ITT INC.

NOTE 6

INCOME TAXES

The following table displays information regarding income tax expense (benefit) from continuing operations.

The following table includes a reconciliation of the U.S. statutory tax rate to our effective income tax rate related to income from continuing operations. The disclosures below reflect the requirements of ASU 2023-09 and are presented prospectively. Prior-year disclosures are presented under previous guidance and are not comparable.

The following table includes a reconciliation of the U.S. statutory tax rate to our effective income tax rate related

to income from continuing operations.

The higher effective tax rate in 2025 compared to 2024 primarily resulted from the jurisdictional mix of earnings. The year over year increase in the effective rate was driven in part by losses generated in entities subject to a valuation allowance. In addition, the company recorded a $4.9 tax expense of U.S. tax on foreign earnings in 2025. The lower rate in 2024 was also due to the company recording a 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.

The Company provides for deferred taxes on the undistributed earnings and profits of all foreign subsidiaries, determined under U.S. tax law. At December 31, 2025, the amount of undistributed earnings and profits of all foreign subsidiaries was $1,091.0. The Company anticipates that these foreign earnings and future earnings of its foreign subsidiaries that are not indefinitely reinvested will be sufficient to meet its U.S. cash needs. The Company is indefinitely reinvested in any excess of financial reporting over tax basis in its foreign subsidiaries that exceeds undistributed earnings and profits. At December 31, 2025, the indefinitely reinvested excess of financial reporting over tax basis was $226.6.

The following table includes the items comprising our deferred tax assets and liabilities.

Deferred taxes included in our Consolidated Balance Sheets were as follows:

The table below provides a rollforward of our valuation allowance on net deferred tax assets (DTA).

The Company continues to maintain a valuation allowance against certain deferred tax assets attributable to a U.S. federal capital loss carryforward, U.S. state net operating losses and tax credits, and certain foreign net deferred tax assets primarily in Luxembourg, Germany, and the U.K. which are not expected to be realized. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets. The cumulative loss incurred over the three-year period ending December 31, 2025 constitutes significant objective negative evidence, resulting in the recognition of a valuation allowance against the net deferred tax assets for these jurisdictions. Such objective negative evidence limits our ability to consider subjective positive evidence, such as our projections of future taxable income. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income change or if objective negative evidence in the form of cumulative losses is no longer present and additional weight can be given to subjective evidence.

We have the following tax attributes available for utilization at December 31, 2025:

(a)Includes approximately $234.4 of net operating loss carryforwards in Luxembourg as of December 31, 2025.

The excess tax benefits related to stock-based compensation of $1.9, $1.8 and $0.9 for 2025, 2024 and 2023, respectively, were recorded as an income tax benefit in the statement of operations and have been reflected in the caption “Excess tax benefits on stock-based compensation” within the effective tax rate reconciliation table.

Uncertain Tax Positions

We recognize income tax benefits from uncertain tax positions only if, based on the technical merits of the position, it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The tax benefits recognized in the Consolidated Financial Statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

The following table displays a rollforward of our unrecognized tax benefits.

As of December 31, 2025, $9.5 of the unrecognized tax benefits would impact the effective tax rate for continuing operations, if realized. The Company operates in various tax jurisdictions and is subject to examination by tax authorities in these jurisdictions. The Company is currently under examination in several jurisdictions including Czechia, Germany, India, Italy, Mexico, and the U.S.

The calculation of our tax liability for unrecognized tax benefits includes dealing with uncertainties in the application of complex tax laws and regulations in various tax jurisdictions. Due to the complexity of some uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liability for unrecognized tax benefits in foreign and domestic jurisdictions is not expected to change by a significant amount.

The following table summarizes the earliest open tax years by major jurisdiction as of December 31, 2025:

We classify interest relating to tax matters as a component of interest expense and tax penalties as a component of income tax expense in our Consolidated Statements of Operations. During 2025, 2024, and 2023 we recognized a net interest expense of $2.1, $0.2, and $0.1, respectively, related to tax matters.

The following table displays the cash paid for income taxes, net of refunds by jurisdiction for the year ended December 31, 2025:

Cash paid for income taxes, net of refunds, totaled $128.6 and $113.1 for the years ended December 31, 2024 and 2023, respectively. Disclosure of cash paid for income taxes by jurisdiction is not required for 2024 and 2023.

NOTE 7

EARNINGS PER SHARE DATA

The following table provides a reconciliation of basic to diluted common shares outstanding, used in the computation of basic and diluted earnings per share presented in our Consolidated Statements of Operations.

There wereno anti-dilutive shares as of December 31, 2025, 2024, and 2023 to exclude from the computation of diluted earnings per share.

NOTE 8

RECEIVABLES, NET

The following table summarizes our receivables and associated allowance for credit losses.

The following table displays our allowance for credit losses for receivables and contract assets.

The following table displays a rollforward of our total allowance for credit losses.

NOTE 9

INVENTORIES

The following table summarizes our inventories.

Government Assistance (ASU 2021-10)

For the year ended December 31, 2023, we recognized a benefit of $6.3 within Costs of Revenue in our Consolidated Statements of Operations related to subsidies received to offset high energy prices at a manufacturing facility.

NOTE 10

OTHER CURRENT AND NON-CURRENT ASSETS

The following table summarizes our other current and non-current assets.

NOTE 11

PLANT, PROPERTY AND EQUIPMENT, NET

The following table summarizes our property, plant, and equipment, net of accumulated depreciation.

Depreciation expense of $92.2, $88.2, and $84.2 was recognized in 2025, 2024 and 2023, respectively.

Government Assistance - Capital Grant

In 2023, a subsidiary in our MT segment entered into an incentive grant agreement with the Italian government related to the expansion of a production facility in Termoli, Italy and an upgrade of research and development capabilities in Barge, Italy. The total grant of 18.3 euros is expected to be received over the next three years beginning in 2025 and is primarily related to capital expenditures and, to a lesser extent, certain research and development activities. During the year ended December 31, 2025, we received a capital-related grant of $7.9, which was recorded as a reduction of property, plant and equipment and will be recognized as a reduction to depreciation expense over the life of the related assets.