Itt Inc. · NYSE:ITT
Itt — Q4 2021 Earnings Presentation
27 slides from Itt's earnings presentation, Feb 10, 2022
Slide 1: 2021 Results and 2022 Outlook
2021 Results and 2022 Outlook February 10, 2022
Slide 2: Safe Harbor and Non-GAAP Disclosures
Safe Harbor and Non-GAAP Disclosures Safe Harbor This presentation contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather r
Slide 3: Key Messages
Key Messages Strong execution, resilient against worsening supply disruptions Q4 FY • Q4 Adjusted EPS of $1.06, +5% vs. 2020 • Executed pricing actions to mitigate $34M of raw material inflation in Q4 Organic Orders Growth +10% +20% • FY adjusted EPS of $4.05, +27% vs. 2020, +6% vs. 2019 +130 bps ad
Slide 4: 2022 Growth Priorities
2022 Growth Priorities Momentum Exiting 2021 Accelerating Innovation Deploying Our Capital Orders R&D Capex Balance Sheet Capacity $2.92B ~$110M ~$155M ~$2B +20% $95M ~16% ~75% $600M $2.39B Organic increase $88M increase growth 2x Adj. FCF 2020 2021 2021 2022E 2021 2022E Deployed in 2021 Available C
Slide 5: Innovation in Action
Innovation in Action Future Growth Platform Advancing Product Innovation Emerging Connector Growth • Awarded content on more than 30 • i-ALERT® monitoring sensor installed over • Awarded contract to deliver Enidine EV platforms 5,000 miles of pipeline assets actuators on Airbus A321neo • First KONI
Slide 6: Q4 Summary Results
Q4 Summary Results $ in millions, except EPS Adjusted Operating Revenue Adjusted EPS Adjusted Free Cash Flow Income and Margin $709M $115M $1.06 $372M $685M $112M $1.01 16.8% $301M 15.8% Q4 2020 Q4 2021 Q4 2020 Q4 2021 Q4 2020 Q4 2021 Q4 2020 Q4 2021 (-2%) Organic revenue 16.8% Adjusted operating ma
Slide 7: Q4 Segment Summary Results
Q4 Segment Summary Results Motion Technologies Industrial Process Connect & Control Technologies $ millions 2021 vs 2020 $ millions 2021 vs 2020 $ millions 2021 vs 2020 Revenue $324 (-8%) Revenue $216 (-5%) Revenue $146 +13% Adjusted Segment Adjusted Segment Adjusted Segment $64 (-7%) $34 (-1%) $27
Slide 8: 2022 End Market and ITT Outlook
2022 End Market and ITT Outlook % of 2021 ‘22 Demand Trends 1H Outlook Revenue • Inventory levels at historic lows in NA, Europe; OE chip shortage limits pace of rebound 42% Automotive • Persistent, high raw material prices will impact 1H adjusted segment margin Chemical & • Long-term demand intact,
Slide 9: 2022 Guidance
2022 Guidance Assumptions +9% to +11% Organic • Supply chain disruptions in 1H, expect 2022 topline constraints Revenue • Raw material prices remain at inflated levels in 1H 2022 +7% to +9% Total • Aero recovery further accelerates in 2H and into 2023 17.6% to 18.5% Adjusted segment • Higher project
Slide 10: 2022 Adjusted EPS Bridge
2022 Adjusted EPS Bridge ($0.58) to ($0.72) ($0.14) to ($0.18) $1.36 to $1.53 ($0.05) $0.04 to $0.05 - Primarily 1H impact +6% to given relatively minor • Friction capacity ($0.16) to ($0.20) inflation impact in • Connectors’ portfolio • Environmentally friendly innovation + 1% reduction in +16% 1H
Slide 11: Summary
Summary • Strong 2021 performance • Overcame $80 million of inflationary headwinds • Overcame unprecedented supply chain challenges • +20% FY 2021 organic orders growth; strong backlog paving the way • Capital deployment firepower, on every front and ready to execute M&A ITT Capital Markets Day Plan
Slide 12: Supplemental Data
Supplemental Data Y itt
Slide 13: Q4 and FY 2021 Orders
Q4 and FY 2021 Orders $252M $941M Highlights $184M Industrial $798M +17% ▪ Organic orders +10% in Q4 after +27% in Q3 and FY organic +47% in Q2 Process growth ▪ 18% organic growth in backlog Q4 2020 Q4 2021 FY 2020 FY 2021 ▪ Driven primarily by IP (+25%) and CCT (+16%) $606M ▪ IP sequential orders g
Slide 14: Q4 Adjusted Segment Operating Margin
Q4 Adjusted Segment Operating Margin vs. PY Q4’20 adjusted segment +130 bps Expansion operating margin 16.9% + Shop floor productivity Volume, mix, price and other +250 bps +100 bps + Footprint rationalization operational Productivity Actions +350 bps margin + Strategic commercial actions expansion
Slide 15: Q4 Adjusted EPS Bridge
Q4 Adjusted EPS Bridge ($0.31) $0.35 ($0.02) $0.01 $0.02 +5% Growth - Raw material inflation, + FX Hedge + $117M in repurchases + Organic sales growth mainly steel for full year + Lower tax rate + Productivity - Motion Tech most impacted - Liquidation of legacy JV - Supply chain disruptions (expedit
Slide 16: FY Summary Results
FY Summary Results Adjusted Operating Orders Revenue Adjusted EPS Income and Margin $2.92B $443M $4.05 $2.81B $2.85B $421M $2.77B $3.81 16.0% 14.8% $356M $2.48B $2.39B 14.4% $3.20 // // // // FY 2019 FY 2020 FY 2021 FY 2019 FY 2020 FY 2021 FY 2019 FY 2020 FY 2021 FY 2019 FY 2020 FY 2021 +20% Organic
Slide 17: Full Year Adjusted EPS Bridge
Full Year Adjusted EPS Bridge ($0.76) ($0.11) $0.16 +27% $1.60 ($0.14) $0.06 Growth - Raw material $0.04 inflation, mainly + Friction capacity steel expansion - Reversal of - Full year impact temporary cost + $117M in + Connector R&D repurchases for ~$84M savings enacted investments full year during
Slide 18: Key Performance Indicators & Non-GAAP Measures
Key Performance Indicators & Non-GAAP Measures Management reviews a variety of key performance indicators including revenue, segment operating income and margins, earnings per share, order growth, and backlog, some of which are calculated on a non-GAAP basis. In addition, we consider certain measure
Slide 19: Non-GAAP Reconciliation: Reported vs. Organic Revenue / Orders Q4 2021
ITT Inc. Non-GAAP Reconciliation Reported vs. Organic Revenue / Orders Fourth Quarter 2021 & 2020 (In Millions) (all amounts unaudited) (As Reported - GAAP) (As Adjusted - Organic) (A) (B) (C) (D) (E) (F) = A-D-E (G) =C-D-E (H) = G / B $ Change % Change Revenue / $ Change % Change 2021 vs. 2021 vs.
Slide 20: Non-GAAP Reconciliation: Adjusted Segment Operating Income and Margin Q4
ITT Inc. Non-GAAP Reconciliation Reported vs Adjusted Segment Operating Income & Segment Operating Margin Fourth Quarter 2021 & 2020 (In Millions) (all amounts unaudited) Q4 2021 Q4 2021 Q4 2021 Q4 2020 Q4 2020 Q4 2020 % Change % Change As Special As As Special As As Reported As Adjusted Reported It
Slide 21: Non-GAAP Reconciliation: Adjusted Income and EPS Q4 2021
ITT Inc. Non-GAAP Reconciliation Reported vs. Adjusted Income from Continuing Operations & Adjusted EPS Fourth Quarter 2021 & 2020 (In Millions, except per share amounts) (all amounts unaudited) 2021 2021 Q4 2021 Q4 2021 Q4 2020 Q4 2020 vs. 2020 vs. 2020 As Non-GAAP As As Non-GAAP As As As Reported
Slide 22: Non-GAAP Reconciliation: Organic Revenue / Orders Full Year 2021
ITT Inc. Non-GAAP Reconciliation Reported vs. Organic Revenue / Orders Full Year 2021 & 2020 (In Millions) (all amounts unaudited) (As Reported - GAAP) (As Adjusted - Organic) (A) (B) (C) (D) (E) (F) = A-D-E (G) =C-D-E (H) = G / B $ Change % Change Revenue / $ Change % Change 2021 vs. 2021 vs. Acqui
Slide 23: Non-GAAP Reconciliation: Adjusted Segment Operating Income and Margin FY
ITT Inc. Non-GAAP Reconciliation Reported vs Adjusted Segment Operating Income & Segment Operating Margin Full Year 2021 & 2020 (In Millions) (all amounts unaudited) FY 2021 FY 2021 FY 2021 FY 2020 FY 2020 FY 2020 % Change % Change As Special As As Special As As Reported As Adjusted Reported Items A
Slide 24: Non-GAAP Reconciliation: Adjusted Income and EPS Full Year 2021
ITT Inc. Non-GAAP Reconciliation Reported vs. Adjusted Income from Continuing Operations & Adjusted EPS Full Year 2021 & 2020 (In Millions, except per share amounts) (all amounts unaudited) 2021 2021 FY 2021 FY 2021 FY 2020 FY 2020 vs. 2020 vs. 2020 As Non-GAAP As As Non-GAAP As As As Reported Adjus
Slide 25: Non-GAAP Reconciliation: Free Cash Flow and Margin Full Year
ITT Inc. Non-GAAP Reconciliation Free Cash Flow and Free Cash Flow Margin Full Year 2021 & 2020 (In Millions) (all amounts unaudited) FY 2021 FY2020 Net Cash - Operating Activities #A $ (8.4) $ 435.9 Capital expenditures 88.4 63.7 Free Cash Flow (96.8) 372.2 Asbestos divestiture payment 398.0 - Adju
Slide 26: Non-GAAP Reconciliation: GAAP vs. Adjusted EPS Guidance 2022
ITT Inc. Non-GAAP Reconciliation GAAP vs. Adjusted EPS Guidance Full Year 2022 (Per share amounts) (all amounts unaudited) 2022 Full-Year Guidance Low High EPS from Continuing Operations - GAAP $ 4.22 $ 4.66 Estimated restructuring, net of tax 0.05 0.02 Other special items, net of tax 0.03 0.02 EPS
Slide 27: Non-GAAP Reconciliation: Free Cash Flow Guidance 2022
ITT Inc. Non-GAAP Reconciliation Free Cash Flow Guidance Full Year 2022 (In Millions) (all amounts unaudited) 2022 Full-Year Guidance Low High Net Cash - Operating Activities $ 455.0 $ 480.0 Capital expenditures 155.0 155.0 Free Cash Flow 300.0 325.0 Revenue #A $ 2,986.0 $ 2,986.0 Free Cash Flow mar