ITT (ITT) 3 Aug 232023 Q2 Earnings call transcript

Welcome to ITT's 2023 Second Quarter Conference Call. Today is Thursday, August 3, 2023. Today's call is being recorded and will be available for replay beginning at 12:00 p.m. ET. [Operator Instructions]. pleasure President the Global of my Mark over Communications. now Vice Macaluso, Investor is to floor turn to It Relations and

You begin. may now

Ellen. you, Good Thank morning.

Chief morning Joining Chief Caprais, Luca Stamford here Officer. and this me Savi, and in Financial ITT's Executive Emmanuel Officer President; are

July will call ending financial which we the X-month results Today's XXXX, for announced ITT's period cover X, this morning.

where that will refer to current results presentation including based our risks XXXX and website, on our today's include our Slide available comments annual and in today's statements of please Form XX-K we X begin, recent expectations. that we other may filings. are due Before on differ uncertainties, forward-looking note to report described on Actual those materially several SEC

results quarter in release we second GAAP reconciliation most both website. of second the figures present which to morning of the detailed be financial noted, press of otherwise XXXX such in or available quarter and our measures. will our on the comparable are presentation, the are include appendix compared and non-GAAP The to this measures Except our

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

stakeholders and by ongoing like to the day their Thank good and ITT. morning. always I and our we deliver employees for world ensure to shareholders in customers support to our begin, you, our as commitments I would do, all who work Mark, every and thanking around to investment hard our on

record many about story is again with Last step-up a execution growth execution. the results fronts. ITT QX, growth quarter, and on the story and And was and in significant

Motion and we it. especially significantly teams rate in our growth accelerated. our higher order We cash Industrial Process margin, and Technologies, Our and deployed generated expanded

cash highlights. X% organically expansion, EPS free Let some points sequentially. million since segment top of up of and of XXX the XX% QX. and margin orders, that, basis improvement on growth more in XX% $XXX flow And XX% organic than me growth, revenue share

Now a growth On and growth. Industrial pricing. daily On by let's delivered and organic historically details. orders another our get remain realizing with quarter aftermarket. Process in service increase driven revenue further are aftermarket, levels, XX% we high rates and order XX% record into parts and the at the projects

On and despite year pumps engineering XXXX. amount prestigious Green a project double the award a XX% orders projects, than most orders This world's year-to-date for project grew more already includes prior an of of comparison. more than are tough in are on QX the all significant XXX% up one LNG for firms.

are Twin-Screw share. Bornemann technologies multiphase our and capturing pump Additionally,

of LNG For awarding was management decarbonization project year. on example, in driving million at was in saw recently gains. content outstanding how our I Germany, that Bornemann the site one per team's I firsthand Bornemann tons are market XX roughly of project the share Australia When capabilities world's produces largest

very quickly Industrial Dave has early and pleased organization. across President to Pumps years and is Steblein as year Goulds ITT. With management of best-in-class Roland ITT IP I'm XX joined Fernando of the IP developing rigor this successful ramping, announce that Process, project with to retired strong after who succeeding outperformance leaders service

differentiation. With senior business more Fernando companies, to Fernando, grow help our large and of than the expertise has premier X leadership ITT. experience enhance decades at to multinational flow IP's welcome

QX driven points. was Friction nearly growth. by XXX Continuing organically, basis OE which with Technologies outperformance, revenue XX% grew Motion in

premier including on with Porsche, content we vehicle won XX BMW. Tesla, electrified and , new auto quarter, BYD, platforms Polisher This OEMs,

quarter a moment. back for Stepping from the

Regulations. eventual With Friction copper-free It the about rollout solutions aspects gains. opportunity EV unique the team's transition. found X each disruption, meet with ability customers next share anticipating to One market Friction brake our serve by accelerate ways of pads. our the to developing their needs. And challenges Emission is the the happening and and their differentiate happened is to with of It's Euro market

team proactively in the expected our ahead Euro with partnership rollout. of been customers The compliant has products X developing Friction

As specializing in Today, to regulation WECODUR, low-emission customized might with technology. ITT together our X you be remember, help years to X highly in company developing a in achieve German XXXX, we are rotor-coating invested expected Ventures compliance, EURO breaking our Fund technology are customers before WECODUR, enacted.

will gains market this share expect again. We further drive once

challenges commercial and Technologies in customers growth. grew orders Connectors OEM organically with year-over-year orders delivered Well-done growing distribution, our Aerospace fueled on Commercial Lastly, prior by Connect defense a and grew with in and versus despite entire year. performance North Connectors demand X% North America. quarter, the increased record Art in team. Aero Defense. in the sequentially, aero American strong XX%, and X% components and And the Control XX%

we than invest driven margin in grew target business. points, quarter. the volume, to the and we while by our shop more fourth pricing productivity, execution, XXX On floor of for performance straight delivered this IP basis margin continuing long-term XX% eclipsing And

advancing manufacturing and to and Seneca lean increasing the running is expect one-piece month. team capabilities Falls, next X in now lines Our IPs flow we have transformation

which cost the basis margin with benefits to and XX% sequentially points foundry in as XXXX. additional XXX progressing closure, will improved basis XXX we also provide MT, beginning anticipated. We're points In

auto roughly the margin destocking With as in abates. will the XXXX, in believe to in progress we MT aftermarket XX% return XXXX

with execute are M&A, Micro-Mode didn't exploring and On to Connectors new getting to sharing Moving distribution. commercial acquisition. opportunities, The working are expand ways the teams waste grow work on our and time teams products synergies package recent and The together the to our pipeline. customer capital we any deployment. to

product into portfolio defense base markets. will space We customer further and attractive believe Micro-Mode differentiated enhance high-frequency entry capabilities miniature and provide and and ITT's design

been customers opportunities business. commercial this our positive, our to has for other is Connectors from and leading Feedback

over $XX paid million ITT also repurchased Beyond and M&A, commercial including of paper million down QX. million of we $XX shares in year-to-date, outstanding $XX

EPS our by With Next, half, our midpoint the year guidance we outperformance large the outlook. backlog a full and today, order to first raising profitable our through $X.XX. acceleration, are of

the growth Notably, the deliver thanks have of IP. or in performance ability high the We MT and XX% to the our of year. of end in low the becomes to range our now confidence new EPS previous for over $X guidance, end

defense Cash generation ramped room flow to the including the to we nearly backlog lies $X.X ready and cash quarter a of is XXXX. markets, energy, QX. free path in and a and grow our of on accomplishments more with growing plenty incredibly entering than in of end position this of air since what are billion, considerably conquer ahead. exposure auto, $XXX strong still proud million ITT I'm team's With to QX, to

The groundbreaking facility to position in investment team with a in for gain equipment to announce ITT will EUR opportunity you new vehicle an XX high-performance Now R&D Termoli, at share that and profitable capabilities. growth upgraded I expansion and production million In joined for June, and ceremony our a share underserved MT's Italy comprises a quickly of like ITT. fast I another would a testing the to facility, prototyping, investment, Friction segment.

than the high-quality needs, from driven We Friction's are Termoli-size responsive, a also installing to demonstrating ongoing partner. solar about This electricity provide sustainability. opportunity commitment panels XX% need for that feedback and by high-performing will their of largely we customers entire more expect was

the today, their We performing. customized their that they deliver most same delivering and platforms. needs, again quality understanding have to is trust highly are for a prestigious And This earned trusting us by win-win. solutions

and are a know will having will and customers the that known attractive. expect trusted they from deliver for partner Our returns ITT benefit

Friction, to team, entire Congratulations earned Termoli Martinotto, Luca investment. this and have the you

Let turn me outlook QX our call over Emmanuel year to now and discuss in the detail. full to results more

Luca. Thank you,

X. Let's begin Slide on

aftermarket Process both see Motion We drove delivery pumps Industrial and line and top strong Friction's XXX%, in performance IP, In MT, continue growth. growth to perfect mid-teens. double-digit over grew revenue In project grew while baseline on-time Technologies.

outperformance indicated June, I conference As quarter. this at a Friction's in ramped

growth saw gains . in thanks volume pricing and rail. KONI in and Axtone, to strong We also share

In distribution, aerospace associated team CCT, of largely the commercial with in components our addressing supply connectors by internal a the demand, especially The dynamics Europe. industrial reducing destocking in our in lead with is challenged declines growth in types. in strong coupled chain continued business offset aero

performance. to Moving our margin

basis driven by collectively XX%, from and over unfavorable XXX foreign basis IP. and incremental volume quarter and Our XX% cost in and impacts. over nearly which margin productivity, of This was inflation this points points outpaced is currency XXX price

strong a inflation eases as ramps further. commodity continue This will and year-over-year delivered productivity and Technologies Motion improvement. sequential

quarter, line not and this product gain CCT $X net EPS. a $X.XX incurred drove we which of Micro-Mode, divested will This points in a million XX of small improvement to basis acquisition Finally, repeat. that to expenses or related amounted margin

XX% step-up On cost realization QX growth is of another performance, showed adjusted result now The outpacing the largely strong pricing is inflation. performance. that in operational EPS, big

a million come more combination improved Finally, to cash came from the this flow higher on impressive free income compared encouraging cash operating quarter. from year-to-date are optimization that Free What's performance, and to even cash, working margin was inventory XX% still almost year-over-year are flow benefits management. further $XXX both increase capital. in of another The and of QX.

continued sight cash of $XXX for strong also expense to ITT of shares nearly this have given line generation. while repurchase year. flow We our from cash interest QX performance, reducing quarter's to we million free With the

results Slide drivers we're income turn now delivered productivity. look in to Let's through gains, X operating EPS growing QX share in and to pricing QX. We the high-quality at

new we unfavorable and our is impacts, this the rate year-over-year inflation. are We triple term. differentiation outpacing operating Pricing growth over rate income cost fact, emerging technologies growth strategic currency and to investments our quarter. the large making almost In and long in was revenue overcame sustain foreign

many to of All high level deliver for will come. years of performance this this help to

we and turn the a even Slide X the in provides quarter. QX Let's as year XXXX. the of of points our full In large management continue of the and ramped The backlog through to backlog the we drive IP, basis discuss is to result The half into expanded part positive that first demand at visibility project continued year-to-date outlook. project over end second greater to excellence. margin profitable saw XXX

levels segment fact easing America sequentially, our are OEM to XX% We quarters. are share in the guidance On CCT, range for to of exceeded offsetting to to this at With and all the the over thanks Orders of lean our the considered, This has in inventory. to we organic midpoint. growing X-year on current X%. expect expectations that margin, elevated work In North of X% progressing performance be revenue distributors our outlook margin signs several our IP through far and inflation are transformation. are continuing see midpoint at of MT solidly driving our improved gains

we $X.XX to our to $X.XX to expect a EPS XX% of increase above our growth With firmly midpoint target. long-term now XX%,

third quarter, Earnings should Technologies. we to be sequentially margin Segment led to Looking with year-over-year. Process. roughly organic be mid-single in expect low up should briefly Motion Industrial flat ahead growth by improvement the mid-single-digit continued digits

remained Finally, our rate at tax XX%. effective approximately

to X Slide me back the on Let up. turn call wrap Luca to

to Thank you, points Q&A. Emmanuel. few A before reiterate our

Growth. First,

We are end attractive and in growing are markets, we and positioned outperforming.

execution not-too-distant team's year performance. long-term given the in has have challenging long-term markets future, bottlenecks segment achieving target we Second, to its fighting ways established assure finding lean margin we and And process outstanding. the XX.X% chain deploy we me our target. our new you, industrial in ITT been are current on a XX%. They been since before has these ask, new processes. of QX, you for And already to for well conditions, way X It are at let in targets end removing will supply still margin

electrified vehicle sight term. and in high-performance and vehicles, capacity support growth investing today losing not we're Third, product development pump in in long in aero defense. the and in innovation, market, to We're the projects, of

sheet on now, have long-term been have we teams we so working years sure will strategic go improving on several summer far. plan. on And that which throughout done for their We've I'm as enabled balance to us them Our the our been deliver offense.

deploying strong and capital business while M&A our are a cultivating investing in pipeline We organically.

EPS our year new is at over raised to full ITT midpoint. we entering of up stepped guidance level a of performance. $X Lastly, the

the for please your in time line you questions. Ellen, Thank and your for ITT. interest today open

[Operator Instructions].

Our first question Damian comes Karas. from

was you more. share hoping on maybe can quarter. Congrats some Luca, the I

you. Thank

funnel? the seeing some expected short share you know you color on on what some pressures also I could in half. seeing speak to the you IP. side? project What could just are back And you Maybe guys Absolutely. you're short-cycle cycle had maybe the more if across

Sure. Thank you, Damian.

is look when if growth. up in the overall, kind we're a orders will about picture, revenue XX% call of, you healthy are orders are full very I talking reinforcing cycle. the as it, see, with the positive, the orders are X.X. So book-to-bill of But And we you at a very XX%. The

up So the our But backlog to year-over-year. goes record up level. funnel also is sequentially

demand. of good level very a overall, So

go short let's on specifically cycle. Now the

at stay will cycle, level. the short the On elevated orders

you So still XX% And at was strong. regions. project parts the example, still quarter, to the but I And different across when the the give growth rate was growing decelerated. in But and grew the volume. you orders, solid price, the X% very X% just is July are an said, Parts board, July were as orders healthy year-over-year. across look

Terrific. quarter. some good to year-to-date And like seen guidance suggests It maybe really incremental. you've me then second switching bit lower nice margins. the XX% the called just and out back like to is my math Obviously, the you incrementals maybe to a in the half. looks XX% If in correct, XX% expansion

business? be to I could thinking So expectations margin talk guess, be just you maybe incrementals less more like for factors might about your little from uplift? your just generally, if that we any how And leading about here, the should a bit

Thanks, Damian. Yes.

segment in sequentially it's between keep And MT continues for to in XX%. that XX% with So mind and margin generally settle IP line will QX and to improve be important QX. QX expect we probably to here, while

I also half. last important will lap think the second need the half, second that and to a it's few positives IP there to one-off remember mostly that year impacted are in in that

still little overall, of second the So of but deceleration in incrementals bit fair, it's very think a healthy. half, I very,

next Our from KeyBanc Hammond Capital Markets. Jeff comes from question

progress Just Europe wanted automotive. connectors an the get in on in update to destocking really industrial

looked I MT in pretty connectors you were some think the out better well. in orders orders pointed and as good like

to kind those runs or of So through I'm year? issues just of ahead plan the it starting themselves thinking if still are wondering resolve

Thanks, Jeff.

Now the in destocking. Motion is when aftermarket still look you aftermarket the at Technologies,

the there situation not So has changed.

all comes probably So for continue the when to will is This destocking of XXXX. it Automotive.

terms a and very When matter had it you quarter of good of look in at Connectors a Connectors. fact. was a record orders as

hard like they this in on And the to team distribution. America I North Distribution we still particularly able Europe, the orders here prepared in through has also in North distribution in led we very worked orders in with remarks. the do And well OEM. perform product has facing the that the portfolio think been is in was America a to are good to sharing very enlarge destocking, to that intake also What QX. put Emmanuel incredibly

Okay. this And then I right is thinking And way? that in about am gain, CCT? $X.XX that the

line, million focus annually CCT. roughly in decided of of is a CCT. to This core we is small Yes. This product the business to on sales $X really that sell

Okay.

So low were -- if you that but out $X gain, million take the margins pretty there.

margins So maybe just what's going on with CCT. the in underlying

you're right, yes, Yes, Jeff.

an levels So of CCT issue little has with cost the a Europe, and in had demand dealing of of base. bit low adjustment

-- July, levels the and to happy we're what to part June on previous of we're June, the we're and back back really report in now also that of we So track, of second performance. we saw as

So half to the feel than we CCT confident year. going back pretty XX% in is of that be higher the

next Our from Sachs. Ritchie comes question Joe Goldman from

of couple questions. a So quick

growth down organic quarter little business? MT, Friction see helpful, just make geographic in And what a you that would like that can us? you any other further on -- color on guys just Like just you for in the did the versus break rail one, that then this be too. bit First saw

Okay.

look first all, think performance of there and Automotive, you you So at when look positive OE. that the was Friction a at when I

still was performing market China, outperformed will points, win is and the almost bit where The color basis market twice little I by especially to give later. growth So awards. of the destocking. a more the were we continue XXX we aftermarket we

OES was negative year-over-year. the growth but independent aftermarket So positive, overall,

Rail had intake. a very good order

got be XX%, of orders up quarter also hard all And at Axtone up expect were XXXX. look we was digit Russia, orders for XX% pretty double may of example, you in Axtone, for the we the year. actually Axtone, last when and remember, KONI in KONI, you to So business the hit and

hard team other and with Western those the incredibly orders worked Now Europe orders offset in has regions. passenger to Russian more

the we for orders in Russia. the expect offset we to business So fully XXXX suspended that

the overall, across positive So board.

by is plus strong the OE, to all based of Friction terms Friction, strong in This as mentioning, revenue which Joe, round it Luca outperformance. XX%, on really Friction, number is growth driven So was mid-teens. up really a in so

and was up KONI coming both also from Rail is XX%. Axtone. this And

So the top of revenue not -- that, we had we had the really But our only we strong of as team really increased and factories. strong orders, mentioning. on output was really Luca

Awesome. last half and back year-over-year saw expected a year-over-year to to great you earnings into Emmanuel, basis I cost my basis? how What's That's on contribute price/cost were the the to guys. for guys then hear contributor a I expectation And of was price a think versus quick quarter, nice the follow-on. on that's year, flat. the

Yes.

you're We we nice expansion, dollar talk basis that. and had of clearly from a XXX So to that. price a costs. positive about me here, margin about thanks contribution And talk precise right, all cost versus points than let from our we Joe. cost price more price basis just When

labor only overhead. material, it not includes also So and

second should the definitely basis than less say trend And a year, we price/cost, basis. see basis, I from on the positive of from so points. dollar And little then positive half that in XXX a would a margin a still

Citigroup. comes question Bystricky next Our Vlad from from

hear can't Vlad. you We

Sorry hear guys. you now? about me that. Can

Yes.

Yes.

Great. Okay.

to I in there? the dynamics end in and connectors channel you're you terms the CCT and So about what ask is guys destock market in actual think where wanted destocking you that of just hearing cycle channel

say would standpoint, customers seeing destocking feel a from destocking, not What moment our their good. at So movement a from I happening destocking we're seeing clear America. I we're distributors' destocking America. in seeing hear pretty the in We're not in our is what Europe. that seeing is we that North but partners we we're customers think for is the are North demand

distributors, continue product our Micro-Mode we in with share develop to with that expand including the have And ones North able America, presence to we'll really our mentioning, products, yielded distributors. new especially has Luca to with As insisted our a significant to lines and that really especially been boost gains. acquired we was

that Friction And wanted I helpful. shift the then you quite announcement you just mentioned, That's on Okay. that to interesting. --

you're winning just product of that visibility you and demand this online And is you're displacing out come content as So I introduced. facility? more give vehicles on expecting focused can or on about on they're to how to that for when offerings any incumbents plant new guess color of sort thinking new

are capacity online? ramping how that you're you about Just bringing thinking

you, Vlad. Thank Sure.

part plant first question up be will the next is will The And So be the running in next the of year. year. building be XXXX. that be September September the will the in October up will -- equipment by line installed

talking now, months you're the So about months from That's now. XX XX XX, from yes, timing.

When to will of producing already we some in that be won awards, it we the awards plants. have comes those

been have we So And that also, this the last something good very got we in the months XX working customers. a together is with visibility.

running be going X. with So that start-up day is good to a the from line

Vlad, And underserved a this market. is

enough customers vehicles. on lucky conventional to our able those guarantee same be high-performance we to vehicles are the to performance we deliver on them So

this given have differentiation high the we is -- success success a we so this confident rate And here. the feel a we that high have very with competition, --

to great because Euro awards, fully as emission the and got Luca face but X awards options. we years. we'll requirements was including also fitting have break fact, Which the for low In some are vehicles, X got in high-performance already, work combination was that we that it mentioning, a

also a technology. new testing great it's for ground So this

from from next Summerville Davidson. Our question Matt comes D.A.

of couple questions. A

'XX the how around looking production would what are First, color production your Friction early on maybe plan regional OEM, building helpful. sort outlook, for 'XX also thought be just you of you're and on at an outlook business

guys to holding that thought basis points vehicle to outperformance. relative And output. to of guess indeed, about a I then on margin XXX touch still on may I pretty gap had maybe starting close. But be talked you you're wide global

on little So maybe a touch bit. that

you, Thank Sure. Matt.

because been better than were QX production pleasant have and a the forecast. they QX original surprise So

XX% So worldwide. roughly plus the first half is

to saying, at look forecast what is full is million you more when conservative. This So today year, IHS vehicles be the is produced. roughly the digit. We XX.X tend for mid-single

more vehicle XX low continuously right? the So digit single we million, we XX on market that are growth. worldwide, produced, and outperform expect million to

North the the This probably is it to We about digits. that probably be We Then grew comes region. growing market think they growing you is think XX% digit. Year-to-date, America when Europe asked mid-single HX. going China flattish, at probably to and region. is for the is mid-single whereas

last basis say, outperformance I we that front of in have share outperform, well. little This would did idea, for As awarded an in I ever. will is we of outperformance points we EU To in keep of bit XXXX, extremely rare outstanding XXX% XXX% to XX OEM The a OES, will will XX China and on in talk new platforms. we a be that a still to of platform. said, axle QX. expect give you we axle about Friction, and the very outperformance premium XXX because award quoting years. been a for the was years. continue the are major launch largest the I China. OE fair second will but for expect last in EV the winning

the won think Cybertruck the So platform. on front We with of BYD. We have with visibility axle Tesla. you this the won about that

electrification outperformance the in to that really is see we for continue So future. a our tailwind

you're had maybe business color, most then seeing maybe deals seeing That's from great. what close the you a made. your the pipeline, Appreciate to and standpoint And M&A comment the segments, multiple incremental on all are maybe actionability, the beyond near-term Luca. where that activity X expectations you're one just what among for

at you the you when look function. know M&A strong M&A, have built we Sure a

interesting pipeline opportunities bolt-ons from those range through transaction. scale larger the to good to and see pipeline. continue move the We We build some the

which also and and and the really valves connectors. I the are on on, making because So particularly and focused stay will area asset pumps because we focus the that it's say our and flow, is the fit progress in pipeline means we strategic are quality, richer

would multiples up still think I that give a sellers high to we multiples that I they say from for it's standpoint, on high before. difficult pretty had And see those multiple

pay so some the with presented to cases, the to And think debunking of case pretty there assumptions been why were those. real I us that attention to that's and really opportunities. rationalizing with be discussing because are successful too the logic those that also And in we've we they in sellers business proved business And case optimistic.

we're that very able the attention the want are so valuation. us spend because we very sure presented provide close to to We're So attentive stay make on business on we that to the been to returns far. we've

Our from Baird. Halloran from next question Mike comes

questions two So here.

First, the comments heard on things. sequentially timing of margins into the Certainly, Maybe curve as pieces et costs, about the up for all of the talk you the cetera, volume, recovery Motion. Emmanuel's move about on just moving side XQ. given you

Mike. Yes, Yes.

mentioned, with then go Motion very excited And we're there's after. points to performance. prior At more basis as this is still over the we XXX Technologies So XXX XX%, year and sequentially.

and into we margin productivity of and more expansion will Tech for opportunities, products, our our of Motion of we line rapidly it many is in terms grow types expand engine brake be pad. and technology continue for see new growth The as to top productivity new types especially

productivity. So in runway of terms lot Friction, a of still

standpoint. also see if standpoint And rail at look from and and opportunities, we platform, many you pricing then a productivity both Axtone, KONI a our

longer of here in P&L. the yet So seeing cycle business, pricing, we're after. our more all still scratched is just surface, we the pricing much the And but impacts this there's not to in have because go

be Axtone at drive expect And to from XXXX to Friction, with continue be to in XX% going a from margin XXXX mark. to we this. well we're as in as in sometime Technologies So least really Motion KONI, further expansion position

on markets trends, can you there? little underlying between talked just And of anyway side, underlying what's versus following the a it. funnel. that some going in share question up earlier That's of underlying efforts gain helpful. delineate Appreciate in on funnel, And -- IP clearly on your on about a you then health robust pretty the help composition the

of you just and in as is chemicals. is funnel is well at of America, oil And year-over-year look across up you strong and Middle January is at Europe, also XX% up in when when couple very the Mike, about which funnel is talking the both stats. region, X, up up the also also North most the up East look Asia Pacific. XX% market, in So gas is in and we're since the on as the the

project. we think good, green a I that have

I think well. at as booking green it's project in of all in they good we terms represent our in in the look funnel as orders roughly the sight have you today, good. And -- a of there XX% booked opportunities of very if we projects. And that

Our next question comes Jones from Nathan from Stifel.

I have just asked. a questions been that follow have couple few ups, of

filled capacity you the on is one a capacity what for to this us could over period First adding addition per be give MK, up? just number and what time you that expect

vehicles. high-performing you're that's -- talking about these that Okay. are And

So low high value high terms products. volume, tend of to in and to mix these be tend be

years. about say, that from in talking go million XX let's you're XX the X maximum next, could anything So probably maybe XX million to pads X to

capacity our orders. know And we we have so in of book terms only We operate. incremental how when capacity, you

don't that's so than we infrastructure the an the expending Termoli sites infrastructure. XX% and standpoint by -- the than So by more from have more

then we're with AMG And the especially to as up Porsche segment. some But and started new going with receive orders, fill it we Daimler already from also prices we from receiving orders.

Okay.

be may pretty So in expecting bit, to the capacity margin not it expansions, that we be but would be this revenue may some you're quoting the not that high -- revenue be booking. good much you're further that

Yes.

think would I to much going The with is are our say that I price fair will it there brake platform. be higher our than expectations today. selling standpoint that And is it's than So higher be volumes profitability a to what from pads. be lower will business unitary per conventional we say

the was going Pad. ask Smart while. on I that update on haven't update it, at for I to while And we're a an heard an for

Just any being made update you've got there. on the progress

Sure. initiative the we that The have of innovation. part on Pad is Smart the

on Pad. several in Smart We have going projects the

with together some a on We opportunity, have as OEM I sensor, at in management project different than of we working some, unconventional a the business customers look and that are one would fleet terms say, side. where

Nathan. And couple a are from you X are with a together changing and OEMs then vehicle, sensors. well as autonomous the of et and cetera, working as X progressing view on a And on point breaking we lot happening technology those Tier of well, with of there the know, are

Just in inventory one we've on, CCT much lot a final XXXX. one destocking Industrials, going built on destocking. Clearly, in seen people of the too

improving. softening, market Some places seeing lead supply chains in are you're times coming are down,

is why there's happening. times underlying are too which is parts on built how much destocking of by pretty on driven much versus multiple People any lead Do color the demand, last that clearly actual of getting shorter. is you softening inputs on So going be this inventory Europe. in being may fact of have year

I think we before, American that were said enlarging job we also And the are also particularly destocking thanks the when of terms that team at to incredibly American the the that we terms North product side, we the has And European great Nathan. So in Emmanuel in are portfolio Industrial in orders. strong Defense is through and was area seeing in distribution QX. on that through as the where look connectors was distribution, strong the North of distribution. this Aero, offering the done

performance been distribution strong North exceptional and for has America in QX. in So because ITT connectors worldwide America distribution North in

from Joe Cowen. question TD today comes Giordano from last Our

guys. quarter, Giordano. on on [indiscernible] the is Joe This Congrats for

first So you question XX% is Motion the on my mentioned. guys margin Technologies,

worked a do how of guys rate pricing Like how margin. view there some the sustainability do term, that you you you long margin? that? view confirm to know as through, is I that but being do still run wanted Just

talked just the we So get XX% that first the step to is our target. think XX% about to I

that Technologies, Motion to for we committed You XX% targets. were may And last those long remember term. year, they

So we first about would I pretty say good feel this XX% step.

a terms we in of level into 'XX, in platforms continue cost coverage better the inflation think productivity, I be will a with we Technologies are next that recovers next kicking of to and feel year Rail. We at production platforms to in structurally especially the profitability. Motion have higher drive year And that as mentioned, drive also -- that we pricing aftermarket and new continue as also, I

to XX% good have XXXX in to next And our line long-term sight years. XXXX. that in X So XX% target a that the -- to of get X and we definitely to for on build then our

be your question would backlog. just And awesome. on That's last

currently, have much how into , do XXXX. or So speaking, broadly think coverage you you visibility I guys guys think, that provides

really So performance yes, the data from for backlog strong has strong us, a been commercial really a standpoint. point

million. backlog up IP versus in is It's Our almost million $XXX QX $XX QX. in

backlog that. about million. in we almost IP So revenue grow by able and $XX were despite to think grew our by XX% We that,

we year-to-date, So book-to-bill. have

to So definitely, this XXXX of grow that be expect level we in we'll backlog, IP. able with in

versus CCT, XX% In continue of to we and a year-over-year, was X.XX. the backlog accumulation. lot million also $XX QX, is up Backlog drive book-to-bill at

aerospace a strong here, really standpoint. from performance also commercial So

here, in so long-term commercial defense, And and in aerospace we backlog. accumulate

So CCT's this for bodes well in revenue XXXX.

is And some centered then and MT, rail around in as orders. backlog defense. here, accumulating strong mentioned, I And we're also mostly

line half good got really definitely and this because -- have we us also of say would the I gives second that for of of the long-cycle XXXX. into sight we awards some overall, So

but it's which was the X ago. backlog, of this higher just also as it And size, the than profitability is year better example, an it's not and

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