ITT INC

Previous wording

During 2023, despite evolving macroeconomic conditions, we delivered strong financial results, which included revenue and operating income growth, operating margin expansion, EPS growth and effective deployment of capital. The following table provides a summary of key performance indicators for 2023 in comparison to 2022.

Current wording

During 2024, we delivered strong financial results, which included revenue and operating income growth, operating margin expansion, EPS growth and effective deployment of capital. The following table provides a summary of key performance indicators for 2024 in comparison to 2023.

Previous wording

•Income from continuing operations was $4.97 per diluted share, an increase of $0.57 as compared to the prior year. The increase was primarily due to higher operating income, as discussed above, and lower share count resulting from open-market share repurchases executed during the year.

Current wording

•Income from continuing operations was $6.30 per diluted share, an increase of $1.33 as compared to the prior year. The increase was primarily due to higher operating income, and lower share count resulting from open-market share repurchases executed during the year, partially offset by higher interest due to acquisition-related debt, and higher corporate expenses.

Previous wording

•We announced our intent to acquire Denmark-based Svanehøj Group A/S ("Svanehøj"), a leading provider of customized critical liquid and cryogenic pumps for liquefied gas applications for the marine sector, which will expand our international footprint and we expect will position us to benefit from the energy transition. The acquisition closed on January 19, 2024.

Current wording

•In January, we acquired Svanehøj for $407.6, a leading provider of customized critical liquid and cryogenic pumps for liquefied gas applications for the marine sector. This acquisition expands our international footprint and positions us to benefit from the energy transition.

Previous wording

•We increased our capital expenditures by 4% over the prior year to fund investments in innovation, capacity and green energy, including solar installations.

Current wording

•We increased our capital expenditures by 15% compared to the previous year reflecting our commitment to innovation and growth, capacity expansion, and green energy, including solar installations.

Previous wording

•We repurchased 0.7 shares of common stock on the open market for $61, and announced a new $1 billion share repurchase program.

Current wording

•We repurchased 0.8 shares of common stock on the open market for $104.8.

Previous wording

•We paid $96 in dividends to our shareholders. Our dividends declared in 2023 of $1.16 per share represented a 10% increase over the dividends per share declared of $1.056 in 2022.

Current wording

•We paid $104.7 in dividends to our shareholders. Our dividends declared in 2024 of $1.28 per share represented a 10% increase over the dividends per share declared of $1.16 in 2023.

Previous wording

During 2023, the global economy experienced a mix of challenges that impacted the Company's performance. These challenges included geopolitical uncertainty, trade disputes, supply chain disruptions, production challenges, labor shortages, raw material constraints, and inflation. These items are described further below.

Current wording

During 2024, geopolitical uncertainty, supply chain disruptions, labor shortages, and raw material constraints impacted the Company's performance. These items are described further below.

Previous wording

In October 2023, tensions between Israel and Palestine escalated, resulting in war, regional instability, and market volatility. This situation has further increased geopolitical tensions, has attracted international attention, and has raised humanitarian and economic concerns. Our operations in Israel are limited to Habonim, which we acquired in April 2022. Habonim is part of our IP segment and had sales of $57.4 and $45.0, respectively, during 2023 and 2022. 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 currently unable to reasonably estimate any future impacts on our business and financial results.

Current wording

The conflict in the Middle East has been ongoing throughout 2024. Our operations in Israel are limited to Habonim Industrial Valves and Actuators Ltd. (Habonim), which we acquired in April 2022 as part of our IP segment. While there has been no material impact on our business to date, further escalation of this conflict could result in further supply chain disruptions, inflation, workforce disruptions, demand fluctuations, or the inability to fulfill customer requests in the region. We are closely monitoring this situation, however, we 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 1A, Risk Factors, herein.

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 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 1A, Risk Factors, herein.

Previous wording

MT revenue for the year ended December 31, 2023 increased $83.8 primarily driven by higher sales volume and pricing actions. Our Friction business grew 6% due to strong OEM demand. Additionally, our KONI and Axtone businesses grew 6% and 10%, respectively. These increases were partially offset by a decline in our Wolverine business of 7%, which was primarily attributable to a decline in sales of sealing materials. The current year period also benefited from favorable foreign currency translation of $17.0. Excluding the impact from foreign currency translation, organic revenue increased $66.8.

Current wording

MT revenue for the year ended December 31, 2024 decreased $10.0 primarily due to the loss of $68.7 of revenue as a result of the divestiture of Wolverine in July 2024. Our Friction business grew 4% due to strong OEM and aftermarket demand. Additionally, our KONI and Axtone businesses grew 15% and 6% respectively, due to strength in our rail business. The current year period also benefited from favorable foreign currency translation of $9.7. Excluding the impact from foreign currency translation and the divestiture, organic revenue increased $68.4 or 4.9%.

Previous wording

IP revenue for the year ended December 31, 2023 increased $158.6 primarily driven by higher sales volume and pricing actions. Our aftermarket business grew 16% primarily within the energy, chemical, and mining markets, and our pump project revenue grew 31%, primarily within the chemical and energy markets. The current year period also benefited by $15.0 from our acquisition of Habonim, which closed in the second quarter of 2022, and $4.7 from favorable foreign currency translation. Excluding the impacts from acquisition and foreign currency translation, organic revenue increased $138.9.

Current wording

IP revenue for the year ended December 31, 2024 increased $231.4 primarily driven by the acquisition of Svanehøj, which closed in January 2024 and contributed $156.2 to total revenue growth. Our pump project revenue grew 19%, primarily within the energy and chemical markets, and the short cycle business grew 5% primarily within the energy and industrial markets. The current year period also benefited by $13.0 from favorable foreign currency translation. Excluding the impacts from the acquisition and foreign currency translation, organic revenue increased $88.2 or 7.8%.

Previous wording

Gross profit for 2023 was $1,107.3, reflecting a gross margin of 33.7%. Gross profit for 2022 was $922.3, reflecting a gross margin of 30.9%. The increases in gross profit and gross margin were primarily driven by an increase in revenue, described above in the section titled"Revenue", partially offset by increases in raw material, labor, and overhead costs, which were driven by inflationary pressures during the year, as discussed above in the section titled"Global Macroeconomic Conditions".

Current wording

Gross profit for 2024 was $1,247.3, reflecting a gross margin of 34.4%. Gross profit for 2023 was $1,107.3, reflecting a gross margin of 33.7%. The increases in gross profit and gross margin were primarily driven by higher revenue, including pricing actions, described above in the section titled"Revenue", partially offset by increases in material and labor costs, as discussed above in the section titled"Global Macroeconomic Conditions".

Previous wording

Sales and marketing expenses increased $17.1 for the year ended December 31, 2023, primarily driven by higher personnel and other sales-related costs to support higher sales activity. The increase in personnel costs was partially attributable to higher headcount stemming from, and timing of, our recent Habonim and Micro-Mode acquisitions.

Current wording

Sales and marketing expenses increased $31.7 for the year ended December 31, 2024, primarily driven by the additions of kSARIA and Svanehøj, as well as higher personnel and other selling and marketing-related costs to support higher sales activity. The increase was partially offset by the divestiture of the Wolverine business.

Previous wording

Research and development (R&D) expenses increased $6.1 for the year ended December 31, 2023, primarily driven by higher personnel costs to support investments in innovation and new product development.

Current wording

Research and development (R&D) expenses increased $13.7 for the year ended December 31, 2024, 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

The increase in interest and other non-operating expense, net for the year ended December 31, 2023 was primarily due to higher interest expense associated with a higher average interest rate on our commercial paper borrowings, and $1.4 of interest expense related to a tax audit settlement in Italy, as discussed below in the section titled "Income Tax Expense". This increase was partially offset by an increase in interest income, which was primarily due to higher weighted average interest rates during the year, and an increase in postretirement benefits due to a prior year plan amendment.

Current wording

The increase in interest and other non-operating expense, net for the year ended December 31, 2024 was primarily due to higher interest expense related to our long-term debt in connection with our acquisitions of Svanehøj and kSARIA and a higher average interest rate on our commercial paper borrowings. In 2023 we had $1.4 of interest expense related to a tax audit settlement in Italy, as discussed below in the section titled "Income Tax Expense."

Previous wording

The higher effective tax rate in 2023 compared to 2022 resulted from the Company recording tax expense in 2023 of $14.2 relating to a tax audit in Italy covering tax years 2016-2022. The 2023 expense includes $6.8 of U.S. tax on foreign earnings. These tax expenses were offset by $16.1 from valuation allowance reversals on deferred tax assets in Germany. ITT also recognized tax benefits of $4.9 from the filing of an amended 2017 consolidated federal tax return.

Current wording

The lower effective tax rate in 2024 compared to 2023 primarily resulted from the Company recording a tax benefit of $6.7 from valuation allowance reversals on U.S. state deferred tax assets and a $5.7 tax benefit of U.S. tax on foreign earnings in 2024. ITT recorded a deferred tax asset of $29.1 on the $138.4 capital loss realized on the Wolverine divestiture. As the Company does not currently anticipate having capital gains sufficient to utilize the capital loss, a full valuation allowance was recorded against the deferred tax asset. The higher rate in 2023 was also due to expense of $14.2 relating to a tax audit in Italy covering tax years 2016-2022. The 2023 expense includes $6.8 of U.S. tax on foreign earnings. These tax expenses were offset by $16.1 from valuation allowance reversals on deferred tax assets in Germany. ITT also recognized tax benefits of $4.9 from the filing of an amended 2017 consolidated federal tax return in 2023.

Previous wording

We are closely monitoring the potential passage of new U.S. and foreign tax legislation, which could result in substantial changes to the current U.S. or foreign tax systems, including changes to the statutory corporate tax rate. In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, which is a multi-jurisdictional plan of action to address base erosion and profit shifting. On December 20, 2021, the OECD released the Model GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Model GloBE Rules for Pillar Two expected by calendar year 2024. We are continuing to evaluate the Model GloBE Rules for Pillar Two and related legislation, and their potential impact on future periods. Enactment of this regulation in its current form could increase the amount of global corporate income tax paid by the Company. These increases could have a material adverse effect on our effective tax rate. As the effects of a change in U.S. or foreign tax law must be recognized in the period in which the new legislation is enacted, should new legislation be signed into law, our financial results could be materially impacted.

Current wording

We are closely monitoring the potential passage of new U.S. and foreign tax legislation, which could result in substantial changes to the current U.S. or foreign tax systems. In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, which is a multi-jurisdictional plan of action to address base erosion and profit shifting. On December 20, 2021, the OECD released the Model GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. Countries are implementing legislation with widespread adoption of the Model GloBE Rules for Pillar Two. We continue to evaluate the Model GloBE Rules for Pillar Two and related legislation, and their potential impacts. Continuing enactment of these regulations could increase the amount of global corporate income tax paid by the Company. These increases could have a material adverse effect on our effective tax rate. As the effects of a change in U.S. or foreign tax law must be recognized in the period in which the new legislation is enacted, should new legislation be signed into law, our financial results could be materially impacted. As of December 31, 2024, Pillar Two taxes have not had a significant impact on ITT's 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. Net cash distributions from foreign countries to the U.S. during the years ended December 31, 2023 and 2022 were $357.5 and $74.0, respectively. The timing and amount of any additional future distributions remains under evaluation 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. Net cash distributions from foreign countries to the U.S. during the years ended December 31, 2024 and 2023 were $230.4 and $357.5, respectively. The timing and amount of any additional future distributions remains under evaluation based on our jurisdictional cash needs.

Previous wording

As of December 31, 2023, we have access to short- and long-term funding sources. These include access to the capital markets through a commercial paper program, as well as $700 of available borrowing capacity under our 2021 Revolving Credit Agreement, which may potentially be expanded to $1,050 under the agreement. In addition, we have market access to secure longer-term funding, if needed. Our commercial paper program is supported by our 2021 Revolving Credit Agreement and our policy is to maintain unused committed bank lines of credit in an amount greater than outstanding commercial paper balances. These sources of capital are described further below.

Current wording

As of December 31, 2024, we have access to short- and long-term funding sources. These include access to the capital markets through a commercial paper program, as well as $700 of available borrowing capacity under our 2021 Revolving Credit Agreement (defined below), which may potentially be expanded to $1,050 under the agreement. In addition, we have market access to secure longer-term funding, if needed. Our commercial paper program is supported by our 2021 Revolving Credit Agreement and our policy is to maintain unused committed bank lines of credit in an amount greater than outstanding commercial paper balances. These sources of capital are described further below.

Previous wording

The decrease in commercial paper outstanding from December 31, 2022 to December 31, 2023 was primarily related to higher share repurchase and acquisition activity in the prior year that was financed using commercial paper, and timing of repayments. See Note 18, Capital Stock, and Note 22, Acquisitions, Investments, and Divestitures, for further information.

Current wording

The increase in commercial paper outstanding from December 31, 2023 to December 31, 2024 was primarily related to acquisition activity that was partially financed using commercial paper, and timing of repayments. See Note 17, Capital Stock, and Note 21, Acquisitions, Investments, and Divestitures, for further information.

Previous wording

All outstanding commercial paper for both periods had maturity terms of less than three months from the date of issuance. Our average daily outstanding commercial paper balance for the years ended 2023 and 2022 was $366.9 and $459.6, respectively, and the maximum outstanding commercial paper during each of those respective years was $669.9 and $561.7.

Current wording

All outstanding commercial paper for both periods had maturity terms of less than three months from the date of issuance. Our average daily outstanding commercial paper balance for the years ended 2024 and 2023 was $338.5 and $366.9, respectively, and the maximum outstanding commercial paper during each of those respective years was $455.0 and $669.9.

Previous wording

Long-term debt is generally defined as any debt with an original maturity greater than 12 months. Our long-term debt is primarily related to outstanding Italian government loans maturing in June 2027. Our long-term debt carries a weighted average fixed interest rate of 0.86% and requires annual principal and interest payments of approximately $2.0, on average, through maturity. The table below provides our long-term debt outstanding as of December 31, 2023 and 2022.

Current wording

Long-term debt is generally defined as any debt with an original maturity greater than 12 months. Our long-term debt is primarily related to the outstanding U.S. term loan maturing in September 2027. The table below provides our long-term debt outstanding as of December 31, 2024 and 2023.

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 Group A/S, which closed on January 19, 2024.

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 million (or $328.9), €275 million (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 14, Debt, for further information.

Previous wording

In December 2023, Fitch Ratings upgraded ITT's short-term ratings, which include its Short-term Issuer Default rating and Commercial Paper rating, from F2 to F1. The upgraded ratings reflect ITT's conservative capital structure, product and geographic diversification, installed base, sizeable aftermarket revenue, solid EBITDA margins, and good financial flexibility. There were no other changes to our credit ratings during 2023. Please refer to the rating agency websites and press releases for more information.

Current wording

In November 2024, Moody's upgraded ITT's senior unsecured rating, from Baa2 to Baa1. The upgraded ratings reflect ITT's conservative capital structure, product and geographic diversification, installed base, sizeable aftermarket revenue, solid EBITDA margins, and good financial flexibility. There were no other changes to our credit ratings during 2024. Please refer to the rating agency websites and press releases for more information.

Previous wording

The increase in net cash from operating activities of $260.3 was primarily driven by favorable net working capital impacts primarily due to improved inventory management and timing of accounts receivable collections, higher operating income, and lower incentive-based compensation payments related to the prior year.

Current wording

The increase in net cash from operating activities of $24.6 was primarily driven by higher operating income and favorable net working capital impacts primarily from focused inventory management and timing of accounts receivable collections, offset by higher compensation payments in the current year.

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, a number of 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. Aggregate dividends declared in 2023 were $95.9, compared to $87.7 in 2022, reflecting annual per share amounts of $1.160 and $1.06, respectively. In the first quarter of 2024, we declared a quarterly dividend of $0.319 per share for shareholders of record on March 8, 2024, which will be paid on April 1, 2024.

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, a number of 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. Aggregate dividends declared in 2024 were $104.8, compared to $95.9 in 2023, reflecting annual per share amounts of $1.276 and $1.160, respectively. In the first quarter of 2025, we declared a quarterly dividend of $0.351 per share for shareholders of record on March 6, 2025, which will be paid on March 31, 2025.

Previous wording

On October 30, 2019, the Board of Directors approved our current program, an indefinite term $500 open-market share repurchase program (the 2019 Plan). All repurchased shares are retired immediately following the repurchases. During the years ended December 31, 2023 and 2022, we spent $60.0 and $245.3, respectively, on open-market share repurchases under the 2019 Plan. As of December 31, 2023, there was $78.8 of remaining authorization left under the 2019 Plan.

Current wording

On October 30, 2019, the Board of Directors approved our current program, an indefinite term $500 open-market share repurchase program (the 2019 Plan). During 2024, we exhausted the remaining capacity under the 2019 Plan. All repurchased shares are retired immediately following the repurchases. During the years ended December 31, 2024 and 2023, we spent $104.5 and $60.0, respectively, on open-market share repurchases under the share repurchasing plans.

Previous wording

On October 4, 2023, the Board of Directors approved an indefinite term $1,000 open-market share repurchase program (the 2023 Plan). Repurchases under this authorization will begin upon the completion of the 2019 Plan.

Current wording

On October 4, 2023, the Board of Directors approved an indefinite term $1,000 open-market share repurchase program (the 2023 Plan). There was $975.0 of remaining capacity left under the 2023 Plan as of December 31, 2024. In February 2025, the Company repurchased 0.2 shares for $25.6 under the 2023 Plan.

Previous wording

Our non-U.S. pension plans, which are typically not funded due to local regulations, had an increase in projected benefit obligation of$5.3 during 2023, primarily due to a lower discount rate. Our other employee-related benefit plans are generally unfunded plans as well. Theprojected benefit obligation of these plans declined by $4.5 during 2023 primarily due to a decrease in the discount rate.

Current wording

Our non-U.S. pension plans, which are typically not funded due to local regulations, had a decrease in projected benefit obligation of$12.0 during 2024, primarily due to foreign currency impacts, the settlement of a plan in connection with the divestiture of Wolverine and a higher discount rate. Our other employee-related benefit plans are generally unfunded plans as well. The projected benefit obligation of these plans declined by $8.2 during 2024 due to an increase in the discount rate.

Previous wording

Contributions to our U.S. and non-U.S. pension and other postretirement plans were $9.5 and $11.0 during 2023 and 2022, respectively, which were used to fund participant benefits. We currently estimate 2024 contributions to our pension and other postretirement benefits plans of approximately $12.

Current wording

Contributions to our U.S. and non-U.S. pension and other postretirement plans were $10.5 and $9.5 during 2024 and 2023, respectively, which were used to fund participant benefits. We currently estimate 2025 contributions to our pension and other postretirement benefits plans of approximately $10.

Previous wording

In addition to the amounts presented in the table above, we have recorded liabilities for uncertain tax positions of $5.7 in our Consolidated Balance Sheet as of December 31, 2023. This amount has been excluded from the contractual obligations table due to an inability to reasonably estimate the timing of payments in individual years.

Current wording

In addition to the amounts presented in the table above, we have recorded liabilities for uncertain tax positions of $6.5 in our Consolidated Balance Sheet as of December 31, 2024. This amount has been excluded from the contractual obligations table due to an inability to reasonably estimate the timing of payments in individual years.

Previous wording

(c)Other long-term obligations include amounts recorded in our Consolidated Balance Sheet as of December 31, 2023, including estimated environmental payments and employee compensation agreements. We estimate based on historical experience that we will spend, on average, approximately $6 per year on environmental investigation and remediation. A portion of our environmental investigation and remediation costs are legally mandated through various orders and agreements with state and federal oversight agencies. As of December 31, 2023, our recorded environmental liability was $56.0. See Note 19, Commitments and Contingencies, to the Consolidated Financial Statements for further information.

Current wording

(c)Other long-term obligations include amounts recorded in our Consolidated Balance Sheet as of December 31, 2024, including estimated environmental payments and employee compensation agreements. We estimate based on historical experience that we will spend, on average, approximately $5 per year on environmental investigation and remediation. A portion of our environmental investigation and remediation costs are legally mandated through various orders and agreements with state and federal oversight agencies. As of December 31, 2024, our recorded environmental liability was $54.9. See Note 18, Commitments and Contingencies, to the Consolidated Financial Statements for further information.

Previous wording

We had $159.4 of guarantees, letters of credit and similar arrangements outstanding as of December 31, 2023, primarily pertaining to commercial or performance guarantees and insurance matters. We have not recorded any material loss contingencies under these guarantees, letters of credit and similar arrangements as of December 31, 2023 as the likelihood of nonperformance by the underlying obligors is considered remote. From time to time, we may provide certain third-party guarantees that may be affected by various conditions and external factors, some of which could require that payments be made under such guarantees. We do not consider the maximum exposure or current recorded liabilities under our third-party guarantees to be material either individually or in the aggregate. We do not believe such payments would have a material adverse impact on our financial statements.

Current wording

We had $176.5 of guarantees, letters of credit and similar arrangements outstanding as of December 31, 2024, primarily pertaining to commercial or performance guarantees and insurance matters. We have not recorded any material loss contingencies under these guarantees, letters of credit and similar arrangements as of December 31, 2024 as the likelihood of nonperformance by the underlying obligors is considered remote. From time to time, we may provide certain third-party guarantees that may be affected by various conditions and external factors, some of which could require that payments be made under such guarantees. We do not consider the maximum exposure or current recorded liabilities under our third-party guarantees to be material either individually or in the aggregate. We do not believe such payments would have a material adverse impact on our financial statements.

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. Management believes 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

•“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, severance, 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 in 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.

Previous wording

(b)Includes income from a recovery of costs associated with the 2020 lease termination of a legacy site.

Current wording

(a)Includes income from a recovery of costs associated with the 2020 lease termination of a legacy site.

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, severance, 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. The after-tax basis of each special item is determined using the jurisdictional tax rate of where the expense or benefit occurred and the tax deductibility under local tax rules. “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)Relates to the sale of our Matrix business in December 2023. See Note 22, Acquisitions, Investments, and Divestitures, to the Consolidated Financial Statements for further information.

Current wording

(a)Relates to the sale of our Wolverine business in July 2024 and Matrix business in December 2023. See Note 21, Acquisitions, Investments, and Divestitures, to the Consolidated Financial Statements for further information.

Previous wording

(c)2023 primarily includes income of $3.7 from a recovery of costs associated with the 2020 lease termination of a legacy site, partially offset by interest expense of $1.4 related to a tax audit settlement in Italy. 2022 primarily includes severance costs.

Current wording

(b)2023 primarily includes income of $3.7 from a recovery of costs associated with the 2020 lease termination of a legacy site, partially offset by interest expense of $1.4 related to a tax audit settlement in Italy.

Previous wording

(e)2023 tax-related special items include benefits from valuation allowance reversals of $(16.4), a settlement expense primarily related to a tax audit in Italy of $14.4, the tax impact on distributions of $7.5, a benefit related to the amendment of our federal tax return of $(4.9), and other of $(2.6). 2022 tax-related special items include a benefit related to a change in deferred tax asset valuation allowance of $(1.2), a benefit related to a change in uncertain tax positions of $(0.7), a tax benefit on future distribution of foreign earnings of $(0.3), and other of $(0.1). See Note 6, Income Taxes, to the Consolidated Financial Statements for further information.

Current wording

(d)2023 tax-related special items include benefits from valuation allowance reversals of $(16.4), a settlement expense primarily related to a tax audit in Italy of $14.4, the tax impact on distributions of $7.5, an amendment of our federal tax return of $(4.9), and other of $(2.6).