ITT INC

REVENUE

The following table illustrates the revenue derived from each of our segments.

(a)See the section titled “Key Performance Indicators and Non-GAAP Measures” for a definition and reconciliation of organic revenue.

Motion Technologies

MT revenue for the three months ended September 28, 2024 decreased by $14.6 primarily due to a decline of $31.4 from the divestiture of Wolverine in July 2024. Revenue for the three-month period reflected strength in the Friction aftermarket and KONI rail businesses, which increased by 9% and 32%, respectively. MT revenue for the nine-month period increased $28.7, as higher sales volume in our Friction business of 6% and KONI rail business of 23% was partially offset by the divestiture of Wolverine. The growth in the Friction business for the nine-month period is primarily attributable to strength in both OE and aftermarket. Foreign currency translation favorably impacted revenue by $1.5 during the third quarterand unfavorably impacted revenue by $8.4 during thenine-month period. Excluding the impact of foreign currency translation and the divestiture of Wolverine, organic revenue during the three- and nine-months periods increased by $15.3 and $68.5, respectively.

Industrial Process

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.

Connect & Control Technologies

CCT revenue for the three and nine months ended September 28, 2024 increased by $23.2 and $60.3, respectively. The acquisitions of kSARIA in September 2024 and Micro-Mode in May 2023 contributed $15.3 and $22.4 to the three- and nine-month periods, respectively, while the divestiture of the Matrix business in December 2023 partially offset the periods by $2.5 and $8.4, respectively. Connector sales grew 6% and 10% in the three- and nine-month periods, respect ively. The nine-month period also incl uded growth in component sales of 7%, particularly within the aerospace and defense markets. Both periods benefited from pricing actions. Excluding the impacts from the acquisitions, the divestiture of Matrix, and foreign currency translation, organic revenue for the three- and nine-month periods increased by $10.4 and $47.6, respectively.

GROSS PROFIT

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.

OPERATING EXPENSES

The following table summarizes our operating expenses, including by segment.

General and administrative (G&A) expenses increased $7.9 and $12.3 for the three and nine months ended September 28, 2024, respectively, primarily driven by the current year acquisitions of kSARIA and Svanehøj, partially offset by the divestiture of the Wolverine business. The increase in the three-month period was also attributable to unfavorable foreign currency impacts. In the nine-month period, higher restructuring costs, bad debt expense and unfavorable foreign currency impacts offset a prior year gain of $3.7 related to the recovery of lease termination costs.

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.

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.

Gain on sale of businesses includes $47.8 and $7.2 related to our sales of the Wolverine business within the MT segment in July 2024 and a product line within the CCT segment in the second quarter of 2023, respectively.

OPERATING INCOME

The following table summarizes our operating income and margin by segment.

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.

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.

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.

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.

INTEREST AND NON-OPERATING EXPENSES, NET

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

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.

INCOME TAX EXPENSE

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

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.

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.

See Note 5, Income Taxes, to the Consolidated Condensed Financial Statements for further information.