Business Wire | Feb 19, 2021 06:30AM EST

ITT Reports Strong Fourth-Quarter Results, Initiates 2021 Guidance

Feb. 19, 2021

WHITE PLAINS, N.Y.--(BUSINESS WIRE)--Feb. 19, 2021--ITT Inc. (NYSE: ITT) today reported fourth quarter 2020 and full-year financial results that reflect the company's resilience and benefits derived from actions taken to address the challenges of the global pandemic. The company reported a fourth quarter year-over-year sales decline of 2%, down 4% on an organic basis, and full year sales decline of 13% to $2,478 million. Segment operating margin for the fourth quarter of 16.9% expanded 200 basis points and adjusted segment operating margin expanded 150 basis points.

In the fourth quarter, the company successfully terminated its U.S. pension plan and transferred the plan's liabilities to an insurance company to reduce administrative costs and eliminate any future funding requirements. The transaction was funded with plan assets and cash of $8 million. As a result, the company recognized a non-cash settlement charge of $137 million within non-operating expenses. Also in the fourth quarter, we negotiated an asbestos coverage-in-place agreement with a group of insurers resulting in a $52 million increase in insurance assets. The company separately incurred tax and other charges totaling $17 million. As a result of these actions, earnings per share was a loss of $0.16 in the fourth quarter. Excluding the impact of these items, adjusted earnings per share increased 2% to $1.01 versus prior year despite the sales decline.

"ITT's performance in the fourth quarter is a testament to the actions we took early in the pandemic to deliver on our commitments to our stakeholders," said Luca Savi, Chief Executive Officer and President of ITT Inc. "Our operational excellence drove 200 basis points of segment operating margin expansion despite a sales decline and coupled with our other two strategic priorities of customer centricity and effective capital deployment, enabled ITT to deliver a strong financial performance to end 2020. Adjusted earnings per share increased 23% sequentially compared to the third quarter, and increased 2% compared to the prior year despite lower sales.

"Our strong fourth quarter capped a year in which we generated $372 million of free cash flow, a 40% increase compared to prior year, representing a 15% free cash flow margin. I am proud of how ITTers around the globe continue to respond to this pandemic.

"I am encouraged by the improvements we saw in the fourth quarter. Motion Technologies grew 10% on an organic basis, with over 400 basis points of adjusted margin expansion fueled by growth in our Friction business, which continues to outpace the global auto market. We were also awarded content on seven new electric vehicle platforms. Adjusted segment margins in Industrial Process expanded 90 basis points driven by productivity and cost controls. We are well on track towards our 15% plus long-term margin target for Industrial Process," Savi continued. "The strength of our portfolio and benefits from actions taken in 2020 will ensure ITT is well positioned for growth and margin expansion in 2021."

Savi concluded, "Our execution and commitment to our customers delivered great results to end a challenging year. We have a robust balance sheet with the ability to deploy ample capital in 2021 toward growth investments, dividends, share repurchases and intensified M&A, whilst we continue to win in the marketplace as demonstrated by our significant new platform awards. I remain confident that the future of ITT is as bright as ever, and I look forward to sharing our progress with the investment community in 2021."

Quarterly Dividend Increase

The company also announced today that it is increasing its quarterly dividend 30% to $0.22 per share on the company's outstanding common stock. The Board of Directors has approved the cash dividend for the first quarter of 2021, which will be payable on April 5, 2021, to shareholders of record as of the close of business on March 17, 2021.

Table 1. Fourth Quarter Performance

4Q 2020 4Q 2019 Change

Revenue $ 708.6 $ 719.1 (1.5) %

Organic Growth (3.9) %

Segment Operating Income $ 119.5 $ 107.1 11.6 %

Segment Operating Margin 16.9 % 14.9 % 200 bps

Adjusted Segment Operating Income $ 120.1 $ 110.8 8.4 %

Adjusted Segment Operating Margin 16.9 % 15.4 % 150 bps

(Loss) Earnings Per Share $ (0.16) $ 0.75 (121.3) %

Adjusted Earnings Per Share $ 1.01 $ 0.99 2.0 %

Note: all results unaudited

Organic revenue (defined as total revenue excluding impact of foreign currency, acquisitions and divestitures) decreased 4% driven by declines in the Connect & Control Technologies and Industrial Process segments. This was partially offset by growth in Motion Technologies driven by Friction sales volumes.

Adjusted segment operating income increased 8% to $120 million, at a margin of 16.9%. The increase in adjusted segment operating income resulted from restructuring cost savings, shop floor productivity and benefits of cost actions, partially offset by reduced volume from weaker demand and disruption caused by the COVID-19 pandemic and strategic investments to drive future growth. On a sequential basis, segment operating income increased 42% and adjusted segment operating income increased 26%.

Operating cash flow for the fourth quarter was down 13%, to $118 million, and free cash flow was down 11%, to $102 million. Full year free cash flow of $372 million increased 40% versus the prior year. This was driven by higher collections, improved inventory management, and a stringent focus on capital expenditures. At the end of 2020, we had approximately $1.6 billion in available liquidity.

Table 2. Fourth Quarter Segment Results

Revenue Operating Income

Reported Inc Organic Reported Adjusted 4Q 2020 / (Dec) Inc / 4Q 2020 Inc / Inc / (Dec) (Dec) (Dec)

Motion Technologies $ 352.1 15.7 % 10.3 % $ 70.1 50.8 % 46.4 %

Industrial Process 228.3 (10.5 )% (10.4 ) 33.1 (4.1 )% (5.0 )% %

Connect & Control 129.0 (19.8 )% (20.9 ) 16.3 (37.5 )% (38.9 )%Technologies %

Total segment 708.6 (1.5 )% (3.9 ) 119.5 11.6 % 8.4 %results %

Note: all results unaudited; excludes intercompany eliminations; comparisons to Q4 2019

Motion Technologies organic revenue increased 10%, reflecting an increase of 13% in Friction with significant outperformance compared to global auto production growth across the end markets we serve. Wolverine increased 12% due to growth in OE shims and seals. KONI and Axtone revenue decreased 2%. Adjusted operating income increased 46% to $69 million primarily due to strong sales volumes coupled with benefits from productivity and cost reduction actions. Adjusted operating margin improved 410 basis points to 19.5%.

Industrial Process organic revenue decreased 10% primarily due to weakness in short-cycle baseline pumps and aftermarket service, principally within the oil and gas market. Adjusted operating income decreased 5% to $35 million primarily due to reduced sales volumes, partially offset by savings from productivity and supply chain improvements, and benefits from restructuring actions. These benefits drove adjusted margin expansion of 90 basis points to 15.1%.

Connect and Control Technologies organic revenue decreased 21% primarily driven by continued weakness in global commercial air traffic and unfavorable timing of defense platforms. Adjusted segment operating income decreased 39% to $17 million primarily driven by reduced sales volume, partially offset by productivity and supply chain actions, as well as restructuring benefits.

Table 3. 2020 Full Year Results

FY 2020 FY 2019 Change

Revenue $ 2,478 $ 2,846 (12.9) %

Organic Growth (13.8) %

Segment Operating Income $ 318.6 $ 432.3 (26.3) %

Segment Operating Margin 12.9 % 15.2 % -230 bps

Adjusted Segment Operating Income $ 376.4 $ 456.7 (17.6) %

Adjusted Segment Operating Margin 15.2 % 16.0 % -80 bps

Earnings Per Share $ 0.78 $ 3.65 (78.6) %

Adjusted Earnings Per Share $ 3.20 $ 3.81 (16.0) %

Cash Flow from Operations $ 435.9 $ 357.7 21.9 %

Free Cash Flow $ 372.2 $ 266.3 39.8 %

Free Cash Flow Margin 15.0 % 9.4 % 560 bps

Note: all results unaudited

2021 Guidance

The company's 2021 guidance assumes limited further disruption from the COVID-19 global pandemic, which significantly impacted 2020 performance, and continued improvement in global economic activity, particularly in the second half of 2021. We expect revenue growth of 5% to 7%, or up 2% to 4% on an organic basis; segment operating margin of 15.5% to 16.0%, and adjusted segment operating margin range of 16.5% to 17.0%, up 130 to 180 bps; earnings per share of $3.12 to $3.48, and adjusted earnings per share of $3.45 to $3.75 per share, up 8% to 17%; and free cash flow of $270 million to $300 million, representing free cash flow margin of 10% to 12% for the full year.

Investor Conference Call Details

ITT's senior management will host a conference call for investors today at 9:00 a.m., Eastern time. The briefing can be monitored live via webcast at the following address on the company's website: www.itt.com/investors. A replay of the webcast will be available for 90 days following the presentation. A replay will also be available telephonically from two hours after the webcast until Friday, March 5, 2021, at midnight, Eastern time. Reconciliations of non-GAAP financial performance metrics to their most comparable U.S. GAAP financial performance metrics are defined and presented below and should not be considered a substitute for, nor superior to, the financial data prepared in accordance with U.S. GAAP.

Safe Harbor Statement

This release contains "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our business, future financial results and 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 such forward-looking statements. Forward-looking statements are uncertain and to some extent unpredictable, and involve 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, there can be no 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: impacts on our business due to the COVID-19 pandemic, including disruptions to our operations and demand for our products, increased costs, disruption of supply chain and other constraints in the availability of key commodities and other necessary services, government-mandated site closures, employee illness or loss of key personnel, the impact of travel restrictions and stay-in-place restrictions on our business and workforce, customer and supplier bankruptcies, impacts to the global economy and financial markets, and liquidity challenges in accessing capital markets; uncertain global economic and capital markets conditions, including due to COVID-19, trade disputes between the U.S. and its trading partners, and fluctuations in oil prices; uncertainties regarding our exposure to pending and future asbestos claims and related liabilities and insurance recoveries; risks due to our operations and sales outside the U.S. and in emerging markets; fluctuations in foreign currency exchange rates; fluctuations in demand or customers' levels of capital investment and maintenance expenditures, especially in the oil and gas, chemical, and mining markets, or changes in our customers' anticipated production schedules, especially in the commercial aerospace market; failure to compete successfully and innovate in our markets; the extent to which there are quality problems with respect to manufacturing processes or finished goods; 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; volatility in raw material prices and our suppliers' ability to meet quality and delivery requirements; failure to manage the distribution of products and services effectively; loss of or decrease in sales from our most significant customers; fluctuations in our effective tax rate; failure to protect our intellectual property rights or violations of the intellectual property rights of others; the risk of material business interruptions, particularly at our manufacturing facilities; the risk of cybersecurity breaches; changes in laws relating to the use and transfer of personal and other information; failure of portfolio management strategies, including cost-saving initiatives, to meet expectations; risk of liabilities from past divestitures and spin-offs; 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, including recently announced tariffs; and risk of product liability claims and litigation. More information on factors that could cause actual results or events to differ materially from those anticipated is included in our reports filed with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2020 (particularly under the caption "Risk Factors"), 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 release speak only as of the date hereof. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Three Months Twelve MonthsFor the Periods Ended 2020 2019 2020 2019December 31Revenue $ 708.6 $ 719.1 $ 2,477.8 $ 2,846.4

Costs of revenue 490.0 491.1 1,695.6 1,936.3

Gross profit 218.6 228.0 782.2 910.1

General and 50.2 64.7 200.7 240.3 administrative expensesSales and marketing 35.8 41.4 146.5 165.9 expensesResearch and 23.6 24.8 84.9 97.9 development expensesAsbestos-related (50.4 ) 11.6 66.3 (20.2 )(benefit) costs, netRestructuring costs 0.5 1.9 43.0 12.8

Asset impairment - - 16.3 1.0 charges(Gain) loss on sale or (0.3 ) 1.3 (2.0 ) 1.0 disposal of long-livedassetsOperating income 159.2 82.3 226.5 411.4

Interest expense 0.1 (1.0 ) (0.7 ) (4.1 )(income), netNon-operating 138.3 1.0 144.2 4.5 postretirement costsMiscellaneous (income), (1.1 ) (1.7 ) (2.2 ) (3.4 )netIncome from continuing 21.9 84.0 85.2 414.4 operations beforeincome taxIncome tax expense 34.9 16.8 15.3 89.9

(Loss) income from (13.0 ) 67.2 69.9 324.5 continuing operationsIncome fromdiscontinuedoperations, including 0.1 1.9 4.0 1.7 tax benefit (expense)of $0.0, $0.5, $(0.2),and $0.6, respectivelyNet (loss) income (12.9 ) 69.1 73.9 326.2

Less: Incomeattributable to 0.6 0.7 1.4 1.1 noncontrollinginterestsNet (loss) income $ (13.5 ) $ 68.4 $ 72.5 $ 325.1 attributable to ITTInc. Amounts attributable toITT Inc.:(Loss) income from (13.6 ) $ 66.5 $ 68.5 $ 323.4 continuing operations,net of taxIncome from 0.1 1.9 4.00 1.7 discontinuedoperations, net of taxNet (loss) income $ (13.5 ) $ 68.4 $ 72.5 $ 325.1

(Loss) earnings pershare attributable toITT Inc.:Basic earnings pershare:Continuing operations $ (0.16 ) $ 0.76 $ 0.79 $ 3.7

Discontinued operations - 0.02 0.05 0.0

Net (loss) income $ (0.16 ) $ 0.78 $ 0.84 $ 3.7

Diluted (loss) earningsper share:Continuing operations $ (0.16 ) $ 0.75 $ 0.78 $ 3.7

Discontinued operations - 0.02 0.05 0.0

Net (loss) income $ (0.16 ) $ 0.77 $ 0.83 $ 3.7

Weighted average common 86.4 87.7 86.7 87.7 shares - basicWeighted average common 86.4 88.6 87.3 88.6 shares - dilutedCONSOLIDATED BALANCE SHEETS (UNAUDITED)(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) December 31, December 31, 2020 2019AssetsCurrent assets:Cash and cash equivalents $ 859.8 $ 612.1

Receivables, net 507.5 578.4

Inventories, net 360.5 392.9

Other current assets 189.5 153.4

Total current assets 1,917.3 1,736.8

Plant, property and equipment, net 525.1 531.5

Goodwill 944.8 927.2

Other intangible assets, net 106.4 138.0

Asbestos-related assets 353.7 319.6

Deferred income taxes 158.3 138.1

Other non-current assets 272.0 316.5

Total non-current assets 2,360.3 2,370.9

Total assets $ 4,277.6 $ 4,107.7

Liabilities and Shareholders' EquityCurrent liabilities:Commercial paper and current maturities of $ 106.8 $ 86.5 long-term debtAccounts payable 306.8 332.4

Accrued liabilities 457.4 430.8

Total current liabilities 871.0 849.7

Asbestos-related liabilities 840.6 731.6

Postretirement benefits 227.5 213.9

Other non-current liabilities 210.6 234.7

Total non-current liabilities 1,278.7 1,180.2

Total liabilities 2,149.7 2,029.9

Shareholders' equity:Common stock:Authorized - 250.0 shares, $1 par value pershareIssued and Outstanding - 86.5 and 87.8 shares, 86.5 87.8 respectivelyRetained earnings 2,319.3 2,372.4

Accumulated other comprehensive loss:Postretirement benefit plans (55.9 ) (133.3 )

Cumulative translation adjustments (223.5 ) (252.0 )

Total ITT Inc. shareholders' equity 2,126.4 2,074.9

Noncontrolling interests 1.5 2.9

Total shareholders' equity 2,127.9 2,077.8

Total liabilities and shareholders' equity $ 4,277.6 $ 4,107.7

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(IN MILLIONS) For the Twelve Months Ended December 31 2020 2019

Operating ActivitiesIncome from continuing operations attributable to $ 68.5 $ 323.4 ITT Inc.Adjustments to income from continuing operationsDepreciation and amortization 112.2 113.4

Equity-based compensation 13.4 15.7

Asbestos-related costs (benefit), net 66.3 (20.2 )

Pension settlement charges 137.0 -

Deferred income tax (benefit) expense (43.9 ) 30.9

Asset impairment charges 16.3 1.0

(Gain) loss on sale or disposal of long-lived assets (2.0 ) 1.0

Other non-cash charges, net 45.0 37.8

Asbestos-related payments, net (9.8 ) (21.6 )

Contributions to postretirement plans (18.0 ) (22.9 )

Changes in assets and liabilities:Change in receivables 83.3 (40.6 )

Change in inventories 36.5 (0.6 )

Change in contract assets (1.0 ) 2.7

Change in contract liabilities (1.9 ) (5.1 )

Change in accounts payable (34.7 ) (1.9 )

Change in accrued expenses 4.2 (14.7 )

Change in income taxes (6.2 ) (9.6 )

Other, net (29.3 ) (31.0 )

Net Cash - Operating activities 435.9 357.7

Investing ActivitiesCapital expenditures (63.7 ) (91.4 )

Proceeds from sale of long-lived assets 1.7 0.9

Acquisitions, net of cash acquired (4.7 ) (113.1 )

Other, net 0.9 0.2

Net Cash - Investing activities (65.8 ) (203.4 )

Financing ActivitiesCommercial paper, net borrowings (repayments) 13.1 (27.2 )

Short-term revolving loans, borrowings 495.8 -

Short-term revolving loans, repayments (524.7 ) -

Long-term debt, issued 1.5 8.1

Long-term debt, repayments (2.5 ) (3.2 )

Repurchase of common stock (84.2 ) (41.4 )

Dividends paid (59.0 ) (52.1 )

Proceeds from issuance of common stock 4.3 14.9

Other, net (2.9 ) (0.6 )

Net Cash - Financing activities (158.6 ) (101.5 )

Exchange rate effects on cash and cash equivalents 35.2 (3.0 )

Net cash from discontinued operations - operating 1.0 0.9 activitiesNet change in cash and cash equivalents 247.7 50.7

Cash and cash equivalents - beginning of year 612.9 562.2 (includes restricted cash of $0.8 and $1.0,respectively)Cash and Cash Equivalents - end of Period (includes $ 860.6 $ 612.9 restricted cash of $0.8 and $0.8, respectively)Supplemental Cash Flow DisclosuresCash paid (received) during the year for:Interest $ 3.3 $ 2.5

Income taxes, net of refunds received 61.1 63.4

Key Performance Indicators and Non-GAAP MeasuresManagement reviews a variety of key performance indicators including revenue,segment operating income and margins, earnings per share, order growth, andbacklog, some of which are calculated on a non-GAAP basis. In addition, weconsider certain measures to be useful to management and investors whenevaluating our operating performance for the periods presented. These measuresprovide a tool for evaluating our ongoing operations and management of assetsfrom period to period. This information can assist investors in assessing ourfinancial performance and measures our ability to generate capital fordeployment among competing strategic alternatives and initiatives, including,but not limited to, acquisitions, dividends, and share repurchases. Some ofthese metrics, however, are not measures of financial performance underaccounting principles generally accepted in the United States of America (GAAP)and should not be considered a substitute for measures determined in accordancewith GAAP. We consider the following non-GAAP measures, which may not becomparable to similarly titled measures reported by other companies, to be keyperformance indicators for purposes of our reconciliation tables.Organic Revenues and Organic Orders are defined as revenue and orders,excluding the impacts of foreign currency fluctuations, acquisitions anddivestitures. Divestitures include sales of portions of our business that didnot meet the criteria for presentation as a discontinued operation. Theperiod-over-period change resulting from foreign currency fluctuations isestimated using a fixed exchange rate for both the current and prior periods.Management believes that reporting organic revenue and organic orders providesuseful information to investors by helping identify underlying trends in ourbusiness and facilitating comparisons of our revenue performance with prior andfuture periods and to our peers.Adjusted Operating Income and Adjusted Segment Operating Income are defined astotal operating income and segment operating income, adjusted to excludespecial items that include, but are not limited to, asbestos-related impacts,impairments, restructuring, realignment, certain acquisition-related impacts,and unusual or infrequent operating items. Special items represent charges orcredits that impact current results, which management views as unrelated to theCompany's ongoing operations and performance. Adjusted Operating Margin andAdjusted Segment Operating Margin are defined as adjusted operating income oradjusted segment operating income divided by revenue. Adjusted SegmentDecremental or Incremental Operating Margin is defined as the change inadjusted segment operating income divided by the change in revenue. We believethese financial measures are useful to investors and other users of ourfinancial statements in evaluating ongoing operating profitability, as well asin evaluating operating performance in relation to our competitors.Adjusted Income from Continuing Operations and Adjusted EPS are defined asincome from continuing operations attributable to ITT Inc. and income fromcontinuing operations attributable to ITT Inc. per diluted share, adjusted toexclude special items that include, but are not limited to, asbestos-relatedimpacts, impairments, restructuring, realignment, pension settlement andcurtailment impacts, certain acquisition-related impacts, income taxsettlements or adjustments, and unusual or infrequent items. Special itemsrepresent charges or credits, on an after-tax basis, that impact currentresults which management views as unrelated to the Company's ongoing operationsand performance. The after-tax basis of each special item is determined usingthe jurisdictional tax rate of where the expense or benefit occurred. Webelieve that adjusted income from continuing operations is useful to investorsand other users of our financial statements in evaluating ongoing operatingprofitability, as well as in evaluating operating performance in relation toour competitors.Free Cash Flow and Free Cash Flow Margin are defined as net cash provided byoperating activities less capital expenditures and the ratio of free cash flowto revenue. We believe that free cash flow and free cash flow margin provideuseful information to investors as they provide insight into a primary cashflow metric used by management to monitor and evaluate cash flows generated byour operations.Working Capital is defined as the sum of Receivables, net, Inventories, net andCurrent contract assets less Accounts payable and Current contract liabilities.Working Capital as a percentage of revenue is calculated by dividing workingcapital by the trailing twelve months of revenue. We believe that workingcapital and working capital as a percentage of revenue provides usefulinformation to investors as it provides insight into both a company'soperational efficiency and its short-term financial health.ITT Inc. Non-GAAP ReconciliationReported vs. Organic Revenue / OrdersFourth Quarter 2020 & 2019(In Millions) (As Reported - GAAP) (As Adjusted - Organic) (A) (B) (C) (D) (E) (F) = (G) = (H) = G A-D-E C-D-E / B Acquisition / FX Revenue $ Change % Change Divestitures Impact / $ Change % Change Orders 2020 vs. 2020 vs. Adj. 2020 Adj. Q4 2020 Q4 2019 2019 2019 Q4 2020 Q4 2020 Q4 2020 vs. 2019 2020 vs. 2019 RevenueITT Inc. $ 708.6 $ 719.1 $ (10.5 ) (1.5 %) $ - $ 17.7 $ 690.9 $ (28.2 ) (3.9 %)

Motion 352.1 304.4 47.7 15.7 % - 16.2 335.9 31.5 10.3 %TechnologiesIndustrial 228.3 255.2 (26.9 ) (10.5 %) - (0.3 ) 228.6 (26.6 ) (10.4 %)ProcessConnect & 129.0 160.8 (31.8 ) (19.8 %) - 1.8 127.2 (33.6 ) (20.9 %)ControlTechnologies OrdersITT Inc. $ 665.2 $ 679.4 $ (14.2 ) (2.1 %) $ - $ 18.9 $ 646.3 $ (33.1 ) (4.9 %)

Motion 351.9 298.2 53.7 18.0 % - 16.3 335.6 37.4 12.5 %TechnologiesIndustrial 183.7 220.2 (36.5 ) (16.6 %) - 0.5 183.2 (37.0 ) (16.8 %)ProcessConnect & 130.0 161.5 (31.5 ) (19.5 %) - 2.0 128.0 (33.5 ) (20.7 %)ControlTechnologies Note: Excludes intercompany eliminationsImmaterial differences due to roundingITT Inc. Non-GAAP ReconciliationReported vs Adjusted Segment Operating Income & Operating MarginFourth Quarter 2020 & 2019(In Millions) Q4 2020 Q4 2020 Q4 2020 Q4 2019 Q4 2019 Q4 2019 % Change % Change As As As Special As As Special As Reported Adjusted Reported Items Adjusted Reported Items Adjusted 2020 vs. 2020 vs. 2019 2019 Revenue:Motion $ 352.1 $ 352.1 $ 304.4 $ 304.4 15.7 % 15.7 %TechnologiesIndustrial 228.3 228.3 255.2 255.2 (10.5 %) (10.5 %)ProcessConnect & 129.0 129.0 160.8 160.8 (19.8 %) (19.8 %)ControlTechnologiesIntersegment (0.8 ) (0.8 ) (1.3 ) (1.3 )eliminationsTotal $ 708.6 $ 708.6 $ 719.1 $ 719.1 (1.5 %) (1.5 %)Revenue OperatingMargin:Motion 19.9 % (40 ) BP 19.5 % 15.3 % 10 BP 15.4 % 460 BP 410 BPTechnologiesIndustrial 14.5 % 60 BP 15.1 % 13.5 % 70 BP 14.2 % 100 BP 90 BPProcessConnect & 12.6 % 40 13.0 % 16.2 % 90 17.1 % (360 ) (410 )Control BP BP BP BPTechnologiesTotal 16.9 % - 16.9 % 14.9 % 50 15.4 % 200 150 Operating BP BP BP BPSegments OperatingIncome:Motion $ 70.1 $ (1.3 ) $ 68.8 $ 46.5 $ 0.5 $ 47.0 50.8 % 46.4 %TechnologiesIndustrial 33.1 1.4 34.5 34.5 1.8 36.3 (4.1 %) (5.0 %)ProcessConnect & 16.3 0.5 16.8 26.1 1.4 27.5 (37.5 %) (38.9 %)ControlTechnologiesTotalSegment $ 119.5 $ 0.6 $ 120.1 $ 107.1 $ 3.7 $ 110.8 11.6 % 8.4 %OperatingIncomeNote: Immaterial differences due to rounding.Special items include, but are not limited to, restructuring and realignment costs, certain asset impairment charges, acquisition-related expenses,and other unusual or infrequent items including certain legal matters.Note: Immaterial differences due to rounding. Special items include, but are not limited to, restructuring and realignmentcosts, certain asset impairment charges, acquisition-related expenses,and other unusual or infrequent items including certainlegal matters.ITT Inc. Non-GAAP ReconciliationReported vs. Adjusted Income from Continuing Operations & Adjusted EPSFourth Quarter 2020 & 2019(In Millions, except per share amounts) Q4 2020 Q4 2020 Q4 2019 Q4 2019 2020 2020 vs. 2019 vs. 2019 As Non-GAAP As As Non-GAAP As As As Reported Adjustments Adjusted Reported Adjustments Adjusted Adjusted Adjusted ($) (%) Segment $ 119.5 $ 0.6 # $ 120.1 $ 107.1 $ 3.7 # $ 110.8 operating A AincomeCorporate 39.7 (47.7 ) # (8.0 ) (24.8 ) 16.3 # (8.5 )income B B(expense)Operating 159.2 (47.1 ) 112.1 82.3 20.0 102.3 income (loss) Interest (0.1 ) - (0.1 ) 1.0 - 1.0 (expense)incomeOther (137.2 ) 137.4 # 0.2 0.7 - 0.7 (expense) CincomeIncome fromcontinuing 21.9 90.3 112.2 84.0 20.0 104.0 operationsbefore tax Income tax (34.9 ) 11.2 # (23.7 ) (16.8 ) 0.9 # (15.9 )(expense) D Dbenefit(Loss) incomefrom (13.0 ) 101.5 88.5 67.2 20.9 88.1 continuingoperations Less: Incomeattributable 0.6 - 0.6 0.7 - 0.7 tononcontrollinginterests(Loss) incomefrom $ (13.6 ) $ 101.5 $ 87.9 $ 66.5 $ 20.9 $ 87.4 continuingoperations -ITT Inc. EPS from $ (0.16 ) # $ 1.17 $ 1.01 $ 0.75 $ 0.24 $ 0.99 $ 0.02 2.0 %continuing Eoperations Note: Amounts may not calculate due to rounding.Per share amounts are based on diluted weighted average commonshares outstanding. #A - 2020 includes restructuring costs ($0.6M)#A - 2019 includes restructuring costs ($1.8M), acquisition related costs($1.7M) and other legal costs ($0.2M). #B - 2020 includes asbestos related benefit ($50.4M) and other costs ($2.7M).The net asbestos benefit is due to an insurance settlement ($52.1M) andasbestos related expense ($1.7M)#B - 2019 includes realignment and other costs ($4.7M), and asbestos relatedexpense ($11.6M). #C - 2020primarilyincludespensionterminationrelatedsettlementcharges. #D - 2020 includes tax-related special items including tax expense forvaluation allowance change ($21.4M), tax expense for the pension terminationrelated to AOCI of ($5.1M)and tax expense on future distribution of foreign earnings ($4.5M), and the nettax benefit of special items #A through #C ($20.8M).#D - 2019 includes various tax-related special items including tax expense forvaluation allowance change ($6.0M), tax expense on future distribution offoreign earnings ($2.2M),tax benefit for return to accrual adjustment ($4.5M), and the tax impact ofother operating special items. #E - 2020 GAAP EPS is calculated using basic average commonshares outstanding due to a net loss.ITT Inc. Non-GAAP ReconciliationReported vs. Organic Revenue / OrdersFull Year 2020 & 2019(In Millions) (As Reported - GAAP) (As Adjusted - Organic) (A) (B) (C) (D) (E) (F) = (G) =C-D-E (H) = G A-D-E / B Acquisition Revenue / $ Change % Change / FX Impact Orders $ Change % Change Divestitures 2020 vs. 2020 vs. Adj. 2020 Adj. FY 2020 FY 2019 2019 2019 FY 2020 FY 2020 FY 2020 vs 2020 vs. . 2019 2019 RevenueITT Inc. $ 2,477.8 $ 2,846.4 $ (368.6 ) (12.9 %) $ 24.4 $ (1.3 ) $ 2,454.7 $ (391.7 ) (13.8 %)

Motion 1,121.1 1,241.8 (120.7 ) (9.7 %) - 8.1 1,113.0 (128.8 ) (10.4 %)TechnologiesIndustrial 843.0 943.8 (100.8 ) (10.7 %) 18.6 (11.4 ) 835.8 (108.0 ) (11.4 %)ProcessConnect & 516.5 663.9 (147.4 ) (22.2 %) 5.8 2.0 508.7 (155.2 ) (23.4 %)ControlTechnologies OrdersITT Inc. $ 2,391.5 $ 2,813.2 $ (421.7 ) (15.0 %) $ 24.8 $ (0.7 ) $ 2,367.4 $ (445.8 ) (15.8 %)

Motion 1,108.5 1,250.6 (142.1 ) (11.4 %) - 8.2 1,100.3 (150.3 ) (12.0 %)TechnologiesIndustrial 798.1 886.8 (88.7 ) (10.0 %) 19.6 (10.9 ) 789.4 (97.4 ) (11.0 %)ProcessConnect & 487.2 678.9 (191.7 ) (28.2 %) 5.2 2.0 480.0 (198.9 ) (29.3 %)ControlTechnologies Note: Excludes intercompany eliminationsImmaterial differences due to roundingITT Inc. Non-GAAP ReconciliationReported vs Adjusted Segment Operating Income & Operating MarginFull Year 2020 & 2019(In Millions) FY 2020 FY 2020 FY 2020 FY 2019 FY 2019 FY 2019 % Change % Change As As As Special As As Special As Reported Adjusted Reported Items Adjusted Reported Items Adjusted 2020 vs. 2020 vs. 2019 2019 Revenue:Motion $ 1,121.1 $ 1,121.1 $ 1,241.8 $ 1,241.8 (9.7 %) (9.7 %)TechnologiesIndustrial 843.0 843.0 943.8 943.8 (10.7 %) (10.7 %)ProcessConnect & 516.5 516.5 663.9 663.9 (22.2 %) (22.2 %)ControlTechnologiesIntersegment (2.8 ) (2.8 ) (3.1 ) (3.1 )eliminationsTotal $ 2,477.8 $ 2,477.8 $ 2,846.4 $ 2,846.4 (12.9 %) (12.9 %)Revenue OperatingMargin:Motion 16.4 % 110 BP 17.5 % 17.4 % 50 BP 17.9 % (100 ) BP (40 ) BPTechnologiesIndustrial 9.2 % 430 BP 13.5 % 11.1 % 160 BP 12.7 % (190 ) BP 80 BPProcessConnect & 11.0 % 170 12.7 % 16.8 % 50 17.3 % (580 ) (460 )Control BP BP BP BPTechnologiesTotal 12.9 % 230 15.2 % 15.2 % 80 16.0 % (230 ) (80 )Operating BP BP BP BPSegments OperatingIncome:Motion $ 184.0 $ 12.7 $ 196.7 $ 216.1 $ 6.2 $ 222.3 (14.9 %) (11.5 %)TechnologiesIndustrial 77.6 36.4 114.0 104.7 14.7 119.4 (25.9 %) (4.5 %)ProcessConnect & 57.0 8.7 65.7 111.5 3.5 115.0 (48.9 %) (42.9 %)ControlTechnologiesTotalSegment $ 318.6 $ 57.8 $ 376.4 $ 432.3 $ 24.4 $ 456.7 (26.3 %) (17.6 %)OperatingIncome Note: Immaterial differences due to rounding. Special items include, but are not limited to, restructuring and realignmentcosts, certain asset impairment charges, acquisition-related expenses,and other unusual or infrequentitems including certain legalmatters.ITT Inc. Non-GAAP ReconciliationReported vs. Adjusted Income from Continuing Operations & Adjusted EPSFull Year 2020 & 2019(In Millions, except per share amounts) FY 2020 FY 2020 FY 2019 FY 2019 2020 2020 vs. 2019 vs. 2019 As Non-GAAP As As Non-GAAP As As As Reported Adjustments Adjusted Reported Adjustments Adjusted Adjusted Adjusted ($) (%) Segment $ 318.6 $ 57.8 # $ 376.4 $ 432.3 $ 24.4 # $ 456.7operating A AincomeCorporate (92.1) 71.4 # (20.7) (20.9) (14.9) # (35.8)(expense) B BincomeOperating 226.5 129.2 355.7 411.4 9.5 420.9income Interest 0.7 - 0.7 4.1 - 4.1incomeOther (142.0) 141.6 # (0.4) (1.1) - (1.1)(expense) CincomeIncome fromcontinuing 85.2 270.8 356.0 414.4 9.5 423.9operationsbefore tax Income tax (15.3) (60.1) # (75.4) (89.9) 4.4 # (85.5)(expense) D DbenefitIncome from 69.9 210.7 280.6 324.5 13.9 338.4continuingoperations Less: Incomeattributable 1.4 - 1.4 1.1 - 1.1tononcontrollinginterestsIncome fromcontinuing $ 68.5 $ 210.7 $ 279.2 $ 323.4 $ 13.9 $ 337.3operations -ITT Inc. EPS from $ 0.78 $ 2.42 $ 3.20 $ 3.65 $ 0.16 $ 3.81 $ (0.61) (16.0%)continuingoperationsNote: Amounts may not calculate due to rounding.Per share amounts are based on diluted weighted average common shares outstanding.#A - 2020 includes restructuring costs ($40.7M), impairment charges ($16.3M) and acquisition related costs ($0.8M).#A - 2019 includes restructuring and realignment costs ($13.1M), acquisition related costs ($8.7M), legal accrual ($1.6M) and other costs ($1.0M).#B - 2020 includes asbestos related expense ($66.3M), restructuring costs ($2.3M) and other costs ($2.8M).The net asbestos expense includes remeasurement expense ($135.9M) to transition to a full horizon, extending the projection through 2052 and other asbestos related costs ($30.8M),partially offset by favorable insurance settlements ($100.4M).#B - 2019 includes restructuring and realignment and other net costs ($5.3M) and asbestos related benefit ($20.2M).The net asbestos related benefit includes remeasurement income ($68.1M), offset by asbestos related expense to maintain 10 year accrual ($47.9M).#C - 2020 primarily includes pension termination related settlement charges.#D - 2020 includes the net tax benefit of special items #A through #C ($58.8M) and tax-related special items including tax expense on future distribution of foreign earnings ($6.3M),tax expense for the pension termination related to AOCI of ($5.1M), tax benefit for valuation allowance change ($6.2M) and tax benefit on uncertain tax position release ($4.4M).#D - 2019 includes various tax-related special items including tax expense for valuation allowance change ($4.7M), tax expense on future distribution of foreign earnings ($7.3M),tax benefit for return to accrual adjustment ($5.0M), and the tax impact of other operating special items.Note: Amounts may not calculate due to rounding.Per share amounts are based on diluted weighted average commonshares outstanding. #A - 2020 includes restructuring costs ($40.7M), impairment charges($16.3M) and acquisition related costs ($0.8M).#A - 2019 includes restructuring and realignment costs ($13.1M),acquisition related costs ($8.7M), legal accrual ($1.6M) and othercosts ($1.0M). #B - 2020 includes asbestos related expense ($66.3M), restructuringcosts ($2.3M) and other costs ($2.8M).The net asbestos expense includes remeasurement expense ($135.9M) to transitionto a full horizon, extending the projection through 2052 and other asbestosrelated costs ($30.8M),partially offset by favorable insurance settlements($100.4M).#B - 2019 includes restructuring and realignment and other net costs($5.3M) and asbestos related benefit ($20.2M).The net asbestos related benefit includes remeasurement income ($68.1M),offset by asbestos related expense to maintain 10 year accrual ($47.9M). #C - 2020 primarily includes pension terminationrelated settlement charges. #D - 2020 includes the net tax benefit of special items #A through #C($58.8M) and tax-related special items including tax expense on futuredistribution of foreign earnings ($6.3M),tax expense for the pension termination related to AOCI of ($5.1M), taxbenefit for valuation allowance change ($6.2M) and tax benefit on uncertaintax position release ($4.4M).#D - 2019 includes various tax-related special items including tax expensefor valuation allowance change ($4.7M), tax expense on future distribution offoreign earnings ($7.3M),tax benefit for return to accrual adjustment ($5.0M), and thetax impact of other operating special items.ITT Inc. Non-GAAP ReconciliationFree Cash Flow and Free Cash Flow MarginFull Year & 4th Qtr. 2020 & 2019(In Millions) FY 2020 FY19 Q4 2020 Q4 2019 Net Cash - Operating Activities # $ 435.9 $ 357.7 $ 117.8 $ 136.0 A Capital expenditures 63.7 91.4 16.1 22.1

Free Cash Flow 372.2 266.3 101.7 113.9

Revenue $ 2,477.8 $ 2,846.4 $ 708.6 $ 719.1

Free Cash Flow Margin 15.0 % 9.4 % 14.4 % 15.8 %

#A - 2020 includes payments for asbestos($9.8M) and restructuring ($33.0M).#A - 2019 includes payments for asbestos($21.6M) and restructuring ($11.7M).#A - Q4 2020 includes payments for asbestos($0.9M) and restructuring ($8.5M).#A - Q4 2019 includes payments for asbestos($1.5M) and restructuring ($3.9M).ITT Inc. Non-GAAP ReconciliationGAAP vs. Adjusted EPS GuidanceFull Year 2021(Per share amounts) 2021 Full-Year Guidance Low High EPS from Continuing Operations - GAAP $ 3.12 $ 3.48

Estimated asbestos related costs, net of tax 0.05 0.04

$ 3.17 $ 3.52

Estimated restructuring and realignment costs, net of tax 0.23 0.19

Other costs, net of tax 0.05 0.04

EPS from Continuing Operations - Adjusted $ 3.45 $ 3.75

Note: The Company has provided forward-looking non-GAAP financial measures fororganic revenue growth and adjustedsegment operating margin in the earnings release. It is not possible, withoutunreasonable efforts, to estimate theimpacts of foreign currency fluctuations, acquisitions, divestitures andcertain other special items that may occurduring 2021 as these items are inherently uncertain and difficult to predict.As a result, the Company is unable toquantify certain amounts that would be included in a reconciliation of organicrevenue growth and adjusted segmentoperating margin to the most directly comparable GAAP financial measureswithout unreasonable efforts and has notprovided reconciliations for these forward looking non-GAAP financialmeasures.ITT Inc. Non-GAAP ReconciliationFree Cash Flow GuidanceFull Year 2021(In Millions) 2021 Full-Year Guidance Low High Net Cash - Operating Activities $ 370.0 $ 400.0

Capital expenditures 100.0 100.0

Free Cash Flow $ 270.0 $ 300.0

Revenue #A $ 2,620.0 $ 2,620.0

Free Cash Flow Margin 10 % 12 %

#A Represents the midpoint of the revenue range provided of 5%to 7%. View source version on businesswire.com: https://www.businesswire.com/news/home/20210219005045/en/

CONTACT: Investor Contact Mark Macaluso +1 914-641-2064 mark.macaluso@itt.com