ITT (ITT) - 2023 Q3 - Quarterly Report

Financial Performance - Net income for Q3 2023 was $111.8 million, an increase of 8.3% compared to$ 103.2 million in Q3 2022[19] - Comprehensive income attributable to ITT Inc. for Q3 2023 was $81.2 million, up from$ 69.2 million in the same quarter last year, reflecting a growth of 17.9%[19] - For the nine months ended September 30, 2023, net income reached $321.4 million, a significant increase of 26.9% from$ 253.3 million in the prior year[19] - Total comprehensive income for the nine months ended September 30, 2023, was $286.9 million, compared to$ 137.1 million for the same period in 2022, indicating a substantial increase of 109.5%[19] - For Q3 2023, ITT Inc. reported total revenue of $822.1 million, a 9.1% increase from$ 753.6 million in Q3 2022[43] - For the nine months ended September 30, 2023, total revenue was $2,453.9 million, a 10.9% increase from$ 2,213.1 million in the same period of 2022[43] - The nine-month operating income was $409.4 million, up 29.1% from$ 317.1 million in the prior year, with an operating margin of 16.7% compared to 14.3%[43] Segment Performance - Motion Technologies segment revenue increased to $359.5 million in Q3 2023 from$ 342.2 million in Q3 2022, with an operating income of $59.4 million and an operating margin of 16.5%[43] - Industrial Process segment revenue rose to$ 279.8 million in Q3 2023 from $248.5 million in Q3 2022, with operating income increasing to$ 64.7 million and an operating margin of 23.1%[43] - Connect & Control Technologies segment revenue grew to $184.0 million in Q3 2023 from$ 163.2 million in Q3 2022, with operating income of $33.2 million and an operating margin of 18.0%[43] Assets and Liabilities - As of September 30, 2023, total assets increased to$ 3,802.3 million from $3,780.3 million as of December 31, 2022, reflecting a growth of 0.6%[21] - Total current liabilities decreased to$ 1,044.0 million from $1,185.5 million, a reduction of 11.9%[21] - The total shareholders' equity as of September 30, 2023, was$ 2,419.2 million, up from $2,257.4 million at the end of 2022, indicating a growth of 7.2%[21] - The total debt and finance leases decreased to$ 251.9 million as of September 30, 2023, from $458.7 million as of December 31, 2022, a significant reduction of about 45%[81] - Commercial paper outstanding decreased to$ 242.7 million as of September 30, 2023, from $448.3 million as of December 31, 2022, a decline of approximately 46%[83] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2023, was$ 367.6 million, significantly higher than $115.2 million in the prior year[23] - The company reported a net cash outflow from investing activities of$ 142.0 million for the nine months ended September 30, 2023, compared to an outflow of $244.8 million in the same period of 2022[23] - Capital expenditures for the nine months ended September 30, 2023, were$ 68.5 million, slightly lower than $73.7 million in the same period of 2022[23] Shareholder Returns - Dividends paid increased to$ 71.9 million in 2023 from $66.1 million in 2022, reflecting an increase of 11.0%[23] - The company repurchased and retired 0.7 million shares of common stock for$ 60.5 million during the nine months ended September 30, 2023, compared to 3.0 million shares for $245.3 million in the same period of 2022[93] - An indefinite term$ 1,000 million open-market share repurchase program was approved on October 4, 2023, to commence after the completion of the existing $500 million program[94] Challenges and Risks - ITT Inc. is facing challenges such as supply chain disruptions and raw material shortages, which could impact future performance[13] - The company is actively managing risks related to foreign currency fluctuations and their potential impact on revenues[13] - The company anticipates continued growth driven by strategic plans and market expansion initiatives, although specific numerical guidance was not provided[10] Tax and Subsidies - The effective tax rate for Q3 2023 was 21.1%, up from 13.7% in Q3 2022, primarily due to prior year benefits from a valuation allowance reversal[51] - The company recognized a benefit of$ 6.3 million related to energy subsidies for the nine months ended September 30, 2023, which was recorded within Costs of revenue[64] Acquisitions - ITT Inc. completed the acquisition of Micro-Mode Products, Inc. for a purchase price of $79.3 million on May 2, 2023, with results reported in the Connect & Control Technologies segment[29] - The company signed an agreement to acquire Svanehøj Group A/S for approximately$ 395 million, expected to close in the first quarter of 2024[117] Employee Compensation - Total share-based compensation expense for the three months ended September 30, 2023, was $5.4 million, an increase from$ 5.0 million in the same period of 2022[91] - The company had no open-market share repurchases during Q3 2023, contrasting with repurchases of 0.1 million shares for $4.4 million in Q3 2022[93]