ITT Inc. (ITT) Q3 2026 earnings review
ITT raises its full-year outlook as defense orders jump
ITT's aerospace and pump businesses are booking orders much faster than they ship products, even as costs from its biggest acquisition weigh on reported profit. Sales from businesses the industrial manufacturer owned a year ago rose 8%, beating what its prior second-half outlook pointed to, while underlying orders jumped 21%. Chief executive Luca Savi raised every full-year target, though by our math the new plan still leaves underlying sales growth near 2% for the fourth quarter.
| Sales from businesses owned a year ago | +7.6% total revenue +44% to $1.44B |
|---|---|
| Orders from businesses owned a year ago | +20.5% +13.3% last quarter |
| Profit per share, excluding one-offs | $2.26 +20% from a year ago; GAAP EPS -15% to $1.38 |
| Full-year profit per share outlook, excluding one-offs | Raised $0.36 new range: $8.54–$8.62 (+19% to +20%) |
⚖️ Verdict: 🟢 Bullish
The story got better because order momentum broadened and the SPX FLOW pump buyout showed sequential margin gains and cash generation. Defense and aerospace orders grew more than 50% for a second straight quarter, while pump orders rebounded from a drop last quarter and lifted free cash flow to $288 million. One caution: standard-accounting profit per share fell 15% on amortization, interest and tax charges that the headline figures exclude.
The question now is whether the implied fourth-quarter slowdown reflects a real cooling in shipments or just a cautious target and four fewer working days. If customers keep taking deliveries at the current pace, fourth-quarter sales will beat the implied 2% rate; if project delays bite, growth will stall. Fourth-quarter underlying sales will settle it.
🐂 Bull Case
Defense and Flow Orders Keep Climbing
ITT makes industrial pumps, valves, auto brake pads and aerospace connectors. A key worry after last quarter's surge was that defense bookings were a one-off spike and pump orders were shrinking. Third-quarter bookings argued against both worries. Orders from businesses owned a year ago rose 20.5% to $1.19 billion, speeding up from 13.3% growth in the second quarter.
- Connect & Control Technologies (CCT, aerospace and defense parts): underlying orders up 55.3% to $405 million, after 58.7% growth last quarter
- CCT order-to-sales ratio: 1.31, meaning new bookings ran 31% ahead of shipments
- Flow Technologies (FT, industrial pumps and valves): underlying orders up 11.2% to $417 million, reversing a 2.9% drop last quarter
The company credited CCT's gains to "pricing actions, wins in defense, industrial connectors and aerospace components", while FT grew on "continued strength in energy and biopharma". Two straight quarters of 50%-plus defense order growth show that demand is not just a single lumpy contract. Still, one rebound quarter in Flow orders softens the concern over delayed Middle East projects rather than settling it.
What to watch: the quarterly filing's backlog note. If total backlog builds above last quarter's $2.67 billion, the order surge is adding to future revenue rather than just replacing shipped work.
SPX FLOW Integration Lifts Margins and Cash
In March, ITT bought SPX FLOW, a maker of industrial mixers, pumps and nutrition systems, for $4.8 billion. Because it is the largest purchase in the manufacturer's history, integration slip-ups and profit dilution were top risks after second-quarter margins dipped. Chief executive Luca Savi said that "at SPX FLOW, we are executing with discipline and speed, delivering high-single-digit growth and capturing cost synergies ahead of schedule".
The numbers in Flow Technologies, the division housing SPX FLOW, backed up Savi's claim. Excluding one-offs and deal amortization, the division's operating margin rose 1.0 percentage point from last quarter to 22.4%, only 0.4 percentage points below last year's pre-deal level. Across ITT, operating margin excluding one-offs rose 1.4 percentage points from a year ago to 21.0%, as higher volumes and prices beat material and labor inflation.
Stronger profit turned into cash. Free cash flow jumped 87% from a year ago to $288.4 million, or 20.0% of sales. That cash allowed management to cut total debt by $215 million during the quarter to $3.51 billion, by our math, keeping its debt-paydown pledge on track.
What to watch: fourth-quarter Flow Technologies operating margin excluding one-offs. Another step up from 22.4% would confirm that the promised $80 million in three-year cost savings is flowing into profit.
Prior Second-Half Plan Proved Cautious
Three months ago, ITT's full-year outlook pointed to underlying sales growth of roughly minus 1% to plus 4.5% for the second half of 2026, by our math, down from 11.8% in the first half. Third-quarter underlying sales instead grew 7.6%, and profit per share excluding one-offs reached $2.26 against the $2.02 to $2.12 quarterly pace implied by the old plan.
Management raised its full-year underlying sales target to 7%–9% from 5%–8% and lifted its profit per share outlook excluding one-offs by 36 cents at the middle of the range, to $8.54–$8.62. Beating the implied third-quarter bar shows that the old outlook was cautious. By our math, the new outlook still leaves fourth-quarter underlying sales growth at about 1.5%, when four extra working days from the first quarter reverse.
What to watch: fourth-quarter underlying sales growth against the implied 1.5% rate. A result near mid-single digits despite four fewer working days would show underlying demand remains near the third-quarter pace.
🐻 Bear Case
Deal Accounting and Debt Cut Reported Profit
ITT highlights profit measures that leave out acquisition charges, and at the start of 2026 it changed those measures to also exclude intangible amortization — the non-cash write-off of acquired customer lists and technology. On that basis, third-quarter profit per share rose 19.6% to $2.26. Under standard accounting rules, profit per share fell 14.8% from a year ago to $1.38, and net income slipped 2.6% to $123.6 million.
- Intangible amortization: $61.2 million (4.2% of revenue), up 3.1 percentage points from 1.1% a year ago
- General, administrative and sales overhead: 15.8% of revenue combined, up 1.6 percentage points from a year ago
- Interest expense: $45.0 million, nearly four times the $11.7 million paid a year ago
- Reported tax rate: 33.2% of pre-tax profit, up from 25.7% a year ago on foreign cash taxes
These costs cut ITT's reported operating margin by 2.3 percentage points to 15.7%. Management did cut its full-year estimate for one-time deal costs to $1.42 per share from $1.80, as inventory write-ups finished. Even so, interest payments, tax charges on foreign cash, and 14.5% more shares from the SPX FLOW buyout are real costs to shareholders that the headline profit figure leaves out.
What to watch: quarterly interest expense and the reported tax rate in the fourth quarter. Debt paydown must bring interest well below $45 million per quarter before reported profit can catch up with adjusted profit.
Auto Brake Demand Barely Moves
Motion Technologies makes brake pads and shock absorbers for cars, trucks and trains. Weak global auto production has weighed on the division all year, and the third quarter brought little relief. Underlying sales rose just 1.8% from a year ago to $362.0 million, after growing 1.6% in the second quarter, lagging the rest of the industrial group.
The company pointed to "growth in Friction and strength in KONI defense", and factory efficiency lifted the division's operating margin excluding one-offs by 0.7 percentage points from a year ago to 21.0%. Underlying orders also picked up to 5.5% growth from 0.7% in the second quarter. However, until carmakers lift production, ITT relies on defense shocks and cost cuts to keep the division's profit growing.
What to watch: whether Motion Technologies' 5.5% order growth turns into underlying sales growth above 2% in the fourth quarter.
Risks this quarter didn't answer
Four standing items from prior quarters received no new numbers in the third-quarter earnings release.
- Consolidated backlog in dollars: management noted a "healthy backlog" and organic orders beat sales by $119 million, but the exact figure awaits Note 4 of the quarterly filing.
- Middle East pump demand: Flow Technologies orders rebounded overall, but the release gave no figures on delayed Middle East orders or the Dammam factory.
- Debt refinancing plan: short-term borrowings stood at $707.3 million and long-term debt at $2.81 billion; terms and maturity updates await the filing and call.
- VIDAR industrial motor sales: unmentioned in the release after three quarters of silence on the $150 million 2030 sales goal.
👓 Other Themes
Motion Head Takes Over Connectors Unit
ITT named Davide Barbon, who runs Motion Technologies, to also lead Connect & Control Technologies effective immediately. Savi said that "bringing our highest growth potential business with the highest margin potential under Davide’s purview creates an opportunity to accelerate performance within CCT". Both divisions will stay separate in financial reports.
💲 Other KPIs
Gross margin — the share of sales left after the direct cost of making products — rose 2.3 percentage points from a year ago and 3.6 percentage points from the second quarter, by our math. Cost of revenue fell to 61.8% of sales from 64.1% a year ago as SPX FLOW's higher-margin products joined the mix and second-quarter inventory write-ups rolled off.
The average diluted share count rose 14.5% from a year ago because the industrial group issued stock in December and March to help pay for SPX FLOW. Compared with the second quarter, the share count held flat at 89.8 million as management resumed buybacks, spending $50.1 million on share repurchases in the third quarter after buying none in the second.
🔮 Guidance
Raised. The middle of the range moved up 1.5 percentage points to 8.0%, the second raise of the same size this year (+1.5 points in Q2, +1.5 points in Q3). By our math, the new full-year target leaves about 1.5% underlying sales growth for the fourth quarter, down from 7.6% in the third quarter, partly because four extra working days from the first quarter reverse in the fourth.
Raised. The middle of the range stepped up 2.5 percentage points to 42.0%, or about $5.59 billion in full-year sales. By our math, that leaves fourth-quarter total sales of roughly $1.46 billion, up 38.5% from a year ago with SPX FLOW included.
Raised. The middle of the standard-accounting margin target rose 0.45 percentage points to 13.7%. By our math, after a 13.3% margin across the first nine months, the plan points to a fourth-quarter reported operating margin near 14.8%, down from 15.7% in the third quarter.
Raised. The middle of the range rose 0.15 percentage points to 20.6%, representing an increase of 0.8 to 1.6 percentage points over 2025. By our math, that leaves the fourth-quarter operating margin excluding one-offs at roughly 21.0%, matching the third quarter's 21.0% reading.
Raised. The middle of the standard-accounting profit range moved up 12 cents to $4.69 per share, helped by a 38-cent cut in estimated full-year acquisition charges to $1.42 per share, partly offset by 18 cents higher restructuring. By our math, the outlook leaves $1.47 per share for the fourth quarter, up from $1.38 in the third quarter.
Raised. Management lifted the middle of the range by 36 cents to $8.58, or 19% to 20% full-year growth. It is the second straight raise of that size (+$0.37 in Q2, +$0.36 in Q3), and the new bottom sits 22 cents above the old top. By our math, the target leaves $2.26 for the fourth quarter, matching the third quarter and up 22.2% from a year ago.
Raised. The middle of the cash target rose $45 million to $610 million, or about 11% of full-year sales, with capital spending held at $150 million. With $464.3 million already collected in the first nine months, the plan leaves $145.7 million for the fourth quarter by our math, down from $187.4 million in last year's fourth quarter.
❓ Key Questions
How much of the implied Q4 slowdown is working days?
By our math, the raised full-year outlook still points to about 1.5% underlying sales growth in the fourth quarter after 7.6% in the third. How much of that step-down comes from the four fewer working days versus softer customer shipments?
Did Middle East pump orders recover or stay deferred?
Flow Technologies underlying orders bounced back to 11.2% growth after shrinking 2.9% in the second quarter on Middle East delays. Did Middle East customers resume booking in the third quarter, or did North American and European projects cover a continued regional drop?
Why combine leadership of Motion and Connect & Control now?
Connect & Control Technologies just posted 18.6% underlying sales growth, 55.3% order growth and a 22.0% operating margin excluding one-offs. Why put Motion Technologies head Davide Barbon in charge of both segments now, and did the former segment head leave?
Why restart share buybacks with $707 million in short-term debt?
After pausing buybacks in the second quarter to pay down SPX FLOW debt, ITT spent $50.1 million repurchasing shares in the third quarter while still carrying $707.3 million in short-term borrowings. How will management split free cash flow between debt reduction and buybacks from here?