ITT (ITT) 9 Feb 232022 Q4 Earnings call transcript

Welcome to ITT's 2022 Fourth Quarter and 2023 Outlook Conference Call. Today is Thursday, February 9, 2023. This call is being recorded and will be available for replay beginning at 12 PM ET. [Operator Instructions].

It is now my pleasure to turn the floor over to Mark Macaluso, Vice President of Investor Relations.

begin. now may You

and Candice, good you, morning. Thank

for here Executive Officer me Officer. XX, call financial XXXX, this ending announced XX-month Caprais, morning Chief ITT's Today's results ITT's cover morning. Savi, which Luca will X- and December Financial and periods are Chief Joining the this President; we Emmanuel and

that we today's comments will Before we Slide to expectations. that refer on X of current forward-looking note statements are begin, please today's based our presentation, where include

a to report number risks Actual non-GAAP full and and to results quarter due may year we in and for annual XXXX differ including year and uncertainties XXXX other Except results compared described the fourth present on of fourth measures. those noted, filings. materially financial include and XX-K the this quarter otherwise full be recent morning our SEC Form will

to are such our of comparable The overview which of press measures and our begin of we with results and an will figures in our year. our in release reconciliation the the we'll the appendix plenty website. for will the the This at of some the for Luca then available achievements on will before are and we both outlook our detailed close fourth morning, quarter most of on presentation, book commercial key questions your discuss XXXX XXXX. review guidance, and results Emmanuel time have end. GAAP

and as to full Please you presentation, note as results I our quarter supplemental assumptions additional year in which the is review. the for to data there on information planning well XXXX encourage

X. will Luca, the turn call begin pleasure to that, With my it's on number Slide now who to over

Thank you, good Mark, and morning.

and in by keep employees to for do, ongoing would I everything to their shareholders results, center commitment their we always at ITT's discuss customers, our for like we thanking of ITT. start our ITT, our the we Before investment

was humbled efforts ever, than and ITTiers. by of all This our quarter, the more I resilience

COVID despite quarter XX% more delivered infection China, than the our ever in highest in employees Wuxi, December. rate First, production of

Our China the of the was team's performance highlight quarter.

ensure chain in Europe, supply our Next, inflation. customers. across We Ukraine and all delivery war our crisis, our the to the energy navigated an updating disruptions through and on-time teams the worked impact of in factories. And

the XX.X%, I It and efforts performance resilience we quarter XX% growth throughout over drove for presenting flow XX% prior organic in XX% growth demonstrated XXXX. revenue businesses the over XX% growth year. record grateful versus delivering that growth was organic XX% following QX $XXX after up growth, of XX% segment cash you this are your today, double-digit free of all QX, a including and in in am orders margin EPS record million

ITT's in many regards, fourth was performance. quarter another step-up In

Now the to details.

Higher ending of strong an up Our the process XX%. and the year. orders at recovery This at seventh year, $X.X revenue MT organic organic consecutive double-digit volumes backlog versus growth quarter drove prior drove in million of price forefront. more of with billion, XX% over led $XXX recovery price growth than resulted industrial we by

grew aftermarket sales outperformance pumps IP for strong XX%, by region. connectors in and organic And in CCT by in XX% continues growth across every in momentum the Execution revenue MT, in baseline and components. boosted QX. gains in continued share projects, aerospace resulting demand

roughly full automotive XXX surpassed the growth global market For we by points. year, basis

best the flow free of Our truly ITT, QX, far roughly in led tough after accomplishment price year. of indeed. quarters, few cost by strong on cash flow cash, free a million segment productivity XX% performance overcoming quarter recovery, generated cash volume margin all margin growth a record we a remarkable for of to in with the and And $XX impact the inflation

local Saudi people in and for these for capabilities this performance, is a fortunate are customers achieved our In IP differentiator. and flow to experience investing deliver this customers. flawlessly XXXX. in I this grow region. team industry, we And underpinned given thread XXX% testing achievements in on-time presence the the new performed in common was to their performance our was where to that and our The commitment Halid Arabia, the our

already us win than helped in incremental has resources to orders. also and South in center in or like million project -- we in has invest for Korea, vertical This more lean. engineering pumps, technology, more $XX here, which our new become like continue excellence Or of

the Seneca efficiency. of of material working Falls, on optimize Speaking next are lean, in to our flows we now plant and transformation layout

for focus margin adjusted realizing We in to incremental guidance full to already excellence, of more enabled original unanticipated relentless QX quality year. earnings per improvement numerous benefits and the This our XXXX and despite the commitment us continuous macro lean deliver in on headwinds. IP's than revenue share XX% are on efforts with and

On and was On acquisition earnings. X.Xx increased more vehicles CapEx to deal. flow. and It by M&A, a adjusted was to capital deployment, $XXX XX% expanded we business than deployed XX% in the ITT's XXXX million a productivity. cash IP's free than or accretive growth strategic of Habani electrified our in valves great and more support

this $XXX in and XX% respectively, lowering dropping now ITT our XX% and effective approximately to increase dividend acquisition. with at and X X%. XXXX, increases million strong performance, versus a XX% morning, over shares, XXXX Xx XXx repurchased announced after share And count of of and our of purchase is we by This the we multiple date of

Finally, on A are significant targets, long-term few progress. our XXXX making highlights. we

improved rate leading reductions in decline rates, the incident XXXX XX% injury focus in both safety severity on X.XX. relentless Our number frequency a frequency of incidents of and in to a drove to much

increasing equity our EPS On line diversity, financial revenue organic emissions, efforts. inclusion from performance, sustainability, our and advancing growth greenhouse and and And gas green we were XXXX target. adjusted our long-term products in reducing growth revenues in are our with

over satisfied. call to of results. the in accomplished discuss the proud Emmanuel we're XXXX. is let we to me we fourth that full We opportunities XXXX and in by never what why that, year encouraged our are but And turn see With quarter

morning. and you, good Thank Luca,

X. organically. was on in of increased businesses. over XX% double-digit growth Slide all Let's over Revenue In by growth projects IP, driven begin XX%

and share ramping up. from capital large near-shoring in CapEx are spend Here, to gains that we benefit activities continue

Short-cycle drove pricing for revenue and by capture. baseline across aerospace the accelerating of strong demand applications commercial increased defense basis a growth in and The strength pumps parts year-over-year as service on recovery aided CCT well.

Our aero business XX%. components grew

we constrained chain to due somewhat However, remain capacity continued issues. supply

infection friction performance XX% particularly by again all shutdowns. unplanned gains defense, product Connectors market drove driven and grew regions share this In in volatility in on-time growth. COVID XX% in and China, order despite quarter OE new XX% customer price gains benefit was to of the share as began MT, Friction's materialize. recovery innovations, rates organic rising

continuing points margin Our rail organically XXX in expansion, offset profitability, up floor were points more points than IP's mainly points business added cost and improvements by XX%. which as the of up of Europe. of We're grew still On price XX% of was of inflation even IP's push demonstrated roughly basis margin onetime orders strength XX%, year-over-year, and basis FX. on XXX XX.X%, XXX margin points roughly XXX basis items, basis above basis and volume shop with XXX excluding

from X% XXXX. was improvement an quite an in is business margin This what

XX.X%, Next, price higher CCT's to and by margin points driven XX recovery. grew basis volume

at ended margin around basis XX%, CCT's year, the up For XXX points.

in combination was stemming points aftermarket by unfavorable basis Europe. margins material, XXX mix MT, driven This XX.X%. and declined auto a to in declines from higher energy labor of Finally, costs and

We for the EPS this This benefits. subsides on in our clearly On level we QX higher $X.XX sale its also inflation pricing $X.XX we loss will margin a previous the inflation, in cost MT's margin was from of quarter, FX, expect business sustain quarter $X.XX had and gain Russia interest cost negative expectations, expense. of given as $X.XX overcame performance we and this asset of below compare but realized tough to that XXXX. return

On collection quarter, exceeding the fourth last improved strength We're supply of significantly efforts and chain improvements is. of our further as the we cash, collections. expect forecast in our disruptions daily on seeing benefits AR the

Let's X. additional this points move make to few page. want I on Slide to a

is inflation competition. again differentiation provide recovery price testament to the in exceeded QX. the This we compared a to First, cost

strengthening U.S. of the significant Second, foreign dollar. was given currency a headwind the

rising year, expense quarter. interest $X this with was our the Third, throughout rates interest million

We XXXX. expect this remain it throughout at level will

didn't despite to in redesign the invest of year, list Finally, encountered sight innovation. long we we development, and the term continue of and this product new long challenges lose

turn discuss to We're momentum. our Friction We're progress making XX%. infrastructure on Slide to to Further, total platforms. beginning also in was rail EV ITT's $XXX new to growth million. XXXX X over in on Let's EV in our see continued electrified our target win revenue -- materialize. of content vehicle investments XXXX, share market

base installed quarter loss future CCT, drive that strong aerospace the Russia significant business were we full revenue with growth year. of orders flat commercial the continuing another project Even rare approximately strong in drive XXXX, demand. aftermarket will ramp. in to enlarge demand saw IP outperformance, is our seeing for in In with and

orders business growth conversion revenue at our XXXX. drove to organically The in EV into the almost the XXXX. through ending first in half us visibility orders also orders million we in significant backlog This of And in give has good connectors. $XX grown least

Let's up XXXX wrap turn to the Slide X to discussion.

for XXXX I'd foreign the headwinds above we issued ITT's impact, was our $X.XX year. over currency cost Here, lost business well like and our last on to guidance inflation, when Russia expectations of this to recap amounted which performance. chart quickly The early

effort action on to teams execute the to productivity address and was and Habonim. execution completed rising mentioned, our pricing sprang negotiations. we Luca As the commercial ramped of integration differentiator, acquisition costs, We into our

will this by the much more and can there proud is do. and that incredibly performance of we we're still humbled achievements, While team's

me and We're our M&A, and driving drive Luca IP Slide to let our XX. on CCT the creation. value-based cash that, value generation turn our performance call of expanding strategic strategy more execute which long-term will With improvements to in further all on-time in back pricing increasing

Emmanuel. Thanks,

XXXX wins market to are friction, Before how outlook, across innovation I'd pumps connectors. driving and and some of customer gains we like share performance cover examples share our and

position during discussed taking EV by Technologies Motion transition. leading advantage Investor its is the full of we Day, As strengthening

vehicle XX This content global platforms, among year, OEMs, electrified awards leading including Poster on automotive with Tesla, and Rivian, Neo from we won others. new BYD,

X with quality in outperformance win we on-time pass platform part million axle and premium below German electrified us that XX% rear launch and front XXXX. best-in-class on defects delivery helped the at Our a

seeing shortages. to for our surge. process, an years that's are infrastructures, also a rebounding and we investing responsiveness. We component In business. connectors capabilities engineering EV Electrification from Customers our are choosing connectors capturing is our are and and because developed chain catering we orders in charging good supply X share connectors and disruptions portfolio regional market of industrial in of

XX% increased X technology. and site to at This eliminate an XXXX independent day. green Nigeria using per the deliver will in of twin in next Bornemann X,XXX stop unique roughly years, our Orders systems COX for flaring company will projects oil Over year. pump compared screw prior to offering tons

are in battery a winning New a near-shoring waste in on including system hazardous recycling Arizona and treatment for Upstate commercial York. opportunities facility We for plant semiconductor new EV a

progress on Investor Finally, in expectations we Gen that the vibration. embedded energy X are Day. that operating and technology, motor at exceeded making showed Initial testing efficiency, displayed temperature or drive prototypes our we EMD,

We discussion capabilities. to XX trials field EMD's are various and in with across industries demonstrate currently initial customers

that our to In technology the motor launching leading customers develop we harsh soldier OEMs. connectors isolation quarter, Cannon and with we custom Technologies, applications Connect helicopter together connectors. new And with military a family vibration war most Control this with withstand of environment. designing are We induced are for new vibration to qualifying reduces our

wearable ruckedized Mission qualifying warrior system. connectors net also for We're Command the

So clearly more innovations of XXXX. you that a throughout hear about will lot exciting

continues turn outperform XX to friction business Slide the to in in the Motion market Starting recover growth outlook prepandemic to production levels. we to Technologies, each as discuss to with Let's global expect now XXXX.

half. single We in planning XXXX to production up Europe are for be flat a in foresee demand, the auto second in to and slowdown low digits in particularly

weakness think through the saw there. then On persist will from and improve auto the XXXX begin we in aftermarket, QX we to

and orders a year with a exited Axtone. the of be is KONI rate strong portion we the rail in war we activity and despite with in QX half. second after On freight a our Ukraine, the strong XXXX will ramping in XXXX year of slowdown think from awards, long Passengers both MT, in potential up declines stemming

further by the Longer in term, infrastructure rate and Europe. in in will be strengthened investments this public the U.S. market

to process. industrial Moving

investments backlog. this activity near with shoring XXXX ramp healthy segment and entering project are with should infrastructure, clean The to We in continue to support energy. a

been has demand, into service trend in and this Parts the AP continued aftermarket strong and January.

pump hand, other the baseline slowed QX in activity and On QX.

are we orders So industrial monitoring closely.

Connect outlook and segment, Moving Control the to Industrial Technologies. In Components is the mixed.

Build and medical amidst business air recovery. and aerospace, outlook. travel connectors our change sequential to demand in the are saw aerospace partial industrial space improving is is short-cycle we In is in a connectors positive the QX, offset. but In low EV the commercial rates encouraging no there providing accelerating

current level In and geopolitical remains around defense, demand preparedness heightened given conflicts globe. the robust of the military

now Let's about XXXX guidance. our talk

We of tempered growth midpoint. by expect primarily markets. of organic in due the conversion is gains and X% to share combination our This the demand, revenue backlog, industrial slowing at short-cycle a of

XXXX, actions supply in an CCT, MT continues. We in XXXX. we following with see value-based deliver To still pricing In On stellar will in expect sales many IP productivity further opportunities chain effectiveness. billion notable and in our performance we to improve drive in into put this journey guidance profitability, perspective, step-up our absolutely approximately to $X.X XXXX. a

and ease second assumption higher material that constraints chain half. will material raw the in costs to continue supply Our is subside and will

still we want at I than last be an rate a do that lower stress, even in it to year. are may inflationary largely environment however, though

of Our adjusted net points the to productivity margin expansion XX inflation, segment actions drive XX.X%. will basis at midpoint of

With are the our of well easing XX%. and on margin and progress we Technologies, to long-term at inflation the target way at IP Motion CCT

be line growth and midpoint. the XXXX. drive will at will growth adjusted EPS a in The strong our working cash, On expansion X% of priority improving key top margin capital

to year. margin On flow inflation actions cash of our free cash can pricing expect generation as outweigh drive our double We and XX% flow performance XX%. operational will and you strong Slide to this than cost see, XX, more

will to impact However, we in Still, results. foreign interest and nonoperational EPS. other headwinds anticipate X% related growth our we expect currency solid a adjusted the

its we expansion with points in at single-digit organic process basis by CCT over quarter, industrial to approximately midpoint, and of to growth first led growth IP by of XX% EPS rate MT margin CCT, the the deliver with XXXX For expect than mid- high and by led line followed XXX year-over-year. margin adjusted QX more

the XXXX We expect be to in in second than EPS growth stronger the half first of half.

a prudently until output the taking are situation. We and QX QX more on have clarity to cautious we economic

to move please share we Q&A, final me before points. Now let a few

year, share strong, outgrow our is The all businesses. and on First, customers, all and to orders XXXX. backlog executed market for competition result the across profitable our gain a grew which we in execute

the performance slow we we are there positive we in Second, half we staying for several years. laser perform that laid been markets, past once expect X signs signs end see foundation has in And in the on and Still this are to can will well. second what again, markets over control. The we're growth executing. some and so focused

in target. I good to as EV and industry share on flawless EVs, are Day, to as Third, competitive many said our way at well are Investor performance our transitions June the we market amplified for ITT. Frictions electrification achieve advantages our is and

Lastly, is all once to I again, that support execution will of in thank the ITT. differentiator would like XXXX, be our for and their continued ITT's stakeholders strength.

all morning. you for the line pleasure questions. As with Candice, this speaking always, it my open been has please

the of Stifel. Jones our Nathan question Instructions] from of So [Operator comes line first

on Congratulations XXXX.

a the had pretty with. few to phenomenal the incremental given with. questions I'm go going A deal you guidance I execution to that's all think on effort headwinds

cost Just the looking in a bridge, bit price at offsetting. surprised XXXX largely buckets inflation your that I'm they're versus

would in up price more back XXXX. more but would have You of XXXX? cost I in think, price and in us $X.XX, as that's why the about just thought that versus some reading you headwind inflation XXXX, second of half, and through some and make would I positive not carry can were color in you you over had from that versus Maybe give on positive

Okay.

price right? incremental would are getting those look the are XXXX. that we got when in got we and that half we are roughly be the XXXX, those at XXXX, to going I So in incremental, we So say price to

the positive to like you across we're that over price The that other element XXXX. slightly something when all couldn't centers, value to you, in maybe that say at Emmanuel, would passing going before be is I to we look stress XXXX,

in is a what of QX. it's we continuation improvement substantial and QX have So a and achieved

price cost and regarding QX Yes. we And QX. -- in positive pricing were the Nathan, --

a is and maintain in Tech think standpoint, like wasn't XXXX. this beat. However, in mind, notably that XXXX, I And that some chemicals from headwinds in Keep We slightly positive. we there commodity also a that were price in large Motion energy.

going are customers to compensate we price for our so back to additional And and cover commodity increase. increases this

would things I say, second XXXX, slow Lastly, in of half the down also. expect we to

price when ask be our to slowdown And economic customers. of for so to mindful we we want increase that

then And the to Okay. maybe bucket [XX] performance operational that's [XX].

about additional implies expect productivity guys that for right the an in deliver expectations to of I'd over-delivered of maybe incrementals the think XXXX, potential from kind margin businesses which clearly what you that the for I of talk and XX% you in the is on which on incremental better in productivity, XXXX about absence growth?

on investment that is that that all think the I that, do working have Nathan, in are we initiatives on. that other side we strategic the of -- the

of examples, Technologies we me or pad is are remarks, we SFO capital developing Let that mass lean a that in you this transformation. products in for also the the couple prepared or investment in EMD give like the digital Motion Axtone the next talked automatic

CCT through are plant take in that like of to complete and relay the Califone. next places the to We also level. Valence out we SFO lean that going activities started a in

So growth. the all initiatives our that's -- and of on to top sustain

incremental So we you into something that take that margin. when consideration at the is look

comes next Andrew the from Obin. Our of question line

me? hear you Can

Yes.

of to So a apologies. like bit ask I'm a question, going convoluted two-part

of weakness potential was talk in weakness. you're sort XX%, in that slides of business, this seeing were connectors then couple about I would which the up some thought sort for indicator But that a lead short-cycle specific the examples. later, fact sort projects IT first, of the highlight citing love So reshoring, of you you

maybe a, do with is same that right, examples sort in but of So b, you time, strong, your yellow. very square underlying maybe the reassuring, At solid activity. I'm the bookings can about projects which circle wrong flashing so the specific of air cycle IP how mine, indicates and short

Yes.

about we connectors talk orders when very that slowing think talking growing I fast. much we're down, still very about is ourselves

that -- connected U.S. is business, is business majorly our think mostly connected I industrial

And U.S. a slowdown think, in is decline a so seeing in what -- activity. I we're

opportunity talked I in specific terms U.S. of We think say, I growth projects, IP semiconductor hand, on other we're award. in seeing the the about would or

We but we growth. gained as We mentioned, we lot won a talked won seeing, also the really Nigeria, some and about of in about obviously, energy. orders We we in Saudi Angola. in Malaysia international talked we're recycling, also battery good in Arabia. but also

project there that's So lot U.S., some growth, the the in I is also a think but international.

And question, more of question. appreciate I another sort Great. big it. a then picture of

best So the numbers midpoint in the midpoint of one your look effectively, X% line top if growth, is EPS I coverage. the X%, at by is of way,

sector. but I have, sort not leverage Or new in shift this operating I'm We'll So at operating this the saying just reality of expect dynamic. high inflation this mode? growth, we of not would of look it, does eventually? sort Eaton more this as a at And we environment, dissimilar sort the high normalize leverage less normal you look where question is into from sort Honeywell of

to have certainly so cost as Luca driving time, have the bit continue, also And on haven't we we performance and to that at given peculiar inflation. the solidify growth is because the up incremental on far. little significant I margin. would say mentioned, Well, XXXX executed want we a we same

we're supply we're both products. to And so comes in in in chain with also investments -- but resources, this investing going

we and think margin of think productivity. I on -- so are focused growth. we're EPS little very kind But I a also very almost And limits bit that our that

about terms future, in that So driving especially when our better long-term of than for think incremental in targets, I margins. really think we we are the average

sure, strong don't from quarter. want Yes, I the anything the to take in away performance

Halloran next from of Our Baird. comes question Mike

just to guide. sure I make a the So of understand questions couple

overall Luca, slightly Motion First, positive global guidance, flattish of kind said the number. type think on I you Stars to

what above at like least outperformance look of the You kind rail puts mid-single-digit a is It you seems have typically guide guys commentary directionally that level would of that like. favorable.

maybe kind of there that's kind everything is It the seem to normal negative all -- the contract like at So me. what it stuff? to case, price some sinks think guidance? get just help of but mid-single-digit downs, together us Is for doesn't

Okay.

that market correct. to at absolutely seen look So the Motion be, growth X the X market the We as side, on will say, I OE you when we have you to tend that Technologies worldwide. points said of outperform

Now points cannot XXX consideration, win get take one need outperformance share, has in as year look XXX market the be market continue and we basis. it to into at And that has the this you thing if that in been to you outperformance share higher the been like past.

into Then take we account. I have QX to we it it the something improve in seen see of is still that it in when is that will offering end And aftermarket, aftermarket. aftermarket. suffer took second, the would the So probably and we the the say, probably XXXX, second like half at

that everything taken is that Technologies. say would I consideration into Motion for needs to And be

other The potential about think that might second the you in to also slowdown particularly in the is Europe. want half, it aspect

other And that other shorter pace sense. thinking IP have just areas the areas any concerns mean, being the pieces. mentioned, to a of half is should the how OE touch? about we as global thinking I cycle of rich question. you reflected that's the year the incremental margins you of because European If We've you you in of back about I Are over reflected move the points which conservatism there in Is any of this of about? think you're being it some year? pretty makes about the clear it's concerts, be that been the ton second economic it's in actually next half those the to there's growth, good that

Okay.

our still view, the to component need question working from understood Pricing it across up, and -- in of board talking CTT. really work step chest right? and margin a of particularly the we you're understand I opportunities, point a on IP So is on is really, big I keep we

we're a the as lean that the to transformation lean the CCT. re-layout have going in as go through Seneca Ford side completely well balance We is transformation of

aspect to other make into The that is buy. past in account and we the is talked take they

having make buy strategy. So we on proper the really and are focused

of about So foundry. if as again, we contacts Force something it, completed and process year XXXX, in This X you the the closing last is announced think once the is connector be Seneca the as on that is end the the well by will of in-sourcing takes a years of side.

So all of those are the stuff margin that will side. help on the

also regards Yes. would be And I XXXX. say in will from in different XXXX many

have the happen really we a margin not what XXXX in be EPS in so is similar in second and significantly You global had strong second QX. is in in in many XXXX. -- that this pretty But growth we and seen to is And terms XXXX think going to half decelerate the half. XXXX economy regards to of to think that think is ramp also QX in going that of We half. in first the and going revenue we the

have was now, -- asked margin the I really focusing would was actually was just probably I good the expectations. a I wish revenue and decel question answer, on more but that I

the maybe anywhere is on where what the the layer were comments revenue embedded short-cycle OE that you it? those beyond any else Or is Emmanuel, that just and So conservatism IP? talking on you can about, European about side

No. Yes.

connectors, components, industrial half. industrial they're second think So in that think going I about think decelerate to the we that you if

to pumps bound decelerate Keep going And in the lot half, second think second we're mind, energy that see and also. all half. I something think really energy chemical industrial also the that I think weaker. a been has cylinders. to are going on And in We

board auto, -- just the across Is deceleration it's not across board. the the it's

next Sachs. comes Goldman question Ritchie Joe of Our the of line from

end we Not a to by came that pile but range, questions, in differently. on just than low high range this I to a maybe expected. little at look taking the were little surprised the but tackle bit right, the the In all don't of range, the the at end a guidance lower of I'll think

in you And your year? so you to Or this in the already decelerate address around in maybe decline declines, what of you it one back the seeing And broader the that expect is do today? is an see business of it are percentage leading more way indicators? actually just not to economy? but half your like seeing kind just business expectation your on Are of

Okay.

the Let you me short expectation connectors, Joe, portfolio. it the know, on the short-cycle as definitely the means one. is But economy, IP. have also that's broader cycle number industrial an we That in in say, means some businesses

when short look When baseline still see but for though look service we declining. the cycle even you in OSAT good IP, numbers. for So at you saw good parts is at and QX actually still good we

price but Now is both volume. because service of also growing,

price Part mainly is growing because of in QX.

QX though year-over-year, orders the would look you if sequentially, So distribution good. at this, I say business, that in over weaknesses that we growing still would which see I start distribution industrial at the even look are you say, you they seeing detail, some there. And declined QX. then connectors the when is have

seeing question, I So you signs. answer these start your Joe? Did

kind did. it contextualize were I this seeing we of Yes, business your that potential weakness. about talking of maybe about maybe to just X/X guess and you're you

So me take the let through breakdown. you

MT about So components. in industrial mostly connectors. IP, is is like business. we're probably something XX% auto. is around by XX% business. This driven talking of And This It's the of the industrial probably

mean, adjusting last That's the follow-on my I above the clearly several a Okay. items great XX% margins, And story All is years. pretty the super even incredible. right. is question for onetime IP then over around just helpful.

trajectory starts this moving of business forward? the to the As shift business more for into your what's expectation projects, margin

have very the been are up. IP that The we we the is us trajectory rigor this change, is The doesn't the And deliver disciplined, that to Joe. for in in very discipline everybody performance pricing trajectory business for understands fundamental rigorous, very, delivering. and

point, another look data profitability. if we do give record at high is just at backlog that of also So we to today, the you have a projects backlog the

that we So processes, proper have the we everybody are understand and executing way. it.

UBS. of question comes Our Damian from next the of Karas line

to and been market market the off know getting respect some But continued asking Chinese start be headlines there market want share still of losing share you about manufacturers. to some the out some friction. XX% mentioned to year. in by that targeting XXXX have I leader to EV this I with expected to gains the global you global recently EVs, about share

And space EV getting that in is general, competitive. more it seems

guys just what friction, ITT So thoughts means for market it positioning your hear your and curious to on profitability.

true, Damian. very that's Well,

couple getting think probably the a of competitive I it's more dynamic out there, that changing, is things.

has on changed. the that we're competition, ourselves think when differentiate very I we to to that the it fast, against the growing still will When market comes not competition. playing growing, are keep able

So you're And believe braking still helped really we therefore, that to the so helps are differentiate. facing to come. to it's help years challenges And is EVs us designing really to still those speed has that you this the you problems for solve new. going far, for us the system are when something relatively and

the haven't XXXX platforms We -- for in with is demonstrated that year. and we been number XX% this by full electric of have the vehicle winning

is would with I that that play we greatness friction Damian, say the And of everyone.

after focus point continuing or to a electric business to And OEM a competition. Chinese existing to so apply whether we same develop and go vehicle defend more platforms, ICE it our the and made also a is traditional the

our And would not a even or so slows impact down, if there's I little bit that this a does changes business. say that transition

on any – planning you’re interest more it offset or some thoughts relates this hit seem Understood. to some Are it that. expecting not Really the would just front, sense deal like higher appreciate If is for capital you around acquisitions it or expense. repurchase that? much make to to possibly buyback And why the of year. maybe deployment, doesn’t shares as

Sure.

So complementary businesses on this through are M&A business you we really growing adding IT. mentioned, really and Damian, as focused to strengthen

And that have so several a mentioned we pipeline. times we very healthy

We’re going the customers. these after the see to immediately or the it’s opportunities. opportunities, around to when we see to great And travel team opportunity relate business really can even refreshing that all

M&A in And feel so we XXXX. our pretty about good activity

in as been whatever And that’s then for materialize precedence repurchases. in take we’ll why we’ve doesn’t continue it’s going If to aggressive above that reason, repurchases be to XXXX.

Giordano Joe Cowen. of to goes next Our question

cost just on wanted start expectations to I side for into the 'XX.

like in less than off number. energy. inflation, it's I in cost called you you think called Europe, the now. down to guiding at inflation want in if some chemicals, Emmanuel, it's I like XX% mean, lags are and you're to and they're I here in I'm 'XX inflation sure -- less high versus out they're prices, levels oil labor to it's because what peak down out things just gas I they're incremental down the prices the and So than understand there. and late there's the prices energy know But chemicals And U.S., gas but a you and 'XX, had -- levered

side -- just on energy seems how exposures the back as what pretty there like like give has to -- are and So it what be those curious to soon. some

Joe. No, no, we agree,

the in you're a is those if very I And for what think -- think we line of it it. or we in that is for the the cost. still in to is high thing significant we're steel I QX what here second a half whether the seen show type of can there's still have that And we've seeing lag that markets where price XXXX. that things, in with before one even experience moment, really in period of decline, we mind energy is or a have much there's keep that

start going QX to benefits and we're in later in progressive year. And the seeing

We is down, instance, that that we're roof, decline So buy materials. go aromatic chemical, commodities that going a the the and of up you're either. going are is that raw fiber, in think experience on to the through But up has inflation seeing later not the on I year. for the XX to easing shot the lot incremental that other

all just follow-up had we those during then does -- how to keep virus that give to if people lot the of you to get much immediately could And some do and And for shutdowns? used Okay. can MT, like back you costs COVID-related a if specific precautions where you is to that margins. much back in like with we away? stuff -- like now there. do if China, you here like almost extra take just the the on living of I this upside How to of be specifically there's just on on China, site Obviously, having if

to Joe. I So would it known a when say comes -- issue, is that

been costs I by through productivity able to China compensated the go that that all of fully volume. those has have As think performance, been and

not That's answer. the so short at all. And

Our next question comes from Citigroup. the line of Vlad Bystricky from

just up in Joe's on following Maybe a different question I'll there and them ask way.

the in know talk of business? high thinking peak-ish prior think get time back how MT about profitability progression the to sort And teens Can of margins line about back given today, you're to path that going those what you I ranges? the So about to you forward.

Okay.

just long-term CCT out for get because going at we through think that get when MT to terms clear and can the long MT, they we a probably, when can sure. not term. to the a has a about there. Within, they're is we XX% achieved. That's NIP. bit happened of there time go this of reach little make to of Investor operating changed. this And But just in this have So visibility of think have there that target than Day have We since margin line, we later what get NIC. be bit But little shared

you us, when the would Vlad, I declining. say, commodities obviously, for And think Yes. is slowly pricing about past, while maintaining that are important

the also inflation think like commodities obviously, I count think about a Wolverine as well. And has war friction, business you they've businesses then of out in to machine been productivity that. has of impacted quite instance, when [indiscernible] been continue we productivity. been Steel, terms on for Axtone And by other

not the but may back help get around around horizon, X-year the be that Luca driving That, horizon. more XX% those And target. we're to us businesses was recovery really in to X-year saying, margin that as so

XX% you Russia profitable I if a business. mean Vlad, Axtone, overnight of good think that was about and So Axtone disappeared very business

now, different a to have all rebuild market. with of was different despite But footprint you to Axtone as digit. in the a have that, recover with and they mid-single see profitable Now

a follow-up, Habonim performing IP's as actually. you just business business Maybe Wanted portfolio. highlighted to well seems quite expectations, to expanded ask you versus about and valves little how your be a the That

end opportunity your presence there capital you're continue of and through market? how So to with expanding deployment in could potential talk either thinking VAVE about incremental that your in about Habonim you sort the or

Thanks on. question, for Vlad. your That's spot

an VAVE area the and and where think organically is inorganically. we investing I growing are

we have in an that very organic used We intellectual can opportunities some be on biopharma some accounts. differentiated happens investing products that point we with and of pipeline. the keep front. pharma in with property on On when IP, And key have view, with that

North will we well investing keep expand happening on in more Habonim acquisition leverage with and with more So the also Habonim as products inorganically America. -- as to the

the we M&A, very is to pharma, So happening. It that And results, strong. key It's markets all not for that cetera. well-executed was value much future, When are terms been Habonim a focused as opportunity where integration cryogenic, comes the acquisition. that creation. terms as that in penetrating et been a in on it's great integration it so the might more, and more some there hydrogen is of be of of are investment,

today And is X%. between think multiples if you related about and the to X%

Kasturi and team. I So well Ilan the by entire said, and deal very a great executed it as by was, by

when it to this things And also us the differently that had I acquisition is Habonim, add manage we in we helping as existing we our also see acquired that VAVE is would engineered previewed way helping business.

story business, of in driving up in which the participated And margin a so of the IP. that we've lot been margin also has expansion

ITT, the the of say And was significant are opportunities engineer on seeing from that biopharm I standpoint. would legacy business which we business, Valves,

XXXX. So to in business existing that are regard, as as expected also Habonim well grow significantly in our

line of Markets. KeyBanc Our next Hammond the of from Capital question comes Jeff

you I'm I for in but the you just least. think level gave confidence most some of and can XQ, rank where segments kind the expansion the you the guidance good order each on for of color margin of or if segment wondering see like

So when a are at businesses, challenges, of different they a facing I the X look bit Jeff. different little

In with next we need very to keep momentum in terms of the and are good to IP, we invest We there taking on We investing invest. need and there, to a have level. to also a eye very have a that and this is business a big short because long close cycle we cycle But projects business. keep really need that is hard. slowing you

and you need properly So decide wait to really where to invest.

keep eye going good in on Technologies, the operational well on sticking on industrial. working on the you at the while pricing. as negotiate there So momentum, look Motion you as crazy efficiency like and When is what an the out can is pricing

quite a and with because with scenario. work automotive lot dealing do, are very market a So difficult that of there quite to is still it's difficult you

opportunities in it But the terms aerospace -- growing. to on what at QX of When got has that challenged CCT higher were of chain the plenty experienced that was CCT in time, in is comes of than because supply same CCT, we and expected. the

$XX because to probably more QX, at those because not labor we of to supply pay look is attention and CCT issues. we need of we if just kind were able million, where roughly revenue So probably of deliver of $XX million shortages issues and chain

you dynamic from XXXX. if terms where mentioning, IT, margin IP around than sustainable So in at closed you are a in think about Jeff, IP think probably if as in I think trajectory, margin in different a that Luca MT, they of about XX% CCT, we and performance

than drive XXXX roughly to in XXX going we're higher points so basis And that.

CCT XX% significant a going XXX roughly -- is XX drive in points little to expansion margin going XXXX. also than less to is basis compared the

really teens. into In high So we're momentum good our MT, back way there. clawing the

nice to I pretty as so see And by much you're material mentioned, very going still cost big. but we still remains think a inflation improvement, affected, that

auto We very half, slowdown I expectation on want and what's kind of weakness understand aftermarket just little general color. to half kind And just particular, front maybe how Okay. and in in you're the more MT things think, just a about broader more production a into -- in guess, good dial your within here? in you back just in America Maybe on different in hear of talked guidance? Europe That's Maybe Europe. I for in broadly, what's your lot thinking North and about built of of recovery China rate the China?

Okay.

And that. will expect to outperform going and of terms I also -- market, point expectation. -- we from I going we X% we forecast we then That China growth, the growth fine. the So estimated point XXXX, our to market is Europe, low comes China said, we when China, North probably to it's we outperform look said as second America. economy X to expect single-digit at that, And for flat for is When to an view, our it in said. and I the think do X of

guess of. had we I our in And December, and they're QX of about all never heard They're COVID, If in that people XX% the now back got what? working. think difficulties in all all right

my is one. view China positive on a So actually

'XX, we terms that in different in a outperformance have an the the market overall global going regions, expect little all that's to in of in so first outperformance seen going 'XX. versus be than we're And higher what we've to

the the then And in markets we're in going all both be the outperformance America. outperform an Europe to are outperformance probably markets to and highest China North different going different with equal all -- and

of line of Blair Bryan Oppenheimer. the from comes question last Our

hat the trajectory and been think sense to on little makes up the about certainly If question, that next outperformance grown our we've XXX I we mid-single-digit it like hang over modeling guess relative it globally share years? gain for the rate OE? the so that's a basis Is step on below following years, the frictional run kind outgrowth bit given friction to right at least to point that up long. the few but XXX you've sounds place accustomed the of

also we North modest outperformance Europe. gotten in And that? more elevated about and think in share By how we've on your China, based significant accustomed outgrowth region, America should to strong then just in really

Spot on, Brian.

different, be it and I correct. what So said would geography you think is different

top our terms in [indiscernible] said and and And EV. the our is because platforms that, what on in is tailwind also performance award even market also than there. higher that in been I'm of over top in One share. XXXX, we be of would rate team that higher say, China. reason outstanding more saying why positive because might our in win in China thanks I lower the electrified our is and much on Europe in probably of to has America So North sales

in a feed outperformance might So that the larger years to come.

that X, But yet lower -- them outperformance. X we see of that to is a going tailwind the be because production years. in the to our could be start with So don't to materializing, a next

asset? for be your win relative speak some expanded [indiscernible]. project finer you is the detail. has points that to, model? there how following up initial to to having And offer a you Could since the appreciate pacing how And can figure energy acquiring a I exactly funnel on seems deal your it's on if much new

Yes.

that think for seeing from on some It's I is share. opportunity end that very revenue also taking expanding from what So much and from a everyone. really model. really we're -- market. an order I we're standpoint is share margin. would seeing the there, hydrogen clearly that bone hydrogen definitely the is a nice standpoint, we're and gaining say outperforming number

the including in board, fourth in the we've -- across terms where we nice of quarter also. improvement capital some reduction really seen So and working cash,

the drive with is batch next the -- give to in have opportunity They're in an still we producing there. really that let are there. They Well, Abom, productivity me you producing we -- example.

And so their capacity. that's limiting production

of which to going growth lot to future reorganizing us constructively, a so and And without the going is CapEx so allow capacity, to implement free support lean line. just very up we're making but investment,

to taken So volume, we addition off. the margin should really, see in

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