ANNUAL
REPORT
2023
ANNUAL REPORT
2 0 2 3
A B O U T U S
At ITT, we have a clear purpose as an organization – to provide our customers with
cutting-edge solutions to help solve their most critical needs across key global end
markets. Our continuous improvement mindset drives our commitment to evolving our
capabilities as a multi-industrial technology, manufacturing and engineering leader.
REVENUE PROFILE
FINANCIAL HIGHLIGHTS
(in millions, except per share data)
Segments
$3,283
$555
$2,988
$2,765
$443
$474
16.0%
15.9%
16.9%
Motion
Technologies
Industrial
Process
Connect &
Control
Technologies
North America
Europe
Asia
Middle East &
Africa
South America
Automotive & Rail
Chemical &
Industrial Pumps
Regions
Aerospace &
Defense
End Markets
General Industrial
Energy
*For a reconciliation of non-GAAP to GAAP results, please refer to the section titled “Results and Filings” on our
website at investors.itt.com
FY 2021
FY 2022
FY 2023
FY 2021
FY 2022
FY 2023
Revenue
$4.44
$4.05
Adjusted Operating
Income & Adjusted
Operating Margin*
$5.21
$430
$301[1]
$174
FY 2021
FY 2022
FY 2023
FY 2021
FY 2022
FY 2023
Adjusted Earnings Per
Share*
Free Cash Flow*
[1]Excluding Q2 2021 $398M asbestos payment
ANNUAL REPORT
2 0 2 3
CEO LETTER
Dear stakeholders,
I, the ITT leadership team and the entire board are all very proud
of our strong performance in 2023. I’m very grateful for all the
hard work and commitment of our ITTers around the world who
delivered these strong results for our customers and for our
stakeholders. Thank you!
Europe, China and India, we continue to gain market share and
develop new innovations for future growth. As an example, we are
developing draft gear for the Digital Automated Coupler in Europe
which is a key element of the digital transformation of the coupling
and decoupling process of wagons in rail.
from
to differentiate
the competition
ITT’s ability
through
performance and innovation enabled us to deliver these financial
results: revenue up 8%, operating margins up 100 basis points,
adjusted earnings per share (EPS) up 17% surpassing $5 and
free cash flow of more than $400 million with 13% free cash
flow margin. Our differentiation from the competition was also
key to ITT’s orders’ growth across the business which will feed
future market share gains in Motion Technologies (MT) Friction
automotive and rail, Industrial Process (IP) pumps and valves,
and Connect & Control Technologies (CCT) connectors.
Let me share some more detail on ITT’s accomplishments in 2023.
Differentiation through performance
Execution is our focus day in and day out at ITT with our SQDC
framework (Safety, Quality, Delivery, Cost) which magnifies focus
on the performance drivers of our businesses. This also enables
us to generate stronger profitability, even in a slow market, as we
saw in 2023.
In MT, we grew market share in both EVs and conventional
vehicles by delivering a near-perfect quality performance with
less than one defective part per million. Similarly, in IP our team
in Saudi Arabia achieved close to 100% on-time delivery in the
region for the second straight year. IP also grew its adjusted
operating margin 330 basis points to over 22% thanks to the
lean initiatives deployed at our sites, eclipsing its long-term
target in just two years. Finally, CCT flew past its pre-pandemic
revenue levels, reaching close to $700 million in 2023, driven by
aerospace and defense growth, overcoming challenges related
to connector destocking in industrial markets and supply chain
disruptions in aerospace. In 2023, our teams continued to deliver
operational excellence for our customers.
Differentiation through customer intimacy and
innovation
We also continue to differentiate with highly engineered products
and solutions that we design and deliver for our customers to
solve their most critical problems. In 2023 we funded more than
$100 million of organic investments to drive further share gains.
In MT, we developed Euro 7-compliant brake pad technology years
ahead of the regulations’ implementation. We are also entering
the high-performance vehicle segment through a ~$55 million
investment to expand our facility in Termoli, Italy. Notably, we have
already secured numerous high-performance brake pad awards
ahead of our production launch expected in late 2024. And
in rail, which benefits from large public investments in the U.S.,
In IP, our Bornemann pumps have emerged as a leader in large
anti-flaring and decarbonization projects, including at the world’s
largest carbon capture site. And with the acquisition of Svanehøj,
we’ve expanded our flow portfolio further with cryogenic pumps
that manage critical liquids for the energy transition in the marine
sector. With our global reach through our production facilities and
a continued focus on close customer collaboration, we secured
the largest single contract ever awarded to IP: a three-year, up
to $80 million agreement to provide ExxonMobil with centrifugal
pumps and aftermarket services.
Finally, in CCT, we won content on new Vertical Take-off and
Landing (VTOL) platforms as zero-emission aircrafts emerge
for short haul travel. Our connectors business also developed
and brought to market an energy storage connector series in
under six months to address the need for improved power and
signal connection in battery packs used in solar and wind energy
systems. The tailwinds of electrification and decarbonization are
good for the world, our customers and they are good for ITT.
Acceleration in financial performance
As a result of our performance and innovation, we drove a
significant step-up in our financial results in 2023. We grew orders
7% to build a record ending backlog over $1 billion. Revenue was
up 8% and eclipsed the $3 billion revenue mark. On profitability, we
expanded operating margin 100 basis points, bringing ITT closer
to our long-term margin targets in each segment. Finally, we grew
adjusted EPS 17%, surpassing $5 for the first time, and generated
more than $400 million of free cash flow.
As a result of this acceleration, our 49% total shareholder return for
2023 was well ahead of most of our peers and all major indexes,
which is a testament to ITT’s performance in 2023. Similarly, over
the 3- and 5-year periods, ITT continued to outpace both the
S&P 400 and S&P 500 indices, demonstrating the strength of our
business and our ability to differentiate and create value.
On capital deployment, we committed to deploy $750 million
of capital to a combination of organic investments, M&A, our
dividend and share repurchases. On M&A, we acquired specialty
connectors manufacturer Micro-Mode in April 2023, and Svanehøj,
a leading pump provider for cryogenic applications, which closed
in early 2024. We also divested two non-core product lines to
continue to streamline our portfolio. We increased our dividend by
10 percent following increases of 30% and 20% in 2021 and 2022,
respectively, and authorized a $1 billion share repurchase program
in October. In total, we have deployed more than $2.5 billion since
2019, demonstrating our commitment to effectively allocate capital
to drive long-term value creation.
ANNUAL REPORT
2 0 2 3
Advancing our sustainability priorities
Sustainability continues to be a priority for ITT. On safety, 60% of
our sites had zero incidents in 2023 and our injury severity rate
decreased by roughly 5%. Our efforts will not stop until we have
reached zero incidents at our plants worldwide. In 2023, we also
published our sustainability update detailing progress in 2022,
including a 7% reduction in GHG emissions and a 10% increase
in spending with diverse U.S. suppliers. Finally, we committed
~$25 million to green projects across ITT and activated new solar
installations in China, Italy, Mexico, South Korea, the Netherlands
and the United States that will help deliver on our carbon emission
reduction promise.
Moving to 2024
In 2023, ITTers all around the world executed in all key areas:
orders, sales, margin, cash and capital deployment. We invested
in our people and in our businesses, both organically and
inorganically, to ensure we continue to differentiate in the future.
We entered 2024 with a record backlog, an active M&A pipeline,
a funnel of innovative products and our ITT drive to always get
better. For ITT, our journey of continuous improvement and of
differentiation continues into 2024 and beyond.
Thank you for your interest in ITT. I look forward to sharing more
with you in the future.
Sincerely,
Luca Savi
Chief Executive Officer & President
ITT Inc.
ANNUAL REPORT
2 0 2 3
OUR TEAM
ITT BOARD OF
DIRECTORS
Timothy H. Powers
Chairman of the ITT Board of
Directors, Former Chairman,
Chief Executive Officer and President,
Hubbell, Incorporated
Nicholas C. Fanandakis
Former Executive Vice President,
Chief Financial Officer,
DuPont de Nemours
Luca Savi
Chief Executive Officer and President,
ITT Inc.
Kevin Berryman
Former Chief Financial Officer and
President at Jacobs Solutions, Inc.
Donald DeFosset Jr.
Former Chairman, President and
Chief Executive Officer of Walter
Industries Inc.
Nazzic Keene
Former Chief Executive Officer at
Science Applications International
Corporation (SAIC)
Rebecca A. McDonald
Former Chief Executive Officer,
Laurus Energy, Inc.
Cheryl L. Shavers
Chairman and Chief Executive Officer,
Global Smarts, Inc.
Sharon Szafranski
Executive Vice President – Welding,
Illinois Tool Works
ITT
LEADERSHIP
TEAM
Luca Savi
Chief Executive Officer
and President
Davide Barbon
Senior Vice President
and President, Motion Technologies
and Asia Pacific
Michael Guhde
Senior Vice President and President,
Connect & Control Technologies
Maurine Lembesis
Senior Vice President and Chief
Human Resources Officer
Nicola Maricelli
Vice President,
Global Supply Chain
Lori B. Marino
Senior Vice President, General
Counsel and Secretary
Emmanuel Caprais
Senior Vice President and Chief
Financial Officer
Bartek Makowiecki
Fernando Roland
Senior Vice President, Strategy and
Business Development
Senior Vice President and President,
Industrial Process
SHAREHOLDER
INFORMATION
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche LLP
695 East Main Street
Stamford, CT 06901
TRANSFER AGENT & REGISTRAR
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
(888) 217-2614
ETHICS CHAMPION PROGRAM
The ITT Ethics Champion Program encourages employees to
report possible violations of our Code of Corporate Conduct or
other misconduct. The ITT Ethics Champion can be contacted at:
ethics.champion@itt.com
FOR GENERAL CORPORATE AND FINANCIAL
INFORMATION, CONTACT:
Mark Macaluso, Vice President, Investor Relations
and Global Communications
mark.macaluso@itt.com
ANNUAL MEETING OF SHAREHOLDERS
The annual meeting will be held at 9 a.m. EDT on
Wednesday, May 15, 2024, virtually, via a live webcast
at www.virtualshareholdermeeting.com/ITT2024
CORPORATE GOVERNANCE
Copies of the ITT Code of Conduct, Corporate Governance
Principles and Committee charters are available on our website:
www.itt.com
CEO & PRESIDENT
Luca Savi
WORLDWIDE EMPLOYEES
10,600+
FOUNDED
1920
NYSE
ITT
(This page has been left blank intentionally.)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
FORM 10-K
☑
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from_____ to _____
Commission File No. 001-05672
ITT INC.
Incorporated in the State of Indiana
81-1197930
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
100 Washington Boulevard, 6th Floor
Stamford, Connecticut 06902
(Principal Executive Office)
Telephone Number: (914) 641-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, par value $1.00 per share
ITT
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the
Exchange Act.
☑ Large accelerated filer
☐ Accelerated filer
☐ Non-accelerated filer
☐ Smaller reporting company
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. Yes þ No ¨
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ
The aggregate market value of common stock of the registrant held by non-affiliates of the registrant on June 30, 2023 was approximately $7.6 billion. As of
February 9, 2024, there were 82.1 million shares of the registrant's common stock outstanding.
Portions of the registrant’s Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for its 2024 Annual
Meeting of Shareholders are incorporated by reference in Part II and Part III of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Description of Business
ITEM
PART I
1
1A Risk Factors
1B Unresolved Staff Comments
1C Cybersecurity
2
Properties
3
Legal Proceedings
4
Mine Safety Disclosures
*
Information About Our Executive Officers
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
PART II
5
6
7
7A Quantitative and Qualitative Disclosures About Market Risk
8
9
9A Controls and Procedures
9B Other Information
9C Disclosures Regarding Foreign Jurisdictions that Prevent Inspections
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
10 Directors, Executive Officers and Corporate Governance
11 Executive Compensation
12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
13 Certain Relationships and Related Transactions, and Director Independence
14 Principal Accounting Fees and Services
PART IV
15 Exhibits and Financial Statement Schedule
16 Form 10-K Summary
Exhibit Index
Signatures
*
Included pursuant to the General Instruction to Item 401 of Regulation S-K.
PAGE
1
11
20
20
21
22
23
22
24
25
26
44
45
45
46
47
47
49
49
49
49
49
50
50
II-1
II-3
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities
and Exchange Commission (the SEC). The SEC maintains a website at www.sec.gov on which you may access our
SEC filings. In addition, we make available free of charge at www.itt.com/investors copies of materials we file with,
or furnish to, the SEC as soon as reasonably practical after we electronically file or furnish these reports, as well as
other important information that we disclose from time to time. In addition, in certain sections of this Annual Report
on Form 10-K we refer readers to additional information that is contained on our website, or that can be accessed
through our website. The information on our website, including the materials we are specifically referencing, do not
constitute a part of this Annual Report on Form 10-K. We have included our website address only as an inactive
textual reference and do not intend it to be an active link to our website.
Our corporate headquarters is located at 100 Washington Boulevard, 6th Floor, Stamford, Connecticut 06902
and the telephone number of this location is (914) 641-2000.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Some of the information included herein includes 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 represent only a belief regarding future events based on current
expectations, estimates, assumptions and projections about our business, future financial results, the industry in
which we operate, and other legal, regulatory and economic developments. These forward-looking statements
include, but are not limited to, future strategic plans and other statements that describe the company’s business
strategy, outlook, objectives, plans, intentions or goals, and any discussion of future events and future operating or
financial performance.
We use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “future,”
“may,” “will,” “could,” “should,” “potential,” “continue,” “guidance” and other similar expressions to identify forward-
looking statements. Forward-looking statements are uncertain and, by their nature, many are inherently
unpredictable and outside of ITT’s control, and are subject to known and unknown risks, uncertainties and other
important factors that could cause actual results to differ materially from those expressed or implied in, or
reasonably inferred from, such forward-looking statements.
Where in any forward-looking statement we express an expectation or belief as to future results or events, such
expectation or belief is based on current plans and expectations of our management, expressed in good faith and
believed to have a reasonable basis. However, we cannot provide any assurance that the expectation or belief will
occur or that anticipated results will be achieved or accomplished.
Among the factors that could cause our results to differ materially from those indicated by forward-looking
statements are risks and uncertainties inherent in our business including, without limitation:
•
•
•
•
•
•
•
•
•
•
•
•
uncertain global economic and capital markets conditions, which have been influenced by heightened
geopolitical tensions, inflation, changes in monetary policies, the threat of a possible global economic
recession, trade disputes between the U.S. and its trading partners, political and social unrest, and the
availability and fluctuations in prices of energy and commodities, including steel, oil, copper and tin;
fluctuations in interest rates and the impact of such fluctuations on customer behavior and on our cost of
debt;
fluctuations in foreign currency exchange rates and the impact of such fluctuations on our revenues,
customer demand for our products and on our hedging arrangements;
volatility in raw material prices and our suppliers’ ability to meet quality and delivery requirements;
risk of liabilities from recent mergers, acquisitions, or venture investments, and past divestitures and spin-
offs;
our inability to hire or retain key personnel;
failure to compete successfully and innovate in our markets;
failure to manage the distribution of products and services effectively;
failure to protect our intellectual property rights or violations of the intellectual property rights of others;
the extent to which there are quality problems with respect to manufacturing processes or finished goods;
the risk of cybersecurity breaches or failure of any information systems used by the Company, including
any flaws in the implementation of any enterprise resource planning systems;
loss of or decrease in sales from our most significant customers;
•
•
•
•
•
•
•
•
risks due to our operations and sales outside the U.S. and in emerging markets, including the imposition
of tariffs and trade sanctions;
fluctuations in demand or customers’ levels of capital investment, maintenance expenditures, production,
and market cyclicality;
the risk of material business interruptions, particularly at our manufacturing facilities;
risks related to government contracting, including changes in levels of government spending and
regulatory and contractual requirements applicable to sales to the U.S. government;
fluctuations in our effective tax rate, including as a result of changing tax laws and other possible tax
reform legislation in the U.S. and other jurisdictions;
changes in environmental laws or regulations, discovery of previously unknown or more extensive
contamination, or the failure of a potentially responsible party to perform;
failure to comply with the U.S. Foreign Corrupt Practices Act (or other applicable anti-corruption
legislation), export controls and trade sanctions; and
risk of product liability claims and litigation.
Refer to Item 1A, Risk Factors for more information on factors that could cause actual results or events to differ
materially from those anticipated and disclosed within this Annual Report on Form 10-K, our Quarterly Reports on
Form 10-Q and in other documents we file from time to time with the SEC.
The forward-looking statements included in this Annual Report on Form 10-K speak only as of the date of this
report. We undertake no obligation (and expressly disclaim any obligation) to update any forward-looking
statements, whether written or oral or as a result of new information, future events or otherwise.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(Amounts reported in this Annual Report on Form 10-K, except per share amounts, are stated in millions unless otherwise specified. References
herein to "ITT," "the Company," and such words as "we," "us," and "our" include ITT Inc. and its subsidiaries on a consolidated basis, unless the
context otherwise indicates.)
COMPANY OVERVIEW
ITT is a diversified manufacturer of highly engineered critical components and customized technology solutions
primarily for the transportation, industrial and energy markets. We manufacture components that are integral to the
operation of equipment, systems and manufacturing processes in these key markets. Our products enable
functionality for applications where reliability and performance are critically important to our customers and the
users of their products. We operate through three primary segments: Motion Technologies (MT), Industrial Process
(IP), and Connect & Control Technologies (CCT).
• $3.3 billion of sales across approx. 125 countries
• Global presence with 67% of revenue outside the U.S.
• Approx. 10,600 employees in 37 countries
• Balanced and diversified portfolio
2023 COMPANY SNAPSHOT
MT is a global manufacturer of highly engineered and durable brake pads, shock absorbers and damping
technologies for the automotive and rail markets. IP is a global manufacturer of industrial pumps, valves, and
monitoring and control systems, and provides aftermarket services for the energy, chemical and petrochemical,
pharmaceutical, general industrial, mining, pulp and paper, food and beverage, and biopharmaceutical markets.
CCT is a global designer and manufacturer of harsh-environment connectors and critical energy absorption and flow
control components, primarily for the aerospace, defense and industrial markets. For additional segment
information, see Segment Information section.
Business Model and Strategy
Our businesses share a common, repeatable operating model centered on our engineering capabilities. Each
business applies its technology and engineering expertise to solve our customers' most pressing challenges. Our
technological applications foster an ongoing business relationship with our customers which provides us with unique
insight into our customers' requirements while enabling us to develop solutions to better assist our customers
achieve their business goals. Our technology and customer intimacy together provide opportunities to capture
recurring revenue streams, aftermarket opportunities and
from original equipment
manufacturers (OEMs).
long-lived platforms
We create long-term stakeholder value through our four strategic priorities of customer centricity, operational
excellence, effective capital deployment, and sustainability and innovation. Our strategy is designed to achieve
premier financial performance by combining profitable growth with operational improvements, while keeping our
customers at the center of everything we do.
Our operational focus centers on safety, quality, on-time delivery and productivity. We are on a journey to
establish a higher performance culture that goes beyond the factory floor to improve the efficiency and effectiveness
of all critical processes in the value chain. These initiatives encompass not only continuous improvement principles,
1
Revenue by Segment (2023)MT 44%IP 34%CCT 22%Revenue by Geography (2023)North America 42%Europe 32%Asia 17%Other 9% but also leadership, talent and cultural aspects. For additional information, refer to Human Capital Management
below.
When value-generating opportunities arise, we seek to expand into new markets and invest in new products
that leverage our deep engineering capabilities. We continue to evaluate investments that will enable us to
strategically and efficiently deploy capital, including close-to-core acquisitions that have unique and differentiated
products, services and technologies. Effective capital deployment, including resource optimization and a disciplined
focus on cash flow management, are a major part of how we plan to achieve our strategy and deliver strong
shareholder returns.
Primary Businesses and Brands
Our brands have a strong international presence across many emerging markets, including China, India,
Mexico, Brazil and Saudi Arabia. Below is a list of the key brands in each segment.
MT
IP
CCT
• ITT Friction TechnologiesTM
• Axtone®
• Goulds PumpsTM
• PRO Services®
• Rheinhütte Pumpen®
• Cannon®
• Aerospace ControlsTM
• Neo-Dyn® Process Controls
OUR KEY BRANDS
• KONI®
• NovitekTM
• Bornemann®
• C'treat®
• HabonimTM
• VEAM®
• Enidine®
• Conoflow®
• Wolverine Advanced Materials®
• GALT.®
• Engineered Valves®
• i-ALERT®
• BIW Connector Systems®
• Compact AutomationTM
• Micro-ModeTM
Environmental, Social & Governance
Environmental, social & governance (ESG) practices play an essential role in our business and are firmly rooted
in how we conduct our operations and in our daily decisions. Our products, manufacturing processes and
innovations reflect our drive to help make the world and the communities we serve more sustainable. We believe
ingraining ESG priorities into our strategy will drive long-term growth and shareholder value and help our customers
meet their ESG goals and, furthermore, is simply the right thing to do.
Environmental
We recognize climate change is a global crisis and we are committed to doing our part to reduce the
environmental impact of our operations. Our approach to environmental stewardship falls into three categories:
▪
▪
▪
Development of innovative products that help customers reduce their greenhouse gas (GHG) emissions,
achieve their sustainability goals and comply with emissions reduction regulations;
Investment in technologies to reduce CO2 emissions, waste sent to landfills and water usage and increase
our energy supply security through solar installations; and
Development of a credible path to carbon neutrality through our Reduce–Avoid–Offset framework, in which
we seek to reduce our carbon footprint and commit to using renewable energy sources.
We partner with our customers to solve challenging problems and deliver best-in-class solutions. ITT's products
enable our customers to operate more efficiently, reduce their total cost of ownership and produce sustainable,
environmentally friendly technologies and processes.
At the same time, it is a business imperative for us to ensure our operations are efficient, sustainable and
environmentally conscious. In 2021, we launched our Reduce–Avoid–Offset framework as part of our development
of a credible plan to carbon neutrality. After developing the framework, we announced a goal of reducing our global
Scope 1 and 2 GHG emissions for all of ITT by 10% by the end of 2026, compared to 2021. In 2022, we launched a
pilot program at our three most energy-intensive locations geared towards more precise measurement and analysis
of Scope 1 and 2 GHG emissions. In 2023, we expanded the pilot program to sites in Czechia and Mexico. As part
2
of this, we are also in the process of collecting and measuring preliminary Scope 3 emissions to further understand
the source of our emissions and how to most accurately reduce them.
We are subject to stringent federal, state, local, and foreign environmental laws and regulations concerning air
emissions, water discharges and waste disposal. In the U.S., these include, but are not limited to, the Federal Clean
Air Act, the Clean Water Act, the Resource, Conservation and Recovery Act, and the Comprehensive Environmental
Response, Compensation and Liability Act. We closely monitor our environmental responsibilities, together with
trends in environmental laws. Separate from our Reduce–Avoid–Offset framework, we have established an internal
program to assess compliance with applicable environmental requirements at our facilities. The program, which
includes periodic audits of many of our locations, including our major operating facilities, is designed to identify
problems in a timely manner, correct potential deficiencies and maintain continued regulatory compliance. ITT's
environmental liabilities are, for the most part, not associated with current operating facilities (only two of ITT's 26
locations with current environmental obligations are associated with active operating sites). Additionally, ITT’s
diligent approach to remediation has resulted in a reduction in the number of ongoing environmental remediation
matters by approximately 50% over the past eight years.
Environmental laws and regulations are subject to change, and the nature and timing of such changes, if any, is
difficult to predict. To minimize our exposure, we have purchased insurance protection against certain environmental
risks arising from our business activities. As actual costs incurred at identified sites in future periods may vary from
our current estimates given the inherent uncertainties in evaluating environmental exposures, it is not possible to
reasonably predict the outcome of these uncertainties or any resulting impact on our financial statements.
For additional information regarding environmental matters, see "Critical Accounting Estimates" within Item 7,
Management's Discussion and Analysis, and Note 19, Commitments and Contingencies, to the Consolidated
Financial Statements.
Social
We recognize that sustainable performance and growth are made possible only through the efforts of our
dynamic, diverse team of approximately 10,600 ITTers globally. Given this, one of our most important commitments
as a company is to create an engaging, inspiring place to work and drive actions that enable every individual's full
potential and performance. Refer to the "Human Capital Management" section below for further information.
Governance
Our Board of Directors (the “Board”) is composed of highly experienced and diverse individuals. The role of the
Board is to oversee the affairs of the Company, including those pertaining to ESG, and to ensure the overall
success of the business. ITT's Board believes in strong corporate governance and is committed to sound principles
and practices. Meanwhile, our ethics and compliance and enterprise risk management programs, and ongoing
shareholder engagement, help us to understand key risks and market trends as an organization and deploy
resources appropriately to meet our current and future needs. ITT has been an early adopter of many of the most
significant governance advances over the last two decades, including majority voting for uncontested director
elections, proxy access bylaws, an independent Board Chair and shareholder rights to call a special meeting.
While we are proud of the strides we have made with respect to our ESG efforts to date, we will continue
looking for ways to improve upon these efforts to help bring additional value to our employees, customers,
communities and business. For further information regarding our ESG commitment, refer to our ITT 2023
Sustainability Update (the "2023 Sustainability Update"), which is a supplement to the full report we published in
2022 and outlines our progress towards our sustainability goals. It is available on our website at www.itt.com/
sustainability.
Human Capital Management
We believe that sustainable performance and growth are made possible only through the efforts of our dynamic
and diverse team of employees. In order to continue innovating in the industries and key end markets we serve, ITT
remains committed to attracting and retaining top talent globally. We strive to make ITT an inclusive and safe
workplace for all, and to create a higher performance culture with opportunities and training for all employees to
develop and grow professionally and personally. In addition, we offer competitive compensation, benefits, and
health and wellness programs.
As of December 31, 2023, we had approximately 10,600 employees located in 37 countries, including
approximately 2,850 employees in the U.S. As of December 31, 2023, approximately 20% of our U.S. employees
are represented by unions. No one unionized facility in the U.S. accounted for more than 15% of ITT's total
revenues. In addition, many of our employees outside the U.S. are covered by collective agreements or represented
3
by works councils or other groups. We continually focus on building strong relationships with our employees. and
we have not experienced any material strikes or work stoppages in the past several years.
Diversity, Equity and Inclusion
Diversity, equity and inclusion (DEI) are key business priorities for ITT and core to our values as a company. We
are committed to fostering an inclusive culture that is fueled by diverse ideas and perspectives, and to leveraging
these differences in ways that positively impact our performance, the engagement of our people and the global
communities in which we operate. We demonstrate our commitment to DEI through actions and we align our efforts
to our strategic workplace and marketplace goals. This includes creating an environment where all ITTers can fully
engage, achieve their potential and freely share ideas to guide us toward innovative thinking and better business
decisions and solutions. It also includes driving practices and programs to build and support diverse representation
in our employee population, including diversity with regard to race, religion, gender, disability, nationality, age,
sexual orientation, ethnic background and more. We firmly believe we will create more success by fostering
diversity of thought and continuously learning from each other's ideas, opinions and experiences. We also believe
that by creating a diverse environment, we will sustain and propel our success in the global marketplace to create
long-term sustainable value for all our stakeholders. For additional information about the actions we are taking to
drive our DEI strategy along with our diversity goals please refer to our 2023 Sustainability Update. Our 2022
Sustainability Report and our 2021 Sustainability Supplement, both of which can be found on our website at
www.itt.com/sustainability, also provide information and the history of our DEI journey. In addition, to provide
additional transparency regarding our commitment to diversity, our most recent Employment Information Report
(EEO-1 report) is available on our website at www.itt.com/our-people/eeo-1-report. We will post our 2023 EEO-1
report to this website when it becomes available.
Health, Safety and Well-being
At ITT, the health, safety, and well-being of our employees is our number one priority. Our Environmental,
Safety, Health and Security Council provides for the systemic control of workplace risks and drives continual
improvement of environmental and occupational safety and health protocols at all of our sites around the world. We
challenge ourselves to continually reduce injury frequency and severity by engaging employees in our “Accept Only
Zero” safety accountability system and fostering an environment where employees take responsibility for their
actions and have access to tools and training to work safely together. Despite these comprehensive measures,
accidents still occur. In such cases, we report the accident, its root cause and any corrective measures taken in
ITT’s company-wide accident reporting and tracking tool. Accident reporting and analysis helps ITT gauge the
effectiveness of our safety initiatives and procedures across all sites, and it helps us find creative solutions to
mitigate risks to our employees at our sites.
Talent Development
In order to foster a higher-performance culture, we are committed to maintaining effective strategies to support
recruiting and hiring, onboarding and training, compensation planning, performance management and professional
development. We invest significant resources to develop our talent in order to remain a worldwide leader in the
manufacturing of highly engineered customized products and solutions. We focus on providing meaningful,
equitable career development pathways and support to help ITTers realize their career aspirations. Our
development philosophy is built around a “know-do” framework which includes both formal training and experiential
learning. Tailored learning programs, coaching and mentoring elevate both technical and other skills (the “know”)
while challenging, well-planned work experiences and global assignments prepare ITTers for current and future
roles (the “do”). Successful employee development is also supported by thoughtful plans built in partnership
between employees and their managers. Our development planning tools and processes ensure targeted, concrete
action planning, and we promote continuous feedback and regular check-ins.
Compensation and Benefits
We provide flexible compensation and benefits programs to help meet the needs of our employees and their
families. In addition to base salaries, we offer numerous benefits for eligible employees, including annual bonuses,
stock awards, an employee stock purchase plan, a 401(k) Plan, healthcare and insurance benefits, health savings
and flexible spending accounts, paid time off, family leave, flexible work schedules, retirement benefits, employee
assistance programs and tuition reimbursement. ITT’s pay and recognition practices leverage data to ensure our
employees receive competitive, equitable salaries supported by evaluations of roles, experience, performance and
union or works council agreements in select areas. Our variable incentive plans reinforce pay for performance and
our strong belief in meritocracy. The majority of our employees are eligible for either a performance-based bonus or
a statutory profit-sharing payment. The bonus plans align employee compensation with financial or operational
results and individual performance. With respect to stock awards, we have used discretionary equity-based grants
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with time-based vesting conditions to facilitate the retention of key personnel, particularly those identified as high-
performing talent.
SEGMENT INFORMATION
See Note 3, Segment Information, to the Consolidated Financial Statements for financial information about each
of our segments.
Motion Technologies (MT)
The Motion Technologies segment is a manufacturer of brake pads, shims, shock absorbers, energy absorption
components and sealing technologies primarily for the transportation industry, including passenger cars and trucks,
light- and heavy-duty commercial and military vehicles, buses and trains. MT consists of the following primary
business units: ITT Friction Technologies, Wolverine Advanced Materials, KONI, and Axtone.
ITT Friction Technologies (Friction)
Friction manufactures a range of brake pads installed as original equipment (OE) on passenger cars (both
internal combustion engine vehicles and electric vehicles) and light commercial vehicles for a variety of end
customers and automotive platforms around the world. OE brake pads are sold directly to OEMs or to Tier-1 brake
manufacturers. Our OE brake pads are designed to meet customer specifications and environmental regulations,
and to satisfy an array of performance standards across multiple geographies. Most automotive OEM platforms (car
models) require specific brake pad formulations and have demanding quality, delivery and volume schedules.
Friction anticipated the industry transition towards copper-free brake pads and is a recognized industry leader in the
paradigm shift towards new brake pad formulations that are designed, developed and tested specifically for electric
vehicles (EVs). Success in developing brake pads for EVs has led Friction to win multiple EV platform awards with
established and new OEMs.
Friction also manufactures aftermarket brake pads designed for the automotive service and repairs market. This
market consists of both OE dealers, also referred to as original equipment service (OES) networks, and
independent aftermarket networks. Brake pads sold within the OES network generally match the specifications of an
original auto platform OE brake pad and are sold either directly to OEMs or to Tier-1 brake manufacturers, such as
Continental AG (Continental), or indirectly through independent distributor channels. Our catalog of pads sold in
independent aftermarket networks features technology designed to provide a range of braking performance levels.
Wolverine Advanced Materials (Wolverine)
Wolverine is a manufacturer of custom damping technologies for automotive braking systems (for both internal
combustion engine vehicles and EVs) and specialized gasket sealing solutions for harsh operating environments.
Wolverine sells its products, which consist primarily of brake shims and gaskets, to Tier-2 brake pad suppliers
(including Friction) and to Tier-1 manufacturers. Brake shims are thin metal and rubber adhesive dampeners that fit
onto the brake pad and against the brake caliper to prevent excessive noise and vibration. Gaskets are an anti-
vibration and sealing solution that prevent fluid spillage in applications such as engines, transmissions, exhaust
systems, fuel systems and a variety of pneumatic systems. These products are sold either as coils of rubber-coated
sheet metal or stamped into finished component parts.
KONI and Axtone
The KONI and Axtone businesses service four main end markets: railway rolling stock for freight and passenger
trains; car and racing; bus, truck and trailer; and defense.
Railway provides a wide range of equipment for passenger rail, locomotives, freight cars, high speed trains and
light rail. Offerings include customized energy absorption solutions, hydraulic shock absorbers (primary, lateral,
and inter-car), yaw dampers, springs, visco-elastic and hydraulic buffers, coupler components and crash
mitigation equipment. Revenue from our rail damping systems is balanced between OE and aftermarket
customers. Sales are made either directly to train manufacturers and train operators carrying out scheduled train
maintenance programs or indirectly through distributors. KONI and Axtone are lifetime partners of rail customers,
also offering repair and overhauling capabilities for their products.
Car and Racing features performance shock absorbers often using our Frequency Selective Damping (FSD)
technology. FSD products generally are used by car and racing enthusiasts who desire to modify their cars for
increased handling performance and comfort. KONI aftermarket car shock absorbers are sold around the world,
5
directly to customers and through a distribution network that markets KONI products into specific geographies or
customer groups. KONI shock absorbers are also incorporated into new OEM platform designs and sold to Tier-1
shock absorber manufacturers.
Bus, Truck and Trailer, and Defense manufactures hydraulic and hydro-pneumatic shock absorbers for sale to both
OEM and aftermarket customers.
Other Information
MT has a global manufacturing footprint with advanced automation capabilities, with production facilities in
Europe, China, North America and India.
MT competes in markets primarily served by large and well-established national and global companies. Key
competitive drivers within the brake pad and brake shim businesses include technical expertise, formulation
development capabilities, scale production, product performance, high-quality standards, customer intimacy,
reputation and the ability to meet demanding delivery and volume schedules in a limited amount of time. We have
well-established, long-term relationships with our OE and OES brake pad customers based on mutual trust, local
proximity and a wide range of cooperative activities, ranging from design, to sampling, prototyping and testing
phases of brake pads.
MT is a global leader in rail suspension components, freight coupling devices currently used in Europe and
crash absorption systems. Competitive drivers in MT's rail business include customer intimacy, price, technical
expertise and product performance. MT's rail products are considered critical components because of safety
requirements and thus they are designed specifically for different train applications and must satisfy strict
compliance requirements.
MT's sales to Continental, a supplier to the automotive industry and MT's largest customer, represented 16% of
MT's 2023 revenue. Automaker requests to use ITT brake pads in their Continental-produced braking systems
(calipers) typically account for approximately half of MT's revenue from Continental. These automaker requests are
generally formalized through supply agreements signed directly between MT and the automakers. The remainder of
MT's sales to Continental is through a long-term agreement to supply Continental with aftermarket parts.
Industrial Process (IP)
The Industrial Process segment is an OEM and an aftermarket parts and service provider of industrial pumps,
valves, plant optimization and remote monitoring systems and services. IP's products serve an extensive base of
customers ranging from large multi-national companies and engineering, procurement and construction (EPC) firms
to regional distributors and various other end-users. IP has a global manufacturing footprint with significant
operations in the United States, South Korea, Saudi Arabia, Mexico and Germany. IP's customers operate in global
infrastructure and natural resource markets such as energy, chemical and petrochemical, pharmaceutical,
biopharmaceutical, general industrial, mining, pulp and paper, food and beverage, and power generation. IP's
marketplace-recognized brands include Goulds PumpsTM, Bornemann®, Rheinhütte Pumpen®, Engineered Valves®,
PRO Services®, C'treat®, i-ALERT® and HabonimTM.
Industrial Pumps
Industrial pumps are used by a wide array of customers and applications primarily in the chemical, energy,
mining, general industrial, pharmaceutical and power generation markets. IP designs and manufactures configured-
to-order and standards-based industrial pumps that are highly engineered and customized to customer needs.
These products include a broad portfolio of centrifugal and twin screw positive displacement pumps that meet the
following industry-recognized standards: American Petroleum Institute (API), American National Standards Institute
(ANSI), ATmosphere EXplosible, European Directive 2014/34/EC (ATEX), IEC standards (IECEx) and International
Organization for Standardization (ISO). Our project pumps are generally part of larger and more complex capital
projects, have longer lead times than baseline pumps and are generally managed by EPC firms.
Valves
Valves are manufactured to handle a wide variety of process conditions and solve unique challenges in the
biopharmaceutical, chemical, mining, power generation, pulp and paper, and general industrial markets. Our
portfolio of valve products includes knife-gate valves, ball valves, hygienic and industrial diaphragm valves, and
valve actuators, marketed under the brand names EnviZion®, Cam-LineTM, Cam-Tite®, Dia-Flo®, Fabri-Valve®, Pure-
Flo®, Skotch®, and HabonimTM. Also included within our portfolio is the Integrated Sensing Platform (ISP), which is a
next-generation linear position sensing technology for EnviZion® and Pure-Flo® hygienic diaphragm valves,
developed specifically for the toughest applications in the biopharmaceutical and sanitary industries.
6
Aftermarket
Our aftermarket solutions, which represented approximately 45% of IP's revenue in 2023, provide customers
with replacement parts, services and plant optimization solutions that reduce total cost of ownership of pumps and
rotating equipment. In addition to providing standard repairs, IP also develops engineered solutions for specific
customer process issues. Examples include innovative technologies like PumpSmart® Control & Protection
Technology and i-ALERT® Equipment Health Monitoring Devices, which remotely control and monitor pumps and
other rotating equipment in an industrial environment.
Other Information
IP markets its products via a global and diversified sales channel structure. Sales to independent distributors,
who service end-users, account for approximately one-third of IP's revenue. We also sell directly to end-users
through our customer-focused direct sales and service organization. In addition, we have focused channels
dedicated to supporting EPC firms as their needs are often distinct from those of distribution and end-user
customers.
The pump and valve markets we serve are highly competitive and fragmented. For most of our products, there
are many regional competitors and a limited number of larger global peers. Primary customer purchase decision
drivers include price, lead time and on-time performance, brand recognition, quality, breadth of product and service
offerings, commercial terms, technical support and localization. Pricing can be very competitive for large projects
because completed projects generate ongoing profitable aftermarket opportunities for the OE provider.
Connect & Control Technologies (CCT)
The Connect & Control Technologies segment designs and manufactures a range of highly-engineered
connectors and specialized products for critical applications supporting various markets including aerospace and
defense, industrial, transportation (including EVs), medical and energy. CCT’s products are often components on
long-lived platforms that generate recurring aftermarket and replacement opportunities. CCT has organized its
business around product offerings and end-user markets, with dedicated teams specializing in solutions for their
specific markets, providing focused customer support and expertise.
Connector Products
The connector product portfolio includes high-performance connectors of the following types: Circular,
Rectangular, Radio Frequency, Fiber Optic, D-sub Miniature, Micro-Miniature and cable assemblies. Brands include
Cannon®, VEAM®, Micro-ModeTM, and BIW Connector Systems®, which deliver solutions to enable the transfer of
data, signals and power for various end-user markets including aerospace, defense, industrial, transportation,
medical and energy. These brands are known for high-performance, high-reliability solutions which withstand high
temperatures and pressure and are resistant to corrosive environments. In certain harsh environment markets, our
connector products are considered market leaders because of our technological capabilities, cost performance and
global footprint.
Products for the commercial aerospace and defense markets include industry standards-based connectors and
late-stage customized solutions. These products are designed to withstand the extreme conditions in harsh
environments that are typical in aviation and military applications where reliability and safety are critical factors.
Products for the industrial markets include connectors for industrial production and transportation equipment,
industrial electronics and instruments, and other industrial and medical applications. Products for the transportation
markets include connectors for electric vehicle charging station applications, passenger rail and heavy-duty
vehicles.
Products for the energy markets include connectors that provide power for electric submersible pumps in oil
wells, reservoir monitoring instruments and electrical downhole heaters. Specific product applications include
electrical power penetrators for wellheads, packers and pods that are able to accommodate various sizes and
provide for multiple sealing strategies and ratings.
Control Products
The control product portfolio consists of highly engineered actuation, flow control, energy absorption,
environmental control, and composite component solutions for the aerospace, defense and industrial markets.
Control products for the aerospace and defense markets include actuators, valves, pumps and switches for flow
control applications, rate controls, seat recline locks and elastomer isolators for aircraft interiors, elastomeric
7
bearings for rotorcraft vibration isolation, heaters, hoses, and composite ducting for environmental control systems,
and advanced composites for engine applications. Brands include Aerospace Controls® and Enidine®.
Control products for the industrial markets include shock absorbers, wire ropes and actuators for factory and
warehouse automation, regulators and switches for process control applications, seismic isolators and large bore
shocks for protection of critical infrastructure, and regulators for natural gas vehicles. Brands include Enidine®,
Compact AutomationTM, Turn-Act®, Neo-Dyn® and Conoflow®.
Other Information
CCT has a global production footprint, including facilities in the United States, Mexico, Germany, Italy, China
and Japan, which provide close geographic proximity to key customers. CCT competes with a large number of
companies in highly fragmented industries, ranging from large public multi-national corporations to small privately-
held local firms, depending on the product line and region. CCT's ability to compete successfully depends upon
numerous factors including quality, price, lead time, performance, brand recognition, customer service, innovation,
application expertise and previous installation history. In addition, collaboration with customers to deliver a wide
range of product offerings has allowed CCT to compete effectively, to cultivate and maintain strong customer
relationships and to expand into new markets. CCT products are sold directly and indirectly through numerous
channels, including distributors. CCT has long-lasting relationships with distributors, as many have been selling
certain CCT products for decades. Sales to distributors represented approximately 30% of CCT's 2023 revenue.
OTHER COMPANY INFORMATION
Key Components and Raw Materials
All of our businesses require various manufactured components and raw materials, the availability and prices of
which may fluctuate.
MANUFACTURED COMPONENTS ASSEMBLED INTO OUR PRODUCTS
• Motors
• Mechanical Seals
• Metal Fabrications
• Steel
• Iron
• Castings
• Machined Castings
• Miscellaneous Metal, Plastic, and Electronic Components
PRIMARY RAW MATERIALS
• Gold
• Aluminum
• Copper
• Tin
• Nickel
• Rubber
• Specialty Alloys, including Titanium
Raw materials are purchased in various forms, such as sheet, bar, rod and wire stock, pellets and metal
powders. We also use various specialty resins and adhesives. Raw materials, supplies and product subassemblies
are purchased from third-party suppliers, contract manufacturers and commodity dealers. For most of our products,
we have alternate sources of supply or such materials are readily available. However, in some instances we depend
on a single source of supply, manufacturing or assembly or participate in commodity markets that may be subject to
a limited number of suppliers.
Our operating results are generally exposed to fluctuations in the prices and supply constraints of raw materials
and commodities due to inflation, supply chain disruptions, foreign currency fluctuations, and tariffs imposed by the
U.S. and other countries. We continually monitor the business conditions of our supply chain to maintain our market
position and to avoid potential supply disruptions. These supply chain challenges have resulted in shortages of
materials, including commodities such as steel, and other components that we use in our production processes. In
2023, decreased availability of raw materials and component parts adversely affected our ability to deliver products
to our customers. Because of the rising demand for raw materials globally, we have experienced increases in
prices, particularly in the first half of the year, which impacted our financial results. See Item 7, Management's
Discussion and Analysis for additional information. We have been able to mitigate the impact of this inflation via
fixed-price supply contracts with suppliers, price increases to customers and productivity savings. We typically
acquire materials and components through a combination of blanket and scheduled purchase orders to support our
materials requirements for an average of four to eight weeks, with the exception of some specialty materials. In
limited circumstances, we may have to obtain scarce components for higher prices on the spot market, which may
8
have a negative impact on our results. We also acquire certain inventory in anticipation of supply constraints or
enter into longer-term pricing commitments with vendors to improve the priority, price and availability of supply. We
evaluate hedging opportunities to mitigate or minimize the risk of margin erosion resulting from the volatility of
commodity prices. The challenges associated with supply chain disruptions and inflation are expected to continue in
2024, and we are unable to reasonably predict when they will be resolved. As a result, we cannot provide assurance
that we will not be adversely affected by materials price volatility or the availability of supplies to meet customer
demand in the future.
Manufacturing Methods
Our businesses utilize two primary methods to fulfill demand for products: build-to-order and engineer-to-order.
•
•
Build-to-order consists of assembling a group of products with the same pre-defined specifications, generally
for our OEM customers. We employ build-to-order capabilities to maximize manufacturing and logistics
efficiencies by producing high volumes of basic product configurations.
Engineer-to-order consists of assembling a customized system according to a customer’s individual order
specifications. Engineer-to-order permits the configuration of units to meet the customized requirements of
our customers.
In both cases, we offer design, integration, test and other production value-added services. Our inventory
management and distribution practices in both build-to-order and engineer-to-order seek to improve customer
delivery performance and minimize inventory holding periods.
Intellectual Property
Where appropriate, we seek patent protection for inventions and improvements that are likely to be incorporated
into our products or where proprietary rights are expected to improve our competitive position. The highly
customized application engineering embedded within our products, our proprietary rights, our knowledge
capabilities and our brand recognition all contribute to enhancing our competitive position.
Although we own and control a significant number of patents, trade secrets, confidential information,
trademarks, trade names, copyrights and other intellectual property rights which, in the aggregate, are of material
importance to our business, management believes that our Company, as a whole, as well as each of our core
segments, is not materially dependent on any one intellectual property right or related group of such rights. Patents,
patent applications and license agreements will expire or terminate over time by operation of law, in accordance
with their terms or otherwise. As the portfolio of our patents, patent applications and license agreements has
evolved over a long period of time, we do not expect the expiration of any specific patent or other intellectual
property right to have a material adverse effect on our financial statements.
Research and Development
Research and Development (R&D) is key to our strategy and is generally focused on the design of highly
engineered solutions. R&D focuses on developing competitive solutions to address clear needs in the market
segments we serve. In addition, we work closely with our customers to address their needs by engineering solutions
to fit their particular application, thus enabling our customers to achieve their specific goals. For example, during
2023, we have been piloting new smart motor technologies that reduce energy and GHG emissions for flow
machines in harsh industrial environments. We believe R&D is a source of competitive advantage and, in recent
years, we have invested in new product innovation, including opening new innovation centers in Italy and China to
support our R&D efforts. We plan to continue with these efforts in the future. R&D as a percentage of sales was
approximately 3% during each of the past three years.
Cyclicality and Seasonality
Many of the businesses in which we operate are subject to specific industry and general economic cycles. We
consider our connector products in our CCT segment to be an early-cycle business, meaning it generally is
impacted in the early portion of an economic cycle. Our automotive and aerospace components businesses tend to
be impacted in the middle portion of the cycle, and our industrial pump business typically is impacted late in the
economic cycle.
Our businesses experience limited seasonal variations. Revenue impacts from the limited seasonal variations
are typically mitigated by our backlog of orders that allows us to adjust levels of production across different periods.
9
General Developments of the Business
Acquisitions and Divestitures
Date of
Transaction
May 2, 2023
Type
Acquisition
Segment
CCT
Business Acquired
Description
Micro-Mode Products, Inc. Specialty designer and manufacturer of
December 29,
2023
Divestiture
CCT
Matrix Composites, Inc.
January 19, 2024 Acquisition
IP
Svanehøj Group A/S
high-bandwidth radio frequency (RF)
connectors for harsh environment defense
and space applications.
Manufacturer of precision composite
components in the aerospace and defense
market.
Supplier of pumps and related aftermarket
services with leading positions in cryogenic
applications for the marine sector.
Other than as described herein, there have been no significant developments since our previous Form 10-K
filing. See Note 22, Acquisitions, Investments, and Divestitures, to the Consolidated Financial Statements for
additional information.
10
ITEM 1A.
RISK FACTORS
We are subject to a wide range of factors that could materially affect future developments and performance.
Because of these factors, past performance may not be a reliable indicator of future results. You should carefully
consider, together with the other information contained in this Annual Report on Form 10-K, the risks and
uncertainties described below. These risks may have a material adverse effect on our reputation, business, results
of operations, financial condition, or cash flows. In addition to these risks, there may be additional risks and
uncertainties that adversely affect our business, performance or financial condition in the future that are not
presently known, are not currently believed to be significant or are not identified below because they are common to
most or all companies.
Business and Operating Risks
Our operating results have been, and may continue to be, adversely affected by unfavorable or uncertain
global macroeconomic and capital market conditions.
Adverse global macroeconomic conditions, including due to heightened geopolitical tensions, inflation, slowing
growth or a recession, currency fluctuations, new or increased tariffs or barriers to trade, tighter credit, higher
interest rates, union strikes, and higher unemployment can negatively impact customer confidence, spending, and
demand for our products and services. In addition, these conditions can negatively impact our customers and
suppliers. A downturn in the economic environment can also lead to increased credit and collectability risk or slower
collection on the Company's trade receivables, increased bankruptcy risk amongst our suppliers, the failure of
derivative counterparties or other financial institutions, limitations on the ability of the Company to issue new debt,
reduced liquidity, declines in the fair value of the Company's financial instruments, and increased impairment risk for
the Company's goodwill and intangible assets. These and other economic factors could materially adversely affect
the Company's business and financial results.
Because a significant portion of our sales are to customers operating outside the U.S., our financial results have
been, and may continue to be, adversely impacted by foreign currency fluctuations, which are influenced by
changes in global macroeconomic conditions. The primary foreign currencies to which we have exposure are the
Euro, Chinese renminbi, Czech koruna, Polish zloty, South Korean won, Saudi riyal, Mexican peso, and Israeli new
shekel. Any significant change in the value of currencies of the countries in which we do business relative to the
value of the U.S. dollar could reduce our revenue and adversely impact our ability to sell products or control costs.
In addition, our international subsidiaries report their results of operations and financial position in their respective
local currencies (i.e., functional currencies), which are then translated into U.S. dollars for financial reporting
purposes. As the relationship between these foreign currencies and the U.S. dollar changes, our financial results
have been, and may continue to be, adversely affected upon translation. From time to time, we enter into derivative
contracts to hedge some of our foreign currency exposures. However, our hedging strategy may fail to reduce our
exposure and could even result in an unfavorable impact on our financial results. Refer to Note 21, Derivative
Financial Instruments, for further information.
During 2023, global macroeconomic conditions continued to be influenced by a number of factors, including
heightened geopolitical tensions. Adverse changes to macroeconomic conditions could jeopardize counterparty
obligations with our customers and may reduce funds available for our customers to pay for our products and
services for a prolonged and perhaps unknown period of time. These factors have resulted and may continue to
result in customers extending terms for payment or failing to timely pay accounts when due and may result in us
having higher customer receivables with increased risk of default. We have experienced and may continue to
experience volatility in revenues, operating results and profitability primarily as a result of these uncertain global
macroeconomic conditions.
Continued instability in the geopolitical environment and global credit markets may put further pressure on global
macroeconomic conditions. If these conditions, or the economic conditions in the key markets or regions in which
we operate, do not improve, we could experience material adverse impacts on our financial results.
Our business has been, and may continue to be, adversely affected by raw material price volatility, a limited
number of suppliers and the inability of suppliers to meet quality and delivery requirements.
Our business relies on third-party suppliers for raw materials, components and contract manufacturing services
to produce our products. Commodity prices and the prices for other raw materials necessary for production have
fluctuated, and may continue to fluctuate, and in 2023 increases in raw material costs negatively impacted our
financial results. We are not always able to pass along raw material and component price increases to our
customers which has impacted, and may continue to impact, our sales growth and profitability.
11
In addition, the supply of raw materials to ITT and to its component parts suppliers has been, and may continue
to be, interrupted for a variety of reasons affecting our suppliers, including congested shipping ports around the
world, production interruptions, heightened geopolitical tensions, including related to the Russia-Ukraine and Israel-
Palestine conflicts, global pandemics, the impaired financial condition of a particular supplier, capacity constraints,
labor disputes or shortages, the ability to meet regulatory requirements and commitments to other purchasers. For
most of our products, we have existing alternate sources of supply, or the required materials have historically been
readily available. In limited instances, we depend on a single source of supply, manufacturing or assembly, or
participate in commodity markets that may be subject to a limited number of suppliers. Although we believe we
could obtain and qualify alternative sources for most sole and limited source supplier materials if necessary, the
transition to an alternative source could be complex, costly, and protracted, especially if the change requires us to
redesign our systems or re-qualify our products. In 2023, decreased availability of raw materials and component
parts adversely affected our ability to deliver products to our customers and resulted in increased backlog.
Any further delay in our suppliers’ abilities to provide us with sufficient quality or flow of materials or any supplier
price increases, or any decreased availability of raw materials or commodities, could further impair our ability to
deliver products to our customers and may impact our profitability.
Recent mergers, acquisitions or venture investments could present operational challenges and past
divestitures and spin-offs may expose us to potential liabilities, all of which could adversely affect our
results of operations and financial position.
We regularly review our portfolio of businesses and pursue growth through the acquisition of other companies,
assets and product lines that either complement or expand our existing businesses. In addition, from time to time,
we make minority investments in other early-stage companies, and we risk losing part or all of our capital in any
such investment. Refer to Note 22, Acquisitions, Investments, and Divestitures, for further information regarding
acquisitions and investments made during the year. Although we conduct what we believe to be a prudent level of
investigation regarding the operating and financial condition of the businesses we acquire, a level of risk remains
regarding the actual operating condition of these businesses. Until we actually assume operating control of these
businesses and their operations, we may not be able to ascertain the actual value or understand the potential
liabilities of, or challenges facing, the acquired businesses and their operations. Acquisitions involve a number of
risks and present financial, managerial and operational challenges that could have a material adverse effect on our
reputation, financial results and business. These include the possibility that:
•
•
•
•
•
an acquired business could under-perform relative to our expectations;
we could fail to realize the expected synergies of an acquisition;
we could experience difficulties in the integration of technology, operations, personnel and financial and
other systems;
we could have acquired substantial undisclosed liabilities;
there could be insufficient internal controls over financial activities or financial reporting at an acquired
company that could impact us on a consolidated basis;
• management attention could be diverted from other businesses;
•
•
•
•
an acquired business may have been impacted by a previous security breach where system/data integrity
was compromised, or data was stolen without the seller's awareness;
we could lose key employees of the acquired businesses;
we could experience increased capital requirements; and
the acquisition could result in customer dissatisfaction.
We have divested a number of businesses, including as part of spin-offs in 1995 and 2011 and our sale of
InTelCo Management LLC (InTelCo), the entity holding asbestos-related assets and liabilities, in 2021. With respect
to some of these former businesses, we have contractually agreed to indemnify the counterparties against, or
otherwise retain, certain liabilities including certain product liability claims and environmental matters. Even without
ongoing contractual indemnification obligations, we could be exposed to liabilities arising out of such divestitures. In
addition, the counterparties to those divestitures may have agreed to indemnify us or assume certain liabilities
relating to those divestitures. However, there can be no assurance that the indemnity or assumption of liability by
the counterparties will be sufficient to protect us against the full amount of these liabilities or that a counterparty will
be able to fully satisfy its obligations. Third parties also could seek to hold us responsible for any of the liabilities that
a counterparty agreed to assume. Even if we ultimately succeed in recovering any amounts for which we were
initially held liable, we may be temporarily required to bear these losses ourselves.
12
The industries in which we operate are experiencing a skilled labor shortage and if we are unable to hire
and retain key personnel, including engineering talent and senior management talent, our ability to operate
or grow our business could be negatively impacted.
The manufacturing industry is currently experiencing a skilled labor shortage. This shortage has created
difficulties for the Company in attracting and retaining factory employees, in meeting customer demand and in
controlling labor costs. We currently have a significant number of open positions, and we expect this to remain so in
2024. A failure to attract or retain engineering and other highly skilled personnel could adversely affect our operating
results, our ability to deliver products and services to our customers and our ability to grow our business. Our future
success will continue to depend, to a significant extent, on our ability to attract or retain engineers, senior
management, our skilled labor source and other key personnel, which will depend on our ability to offer competitive
compensation, training, flexibility and other benefits that our current and prospective employees desire.
Failure to provide high quality and reliable products, innovate or respond to competitors in our markets or
protect our intellectual property rights could adversely impact our business and financial results.
We believe product performance, reliability and innovation, application expertise, enforcement of intellectual
property rights, brand reputation, and price are principal points of competition in our markets.
We manufacture key components that are integral to the operation of systems and manufacturing processes in
the markets we serve. The reliability and performance of our products are critically important to our customers and
the users of their products. Accordingly, quality is extremely important to us and our customers due to the potentially
costly consequences of product failure. Our quality certifications, including products manufactured to military
specifications, are critical to the marketing success of our goods and services. Our success in part depends on our
ability to attract and retain skilled engineers and to manufacture to exact tolerances precision-engineered
components, subassemblies and finished devices from multiple materials. If our components fail to meet these
standards or fail to adapt to evolving standards, we could damage our reputation as a manufacturer of high-quality
components, which could hurt our ability to remain competitive and result in a loss of customers, market share or
product sales.
Maintaining and improving our competitive position will require continued investment by us in manufacturing,
research and development, engineering, marketing, customer service and support, and our distribution networks.
Insufficient investment in these areas may result in a failure to maintain our competitive position. In addition, our
existing competitors, or potential new competitors, may develop products that are cheaper and/or superior to our
products, or may develop more efficient or effective methods of providing products and services or may adapt more
quickly than we do to new technologies or evolving customer requirements. These pressures may result in us
having to take actions, such as adjusting the prices of certain products, in order to stay competitive.
Obtaining, maintaining and enforcing our proprietary rights is another factor that is critical to the success of our
business and our ability to remain competitive. For certain products and manufacturing processes, we rely on
patents, trademarks, trade secrets, non-disclosure agreements and other contracts to protect these rights. These
contracts may be breached, or may not prevent competitors from independently developing or selling similar
products. In addition, during the normal course of business, we could unintentionally infringe or violate the
proprietary rights of others. Intellectual property litigation could be time consuming for management and could result
in significant legal expenses to either pursue claims against others, or to defend ourselves. If we are unable to
protect our patents, trademarks, or other proprietary rights, or if we infringe or violate the rights of others, our ability
to remain competitive could be adversely impacted.
If we are unable to maintain our competitive position, our business, results of operations or financial condition
could be materially adversely affected.
Our operations could be disrupted, and our business could be materially and adversely affected by our
inability to prevent, detect or adequately respond to cybersecurity breaches.
The efficient operation of our business is dependent on information technology (IT) systems, some of which are
owned or managed by third parties. In the ordinary course of business, we collect and store confidential information,
including proprietary business information belonging to us, our customers, suppliers, business partners and other
third parties, as well as personally identifiable information of our employees and others.
Our information technology systems and those of our third-party service providers may be susceptible to
damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures,
cybersecurity incidents and user errors that may affect our operations. Although we actively manage the risks to our
information technology systems that are within our control, we can provide no assurance that our actions or those of
13
our third-party service providers will always be successful in eliminating or mitigating risks to our systems, networks
or data. Even the most well-protected information technology systems are vulnerable to internal and external
cybersecurity incidents including, but not limited to, those by employees and by computer hackers and other threat
actors utilizing techniques such as phishing, ransomware or denial of service attacks. We have experienced
cybersecurity incidents in the past which have not had a material impact on our operations or financial results. If we
experience a future disruption in our information technology systems, it could result in the loss of sales and
customers and significant incremental costs, which could materially adversely affect our business. In addition, as a
provider of products and services to government and commercial customers, and particularly as a government
contractor, we are subject to a heightened risk of cybersecurity incidents caused by computer viruses, illegal break-
ins or hacking, sabotage, or acts of vandalism, including by foreign governments, hackers and cyber terrorists.
Furthermore, information technology security threats are increasing in sophistication, intensity and frequency. A
cybersecurity incident may occur, including breaches that we may be unable to detect in a timely manner. The
unavailability of our information technology systems, the failure of these systems to perform as anticipated for any
reason, or any significant breach of security could cause significant disruption to our business or could result in
decreased performance and increased costs.
We continue to monitor data security regulations in the jurisdictions in which we operate. The processing and
storage of certain information is increasingly subject to privacy and data security regulations, and many such
regulations are country-specific. The interpretation and application of data protection laws in the U.S., Europe, and
elsewhere are uncertain, evolving and may be inconsistent across jurisdictions. Compliance with these various laws
may be onerous and require us to incur substantial costs or to change our business practices in a manner that
adversely affects our business, while failure to comply with such laws may subject us to substantial penalties.
If we are unable to protect sensitive information, our customers or governmental authorities could question the
adequacy of our security processes and procedures and our compliance with evolving privacy and data security
regulations and government cybersecurity requirements for government contractors, potentially causing us to lose
business. A breach could also result in the loss of our intellectual property, potentially impacting our long-term
capability to compete for sales of affected products. In addition, a breach of security of our information technology
systems could result in litigation, regulatory action and potential liability, as well as increased costs to implement
further information security measures. If we are unable to prevent, detect or adequately respond to cybersecurity
incidents, our operations could be disrupted, our reputation could be harmed, and our business could be materially
and adversely affected.
The Company’s ability to manage its business and monitor results is highly dependent upon information
and communication systems, and a failure of these systems, including flaws in the implementation of any
enterprise resource planning (ERP) systems, could adversely impact our business or financial results.
The Company is dependent upon a variety of information technology IT systems, including ERP and
communication systems, to operate its business. Over the past several years, we have been implementing new
ERP systems at many of our sites, including within our shared services subsidiary, and we expect these ERP
implementations to continue for the next several years. These ERP implementations have required and will continue
to require significant investment in capital and deployment of human resources. Potential flaws in implementing
ERP systems or in the failure of any portion or module of the ERP systems may pose risks to our ability to operate
successfully and efficiently. In addition, failure to implement the appropriate internal controls with respect to new
ERP systems may result in the ERP systems producing inaccurate or unreliable information. Any disruptions, delays
or deficiencies in the design or implementation of the new ERP systems or related internal controls, or in the
performance of legacy IT systems, could adversely affect the Company’s ability to effectively manage its business,
which could adversely affect the Company’s reputation, competitive position and financial results.
A significant portion of our revenue is derived from a single customer. Loss of this customer, a loss of
business with this customer, or a reduction in this customer's market share, could adversely impact our
financial results.
Sales to Continental, a supplier to the automotive industry and ITT's largest customer, were approximately 7%
of our total revenue in 2023. Requests by automakers to use ITT brake pads in their Continental-produced braking
systems (calipers) typically account for approximately half of MT's revenue from Continental. These automaker
requests are generally formalized through supply agreements signed directly between MT and the automakers. The
remainder of MT's sales to Continental in 2023 was generated from a 10-year agreement to supply Continental with
aftermarket parts, which expired on December 31, 2023. A new 10-year agreement, effective January 1, 2024, and
extending through December 31, 2033, was signed in March 2023. The loss of this customer, or a reduction in this
14
customer's market share could have a material adverse effect on our business, results of operations or financial
condition.
Due to our operations and sales outside of the U.S., we are subject to inherent business risks, including the
imposition of tariffs, which may adversely affect our financial results.
Our international operations, including U.S. exports, comprise a growing portion of our operations and are a
strategic focus for continued future growth. Our sales in emerging markets such as Mexico, South America, China,
and the Middle East have been increasing. In both 2023 and 2022, approximately 67% of our total sales were to
customers operating outside of the United States. Our sales from international operations and export sales are
subject to varying degrees of risks inherent in doing business outside of the United States. These risks include the
following:
• war or geopolitical instability in regions where we operate;
• fluctuations in foreign exchange rates;
• possibility of unfavorable circumstances arising from host country laws or regulations;
• restrictions, regulations, or tax liabilities on currency repatriation;
• potential negative consequences from changes to taxation policies;
• the disruption of operations from labor and political disturbances;
• our ability to hire and maintain qualified staff in these regions; and
• changes in tariffs and trade barriers, sanctioned countries and individuals, and import and export licensing
requirements.
Our operations in emerging markets could involve additional uncertainties such as challenges in our ability to
protect our intellectual property, pressure on the pricing of our products, and risks of political instability.
Governments of emerging market countries may also impose limitations or prohibitions on our ability to repatriate
funds, impose or increase withholding or other taxes on remittances and other payments to us, seek to nationalize
our assets, or impose or increase investment barriers or other restrictions that may adversely affect our business.
Under the previous administration, the U.S. government undertook a series of actions to increase tariffs on
certain goods imported into the U.S., including steel and aluminum, and in response certain governments imposed
retaliatory tariffs on various goods. These tariffs have negatively impacted demand for our products as well as the
cost of certain parts and materials that we purchase from vendors located overseas, particularly in China. We have
been mitigating, and will continue attempting to mitigate, the impact of tariffs by lowering input costs through efficient
utilization of our global manufacturing footprint, supplier and customer negotiations, and diversification strategies.
However, we expect that any new or continued trade disputes or increased tensions between the U.S. and other
countries, and any governmental actions, including increases of existing tariffs or the imposition of new tariffs, in
response to those trade disputes or increased tensions, may continue to adversely impact demand for our products
and our financial results.
The cost of compliance with increasingly complex and often conflicting regulations worldwide can also impair
our flexibility in modifying product, marketing, pricing or other strategies for growing our businesses, as well as our
ability to improve productivity and maintain acceptable profit margins.
Our business is impacted by our customers' levels of capital investment, maintenance expenditures,
production, and market cyclicality.
Demand for certain of our products and services depends on the levels of capital investment, planned
maintenance expenditures, and/or production of our customers which, in turn, depend on general economic
conditions, availability of credit, economic conditions within their respective industries, supply and demand shocks,
workforce strikes or employee absenteeism, volatility in commodity prices, expectations of future market behavior
and their liquidity and financial position. The ability of our customers to finance capital investment, maintenance,
and/or production may also be affected by factors independent of the conditions in their industries, such as the
condition of global credit and capital markets. Accordingly, some of our customers have chosen to postpone capital
investment, maintenance, and/or production, and may continue doing so in the future, potentially even during
favorable conditions in their industries or markets, which has led, and may continue leading, to a delay or
cancellation of orders.
Our customer's businesses, particularly those in the energy, chemical and mining industries, which represented
approximately 10%, 9%, and 4%, respectively, of our 2023 revenue, are to varying degrees cyclical and have
experienced, and may in the future experience, periodic downturns of varying severity. For example, the volatility of
15
the energy market has generally been dependent upon the prevailing view of future gas and oil prices, which are
influenced by numerous supply and demand factors, including availability and cost of capital, global and domestic
economic conditions, environmental regulations, policies of the Organization of the Petroleum Exporting Countries
(OPEC) countries and Russia and other factors. Our customers in these industries, particularly those whose
demand for our products and services is primarily profit-driven, have tended to delay large capital projects, including
expensive maintenance and upgrades, during economic downturns. Additionally, fluctuating energy demand
forecasts and commodity pricing and other macroeconomic factors may cause our customers to be more
conservative in their capital planning, which could reduce demand for our products and services, result in the delay
or cancellation of existing orders, or lead to excess manufacturing capacity, which unfavorably impacts our
absorption of fixed manufacturing costs. This reduced demand may also erode average selling prices in our
industry. These factors could have a material adverse effect on our business, results of operations and financial
condition.
A material business interruption, particularly at one of our manufacturing facilities, could negatively impact
our ability to generate sales and meet customer demand.
If operations at one or more of our manufacturing facilities were to be disrupted or damaged as a result of war
(including related to Russia-Ukraine, Israel-Palestine, and China-Taiwan), an epidemic or pandemic (including,
without limitation, COVID-19), changing weather or climate conditions (including increases in storm intensity, sea-
level rise, melting of permafrost and temperature extremes on facilities or operations; and changes in the availability
or quality of water, or other natural resources on which our business depends), IT system failure, cyber-attack,
equipment failure, labor dispute, natural disaster, power outage, fire, explosion, act of terrorism, relocation of
production location or any other catastrophic event or reason, our ability to meet customer demand for our products
may be impacted. We have business continuity plans in place to mitigate the effects of such interruptions, but these
plans may not be sufficient to resolve the issues in a timely manner. A significant interruption in production capability
could also require us to make substantial payments due to non-performance. We also have insurance for certain
covered losses which we believe to be adequate to offset a significant portion of the costs for reconstruction of
facilities and equipment, as well as certain financial losses resulting from production interruptions or shutdowns.
However, any recovery under our insurance policies would be subject to deductibles and, depending on the
coverage, may not offset the lost revenues or increased expenses that may be experienced during the disruption of
operations.
Increased scrutiny from investors, lenders and other market participants regarding our environmental,
social and governance or sustainability responsibilities could expose us to additional costs and adversely
impact our reputation, business, financial performance and growth.
There is an increasing focus from certain investors, customers and other key stakeholders on corporate
responsibility, specifically related to ESG matters, including companies' contribution to climate change and loss of
biodiversity. Some investors have used, and may continue to use, ESG criteria to guide their investment strategies
and, in some cases, have chosen, and may continue to choose, not to invest in ITT, or to divest their holdings of ITT
if they believe our policies relating to corporate responsibility are inadequate.
The ESG factors by which companies’ corporate responsibility practices are assessed have been evolving and
may continue to evolve. Additionally, requirements on U.S. public companies and companies with European
operations with regards to ESG compliance have been increasing and may continue to increase, including, but not
limited to, the SEC's proposal to require extensive climate-related disclosures and the European Union's Corporate
Sustainability Reporting Directive (CSRD), which could additionally require third-party assurance disclosures. These
evolving standards and regulations have caused us, and may continue causing us, to undertake costly initiatives to
satisfy such new criteria. If we are unable to satisfy new corporate responsibility criteria, investors may conclude our
policies are inadequate and choose not to invest in our securities or to divest all or a portion of their current
holdings, which in either case may adversely affect the price of our securities.
In addition, as we identify ESG topics for voluntary disclosure and work to align with the recommendations of
the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) and Sustainability
Accounting Standards Board (SASB) standards and our own assessment of priority of ESG issues, we have
expanded and, in the future, may continue to expand our disclosures in these areas. Statements about our ESG
initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are
still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change
in the future. If our ESG-related data, processing and reporting are incomplete or inaccurate, if we fail to achieve
progress on our metrics on a timely basis or at all, or if we fail to satisfy the expectations of investors and other key
stakeholders, our reputation, business, and financial performance could be adversely affected.
16
Legal and Regulatory Risks
We are subject to risks related to government contracting, including changes in levels of government
spending and regulatory and contractual requirements applicable to sales to the U.S. government.
Our CCT and MT segments derive a portion of their revenue from sales to U.S. government customers and
higher tier contractors who sell to the U.S. government. The government's expenditures are subject to political and
budgetary fluctuations and constraints, which may result in significant unexpected changes in levels of demand for
our products. In addition, the award, administration and performance of government contracts are subject to
regulatory and contractual requirements that differ significantly from the terms and conditions that apply to contracts
with our non-governmental customers. We have in the past and may in the future be subject to audits and
investigations to evaluate our compliance with these requirements. If we are found to have failed to comply with
requirements applicable to government contractors, we may be subject to various actions, including but not limited
to fines or penalties, reductions in the value of our government contracts, restrictions on the sale of certain products
to the government, or suspension or debarment from government contracting. Failure to comply with applicable
requirements also could harm our reputation and our ability to compete for future government contracts or sell
equivalent commercial products.
If we are not able to meet the requirements for government contractors, we may lose orders, which could have
a material adverse effect on our business, financial condition and results of operations.
Changes in our effective tax rates as a result of changes in the realizability of our deferred tax assets, the
geographic mix of earnings, tax examinations or disputes, tax authority rulings or changes in the tax laws
may adversely affect our financial results.
The Company is subject to taxes in the U.S. and in various foreign jurisdictions. We exercise significant
judgment in calculating our provision for income taxes and other tax liabilities. In the ordinary course of our
business, there are many transactions and calculations where the ultimate tax determination is uncertain. Changes
in domestic or foreign tax laws and regulations, or their interpretation, could result in higher or lower tax rates
assessed or changes in the taxability of certain income or the deductibility of certain expenses, thereby affecting our
tax expense and profitability. Any significant increase in our future effective tax rates could reduce net income in
future periods. Given the global nature of our business, a number of factors may increase our future effective tax
rates, including changes in the geographic mix of our profits among jurisdictions with differing statutory income tax
rates; sustainability of historical income tax rates in the jurisdictions in which we conduct business; changes in tax
laws applicable to us; expiration, renewal or application of tax holidays; the resolution of issues arising from tax
audits with various tax authorities; or changes in the valuation of our deferred tax assets, deferred tax liabilities and
deferred tax asset valuation allowances.
The amount of income taxes and other taxes we have paid are subject to ongoing audits by U.S. federal, state,
and local tax authorities and by non-U.S. authorities. If these audits result in assessments different from amounts
paid or reserved, future financial results may include unfavorable tax adjustments. We are currently under routine
examination by the U.S. Internal Revenue Service and other U.S. and non-U.S. tax authorities, and we may be
subject to additional examinations in the future. The tax authorities may disagree with our tax treatment of certain
material items and thereby increase our tax liability. Failure to sustain our position in these matters could result in a
material adverse effect on our financial statements.
We are closely monitoring the potential passage of new U.S. and foreign tax legislation, which could result in
substantial changes to the current U.S. or foreign tax systems, including changes to the statutory corporate tax rate.
In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers
reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, which is a multi-jurisdictional
plan of action to address base erosion and profit shifting. On December 20, 2021, the OECD released the Model
GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. The OECD
continues to release additional guidance and countries are implementing legislation with widespread adoption of the
Model GloBE Rules for Pillar Two expected by calendar year 2024. We are continuing to evaluate the Model GloBE
Rules for Pillar Two and related legislation, and their potential impact on future periods. Enactment of this regulation
in its current form could increase the amount of global corporate income tax paid by the Company. These increases
could have a material adverse effect on our effective tax rate. As the effects of a change in U.S. or foreign tax law
must be recognized in the period in which the new legislation is enacted, should new legislation be signed into law,
our financial results could be materially impacted.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the Inflation Reduction
Act) into law. The Inflation Reduction Act includes a new corporate alternative minimum tax (the Corporate AMT) of
17
15% on the adjusted financial statement income (AFSI) of corporations with an average AFSI exceeding $1.0 billion
over a three-year period. The Corporate AMT was effective for the Company beginning in 2023. Given the AFSI
threshold, the Corporate AMT was not applicable to the Company in 2023, but the Corporate AMT may have
potential impacts on our future U.S. tax expense, cash taxes and effective tax rate. Additionally, the Inflation
Reduction Act imposes a 1% excise tax on the fair market value of net stock repurchases made after December 31,
2022. The impact of this provision was not material in 2023 and future impacts will be dependent on the extent of
share repurchases made in future periods.
Changes in environmental laws or regulations, the discovery of previously unknown or more extensive
contamination or the failure of a potentially responsible party to perform may adversely affect our financial
results.
We are subject to a variety of federal, state, local and foreign laws, rules and regulations related to the use,
storage, handling, discharge or disposal of certain toxic, volatile or otherwise hazardous chemicals, gases and other
substances used in manufacturing our products, as well as laws related to greenhouse gas emissions (including
cap-and-trade laws). These laws could require us to incur substantial expenses. Environmental laws and
regulations allow for the assessment of substantial fines and criminal sanctions as well as facility shutdowns to
address violations and may require the installation of costly pollution control equipment or operational changes to
limit emissions or discharges. The discovery of previously unknown or more extensive contamination at a site which
the Company previously operated or currently operates could suddenly subject the Company to costly remediation
efforts. We could be affected directly or indirectly through impacts on our customers and suppliers by changes in
environmental laws or regulations, including, for example, those imposed in response to vapor intrusion or climate
change concerns and violations by us of such laws and regulations. We may also be impacted by the adequacy of
insurance policies, our inability to recover costs associated with any such developments, or financial insolvency of
other potentially responsible parties which could have a material adverse effect on our business, financial condition
and results of operations. In addition, new laws and regulations that might favor the increased use of non-fossil
fuels, including nuclear, wind, solar and biofuels or that are designed to increase energy efficiency could reduce
demand for oil and gas production or power generation resulting in lower spending by our IP customers.
Failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation,
as well as export controls and trade sanctions, could result in fines or criminal penalties.
We operate in a number of countries throughout the world, including countries known to have a reputation for
corruption. We are committed to doing business in accordance with applicable anti-corruption laws. However, we
cannot provide assurance that our internal controls will always protect us from reckless or criminal acts committed
by our employees, agents or business partners that would violate U.S. and/or applicable non-U.S. laws, including
anti-bribery, competition, trade sanctions and regulation, and other laws including but not limited to, the U.S. Foreign
Corrupt Practices Act of 1977 and the U.K. Bribery Act of 2010, as well as trade sanctions administered by the
Office of Foreign Assets Control, the U.S. Department of State and the U.S. Department of Commerce. Any such
violation could result in substantial fines, sanctions, civil and/or criminal penalties, suspension or debarment from
government contracts or curtailment of operations in certain jurisdictions, and might adversely affect our business,
financial condition or results of operations or financial position. Furthermore, detecting, investigating, and resolving
actual or alleged violations is expensive and can consume significant time and attention of our senior management.
Even the allegation or appearance of our employees, agents or business partners acting improperly or illegally
could damage our reputation and result in significant expenditures in investigating and responding to such actions.
We are subject to laws, regulations and potential claims relating to product liability.
Our business exposes us to potential product liability risks that are inherent in the design, manufacture, and
marketing of products for the markets we serve. In addition, many of the devices we manufacture and sell are
critical components designed to be used in harsh environments for long periods of time where the cost of failure is
high. Component failures, manufacturing defects, design flaws, or inadequate disclosure of product-related risks or
product-related information could result in an unsafe condition or injury to, or death of, an end-user of our products.
The occurrence of such a problem could result in product liability claims or a recall of, or safety alert relating to, one
or more of our products which could ultimately result, in certain cases, in the removal of such products from the
marketplace and claims regarding costs associated therewith. Product liability claims or product recalls in the future,
regardless of their ultimate outcome, could have an adverse effect on our reputation and on our ability to attract and
retain customers for our products.
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Anti-takeover provisions in our organizational documents and Indiana law could delay or prevent a change
in control.
Certain provisions of our articles of incorporation and by-laws may delay or prevent a merger or acquisition that
a shareholder may consider favorable. For example, the articles of incorporation authorize our Board of Directors to
issue one or more series of preferred stock. Such provisions may also discourage acquisition proposals or delay or
prevent a change in control, which could harm our stock price. Indiana law also imposes some restrictions on
mergers and other business combinations between any holder of 10% or more of our outstanding common stock
and us as well as certain restrictions on the voting rights of "control shares" of an "issuing public corporation."
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ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 1C.
CYBERSECURITY
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program intended to protect the
confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management
program includes a cybersecurity incident response plan.
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity
Framework (NIST CSF). This does not imply that we meet any particular technical standards, specifications, or
requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage the cybersecurity
risks that are relevant to our business.
Our cybersecurity risk management program is integrated into, and forms an integral part of, our overall
enterprise risk management program, and shares common methodologies, reporting channels and governance
processes that apply across the enterprise risk management program to other legal, compliance, strategic,
operational, and financial risk areas.
We have established a proactive approach to identify and manage material cybersecurity threats which
includes, but is not limited to, the following:
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Security policies and practices aligned with NIST Special Publication 800-171, Revision 2 (NIST 800-171
Rev 2) and the organization’s enterprise risk management requirements;
Annual cybersecurity reporting and strategic update to ITT's Board of Directors;
Enterprise-wide centralized Security Information and Event Management (SIEM);
Regular red-team attack simulations led by industry-leading third-party cybersecurity firms;
Continuous internal and external facing vulnerability management scanning;
Threat intelligence feeds from various external sources (fee and non-fee based);
Threat hunting;
Strategically deployed artificial intelligence-based threat detection technology;
Cyber risk assessment and classification processes;
Cyber threat tabletop simulation exercises;
Cyber Incident Response Plan processes;
Externally led, targeted threat hunting exercises;
Engagement of forensic cybersecurity and data analysis firms (as needed) to conduct independent
validation assessments if a breach is suspected and/or validated;
Engagements with third party consultants to build, design, and improve cyber risk management tools and
processes;
Third-party technology and service provider risk evaluation process; and
Cybersecurity insurance coverage.
During 2023, there were no cybersecurity incidents that had a material effect on the Company. Furthermore, we
have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents,
that have materially affected us to date, including our business, business strategy, results of operations, or financial
condition. For a discussion of prospective risks related to potential cybersecurity incidents, please refer to Item 1A,
Risk Factors.
20
Cybersecurity Governance
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit
Committee oversight of cybersecurity and other information technology risks. The Audit Committee oversees
management’s implementation of our cybersecurity risk management program and discusses with management the
Company's cybersecurity and other information technology risks, controls, and procedures.
The Board receives annual reports from management on our cybersecurity risks and strategic updates. These
reports are designed to provide the Board a view into the progress of previous efforts, an update on existing and
new material risks, and an overview of proposed or planned cybersecurity-related projects, and foster a discussion
of cyber threats trending within the industry and their applicability to the organization. If a new material risk is
identified, or if the Company is impacted by a material security incident, the Audit Committee and the full Board of
Directors are notified and apprised of developments.
ITT employs a team of certified cybersecurity professionals responsible for assessing and managing
cybersecurity risks, led by the Chief Information Security Officer (CISO), who altogether make up ITT’s Cyber
Security Operations Center (CSOC). The qualifications of our cybersecurity team include the following industry-
recognized certifications: Certified Ethical Hacker (C|EH), Security+, GIAC Incident Handler Certification (GCIH),
and GIAC Foundational Cybersecurity Technologies (GFACT). Additionally, our cybersecurity team possesses
several Federal Emergency Management Agency (FEMA) and Department of Homeland Security (DHS) certificates
pertaining to cybersecurity. The CSOC monitors the global ITT landscape for cyber threats, provides prevention
strategies, initiates incident response for detected intrusions, and prescribes proactive and reactive mitigation
strategies. The CSOC serves as the cornerstone for protecting, assessing, and managing cybersecurity risks for the
enterprise, which includes, but is not limited to, back office processes, critical manufacturing processes, intellectual
property, and sensitive data. The CISO reports to the Chief Information Officer (CIO), who in turn reports to the
Chief Financial Officer (CFO). The combined expertise and qualifications of our cybersecurity team enable us to
effectively monitor, assess, and respond to cybersecurity threats.
Management is actively informed about, and monitors, cybersecurity incidents, including their prevention,
detection, mitigation, and remediation, through defined processes and reporting mechanisms. This proactive
approach includes the alignment of security policies and practices with NIST 800-171 Rev 2 and the organization's
enterprise risk management requirements. Twice annually, the CFO and CEO are briefed by the CISO and CIO
regarding ongoing projects, investments and changes to the threat landscape that have impacted, or may impact,
the organization, ensuring that the highest levels of management are kept abreast of the Company's cybersecurity
posture. Overall, this comprehensive approach ensures that management is well-informed and actively involved in
safeguarding the Company from cybersecurity threats.
ITEM 2. PROPERTIES
We own or lease approximately 170 manufacturing plants, warehouses, service centers, and sales and
administrative offices to support our operations. These properties are located in various regions around the world,
including North America, Europe, Asia, South America and the Middle East. We consider these properties to be in
good condition with sufficient capacity to accommodate the Company’s needs.
The following table summarizes the number of our material properties (other than our corporate headquarters)
by business segment as of December 31, 2023. We consider our properties containing 25,000 square feet or more,
which primarily consist of manufacturing locations, to be material. Our material properties account for over 90% of
the total square feet of our properties.
Number of Owned Locations
Number of Leased Locations
Total Locations
Motion
Technologies
13
9
22
Industrial
Process
11
22
33
Connect & Control
Technologies
5
6
11
Total
29
37
66
21
ITEM 3.
LEGAL PROCEEDINGS
From time to time, we are involved in legal proceedings that are incidental to the operation of our businesses.
Some of these proceedings allege damages relating to environmental exposure, intellectual property matters,
copyright infringement, personal injury claims, product liabilities, employment and employee benefit matters,
government contract issues and commercial or contractual disputes and acquisitions or divestitures. Descriptions of
certain legal proceedings to which the Company is a party are contained in Note 19, Commitments and
Contingencies, to the Consolidated Financial Statements.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The executive officers of the Company as of February 1, 2024, are listed below.
Name
Luca Savi
Davide Barbon
Emmanuel Caprais
Cheryl de Mesa Graziano
Maurine C. Lembesis
Bartek Makowiecki
Lori B. Marino
Fernando Roland
Age
58
54
49
51
57
45
49
50
Current Title
President and Chief Executive Officer
Senior Vice President and President, Motion Technologies and Asia
Pacific
Senior Vice President and Chief Financial Officer
Vice President and Chief Accounting Officer
Senior Vice President and Chief Human Resources Officer
Senior Vice President, Strategy and Business Development
Senior Vice President, General Counsel, Corporate Secretary and Chief
Compliance Officer
Senior Vice President and President, Industrial Process
Luca Savi has served as our Chief Executive Officer, President and a director of the Company since January 2019.
He previously served as President and Chief Operating Officer of the Company from August 2018 to December
2018 and as Executive Vice President and Chief Operating Officer from January 2017 to August 2018. Prior to
that, he served as Executive Vice President, Motion Technologies from February 2016 to January 2017 and as
Senior Vice President and President, Motion Technologies from November 2011 to February 2016. Prior to
joining ITT, Mr. Savi served as Chief Operating Officer, Comau Body Welding at Comau, a subsidiary of the Fiat
Group responsible for producing and serving advanced manufacturing systems, and from 2009 to 2011 as Chief
Executive Officer, Comau North America from 2007 to 2009. Mr. Savi previously held leadership roles at
Honeywell International, Royal Dutch Shell and technical roles at Ferruzzi-Montedison Group. Mr. Savi is
currently a director of MSA Safety Inc. and serves on its compensation committee.
Davide Barbon has served as our Senior Vice President and President, Motion Technologies and Asia Pacific
Region since October 2023. He previously served as our Senior Vice President and President, Asia Pacific
Region since October 2020. Prior to that, he served as General Manager of the KONI and Axtone businesses
within Motion Technologies from January 2017. Mr. Barbon joined the Company in 2010, initially serving in the
Brazil, Russia, India and China business of Motion Technologies, and then led its China business for five years.
Prior to joining ITT, he spent 14 years with JLG Industries, where he had a number of roles of increasing
responsibility across the United States, Europe, and Latin America.
Emmanuel Caprais has served as our Senior Vice President and Chief Financial Officer since October 2020. He
previously served as Vice President of Finance and Group Chief Financial Officer, in charge of the Company’s
business unit finance teams, Financial Planning & Analysis and Investor Relations for the company. Mr. Caprais
joined ITT in 2012, at which time he served as segment Chief Financial Officer of Motion Technologies and later
Industrial Process. Prior to joining ITT, Mr. Caprais held leadership roles in finance at Marelli, and earlier held
positions of increasing responsibility in finance at Valeo across North America and Europe.
22
Cheryl de Mesa Graziano has served as our Vice President and Chief Accounting Officer since November 2022.
Prior to joining ITT, she served as Chief Accounting Officer of Party City Holdco Inc. (Party City) from December
2021 to October 2022. Ms. de Mesa Graziano also served as Vice President, Global Controller and Vice
President, Financial Reporting and Accounting at Party City. She previously held various positions of increasing
responsibility at Stanley Black & Decker, Inc. from May 2013 to October 2019, including Assistant Corporate
Controller and Global Leader, Corporate Technical Accounting and Compliance. Before 2013, Ms. de Mesa
Graziano held finance leadership roles at other companies including IBM and Financial Executives International.
Maurine C. Lembesis has served as our Senior Vice President and Chief Human Resources Officer since January
2019. Prior to that, Ms. Lembesis served as our Vice President and Corporate Human Resources Business
Partner. Prior to joining ITT in 2013, she held roles of increasing responsibility in Human Resources at Avon
Products Inc., including the role of Executive Director of Human Resources. In addition, Ms. Lembesis held
various other human resources roles at Capital Group Companies, Pfizer Inc. and GE Capital.
Bartek Makowiecki has served as our Senior Vice President, Strategy and Business Development since September
2021. Prior to joining ITT, he served as Global Head of Strategy, M&A and Venturing of Ingredion Incorporated
from October 2017 to September 2021. Immediately prior, he served as Director, Corporate Strategy & Head of
M&A at Owens Corning from November 2015 to October 2017. Prior to that, Mr. Makowiecki held roles of
increasing responsibility in global strategy and M&A at Parker-Hannifin Corporation from August 2003 to
October 2015.
Lori B. Marino has served as our Senior Vice President and General Counsel since January 2023. She was
appointed as Corporate Secretary and Chief Compliance Officer in October 2023. Ms. Marino previously served
as Vice President, Deputy General Counsel and Secretary of ITT from May 2016 to April 2019 and as Vice
President, Chief Corporate Counsel and Corporate Secretary from September 2013 to May 2016. Prior to
rejoining ITT, Ms. Marino served as Executive Vice President, General Counsel, Secretary and Chief Human
Resources Officer at New Senior Investment Group Inc. from April 2019 to September 2021.
Fernando Roland has served as our Senior Vice President and President of Industrial Process since August 2023.
Prior to joining ITT, Mr. Roland served as Senior Vice President, Customer Engineered Solutions — Americas,
and held other leadership roles at Continental AG from March 2013 to July 2023. Prior to that, Mr. Roland held
various business leadership positions at companies such as DuPont de Nemours, Inc., Hyosung Corporation,
and Performance Fibers from 1996 to 2013.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
23
PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
COMMON STOCK AND DIVIDENDS
Our common stock is reported in the consolidated transaction reporting system of the New York Stock
Exchange (NYSE), the principal market in which this security is traded (under the trading symbol "ITT"). There were
approximately 5,706 holders of record of our common stock on February 9, 2024.
The amount and timing of dividends payable on our common stock are within the sole discretion of our Board of
Directors and will be based on, and affected by, a number of factors, including our financial position and results of
operations, available cash, expected capital spending plans, prevailing business conditions, and other factors the
Board deems relevant. Therefore, we cannot provide any assurance as to what level of dividends, if any, will be paid
in the future.
During the fiscal year ended December 31, 2023, the Company did not offer or sell any equity securities that
were not registered under the Securities Act.
ISSUER PURCHASES OF EQUITY SECURITIES
On October 30, 2019, the Board of Directors approved an indefinite term $500 share repurchase program (the
2019 Plan) under which $78.8 remained available as of December 31, 2023. We continue to utilize the 2019 Plan in
a manner that is consistent with our capital allocation strategy, which has centered on those investments necessary
to grow our businesses organically and through acquisitions, while also providing cash returns to shareholders.
On October 4, 2023, the Board of Directors approved an indefinite term $1,000 open-market share repurchase
program (the 2023 Plan). Repurchases under this authorization will begin upon the completion of the 2019 Plan.
We have made no open-market share repurchases of our common stock during the quarter ended December
31, 2023.
24
COMPANY STOCK PERFORMANCE
The following graph shows a comparison of the cumulative total shareholder return for ITT, the S&P 400 Mid
Cap Index, and the S&P 400 Capital Goods Index over the five years ended December 31, 2023. It shows the share
price appreciation of a $100 investment made on December 31, 2018, assuming any dividends paid are reinvested.
COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
12/31/2023
ITT Inc.
S&P 400 Mid-Cap
S&P 400 Capital Goods
$ 100.00
$ 100.00
$ 100.00
$ 154.58
$ 126.17
$ 132.75
$ 162.96
$ 143.39
$ 159.09
$ 218.32
$ 178.85
$ 203.10
$ 175.74
$ 155.42
$ 182.76
$ 261.68
$ 180.90
$ 251.41
This graph is not, and is not intended to be, indicative of future performance of our common stock. This graph
shall not be deemed "filed" with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and should not be deemed to be incorporated by reference into any of our
prior or subsequent filings under the Securities Act.
ITEM 6.
[RESERVED]
Not applicable.
25
ITT Inc.S&P 400 Mid-CapS&P 400 Capital Goods201820192020202120222023$100$125$150$175$200$225$250$275 ITEM 7.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and the notes
related thereto. As we noted earlier in the Forward-Looking and Cautionary Statements of this Annual Report on
Form 10-K, this Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of
Operations, and Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk (along with other
sections of this Annual Report), may contain forward-looking statements. The risks discussed in Part I, Item 1A, Risk
Factors, and other risks identified in this Annual Report on Form 10-K could cause our actual results to differ
materially from those expressed by such forward-looking statements.
All comparisons included within this Part II, Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations, refer to results for the year ended December 31, 2023 compared to the year
ended December 31, 2022, unless stated otherwise. Additionally, all financial results and share repurchases other
than per share amounts are reported in millions, unless stated otherwise. Per share amounts are reported in ones.
Please refer to our Annual Report on Form 10-K (2022 Annual Report) for a discussion of the year ended December
31, 2022 compared to the year ended December 31, 2021.
OVERVIEW
ITT Inc., through its worldwide subsidiaries, is a diversified manufacturer of highly engineered critical
components and customized technology solutions for the transportation, industrial and energy markets. Our product
and service offerings are organized into three segments: Motion Technologies (MT), Industrial Process (IP), and
Connect & Control Technologies (CCT). Refer to Part I, Item 1, Description of Business, for a further overview of our
company, segments, products and service offerings, and other information about the business.
EXECUTIVE SUMMARY
During 2023, despite evolving macroeconomic conditions, we delivered strong financial results, which included
revenue and operating income growth, operating margin expansion, EPS growth and effective deployment of
capital. The following table provides a summary of key performance indicators for 2023 in comparison to 2022.
Revenue
$3,283
Operating Income
Operating Margin
$528
16.1%
EPS
$4.97
10% Increase
13% Increase
40bp Increase
13% Increase
Organic Revenue
Adjusted Operating
Income
Adjusted Operating
Margin
$3,229
$555
16.9%
Adjusted
EPS
$5.21
8% Increase
17% Increase
100bp Increase
17% Increase
See the section titled "Key Performance Indicators and Non-GAAP Measures" for a definition and reconciliation
of organic revenue, adjusted operating income, adjusted operating margin, and adjusted EPS.
Our 2023 results include:
•
Revenue of $3,283.0 increased $295.3 due to higher sales volume and pricing actions, particularly within
IP's aftermarket business, MT's Friction OE business, and CCT's components business. In addition, our
2023 results benefited by $30.5 from our recent acquisitions of Habonim and Micro-Mode Products, Inc.
("Micro-Mode"), and by $23.1 from favorable foreign currency translation.
• Operating income of $528.2 increased $60.2, primarily due to higher revenue, productivity savings, a gain
of $7.2 on the sale of a product line within our CCT segment, lower charges related to the suspension of
business in Russia, and the accretive impact of our recent acquisitions of Habonim and Micro-Mode. The
increase in operating income was partially offset by higher labor, raw material and overhead costs,
unfavorable foreign currency impacts and product mix, a loss of $15.3 on the sale of our Matrix Composites,
Inc. ("Matrix") business, and a prior year gain of $15.5 on the sale of facilities within our IP segment.
26
•
Income from continuing operations was $4.97 per diluted share, an increase of $0.57 as compared to the
prior year. The increase was primarily due to higher operating income, as discussed above, and lower share
count resulting from open-market share repurchases executed during the year.
Throughout 2023, we remained committed to creating value through effective capital deployment, which
included the following:
•
In May, we acquired Micro-Mode, a leading provider of highly engineered connectors for harsh environment
defense and space applications.
• We announced our intent to acquire Denmark-based Svanehøj Group A/S ("Svanehøj"), a leading provider
of customized critical liquid and cryogenic pumps for liquefied gas applications for the marine sector, which
will expand our international footprint and we expect will position us to benefit from the energy transition.
The acquisition closed on January 19, 2024.
• We increased our capital expenditures by 4% over the prior year to fund investments in innovation, capacity
and green energy, including solar installations.
• We repurchased 0.7 shares of common stock on the open market for $61, and announced a new $1 billion
share repurchase program.
• We paid $96 in dividends to our shareholders. Our dividends declared in 2023 of $1.16 per share
represented a 10% increase over the dividends per share declared of $1.056 in 2022.
Global Macroeconomic Conditions
During 2023, the global economy experienced a mix of challenges that impacted the Company's performance.
These challenges included geopolitical uncertainty, trade disputes, supply chain disruptions, production challenges,
labor shortages, raw material constraints, and inflation. These items are described further below.
Israel-Palestine Conflict
In October 2023, tensions between Israel and Palestine escalated, resulting in war, regional instability, and
market volatility. This situation has further increased geopolitical tensions, has attracted international attention, and
has raised humanitarian and economic concerns. Our operations in Israel are limited to Habonim, which we
acquired in April 2022. Habonim is part of our IP segment and had sales of $57.4 and $45.0, respectively, during
2023 and 2022. Further escalation of this conflict could result in supply chain disruptions, inflation, workforce
disruptions, demand fluctuations, or the inability to fulfill customer requests in the region. We are currently unable to
reasonably estimate any future impacts on our business and financial results.
Russia-Ukraine War
In February 2022, the United States and other leading nations announced targeted economic sanctions on
Russia and certain Russian citizens in response to Russia’s war with Ukraine, which has increased regional
instability and global economic and political uncertainty.
During the years ended December 31, 2023 and 2022, we recorded total pre-tax charges of $2.5 and $7.9,
primarily related to suspending our business in Russia. Any future impacts on our business and financial results are
not expected to be material.
Inflationary Pressures
Since 2020, the cost of energy and raw materials we use in our production processes, including commodities
such as steel, oil, copper, and tin, have significantly increased. The rising prices are primarily due to reduced supply
caused by supply chain disruptions primarily stemming from the COVID-19 pandemic and the ongoing Russia-
Ukraine war.
Beginning in 2022, central banks around the world have been raising interest rates to counter inflation. Rising
interest rates increased our cost of debt and contributed to instability in the global banking system during 2023,
which has impacted consumer behavior, including demand for our products.
The manufacturing industry continues to experience a skilled labor shortage, which has created difficulties in
attracting and retaining factory employees and has resulted in higher labor costs.
27
Global macroeconomic conditions have led and may continue to lead to decreased demand for our products,
increased costs, and reduced operating margins. We have been able to offset most of these negative impacts
through pricing actions and productivity savings, which we continue to pursue. Future impacts on our business and
financial results as a result of these conditions are not estimable at this time, and depend, in part, on the extent to
which these conditions improve or worsen, which remains uncertain. For additional discussion of the risks related to
global macroeconomic conditions, see Part I, Item 1A, Risk Factors, herein.
DISCUSSION OF FINANCIAL RESULTS
2023 VERSUS 2022
For the Year Ended December 31
Revenue
Gross profit
Operating expenses
Operating income
Interest and other non-operating expense, net
Income tax expense
Income from continuing operations attributable to ITT Inc.
Net income attributable to ITT Inc.
Gross margin
Operating expense to revenue ratio
Operating margin
Effective tax rate
2023
$ 3,283.0
1,107.3
579.1
528.2
8.7
104.8
411.4
$ 410.5
2022
$ 2,987.7
922.3
454.3
468.0
6.2
91.1
368.3
$ 367.0
33.7 %
17.6 %
16.1 %
20.2 %
30.9 %
15.2 %
15.7 %
19.7 %
Change
9.9 %
20.1 %
27.5 %
12.9 %
40.3 %
15.0 %
11.7 %
11.9 %
280 bp
240 bp
40 bp
50 bp
All comparisons included within the Discussion of Financial Results for 2023 versus 2022 refer to results for the
year ended December 31, 2023 compared to the year ended December 31, 2022, unless stated otherwise.
REVENUE
The following table summarizes the revenue derived from each of our segments.
For the Year Ended December 31
Motion Technologies
Industrial Process
Connect & Control Technologies
Eliminations
Total Revenue
2023
2022
Change
$ 1,457.8
1,129.6
699.4
$ 1,374.0
971.0
645.6
(3.8)
(2.9)
6.1 %
16.3 %
8.3 %
Organic
growth(a)
4.9 %
14.3 %
5.7 %
$ 3,283.0
$ 2,987.7
9.9 %
8.1 %
(a) See the section titled "Key Performance Indicators and Non-GAAP Measures" for a definition and reconciliation of organic
revenue.
Motion Technologies
MT revenue for the year ended December 31, 2023 increased $83.8 primarily driven by higher sales volume
and pricing actions. Our Friction business grew 6% due to strong OEM demand. Additionally, our KONI and Axtone
businesses grew 6% and 10%, respectively. These increases were partially offset by a decline in our Wolverine
business of 7%, which was primarily attributable to a decline in sales of sealing materials. The current year period
also benefited from favorable foreign currency translation of $17.0. Excluding the impact from foreign currency
translation, organic revenue increased $66.8.
In March 2023, our Friction business signed a new 10-year agreement, effective January 1, 2024, for the supply
of ITT aftermarket brake pads to Continental AG. The previous 10-year agreement with Continental AG expired on
December 31, 2023. The new agreement is expected to generate over $1 billion in revenue over its term.
28
Industrial Process
IP revenue for the year ended December 31, 2023 increased $158.6 primarily driven by higher sales volume
and pricing actions. Our aftermarket business grew 16% primarily within the energy, chemical, and mining markets,
and our pump project revenue grew 31%, primarily within the chemical and energy markets. The current year
period also benefited by $15.0 from our acquisition of Habonim, which closed in the second quarter of 2022, and
$4.7 from favorable foreign currency translation. Excluding the impacts from acquisition and foreign currency
translation, organic revenue increased $138.9.
The level of order and shipment activity at IP can vary significantly from period to period due to pump projects
which are highly engineered, customized to customer needs, and have longer lead times. Total IP orders during
2023 were $1,227.0, an increase of 11.4% compared to the prior year, including $285.9 of orders in the fourth
quarter, which represents 5.5% growth from the fourth quarter of last year. IP's backlog as of December 31, 2023
was $676.8, reflecting an increase of $96.8, or 16.7%, compared to December 31, 2022. Our backlog represents
firm orders that have been received, acknowledged, and entered into our production systems.
Connect & Control Technologies
CCT revenue for the year ended December 31, 2023 increased $53.8 primarily driven by pricing actions and
higher sales volume. Specifically, component sales grew 21%, primarily within the aerospace and defense markets,
while connector sales grew 1%. The current year period also benefited $15.5 from our second quarter acquisition of
Micro-Mode and $1.4 from favorable foreign currency translation. Excluding the impacts from acquisition and
favorable foreign currency translation, organic revenue increased $36.9.
GROSS PROFIT
Gross profit for 2023 was $1,107.3, reflecting a gross margin of 33.7%. Gross profit for 2022 was $922.3,
reflecting a gross margin of 30.9%. The increases in gross profit and gross margin were primarily driven by an
increase in revenue, described above in the section titled "Revenue", partially offset by increases in raw material,
labor, and overhead costs, which were driven by inflationary pressures during the year, as discussed above in the
section titled "Global Macroeconomic Conditions".
OPERATING EXPENSES
The following table provides a disaggregation of our operating expenses by expense type, as well as by
segment.
For the Year Ended December 31
General and administrative expenses(a)
Sales and marketing expenses
Research and development expenses
Gain on sale of long-lived assets
Total operating expenses
By Segment:
Motion Technologies
Industrial Process
Connect & Control Technologies
Corporate & Other
2022
Change
2023
$ 302.6
174.0
102.6
$ 217.2
156.9
96.5
(0.1)
(16.3)
$ 579.1
$ 454.3
$ 173.7
207.6
144.1
53.7
$ 140.9
150.0
119.6
43.8
39.3 %
10.9 %
6.3 %
(99.4) %
27.5 %
23.3 %
38.4 %
20.5 %
22.6 %
(a) The prior year presentation has been updated to conform to the current year presentation.
29
General and administrative (G&A) expenses increased $85.4 for the year ended December 31, 2023. The
increase was primarily due to higher incentive-based compensation and payroll costs, including as a result of higher
headcount stemming from our acquisitions of Habonim in the second quarter of 2022 and Micro-Mode in the second
quarter of 2023, a loss of $15.3 on the sale of our Matrix business, higher restructuring charges, and unfavorable
foreign currency impacts. The increase was partially offset by a gain of $7.2 resulting from the sale of a product line
within our CCT segment, income of $3.7 from a recovery of costs associated with the 2020 lease termination of a
legacy site, higher corporate-owned life insurance investment gains, and lower asset impairment charges.
Sales and marketing expenses increased $17.1 for the year ended December 31, 2023, primarily driven by
higher personnel and other sales-related costs to support higher sales activity. The increase in personnel costs was
partially attributable to higher headcount stemming from, and timing of, our recent Habonim and Micro-Mode
acquisitions.
Research and development (R&D) expenses increased $6.1 for the year ended December 31, 2023, primarily
driven by higher personnel costs to support investments in innovation and new product development.
Gain on sale of long-lived assets decreased by $16.2 for the year ended December 31, 2023. The prior year
period included a one-time gain of $15.5 related to the sale of facilities that were previously held within our IP
segment.
OPERATING INCOME
The following table summarizes our operating income and operating margin by segment.
For the Year Ended December 31
Motion Technologies
Industrial Process
Connect & Control Technologies
Corporate & Other
Total operating income
Operating Margin:
Motion Technologies
Industrial Process
Connect & Control Technologies
Consolidated ITT
2023
$ 230.8
243.6
107.5
(53.7)
$ 528.2
2022
$ 208.5
187.6
115.8
(43.9)
$ 468.0
15.8 %
21.6 %
15.4 %
16.1 %
15.2 %
19.3 %
17.9 %
15.7 %
Change
10.7 %
29.9 %
(7.2) %
22.3 %
12.9 %
60 bp
230 bp
(250) bp
40 bp
MT operating income for the year ended December 31, 2023 increased $22.3 primarily due to higher revenue,
as discussed above, productivity savings, and lower charges related to the suspension of business in Russia. The
increase was partially offset by higher raw material, labor and overhead costs, as well as unfavorable foreign
currency impacts and product mix.
IP operating income for the year ended December 31, 2023 increased $56.0, driven by higher revenue, as
discussed above, productivity savings, lower charges related to the suspension of business in Russia, and the
accretive impact of the acquisition of Habonim, which occurred in the second quarter of 2022. The increase was
partially offset by higher labor and overhead costs, and unfavorable foreign currency impacts. The prior year period
also benefited from a non-recurring gain of $15.5 related to the sale of facilities.
CCT operating income for the year ended December 31, 2023 decreased $8.3, driven by a $15.3 loss on the
sale of our Matrix business, and higher raw material, labor and overhead costs. The decrease was partially offset by
higher revenue, as discussed above, productivity savings, a gain of $7.2 related to the sale of a product line, and
the accretive impact of the second quarter acquisition of Micro-Mode.
Within Corporate & Other, corporate costs, net, increased $9.8 for the year ended December 31, 2023, primarily
driven by higher personnel-related costs, including incentive-based compensation. The increase was partially offset
by income of $3.7 from a recovery of costs associated with the 2020 lease termination of a legacy site as well as by
higher corporate-owned life insurance investment gains. The prior year period also included a $1.7 asset
impairment charge related to the relocation of the Company’s corporate headquarters.
30
INTEREST AND OTHER NON-OPERATING EXPENSE (INCOME), NET
The following table summarizes our interest and other non-operating expense (income), net.
For the Year Ended December 31
Interest expense
Interest income
Non-operating postretirement (benefit) costs, net
Other non-operating income, net
Total interest and other non-operating expense, net
2023
$ 19.2
2022
$ 10.9
(8.8)
(0.4)
(1.3)
(4.5)
1.1
(1.3)
$ 8.7
$ 6.2
Change
76.1 %
95.6 %
136.4 %
— %
40.3 %
The increase in interest and other non-operating expense, net for the year ended December 31, 2023 was
primarily due to higher interest expense associated with a higher average interest rate on our commercial paper
borrowings, and $1.4 of interest expense related to a tax audit settlement in Italy, as discussed below in the section
titled "Income Tax Expense". This increase was partially offset by an increase in interest income, which was
primarily due to higher weighted average interest rates during the year, and an increase in postretirement benefits
due to a prior year plan amendment.
31
INCOME TAX EXPENSE
The following table summarizes our income tax expense and effective tax rate.
For the Year Ended December 31
Income tax expense
Effective tax rate
2023
2022
$ 104.8
$ 91.1
Change
15.0 %
20.2 %
19.7 %
50 bps
The higher effective tax rate in 2023 compared to 2022 resulted from the Company recording tax expense in
2023 of $14.2 relating to a tax audit in Italy covering tax years 2016-2022. The 2023 expense includes $6.8 of U.S.
tax on foreign earnings. These tax expenses were offset by $16.1 from valuation allowance reversals on deferred
tax assets in Germany. ITT also recognized tax benefits of $4.9 from the filing of an amended 2017 consolidated
federal tax return.
We are closely monitoring the potential passage of new U.S. and foreign tax legislation, which could result in
substantial changes to the current U.S. or foreign tax systems, including changes to the statutory corporate tax rate.
In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers
reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, which is a multi-jurisdictional
plan of action to address base erosion and profit shifting. On December 20, 2021, the OECD released the Model
GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. The OECD
continues to release additional guidance and countries are implementing legislation with widespread adoption of the
Model GloBE Rules for Pillar Two expected by calendar year 2024. We are continuing to evaluate the Model GloBE
Rules for Pillar Two and related legislation, and their potential impact on future periods. Enactment of this regulation
in its current form could increase the amount of global corporate income tax paid by the Company. These increases
could have a material adverse effect on our effective tax rate. As the effects of a change in U.S. or foreign tax law
must be recognized in the period in which the new legislation is enacted, should new legislation be signed into law,
our financial results could be materially impacted.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the Inflation Reduction
Act) into law. The Inflation Reduction Act includes a new corporate alternative minimum tax (the Corporate AMT) of
15% on the adjusted financial statement income (AFSI) of corporations with an average AFSI exceeding $1.0 billion
over a three-year period. The Corporate AMT was effective for the Company beginning in 2023. Given the AFSI
threshold, the Corporate AMT was not applicable to the Company in 2023, but the Corporate AMT may have
potential impacts on our future U.S. tax expense, cash taxes and effective tax rate. Additionally, the Inflation
Reduction Act imposes a 1% excise tax on the fair market value of net stock repurchases made after December 31,
2022. The impact of this provision was not material in 2023 and future impacts will be dependent on the extent of
share repurchases made in future periods.
We operate in various tax jurisdictions and are subject to examination by tax authorities in these jurisdictions. We
are currently under examination in several jurisdictions including Czechia, Germany, Hong Kong, India, Italy, Japan,
the U.S. and Venezuela. The calculation of our tax liability for unrecognized tax benefits includes dealing with
uncertainties in the application of complex tax laws and regulations in various tax jurisdictions. Due to the
complexity of some uncertainties, the ultimate resolution may result in a payment that is materially different from our
current estimate of the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liability for
unrecognized tax benefits in foreign and domestic jurisdictions is not expected to change by a significant amount.
See Note 6, Income Taxes, to the Consolidated Financial Statements for further information on tax-related
matters.
32
LIQUIDITY AND CAPITAL RESOURCES
Funding and Liquidity Strategy
We monitor our funding needs and execute strategies to meet overall liquidity requirements, including the
management of our capital structure, on both a short- and long-term basis. Significant factors that affect our overall
management of liquidity include our cash flow from operations, credit ratings, the availability of commercial paper,
access to bank lines of credit, term loans, and the ability to attract long-term capital on satisfactory terms. We
assess these factors along with current market conditions on a continuous basis, and as a result, may alter the mix
of our short- and long-term financing when it is advantageous to do so. We expect to have enough liquidity to fund
operations for at least the next 12 months and beyond.
We manage our worldwide cash requirements considering available funds among the many subsidiaries through
which we conduct business and the cost effectiveness with which those funds can be accessed. We support our
growth and expansion in markets outside of the U.S. through the enhancement of existing products and
development of new products, increased capital spending, and potential foreign acquisitions. We look for
opportunities to access cash balances in excess of local operating requirements to meet our global liquidity needs in
a cost-efficient manner. We transfer cash between certain international subsidiaries and the U.S. when it is cost
effective to do so. Net cash distributions from foreign countries to the U.S. during the years ended December 31,
2023 and 2022 were $357.5 and $74.0, respectively. The timing and amount of any additional future distributions
remains under evaluation based on our jurisdictional cash needs.
Capital Resources
As of December 31, 2023, we have access to short- and long-term funding sources. These include access to
the capital markets through a commercial paper program, as well as $700 of available borrowing capacity under our
2021 Revolving Credit Agreement, which may potentially be expanded to $1,050 under the agreement. In addition,
we have market access to secure longer-term funding, if needed. Our commercial paper program is supported by
our 2021 Revolving Credit Agreement and our policy is to maintain unused committed bank lines of credit in an
amount greater than outstanding commercial paper balances. These sources of capital are described further below.
Commercial Paper
When available and economically feasible, we have accessed the commercial paper market through programs in
place in the U.S. and Europe to supplement cash flows generated internally and to provide additional short-term
funding.
The following table presents our outstanding commercial paper borrowings. See Note 15, Debt, for further
information.
As of December 31
Commercial Paper Outstanding - U.S. Program
Commercial Paper Outstanding - Euro Program
Total Commercial Paper Outstanding
2023
2022
$
184.9
$
299.2
—
184.9
$
149.1
448.3
The decrease in commercial paper outstanding from December 31, 2022 to December 31, 2023 was primarily
related to higher share repurchase and acquisition activity in the prior year that was financed using commercial
paper, and timing of repayments. See Note 18, Capital Stock, and Note 22, Acquisitions, Investments, and
Divestitures, for further information.
All outstanding commercial paper for both periods had maturity terms of less than three months from the date of
issuance. Our average daily outstanding commercial paper balance for the years ended 2023 and 2022 was $366.9
and $459.6, respectively, and the maximum outstanding commercial paper during each of those respective years
was $669.9 and $561.7.
Revolving Credit Agreement
On August 5, 2021, we entered into a revolving credit facility agreement with a syndicate of third party lenders
including Bank of America, N.A., as administrative agent (as amended, the 2021 Revolving Credit Agreement). The
2021 Revolving Credit Agreement matures in August 2026 and provides for an aggregate principal amount of up to
$700 of (i) revolving extensions of credit (the revolving loans) outstanding at any time, and (ii) letters of credit for a
face amount up to $100 at any time outstanding. Subject to certain conditions, we are permitted to terminate
permanently the total commitments and reduce commitments by a minimum aggregate amount of $10 or any whole
33
multiple of $1 in excess thereof. Borrowings under the credit facility are available in U.S. dollars, Euros, British
pound sterling or any other currency that may be requested by us, subject to the approval of the administrative
agent and each lender. We are permitted to request that lenders increase the commitments under the facility by up
to $350 for a maximum aggregate principal amount of $1,050; however, this is subject to certain conditions and
therefore may not be available to us. As of December 31, 2023 and 2022, we had no outstanding borrowings under
the 2021 Revolving Credit Agreement. See Note 15, Debt, to the Consolidated Financial Statements for further
information.
Long-term Debt
Long-term debt is generally defined as any debt with an original maturity greater than 12 months. Our long-term
debt is primarily related to outstanding Italian government loans maturing in June 2027. Our long-term debt carries a
weighted average fixed interest rate of 0.86% and requires annual principal and interest payments of approximately
$2.0, on average, through maturity. The table below provides our long-term debt outstanding as of December 31,
2023 and 2022.
As of December 31
Current portion of long-term debt
Non-current portion of long-term debt
Total long-term debt
See Note 15, Debt, for further information.
Term Loan
2023
2022
$
$
2.3
5.7
8.0
$
$
2.2
7.7
9.9
On January 12, 2024, ITT Italia S.r.l. (“ITT Italia”), an indirect wholly owned subsidiary of ITT, entered into a
facility agreement (the “ITT Italia Credit Agreement”), among the Company, as a guarantor, ITT Italia, as borrower,
and BNP Paribas, Italian Branch, as bookrunner, sole underwriter and global coordinator, mandated lead arranger
and agent.
The ITT Italia Credit Agreement has an initial maturity of three years and provides for term loan borrowings in an
aggregate principal amount of €300 million, €275 million of which have been used to finance the Company’s
acquisition of Svanehøj Group A/S, which closed on January 19, 2024.
See Note 15, Debt, for further information.
Credit ratings
The Company's ability to access the global capital markets and the related cost of financing is dependent upon,
among other factors, the Company's credit ratings. Our credit ratings as of December 31, 2023 were as follows:
Rating Agency
Standard & Poor’s
Moody’s Investors Service
Fitch Ratings
Short-Term
Ratings
A-2
P-2
F1
Long-Term
Ratings
BBB
Baa2
BBB+
In December 2023, Fitch Ratings upgraded ITT's short-term ratings, which include its Short-term Issuer Default
rating and Commercial Paper rating, from F2 to F1. The upgraded ratings reflect ITT's conservative capital
structure, product and geographic diversification, installed base, sizeable aftermarket revenue, solid EBITDA
margins, and good financial flexibility. There were no other changes to our credit ratings during 2023. Please refer to
the rating agency websites and press releases for more information.
34
Sources and Uses of Liquidity
In addition to the capital resources discussed above, our principal source of liquidity is our cash flow generated
from operating activities, which provides us with the ability to meet the majority of our short-term funding
requirements. The following table summarizes net cash derived from operating, investing, and financing activities for
the years ended December 31, 2023 and 2022.
For the Year Ended December 31
Operating activities
Investing activities
Financing activities
Foreign exchange
Total net cash used in continuing operations
Net cash from discontinued operations
Net change in cash and cash equivalents
Operating Activities
2023
$ 538.0
(181.0)
(432.3)
3.6
(71.7)
(0.3)
(72.0)
$
$
2022
$ 277.7
(255.1)
(83.3)
(25.8)
(86.5)
0.1
(86.4)
$
$
The increase in net cash from operating activities of $260.3 was primarily driven by favorable net working capital
impacts primarily due to improved inventory management and timing of accounts receivable collections, higher
operating income, and lower incentive-based compensation payments related to the prior year.
Investing Activities
The increase in net cash from investing activities of $74.1 was primarily driven by our acquisition and equity-
method investment activity. In 2023, we acquired Micro-Mode for a purchase price of $79.3. In 2022, we acquired
Habonim for a purchase price of $139.9 and we purchased a minority investment in CRP Technology Srl and CRP
USA LLC for $23.0. In addition, during 2023, we received proceeds of $10.5 from the sale of a product line within
our CCT segment and $1.0 from the sale of our Matrix business, while in 2022 we received proceeds of $20.9 from
the sale of facilities within our IP segment. Refer to Note 22, Acquisitions, Investments, and Divestitures, and Note
11, Plant, Property and Equipment, Net, for further information.
Financing Activities
The decrease in net cash from financing activities of $349.0 was primarily driven by a higher cash outflows of
$525.7 associated with commercial paper borrowings due to timing of repayments. This was partially offset by lower
cash outflows of $185.3 related to repurchases of ITT common stock.
Dividends
The amount and timing of dividends payable on our common stock are within the sole discretion of our Board of
Directors and will be based on, and affected by, a number of factors, including our financial position and results of
operations, available cash, expected capital spending plans, prevailing business conditions, and other factors the
Board of Directors deems relevant. Therefore, we cannot provide any assurance as to what level of dividends, if
any, will be paid in the future. Aggregate dividends declared in 2023 were $95.9, compared to $87.7 in 2022,
reflecting annual per share amounts of $1.160 and $1.06, respectively. In the first quarter of 2024, we declared a
quarterly dividend of $0.319 per share for shareholders of record on March 8, 2024, which will be paid on April 1,
2024.
Open-market Share Repurchases
On October 30, 2019, the Board of Directors approved our current program, an indefinite term $500 open-
market share repurchase program (the 2019 Plan). All repurchased shares are retired immediately following the
repurchases. During the years ended December 31, 2023 and 2022, we spent $60.0 and $245.3, respectively, on
open-market share repurchases under the 2019 Plan. As of December 31, 2023, there was $78.8 of remaining
authorization left under the 2019 Plan.
On October 4, 2023, the Board of Directors approved an indefinite term $1,000 open-market share repurchase
program (the 2023 Plan). Repurchases under this authorization will begin upon the completion of the 2019 Plan.
See Note 18, Capital Stock for more information.
35
Funding of Postretirement Plans
The following table provides a summary of the funded status of our postretirement benefit plans.
As of December 31
Fair value of plan assets
Projected benefit obligation
Funded status
U.S.
Pension
$
2023
2022
Non-U.S.
Pension
Other
Benefits
Total
U.S.
Pension
Non-U.S.
Pension
Other
Benefits
Total
— $
0.4 $
— $
0.4 $
— $
0.4 $
11.2
(11.2) $
73.2
(72.8) $
66.2
(66.2) $ (150.2) $
150.6
11.2
(11.2) $
$
67.9
(67.5) $
— $
0.4
70.7
149.8
(70.7) $ (149.4)
Our non-U.S. pension plans, which are typically not funded due to local regulations, had an increase in
projected benefit obligation of $5.3 during 2023, primarily due to a lower discount rate. Our other employee-related
benefit plans are generally unfunded plans as well. The projected benefit obligation of these plans declined by $4.5
during 2023 primarily due to a decrease in the discount rate.
Contributions to our U.S. and non-U.S. pension and other postretirement plans were $9.5 and $11.0 during
2023 and 2022, respectively, which were used to fund participant benefits. We currently estimate 2024 contributions
to our pension and other postretirement benefits plans of approximately $12.
See Note 16, Postretirement Benefit Plans, for additional financial information related to our postretirement
obligations.
Contractual Obligations
The following table summarizes ITT’s commitment to make future payments under long-term contractual
obligations as of December 31, 2023.
Long-term debt
Operating leases
Purchase obligations(a)
Postretirement benefit payments(b)
Other long-term obligations(c)
Total
Payments Due By Period
Total
2024
2025 to
2026
2027 to
2028
Beyond
2029
$
8.0
104.9
133.2
150.2
68.5
$ 464.8
$
$
2.3
23.1
120.0
11.7
8.6
165.7
$
$
4.7
37.1
10.5
20.9
18.1
91.3
$
$
1.0
21.7
—
20.0
6.3
49.0
$
$
—
23.0
2.7
97.6
35.5
158.8
In addition to the amounts presented in the table above, we have recorded liabilities for uncertain tax positions
of $5.7 in our Consolidated Balance Sheet as of December 31, 2023. This amount has been excluded from the
contractual obligations table due to an inability to reasonably estimate the timing of payments in individual years.
(a) Represents unconditional purchase agreements that are enforceable and legally binding and that specify all
significant terms to purchase goods or services, including fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of the transaction. Purchase agreements
that are cancellable without penalty have been excluded.
(b) Represents the projected timing of payments for benefits earned to date and the expectation that certain
future service will be earned by current active employees for our pension and other employee-related benefit
plans. See Note 16, Postretirement Benefit Plans, for additional financial information related to our
postretirement obligations.
(c) Other long-term obligations include amounts recorded in our Consolidated Balance Sheet as of December 31,
2023, including estimated environmental payments and employee compensation agreements. We estimate
based on historical experience that we will spend, on average, approximately $6 per year on environmental
investigation and remediation. A portion of our environmental investigation and remediation costs are legally
mandated through various orders and agreements with state and federal oversight agencies. As of
December 31, 2023, our recorded environmental liability was $56.0. See Note 19, Commitments and
Contingencies, to the Consolidated Financial Statements for further information.
36
Off-Balance Sheet Arrangements
Off-balance sheet arrangements represent transactions, agreements or other contractual arrangements with
unconsolidated entities, where an obligation or contingent interest exists. Our off-balance sheet arrangements as of
December 31, 2023 consist of indemnities related to acquisition and disposition agreements and certain third-party
guarantees.
Indemnities
Since our founding in 1920 (pre-spin-offs), we have acquired and disposed of numerous businesses. The
related acquisition and disposition agreements allocate certain assets and liabilities among the parties and contain
various representation and warranty clauses and may provide indemnities for a misrepresentation or breach of the
representations and warranties by either party or for assumed or excluded liabilities. These provisions address a
variety of subjects. The term and monetary amounts of each such provision are defined in the specific agreements
and may be affected by various conditions and external factors. Many of the provisions have expired either by
operation of law or as a result of the terms of the agreement. We do not have a liability recorded for these expired
provisions and are not aware of any claims or other information that would give rise to material payments under
such provisions.
Guarantees
We had $159.4 of guarantees, letters of credit and similar arrangements outstanding as of December 31, 2023,
primarily pertaining to commercial or performance guarantees and insurance matters. We have not recorded any
material loss contingencies under these guarantees, letters of credit and similar arrangements as of December 31,
2023 as the likelihood of nonperformance by the underlying obligors is considered remote. From time to time, we
may provide certain third-party guarantees that may be affected by various conditions and external factors, some of
which could require that payments be made under such guarantees. We do not consider the maximum exposure or
current recorded liabilities under our third-party guarantees to be material either individually or in the aggregate. We
do not believe such payments would have a material adverse impact on our financial statements.
37
KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES
Management reviews a variety of key performance indicators including revenue, segment operating income and
margins, and earnings per share, some of which are calculated other than in accordance with accounting principles
generally accepted in the United State of America (GAAP). In addition, we consider certain measures to be useful to
management and investors when evaluating our operating performance for the periods presented. These measures
provide a tool for evaluating our ongoing operations and management of assets from period to period. This
information can assist investors in assessing our financial performance and measures our ability to generate capital
for deployment among competing strategic alternatives and initiatives, including, but not limited to, acquisitions,
dividends, and share repurchases. Some of these metrics, however, are not measures of financial performance
under GAAP and should not be considered a substitute for measures determined in accordance with GAAP. We
consider the non-GAAP measures disclosed in this Annual Report on Form 10-K to be key performance indicators.
These measures, which may not be comparable to similarly titled measures reported by other companies, consist of
the following:
•
“Organic revenue” is defined as revenue, excluding the impacts of foreign currency fluctuations and
acquisitions. The period-over-period change resulting from foreign currency fluctuations is estimated using a
fixed exchange rate for both the current and prior periods. Management believes that reporting organic revenue
provides useful information to investors by facilitating comparisons of our revenue performance with prior and
future periods and to our peers.
A reconciliation of revenue to organic revenue for the year ended December 31, 2023 is provided below.
2023 Revenue
Acquisitions
Foreign currency translation
2023 Organic revenue
2022 Revenue
Organic revenue growth
Percentage change
Motion
Technologies
$ 1,457.8
Industrial
Process
$ 1,129.6
Connect &
Control
Technologies
699.4
$
Eliminations
Total
ITT
$
(3.8) $ 3,283.0
—
(17.0)
1,440.8
1,374.0
$
66.8
$
(15.0)
(4.7)
1,109.9
971.0
138.9
(15.5)
(1.4)
682.5
645.6
—
—
(30.5)
(23.1)
(3.8)
3,229.4
(2.9)
2,987.7
$
36.9
$
(0.9) $
241.7
4.9 %
14.3 %
5.7 %
8.1 %
38
•
“Adjusted operating income (loss)” is defined as operating income (loss), adjusted to exclude special items that
include, but are not limited to, certain gain on sale of long-lived assets, restructuring, severance, certain asset
impairment charges, certain acquisition- and divestiture-related impacts and unusual or infrequent operating
items. Special items represent charges or credits that impact current results, which management views as
unrelated to the Company’s ongoing operations and performance. “Adjusted operating margin” is defined as
adjusted operating income (loss) divided by revenue. We believe that these financial measures are useful to
investors and other users of our financial statements in evaluating ongoing operating profitability, as well as in
evaluating operating performance in relation to our competitors.
Reconciliations of operating income (loss) to adjusted operating income (loss) for the years ended
December 31, 2023 and 2022 are provided below.
Year Ended December 31, 2023
Operating income (loss)
Loss on sale of business(a)
Restructuring costs
Impacts related to Russia-Ukraine war
Acquisition- and divestiture-related costs
Other(b)
Motion
Technologies
$ 230.8
Industrial
Process
$ 243.6
Connect &
Control
Technologies
$ 107.5
—
4.0
1.3
—
0.1
—
4.6
1.2
—
—
15.3
1.3
—
2.4
(0.1)
Corporate
$
(53.7) $ 528.2
ITT Inc.
—
—
—
—
15.3
9.9
2.5
2.4
(3.7)
(3.7)
Adjusted operating income (loss)
$ 236.2
$ 249.4
$ 126.4
$
(57.4) $ 554.6
Operating margin
Adjusted operating margin
15.8 %
16.2 %
21.6 %
22.1 %
15.4 %
18.1 %
16.1 %
16.9 %
Year Ended December 31, 2022
Operating income (loss)
Gain on sale of long-lived assets(c)
Impacts related to the Russia-Ukraine war
Restructuring costs
Acquisition-related costs
Asset impairment charges
Other(d)
$ 208.5
$ 187.6
$ 115.8
$
(43.9) $ 468.0
—
3.1
2.7
—
—
1.3
(15.5)
4.8
1.3
3.2
—
1.2
—
—
—
—
—
—
—
—
(0.2)
0.5
1.7
1.7
(15.5)
7.9
3.8
3.7
1.7
4.2
Adjusted operating income (loss)
$ 215.6
$ 182.6
$ 115.8
$
(40.2) $ 473.8
Operating margin
Adjusted operating margin
15.2 %
15.7 %
19.3 %
18.8 %
17.9 %
17.9 %
15.7 %
15.9 %
(a) Relates to the sale of our Matrix business in December 2023. See Note 22, Acquisitions, Investments, and Divestitures, to
the Consolidated Financial Statements for further information.
(b)
Includes income from a recovery of costs associated with the 2020 lease termination of a legacy site.
(c) 2022 includes a gain of $14.7 related to the sale of a former operating facility that was previously held by a business within
our IP segment. See Note 11, Plant, Property and Equipment, Net, to the Consolidated Financial Statements for further
information.
(d) 2022 includes severance charges and accelerated amortization of an intangible asset.
39
•
“Adjusted income from continuing operations” is defined as income from continuing operations attributable to
ITT Inc. adjusted to exclude special items that include, but are not limited to, certain gain on sale of long-lived
assets, restructuring, severance, certain asset impairment charges, certain acquisition- and divestiture-related
impacts, income tax settlements or adjustments and unusual or infrequent items. Special items represent
charges or credits, on an after-tax basis, that impact current results, which management views as unrelated to
the Company’s ongoing operations and performance. The after-tax basis of each special item is determined
using the jurisdictional tax rate of where the expense or benefit occurred. “Adjusted income from continuing
operations per diluted share” (adjusted EPS) is defined as adjusted income from continuing operations divided
by diluted weighted average common shares outstanding. We believe that adjusted income from continuing
operations and adjusted EPS are useful to investors and other users of our financial statements in evaluating
ongoing operating profitability, as well as in evaluating operating performance in relation to our competitors.
Reconciliations of adjusted income from continuing operations attributable to ITT to income from continuing
operations attributable to ITT and adjusted income from continuing operations attributable to ITT per diluted share to
income from continuing operations attributable to ITT per diluted share (EPS) for the years ended December 31,
2023 and 2022 are provided below. Per share amounts are reported in ones and may not calculate due to rounding.
Reported
Loss on sale of business(a)
Restructuring costs
Impacts from Russia-Ukraine war
Acquisition- and divestiture-related costs
Gain on sale of long-lived assets(b)
Asset impairment charges
Other (benefits) costs(c)
Total tax (benefit) expense of adjustments(d)
Tax-related special items(e)
Adjusted
2023
Income from
Continuing
Operations
EPS
2022
Income from
Continuing
Operations
EPS
$
$
411.4 $
15.3
9.9
2.5
2.4
—
—
(2.3)
(6.2)
(2.0)
431.0 $
4.97
0.19
0.12
0.03
0.03
—
—
(0.04)
(0.07)
(0.02)
5.21
$
$
368.3 $
—
3.8
7.9
3.7
(15.5)
1.7
4.2
(0.3)
(2.3)
371.5 $
4.40
—
0.05
0.09
0.04
(0.19)
0.02
0.06
—
(0.03)
4.44
(a) Relates to the sale of our Matrix business in December 2023. See Note 22, Acquisitions, Investments, and Divestitures, to
the Consolidated Financial Statements for further information.
(b) 2022 includes a gain of $14.7 on the sale of a former operating facility previously held by a business within our IP segment.
See Note 11, Plant, Property and Equipment, Net, to the Consolidated Financial Statements for further information.
(c) 2023 primarily includes income of $3.7 from a recovery of costs associated with the 2020 lease termination of a legacy site,
partially offset by interest expense of $1.4 related to a tax audit settlement in Italy. 2022 primarily includes severance costs.
(d) The tax impact of each adjustment is determined using the jurisdictional tax rate of where the expense or benefit occurred.
(e) 2023 tax-related special items include benefits from valuation allowance reversals of $(16.4), a settlement expense primarily
related to a tax audit in Italy of $14.4, the tax impact on distributions of $7.5, a benefit related to the amendment of our
federal tax return of $(4.9), and other of $(2.6). 2022 tax-related special items include a benefit related to a change in
deferred tax asset valuation allowance of $(1.2), a benefit related to a change in uncertain tax positions of $(0.7), a tax
benefit on future distribution of foreign earnings of $(0.3), and other of $(0.1). See Note 6, Income Taxes, to the
Consolidated Financial Statements for further information.
40
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements and related disclosures in accordance with GAAP requires us to make
judgments, estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Significant accounting policies used in the preparation of the financial statements are
discussed in Note 1, Description of Business, Basis of Presentation and Summary of Significant Accounting
Policies, to the Consolidated Financial Statements. An accounting policy is deemed critical if it requires an
accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the
estimate is made, if different estimates reasonably could have been used, or if changes to the estimate that are
reasonably possible could materially affect the financial statements. Senior management has discussed the
development, selection and disclosure of these estimates with the Audit Committee of ITT’s Board of Directors.
The accounting estimates and assumptions discussed below are those that we consider most critical to fully
understanding our financial statements and evaluating our results as they are inherently uncertain, involve the most
subjective or complex judgments, include areas where different estimates reasonably could have been used, and
the use of an alternative estimate that is reasonably possible could materially affect the financial statements. We
base our estimates on historical experience and other data and assumptions believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Management believes the accounting estimates
employed and the resulting balances reported in the Consolidated Financial Statements are reasonable; however,
actual results could differ materially from our estimates and assumptions.
Revenue Recognition
Revenue is derived from the sale of products and services to customers. We recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect
to be entitled in exchange for those goods or services. For product sales, other than certain long-term construction
and production type contracts where we have no alternative use for the product and have an enforceable right to
payment, we recognize revenue at the time control of our promised goods or services passes to the customer,
generally when products are shipped and the contractual terms have been fulfilled.
We recognize revenue for certain highly customized long-term design and build projects using the cost-to-cost
method, based upon the percentage of costs incurred to total projected costs. Revenue and profit recognized under
the cost-to-cost method are based on management’s estimates of measures such as total contract revenues,
contract costs and the extent of progress toward completion. Due to the long-term nature of the contracts, these
estimates are subject to uncertainties and require significant judgment. Estimates of contract costs include labor
hours and rates, and material costs. These estimates consider historical performance, the complexity of the work to
be performed, the estimated time to complete the project, and other economic factors such as inflation and market
rates. We update our estimates on a periodic basis and any revisions to such estimates are recorded in earnings in
the period in which they are determined. Provisions for estimated losses, if any, on uncompleted long-term
contracts, are made in the period in which such losses are determined.
For contracts recognized at a point in time, provisions for estimated losses, if any, on uncompleted
arrangements are recognized in the period in which such losses are determined. These estimates are subject to
uncertainties and require significant judgment. They may consider historical performance, the complexity of the
work to be performed, the estimated time to complete the project, and other economic factors such as inflation.
Additionally, accruals for estimated expenses related to sales returns and warranties are made at the time
products are sold. Reserves for sales returns, rebates and other allowances are established using historical
information on the frequency of returns for a particular product and period over which products can be returned. For
distributors and resellers, our typical return period is less than 180 days. Future market conditions and product
transitions may require us to take actions to increase customer incentive offerings, possibly resulting in a reduction
in revenue at the time the incentive is offered.
Warranty accruals are established using historical information on the nature, frequency, and average cost of
warranty claims and estimates of future costs. Our standard product warranty terms generally include post-sales
support and repairs or replacement of a product at no additional charge for a specified period of time. Although we
engage in extensive product quality programs and processes, we base our estimated warranty obligation on product
warranty terms offered to customers, ongoing product failure rates, materials usage, service delivery costs incurred
in correcting a product failure, and specific product class failures outside of our baseline experience and associated
overhead costs. If actual product failure rates, repair rates, or any other post-sales support costs differ from these
estimates, revisions to the estimated warranty liability would be required.
41
For certain highly complex contracts, design, engineering, and other preproduction costs may be capitalized if
the costs relate directly to a contract or anticipated contract that the entity can specifically identify, the costs
generate or enhance resources of the entity that will be used in satisfying performance obligations in the future and
the costs are expected to be recovered. In addition to direct labor and materials to fulfill a contract or anticipated
contract, we exercise judgment in determining which costs are allocated, including allocations of contract
management and depreciation of tooling used to fulfill the contract. Additionally, overall contract profitability is
estimated in determining cost recoverability.
Income Taxes
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of
differences between the financial reporting and tax bases of assets and liabilities, applying currently enacted tax
rates in effect for the year in which we expect the differences will reverse. We periodically assess the likelihood that
we will be able to recover our deferred tax assets, and we reflect any changes to our estimate of the amount we are
more likely than not to realize as a valuation allowance, with a corresponding adjustment to earnings or other
comprehensive income (loss), as appropriate. The ultimate realization of deferred tax assets depends on the
generation of future taxable income (including the reversals of deferred tax liabilities) during the periods in which
those deferred tax assets will become deductible.
The Company assesses all available positive and negative evidence regarding the realizability of its deferred
tax assets. Significant judgment is required in assessing the need for any valuation allowance recorded against
deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, both
positive and negative, including the future reversal of existing taxable temporary differences, taxable income in
carryback periods, prudent and feasible tax planning strategies, estimated future taxable income, and whether we
have a recent history of losses. The valuation allowance can be affected by changes to tax regulations,
interpretations and rulings, changes to enacted statutory tax rates, and changes to future taxable income estimates.
Our effective tax rate reflects the impact of certain undistributed foreign earnings for which we have not
provided U.S. taxes because these earnings are considered indefinitely reinvested outside of the U.S. We plan
foreign earnings remittance amounts based on projected cash flow needs, as well as the working capital and long-
term investment requirements of our foreign subsidiaries and our domestic operations. Based on these
assumptions, we estimate the amount we will distribute to the U.S. and accrue U.S. and foreign taxes on these
planned foreign remittance amounts. Material changes in our estimates of cash, working capital and long-term
investment requirements in the various jurisdictions in which we do business could impact our effective tax rate. Our
provision for income taxes could be adversely impacted by changes in our geographic mix of earnings or changes in
the enacted tax rates in the jurisdictions in which we conduct our business.
The calculation of our deferred and other tax balances involves significant management judgment when dealing
with uncertainties in the application of complex tax regulations and rulings in a multitude of taxing jurisdictions
across our global operations. The Company is routinely audited by U.S. federal, state and foreign tax authorities,
the results of which could cause proposed assessments against the Company. We recognize potential liabilities and
record tax liabilities for anticipated tax audit issues based on our estimate of whether, and to the extent to which,
additional taxes will be due. Furthermore, we recognize the tax benefit from an uncertain tax position only if it is
more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the
technical merits of the position in consideration of applicable tax statutes and related interpretations and precedents
and the expected outcome of the proceedings (or negotiations) with the taxing authorities. Tax benefits recognized
in the financial statements from such a position are measured based on the largest benefit that has a greater than
50% likelihood of being realized on ultimate settlement.
We adjust our liability for uncertain tax positions in light of changing facts and circumstances; however, the
ultimate resolution of a tax examination may differ from the amounts recorded in the financial statements for a
number of reasons, including the Company’s decision to settle rather than litigate a matter, relevant legal precedent
related to similar matters, and the Company’s success in supporting its filing positions with the tax authorities. If our
estimate of tax liabilities proves different than the ultimate outcome, such differences will affect the provision for
income taxes in the period in which such determination is made.
42
Goodwill and Other Intangible Assets
We review goodwill and indefinite-lived intangible assets for impairment annually and whenever events or
changes in circumstances indicate the carrying value of an asset may not be recoverable. We also review the
carrying value of our finite-lived intangible assets for potential impairment when impairment indicators arise. We
conduct our annual impairment tests as of the first day of the fourth quarter. When reviewing for impairment, we
may opt to make an initial qualitative evaluation, which considers present events and circumstances, to determine
the likelihood of impairment. Our decision to perform a qualitative impairment assessment for an individual reporting
unit in a given year is influenced by a number of factors, including the significance of the excess of the reporting
unit's estimated fair value over carrying value at the last quantitative assessment date, changes in macroeconomic,
industry and reporting-unit specific conditions and the amount of time in between quantitative fair value
measurements. If the likelihood of impairment is not considered to be more likely than not, then no further testing is
performed.
In cases when we opt not to perform a qualitative evaluation, or the qualitative evaluation indicates that the
likelihood of impairment is more likely than not, we then perform a quantitative impairment test for goodwill. We test
each reporting unit for goodwill impairment quantitatively at a minimum of once every three years. We compare the
estimated fair value of each reporting unit to its carrying value. If the estimated fair value of the reporting unit
exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired. If the carrying
value of the net assets assigned to the reporting unit exceeds its fair value, then we record an impairment loss
equal to the difference. In our annual impairment test for indefinite-lived intangible assets, we compare the fair value
of those assets to their carrying value. We recognize an impairment loss when the estimated fair value of the
indefinite-lived intangible asset is less than its carrying value.
We estimate the fair value of our reporting units using an income approach. Under the income approach, we
calculate fair value based on the present value of estimated future cash flows. We estimate the fair value of our
indefinite-lived intangible assets using the relief from royalty method. The relief from royalty method estimates the
portion of a company’s earnings attributable to an intellectual property asset based on an assumed royalty rate that
the company would have paid had the asset not been owned.
Determining the fair value of a reporting unit or an indefinite-lived intangible asset is judgmental in nature and
involves the use of significant estimates and assumptions, particularly related to future operating results and cash
flows. These estimates and assumptions include, but are not limited to, revenue growth rates and operating margins
used to calculate projected future cash flows, risk-adjusted discount rates, assumed royalty rates, future economic
and market conditions, and the identification of appropriate market comparable data. In addition, the identification of
reporting units and the allocation of assets and liabilities to the reporting units when determining the carrying value
of each reporting unit also requires judgment. Goodwill is tested for impairment at the reporting unit level, which,
based on the applicable accounting guidance, is either the operating segment or one level below (e.g., the divisions
of our CCT segment). The fair value of our reporting units and indefinite-lived intangible assets are based on
estimates and assumptions that are believed to be reasonable. Significant changes to these estimates and
assumptions could adversely impact our conclusions. Actual future results may differ from those estimates. During
the fourth quarter of 2023, we performed our annual impairment assessment and determined that the estimated fair
values of our goodwill reporting units were substantially in excess of each of their carrying values. Had different
reporting units been identified or had different valuation techniques or assumptions been utilized, the results of our
impairment tests could have resulted in an impairment loss, which could have been material.
See Note 12, Goodwill and Other Intangible Assets, Net, to the Consolidated Financial Statements for more
information.
Environmental Liabilities
We are subject to various federal, state, local, and foreign environmental laws and regulations that require
environmental assessment or remediation efforts. Accruals for environmental exposures are recorded on a site-by-
site basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably
estimated, based on current law and existing technologies. Significant judgment is required to determine both the
likelihood of a loss and the estimated amount of loss. Engineering studies, probability techniques, historical
experience, and other factors are used to identify and evaluate remediation alternatives and their related costs in
estimating our reserve for environmental liabilities. Our environmental reserve of $56.0 at December 31, 2023,
represents management’s estimate of undiscounted costs expected to be incurred related to environmental
assessment or remediation efforts, including related legal fees, without regard to potential recoveries from insurance
companies or other third parties. Our estimated liability is reduced to reflect the participation of other potentially
responsible parties in those instances where it is probable that such parties are legally responsible and financially
43
capable of paying their respective share of the relevant costs and that share can be reasonably estimated. Our
environmental accruals are reviewed and adjusted for progress of investigation and remediation efforts and as
additional technical or legal information become available, such as the impact of negotiations with regulators and
other potentially responsible parties, settlements, rulings, advice of legal counsel, and other current information.
We closely monitor our environmental responsibilities, together with trends in the environmental laws.
Environmental remediation reserves are subject to numerous inherent uncertainties that affect our ability to estimate
our share of the costs. Such uncertainties involve incomplete information regarding particular sites, incomplete
information regarding other potentially responsible parties, uncertainty regarding the nature and extent of
contamination at each site, uncertainties concerning the extent of remediation required under existing regulations,
uncertainties concerning our share of any remediation liability, if any, widely varying cost estimates associated with
potential alternative remedial approaches, uncertainty with regard to the length of time required to remediate a
particular site, uncertainties concerning the potential effects of continuing improvements in remediation technology,
and unpredictable nature and timing of changes in environmental standards and regulatory requirements. The effect
of legislative or regulatory changes on environmental standards could be material to the Company’s financial
statements. Additionally, violations by us of such laws and regulations, discovery of previously unknown or more
extensive contamination, litigation involving environmental impacts, our inability to recover costs associated with
any such developments, or financial insolvency of other potentially responsible parties could have a material
adverse effect on our financial statements.
Although it is not possible to predict with certainty the ultimate costs of environmental remediation, the
reasonably possible high-end of our estimated environmental liability range at December 31, 2023 was $98.2. See
Note 19, Commitments and Contingencies, to the Consolidated Financial Statements for more information.
Recent Accounting Pronouncements
See Note 2, Recent Accounting Pronouncements, to the Consolidated Financial Statements for a complete
discussion of recent accounting pronouncements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a result of our global operating and financing activities, we are exposed to various market risks, including
from changes in foreign currency exchange rates, interest rates and commodity prices, which may adversely affect
our operating results and financial position. The impact from changes in market conditions is generally minimized
through our normal operating and financing activities. However, we may use derivative instruments, primarily
forward contracts, interest rate swaps and futures contracts, to manage some of these risks. We do not use
derivative financial instruments for trading or other speculative purposes. To minimize the risk of counterparty non-
performance, derivative instruments are entered into with major financial institutions and there is no significant
concentration with any one counterparty.
Foreign Currency Risk
Foreign currency risk is the possibility that our financial results could be adversely impacted because of
changes in currency exchange rates. Our foreign currency exchange rate risk relates to receipts from customers,
payments to suppliers and intercompany transactions denominated in foreign currencies. Our principal currency
exposures relate to the euro, Chinese renminbi, Czech koruna, South Korean won, and Saudi riyal.
Based on a sensitivity analysis, a hypothetical 10% change in the foreign currency exchange rates for the year
ended December 31, 2023 would have impacted our pre-tax earnings by approximately $38. This calculation
assumes that all currencies change in the same direction and proportion relative to the U.S. dollar and that there are
no indirect effects, such as changes in non-U.S. dollar sales volumes or prices. To mitigate this risk, from time to
time, we enter into derivative financial instruments (e.g., forward contracts) with creditworthy counterparties. The
aforementioned sensitivity analysis does not take into account the impact of any derivative financial instruments
entered into.
Interest Rate Risk
Interest rate risk is the possibility that our financial results could be adversely impacted because of changes in
interest rates. The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding
debt, which consists primarily of commercial paper. While the Company is exposed to global interest rate
fluctuations, it is most affected by fluctuations in U.S. interest rates. Changes in interest rates affect the interest
earned on the Company’s cash and cash equivalents, derivative financial instruments and the fair value of those
instruments, as well as costs associated with hedging and interest paid on the Company’s outstanding debt.
44
During 2023, central banks around the world raised interest rates to counter inflation. Rising interest rates have
increased our cost of debt and may adversely impact customer behavior, including demand for our products. These
conditions have contributed to a strengthening of the U.S. dollar relative to foreign currencies, which has resulted in
unfavorable foreign currency translation impacts.
As of December 31, 2023, our outstanding commercial paper was $184.9, with a weighted average interest rate
of 5.61%. We estimate that a hypothetical increase in interest rates of 100 basis points would result in
approximately $1.9 of additional annual interest expense based on current borrowing levels.
Commodity Price Risk
Commodity price risk is the possibility that our financial results could be adversely impacted because of
changes in the prices of commodities used in production. Portions of our business are exposed to volatility in the
prices of certain commodities, such as steel, gold, copper, nickel, iron, aluminum, tin, and rubber as well as
specialty alloys, including titanium that we purchase in the raw form, or that are used in purchased component
parts. The prices of these and other commodities may also be impacted by tariffs. When practical, we attempt to
control such costs through fixed-price contracts with suppliers; however, we are prone to exposure as these
contracts expire. We evaluate hedging opportunities to mitigate or minimize the risk of operating margin erosion
resulting from the volatility of commodity prices.
Since 2020, the cost of raw materials, including commodities such as steel, that we use in our production
processes has increased. The rising prices are mainly a result of increased demand fueled by economic recovery
from the COVID-19 pandemic as well as lower supply since global production capacity was cut in 2020. In addition,
heightened geopolitical tensions during 2023, including as a result of the Russia-Ukraine war, have exacerbated
inflationary pressures on commodity prices. The impact of higher commodity prices on our financial results during
2023 was partially mitigated by fixed-price supply contracts with suppliers as well as by pricing actions.
Assuming all other variables remain constant, we estimate that a hypothetical 10% change in steel prices,
excluding any impact of purchased component parts, would impact pre-tax earnings by approximately $8 to $10.
We estimate that a hypothetical 10% change in prices for any other commodity would not be material to our
financial statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements herein.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
45
ITEM 9A.
CONTROLS AND PROCEDURES
Attached as exhibits to this Annual Report on Form 10-K are certifications of the Company’s Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), which are required in accordance with Rule 13a-14 under the
Exchange Act, as amended.
(a) Evaluation of Disclosure Controls and Procedures
The Company, with the participation of various levels of management, including the CEO and CFO, conducted
an evaluation of effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2023. Based on such evaluation, such
officers have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, the
Company’s disclosure controls and procedures are effective.
The Company's Disclosure Committee has the responsibility of considering and evaluating the materiality of
information and reviewing disclosure obligations on a timely basis. The Disclosure Committee meets regularly and
assists the CEO and the CFO in designing, establishing, reviewing, and evaluating the Company’s disclosure
controls and procedures.
(b) Management’s Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America.
Internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, completely, accurately and fairly reflect the transactions and
dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of the financial statements in accordance with accounting principles generally
accepted in the United States of America; (iii) provide reasonable assurance that Company receipts and
expenditures are made only in accordance with the authorization of management and the directors of the Company,
and (iv) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of assets that could have a material effect on the Consolidated Financial Statements. Internal control
over financial reporting includes the controls themselves, monitoring and internal auditing practices, and actions
taken to correct any identified deficiencies.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2023. Management based this assessment on criteria for effective internal control over financial
reporting described in the 2013 "Internal Control — Integrated Framework" released by the Committee of
Sponsoring Organizations (COSO) of the Treadway Commission. Management's assessment included an
evaluation of the design of the Company’s internal control over financial reporting and testing of the operational
effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with
the Audit Committee of our Board of Directors.
For purposes of evaluating internal controls over financial reporting, management determined that the internal
controls of Micro-Mode, which the Company acquired on May 2, 2023, would be excluded from the internal control
assessment as of December 31, 2023, due to the timing of the closing of the acquisition and as permitted by the
rules and regulations of the U.S. Securities and Exchange Commission. For the year ended December 31, 2023,
Micro-Mode constituted 2.3% of total assets and 0.5% of total revenues of the Company.
Based on this assessment, management determined that, as of December 31, 2023, the Company maintained
effective internal control over financial reporting.
The Company’s management, including the CEO and the CFO, does not expect that our internal control over
financial reporting, because of inherent limitations, will prevent or detect all errors and all fraud. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may be inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s assessment, included herein, should be read in conjunction with the certifications and the
attestation report on the registrant's internal control over financial reporting issued by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report, which appears subsequent to Item 9B in this
Annual Report on Form 10-K.
46
(c) Changes in Internal Control over Financial Reporting
During the three months ended December 31, 2023, no change occurred in our internal control over financial
reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B.
OTHER INFORMATION
Disclosure pursuant to Section 219 of the Iran Threat Reduction & Syria Human Rights Act (ITRA)
This disclosure is made pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of
2012 which added subsection (r) to Section 13 of the Exchange Act (Section 13(r)). Section 13(r) requires an issuer
to disclose in its annual or quarterly reports whether it or any of its affiliates have knowingly engaged in certain
activities, transactions or dealings relating to Iran. Disclosure of such activities, transactions or dealings is required
even when conducted outside the United States by non-U.S. persons in compliance with applicable law, and
whether or not such activities are sanctionable under U.S. law.
In its 2012 Annual Report, ITT described its acquisition of all the shares of Joh. Heinr. Bornemann GmbH
(Bornemann) in November 2012, as well as certain activities of Bornemann in Iran and the wind down of those
activities in accordance with a General License issued on December 26, 2012 (the General License) by the Office of
Foreign Assets Control. As permitted by the General License, on or before March 8, 2013, Bornemann completed
the wind-down activities and ceased all activities in Iran. As required to be disclosed by Section 13(r), the gross
revenues and operating income to Bornemann from its Iranian activities subsequent to its acquisition by ITT were
€2.2 million and €1.5 million, respectively. Prior to its acquisition by ITT, Bornemann issued a performance bond to
its Iranian customer in the amount of €1.3 million (the Bond). Bornemann requested that the Bond be canceled prior
to March 8, 2013; however, the former customer refused this request and as a result the Bond remains
outstanding. Bornemann did not receive gross revenues or operating income, or pay interest, with respect to the
Bond in any subsequent periods through December 31, 2023, however, Bornemann did pay annual fees of
approximately €7 thousand in 2023, €7 thousand in 2022 and €10 thousand in 2021, to the German financial
institution which is maintaining the Bond.
Rule 10b5-1 Trading Plans
During the fourth quarter of 2023, none of the Company’s directors or executive officers adopted or terminated
any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy
the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in
Item 408 of Regulation S-K.
ITEM 9C.
DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT
PREVENT INSPECTIONS
Not applicable.
47
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of ITT Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of ITT Inc. and subsidiaries (the "Company") as of
December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the
Company and our report dated February 12, 2024, expressed an unqualified opinion on those financial statements.
As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its
assessment the internal control over financial reporting at Micro-Mode Products, Inc., which was acquired on May 2,
2023, and whose financial statements constitute 2.3% of total assets and 0.5% of total revenues of the consolidated
financial statement amounts as of and for the year ended December 31, 2023. Accordingly, our audit did not include
the internal control over financial reporting at Micro-Mode Products, Inc.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
February 12, 2024
48
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this Item 10 is incorporated by reference from the information provided under the
sections entitled "Voting Items," "How to Vote," "Election of Directors (Proxy Item No. 1)," "Corporate Governance
and Related Matters-Board and Committee Structure-Overview of Committees-Audit Committee" and "Audit
Committee Report" in our Proxy Statement for the 2024 Annual Meeting of Shareholders (2024 Proxy Statement).
Information required by this Item 10 with respect to executive officers of the Company is contained under the
heading "Information About Our Executive Officers" in Part I of this Annual Report on Form 10-K.
ITT has adopted corporate governance principles and charters for each of its standing committees. The
principles address director qualification standards and responsibilities, access to management and independent
advisors, compensation, orientation and continuing education, management succession principles and board and
committee self-evaluation. The corporate governance principles and charters are available on the Company’s
website at investors.itt.com/investors/governance. A copy of the corporate governance principles and charters is
also available to any shareholder who requests a copy from the Company’s secretary.
ITT has also adopted a written code of ethics, the "Code of Conduct," which is applicable to all directors,
employees and officers (including the Company’s principal executive officer, principal financial officer, principal
accounting officer or controller, or person performing similar functions). The Company’s Code of Conduct is
available on our website at investors.itt.com/investors/governance. We intend to satisfy the disclosure requirement
under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Conduct by
posting such information on our website at www.itt.com.
Pursuant to New York Stock Exchange (NYSE) Listing Company Manual Section 303A.12(a), the Company
submitted a Section 12(a) CEO Certification to the NYSE in 2023. The Company also filed with the SEC, as exhibits
to the Company’s current Annual Report on Form 10-K, the certifications required under Section 302 of the
Sarbanes-Oxley Act for its Chief Executive Officer and Chief Financial Officer.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item 11 is incorporated by reference to the discussion under the headings "2023
Non-Management Director Compensation," "Compensation Tables," "Compensation Discussion and Analysis,"
"Compensation and Human Capital Committee Report" and "Compensation Committee Interlocks and Insider
Participation" in our 2024 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information required by this Item 12 is incorporated by reference to the discussion under the caption "Other
Matters - Stock Ownership of Directors, Executive Officers, and Certain Shareholders," and "Equity Compensation
Plan Information" in our 2024 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Information required by this item is incorporated by reference to the discussions under the captions "Corporate
Governance and Related Matters-Board and Governance Policies-Policies
for Approving Related Party
Transactions" and "Directors’ Qualification and Selection Process-Director Independence" in our 2024 Proxy
Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information about the fees for 2023 and 2022 for professional services rendered by our independent registered
public accounting firm is incorporated by reference to the discussion under the heading "Ratification of Appointment
of the Independent Registered Public Accounting Firm (Proxy Item No. 2)" of our 2024 Proxy Statement. Our Audit
Committee’s policy on pre-approval of audit and permissible non-audit services of our independent registered public
accounting firm is also incorporated by reference to the discussion under the heading "Ratification of Appointment of
the Independent Registered Public Accounting Firm (Proxy Item No. 2)" of our 2024 Proxy Statement.
49
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as a part of this report:
1. See Index to Consolidated Financial Statements appearing on page 51 for a list of the financial statements
filed as a part of this report.
2. See Exhibit Index on page II-1 for a list of the exhibits filed or incorporated herein as a part of this report.
(b) Financial Statement Schedules are omitted because of the absence of the conditions under which they are
required or because the required information is included in the Consolidated Financial Statements filed as part
of this report.
ITEM 16. FORM 10-K SUMMARY
Not Applicable.
50
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021
Notes to the Consolidated Financial Statements:
Note 1 – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
Note 2 – Recent Accounting Pronouncements
Note 3 – Segment Information
Note 4 – Revenue
Note 5 – Restructuring Actions
Note 6 – Income Taxes
Note 7 – Earnings Per Share Data
Note 8 – Receivables, Net
Note 9 – Inventories
Note 10 – Other Current and Non-Current Assets
Note 11 – Plant, Property and Equipment, Net
Note 12 – Goodwill and Other Intangible Assets, Net
Note 13 – Accounts Payable, Accrued Liabilities and Other Non-Current Liabilities
Note 14 – Leases
Note 15 – Debt
Note 16 – Postretirement Benefit Plans
Note 17 – Long-Term Incentive Employee Compensation
Note 18 – Capital Stock
Note 19 – Commitments and Contingencies
Note 20 – Guarantees, Indemnities and Warranties
Note 21 – Derivative Financial Instruments
Note 22 – Acquisitions, Investments, and Divestitures
PAGE
52
54
55
56
57
58
59
59
66
66
69
71
72
75
75
76
76
77
77
79
80
81
83
87
89
89
91
92
93
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of ITT Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ITT Inc. and subsidiaries (the "Company") as of
December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income,
shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the
related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in
conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 12, 2024, expressed an unqualified
opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition – Refer to Note 1 and Note 4 to the Consolidated Financial Statements
Critical Audit Matter Description
The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Given the Company’s decentralized structure and geographic dispersion of the Company’s business units, auditing
revenue recognized at a point in time required significant audit effort for us to identify, test, and evaluate the
Company’s revenue recognition.
How the Critical Audit Matter Was Assessed in the Audit
To address this critical audit matter, we performed the following procedures to test revenue recognized at a point in
time, among others:
52
• Obtained an understanding of the Company’s geographic composition of revenue and used judgment to
determine which business units to perform revenue recognition procedures on.
• Obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s
relevant controls at certain business units to determine the appropriate revenue recognition.
•
•
•
Performed site visits of selected business units across various geographies to perform revenue recognition
testing and observe the Company's process, products, and arrangements.
Performed detail transaction testing of revenue recognition at the business units by (1) evaluating the terms
of revenue contracts and the appropriateness of management’s determination of revenue recognition; (2)
agreeing amounts recorded to source documents to determine the revenue was properly recognized.
Evaluated the overall sufficiency of audit evidence obtained by assessing the results of procedures
performed over revenue recognition.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
February 12, 2024
We have served as the Company's auditor since 2002.
53
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31
Revenue
Costs of revenue
Gross profit
General and administrative expenses
Sales and marketing expenses
Research and development expenses
Gain on sale of long-lived assets
Asbestos-related benefit, net
Operating income
Interest expense (income), net
Other non-operating income, net
Income from continuing operations before income tax
Income tax expense
Income from continuing operations
(Loss) income from discontinued operations, net of tax benefit of $0.3,
$0.4, and $0.2, respectively
Net income
Less: Income attributable to noncontrolling interests
2023
$ 3,283.0
2,175.7
1,107.3
302.6
174.0
102.6
(0.1)
—
528.2
10.4
(1.7)
519.5
104.8
414.7
(0.9)
413.8
3.3
2022
$ 2,987.7
2,065.4
2021
$ 2,765.0
1,865.5
922.3
217.2
156.9
96.5
(16.3)
—
468.0
6.4
(0.2)
461.8
91.1
370.7
(1.3)
369.4
2.4
899.5
230.9
150.8
94.9
(7.0)
(74.4)
504.3
(1.1)
(3.7)
509.1
189.6
319.5
1.5
321.0
4.7
Net income attributable to ITT Inc.
$ 410.5
$ 367.0
$ 316.3
Amounts attributable to ITT Inc.:
Income from continuing operations, net of tax
$ 411.4
$ 368.3
$ 314.8
(Loss) income from discontinued operations, net of tax
(0.9)
(1.3)
1.5
Net income
$ 410.5
$ 367.0
$ 316.3
Earnings (loss) per share attributable to ITT Inc.:
Basic:
Continuing operations
Discontinued operations
Net income
Diluted:
Continuing operations
Discontinued operations
Net income
Weighted average common shares – basic
Weighted average common shares – diluted
$
5.00
$
4.42
(0.01)
(0.02)
$
4.99
$
4.40
$
$
4.97
(0.01)
4.96
82.3
82.7
$
$
4.40
(0.02)
4.38
83.4
83.7
$
$
$
$
3.66
0.02
3.68
3.64
0.02
3.66
86.0
86.5
The accompanying Notes to the Consolidated Financial Statements are an integral part of the above Consolidated Statements of
Operations.
54
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN MILLIONS)
YEARS ENDED DECEMBER 31
Net income
Other comprehensive income (loss):
Net foreign currency translation adjustment
Net change in postretirement benefit plans, net of tax impacts of $1.7,
$(7.6), and $(1.5), respectively
Other comprehensive (loss) income
Comprehensive income
2023
2022
2021
$ 413.8
$ 369.4
$ 321.0
17.6
(67.4)
(57.0)
(5.2)
12.4
44.4
(23.0)
15.1
(41.9)
426.2
346.4
279.1
Less: Comprehensive income attributable to noncontrolling interests
3.3
2.4
4.7
Comprehensive income attributable to ITT Inc.
Disclosure of reclassification adjustments and other adjustments to
postretirement benefit plans (See Note 16)
Reclassification adjustments:
Amortization of prior service benefit, net of tax expense of $1.4, $1.3, and
$1.2, respectively
Amortization of net actuarial loss, net of tax benefit of $—, $(0.5), and
$(0.7), respectively
Other adjustments:
Prior service cost, net of tax expense of $—, $(1.9), and $—, respectively
Net actuarial (loss) gain, net of tax benefit (expense) of $0.3, $(6.5), and
$(2.0), respectively
Unrealized change from foreign currency translation
$ 422.9
$ 344.0
$ 274.4
$
(4.6)
$
(4.2)
$
(3.9)
0.1
—
(0.5)
(0.2)
2.6
6.2
38.1
1.7
3.7
—
12.6
2.7
Net change in postretirement benefit plans, net of tax
$
(5.2)
$ 44.4
$ 15.1
The accompanying Notes to the Consolidated Financial Statements are an integral part of the above Consolidated Statements of
Comprehensive Income.
55
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31
Assets
Current assets:
Cash and cash equivalents
Receivables, net
Inventories
Other current assets
Total current assets
Non-current assets:
Plant, property and equipment, net
Goodwill
Other intangible assets, net
Other non-current assets
Total non-current assets
Total assets
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term borrowings
Accounts payable
Accrued and other current liabilities
Total current liabilities
Non-current liabilities:
Postretirement benefits
Other non-current liabilities
Total non-current liabilities
Total liabilities
Shareholders’ equity:
Common stock:
Authorized – 250.0 shares, $1 par value per share
Issued and Outstanding – 82.1 and 82.7 shares, respectively
Retained earnings
Accumulated other comprehensive loss:
Postretirement benefits
Cumulative translation adjustments
Total accumulated other comprehensive loss
Total ITT Inc. shareholders' equity
Noncontrolling interests
Total shareholders’ equity
Total liabilities and shareholders’ equity
2023
2022
$ 489.2 $ 561.2
675.2
575.4
117.9
628.8
533.9
112.9
1,857.7
1,836.8
561.0
1,016.3
116.6
381.0
526.8
964.8
112.8
339.1
2,074.9
1,943.5
$ 3,932.6 $ 3,780.3
$ 187.7 $ 451.0
437.0
413.1
401.1
333.4
1,037.8
1,185.5
138.7
217.0
355.7
137.2
200.2
337.4
1,393.5
1,522.9
82.1
82.7
2,778.0
2,509.7
3.6
(1.6)
(347.9)
(330.3)
(344.3)
(331.9)
2,248.1
2,528.2
9.3
10.9
2,257.4
2,539.1
$ 3,932.6 $ 3,780.3
The accompanying Notes to the Consolidated Financial Statements are an integral part of the above Consolidated Balance
Sheets.
56
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
YEARS ENDED DECEMBER 31
Operating Activities
Income from continuing operations attributable to ITT Inc.
Adjustments to income from continuing operations:
Depreciation and amortization
Equity-based compensation
Asbestos-related (benefit) costs, net
Deferred income tax expense (benefit)
Gain on sale of long-lived assets
Other non-cash charges, net
Contribution to divest asbestos-related assets and liabilities
Changes in assets and liabilities:
Change in receivables
Change in inventories
Change in contract assets
Change in contract liabilities
Change in accounts payable
Change in accrued expenses
Change in income taxes
Other, net
Net Cash – Operating activities
Investing Activities
Capital expenditures
Proceeds from sale of business
Proceeds from sale of long-lived assets
Acquisitions, net of cash acquired
Payments to acquire interest in unconsolidated subsidiaries
Other, net
Net Cash – Investing activities
Financing Activities
(Repayments of)/Proceeds from commercial paper, net
Long-term debt, repayments
Share repurchases under repurchase plan
Payments for taxes related to net share settlement of stock incentive plans
Dividends paid
Other, net
Net Cash – Financing activities
Exchange rate effects on cash and cash equivalents
Net cash from discontinued operations – operating activities
Net change in cash and cash equivalents
Cash and cash equivalents – beginning of year (includes restricted cash of $0.7,
$0.8, and $0.8, respectively)
Cash and Cash Equivalents – end of year (includes restricted cash of $0.7, $0.7,
and $0.8, respectively)
Supplemental Disclosures of Cash Flow and Non-Cash Information:
Cash paid for Interest
Cash paid for Income taxes, net of refunds received
Capital expenditures included in accounts payable
2023
2022
2021
$ 411.4
$ 368.3
$ 314.8
109.2
20.2
—
(27.6)
(0.1)
37.1
—
(39.2)
(34.4)
(0.3)
23.1
26.3
47.6
5.4
(40.7)
538.0
(107.6)
11.5
0.9
(79.3)
(2.5)
(4.0)
(181.0)
(266.0)
(2.2)
(60.0)
(7.2)
(95.8)
(1.1)
(432.3)
3.6
(0.3)
(72.0)
107.4
18.1
—
2.9
(16.3)
29.3
—
(90.7)
(99.5)
(7.4)
23.3
39.4
(36.9)
(13.5)
(46.7)
277.7
(103.9)
—
20.9
(146.9)
(25.6)
0.4
(255.1)
259.7
(2.1)
(245.3)
(8.8)
(87.9)
1.1
(83.3)
(25.8)
0.1
(86.4)
113.1
16.5
(74.4)
115.7
(7.0)
28.3
(398.0)
(62.2)
(82.7)
(2.5)
(3.6)
77.6
15.8
8.2
(68.0)
(8.4)
(88.4)
—
8.0
—
(1.9)
—
(82.3)
95.4
(2.4)
(104.8)
(11.7)
(75.8)
(0.5)
(99.8)
(22.6)
0.8
(212.3)
561.9
648.3
860.6
$ 489.9
$ 561.9
$ 648.3
$
15.7
$ 113.1
25.3
$
$
$
$
10.8
92.7
21.8
$
$
$
3.3
61.3
17.5
The accompanying Notes to the Consolidated Financial Statements are an integral part of the above Consolidated Statements of Cash Flows.
57
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(IN MILLIONS, EXCEPT SHARE AMOUNTS)
Common Stock
(Shares)
(Dollars)
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interest
Total
Shareholders'
Equity
86.5 $
86.5 $ 2,319.3 $
(279.4) $
December 31, 2020
Net income
Activity from stock incentive plans
Share repurchases
Shares withheld related to net share
settlement of stock incentive plans
Dividends declared ($0.88 per share)
Dividend to noncontrolling interest
Net change in postretirement benefit plans, net
of tax
Net foreign currency translation adjustment
Other
December 31, 2021
Net income
Activity from stock incentive plans
Shares withheld related to net share
settlement of stock incentive plans
Dividends declared ($1.056 per share)
Dividend to noncontrolling interest
Acquisition of noncontrolling interest
Net change in postretirement benefit plans, net
of tax
Net foreign currency translation adjustment
Other
December 31, 2022
Net income
Activity from stock incentive plans
—
0.3
—
0.3
316.3
17.4
(1.2)
(1.2)
(103.6)
(0.1)
(0.1)
85.5
2,461.6
—
0.3
367.0
19.7
(0.1)
(0.1)
(11.6)
(76.2)
—
—
—
—
(8.7)
(87.7)
—
—
—
—
0.1
—
—
—
—
—
—
—
—
—
—
—
82.7
2,509.7
—
0.2
410.5
20.6
—
—
—
—
—
85.5
—
0.3
—
—
—
—
—
—
82.7
—
0.2
Share repurchases
(3.0)
(3.0)
(242.3)
Share repurchases
(0.7)
(0.7)
(59.8)
Shares withheld related to net share
settlement of stock incentive plans
Dividends declared ($1.16 per share)
Dividend to noncontrolling interest
Net change in postretirement benefit plans, net
of tax
Net foreign currency translation adjustment
(0.1)
(0.1)
—
—
—
—
—
—
—
—
(7.1)
(95.9)
—
—
—
—
—
—
—
—
—
15.1
(57.0)
—
(321.3)
—
—
—
—
—
—
—
44.4
(67.4)
—
(344.3)
—
—
—
—
—
—
(5.2)
17.6
1.5
4.7
—
—
—
—
(1.4)
—
—
0.1
4.9
2.4
—
—
—
—
(0.5)
2.7
—
—
(0.2)
9.3
3.3
—
—
—
—
(1.7)
—
—
$
2,127.9
321.0
17.7
(104.8)
(11.7)
(76.2)
(1.4)
15.1
(57.0)
0.1
2,230.7
369.4
20.0
(245.3)
(8.8)
(87.7)
(0.5)
2.7
44.4
(67.4)
(0.1)
2,257.4
413.8
20.8
(60.5)
(7.2)
(95.9)
(1.7)
(5.2)
17.6
December 31, 2023
82.1 $
82.1 $ 2,778.0 $
(331.9) $
10.9
$
2,539.1
The accompanying Notes to the Consolidated Financial Statements are an integral part of the above Consolidated Statements of
Changes in Shareholders’ Equity.
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS AND SHARES (EXCEPT PER SHARE AMOUNTS) IN MILLIONS, UNLESS OTHERWISE STATED)
NOTE 1
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Description of Business
ITT Inc. is a diversified manufacturer of highly engineered critical components and customized technology
solutions for the transportation, industrial, and energy markets. Unless the context otherwise indicates, references
herein to "ITT," "the Company," and such words as "we," "us," and "our" include ITT Inc. and its subsidiaries. ITT
operates in three segments: Motion Technologies, consisting of friction materials, and shock and vibration
equipment; Industrial Process, consisting of industrial flow equipment and services; and Connect & Control
Technologies, consisting of electronic connectors, fluid handling, motion control, composite materials, and noise and
energy absorption products. Financial information for our segments is presented in Note 3, Segment Information.
Business Combination
On May 2, 2023, we completed the acquisition of Micro-Mode Products, Inc. (Micro-Mode) for a purchase price
of $79.3, net of cash acquired. Subsequent to the acquisition, Micro-Mode’s results are reported within our CCT
segment. Refer to Note 22, Acquisitions, Investments, and Divestitures, for further information.
Russia-Ukraine War
In February 2022, the United States and other leading nations announced targeted economic sanctions on
Russia and certain Russian citizens in response to Russia’s war with Ukraine, which has increased regional
instability and global economic and political uncertainty. As described in Part I, Item 1A, Risk Factors, our business
may be sensitive to global economic conditions, which can be negatively impacted by instability in the geopolitical
environment.
During the years ended December 31, 2023 and 2022, we recorded total pre-tax charges of $2.5 and $7.9,
primarily related to suspending our business in Russia.
Basis of Presentation
The Consolidated Financial Statements and Notes thereto were prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP).
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the
reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions
are used for, but not limited to, revenue recognition, unrecognized tax benefits, deferred tax valuation allowances,
projected benefit obligations for postretirement plans, accounting for business combinations, goodwill and other
intangible asset impairment testing, environmental liabilities, allowance for credit losses and inventory valuation.
Actual results could differ from these estimates.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Significant Accounting Policies
Principles of Consolidation
Our consolidated financial statements include the accounts of all majority-owned subsidiaries. ITT consolidates
companies in which it has a controlling financial interest or when ITT is considered the primary beneficiary of a
variable interest entity. The results of companies acquired or disposed of during the fiscal year are included in the
Consolidated Financial Statements from the effective date of acquisition or up to the date of disposal. All
intercompany transactions have been eliminated.
59
Revenue Recognition
Revenue is derived from the sale of products and services to customers. We recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect
to be entitled in exchange for those goods or services.
For product sales, we consider practical and contractual limitations in determining whether there is an alternative
use for the product. For example, long-term design and build contracts are typically highly customized to a
customer’s specifications. For contracts with no alternative use and an enforceable right to payment for work
performed to date, including a reasonable profit if the contract were to be terminated at the customer’s convenience
for reason other than nonperformance, we recognize revenue over time. All other product sales are recognized at a
point in time.
For contracts recognized over time, we use the cost-to-cost method or the units-of-delivery method, depending
on the nature of the contract, including length of production time.
For contracts recognized at a point in time, we recognize revenue when control passes to the customer, which is
generally based on shipping terms that address when title and risk and rewards pass to the customer. However, we
also consider certain customer acceptance provisions as certain contracts with customers include installation,
testing, certification or other acceptance provisions. In instances where contractual terms include a provision for
customer acceptance, we consider whether we have previously demonstrated that the product meets objective
criteria specified by either the seller or customer in assessing whether control has passed to the customer.
For service contracts, we recognize revenue as the services are rendered if the customer is benefiting from the
service as it is performed, or otherwise upon completion of the service. Separately priced extended warranties are
recognized as a separate performance obligation over the warranty period.
The transaction price in our contracts consists of fixed consideration and the impact of variable consideration
including returns, rebates and allowances, and penalties. Variable consideration is generally estimated using a
probability-weighted approach based on historical experience, known trends, and current factors including market
conditions and status of negotiations.
When there is more than one performance obligation, the transaction price is allocated to the performance
obligations based on the relative estimated standalone selling prices. If not sold separately, estimated standalone
selling prices are determined considering various factors including market and pricing trends, geography, product
customization, and profit objectives. Revenue is recognized when the appropriate revenue recognition criteria for
the individual performance obligations have been satisfied.
Revenue is reported net of any required taxes collected from customers and remitted to government authorities,
with the collected taxes recorded as current liabilities until remitted to the relevant government authority.
Shipping and handling activities are accounted for as activities to fulfill a promise to transfer a product to a
customer. As such, shipping and handling activities are not evaluated as a separate performance obligation.
For most contracts, payment is due from the customer within 30 to 90 days after the product is delivered or the
service has been performed. For design and build contracts, we generally collect progress payments from the
customer throughout the term of the contract, resulting in contract assets or liabilities depending on the timing of the
payments. Contract assets consist of unbilled amounts when revenue recognized exceeds customer billings.
Contract liabilities consist of advance payments and billings in excess of revenue recognized.
Design and engineering costs for highly complex products to be sold under a long-term production-type contract
are capitalized and amortized in a manner consistent with revenue recognition of the related contract or anticipated
contract. Other design and development costs are capitalized only if there is a contractual guarantee for
reimbursement. Costs to obtain a contract (e.g., commissions) for contracts greater than one year are capitalized
and amortized in a manner consistent with revenue recognition of the related contract.
Product Warranties
Our standard product warranty terms generally include post-sales support and repairs or replacement of a
product at no additional charge for a specified period of time. Accruals for estimated expenses related to product
warranties are made at the time revenue is recognized and are recorded as a component of costs of revenue. We
estimate the liability for warranty claims based on our standard warranties, the historical frequency of claims and the
cost to replace or repair our products under warranty. Factors that influence our warranty liability include the number
of units sold, the length of warranty term, historical and anticipated rates of warranty claims and the cost per claim.
60
Postretirement Benefit Plans
ITT sponsors numerous pension and other employee-related defined benefit plans (collectively, postretirement
benefit plans). Substantially all of our U.S. postretirement benefit plans are closed to new participants.
Postretirement benefit obligations are generally determined, where applicable, based on participant years of
service, future compensation, age at retirement or termination, and the assumed rate of future healthcare cost
increases. The determination of projected benefit obligations and the recognition of expenses related to
postretirement benefit plans are dependent on various assumptions that are judgmental. The assumptions involved
in the measurement of our postretirement benefit plan obligations and net periodic postretirement costs primarily
relate to discount rates, mortality and termination rates, and other factors. Management develops each assumption
using relevant Company experience in conjunction with market-related data for each individual country in which
such plans exist. Actual results that differ from our assumptions are accumulated and are amortized over the
estimated future working life, or remaining lifetime, of the plan participants depending on the nature of the retirement
plan.
The funded status of all plans is recorded on our balance sheet. Actuarial gains and losses and prior service
costs or credits that have not yet been recognized through net income are recorded in accumulated other
comprehensive income within shareholders’ equity, net of taxes, until they are amortized as a component of net
periodic postretirement cost.
Research & Development
Research and development activities are charged to expense as incurred. R&D as a percentage of sales was
3.1%, 3.2%, and 3.4% during 2023, 2022 and 2021, respectively.
Income Taxes
We determine the provision for income taxes using the asset and liability approach. Under this approach,
deferred income tax assets and liabilities are determined based on the estimated future tax effects of differences
between the financial reporting and tax bases of assets and liabilities, applying currently enacted tax rates in effect
for the year in which we expect the differences will reverse. The ultimate realization of deferred tax assets is
dependent on the generation of future taxable income (including the reversals of deferred tax liabilities) during the
periods in which those deferred tax assets will become deductible.
We record a valuation allowance against our deferred tax assets when it is more likely than not that all or a
portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, the Company
considers all available positive and negative evidence regarding the realizability of its deferred tax assets, including
the future reversal of existing taxable temporary differences, taxable income in carryback periods, prudent and
feasible tax planning strategies, estimated future taxable income, and whether we have a recent history of losses.
The valuation allowance can be affected by changes to tax regulations, interpretations and rulings, changes to
enacted statutory tax rates, and changes to future taxable income estimates.
We have not provided deferred tax liabilities for the impact of U.S. income taxes on book over tax basis which
we consider indefinitely reinvested outside the U.S. We plan foreign earnings remittance amounts based on
projected cash flow needs, as well as the working capital and long-term investment requirements of foreign
subsidiaries and our domestic operations.
Furthermore, we recognize the tax benefit from an uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position
in consideration of applicable tax statutes and related interpretations and precedents and the expected outcome of
the proceedings (or negotiations) with the taxing authorities. Tax benefits recognized in the financial statements
from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being
realized on ultimate settlement.
The Company has elected to account for Global Intangible Low Taxed Income as a current period expense
when incurred. See Note 6, Income Taxes, for additional information.
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Earnings Per Share
Basic earnings per common share considers the weighted average number of common shares outstanding.
Diluted earnings per share considers the outstanding shares utilized in the basic earnings per share calculation as
well as the dilutive effect of outstanding stock options and restricted stock that do not contain rights to nonforfeitable
dividends. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock
units and unvested performance stock units. The dilutive effect of such equity awards is calculated based on the
average share price for each reporting period using the treasury stock method. Common stock equivalents are
excluded from the computation of earnings per share if they have an anti-dilutive effect. See Note 7, Earnings Per
Share Data, for additional information.
Cash and Cash Equivalents
ITT considers all highly liquid investments purchased with an original maturity or remaining maturity at the time
of purchase of three months or less to be cash equivalents. Cash equivalents primarily include fixed-maturity time
deposits and money market investments. Restricted cash was $0.7 as of December 31, 2023 and December 31,
2022. Restricted cash is presented within Other current assets and Other non-current assets in our Consolidated
Balance Sheets.
Concentrations of Credit Risk
Financial instruments that potentially subject ITT to significant concentrations of credit risk consist principally of
cash and cash equivalents, accounts and notes receivables from trade customers, investments, and derivative
financial instruments. We maintain cash and cash equivalents with various financial institutions located in different
geographical regions, and our policy is designed to limit exposure to any individual counterparty. Derivative financial
instruments are transacted with multiple highly reputable financial institutions. As part of our risk management
processes, we perform periodic evaluations of the relative credit standing of the financial institutions with which we
transact. We have not sustained any material credit losses during the previous three years with respect to financial
instruments held at financial institutions.
Credit risk with respect to accounts receivable is generally diversified due to the large number of entities
comprising ITT’s customer base and their dispersion across many different industries and geographic regions.
However, our largest customer represented approximately 10% of the total outstanding trade accounts receivable
balances as of December 31, 2023 and December 31, 2022. Occasionally, we enter into notes receivables with
certain of our customers. These notes receivables have maturities of six to 12 months and are guaranteed by
reputable banks. ITT performs ongoing credit evaluations of the financial condition of its third-party distributors,
resellers and other customers and requires collateral, such as letters of credit and bank guarantees, in certain
circumstances.
Allowance for Credit Losses
We determine our allowance for credit losses using a combination of factors to reduce our trade receivables and
contract asset balances to the net amount expected to be collected. The allowance is based on a variety of factors
including the length of time receivables are past due, macroeconomic trends and conditions, significant one-time
events, historical experience, and expectations of future economic conditions. We also record an allowance for
individual accounts when we become aware of specific customer circumstances, such as in the case of bankruptcy
filings or deterioration in the customer’s operating results or financial position. The past due or delinquency status of
a receivable is based on the contractual payment terms of the receivable. If circumstances related to the specific
customer change, we adjust estimates of the recoverability of receivables as appropriate.
Inventories
Inventories, which include the costs of material, labor and overhead, are stated at the lower of cost or net
realizable value. Cost is generally computed using the standard cost method, which approximates actual cost on a
first-in, first-out (FIFO) basis. Variances between standard and actual costs are charged to cost of sales or
capitalized to inventory. Estimated losses from obsolete and slow-moving inventories are recorded to reduce
inventory values to their estimated net realizable value and are charged to cost of sales. At the point of loss
recognition, a new cost basis for that inventory is established and subsequent changes in facts and circumstances
do not result in a recovery in carrying value. Inventories valued under the last-in, first-out (LIFO) method represent
13.8% and 13.0% of total 2023 and 2022 inventories, respectively. We have a LIFO reserve of $19.1 and $16.8
recorded as of December 31, 2023 and 2022, respectively.
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Plant, Property and Equipment
Plant, property and equipment, including capitalized interest applicable to major project expenditures, are
recorded at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets.
Leasehold improvements are depreciated over the life of the lease or the asset, whichever is shorter. Fully
depreciated assets are retained in property and accumulated depreciation accounts until disposal. Repairs and
maintenance costs are expensed as incurred. See Note 11, Plant, Property and Equipment, Net, for additional
information.
Leases
The Company enters into leases for the use of premises and equipment, primarily classified as operating
leases. Operating lease costs are recognized as an operating expense over the lease term on a straight-line basis.
For leases with terms greater than 12 months, we record a right-of-use asset and lease liability equal to the present
value of the lease payments. In determining the discount rate used to measure the right-of-use asset and lease
liability, we utilize the Company’s incremental borrowing rate and consider the term of the lease, as well as the
geographic location of the leased asset.
Where options to renew a lease are available, they are included in the lease term and capitalized on the
balance sheet to the extent there would be a significant economic penalty not to elect the option. Certain real estate
leases are subject to periodic changes in an index or market rate. Although lease liabilities are not remeasured as a
result of changes to an index or rate, these changes are treated as variable lease payments and recognized in the
period in which the obligation for those payments is incurred. Variable lease expense also includes property tax and
property insurance costs. See Note 14, Leases, for additional information.
Capitalized Internal Use Software
Costs incurred in the preliminary project stage of developing or acquiring internal use software are expensed as
incurred. After the preliminary project stage is completed, management has approved the project and it is probable
that the project will be completed and the software will be used for its intended purpose, ITT capitalizes certain
internal and external costs incurred to acquire or create internal use software, principally related to software coding,
designing system interfaces and installation and testing of the software. ITT amortizes capitalized internal use
software costs using the straight-line method over the estimated useful life of the software, generally from 3 to 7
years.
Investments
Investments in fixed-maturity time deposits having an original maturity exceeding three months at the time of
purchase, referred to as short-term time deposits, are classified as held-to-maturity and are recorded at amortized
cost, which approximates fair value. There were no short-term time deposits held as of December 31, 2023 and
December 31, 2022.
Investments in entities where we have the ability to exercise significant influence, but do not control, are
accounted for under the equity method of accounting and are included in Other noncurrent assets in our
Consolidated Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in
the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in
non-operating profit in Other non-operating income, net in our Consolidated Statements of Operations. We evaluate
our equity method investments for impairment whenever events or changes in circumstances indicate that the
carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is
determined to be other than temporary, a loss is recorded in earnings in the current period.
Investments in entities for which we do not have significant operating influence (we generally hold a less than
20% ownership stake in these entities) are initially recorded at the purchase price. For investments in entities with
readily determinable fair values (e.g., publicly traded), the investment is measured at fair value each subsequent
reporting period. For investments in entities without a readily determinable fair value, we have made an accounting
policy election to measure the investment at cost, adjusted for any impairments and/or observable price changes. In
both cases, these investments are included in Other noncurrent assets in our Consolidated Balance Sheets, with
any gains or losses and dividends received recognized in non-operating profit in Other non-operating income, net in
our Consolidated Statements of Operations.
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Investments in corporate-owned life insurance (COLI) policies are recorded at their cash surrender values as of
the balance sheet date. The Company’s investments in COLI policies are included in other non-current assets in our
Consolidated Balance Sheets and were $128.4 and $119.6 at December 31, 2023 and 2022, respectively. Changes
in the cash surrender value during the period generally reflect gains or losses in the fair value of assets, premium
payments, and policy redemptions. Gains from COLI investments of $4.2, $0.7, and $3.9 were recorded within
General and administrative expenses in our Consolidated Statements of Operations during years ended
December 31, 2023, 2022 and 2021, respectively. Cash receipts from COLI policies were $0.0, $0.4, and $0.0
during 2023, 2022, and 2021, respectively, and are recognized in investing activities in our Consolidated Statements
of Cash Flows.
Long-Lived Asset Impairment
Long-lived assets, including intangible assets with finite lives and capitalized internal use software, are tested
for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable.
We assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are
expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected
to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the
carrying value of the asset. When an impairment is identified, we reduce the carrying amount of the asset to its
estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable
market values.
Goodwill and Intangible Assets
Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned
to the net assets of the acquired business. Intangible assets include customer relationships, proprietary technology,
trademarks, patents and other intangible assets. Intangible assets with a finite life are generally amortized on a
straight-line basis over an estimated economic useful life, which generally ranges from 7-20 years, and are tested
for impairment if indicators of impairment are identified. Certain of our intangible assets have an indefinite life,
namely certain brands and trademarks.
Goodwill and indefinite-lived intangible assets are not amortized, but rather are tested for impairment annually
(or more frequently if impairment indicators arise, such as changes to the reporting unit structure, significant
adverse changes in the business climate or an adverse action or assessment by a regulator). We conduct our
annual impairment testing on the first day of the fourth fiscal quarter. We may perform an initial qualitative
evaluation which considers present events and circumstances, to determine the likelihood of impairment. If the
likelihood of impairment is not considered to be more likely than not, then no further testing is performed. If it is
considered to be more likely than not that the asset is impaired based on the qualitative evaluation or we elect not to
perform a qualitative evaluation, then a quantitative impairment test is performed. In the quantitative impairment
test, the fair value of each reporting unit is compared to its carrying amount. If the fair value of a reporting unit
exceeds its carrying value, there is no impairment. If the carrying value of the reporting unit exceeds its estimated
fair value, then we record an impairment loss equal to the difference. For indefinite-lived intangibles, if it is
considered to be more likely than not that the asset is impaired, we compare the fair value of those assets to their
carrying value. We recognize an impairment loss when the estimated fair value of the indefinite-lived intangible
asset is less than its carrying value.
We estimate the fair value of our reporting units using an income approach. Under the income approach, we
estimate fair value based on the present value of estimated future cash flows. We estimate the fair value of our
indefinite-lived intangible assets using the relief from royalty method. The relief from royalty method estimates the
portion of a company’s earnings attributable to an intellectual property asset based on an assumed royalty rate that
the company would have paid had the asset not been owned. See Note 12, Goodwill and Other Intangible Assets,
Net, for additional information.
Business Combinations
We allocate the purchase price of acquisitions to the tangible and intangible assets acquired, liabilities
assumed, and non-controlling interests in the acquiree based on their estimated fair value at the acquisition date.
Changes to acquisition date fair values prior to the expiration of the measurement period, a period not to exceed 12
months from date of acquisition, are recorded as an adjustment to the associated goodwill in the reporting period in
which the adjustment amounts are determined. Changes to acquisition date fair values after expiration of the
measurement period are recorded in earnings. The excess of the acquisition price over those estimated fair values
is recorded as goodwill. Acquisition-related expenses are expensed as incurred and the costs associated with
restructuring actions initiated after the acquisition are recognized separately from the business combination. See
Note 22, Acquisitions, Investments, and Divestitures, for additional information.
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Commitments and Contingencies
We record accruals for commitments and loss contingencies when it is probable that a liability has been
incurred and the amount of loss can be reasonably estimated. Significant judgment is required to determine both
probability and the estimated amount of loss, and these assessments can involve a series of complex judgments
about future events and may rely on estimates and assumptions that have been deemed reasonable by
management. We review these accruals quarterly and adjust the accruals to reflect the impact of negotiations,
settlements, rulings, advice of legal counsel, and other current information. See Note 19, Commitments and
Contingencies, for additional information.
Environmental-Related Liabilities and Assets
Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has
been incurred and the amount of the liability can be reasonably estimated, based on current law and existing
technologies. Our estimated liability is reduced to reflect the participation of other potentially responsible parties in
those instances where it is probable that such parties are legally responsible and financially capable of paying their
respective shares of the relevant costs, and that share can be reasonably estimated. Environmental liabilities are
primarily included in other non-current liabilities at undiscounted amounts.
The Company records an asset related to its environmental insurance and other expected third party
recoveries. The environmental-related asset represents our best estimate of probable recoveries from third parties
for costs incurred in past periods, as well as costs estimated to be incurred in future periods.
Environmental costs and related recoveries are recorded within General and administrative expenses in our
Consolidated Statements of Operations, other than those related to discontinued operations. See Note 19,
Commitments and Contingencies, for additional information.
Foreign Currency
The national currencies of our foreign subsidiaries are generally the functional currencies. Balance Sheet
accounts are translated at the exchange rate in effect at the end of each period, except for equity which is translated
at historical rates; Statement of Operations accounts are translated at the average rates of exchange prevailing
during the period. Gains and losses resulting from foreign currency translation are reflected in the cumulative
translation adjustments component of shareholders’ equity.
For foreign subsidiaries that do not use the local currency as their functional currency, foreign currency assets
and liabilities are remeasured to the foreign subsidiary’s functional currency using end of period exchange rates,
except for nonmonetary balance sheet accounts, which are remeasured at historical exchange rates.
For transactions denominated in other than the functional currency, revenue and expenses are remeasured at
average exchange rates in effect during the reporting period in which the transactions occurred, except for
expenses related to nonmonetary assets and liabilities. Transaction gains or losses from foreign currency
remeasurement are reported in General and administrative expenses in our Consolidated Statements of
Operations. During the years ended December 31, 2023, 2022, and 2021, we recognized transaction (loss)/gain of
$(7.0), $6.1 and $1.9, respectively.
Derivative Financial Instruments
From time to time, the Company may use derivative financial instruments, primarily foreign currency forward
and option contracts, to mitigate exposure from foreign currency exchange rate fluctuations as it pertains to receipts
from customers, payments to suppliers and intercompany transactions; as well as from commodity price
fluctuations. We record derivatives at their fair value as either an asset or liability. For derivatives not designated as
hedges, adjustments to reflect changes in the fair value of our derivatives are included in earnings. For cash flow
hedges that qualify and are designated for hedge accounting, the effective portion of the change in fair value of the
derivative is recorded in accumulated other comprehensive loss and subsequently recognized in earnings when the
hedged transaction affects earnings. Any ineffective portion is recognized immediately in earnings. As of
December 31, 2023 and 2022, no derivatives were designated as hedges. The differentials paid or received on
interest rate swap agreements are recognized as adjustments to interest expense. Derivative contracts involve the
risk of non-performance by the counterparty. The fair value of our foreign currency contracts are determined using
the net position of the contracts and the applicable spot rates and forward rates as of the reporting date. See Note
21, Derivative Financial Instruments, for additional information.
Related Parties
Under Accounting Standards Codification (ASC) Topic 850, Related Party Disclosures, related party
transactions include those between: (a) a parent entity and its subsidiaries; (b) subsidiaries of a common parent; (c)
65
an entity and trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or
under the trusteeship of the entity’s management; (d) an entity and its principal owners, management, or members
of their immediate families; and (e) affiliates.
In January 2021, the Company entered into a three-month consulting agreement for $0.2 with Thomas Scalera,
ITT's former Executive Vice President and Chief Financial Officer. The consulting agreement included, but was not
limited to, financial, accounting, and investor relations advisory services.
There were no other material related party transactions during 2023, 2022 or 2021.
NOTE 2
RECENT ACCOUNTING PRONOUNCEMENTS
From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue
new accounting pronouncements. Updates to the FASB's accounting standards are communicated through
issuance of an Accounting Standards Update (“ASU”). The Company considers the applicability and impact of all
ASUs on our business and financial results.
Recently issued accounting pronouncements not yet adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements by requiring
disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision
Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires
disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM
uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to
allocate resources. This ASU is effective for annual periods beginning after December 15, 2023, and interim periods
within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all
prior periods presented in the financial statements. Early adoption is permitted. We are currently evaluating the
impact that this guidance will have on the disclosures within our financial statements, and expect to adopt this ASU
for the year ending December 31, 2024.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income
Tax Disclosures. This ASU requires disclosure of specific categories in the rate reconciliation and additional
information for reconciling items that meet a quantitative threshold. The amendment also includes other changes to
improve the effectiveness of income tax disclosures, including further disaggregation of income taxes paid for
individually significant jurisdictions. This ASU is effective for annual periods beginning after December 15, 2024.
Adoption of this ASU should be applied on a prospective basis. Early adoption is permitted. We are currently
evaluating the impact that this guidance will have on the disclosures within our financial statements, and expect to
adopt this ASU for the year ending December 31, 2025.
During 2023, there were no other new accounting standards issued, or that are pending issuance, that are
expected to have a material impact on our consolidated financial statements upon adoption.
NOTE 3
SEGMENT INFORMATION
The Company’s segments are reported on the same basis used by our chief operating decision maker for
evaluating performance and for allocating resources. Our three reportable segments are referred to as: Motion
Technologies, Industrial Process, and Connect & Control Technologies.
Motion Technologies manufactures brake components and specialized sealing solutions, shock absorbers and
damping technologies primarily for the global automotive, truck and trailer, public bus and rail transportation
markets.
Industrial Process manufactures engineered fluid process equipment serving a diversified mix of customers in
global industries such as chemical, energy, mining, and other industrial process markets and is a provider of
plant optimization and efficiency solutions and aftermarket services and parts.
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Connect & Control Technologies manufactures harsh-environment connector solutions, critical energy
absorption, flow control components, and composite materials for the aerospace and defense, general
industrial, medical, and energy markets.
Assets of our reportable segments exclude general corporate assets, which principally consist of cash,
investments, deferred taxes, and certain property, plant and equipment. These assets are included within Corporate
and Other, which is described further below.
Corporate and Other consists of corporate office expenses including compensation, benefits, occupancy,
depreciation, and other administrative costs, as well as charges related to certain matters, such as asbestos and
environmental liabilities, that are managed at a corporate level and are not included in segment results when
evaluating performance or allocating resources. In addition, Corporate and Other includes research and
development-related expenses associated with a subsidiary that does not constitute a reportable segment.
The following table presents our revenue for each segment and reconciles our total segment revenue to total
consolidated revenue.
For the Year Ended December 31
Motion Technologies
Industrial Process
Connect & Control Technologies
Total segment revenue
Eliminations
Total consolidated revenue
Revenue
2022
2021
2023
$ 1,457.8 $ 1,374.0 $ 1,368.6
1,129.6
699.4
971.0
645.6
843.2
554.7
3,286.8
2,990.6
2,766.5
(3.8)
(2.9)
(1.5)
$ 3,283.0 $ 2,987.7 $ 2,765.0
The following table presents our operating income for each segment and reconciles our total segment operating
income to income from continuing operations before income tax.
For the Year Ended December 31
Motion Technologies
Industrial Process
Connect & Control Technologies
Total segment operating income
Other corporate costs
Asbestos-related benefit, net(a)
Interest (expense) income, net
Other non-operating income, net
Income from continuing operations before income tax
Operating Income
2022
2021
2023
$ 230.8 $ 208.5 $ 258.2
243.6
107.5
187.6
115.8
126.8
81.7
581.9
511.9
(53.7)
—
(43.9)
—
466.7
(36.8)
74.4
(10.4)
(6.4)
1.7
0.2
1.1
3.7
$ 519.5 $ 461.8 $ 509.1
(a) The 2021 period includes a pre-tax gain of $88.8 resulting from the InTelCo divestiture transaction. See Note 19,
Commitments and Contingencies, for further information.
The following table presents our operating margin for each segment. Segment operating margin is calculated as
segment operating income divided by segment revenue.
For the Year Ended December 31
Motion Technologies
Industrial Process
Connect & Control Technologies
2023
2022
2021
15.8 % 15.2 % 18.9 %
21.6 % 19.3 % 15.0 %
15.4 % 17.9 % 14.7 %
The following table presents our assets as of December 31, 2023 and 2022, as well as our capital expenditures
and depreciation and amortization expense for the years ended December 31, 2023, 2022, and 2021, by segment.
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Assets
Capital
Expenditures
Depreciation
and Amortization
2023
2022
2023
2022
2021
2023
2022
2021
Motion Technologies
Industrial Process
Connect & Control Technologies
Corporate and Other
Total
$ 1,366.6
$ 1,311.9
$ 72.0
$ 73.2
$ 71.1
$ 64.4
$ 59.9
$ 64.1
1,323.2
1,218.6
834.6
408.2
751.6
498.2
17.7
16.1
1.8
10.9
14.8
5.0
6.7
8.5
2.1
21.9
20.3
2.6
25.3
18.8
3.4
22.3
21.8
4.9
$ 3,932.6
$ 3,780.3
$ 107.6
$ 103.9
$ 88.4
$ 109.2
$ 107.4
$ 113.1
The following table displays consolidated revenue by geographic region. Revenue is attributed to individual regions
based on the destination of the product or service delivery.
For the Year Ended December 31, 2023
North America(a)
Europe(b)
Asia(c)
Middle East and Africa
South America
Motion
Technologies
Industrial
Process
Connect &
Control
Technologies
Eliminations
Total
$
265.2 $
660.9 $
441.1 $
(3.7) $
1,363.5
802.7
370.1
1.5
18.3
109.1
118.5
139.6
101.5
134.8
84.1
28.4
11.0
—
(0.1)
—
—
1,046.6
572.6
169.5
130.8
Total
$
1,457.8 $
1,129.6 $
699.4 $
(3.8) $
3,283.0
For the Year Ended December 31, 2022
North America(a)
Europe(b)
Asia(c)
Middle East and Africa
South America
$
266.9 $
566.2 $
390.2 $
(2.8) $
1,220.5
756.7
333.6
1.3
15.5
94.6
102.8
120.8
86.6
136.4
88.1
22.4
8.5
—
(0.1)
—
—
987.7
524.4
144.5
110.6
Total
$
1,374.0 $
971.0 $
645.6 $
(2.9) $
2,987.7
For the Year Ended December 31, 2021
North America(a)
Europe(b)
Asia(c)
Middle East and Africa
South America
$
249.9 $
470.1 $
331.4 $
(1.5) $
1,049.9
798.8
307.8
1.0
11.1
96.0
99.8
97.7
79.6
115.5
84.0
18.1
5.7
—
—
—
—
1,010.3
491.6
116.8
96.4
Total
$
1,368.6 $
843.2 $
554.7 $
(1.5) $
2,765.0
(a)
(b)
(c)
Includes revenue of $1,075.8, $978.6, and $842.9 from the United States for 2023, 2022, and 2021, respectively.
Includes revenue of $387.8, $404.7, and $418.3 from Germany for 2023, 2022, and 2021, respectively.
Includes revenue of $351.8, $307.8, and $306.5 from China for 2023, 2022, and 2021, respectively.
68
The following table displays Plant, Property and Equipment (PPE), net by geographic region.
As of December 31
North America(a)
Europe(b)
Asia(c)
Middle East and Africa
South America
Total
2023
2022
$ 165.0
$ 156.5
287.5
87.8
17.8
2.9
272.5
79.2
15.8
2.8
$ 561.0
$ 526.8
(a)
(b)
(c)
Includes PPE, net of $127.1 and $125.2 in the United States as of December 31, 2023 and 2022, respectively.
Includes PPE, net of $134.4 and $113.6 in Italy as of December 31, 2023 and 2022, respectively.
Includes PPE, net of $63.2 and $52.8 in China as of December 31, 2023 and 2022, respectively.
NOTE 4
REVENUE
The following table represents our revenue disaggregated by end market.
For the Year Ended December 31, 2023
Auto and rail
Chemical and industrial pumps
Aerospace and defense
General industrial
Energy
Total
For the Year Ended December 31, 2022
Auto and rail
Chemical and industrial pumps
Aerospace and defense
General industrial
Energy
Total
For the Year Ended December 31, 2021
Auto and rail
Chemical and industrial pumps
Aerospace and defense
General industrial
Energy
Total
Motion
Technologies
Industrial
Process
Connect &
Control
Technologies Eliminations
Total
$ 1,423.7
$
—
$
—
8.4
25.7
—
893.0
—
—
236.6
—
—
377.3
270.7
51.4
$
(0.1)
$ 1,423.6
(0.1)
—
(3.6)
—
892.9
385.7
292.8
288.0
$ 1,457.8
$ 1,129.6
$ 699.4
$
(3.8)
$ 3,283.0
$ 1,336.1
$
—
$
—
7.8
30.1
—
780.9
—
—
190.1
—
—
316.9
285.1
43.6
$
(0.1)
$ 1,336.0
(0.1)
—
(2.7)
—
780.8
324.7
312.5
233.7
$ 1,374.0
$ 971.0
$ 645.6
$
(2.9)
$ 2,987.7
$ 1,335.1
$
—
$
—
8.3
25.2
—
659.0
—
—
184.2
—
—
261.4
255.2
38.1
$
—
—
—
(1.5)
—
$ 1,335.1
659.0
269.7
278.9
222.3
$ 1,368.6
$ 843.2
$ 554.7
$
(1.5)
$ 2,765.0
During 2023, 2022, and 2021, a single external customer, Continental AG, accounted for 7.3%, 8.4%, and 9.8%
of consolidated ITT revenue, respectively. Revenue from this customer is reported within our Motion Technologies
segment.
69
Revenue recognized related to our Industrial Process segment primarily consists of pumps, valves and plant
optimization systems and related services which serve the general industrial, energy, chemical and petrochemical,
pharmaceutical, mining, pulp and paper, food and beverage, and power generation markets. Many of Industrial
Process’s products are highly engineered and customized to our customer needs and therefore do not have an
alternative use. For these longer term design and build projects, if the contract states that we also have an
enforceable right to payment, we recognize revenue over time using the cost-to-cost method as we satisfy the
performance obligations identified in the contract. If no right to payment exists, revenue is recognized at a point in
time, generally based on shipping terms. A majority of our design and build project contracts currently do not have a
right to payment. For pumps that do have an alternative use to us, revenue is recognized at a point in time.
Revenue on service and repair contracts, representing 4%, 4%, and 3% of consolidated ITT revenue in 2023, 2022,
and 2021, respectively, is recognized after the services have been rendered or over the service contract period.
Our Motion Technologies segment manufactures brake pads, shims, shock absorbers, and energy absorption
components, and sealing technologies primarily for the transportation industry. Our Connect & Control Technologies
segment designs and manufactures a range of highly engineered connectors and specialized control components
for critical applications supporting various markets including aerospace and defense, industrial, transportation,
medical, and energy. In both of these segments, most products have an alternative use. Therefore, revenue for
those products is recognized at a point in time when control passes to the customer. In certain circumstances, we
have concluded we do not have an alternative use for the component product. In these cases, due to the short-term
nature of the production process we use a units-of-delivery method of revenue recognition.
Contract Assets and Liabilities
Contract assets consist of unbilled amounts where revenue recognized exceeds customer billings. Contract
liabilities consist of advance payments and billings in excess of revenue recognized. The following table represents
our net contract assets and liabilities.
As of December 31
Current contract assets
Noncurrent contract assets
Current contract liabilities
Noncurrent contract liabilities
Net contract liabilities
2023
$ 25.8
1.6
(95.9)
(4.5)
(73.0)
$
2022
$ 26.3
1.2
(70.2)
(4.4)
(47.1)
$
Our net contract liability increased $25.9 during 2023, primarily due to timing of cash receipts relative to project
performance within our IP segment. During 2023, we recognized revenue of $49.2 related to contract liabilities at
December 31, 2022.
The aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance
obligations was $1,246.5 as of December 31, 2023. Of this amount, we expect to recognize approximately $1,030 to
$1,050 of revenue during 2024 and the remainder thereafter.
As of December 31, 2023 and 2022, deferred contract costs, net were $3.8 and $4.5, respectively, primarily
related to pre-contract costs. During 2023 and 2022, we amortized $0.7 and $1.0, respectively.
70
NOTE 5
RESTRUCTURING ACTIONS
From time to time, we initiate restructuring actions to optimize our cost structure, improve operational
efficiencies, align our workforce with strategic business initiatives, or integrate acquired businesses. For the years
ended December 31, 2023, 2022, and 2021, none of our restructuring activities were considered individually
significant. Restructuring costs are recorded within General and administrative expenses in our Consolidated
Statements of Operations.
The following table summarizes our restructuring costs by component and by segment.
For the Year Ended December 31
By component:
Severance and other employee-related costs
Asset write-offs
Other
Total restructuring costs
By segment:
Motion Technologies
Industrial Process
Connect & Control Technologies
Corporate and Other
Total restructuring costs
2023
2022
2021
$
$
$
$
8.0
1.8
0.1
9.9
4.0
4.6
1.3
—
9.9
$
$
$
$
$
$
3.5
0.1
0.2
3.8
2.7
1.3
—
(0.2)
$
3.8
$
8.0
0.6
1.0
9.6
3.9
3.1
2.4
0.2
9.6
The following table displays a rollforward of our total restructuring liability, which is included within Accrued and
other current liabilities in our Consolidated Balance Sheets.
Restructuring liability as of January 1
Restructuring costs
Reversal of prior accruals
Cash payments
Asset write-offs
Foreign exchange translation and other
Restructuring liability as of December 31
By accrual type:
Severance and other employee-related
Other
2023
2022
$
3.9
$ 11.0
10.9
(1.0)
(7.3)
(1.8)
0.1
4.8
4.5
0.3
$
$
5.1
(1.3)
(10.5)
(0.1)
(0.3)
$
3.9
$
3.9
—
71
NOTE 6
INCOME TAXES
The following table displays information regarding income tax expense (benefit) from continuing operations.
For the Year Ended December 31
Income (loss) components:
United States
International
Income from continuing operations before income tax
Income tax expense (benefit) components:
Current income tax expense (benefit):
United States – federal
United States – state and local
International
Total current income tax expense
Deferred income tax expense (benefit) components:
United States – federal
United States – state and local
International
Total deferred income tax expense (benefit)
Income tax expense
Effective income tax rate
2023
2022
2021
$ 164.6
354.9
519.5
$ 155.7
306.1
461.8
$ 199.4
309.7
509.1
41.3
5.5
85.6
132.4
(14.1)
(2.7)
(10.8)
(27.6)
$ 104.8
32.6
1.2
54.4
88.2
(0.2)
3.1
—
2.9
$ 91.1
21.1
2.6
50.2
73.9
96.9
15.5
3.3
115.7
$ 189.6
20.2 %
19.7 %
37.2 %
The following table includes a reconciliation of the U.S. statutory tax rate to our effective income tax rate related
to income from continuing operations.
For the Year Ended December 31
Tax provision at U.S. statutory rate
State and local income tax
U.S. tax on foreign earnings
Italy patent box
Foreign-Derived Intangible Income ("FDII")
Excess tax benefits on stock-based compensation
Audit settlements and unrecognized tax benefits
Valuation allowance on deferred tax assets
Tax on undistributed foreign earnings
Asbestos divestiture
Foreign tax rate differential
Amended tax return
Other adjustments
Effective income tax rate
2023
21.0 %
0.9 %
1.3 %
(1.1) %
(1.2) %
(0.2) %
2.7 %
(3.1) %
0.3 %
— %
1.6 %
(1.0) %
(1.0) %
20.2 %
2022
21.0 %
1.1 %
0.6 %
(1.2) %
(1.1) %
(0.5) %
(0.2) %
(0.2) %
(0.1) %
— %
— %
— %
0.3 %
19.7 %
2021
21.0 %
0.6 %
0.1 %
(1.3) %
(0.5) %
(0.6) %
(1.0) %
(0.4) %
0.8 %
18.9 %
(0.2) %
— %
(0.2) %
37.2 %
The higher effective tax rate in 2023 compared to 2022 resulted from the Company recording tax expense in
2023 of $14.2 relating to a tax audit in Italy covering tax years 2016-2022. The 2023 expense includes $6.8 of U.S.
tax on foreign earnings. These tax expenses were offset by $16.1 from valuation allowance reversals on deferred
tax assets in Germany. ITT also recognized tax benefits of $4.9 from the filing of an amended 2017 consolidated
federal tax return.
The Company provides for deferred taxes on the undistributed earnings and profits of all foreign subsidiaries,
determined under U.S. tax law. At December 31, 2023, the amount of undistributed earnings and profits of all
foreign subsidiaries was $1,246.2. The Company anticipates that these foreign earnings and future earnings of its
foreign subsidiaries that are not indefinitely reinvested will be sufficient to meet its U.S. cash needs. The Company
is indefinitely reinvested in any excess of financial reporting over tax basis in its foreign subsidiaries that exceeds
undistributed earnings and profits. At December 31, 2023, the indefinitely reinvested excess of financial reporting
over tax basis was $325.5.
72
The following table includes the items comprising our deferred tax assets and liabilities.
As of December 31
Deferred Tax Assets:
Loss carryforwards
Inventory
Accruals
Employee benefits
Research and expenditures capitalization
Credit carryforwards
Other
Gross deferred tax assets
Less: Valuation allowance
Net deferred tax assets
Deferred Tax Liabilities:
Intangibles
Undistributed earnings
Accelerated depreciation
Total deferred tax liabilities
Net deferred tax assets
Deferred taxes included in our Consolidated Balance Sheets were as follows:
As of December 31
Other non-current assets
Other non-current liabilities
Net deferred tax assets
2023
2022
$
97.0
24.1
27.1
39.0
17.8
11.1
30.2
246.3
73.3
$ 173.0
$
(45.3)
(46.2)
(24.1)
$ (115.6)
57.4
$
$ 119.1
20.5
26.0
34.1
10.2
2.8
25.2
237.9
102.4
$ 135.5
$
(42.2)
(34.8)
(24.3)
$ (101.3)
34.2
$
2023
2022
$
$
76.0
(18.6)
57.4
$
$
54.7
(20.5)
34.2
The table below provides a rollforward of our valuation allowance on net deferred tax assets (DTA).
DTA valuation allowance as of December 31, 2020
Change in assessment
Current year operations
DTA valuation allowance as of December 31, 2021
Change in assessment
Current year operations
DTA valuation allowance as of December 31, 2022
Change in assessment
Current year operations
DTA valuation allowance as of December 31, 2023
State
$ 40.4
—
(4.7)
$ 35.7
—
3.8
$ 39.5
(23.1)
(0.8)
$ 15.6
Foreign
$ 82.6
(1.9)
(7.6)
$ 73.1
(1.1)
(9.1)
$ 62.9
(16.4)
11.2
$ 57.7
Total
$ 123.0
(1.9)
(12.3)
$ 108.8
(1.1)
(5.3)
$ 102.4
(39.5)
10.4
$ 73.3
The Company continues to maintain a valuation allowance against certain deferred tax assets attributable to
state net operating losses and tax credits, and certain foreign net deferred tax assets primarily in Luxembourg,
Germany, and the U.K. which are not expected to be realized. Management assesses the available positive and
negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of
deferred tax assets. The cumulative loss incurred over the three-year period ending December 31, 2023 constitutes
significant objective negative evidence, resulting in the recognition of a valuation allowance against the net deferred
tax assets for these jurisdictions. Such objective negative evidence limits our ability to consider subjective positive
evidence, such as our projections of future taxable income. The amount of the deferred tax asset considered
realizable, however, could be adjusted if estimates of future taxable income change or if objective negative evidence
in the form of cumulative losses is no longer present and additional weight can be given to subjective evidence.
73
We have the following tax attributes available for utilization at December 31, 2023:
Attribute
U.S. state net operating losses
U.S. federal tax credits
U.S. state tax credits
Foreign net operating losses(a)
Amount
$ 312.6
8.4
2.3
305.7
First Year of
Expiration
12/31/2024
12/31/2029
12/31/2027
12/31/2024
(a)
Includes approximately $223.0 of net operating loss carryforwards in Luxembourg as of December 31, 2023.
Excess tax benefits related to stock-based compensation of $0.9, $2.4 and $3.2 for 2023, 2022 and 2021,
respectively, were recorded as an income tax benefit in the statement of operations and have been reflected in the
caption “Excess tax benefits on stock-based compensation” within the effective tax rate reconciliation table.
Uncertain Tax Positions
We recognize income tax benefits from uncertain tax positions only if, based on the technical merits of the
position, it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The
tax benefits recognized in the Consolidated Financial Statements from such positions are measured based on the
largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
The following table displays a rollforward of our unrecognized tax benefits.
For the Year Ended December 31
Unrecognized tax benefits – January 1
Additions for:
Current year tax positions
Prior year tax positions
Reductions for:
Prior year tax positions
Expiration of statute of limitations
Settlements
Unrecognized tax benefits – December 31
2023
2022
$
6.7
$
7.6
2021
$ 41.5
1.4
0.5
(0.6)
(2.3)
—
5.7
$
1.7
0.3
(0.1)
(2.8)
—
6.7
$
0.6
0.1
(5.5)
(19.7)
(9.4)
7.6
$
As of December 31, 2023, $4.4 of the unrecognized tax benefits would impact the effective tax rate for
continuing operations, if realized. The Company operates in various tax jurisdictions and is subject to examination
by tax authorities in these jurisdictions. The Company is currently under examination in several jurisdictions
including Czechia, Germany, India, Italy, and the U.S.
The calculation of our tax liability for unrecognized tax benefits includes dealing with uncertainties in the
application of complex tax laws and regulations in various tax jurisdictions. Due to the complexity of some
uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of
the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liability for unrecognized tax
benefits in foreign and domestic jurisdictions is not expected to change by a significant amount.
The following table summarizes the earliest open tax years by major jurisdiction as of December 31, 2023:
Jurisdiction
China
Czechia
Germany
Hong Kong
India
Italy
Japan
Korea
Luxembourg
Mexico
United States
Earliest Open Year
2018
2014
2017
2020
2013
2016
2022
2023
2017
2016
2020
74
We classify interest relating to tax matters as a component of interest expense and tax penalties as a
component of income tax expense in our Consolidated Statements of Operations. During 2023, 2022, and 2021 we
recognized a net interest benefit of $0.1, $0.0, and $0.7, respectively, related to tax matters.
NOTE 7
EARNINGS PER SHARE DATA
The following table provides a reconciliation of basic to diluted common shares outstanding, used in the
computation of basic and diluted earnings per share presented in our Consolidated Statements of Operations.
For the Year Ended December 31
Basic weighted average common shares outstanding
Add: Dilutive impact of outstanding equity awards
Diluted weighted average common shares outstanding
2023
2022
2021
82.3
0.4
82.7
83.4
0.3
83.7
86.0
0.5
86.5
There were 0.1 anti-dilutive shares as of December 31, 2023, and no anti-dilutive shares as of December 31,
2022 and 2021, to exclude from the computation of diluted earnings per share.
NOTE 8
RECEIVABLES, NET
The following table summarizes our receivables and associated allowance for credit losses.
As of December 31
Trade accounts receivable
Notes receivable
Other
Receivables, gross
Less: allowance for credit losses - receivables
Receivables, net
2023
2022
$ 641.3
25.5
22.6
689.4
(14.2)
$ 675.2
$ 614.0
8.2
18.3
640.5
(11.7)
$ 628.8
The following table displays our allowance for credit losses for receivables and contract assets.
As of December 31
Allowance for credit losses - receivables
Allowance for credit losses - contract assets
Total allowance for credit losses
2023
2022
$ 14.2
$ 11.7
—
0.5
$ 14.2
$ 12.2
The following table displays a rollforward of our total allowance for credit losses.
Total allowance for credit losses as of January 1
Charges (recoveries) to income(a)
Write-offs
Foreign currency and other
Total allowance for credit losses as of December 31
2023
2022
2021
$ 12.2
2.2
(0.9)
0.7
$ 14.2
$ 12.5
2.0
(2.0)
(0.3)
$ 12.2
$ 15.6
(2.0)
(1.0)
(0.1)
$ 12.5
(a) During the years ended December 31, 2023 and 2022, we recognized bad debt expense of $1.2 and $1.6, respectively,
relating to impacts stemming from the Russia-Ukraine war. See Note 1, Description of Business and Basis of Presentation,
for further information.
75
NOTE 9
INVENTORIES
The following table summarizes our inventories.
As of December 31
Raw materials
Work in process
Finished goods
Inventories(a)
2023
2022
$ 366.6
$ 342.7
111.8
97.0
104.6
86.6
$ 575.4
$ 533.9
(a) During the years ended December 31, 2023 and 2022, we recorded inventory write-downs of $1.1 and $5.2, respectively,
related to inventories held by entities impacted by the Russia-Ukraine war. See Note 1, Description of Business and Basis of
Presentation, for further information.
Government Assistance (ASU 2021-10)
Since the start of the COVID-19 pandemic, energy prices have been increasing throughout the world,
particularly in Europe. These increases have prompted governments to put in place measures to shield businesses
and consumers from the direct impact of rising prices. These measures include granting subsidies to help offset the
high energy prices.
ASU 2021-10 requires entities to provide information about the nature of transactions, related policies and effect
of government grants on an entity’s financial statements. In particular, in Italy, to qualify for an energy subsidy a
company must apply for and receive a certificate attesting that the company is an "energy and gas consuming
company" (high energy consumption connected to the production cycle). The amount of subsidies granted is
calculated based on a percentage of actual consumption, ranging from 25% to 40%. One of our Italian subsidiaries
within our MT segment obtained this certificate and was granted energy subsidies from the Italian government
beginning in April 2022. This program concluded in the second quarter of 2023. For the years ended December 31,
2023 and 2022, we recognized a benefit related to energy subsidies of $6.3 and $7.3, respectively, which we
recorded within Costs of revenue in our Consolidated Statements of Operations. There was no other material
government assistance received by the Company or any of our subsidiaries during the year.
NOTE 10
OTHER CURRENT AND NON-CURRENT ASSETS
The following table summarizes our other current and non-current assets.
As of December 31
Advance payments and other prepaid expenses
Current contract assets, net
Prepaid income taxes
Other
Other current assets
Other employee benefit-related assets
Operating lease right-of-use assets
Deferred income taxes
Equity method and other investments
Capitalized software costs
Environmental-related assets
Other
Other non-current assets
2023
2022
$ 55.3
$ 45.0
25.8
16.9
19.9
$ 117.9
$ 128.6
87.4
76.0
46.6
7.9
6.0
28.5
$ 381.0
26.3
25.1
16.5
$ 112.9
$ 119.8
73.8
54.7
42.9
12.4
9.6
25.9
$ 339.1
76
NOTE 11
PLANT, PROPERTY AND EQUIPMENT, NET
The following table summarizes our property, plant, and equipment, net of accumulated depreciation.
As of December 31
Machinery and equipment
Buildings and improvements
Furniture, fixtures and office equipment
Construction in progress
Land and improvements
Other
Plant, property and equipment, gross
Less: accumulated depreciation
Plant, property and equipment, net
Useful life
(in years)
2 - 10
5 - 40
3 - 7
2023
2022
$ 1,317.9
$ 1,208.3
298.4
277.6
83.7
78.1
29.5
1.7
80.5
86.9
29.3
3.3
1,809.3
1,685.9
(1,248.3)
(1,159.1)
$ 561.0
$ 526.8
Depreciation expense of $84.2, $80.7, and $85.8 was recognized in 2023, 2022 and 2021, respectively.
During 2022, we recorded a gain of $14.7 related to the sale of a former operating facility that was previously
held by a business within our IP segment. During 2021, we recorded a gain of $7.0 related to the sale of land that
was previously held by a business within our MT segment. These gains were recorded within Gain on sale of long-
lived assets in our Consolidated Statements of Operations for the years ended December 31, 2022 and 2021.
NOTE 12
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
The following table provides a rollforward of the carrying amount of our goodwill by segment.
Goodwill as of December 31, 2021
Goodwill acquired
Foreign currency translation
Goodwill as of December 31, 2022
Goodwill acquired
Allocated to divestiture of business(a)
Foreign currency translation
Goodwill as of December 31, 2023
Motion
Technologies
Industrial
Process
Connect &
Control
Technologies
Total
$
$
$
292.3 $
—
(4.6)
287.7 $
—
—
4.6
292.3 $
352.4 $
62.9
(16.6)
398.7 $
—
—
4.3
403.0 $
279.6 $
0.3
(1.5)
278.4 $
44.6
(2.7)
924.3
63.2
(22.7)
964.8
44.6
(2.7)
0.7
321.0 $
9.6
1,016.3
(a) During the fourth quarter of 2023, we completed the sale of our Matrix business, which was previously included within our
CCT segment. Goodwill of $0.3 was allocated to the divestiture. Additionally, during the second quarter of 2023, we
completed the sale of a product line within our CCT segment. Goodwill of $2.4 was allocated to the divestiture. See Note 22,
Acquisitions, Investments, and Divestitures, for further information.
Goodwill acquired represents the preliminary calculation of the excess purchase price over the net assets
acquired. During the year ended December 31, 2023, goodwill acquired is related to our acquisition of Micro-Mode.
The valuation of Micro-Mode is pending completion. Upon completion, goodwill acquired will be adjusted based on
the final fair values of the net assets acquired. For the year ended December 31, 2022, goodwill acquired is related
to our acquisitions of Habonim and a product line from Clippard Instrument Laboratory, Inc. (Clippard). Refer to Note
22, Acquisitions, Investments, and Divestitures, for further information.
77
Other Intangible Assets, Net
The following table summarizes our other intangible assets, net of accumulated amortization.
As of December 31
Customer relationships(a)
Proprietary technology
Trademarks and other
Total finite-lived intangibles
Indefinite-lived intangibles
Other intangible assets
2023
2022
Gross
Carrying
Amount
Accumulated
Amortization
Net
Intangibles
Gross
Carrying
Amount
Accumulated
Amortization
Net
Intangibles
$
202.4 $
(138.4) $
64.0 $
191.5 $
(127.1) $
61.5
22.0
285.9
19.1
(32.5)
(17.5)
(188.4)
—
29.0
4.5
97.5
19.1
59.2
17.6
268.3
19.0
(30.8)
(16.6)
(174.5)
—
64.4
28.4
1.0
93.8
19.0
$
305.0 $
(188.4) $
116.6 $
287.3 $
(174.5) $
112.8
(a) During the fourth quarter of 2023, we completed the sale of our Matrix business, which was previously included within our
CCT segment. Customer relationships with a net book value of $5.5 were written off as part of the divestiture. See Note 22,
Acquisitions, Investments, and Divestitures, for further information.
In connection with the acquisition of Micro-Mode in May 2023, we acquired intangible assets with a preliminary
fair value of $28.7. These intangible assets consist of the following:
Customer relationships
Developed technology
Trade name
Backlog
Other
Total intangible assets acquired
Useful life
(in years)
20
20
20
<2
10
Fair value
$
18.5
5.5
2.3
1.9
0.5
$
28.7
Refer to Note 22, Acquisitions, Investments, and Divestitures, for further information.
Customer relationships, proprietary technology and trademarks and other intangible assets are amortized over
weighted average lives of approximately 13.6 years, 14.4 years and 7.1 years, respectively. Indefinite-lived
intangibles primarily consist of brands and trademarks.
Amortization expense related to intangible assets for 2023, 2022 and 2021 was $19.1, $20.8, and $18.9,
respectively. Estimated amortization expense for each of the five succeeding years and thereafter is as follows:
2024
2025
2026
2027
2028
Thereafter
$
15.9
14.0
10.7
8.7
8.7
39.5
78
NOTE 13
ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES
The following table summarizes our accrued liabilities and other non-current liabilities.
As of December 31
Compensation and other employee-related benefits
Contract liabilities and other customer-related liabilities
Accrued income taxes and other tax-related liabilities
Operating lease liabilities
Accrued warranty costs
Environmental and other legal matters
Accrued restructuring costs
Other
Accrued and other current liabilities
Operating lease liabilities
Environmental liabilities
Deferred income taxes and other tax-related liabilities
Compensation and other employee-related benefits
Non-current maturities of long-term debt
Other
Other non-current liabilities
Supply Chain Financing
2023
$ 165.5
133.6
30.7
19.5
14.0
5.8
4.8
39.2
2022
$ 134.4
92.2
27.1
19.0
14.3
5.7
3.9
36.8
$ 413.1
$ 72.3
$ 333.4
$ 58.9
52.0
25.0
38.0
5.7
24.0
$ 217.0
53.1
31.1
25.0
7.7
24.4
$ 200.2
The Company has supply chain financing ("SCF") programs in place under which participating suppliers may
elect to obtain payment from an intermediary. The Company confirms the validity of invoices from participating
suppliers and agrees to pay the intermediary an amount based on invoice totals. The majority of amounts payable
under these programs are due within 90 to 180 days and are considered commercially reasonable. There are no
assets pledged as security or other forms of guarantees provided for the committed payments. As of December 31,
2023 and 2022, there were $19.7 and $12.9, respectively, of outstanding amounts payable to suppliers who have
elected to participate in these SCF programs. These amounts were recorded within Accounts payable in our
Consolidated Balance Sheets.
79
NOTE 14
LEASES
The Company’s lease portfolio primarily relates to real estate, which may be used for manufacturing or non-
manufacturing purposes (e.g., office space), and contains lease terms generally ranging between one and 18 years.
Our lease portfolio also includes vehicles and equipment. Substantially all of our leases are classified as operating
leases.
Lease costs associated with fixed payments related to the Company's operating leases were $30.2, $26.6, and
$25.7 for the years ended December 31, 2023, 2022 and 2021, respectively. Short-term lease costs, variable lease
costs, and sublease income related to our operating leases, as well as total lease costs related to our finance
leases, were not material for the years ended December 31, 2023, 2022 and 2021.
The following table displays our future lease obligations related to non-cancellable operating leases with an
initial term in excess of 12 months as of December 31, 2023.
2024
2025
2026
2027
2028
Thereafter
Total undiscounted future operating lease obligations
Less: imputed interest
Present value of future operating lease obligations(a)
$
$
23.1
20.0
17.1
12.4
9.3
23.0
104.9
13.1
91.8
(a)
Includes $19.5 of current operating lease liabilities recorded within Accrued and other current liabilities and $72.3 of non-
current operating lease liabilities recorded within Other non-current liabilities in our Consolidated Balance Sheets.
The following table includes other supplemental information regarding our operating leases.
As of or for the Year Ended December 31
Operating cash outflows from operating leases(a)
Right-of-use assets obtained in exchange for new operating lease liabilities
Weighted average remaining lease term (in years)
Weighted average discount rate(b)
2023
$ 24.5
$ 32.5
6.1
3.4 %
2022
$ 25.9
$ 18.3
5.8
2.7 %
(a)
Included within Other, net in our Consolidated Statements of Cash Flows.
(b) We use a discount rate for each lease based on an estimated incremental borrowing rate over a similar term as the lease,
as the discount rate implicit in each lease cannot be readily determined.
In May 2022, we relocated our corporate headquarters from White Plains, New York to Stamford, Connecticut.
During 2022, we terminated our former corporate headquarters lease, which resulted in an asset impairment charge
of $1.7, reflected within our Consolidated Statements of Operations.
80
NOTE 15
DEBT
The following table summarizes our outstanding debt obligations.
As of December 31
Commercial paper(a)
Short-term loans
Current maturities of long-term debt
Total short-term borrowings
Non-current maturities of long-term debt
Total debt
2023
2022
$
184.9
$
448.3
0.5
2.3
187.7
5.7
$
193.4
$
0.5
2.2
451.0
7.7
458.7
(a) The decrease in commercial paper outstanding from December 31, 2022 to December 31, 2023 was primarily related to
higher share repurchase and acquisition activity in the prior year that was financed using commercial paper, and timing of
repayments. See Note 18, Capital Stock, and Note 22, Acquisitions, Investments, and Divestitures, for additional
information.
Commercial Paper
The following table presents our outstanding commercial paper borrowings and associated weighted average
interest rates.
As of or for the Year Ended December 31
Commercial Paper Outstanding - U.S. Program
Commercial Paper Outstanding - Euro Program
Total Commercial Paper Outstanding
Weighted Average Interest Rate - U.S. Program
Weighted Average Interest Rate - Euro Program
2023
$ 184.9
—
$ 184.9
2022
$ 299.2
149.1
$ 448.3
5.61 %
N/A
4.92 %
2.31 %
Outstanding commercial paper for both periods had maturity terms less than three months from the date of
issuance.
Revolving Credit Agreement
On August 5, 2021, we entered into a revolving credit facility agreement with a syndicate of third party lenders
including Bank of America, N.A., as administrative agent (the 2021 Revolving Credit Agreement). Upon its
effectiveness, this agreement replaced our existing $500 revolving credit facility due November 2022 (the 2014
Revolving Credit Agreement). The 2021 Revolving Credit Agreement matures in August 2026 and provides for an
aggregate principal amount of up to $700. The 2021 Revolving Credit Agreement provides for a potential increase of
commitment of up to $350 for a possible maximum of $1,050 in aggregate commitments at the request of the
Company and with the consent of the institutions providing such increase of commitments.
On May 10, 2023, we entered into the First Amendment (the Amendment) to the Company’s 2021 Revolving
Credit Agreement. In connection with the phase out of LIBOR as a reference interest rate, the Amendment replaced
LIBOR as a benchmark for United States Dollar revolving borrowings with the term secured overnight financing rate
(Term SOFR), and replaced LIBOR as a benchmark for Euro swing line borrowings with the euro overnight short-
term rate (ESTR). The Amendment did not have a significant impact on the Company’s consolidated financial
statements.
Since the Amendment, the interest rate per annum on the 2021 Revolving Credit Agreement is based on the
Term SOFR rate of the currency we borrow in, plus a margin of 1.1%. There is a 0.15% fee per annum applicable to
the commitments under the 2021 Revolving Credit Agreement. The margin and fees are subject to adjustment
should the Company’s credit ratings change.
As of December 31, 2023 and December 31, 2022, we had no outstanding obligations under the current or
former revolving credit facility.
The 2021 Revolving Credit Agreement contains customary affirmative and negative covenants that, among other
things, will limit or restrict our ability to: incur additional debt or issue guarantees; create certain liens; merge or
consolidate with another person; sell, transfer, lease or otherwise dispose of assets; liquidate or dissolve; and enter
81
into restrictive covenants. Additionally, the 2021 Revolving Credit Agreement requires us not to permit the ratio of
consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization
(EBITDA) (leverage ratio) to exceed 3.50 to 1.00, with a qualified acquisition step up immediately following such
qualified acquisition of 4.00 to 1.00 for four quarters, 3.75 to 1.00 for two quarters thereafter, and returning to 3.50 to
1.00 thereafter.
As of December 31, 2023, all financial covenants (e.g., leverage ratio) associated with the 2021 Revolving Credit
Agreement were within the prescribed thresholds.
Long-term Debt
Our long-term debt is primarily related to outstanding Italian government loans maturing in June 2027. Our long-
term debt carries a weighted average fixed interest rate of 0.86% and requires annual principal and interest
payments of approximately $2.0, on average, through maturity. The non-current portion of long-term debt is
presented within other non-current liabilities in our Consolidated Balance Sheets.
Subsequent Event
On January 12, 2024, ITT Italia S.r.l. (“ITT Italia”), an indirect wholly owned subsidiary of ITT, entered into a
facility agreement (the “ITT Italia Credit Agreement”), among the Company, as a guarantor, ITT Italia, as borrower,
and BNP Paribas, Italian Branch, as bookrunner, sole underwriter and global coordinator, mandated lead arranger
and agent.
The ITT Italia Credit Agreement has an initial maturity of three years and provides for term loan borrowings in an
aggregate principal amount of €300 million, €275 million of which have been used to finance the Company’s
acquisition of Svanehøj Group A/S, which closed on January 19, 2024.
The interest rate per annum on the ITT Italia Credit Agreement is based on the EURIBOR rate for Euros, plus a
margin of 1.00%. The margin and fees are subject to adjustment should the Company’s credit ratings change.
The ITT Italia Credit Agreement contains customary affirmative and negative covenants, as well as financial
covenants (e.g., leverage ratio), that are similar to those contained in our 2021 Revolving Credit Agreement, as
described above.
82
NOTE 16
POSTRETIREMENT BENEFIT PLANS
Defined Contribution Plans
Substantially all of ITT’s U.S. and certain international employees are eligible to participate in a defined
contribution plan. ITT sponsors numerous defined contribution savings plans, which allow employees to contribute a
portion of their pre-tax and/or after-tax income in accordance with specified guidelines. Certain plans require us to
match a portion of the employee contributions. Company contributions charged to expense amounted to $17.3,
$16.5 and $14.5 for 2023, 2022 and 2021, respectively.
The ITT Stock Fund, an investment option in our U.S. based defined contribution plan, is considered an
employee stock ownership plan and, as a result, participants in the ITT Stock Fund may receive dividends in cash
or may reinvest such dividends into the ITT Stock Fund. The ITT Stock Fund held approximately 0.1 shares of ITT
common stock at December 31, 2023.
Defined Benefit Plans
ITT currently sponsors a number of defined benefit pension plans, primarily outside of the U.S., which have
approximately 970 active participants. As of December 31, 2023, international pension plans represented 87% of
our total projected pension benefit obligation. There is one remaining U.S. pension plan, which is frozen to new
participants. International plan benefits are primarily determined based on participant years of service, future
compensation, and age at retirement or termination.
ITT also provides health care and life insurance benefits for certain unionized employees in the U.S. upon
retirement. Nearly all of these plans are closed to new participants. The majority of the liability pertains to retirees
with postretirement medical insurance.
Other Postretirement Employee Benefit (OPEB) Plan Amendment and Remeasurement
On July 31, 2022, management approved changes to a postretirement medical plan, covering certain unionized
employees and retirees within our IP business. These changes closed the plan to new hires and, beginning in 2023,
plan participants will receive a fixed contribution into a Health Reimbursement account. The plan amendment
resulted in a decrease in our other postretirement benefit obligation and a prior service credit of $8.1 in 2022. The
prior service credit was reflected in other comprehensive income and will be recognized into net income over
approximately 10 years.
Balance Sheet Information
The following table provides a summary of the funded status of our postretirement benefit plans and the
presentation of the funded status within our Consolidated Balance Sheets.
As of December 31
Pension
2023
Other
Benefits
Total
Pension
2022
Other
Benefits
Total
Fair value of plan assets
$
0.4
$
—
$
0.4
$
0.4
$
—
$
0.4
Projected benefit obligation
84.4
66.2
150.6
79.1
70.7
149.8
Funded status
$
(84.0)
$
(66.2)
$ (150.2)
$
(78.7)
$
(70.7)
$ (149.4)
Amounts reported within:
Non-current assets
Accrued liabilities
Non-current liabilities
$
0.2
$
—
$
0.2
$
0.2
$
—
$
0.2
(5.5)
(78.7)
(6.2)
(60.0)
(11.7)
(138.7)
(5.6)
(73.3)
(6.8)
(63.9)
(12.4)
(137.2)
A portion of our projected benefit obligation includes amounts that have not yet been recognized as expense in
our results of operations. Such amounts are recorded within accumulated other comprehensive loss until they are
amortized as a component of net periodic postretirement cost.
83
The following table provides a summary of amounts recorded within accumulated other comprehensive loss.
As of December 31
Net actuarial loss
Prior service cost (benefit)
Total
2023
Other
Benefits
Total
Pension
2022
Other
Benefits
Total
$
0.4
$
9.9
$
(18.5)
(18.2)
$
(18.1)
$
(8.3)
$
5.7
0.3
6.0
$
3.4
$
9.1
(24.6)
(24.3)
$
(21.2)
$
(15.2)
Pension
$
$
9.5
0.3
9.8
The following tables provide a rollforward of the benefit obligation, plan assets and funded status for our
U.S. and international pension plans and our other employee-related defined benefit plans.
For the Year Ended December 31
Change in benefit obligation
2023
2022
U.S.
Pension
Int’l
Pension
Other
Benefits
Total
U.S.
Pension
Int’l
Pension
Other
Benefits
Total
Benefit obligation as of January 1
$ 11.2 $ 67.9 $ 70.7 $ 149.8 $ 14.8 $ 93.1 $ 106.4 $ 214.3
Service cost
Interest cost
Amendments
Actuarial loss (gain)(a)
Benefits paid
Settlement
Foreign currency translation
—
0.6
—
0.3
0.8
2.4
—
3.4
0.3
3.1
—
(2.9)
(0.9)
(3.2)
(5.0)
—
—
(0.4)
2.3
—
—
1.1
6.1
—
0.8
(9.1)
(0.4)
2.3
—
0.3
—
1.2
1.0
—
0.6
2.2
1.8
3.5
(8.1)
(8.1)
(3.0)
(18.3)
(23.3)
(44.6)
(0.9)
(3.1)
(7.1)
(11.1)
—
—
—
(6.0)
—
—
—
(6.0)
Benefit obligation as of December 31 $ 11.2 $ 73.2 $ 66.2 $ 150.6 $ 11.2 $ 67.9 $ 70.7 $ 149.8
(a) The actuarial gain in 2022 is primarily due to an increase in discount rates during the year.
2023
2022
U.S.
Pension
Int’l
Pension
Other
Benefits
Total
U.S.
Pension
Int’l
Pension
Other
Benefits
Total
Change in plan assets
Plan assets as of January 1
$ — $
0.4 $ — $
0.4 $ — $
0.5 $ — $
0.5
Employer contributions
0.9
3.6
5.0
Benefits and expenses paid
(0.9)
(3.2)
(5.0)
Settlement
Foreign currency translation
—
—
(0.4)
—
—
—
9.5
(9.1)
(0.4)
—
0.9
3.0
7.1
11.0
(0.9)
(3.1)
(7.1)
(11.1)
—
—
—
—
—
—
—
—
Plan assets as of December 31
$ — $
0.4 $ — $
0.4 $ — $
0.4 $ — $
0.4
Funded status at end of year
$
(11.2) $
(72.8) $
(66.2) $ (150.2) $
(11.2) $
(67.5) $
(70.7) $ (149.4)
The accumulated benefit obligation for all defined benefit pension plans was $82.5 and $77.5 as of
December 31, 2023 and 2022, respectively. Information for pension plans with an accumulated benefit obligation in
excess of plan assets is included in the following table.
As of December 31
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
2023
2022
$
84.2
$
78.9
82.3
—
77.3
—
84
Statements of Operations Information
The following table provides the components of net periodic postretirement cost and other amounts recognized
in other comprehensive loss as they pertain to our defined benefit pension plans.
For the Year Ended December 31
Net periodic postretirement cost - pension
U.S.
Pension
2023
Int’l
Pension
2022
2021
Total
U.S.
Pension
Int’l
Pension
Total
U.S.
Pension
Int’l
Pension
Total
Service cost
Interest cost
Amortization of net actuarial loss
0.8 $ 0.8 $ — $
2.4
—
3.2
0.1
Total net periodic postretirement cost
3.3
Other changes in plan assets and benefit obligations
recognized in other comprehensive income
$ — $
0.6
—
0.6
—
0.6
Net periodic postretirement cost
Settlement charge and other(a)
3.0
—
3.8
0.1
3.9
0.3
0.2
0.5
—
0.5
1.2 $ 1.2 $ — $
1.0
1.1
3.3
—
3.3
1.3
1.3
3.8
—
3.8
0.3
0.2
0.5
(3.4)
(2.9)
1.4 $ 1.4
1.0
0.7
1.8
1.6
4.2
3.7
(3.4)
—
0.8
3.7
Net actuarial (gain) loss
Amortization of net actuarial loss
Foreign currency translation and
other
Total change recognized in other
comprehensive income
Total impact from net periodic
postretirement cost and changes in
other comprehensive income
0.3
—
—
0.3
3.4
—
3.7
—
(3.0)
(0.2)
(18.3) (21.3)
(1.3)
(1.1)
(0.1)
(0.2)
(6.3)
(1.6)
(6.4)
(1.8)
0.1
3.5
0.1
3.8
—
(1.7)
(1.7)
—
(2.7)
(2.7)
(3.2)
(21.1) (24.3)
(0.3)
(10.6) (10.9)
$
0.9 $
6.8 $ 7.7 $
(2.7) $ (17.8) $ (20.5) $
(3.2) $
(6.9) $ (10.1)
(a) 2021 includes income of $3.4 from a pricing adjustment associated with the 2020 termination and sale of the U.S. qualified
pension plan.
The following table provides the components of net periodic postretirement cost and other amounts recognized
in other comprehensive loss as they pertain to other employee-related defined benefit plans.
For the Year Ended December 31
Net periodic postretirement cost - other postretirement
Service cost
Interest cost
Amortization of net actuarial loss
Amortization of prior service benefit
Total net periodic postretirement cost
Other changes in plan assets and benefit obligations recognized in other
comprehensive income
Net actuarial (gain) loss
Prior service benefit
Amortization of net actuarial loss
Amortization of prior service credit
Total changes recognized in other comprehensive income
Total impact from net periodic postretirement cost and changes in other
comprehensive income
2023
2022
2021
$
0.3
3.1
—
(6.0)
(2.6)
(2.9)
—
—
6.0
3.1
$
0.6
2.2
1.8
(5.5)
(0.9)
(23.3)
(8.1)
(1.8)
5.5
(27.7)
$
0.7
1.8
2.6
(5.1)
—
(8.2)
—
(2.6)
5.1
(5.7)
$
0.5
$
(28.6)
$
(5.7)
Postretirement Plan Assumptions
The determination of projected benefit obligations and the recognition of expenses related to postretirement
benefit plans are dependent on various assumptions that are judgmental and developed in consultation with
external advisors. Management develops each assumption using relevant Company experience in conjunction with
market-related data for each individual country in which such plans exist. Periodically, the Company performs
experience studies to validate certain actuarial assumptions such as age of retirement, rates of turnover, utilization
of optional forms of payments. The actuarial assumptions are based on the provisions of the applicable accounting
pronouncements, review of various market data and discussion with our external advisors. Assumptions are
reviewed annually and adjusted as necessary. Changes in these assumptions could materially affect our financial
statements.
85
The following table provides the weighted-average assumptions used to determine projected benefit obligations
and net periodic postretirement cost as they pertain to our U.S. and non-U.S. defined benefit pension plans and
other employee-related defined benefit plans.
Obligation Assumptions:
Discount rate
Rate of future compensation increase
Cost Assumptions:
Discount rate
Expected return on plan assets
2023
U.S.
Pension
Int’l
Pension
Other
Benefits
U.S.
Pension
2022
Int’l
Pension
Other
Benefits
5.0 %
N/A
5.3 %
N/A
3.1 %
3.4 %
3.6 %
1.0 %
5.0 %
N/A
5.3 %
N/A
5.3 %
N/A
2.7 %
N/A
3.6 %
2.8 %
1.1 %
1.0 %
5.3 %
N/A
3.0 %
N/A
The discount rate is used to calculate the present value of expected future benefit payments at the
measurement date. The discount rate assumption is based on current investment yields of high-quality fixed income
investments during the retirement benefits maturity period. The pension discount rate is determined by considering
an interest rate yield curve comprising AAA/AA bonds, with maturities that are generally between zero and 30 years,
developed by the plan's actuaries. Annual benefit payments are then discounted to present value using this yield
curve to develop a single discount rate matching the plan's characteristics.
We estimate the service and interest components of net periodic benefit cost of the U.S. defined benefit plans
by discounting the individual expected cash flows underlying the service cost and interest cost using the applicable
spot rates from the yield curve used to discount the cash flows in measuring the benefit obligation.
The rate of future compensation increase assumption for foreign plans reflects our long-term actual experience
and future and near-term outlook. The rate of future compensation increase assumption is not applicable for the
U.S. plan because the plan is frozen.
The Company has updated the mortality assumption to reflect the most recent projection update.
The assumed rate of future increases in the per capita cost of health care (the health care trend rate) is 7.3% for
pre-age 65 retirees and 6.3% for post-age 65 retirees for 2024, decreasing ratably to 4.5% in 2031. To the extent
that actual experience differs from these assumptions, the effect will be amortized over the average future working
life or life expectancy of the plan participants.
Fair Value of Plan Assets
As of December 31, 2023 and 2022, our plan assets were not material.
Contributions
Our postretirement plans are largely unfunded, and therefore plan contributions generally reflect required
benefit payments. We fund certain of our international pension plans in countries where funding is allowable and
tax-efficient. During 2023 and 2022, we contributed $4.5 and $3.9, respectively, to our global pension plans and we
anticipate making contributions of approximately $6 during 2024.
We contributed $5.0 and $7.1 to our other employee-related defined benefit plans during 2023 and 2022,
respectively. We estimate that the 2024 contributions to our other employee-related defined benefit plans will be
approximately $6.
86
Estimated Future Benefit Payments
The following table provides the projected timing of payments for benefits earned to date and the expectation
that certain future service will be earned by current active employees for our pension and other employee-related
benefit plans.
2024
2025
2026
2027
2028
2029 - 2033
U.S.
Pension
$
0.9
0.9
0.9
0.9
0.9
4.4
Int’l
Pension
4.6
$
3.8
3.8
3.7
3.9
19.8
Other
Benefits
6.2
$
5.9
5.6
5.4
5.2
23.4
NOTE 17
LONG-TERM INCENTIVE EMPLOYEE COMPENSATION
The 2011 Omnibus Incentive Plan (2011 Incentive Plan) was approved by shareholders and established in May
2011 to provide for the awarding of options on common shares and full value restricted common shares or units to
employees and non-employee directors. As of December 31, 2023, 36.5 shares were available for future grants
under the 2011 Incentive Plan. The Company can make shares available for the exercise of stock options or vesting
of restricted shares or units by purchasing shares in the open market.
Our long-term incentive plan (LTIP) awards are comprised of two components: restricted stock units (RSUs) and
performance stock units (PSUs). The majority of RSUs and PSUs settle in shares; however RSUs and PSUs
granted to certain international employees are settled in cash. We account for equity-settled RSUs and PSUs as
equity-based compensation awards. We account for cash-settled RSUs and PSUs as liability-based awards. PSUs
contain equally weighted performance conditions for total shareholder return (TSR) and return on invested capital
(ROIC). PSUs vest based on predetermined performance metrics that align with the Company's stock price and
financial performance following a three-year performance period and are subject to a payout factor which includes a
maximum and minimum payout. PSUs are accounted for as two distinct awards, a TSR award and a ROIC award.
LTIP costs are primarily recorded within General and administrative expenses in our Consolidated Statements
of Operations, at their grant date fair value over the requisite service period (typically three years) on a straight-line
basis and are reduced by forfeitures as they occur.
The following table summarizes our share-based compensation expense associated with our LTIP awards.
For the Year Ended December 31
Equity-based awards
Liability-based awards
Total share-based compensation expense
2023
$ 20.2
1.7
$ 21.9
2022
$ 18.1
1.0
$ 19.1
2021
$ 16.5
1.3
$ 17.8
The income tax benefit realized during 2023, 2022 and 2021 associated with exercised stock options and
vested restricted stock was $0.9, $2.4 and $3.2, respectively.
As of December 31, 2023, there was $25.0 of total unrecognized compensation cost related to non-vested
equity awards. This cost is expected to be recognized ratably over a weighted-average period of 1.8 years.
Additionally, unrecognized compensation cost related to liability-based awards was $2.4, which is expected to be
recognized ratably over a weighted-average period of 1.9 years.
The fair value of equity-settled RSUs is determined using the closing price of the Company’s common stock on
the date of grant. The fair value of cash-settled RSUs is remeasured using the closing price of ITT's common stock
at the end of each reporting period. Recipients do not have voting rights and do not receive cash dividends during
the restriction period. Dividend equivalents on RSUs, which are subject to forfeiture, are accrued and paid in cash
upon vesting of the RSU. If a recipient retires or is terminated other than for cause, a pro rata portion of the RSU
may vest.
87
For PSUs, the fair value of the ROIC award is based on the closing price of ITT common stock on the date of
grant less the present value of expected dividend payments during the vesting period. For ROIC awards granted in
2023, a dividend yield of 1.24% was assumed based on ITT's annualized dividend payment of $1.16 per share and
the March 3, 2023 closing stock price of $93.83. The fair value of the ROIC award is fixed on the grant date;
however, a probability assessment is performed each reporting period to estimate the likelihood of achieving the
ROIC targets and the amount of compensation to be recognized.
The fair value of the TSR award is measured using a Monte Carlo simulation on the date of grant, measuring
potential total shareholder return for ITT relative to the other companies in the S&P 400 Capital Goods Index (the
TSR Performance Group). The expected volatility of ITT's stock price is based on the historical volatility of a peer
group while expected volatility for the other companies in the TSR Performance Group is based on their own stock
price history. For TSR awards granted in 2023, all volatility and correlation measures were based on three years of
daily historical price data through March 3, 2023, corresponding to the three-year performance period of the award.
As the grant date occurs after the beginning of the performance period, actual TSR performance between the
beginning of the performance period (December average closing stock price) and the grant date was reflected in the
valuation. For TSR awards granted in 2023, a dividend yield of 1.24% was assumed based on ITT's annualized
dividend payment of $1.16 per share and the March 3, 2023 closing stock price of $93.83.
The table below provides a rollforward of our outstanding RSUs and PSUs.
Restricted Stock and
Performance Units
Outstanding as of January 1
Granted
Vested and issued
Forfeited
Outstanding as of December 31
Vested pending issuance
2023
2022
2021
Weighted
Average
Grant Date
Fair Value
Shares
Weighted
Average
Grant Date
Fair Value
Shares
Shares
Weighted
Average
Grant Date
Fair Value
0.7 $
0.3
(0.2)
(0.1)
0.7 $
0.1 $
76.36
99.33
69.91
77.20
88.40
98.67
0.7 $
0.3
(0.3)
—
0.7 $
0.1 $
71.21
77.72
66.20
—
76.36
63.88
0.8 $
0.3
(0.3)
(0.1)
0.7 $
0.1 $
59.25
90.14
57.36
68.18
71.21
65.25
The table below provides the number of our outstanding shares by award type. Cash-settled RSUs and PSUs
outstanding were not material.
As of December 31
Equity-settled RSUs
Equity-settled PSUs
2023
2022
2021
0.4
0.3
0.4
0.2
0.4
0.3
As of December 31, 2023, substantially all RSUs outstanding are expected to vest. As of December 31, 2023,
the total number of PSUs expected to vest based on current performance estimates, including those vested but
pending issuance, was 0.4.
Non-Qualified Stock Options
Prior to 2017, our LTIP award grants also included non-qualified stock options (NQOs). NQOs outstanding and
exercisable were nominal as of December 31, 2023, and 0.1 as of both December 31, 2022 and 2021. As of
December 31, 2023, there were no options "out-of-the-money" and all options outstanding were fully vested. NQOs
exercised of 0.1 during each of the years ended December 31, 2023, 2022 and 2021 resulted in cash proceeds of
$0.6, $1.8 and $1.2, respectively.
Employee Stock Purchase Plan
We sponsor the ITT Inc. 2023 Employee Stock Purchase Plan (2023 ESPP), pursuant to which eligible
employees may elect to contribute from 1% to 10% of their eligible compensation, which includes after-tax base
salary and annual bonus, subject to certain income limits, to purchase shares of ITT's common stock. The adoption
of the 2023 ESPP was approved by our shareholders at our 2023 Annual Shareholders Meeting. The aggregate
number of shares of ITT’s stock authorized for issuance under the 2023 ESPP was 0.5.
88
Pursuant to the terms of the 2023 ESPP, employees may purchase stock under the 2023 ESPP at a price equal
to 95% of ITT’s closing stock price on the purchase date. For the year ended December 31, 2023, no stock-based
compensation expense was recorded in connection with the 2023 ESPP because the criteria of a non-
compensatory plan in accordance with ASC 718, Compensation - Stock Compensation, were met.
NOTE 18
CAPITAL STOCK
ITT has authority to issue an aggregate of 300 shares of capital stock, of which 250 shares have been
designated as common stock having a par value of $1 per share and 50 shares have been designated as preferred
stock not having any par or stated value. There was no preferred stock outstanding as of December 31, 2023 and
2022.
The holders of ITT common stock are entitled to receive dividends when and as declared by ITT’s Board of
Directors. Dividends are paid quarterly. Dividends declared were $1.160, $1.056 and $0.880 per common share
totaling $95.9, $87.7, and $76.2 in 2023, 2022, and 2021, respectively.
On October 30, 2019, the Board of Directors approved our current program, an indefinite term $500 open-
market share repurchase program (the 2019 Plan). During 2023, 2022, and 2021, we repurchased and retired 0.7
shares, 3.0 shares, and 1.2 shares of common stock for $60.5, $245.3 and $104.8, respectively, under the 2019
Plan. 2023 included $0.5 related to a 1% excise tax assessed on share repurchases under the Inflation Reduction
Act of 2022, which went into effect for repurchases made after December 31, 2022. As of December 31, 2023, there
was $78.8 of remaining authorization left under the 2019 Plan.
On October 4, 2023, the Board of Directors approved an indefinite term $1,000 open-market share repurchase
program (the 2023 Plan). Repurchases under this authorization will begin upon the completion of the 2019 Plan.
Separate from our open-market share repurchase programs, the Company withheld 0.1 shares of common
stock during each of the years ended 2023, 2022 and 2021 for an aggregate purchase price of $7.2, $8.8, and
$11.7, respectively, in settlement of employee tax withholding obligations due upon the vesting of equity-based
compensation awards.
NOTE 19
COMMITMENTS AND CONTINGENCIES
From time to time, we are involved in litigation, claims, government inquiries, investigations and proceedings,
including but not limited to those relating to environmental exposures, intellectual property matters, personal injury
claims, product liabilities, regulatory matters, commercial and government contract issues, employment and
employee benefit matters, commercial or contractual disputes, and securities matters.
Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present
information including our assessment of the merits of the particular claim, as well as our current reserves and
insurance coverage, we do not expect that such legal proceedings will have any material adverse impact on our
financial statements, unless otherwise noted below. However, there can be no assurance that an adverse outcome
in any of the proceedings described below will not result in material fines, penalties or damages, changes to the
Company's business practices, loss of (or litigation with) customers or a material adverse effect on our financial
statements.
Asbestos Matters
On June 30, 2021, the Company completed the sale of InTelCo Management LLC (InTelCo), a former subsidiary
of the Company which previously held its asbestos-related assets and liabilities, to a third party, Sapphire TopCo,
Inc. (Buyer). The sale included a $398.0 cash contribution from the Company to InTelCo. Following the completion
of the sale, the Company no longer has any obligation with respect to pending and future asbestos claims and has
deconsolidated InTelCo from its financial results.
89
The table below summarizes our total net asbestos-related (benefit) costs.
For the Year Ended December 31
Asbestos provision, net(a)
Gain on divestiture before income tax
Asbestos-related (benefit) costs, net
2023
2022
2021
$
$
—
—
—
$
$
—
—
—
$
$
14.4
(88.8)
(74.4)
(a) 2021 includes costs related to the divestiture of InTelCo as well as certain administrative costs such as legal-related costs
for insurance asset recoveries.
Environmental Matters
In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and
regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and site
remediation. These sites are in various stages of investigation and/or remediation and in many of these proceedings
our liability is considered de minimis. We have received notification from the U.S. Environmental Protection Agency,
and from similar state and foreign environmental agencies, that a number of sites formerly or currently owned or
operated by the Company, and other properties or water supplies that may be or have been impacted from those
operations, contain disposed or recycled materials or wastes and require environmental investigation or
remediation. These sites include instances where we have been identified as a potentially responsible party under
federal and state environmental laws and regulations.
Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has
been incurred and the amount of the liability can be reasonably estimated. The following table provides a rollforward
of the estimated current and long-term environmental liability.
Balance as of January 1
Changes in estimates for pre-existing accruals:
Continuing operations
Discontinued operations(a)
Accruals added during the period for new matters
Cash payments
Foreign currency
Balance as of December 31
2023
2022
$
57.1
$
54.1
2.6
—
—
(3.9)
0.2
56.0
1.7
5.4
0.1
(4.0)
(0.2)
57.1
$
$
(a) During 2022, we increased the estimated environmental liability for a former site of ITT by $5.4 and recognized an
insurance-related asset of $4.3. The resulting net pre-tax expense of $1.1 has been presented as a loss from discontinued
operations within our Consolidated Statements of Operations.
Environmental-related assets, including a qualified settlement fund (QSF) and estimated recoveries from
insurance providers and other third parties, were $10.0 and $13.6 as of December 31, 2023 and 2022, respectively.
The following table illustrates the reasonably possible high range of estimated liability and number of active
sites for environmental matters.
As of December 31
High-end estimate of environmental liability
Number of open environmental sites
2023
$ 98.2
26
2022
$ 93.5
28
As actual costs incurred at identified sites in future periods may vary from our current estimates given the
inherent uncertainties in evaluating environmental exposures, management believes it is possible that the outcome
of these uncertainties may have a material adverse effect on our financial statements.
90
NOTE 20
GUARANTEES, INDEMNITIES AND WARRANTIES
Indemnities
Since our founding in 1920 (pre-spin-offs), we have acquired and disposed of numerous businesses. The
related acquisition and disposition agreements allocate certain assets and liabilities among the parties and contain
various representation and warranty clauses and may provide indemnities for a misrepresentation or breach of the
representations and warranties by either party or for assumed or excluded liabilities. These provisions address a
variety of subjects. The term and monetary amounts of each such provision are defined in the specific agreements
and may be affected by various conditions and external factors. Many of the provisions have expired either by
operation of law or as a result of the terms of the agreement. We do not have a liability recorded for these expired
provisions and are not aware of any claims or other information that would give rise to material payments under
such provisions.
Guarantees
We have $159.4 of guarantees, letters of credit and similar arrangements outstanding at December 31, 2023,
primarily pertaining to commercial or performance guarantees and insurance matters. We have not recorded any
material loss contingencies under these guarantees, letters of credit and similar arrangements as of December 31,
2023 as the likelihood of nonperformance by ITT is considered remote. From time to time, we may provide certain
third-party guarantees that may be affected by various conditions and external factors, some of which could require
that payments be made under such guarantees. We do not consider the maximum exposure or current recorded
liabilities under our third-party guarantees to be material either individually or in the aggregate. We do not believe
such payments would have a material adverse impact on our Consolidated Financial Statements.
Warranties
ITT warrants numerous products, the terms of which vary widely. In general, ITT warrants its products against
defect and specific non-performance. In certain markets, such as automotive, aerospace and rail, liability for product
defects could extend beyond the selling price of the product and could be significant if the defect interrupts
production or results in a recall.
The table below presents a rollforward of our total warranty liability, which is recorded within Accrued liabilities
and Other non-current liabilities in our Consolidated Balance Sheets.
Warranty liability as of January 1
Warranty expense
Payments
Foreign currency and other
Warranty liability as of December 31
2023
2022
$ 16.2
5.4
(5.1)
—
$ 16.5
$ 20.1
1.8
(5.2)
(0.5)
$ 16.2
91
NOTE 21
DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to various market risks relating to its ongoing business operations. From time to time,
we use derivative financial instruments to mitigate our exposure to certain of these risks, including foreign exchange
rate and commodity price fluctuations. By using derivatives, the Company is further exposed to credit risk. Our
exposure to credit risk includes the counterparty’s failure to fulfill its financial obligations under the terms of the
derivative contract. The Company attempts to minimize its exposure by avoiding concentration risk among its
counterparties and by entering into transactions with creditworthy counterparties.
Foreign Currency Derivative Contracts
The Company enters into foreign currency forward or option contracts to mitigate foreign currency risk
associated with transacting with international customers, suppliers, and subsidiaries. The notional amounts and fair
values of our outstanding foreign currency derivative contracts, which are recorded within other current assets in our
Consolidated Balance Sheets, were as follows:
As of December 31
Notional amount (U.S. dollar equivalent)
Fair value of foreign currency derivative contracts(a)
2023
2022
$
$
258.4
3.8
$
$
136.5
1.7
(a) Our foreign currency derivative contracts are classified within Level 2 of the fair value hierarchy because these contracts are
not actively traded and the valuation inputs are based on market observable data of similar instruments.
Gains or losses arising from changes in fair value of our foreign currency derivative contracts are recorded
within General and administrative expenses in our Consolidated Statements of Operations, and were as follows:
For the Year Ended December 31
(Loss) gain on foreign currency derivative contracts(b)
2023
2022
$
(2.5)
$
10.1
(b) None of our derivative contracts were designated as hedging instruments under ASC 815, Derivatives & Hedging.
The cash flow impact upon settlement of our foreign currency derivative contracts is included in operating
activities in our Consolidated Statements of Cash Flows. During the year ended December 31, 2023 and
December 31, 2022, net cash inflows from foreign currency derivative contracts were $1.5 and $7.7, respectively.
92
NOTE 22
ACQUISITIONS, INVESTMENTS, AND DIVESTITURES
Acquisition of Micro-Mode Products, Inc. (Micro-Mode)
On May 2, 2023, we completed the acquisition of 100% of the privately held stock of Micro-Mode for a purchase
price of $79.3, net of cash acquired. Micro-Mode is a specialty designer and manufacturer of high-bandwidth radio
frequency (RF) connectors for harsh environment defense and space applications. Micro-Mode has a single
manufacturing site near San Diego, California and generated approximately $26 in sales in 2022. Subsequent to the
acquisition, Micro-Mode’s results have been reported within our CCT segment.
Acquisition of Habonim Industrial Valves and Actuators Ltd (Habonim)
On April 4, 2022, we completed the acquisition of 100% of the privately held stock of Habonim for a purchase
price of $139.9. Habonim is a designer and manufacturer of valves, valve automation and actuation for gas
distribution (including liquified natural gas), biotech and harsh application service sectors. Habonim sells directly to
original equipment manufacturers and integrators for customized solutions. Habonim has operations in Israel, the
U.S. and the Netherlands, and has a workforce of approximately 200 employees. Subsequent to the acquisition,
Habonim’s results have been reported within our IP segment. The allocation of the purchase price to the assets
acquired and liabilities assumed was completed as of April 1, 2023, and is presented in the table below.
The assets acquired and liabilities assumed for both our Micro-Mode and Habonim acquisitions were recorded
at fair value. As of December 31, 2023, the allocation of the purchase price to the assets acquired and liabilities
assumed was substantially complete related to our acquisition of Micro-Mode, and was completed related to our
acquisition of Habonim, and is presented in the table below.
Allocation of Purchase Price
Receivables
Inventory
Plant, property and equipment
Goodwill
Other intangible assets
Other assets
Accounts payable and accrued liabilities
Other liabilities
Noncontrolling interest
Net assets acquired
Micro-Mode
Habonim
$
$
2.7 $
5.6
6.0
44.6
28.7
0.3
(2.3)
(6.3)
—
79.3 $
10.2
17.8
16.1
62.9
47.2
4.2
(8.7)
(7.1)
(2.7)
139.9
Related to the acquisition of Micro-Mode, the primary areas of the purchase price allocations that are not yet
finalized relate to the valuation of certain tangible and intangible assets, certain liabilities, income tax, and residual
goodwill, which represents the excess of the purchase price over the fair value of the net tangible and other
intangible assets acquired. We expect to obtain the information necessary to finalize the fair value of the net assets
and liabilities during the measurement period, not to exceed one year from the acquisition date. Changes to the
preliminary estimates of the fair value during the measurement period will be recorded as adjustments to those
assets and liabilities with a corresponding adjustment to goodwill in the period they occur. The goodwill arising from
this acquisition is not deductible for income tax purposes.
Pro forma results of operations have not been presented because the acquisitions were not deemed significant
as of their acquisition dates.
Acquisition of Product Line
During June 2022, we purchased all production assets and proprietary technology related to an energy
absorption product line for high-cycle applications in industrial automation. The Company determined that the
product line met the definition of a business per ASC 805, Business Combinations. The product line was acquired
for $7.0 from Clippard Instrument Laboratory, Inc., which is a third party U.S. manufacturer of electronic and
pneumatic components, and is included within our CCT segment.
93
Investments in CRP Technology and CRP USA (CRP)
During the second quarter of 2022, we purchased a minority investment of 46% in CRP Technology Srl and
33% in CRP USA LLC (collectively "CRP") for $23.0. CRP is a manufacturer of reinforced composite materials for
3D printing for the aerospace, defense, premium automotive, and motorsports industries. CRP's Windform® high-
performance materials enable engineers to develop complex, customized designs while providing lightweight and
exceptionally durable products. In May 2023, ITT purchased an additional 9% share of CRP USA LLC for $1.4. This
additional investment brought ITT’s direct share ownership in CRP USA LLC to 42%. The CRP investments are
accounted for as equity method investments.
Divestiture of Matrix Composites, Inc. (Matrix)
On December 29, 2023, we completed the sale of our Matrix business, an aerospace and defense components
manufacturer within our CCT segment, to a third party for total cash proceeds of $1.0. In connection with this
transaction, we recorded a $15.3 pre-tax loss, which has been presented within General and administrative
expenses on our Consolidated Statement of Operations for the year ended December 31, 2023.
Divestiture of Product Line
During the second quarter of 2023, we completed the sale of a product line within our CCT segment to a third
party for $10.5. The Company determined that the product line met the definition of a business per ASC 805,
Business Combinations. As a result of the transaction, we recognized a pre-tax gain on sale of $7.2, which is
included in the General and administrative expenses line on our Consolidated Statements of Operations for the year
ended December 31, 2023. Goodwill of $2.4 was allocated to the divestiture.
Subsequent Event
On January 19, 2024, we completed the acquisition of 100% of the outstanding shares of privately held
Svanehøj Group A/S (Svanehøj) for a purchase price of approximately $410, net of cash acquired. Svanehøj is a
supplier of pumps and related aftermarket services with leading positions in cryogenic applications for the marine
sector. Svanehøj is headquartered in Denmark and has additional operations in Singapore and France. Svanehøj
employs around 400 employees and generated approximately $140 in sales in 2022. Upon closing of the
transaction, Svanehøj became part of our IP segment.
94
EXHIBIT INDEX
Exhibit
Number Description
3.1
Amended and Restated Articles of Incorporation, effective as of May 23, 2018
Incorporated by reference to Exhibit 3.1 of ITT Inc.’s Form 8-K dated May 25, 2018
Amended and Restated By-laws of ITT Inc., effective as of February 14, 2023
Incorporated by reference to Exhibit 3.2 of ITT Inc.’s Form 10-K for the year ended December 31, 2022
Description of Registrant's Securities
Incorporated by reference to Exhibit 4.1 of ITT Inc.’s Form 10-K for the year ended December 31, 2019
Credit Agreement, dated August 5, 2021, among ITT Inc. and Other Parties Signatory Thereto
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 10-Q for the quarter ended July 3, 2021
First Amendment to Credit Agreement, dated as of May 10, 2023, among ITT Inc. and Other Parties Signatory
Thereto
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 8-K dated May 12, 2023
Second Amendment to Credit Agreement, dated as of December 6, 2023, among ITT Inc. and Other Parties
Signatory Thereto
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 8-K dated December 7, 2023
Credit Agreement, dated as of January 12, 2024, among ITT Inc., ITT Italia S.r.l. and the Other Parties Signatory
Thereto
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 8-K dated January 19, 2024
Indenture between ITT Corporation and Union Bank N.A., as Trustee dated May 1, 2009
Incorporated by reference to Exhibit 4.3 of ITT Inc.’s Form S-3 dated September 18, 2015
First Supplemental Indenture, dated as of May 16, 2016, between ITT Corporation, ITT Inc. and MUFG Union Bank,
N.A. as Trustee
Incorporated by reference to Exhibit 4.2 of ITT Inc.’s Post-Effective Amendment No. 1 to Registration Statement on
Form S-3 dated May 16, 2016
ITT Annual Incentive Plan for Executive Officers, amended and restated as of May 16, 2016
Incorporated by reference to Exhibit 10.5 of ITT Inc.’s Form 10-Q for the quarter ended June 30, 2016
ITT Retirement Savings Plan (amended and restated effective January 1, 2020)
Incorporated by reference to Exhibit 10.18 of ITT Inc.’s Form 10-K for the year ended December 31, 2020
ITT Supplemental Retirement Savings Plan, amended and restated as of May 2, 2020
Incorporated by reference to Exhibit 10.19 of ITT Inc.’s Form 10-K for the year ended December 31, 2020
ITT Senior Executive Severance Pay Plan, amended and restated as of June 17, 2019
Incorporated by reference to Exhibit 10.2 of ITT Inc.’s Form 10-Q for the quarter ended June 30, 2019
ITT Senior Executive Change in Control Severance Pay Plan, amended and restated as of June 17, 2019
Incorporated by reference to Exhibit 10.3 of ITT Inc.’s Form 10-Q for the quarter ended June 30, 2019
ITT Change in Control Severance Plan, amended and restated as of May 16, 2016
Incorporated by reference to Exhibit 10.10 of ITT Inc.’s Form 10-Q for the quarter ended June 30, 2016
ITT Deferred Compensation Plan, as amended and restated as of May 16, 2016
Incorporated by reference to Exhibit 10.4 of ITT Inc.’s Form 8-K dated May 16, 2016
ITT Deferred Compensation Plan for Non-Employee Directors, amended and restated as of January 1, 2020
Incorporated by reference to Exhibit 10.4 of ITT Inc.’s Form 10-Q for the quarter ended March 31, 2020
Non-Employee Director Compensation Summary
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 10-Q for the quarter ended October 1, 2022
2011 Omnibus Incentive Plan
Incorporated by reference to Exhibit 4.3 of ITT Inc.’s Registration Statement on Form S-8 as filed on October 28,
2011
ITT 2003 Equity Incentive Plan, amended and restated as of February 15, 2008 and approved by shareholders on
May 13, 2008 (previously amended and restated as of July 13, 2004 and subsequently amended as of December 18,
2006) and previously known as ITT Industries, Inc. 2003 Equity Incentive Plan
Incorporated by reference to Exhibit 10.5 of ITT Inc.’s Form 10-Q for the quarter ended June 30, 2008
Omnibus Amendment to Long-Term Incentive Plans, dated as of May 16, 2016
Incorporated by reference to Exhibit 10.2 of ITT Inc.’s Current Report on Form 8-K dated May 16, 2016
Amendment to the ITT Consolidated Hourly Pension Plan, dated as of February 19, 2020
Incorporated by reference to Exhibit 10.3 of ITT Inc.’s Form 10-Q for the quarter ended March 31, 2020
Form of 2023 Performance Unit Award Agreement
Incorporated by reference to Exhibit 10.17 of ITT Inc.’s Form 10-K for the year ended December 31, 2022
Form of 2023 Restricted Stock Unit Award Agreement
Incorporated by reference to Exhibit 10.18 of ITT Inc.’s Form 10-K for the year ended December 31, 2022
Form of 2022 Performance Unit Award Agreement
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 10-Q for the quarter ended April 2, 2022
3.2
4.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
II-1
Exhibit
Number Description
10.23*
Form of 2022 Restricted Stock Unit Award Agreement
Incorporated by reference to Exhibit 10.2 of ITT Inc.’s Form 10-Q for the quarter ended April 2, 2022
Form of 2021 Performance Unit Award Agreement
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 10-Q for the quarter ended March 31, 2021
Form of 2021 Restricted Stock Unit Award Agreement
Incorporated by reference to Exhibit 10.2 of ITT Inc.’s Form 10-Q for the quarter ended March 31, 2021
Form of 2023 Restricted Stock Unit Award Agreement for Non-Employee Directors
Incorporated by reference to Exhibit 10.1 of ITT Inc.’s Form 10-Q for the quarter ended July 1, 2023
Form of ITT Inc. Indemnification Agreement with its directors and officers
Incorporated by reference to Exhibit 10.5 to ITT Inc.’s Form 8-K dated May 16, 2016
Amended Offer Letter between Mary Beth Gustafsson and ITT Inc.
Incorporated by reference to Exhibit 10.27 of ITT Inc.’s Form 10-K for the year ended December 31, 2022
Subsidiaries of the Registrant
Consent of Deloitte & Touche LLP
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
ITT Clawback Policy
The following materials from ITT Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023,
formatted in iXBRL (inline Extensible Business Reporting Language): (i) Consolidated Statements of Operations,
(ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated
Statements of Cash Flows, (v) Consolidated Statements of Changes in Shareholders’ Equity and (vi) Notes to the
Consolidated Financial Statements
Cover Page Interactive Data File (embedded within the Inline XBRL document).
10.24*
10.25*
10.26*
10.27
10.28*
21.1
23.1
31.1
31.2
32.1
32.2
97.1
101
104
* Management compensatory plan
II-2
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
ITT Inc.
(Registrant)
By:
/S/ CHERYL DE MESA GRAZIANO
Cheryl de Mesa Graziano
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
February 12, 2024
II-3
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE
TITLE
DATE
/S/ LUCA SAVI
Luca Savi
(Principal Executive Officer)
/S/ EMMANUEL CAPRAIS
Emmanuel Caprais
(Principal Financial Officer)
/S/ CHERYL DE MESA GRAZIANO
Cheryl de Mesa Graziano
(Principal Accounting Officer)
Chief Executive Officer,
President and Director
Senior Vice President and
Chief Financial Officer
Vice President and
Chief Accounting Officer
February 12, 2024
February 12, 2024
February 12, 2024
/S/ KEVIN BERRYMAN
Director
February 12, 2024
Kevin Berryman
/S/ DONALD DEFOSSET, JR.
Director
February 12, 2024
Donald DeFosset, Jr.
/S/ NICHOLAS C. FANANDAKIS
Director
February 12, 2024
Nicholas C. Fanandakis
/S/ NAZZIC KEENE
Nazzic Keene
Director
February 12, 2024
/S/ REBECCA A. MCDONALD
Director
February 12, 2024
Rebecca A. McDonald
/S/ TIMOTHY H. POWERS
Director
February 12, 2024
Timothy H. Powers
/S/ CHERYL L. SHAVERS
Director
February 12, 2024
Cheryl L. Shavers
/S/ SHARON SZAFRANSKI
Director
February 12, 2024
Sharon Szafranski
II-4
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(This page has been left blank intentionally.)
ANNUAL REPORT
2 0 2 3
O U R G L O B A L MANUFACT U R IN G
FOOTPRINT
N O R T H & S O U T H
A M E R I C A
E U R O P E , M I D D L E
E A S T & A F R I C A
ITT is a diversified leading global manufacturer of highly engineered critical components
and customized technology solutions for the transportation, industrial, and energy markets.
With a strong global footprint of more than 100 facilities, including ~50 manufacturing sites,
we are well positioned to solve critical challenges for our customers around the world. Our
locations include manufacturing facilities and global service capabilities in 37 countries.
Through these worldwide operations and building on our heritage of innovation, our
approximately 10,600 team members partner with our customers to deliver enduring
solutions that make a lasting difference and help the world move forward. ITT is
headquartered in Stamford, CT, with sales in approximately 125 countries. The company
generated 2023 revenues of ~$3 billion. For more information, visit www.itt.com.
INDUSTRIAL PROCESS
Designs and manufactures pumps, valves,
monitoring and control solutions, water
treatment systems and aftermarket parts for
the chemical, oil and gas, mining and other
industrial process markets, as well as
global service capabilities.
A S I A
Amory, Mississippi
Buenos Aires, Argentina
Chungbuk, South Korea
Cullman, Alabama
Dammam, Saudi Arabia
Kfar HaNassi, Israel
Lancaster, Pennsylvania
Obernkirchen, Germany
Rennerod, Germany
Salto, Brazil
Seneca Falls, New York
The Woodlands, Texas
Tizayuca, Mexico
Vadodara, India
Wiesbaden, Germany
Zachary, Louisiana
MOTION TECHNOLOGIES
Designs and manufactures brake pads,
shock absorbers and sealing solutions for
the automotive and rail markets.
Barge, Italy
Blacksburg, Virginia
Changshu, China
Dearborn, Michigan
Hebron, Kentucky
Kańczuga, Poland
Leesburg, Florida
Neitersen, Germany
Novi, Michigan
Öhringen, Germany
Ostrava, Czech Republic
Oud-Beijerland, Netherlands
Prostejov, Czech Republic
Silao, Mexico
Stalowa Wola, Poland
Termoli, Italy
Vadodara, India
Vauda Canavese, Italy
Wuxi, China
CONNECT AND CONTROL
TECHNOLOGIES
Designs and manufactures composite
materials, harsh-environment connectors
and critical energy absorption and flow
control components primarily for the
aerospace, defense and industrial markets.
ITT WORLD
HEADQUARTERS
Stamford, Connecticut
ITT has a global footprint
representing manufacturing, office
and sales, and global service
facilities, including the identified
locations by segment.
Bad König, Germany
El Cajon, California
Irvine, California
Lainate, Italy
Nogales, Mexico
Orchard Park, New York
Santa Rosa, California
Shenzhen, China
Valencia, California
Weinstadt, Germany
Westminster, South Carolina
Wuxi, China
Zama, Japan
ANNUAL REPORT
2 0 2 3
100 Washington Blvd
Stamford, CT 06902
(914) 641-2000
www.itt.com
©2024 ITT Inc.