0, respectively, reflecting gross margins of 34.9% and 33.6%, respectively. Gross profit for the six months ended June 29, 2024 and July 1, 2023 was $616.9 and $541.9, respectively, reflecting gross margins of 34.0% and 33.2%, respectively. The increases in gross profit and margin for both periods were primarily driven by increases in revenue, as described above, and productivity savings. The increases in gross profit and margin were partially offset by increases in material, labor and overhead costs, which were driven by inflationary pressures as discussed above. See section titled, “Macroeconomic Conditions”, for further information.

Previous wording

General and administrative (G&A) expenses increased $3.2 for the three months ended March 30, 2024 primarily driven by higher personnel, incentive-based compensation, and restructuring costs and the additions of Svanehøj and Micro-Mode in the first quarter of 2024 and the second quarter of 2023, respectively. The increase during the period was partially offset by favorable foreign currency impacts.

Current wording

General and administrative (G&A) expenses increased $8.4 and $11.6 for the three and six months ended June 29, 2024, respectively. The increases in both periods were primarily driven by higher restructuring, personnel, and incentive-based compensation costs and the additions of Svanehøj and Micro-Mode in January 2024 and May 2023, respectively. The increases in both periods were partially offset by favorable foreign currency impacts and lower bad debt expense.

Previous wording

Sales and marketing expenses increased $7.2 for the three months ended March 30, 2024 primarily driven by higher personnel costs and the additions of Svanehøj and Micro-Mode.

Current wording

Sales and marketing expenses increased $6.7 and $13.9 for the three and six months ended June 29, 2024, respectively, primarily driven by higher personnel costs and the additions of Svanehøj and Micro-Mode.

Previous wording

Research and development expenses increased $3.6 for the three months ended March 30, 2024 primarily driven by higher personnel costs and continued strategic investments to support innovation and new product development.

Current wording

Research and development expenses increased $4.0 and $7.6 for the three and six months ended June 29, 2024, respectively, primarily driven by higher personnel costs and continued strategic investments to support innovation and new product development.

Previous wording

MT operating income for the three months ended March 30, 2024 increased $17.2 primarily due to productivity savings, higher revenue, as discussed above, and lower raw material prices. The increase during the period was partially offset by higher labor costs, strategic growth investments and unfavorable sales mix.

Current wording

MT operating income for the three and six months ended June 29, 2024 increased $13.5 and $30.7, respectively, primarily due to higher revenue, as discussed above, productivity savings, and lower raw material costs. The increases during both periods were partially offset by unfavorable sales mix and higher labor costs.

Previous wording

IP operating income for the three months ended March 30, 2024 increased $8.5 primarily driven by higher revenue, as discussed above, and productivity savings. The increase during the period was partially offset by higher labor and overhead costs.

Current wording

CCT operating income for the three and six months ended June 29, 2024 increased $7.0 and $10.3 primarily driven by higher revenue, as discussed above, and productivity savings. The increases during both periods were partially offset by a prior year gain of $7.2 from the sale of a product line, higher material costs, and unfavorable foreign currency translation impacts.

Previous wording

Other corporate costs for the three months ended March 30, 2024 increased $4.1 primarily driven by a one-time benefit of $3.7 in the prior year period related to the recovery of lease termination costs and higher personnel-related costs.

Current wording

Other corporate costs for the three and six months ended June 29, 2024 increased $2.9 and $7.0, respectively. The increase in the six-month period was primarily driven by a one-time benefit of $3.7 in the prior year period related to the recovery of lease termination costs and higher personnel-related costs.

Previous wording

The following table summarizes our interest and non-operating expense, net.

Current wording

The following table summarizes our interest and non-operating income and expenses.

Previous wording

The increase in interest and non-operating expense, net for the three months ended March 30, 2024 was primarily driven by an increase in interest expense, which was due to higher average commercial paper borrowings and higher long-term debt in connection with our acquisition of Svanehøj.

Current wording

The increase in total interest and non-operating expenses, net for the three and six months ended June 29, 2024 was primarily driven by an increase in interest expense due to higher average outstanding long-term debt in connection with our acquisition of Svanehøj.

Previous wording

The following table summarizes our income tax expense and effective tax rate.

Current wording

The following table summarizes our income tax expense and effective tax rate (ETR).

Previous wording

The increase in the effective tax rate (ETR) for the three months ended March 30, 2024 was due to prior year benefits of $16.3 from valuation allowance reversals on deferred tax assets in Germany and $4.9 from filing an amended 2017 consolidated U.S. federal tax return. These benefits were partially offset by a prior year expense of $14.1 relating to an Italian tax audit settlement covering tax years 2016-2022.

Current wording

The decrease in the ETR for the three months ended June 29, 2024 was due to the recognition of a U.S. federal deferred tax asset as part of a prior year acquisition. The increase in the ETR for the six months ended June 29, 2024 was due to prior year benefits of $16.3 from valuation allowance reversals on deferred tax assets in Germany and $4.9 from filing an amended 2017 consolidated federal tax return. These benefits were partially offset by a prior year expense of $14.1 relating to an Italian tax audit settlement covering tax years 2016-2022.

Previous wording

We manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We support our growth and expansion in markets outside of the U.S. through the enhancement of existing products and development of new products, increased capital spending, and potential foreign acquisitions. We look for opportunities to access cash balances in excess of local operating requirements to meet our global liquidity needs in a cost-efficient manner. We transfer cash between certain international subsidiaries and the U.S. when it is cost effective to do so. During the three months ended March 30, 2024, we had net cash distributions from foreign countries to the U.S. of $42.6. During the year ended December 31, 2023, we had net cash distributions from foreign countries to the U.S. of $357.5. The timing and amount of any additional future distributions will be evaluated based on our jurisdictional cash needs.

Current wording

We manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We support our growth and expansion in markets outside of the U.S. through the enhancement of existing products and development of new products, increased capital spending, and potential foreign acquisitions. We look for opportunities to access cash balances in excess of local operating requirements to meet our global liquidity needs in a cost-efficient manner. We transfer cash between certain international subsidiaries and the U.S. when it is cost effective to do so. During the six months ended June 29, 2024, we had net cash distributions from foreign countries to the U.S. of $87.9. During the year ended December 31, 2023, we had net cash distributions from foreign countries to the U.S. of $357.5. The timing and amount of any additional future distributions will be evaluated based on our jurisdictional cash needs.

Previous wording

The amount and timing of dividends payable on our common stock are within the sole discretion of our Board of Directors and will be based on, and affected by, several factors, including our financial position and results of operations, available cash, expected capital spending plans, prevailing business conditions, and other factors the Board of Directors deems relevant. Therefore, we cannot provide any assurance as to what level of dividends, if any, will be paid in the future. In the first quarter of 2024, we declared a dividend of $0.319 per share for shareholders of record on March 8, 2024, which was a 10% increase from the quarterly dividends of $0.29 that were declared in 2023. Dividend payments during the three months ended March 30, 2024 amounted to $26.5.

Current wording

The amount and timing of dividends payable on our common stock are within the sole discretion of our Board of Directors and will be based on, and affected by, several factors, including our financial position and results of operations, available cash, expected capital spending plans, prevailing business conditions, and other factors the Board of Directors deems relevant. Therefore, we cannot provide any assurance as to what level of dividends, if any, will be paid in the future. In the second quarter of 2024, we declared a dividend of $0.319 per share for shareholders of record on June 3, 2024, which was a 10% increase from the quarterly dividends of $0.29 that were declared in 2023. Dividend payments during the six months ended June 29, 2024 amounted to $52.6.

Previous wording

From time to time, the Company may repurchase shares of its stock on the open market. The timing of any repurchases and the actual number of shares repurchased depends on a variety of factors, including remaining authorization under existing Board-approved share repurchase programs, the Company’s stock price, restrictions under the Company’s debt obligations, other uses for capital, the dilutive impact of shares issued during the period related to the Company’s long-term incentive plans, impacts on the value of remaining shares, and market and economic conditions. During the three months ended March 30, 2024, there were no open-market share repurchases. During the three months ended April 1, 2023, we spent $30.0 on open-market share repurchases under our share repurchase programs. All repurchased shares are retired immediately following the repurchases. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, for additional information.

Current wording

From time to time, the Company may repurchase shares of its stock on the open market. The timing of any repurchases and the actual number of shares repurchased depends on a variety of factors, including remaining authorization under existing Board-approved share repurchase programs, the Company’s stock price, restrictions under the Company’s debt obligations, other uses for capital, the dilutive impact of shares issued during the period related to the Company’s long-term incentive plans, impacts on the value of remaining shares, and market and economic conditions. During the six months ended June 29, 2024, we spent $79.0 on open-market share repurchases under our share repurchase programs. During the six months ended July 1, 2023, we spent $60.0 on open-market share repurchases under our share repurchase programs. All repurchased shares are retired immediately following the repurchases. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, for additional information.

Previous wording

On August 5, 2021, we entered into a revolving credit facility agreement with a syndicate of third party lenders including Bank of America, N.A., as administrative agent (the 2021 Revolving Credit Agreement). The 2021 Revolving Credit Agreement matures in August 2026 and provides for an aggregate principal amount of up to $700 of (i) revolving extensions of credit (the revolving loans) outstanding at any time, and (ii) letters of credit for a face amount of up to $100 at any time outstanding. Subject to certain conditions, we are permitted to terminate permanently the total commitments and reduce commitments by a minimum aggregate amount of $10 or any whole multiple of $1 in excess thereof. Borrowings under the credit facility are available in U.S. dollars, Euros, British pound sterling or any other currency that may be requested by us, subject to the approval of the administrative agent and each lender. We are permitted to request that lenders increase the commitments under the facility by up to $350 for a maximum aggregate principal amount of $1,050; however, this is subject to certain conditions and therefore may not be available to us. As of March 30, 2024 and December 31, 2023, we had no outstanding borrowings under the 2021 Revolving Credit Agreement. See Note 13, Debt, for further information.

Current wording

On August 5, 2021, we entered into a revolving credit facility agreement with a syndicate of third party lenders including Bank of America, N.A., as administrative agent (the 2021 Revolving Credit Agreement). The 2021 Revolving Credit Agreement matures in August 2026 and provides for an aggregate principal amount of up to $700 of (i) revolving extensions of credit (the revolving loans) outstanding at any time, and (ii) letters of credit for a face amount of up to $100 at any time outstanding. Subject to certain conditions, we are permitted to terminate permanently the total commitments and reduce commitments by a minimum aggregate amount of $10 or any whole multiple of $1 in excess thereof. Borrowings under the credit facility are available in U.S. dollars, Euros, British pound sterling or any other currency that may be requested by us, subject to the approval of the administrative agent and each lender. We are permitted to request that lenders increase the commitments under the facility by up to $350 for a maximum aggregate principal amount of $1,050; however, this is subject to certain conditions and therefore may not be available to us. As of June 29, 2024 and December 31, 2023, we had no outstanding borrowings under the 2021 Revolving Credit Agreement. See Note 13, Debt, to the Consolidated Condensed Financial Statements for further information.

Previous wording

The ITT Italia Credit Agreement has an initial maturity of three years and provides for term loan borrowings in an aggregate principal amount of €300 million, €275 million of which have been used to finance the Company’s acquisition of Svanehøj, which closed on January 19, 2024. Total outstanding borrowings under the facility were €210 million, or $226.7, as of March 30, 2024. See Note 13, Debt, for further information.

Current wording

The ITT Italia Credit Agreement has an initial maturity of three years and provides for term loan borrowings in an aggregate principal amount of €300 million (or $328.9), €275 million (or $301.5) of which have been used to finance the Company’s acquisition of Svanehøj, which closed on January 19, 2024. Total outstanding borrowings under the facility were €175 million, or $187.2, as of June 29, 2024. See Note 13, Debt, to the Consolidated Condensed Financial Statements for further information.

Previous wording

The change in net cash from operating activities was relatively flat year-over-year. The increase in segment operating income was offset by unfavorable year-over-year net working capital impacts primarily due to timing of accounts receivable collections and higher incentive compensation payments.

Current wording

The increase in net cash from operating activities of $17.7 was primarily due to an increase in segment operating income and improved inventory management, which was partially offset by higher incentive compensation payments in the current period.

Previous wording

The decrease in net cash from investing activities of $406.8 was mainly driven by the acquisition of Svanehøj. Refer to Note 18, Acquisitions, for further information.

Current wording

The decrease in net cash from investing activities of $340.8 was mainly driven by the acquisition of Svanehøj. Refer to Note 18, Acquisitions and Divestitures, to the Consolidated Condensed Financial Statements for further information.

Previous wording

The increase in net cash from financing activities of $456.3 was mainly driven by the increase in commercial paper borrowings and long-term debt to finance the acquisition of Svanehøj. Refer to Note 13, Debt, for further information.

Current wording

The increase in net cash from financing activities of $390.1 was mainly driven by an increase in commercial paper borrowings and long-term debt to finance the acquisition of Svanehøj. Refer to Note 13, Debt, to the Consolidated Condensed Financial Statements for further information. The increase was partially offset by an increase in open-market share repurchase activity. Refer to Note 15, Capital Stock, to the Consolidated Condensed Financial Statements for further information.

Previous wording

Management reviews a variety of key performance indicators including revenue, segment operating income and margins, and earnings per share, some of which are calculated with accounting principles other than those generally accepted in the United States of America (GAAP). In addition, we consider certain measures to be useful to management and investors when evaluating our operating performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and management of assets from period to period. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including, but not limited to, acquisitions, dividends, and share repurchases. Some of these metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for measures determined in accordance with GAAP. We consider the following non-GAAP measures to be key performance indicators. These measures may not be comparable to similarly titled measures reported by other companies.

Current wording

Management reviews a variety of key performance indicators including revenue, operating income and margin, and earnings per share. In addition, we consider certain measures to be useful to management and investors when evaluating our operating performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and management of assets from period to period. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including, but not limited to, acquisitions, dividends, and share repurchases. Some of these metrics, however, are not measures of financial performance under accounting principles generally accepted in the United States of America (GAAP) and should not be considered a substitute for measures determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators for purposes of our reconciliation tables.

Previous wording

A reconciliation of revenue to organic revenue for the three months ended March 30, 2024 is provided below.

Current wording

Reconciliations of revenue to organic revenue for the three and six months ended June 29, 2024 are provided below.

Previous wording

•“Adjusted operating income (loss)” is defined as operating income (loss), adjusted to exclude special items that include, but are not limited to, certain gain on sale of long-lived assets, restructuring, certain asset impairment charges, certain acquisition- and divestiture-related impacts and unusual or infrequent operating items. Special items represent charges or credits that impact current results, which management views as unrelated to the Company’s ongoing operations and performance. “Adjusted operating margin” is defined as adjusted operating income (loss) divided by revenue. We believe that these financial measures are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as evaluating operating performance in relation to our competitors.

Current wording

•“Adjusted operating income (loss)” is defined as operating income (loss), adjusted to exclude special items that include, but are not limited to, restructuring, certain asset impairment charges, certain acquisition- and divestiture-related impacts and unusual or infrequent operating items. Special items represent charges or credits that impact current results, which management views as unrelated to the Company’s ongoing operations and performance. “Adjusted operating margin” is defined as adjusted operating income (loss) divided by revenue. We believe that these financial measures are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as evaluating operating performance in relation to our competitors.

Previous wording

Reconciliations of operating income (loss) to adjusted operating income (loss) for the three months ended March 30, 2024 and April 1, 2023 are provided below.

Current wording

Reconciliations of operating income (loss) to adjusted operating income (loss) for the three and six months ended June 29, 2024 and July 1, 2023 are provided below.

Previous wording

•“Adjusted income from continuing operations” is defined as income from continuing operations attributable to ITT Inc. adjusted to exclude special items that include, but are not limited to, certain gain on sale of long-lived assets, restructuring, certain asset impairment charges, certain acquisition- and divestiture-related impacts, income tax settlements or adjustments and unusual or infrequent items. Special items represent charges or credits, on an after-tax basis, that impact current results, which management views as unrelated to the Company’s ongoing operations and performance. The after-tax basis of each special item is determined using the jurisdictional tax rate of where the expense or benefit occurred. “Adjusted income from continuing operations per diluted share” (adjusted EPS) is defined as adjusted income from continuing operations divided by diluted weighted average common shares outstanding. We believe that adjusted income from continuing operations and adjusted EPS are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.

Current wording

•“Adjusted income from continuing operations” is defined as income from continuing operations attributable to ITT Inc. adjusted to exclude special items that include, but are not limited to, restructuring, certain asset impairment charges, certain acquisition- and divestiture-related impacts, income tax settlements or adjustments and unusual or infrequent items. Special items represent charges or credits, on an after-tax basis, that impact current results, which management views as unrelated to the Company’s ongoing operations and performance. “Adjusted income from continuing operations per diluted share” (adjusted EPS) is defined as adjusted income from continuing operations divided by diluted weighted average common shares outstanding. We believe that adjusted income from continuing operations and adjusted EPS are useful to investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.

Previous wording

(a)Includes integration-related expenses and inventory step-up amortization related to the acquisition of Svanehøj. See Note 18, Acquisitions, for further information.

Current wording

(a)The three and six months ended June 29, 2024 included integration-related expenses and inventory step-up amortization related to the acquisition of Svanehøj. The three and six months ended July 1, 2023 included integration-relation expenses related to the acquisition of Micro-Mode. See Note 18, Acquisitions and Divestitures, to the Consolidated Condensed Financial Statements for further information.

Previous wording

(d)Q1 2024 tax-related special items include expense (benefits) from tax on undistributed foreign earnings of $1.8 and other tax special items of ($0.1). Q1 2023 primarily reflect benefits from valuation allowance reversals of ($17.6) and the amendment of our U.S. federal tax return of ($4.9), partially offset by a settlement related to a tax audit in Italy of $14.1, tax on future distribution of foreign earnings of $2.6, and other special items of ($0.3).

Current wording

The three months ended July 1, 2023 included tax expense on distributions of non-U.S. income ($1.2), and other tax-related special items ($0.8). The six months ended July 1, 2023 included benefits from valuation allowance reversals ($17.5) and the amendment of our federal tax return ($4.9), partially offset by a settlement expense related to a tax audit in Italy ($14.3) and tax on future distribution of foreign earnings ($2.9).