ITT Inc. Q1 2023 Earnings Call

As a result, adjusted EPS will grow roughly 20% in Q2 and essentially be in line with the first quarter.

Our tax rate remains at 21% and interest expense will remain at an elevated level.

Now I'll turn the call back to Luca on slide nine.

Thanks, Amanda well before we move to the best part of the call to Q&A, just a few points.

This quarter, we focus on growth and execution in everything with it and we delivered a strong performance.

To increase orders project awards, and large green energy wins, we delivered on growth.

So our cash performance capital deployment that operational improvements we delivered on execution.

The award and share gains, we're bringing home and our execution gives us the confidence to deliver on our long term target, 6% topline growth, 20% segment margin, 10%, plus EPS growth and 12% free cash flow margin.

We are proud of our performance this quarter and never satisfied so our journey continues.

I'd like to thank all our stakeholders for their continued support of ITT. It has been my pleasure speaking with you. All this morning and your please open the line for questions.

Thank you the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your touch time fun. If any point. Your question has been answered you may remove yourself from the queue by pressing the pound key.

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Please limit yourself to two questions one question and one follow up thank you.

Our first question today comes from Jeff Hammond from Keybanc capital markets. Your line is open.

Hey, good morning, gentlemen.

Hi, Jeff.

Just.

I guess to start.

Within your unchanged.

Organic growth guidance, there seems to be some moving pieces around kind of IP coming in better.

Some of this.

Friction destocking and softness in CCT can you just maybe speak to.

How youre thinking about the segments differently from when they were organic growth.

Standpoint for the year.

I think you got it Jeff I think that IP is as come out stronger in Q1, and we see the strength in projects and also the strength in the show cycle in Q1 so.

<unk> IP, we let will be better for the year.

Continue to see the outperformance in the OE friction, but I will say the aftermarket industrial technologies in automotive is probably be.

It's lower than what we expected the Destocking will last for the entire year and then when it comes to the connector side of the business are also the destocking of the connectors that we'd probably lost for the full year of 2023. This is really how it plays.

Okay and then.

Just on the destock.

Usually these are kind of sharper destock and then youre kind of settled what makes you think that.

These destock carry through the year.

When it comes to the automotive is really talking to our customers and really the feedback that we're getting from them. When you look at the distribution on the on the connectors. For example, we see the decline in the orders that Betsy, we still see the inventory level.

So when we look at the point of sales their bookings and inventory level with our simulation, we talked to our distributors and we think that this has been the last little bit longer.

How we got that.

And on CCT.

That was a necessity that youre talking about the distributors on their on the connector side Jeff.

Okay, great I'll get back in queue. Thanks.

Thanks, Jeff.

Our next question comes from Scott Davis from Melius Research Your line is open.

Good morning, Scott Good morning, guys.

Good morning.

Presentation is really pretty clear so I wanted to take a step back a little bit.

Thanks.

Full of quarters now how much of that is being driven by the lean initiatives out of Seneca falls and are still incremental margin benefit to be realized and if so is there a way to quantify that.

Inventory at our distributors has not gone down so what we're seeing today is that they're reflecting the improvement in the supply chain and so they don't need to a preorder as many components, but we don't see yet inventory declining we are we're seeing.

Some of their Pos's data that is that is stabilizing so that that makes us a little bit of hopeful, but we think that's in terms from from our inventory reduction.

From an inventory reduction standpoint, where we haven't they haven't really started reducing inventory.

And and so we checked also the last point I wanted to make is that we checked on the market's aside and it's really in a market driven events and it's not really driven by by our ability to supply connect us to them.

Great. Thank you that's helpful.

Thank you ma'am.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.

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