ITT INC

Previous 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.

Current wording

All comparisons included within Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to the comparable three and nine months ended September 30, 2023, unless stated otherwise.

Previous 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.

Current wording

During the third 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 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.

Current wording

Throughout 2024, the Israel-Hamas conflict 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 Lebanon, Iran or Yemen, 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 situation, and are unable to reasonably estimate future impacts on our business and financial results at this time.

Previous wording

Global macroeconomic conditions have led and may continue to lead to decreased demand for our products, increased costs, and reduced operating margins. We have been able to offset most of these negative impacts through pricing actions and productivity savings, which we continue to pursue. Future impacts on our business and financial results as a result of these conditions are not estimable at this time, and depend, in part, on the extent to which these conditions improve or worsen, which remains uncertain. For additional discussion of the risks related to global macroeconomic conditions, see Part I, Item IA, “Risk Factors” in our 2023 Annual Report.

Current wording

Inflationary pressures, driven by factors such as supply chain disruptions and the ongoing Russia-Ukraine and Middle East conflicts, have led to increased prices for energy and raw materials we use in our production processes, including commodities such as steel, oil, copper, and tin. Additionally, the manufacturing industry continues to experience a skilled labor shortage, which has created difficulties in attracting and retaining factory employees and has resulted in higher labor costs. We have been able to offset most of these negative impacts through pricing actions and productivity savings, which we continue to pursue. Future impacts on our business and financial results as a result of these conditions are not estimable at this time, and depend, in part, on the extent to which these conditions improve or worsen, which remains uncertain. For additional discussion of the risks related to global macroeconomic conditions, see Part I, Item IA, “Risk Factors” in our 2023 Annual Report.

Previous 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.

Current wording

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

Previous wording

Our second quarter 2024 results are summarized below:

Current wording

Our third quarter 2024 results are summarized below:

Previous 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.

Current wording

•Revenue of $885.2 increased by $63.1 due to higher sales volume, particularly within MT’s Friction aftermarket and KONI rail businesses, IP’s short-cycle business and CCT’s connectors business. In addition, the acquisitions of kSARIA and Svanehøj contributed $55.2 to total revenue growth while the Wolverine and Matrix divestitures reduced total revenue by $33.9. The increase in revenue during the period was partially offset by unfavorable foreign currency translation of $1.7.

Previous 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.

Current wording

•Income from continuing operations was $1.96 per diluted share, an increase of $0.62 as compared to the prior year, primarily due to higher operating income, as discussed above. Adjusted income from continuing operations was $1.46 per diluted share, an increase of $0.09 as compared to the prior year.

Previous 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.

Current wording

IP revenue for the three and nine months ended September 28, 2024 increased by $54.0 and $158.5, respectively, primarily driven by the acquisition of Svanehøj, which closed in January 2024 and contributed $40.0 and $107.2, respectively, to total revenue growth. In addition, both periods benefited from higher sales volume and pricing actions. The three-month period benefited from growth in the short-cycle business of 8%, primarily in the energy and general industrial markets. The nine-month period saw growth in pump projects of 26%, primarily attributable to the energy market. The increases in revenue during the three- and nine-month periods were partially offset by unfavorable foreign currency translation of $3.1 and $6.9, respectively. Excluding the impacts from the acquisition and foreign currency translation, organic revenue for the three- and nine-month periods increased by $17.1 and $58.2, respectively.

Previous 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.

Current wording

Gross profit for the three months ended September 28, 2024 and September 30, 2023 was $314.0 and $279.4, respectively, reflecting gross margins of 35.5% and 34.0%, respectively. Gross profit for the nine months ended September 28, 2024 and September 30, 2023 was $930.9 and $821.3, respectively, reflecting gross margins of 34.5% and 33.5%, respectively. The increases in gross profit and margin for both periods were primarily driven by increases in revenue, as described above, and productivity savings, partially offset by increases in material and labor costs. See section titled, “Macroeconomic Conditions”, for further information.

Previous 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.

Current wording

Sales and marketing expenses increased $6.1 and $20.0 for the three and nine months ended September 28, 2024, respectively, primarily driven by higher personnel costs and the additions of kSARIA and Svanehøj, partially offset by the divestiture of the Wolverine business.

Previous 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.

Current wording

Research and development expenses increased $3.6 and $11.2 for the three and nine months ended September 28, 2024, respectively, primarily driven by acquisitions, higher personnel costs and continued strategic investments to support innovation and new product development, partially offset by the divestiture of the Wolverine business.

Previous 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.

Current wording

MT operating income for the three and nine months ended September 28, 2024 increased $50.6 and $81.3, respectively, primarily due to a $47.8 gain on sale of the Wolverine business. In addition, the three- and nine-month periods benefited from productivity savings and lower raw material and overhead costs, partially offset by lower revenue due to the Wolverine divestiture, unfavorable foreign currency impacts and higher labor costs.

Previous wording

IP operating income for the three and six months ended June 29, 2024 decreased $0.6 and increased $7.9, respectively. The decrease in the three-month period was primarily driven by higher material, labor, overhead, and restructuring costs, and M&A costs related to the acquisition of Svanehøj. This decrease was partially offset by higher revenue, as discussed above. The increase in the six-month period was primarily driven by higher revenue, as discussed above, and productivity savings. This increase was partially offset by higher material, labor, overhead, and M&A costs and unfavorable sales mix.

Current wording

IP operating income for the three and nine months ended September 28, 2024 increased $5.1 and $13.0, respectively. The increase in the three-month period was primarily driven by productivity savings, sales volume and pricing, partially offset by higher material, labor and overhead costs and increased bad debt expense due to a prior year recovery. The increase in the nine-month period was primarily driven by higher revenue, as discussed above, and productivity savings. This increase was partially offset by higher material, labor, overhead, M&A costs and unfavorable sales mix.

Previous 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.

Current wording

CCT operating income for the three and nine months ended September 28, 2024 increased $4.9 and $15.2 primarily driven by higher revenue, as discussed above, and productivity savings, partially offset by higher material, labor, and overhead costs. The increase during the nine-month period was also partially offset by a prior year gain of $7.2 from the sale of a product line.

Previous 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.

Current wording

Other corporate costs for the three and nine months ended September 28, 2024 decreased $4.2 and increased $2.8, respectively. The decrease in the three-month period was primarily due to lower personnel-related costs and higher earnings on corporate-owned life insurance. The increase in the nine-month periodwas primarily driven by a one-time benefit of $3.7 in the prior year period related to the recovery of lease termination costs.

Previous 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.

Current wording

The increase in total interest and non-operating expenses, net for the three and nine months ended September 28, 2024 was primarily driven by an increase in interest expense due to higher average outstanding long-term debt in connection with our acquisitions of Svanehøj and kSARIA.

Previous 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.

Current wording

The decrease in the ETR for the three months ended September 28, 2024 was primarily due to a benefit recognized on the sale of Wolverine. The increase in the ETR for the nine months ended September 28, 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 $14.3 relating to an Italian tax audit settlement covering tax years 2016-2022.

Previous wording

In October 2021, more than 135 countries and jurisdictions agreed to participate in a “two-pillar” international tax approach developed by the Organisation for Economic Co-operation and Development (OECD), which includes establishing a global minimum corporate tax rate of 15 percent. The OECD published Tax Challenges Arising from the Digitalisation of the Economy — Global Anti-Base Erosion Model Rules (Pillar Two) in December 2021 and subsequently issued additional commentary and administrative guidance clarifying several aspects of the model rules. Since the model rules have been released, many countries have now enacted Pillar Two-related laws, some of which became effective January 1, 2024, and it is anticipated that many more will follow suit throughout 2024. As of June 29, 2024, the Company does not expect Pillar Two taxes to have a significant impact on its 2024 financial statements.

Current wording

In October 2021, more than 135 countries and jurisdictions agreed to participate in a “two-pillar” international tax approach developed by the OECD, which includes establishing a global minimum corporate tax rate of 15 percent. The OECD published Tax Challenges Arising from the Digitalisation of the Economy — Global Anti-Base Erosion Model Rules (Pillar Two) in December 2021 and subsequently issued additional commentary and administrative guidance clarifying several aspects of the model rules. Since the model rules have been released, many countries have enacted Pillar Two-related laws, some of which became effective on January 1, 2024, and it is anticipated that many more will follow suit throughout 2024 and 2025. As of September 28, 2024, the Company does not expect Pillar Two taxes to have a significant impact on its 2024 financial statements.

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 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.

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 nine months ended September 28, 2024, we had net cash distributions from foreign countries to the U.S. of $99.3. 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 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.

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 third quarter of 2024, we declared a dividend of $0.319 per share for shareholders of record on September 3, 2024, which was a 10% increase from the quarterly dividends of $0.29 that were declared in 2023. Dividend payments during the nine months ended September 28, 2024 amounted to $78.7.

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 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.

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 three and nine months ended September 28, 2024, we spent $25.0 and $104.0 on open-market share repurchases under our share repurchase programs, respectively. During the three and nine months ended September 30, 2023, we spent $0.0 and $60.0 on open-market share repurchases under our share repurchase programs, respectively. 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

From December 31, 2023 to June 29, 2024, we increased our borrowings under the U.S. commercial paper program to partially finance the acquisition of Svanehøj. See Note 13, Debt, to the Consolidated Condensed Financial Statements for further information.

Current wording

In the nine months ended September 28, 2024, we increased our borrowings under the U.S. commercial paper program to partially finance the acquisition of Svanehøj. See Note 13, Debt, to the Consolidated Condensed Financial Statements for further information.

Previous wording

On January 12, 2024, ITT Italia S.r.l. (ITT Italia), an indirect wholly owned subsidiary of ITT, entered into a facility agreement (the ITT Italia Credit Agreement), among the Company, as a guarantor, ITT Italia, as borrower, and BNP Paribas, Italian Branch, as bookrunner, sole underwriter and global coordinator, mandated lead arranger and agent.

Current wording

On January 12, 2024, ITT Italia S.r.l. (ITT Italia), an indirect wholly owned subsidiary of the Company, entered into a facility agreement (the ITT Italia Credit Agreement), among the Company, as a guarantor, ITT Italia, as borrower, and BNP Paribas, Italian Branch, as bookrunner, sole underwriter and global coordinator, mandated lead arranger and agent.

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 (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.

Current wording

The ITT Italia Credit Agreement had an initial maturity of three years and provided for term loan borrowings in an aggregate principal amount of €300 (or $328.9), €275 (or $301.5) of which were used to finance the Company’s acquisition of Svanehøj, which closed on January 19, 2024. During the third quarter of 2024, ITT Italia repaid €175, representing the remaining outstanding balance on the ITT Italia Credit Agreement. Year-to-date repayments of the facility agreement totaled €275. See Note 13, Debt, to the Consolidated Condensed Financial Statements for further information.

Previous 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.

Current wording

The decrease in net cash from operating activities of $28.2 was primarily due to unfavorable working capital from timing of accounts receivable collections and higher compensation payments in the current year, partially offset by an increase in segment operating income.

Previous 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.

Current wording

The increase in net cash used in investing activities of $652.6 was mainly driven by the acquisitions of kSARIA and Svanehøj, offset by proceeds from the divestiture of the Wolverine business. 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 $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.

Current wording

The increase in net cash from financing activities of $777.2 was mainly driven by an increase in commercial paper borrowings and long-term debt to finance the current year acquisitions. The term loan borrowing to partially fund the Svanehøj acquisition was fully repaid during the third quarter of 2024. Refer to Note 13, Debt, to the Consolidated Condensed Financial Statements for further information. The increase was also driven by additional open-market share repurchase activity and dividend payments. Refer to Note 15, Capital Stock, to the Consolidated Condensed Financial Statements for further information.

Previous wording

•“Organic revenue” is defined as revenue, excluding the impacts of foreign currency fluctuations and acquisitions. The period-over-period change resulting from foreign currency fluctuations is estimated using a fixed exchange rate for both the current and prior periods. We believe that reporting organic revenue provides useful information to investors by facilitating comparisons of our revenue performance with prior and future periods and to our peers.

Current wording

•“Organic Revenue” is defined as revenue, excluding the impacts of foreign currency fluctuations, acquisitions, and divestitures that may or may not qualify as discontinued operations. Current year activity from acquisitions is excluded for twelve months following the closing date of acquisition. The period-over-period change resulting from foreign currency fluctuations is estimated using a fixed exchange rate for both the current and prior periods. Prior year revenue is adjusted to exclude activity during the comparable period for twelve months post-closing date for divestitures that do not qualify as discontinued operations. We believe that reporting organic revenue provides useful information to investors by helping identify underlying trends in our business and facilitating comparisons of our revenue performance with prior and future periods and to our peers.

Previous wording

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

Current wording

Reconciliations of revenue to organic revenue for the three and nine months ended September 28, 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, 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” is defined as operating income 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 divided by revenue. We believe these financial measures 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

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.

Current wording

Reconciliations of operating income to adjusted operating income (loss) for the three and nine months ended September 28, 2024 and September 30, 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, 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.

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. 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.

Previous 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.

Current wording

(b)The nine months ended September 28, 2024 includes inventory step-up amortization related to the acquisition of Svanehøj.

Previous wording

(b)2023 other special items primarily consisted of income from a recovery of costs associated with the 2020 lease termination of a legacy site.

Current wording

(c)2023 other pre-tax special items primarily includes income from a recovery of costs associated with the 2020 lease termination of a legacy site.

Previous wording

(d)The three months ended June 29, 2024 included a tax benefit to record a net operating loss deferred tax asset related to a prior year acquisition of $(2.0), tax expense on distributions of non-U.S. income of $1.0, and other tax-related special items of $1.0. The six months ended June 29, 2024 included expense (benefits) from tax on undistributed foreign earnings of $2.4, a tax benefit to record a net operating loss deferred tax asset related to a prior year acquisition of $(2.0), and other tax special items of $1.3.

Current wording

(d)The nine months ended September 28, 2024 includes tax expense on distributions of $5.4, tax expense from valuation allowance impacts of $2.2, expense from tax on undistributed foreign earnings of $1.9, a tax benefit to record a net operating loss deferred tax asset related to a prior year acquisition of $(2.0) and a tax benefit on return to accrual adjustments of ($0.6). The nine months ended September 30, 2023 includes benefits from valuation allowance reversals of ($16.1) and the amendment of our federal tax return of ($4.9), partially offset by a settlement expense related to a tax audit in Italy of $14.4 and tax expense on future distribution of foreign earnings of $2.2 and other tax-related special items of $0.6.