ITT Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Davis - Emilius Research - Analyst : Thank you, very good morning guys. Morning, Scott. And I think the headline to me at least these order numbers are pretty big. Can you give us a little bit of color on why you think orders picked up so much? Is there maybe some impact of people trying to get ahead of price increases? Is there any other variables out there that you can kind of point to that could explain sequentially, and year-over-year, why you had such a big increase?

Question: Scott Davis - Emilius Research - Analyst : Okay. Helpful. And then just to clarify, the big buyback that you did presumably to help offset Wolverine, but not fully, of course, but help -- but was that because of market weakness or because you see perhaps a on M&A? What -- any color behind that, please?

Question: Scott Davis - Emilius Research - Analyst : Well, best of luck guys I'll pass it on thank you.

Question: Mike Halloran - Robert W. Baird & Co - Analyst : Hey, good morning. Everyone. Hi, So first, can you just bridge the previous guidance to the current guidance. It feels like pricing moves revenue up a little bit, probably some implicit pressure on the volumes. Not that you're seeing it today, but you're assuming back half maybe a little something FX more favorable. Anything else I should be thinking about from a put and take from previous guidance to the current guide?

Question: Mike Halloran - Robert W. Baird & Co - Analyst : That's super helpful. I appreciate that. So then just kind of thinking about the resilience of the model here. I think the IP side, give us your thoughts on how that should track if you do get a little bit of softness? I know the pipeline, the backlog, the all very attractive. How do you think that track? How do you think the customer base respond? Do you think there's enough inertia in what you're doing as well as the need in the market to have some sort of offsets or at least be pretty resilient in the face of that.

Question: Mike Halloran - Robert W. Baird & Co - Analyst : Really appreciate it thanks gentlemen.

Question: Vladimir Bystricky - Citi Research - Analyst : Good Morning guys. Thanks for taking my thanks for taking my question. So maybe just following up on IP. You mentioned continued investments that you're making in Saudi and in India. I guess in the Saudi region, in particular, can you talk about whether -- or how you're thinking about any potential risks to Saudi spending plans as we've seen crude oil prices pull back this year and whether you're hearing any change in tone from your customers there?

Question: Vladimir Bystricky - Citi Research - Analyst : That's great to hear, Luca, I appreciate it. And then maybe just shifting to MT. You mentioned, I think, an expectation for Friction OE outperformance to ramp in North America and Europe over the course of the year. Can you just talk about -- is that based on OEM production schedules and platform introductions. And do you see any risk of further modifications to those schedules just given the current uncertainty in the environment?

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : Yeah, have a good morning.

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : So just want to hit the -- good color on the tariff exposure. Can you just talk about how much of the $50 million to $60 million you cover with price, where specifically you're announcing price increases? And then just any changes you're implementing around sourcing or otherwise to kind of further mitigate the headwinds?

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : Okay. That's helpful. And then just back on M&A. A lot of companies have said, gosh, it's gotten more difficult. We got to ask a million questions on tariffs. And we don't know what's going to happen from a demand perspective and that makes M&A difficult. But it sounds like you guys still feel like you can get stuff to the finish line. Maybe just speak to actionability and if you've seen stuff fall out because of all this noise.

Question: Jeff Hammond - KeyBanc Capital Markets - Analyst : Okay great we'll see you guys in a couple weeks.

Question: Brad Hewitt - Wolfe Research - Analyst : Hey good morning guys, thanks for taking my question. So on the IP side, very strong project orders in Q1 with the 47% growth. Just curious if you can walk through your updated growth assumptions for IP between projects and short cycle. I believe your prior guidance was like mid-teens growth in projects and kind of low to mid-singles in short cycles.

Question: Brad Hewitt - Wolfe Research - Analyst : Okay. That's helpful. And then maybe Switching over to the tariff side of things. So you mentioned the $50 million to $60 million in gross headwind for the rest of the year, most of that offset coming from price. I guess, just curious in your guidance, what are you embedding in terms of demand elasticity in response to those price increases?

Question: Joseph Ritchie - Goldman Sachs & Co - Analyst : Hey, I'm sorry if I missed it. But have you guys said how much of the $50 million to $60 million in tariff cost impact is coming from each segment. Just trying to gauge just in terms of your ability to kind of pass pricing? I know that sometimes it takes a little bit longer for the Friction business. Sure, Joe.

Question: Joseph Ritchie - Goldman Sachs & Co - Analyst : Yeah ,that's good to hear. And then just a follow-up question. VIDAR seems really interesting. I'm just curious, as you think about the opportunity in getting after this opportunity, Luca. Is it the same like sales force? Are you able to kind of cross-sell this with your pumps business as well? Just like help us understand how you see this playing out.

Question: Joseph Ritchie - Goldman Sachs & Co - Analyst : Okay. Understood. I'm sure we'll get more details at Investor Day.

Question: Andrew Obin - Bank of America Securities - Analyst : Thank you, and then the short-cycle distribution business in CCT tends to be I guess, a in the coal mine for you in terms of general macro industrial activity. And I just wanted to ask how that business is trending. I understand you've had really great share gains in that business as well, but I want to understand how is that business trending? And then maybe any commentary on the tone you're hearing from your distributors? Are they showing any signs of weakness?

Question: Andrew Obin - Bank of America Securities - Analyst : Thank you.

Question: Damian Karas - UBS - Analyst : Good Morning Damien. Hey, good morning everyone. Sorry if I missed this, but I wanted to ask about some of the pricing trends that you're seeing in MT. I'm just curious, like is there going to be a transient period here in which you're going to maybe get hit with some of these tariff cost headwinds more immediately. And then over time, you'll offset that with price. Or could you just give us a sense like what kind of how pricing is playing out in that market?

Question: Damian Karas - UBS - Analyst : Okay. That's really helpful. And I'm not sure if you talked about it, but could you just give us a little bit better sense on what's going on with Svanehoj

Question: Damian Karas - UBS - Analyst : Yeah. It seems like that deal is certainly bearing fruit. Best of luck.

Question: Joseph Giordano - TD Cowen - Analyst : Hey guys, this is Michael on for Joe.

Question: Joseph Giordano - TD Cowen - Analyst : You mentioned earlier about connector strength, and I know some people have been kind of contemplating a prebuy. If there's any kind of color there that would be certainly helpful in the end market dynamics at play as well? I would appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:30PM, ITT.N - Q1 2025 ITT Inc Earnings Call

Question: Joseph Giordano - TD Cowen - Analyst : Great. That's helpful. Actually another question I had, too. I know you mentioned you saw down low -- or excuse me, mid-teens in the quarter. My understanding, if I remember correctly, there was supposed to be like an OE ramp in 2Q. Does this destocking dynamic for A&D change that ramp timing? Any time that you guys are mostly levered to widebody, but any color there would be great.

Question: Joseph Giordano - TD Cowen - Analyst : Great, thanks guys.