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What changed in ITT INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ITT INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+323 added−327 removedSource: 10-K (2025-02-10) vs 10-K (2024-02-12)

Top changes in ITT INC.'s 2024 10-K

323 paragraphs added · 327 removed · 262 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

69 edited+18 added−14 removed41 unchanged
Biggest changeTalent 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.
Biggest changeOur most recent Employment Information Report (EEO-1 report) is available at www.itt.com/our-people/eeo-1-report, where we will also post our 2024 EEO-1 report when it becomes available . 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.
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.
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, help our customers meet their ESG goals and, furthermore, is simply the right thing to do.
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 CO 2 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.
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 and processes to reduce CO 2 emissions, waste sent to landfills, 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.
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 4 with time-based vesting conditions to facilitate the retention of key personnel, particularly those identified as high-performing talent.
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 with time-based vesting conditions to facilitate the retention of key personnel, particularly those identified as high-performing talent.
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.
In limited circumstances, we may have to obtain scarce components for higher prices on the spot market, which may 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.
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.
ITT Friction Technologies (Friction) Friction manufactures a range of brake pads installed as original equipment (OE) on passenger cars (both internal combustion engine vehicles, hybrids 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 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.
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. 9 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.
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.
In addition, many of our employees outside the U.S. are covered by collective agreements or represented 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.
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.
KONI aftermarket car shock absorbers are sold around the world, 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.
Our development planning tools and processes ensure targeted, concrete action planning, and we promote continuous feedback and regular check-ins. Compensation and Benefit s We provide flexible compensation and benefits programs to help meet the needs of our employees and their families.
Our development planning tools and processes ensure targeted, concrete action planning, and we promote continuous feedback and regular check-ins. 4 Compensation and Benefit s We provide flexible compensation and benefits programs to help meet the needs of our employees and their families.
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 customers operate in global infrastructure and natural resource markets such as energy, chemical and petrochemical, pharmaceutical, general industrial, marine, mining, pulp and paper, food and beverage, power generation and biopharmaceutical.
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.
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 imperative for our business to ensure our operations are efficient, sustainable and environmentally conscious.
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.
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 and Micro-Miniature.
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.
Connect & Control Technologies (CCT) The Connect & Control Technologies segment designs and manufactures a range of highly-engineered connectors, cable assemblies, 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.
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.
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, except for some specialty materials.
Our technology and customer intimacy together provide opportunities to capture recurring revenue streams, aftermarket opportunities and long-lived platforms from original equipment manufacturers (OEMs). We create long-term stakeholder value through our four strategic priorities of customer centricity, operational excellence, effective capital deployment, and sustainability and innovation.
Our technology and customer intimacy together provide opportunities to capture recurring revenue streams, aftermarket opportunities and content on long-lived platforms from original equipment manufacturers (OEMs). We create long-term stakeholder value through our four strategic priorities of customer centricity, operational excellence, effective capital deployment, and sustainability and innovation.
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.
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 thus enabling us to develop solutions to better assist our customers achieve their business goals.
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.
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.
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.
We strive to make ITT an engaging 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.
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.
In addition to base salaries, we offer numerous benefits for eligible employees, including annual bonuses, stock awards, an employee stock purchase plan for employees in the U.S., 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.
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.
CCT is a global designer and manufacturer of harsh-environment interconnect solutions 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.
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.
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, geopolitical disruptions, and inflation are expected to continue in 2025, and we are unable to reasonably predict when they will be resolved.
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.
Effective capital deployment, including resource optimization and a disciplined focus on cash flow management, are a major part of how we execute our strategy and continue to 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.
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.
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, marine, mining, pulp and paper, food and beverage, power generation and biopharmaceutical markets.
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.
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 and reservoir monitoring instruments.
OUR KEY BRANDS MT • ITT Friction Technologies TM • KONI ® • Wolverine Advanced Materials ® • Axtone ® • Novitek TM • GALT. ® IP • Goulds Pumps TM • Bornemann ® • Engineered Valves ® • PRO Services ® • C'treat ® • i-ALERT ® • Rheinhütte Pumpen ® • Habonim TM CCT • Cannon ® • VEAM ® • BIW Connector Systems ® • Aerospace Controls TM • Enidine ® • Compact Automation TM • Neo-Dyn ® Process Controls • Conoflow ® • Micro-Mode TM 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 KEY BRANDS MT • ITT Friction Technologies TM • KONI ® • GALT. ® • Axtone ® • Novitek TM IP • Goulds Pumps TM • Bornemann ® • i-ALERT ® • PRO Services ® • C'treat ® • Svanehøj ® • Rheinhütte Pumpen ® • Habonim TM • Hamworthy Pumps ® • Engineered Valves ® CCT • Cannon ® • VEAM ® • BIW Connector Systems ® • Aerospace Controls TM • Enidine ® • Compact Automation TM • Neo-Dyn ® Process Controls • Conoflow ® • Micro-Mode TM • kSARIA ® 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.
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.
Key competitive drivers within the brake pad business include technical expertise, formulation development capabilities, scale production, product performance, high-quality standards, cost, customer intimacy, reputation and the ability to meet demanding delivery and volume schedules in a limited amount of time.
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 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 bearings for rotorcraft vibration isolation, heaters, hoses, and composite ducting for environmental control systems. Brands include Aerospace Controls ® and Enidine ® .
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 but also leadership, talent and cultural aspects. For additional information, refer to Human Capital Management below.
We are establishing 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, but also leadership, talent and cultural aspects. For additional information, refer to Human Capital Management below.
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 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 hybrid and EV platform awards with established and new OEMs.
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.
Motion Technologies (MT) The Motion Technologies segment is a manufacturer of brake pads, shock absorbers, energy absorption components and damping 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, KONI, and Axtone.
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.
For additional information regarding environmental matters, see " Critical Accounting Estimates " within Item 7, Management's Discussion and Analysis , and Note 18, 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 team of approximately 11,700 ITTers globally.
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.
In 2022, we launched a 2 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 program to include sites in Czechia and Mexico, and in 2024, we added our Italy and China sites to the program's scope.
We operate through three primary segments: Motion Technologies (MT), Industrial Process (IP), and Connect & Control Technologies (CCT). 2023 COMPANY SNAPSHOT • $3.3 billion of sales across approx. 125 countries • Approx. 10,600 employees in 37 countries • Global presence with 67% of revenue outside the U.S. • Balanced and diversified portfolio MT is a global manufacturer of highly engineered and durable brake pads, shock absorbers and damping technologies for the automotive and rail markets.
We operate through three primary segments: Motion Technologies (MT), Industrial Process (IP), and Connect & Control Technologies (CCT). 2024 COMPANY SNAPSHOT • $3.6 billion of sales across approx. 125 countries • Approx. 11,700 employees in 39 countries • Global presence with 67% of revenue outside the U.S. • Balanced and diversified portfolio MT is a global manufacturer of highly engineered brake pads, shock absorbers and damping technologies for the automotive and rail markets.
Specialty designer and manufacturer of high-bandwidth radio frequency (RF) connectors for harsh environment defense and space applications. December 29, 2023 Divestiture CCT Matrix Composites, Inc. Manufacturer of precision composite components in the aerospace and defense market.
December 29, 2023 Divestiture CCT Matrix Composites, Inc.("Matrix") Manufacturer of precision composite components in the aerospace and defense market. May 2, 2023 Acquisition CCT Micro-Mode Products, Inc. Specialty designer and manufacturer of high-bandwidth radio frequency (RF) connectors for harsh environment defense and space applications.
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.
It is available on our website at www.itt.com/sustainability. 3 Human Capital Management We believe that sustainable performance and growth are made possible only through the efforts of our dynamic 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.
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.
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. 1 Our operational focus centers on safety, quality, delivery and cost. This is the foundation of the improvements we make in each of our businesses.
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.
We are proud of the strides we have made with respect to our ESG efforts to date, and 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 2024 Sustainability Report (the "2024 Sustainability Report").
Brands include Cannon ® , VEAM ® , Micro-Mode TM , 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.
Brands include Cannon®, VEAM®, Micro-Mode TM , 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.
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.
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.
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 Type Segment Business Acquired Description May 2, 2023 Acquisition CCT Micro-Mode Products, Inc.
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. 10 General Developments of the Business Acquisitions and Divestitures Date of Transaction Type Segment Business Acquired Description September 12, 2024 Acquisition CCT kSARIA Parent, Inc.
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.
Additionally, ITT’s diligent remediation approach continues to effectively reduce the number of ongoing matters year after year. 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.
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'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.
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.
In certain harsh environment markets, our connector products are considered market leaders because of our technological capabilities, cost performance and global footprint. 7 Products for the commercial aerospace and defense markets include industry standards-based connectors and late-stage customized solutions.
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.
As of December 31, 2024, we had approximately 11,700 employees located in 39 countries, including approximately 3,400 employees in the U.S. As of December 31, 2024, approximately 13% 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.
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.
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.
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.
Sales to distributors represented approximately 30% of CCT's 2024 revenue. 8 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.
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.
We invest significant resources to develop our talent to remain a global 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.
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.
Research and Development Research and Development (R&D) is key to our strategy and is generally focused on the design of highly engineered critical components. Our R&D teams develop competitive products to address our customers' needs in the markets we serve.
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.
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 drives the systemic control of workplace risks and continual improvement of environmental and occupational safety and health protocols at all of our sites.
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.
MT's sales to Continental, a supplier to the automotive industry and MT's largest customer, represented 17% of MT's revenue, and approximately 7% of ITT's total revenue in 2024. 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.
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.
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.
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.
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.
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.
In 2024, supply disruptions for 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 and delays in supply, particularly in the first half of the year, which impacted our financial results.
January 19, 2024 Acquisition IP Svanehøj Group A/S 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
Other than as described herein, there have been no significant developments since our previous Form 10-K filing. See Note 21, Acquisitions, Investments, and Divestitures , to the Consolidated Financial Statements for additional information. 11
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.
Railway supplies 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.
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.
KONI and Axtone are lifetime partners of rail customers, also offering repair and overhauling capabilities for their products. Other Information MT has a global manufacturing footprint with advanced automation capabilities, with production facilities in Europe, China, and North America. MT competes in markets primarily served by large and well-established national and global companies.
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.
Sales are made either directly to train manufacturers and train operators carrying out scheduled train maintenance programs or indirectly through distributors. 5 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.
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.
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. Cable Assembly Products In September 2024, ITT acquired kSARIA Parent, Inc.
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.
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.
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.
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. ITT provides an employee stock purchase program benefit to U.S. employees as an opportunity to invest in ITT stock at a discounted price and share in the company's success.
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.
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 has a global manufacturing footprint with significant operations in the United States, South Korea, Saudi Arabia, Mexico, Germany, Denmark, and Singapore.
IP's marketplace-recognized brands include Goulds Pumps TM , Bornemann ® , Rheinhütte Pumpen ® , Engineered Valves ® , PRO Services ® , C'treat ® , i-ALERT ® and Habonim TM . 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's marketplace-recognized brands include Goulds Pumps TM , Bornemann®, Rheinhütte Pumpen®, Engineered Valves®, PRO Services®, C'treat®, i-ALERT® and, Habonim TM , In January 2024, we acquired Svanehøj Group A/S (Svanehøj) incorporating the Svanehøj® and Hamworthy Pumps® brand pumps into IP's portfolio.
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.
Our catalog of pads sold in independent aftermarket networks features technology designed to provide a range of braking performance levels. KONI The KONI business services four main end markets: railway rolling stock for freight and passenger trains; car and racing; bus, truck and trailer; and defense.
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.
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 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.
ITT also implements a robust environmental due diligence process during mergers and acquisitions. As a result of ITT’s ongoing compliance and diligence efforts, 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).
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.
We believe R&D is a source of competitive advantage and we continue to invest approximately 3% of revenue annually, in new product innovation and other R&D efforts. Cyclicality and Seasonality Many of the businesses in which we operate are subject to specific industry and general economic cycles.
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.
By creating a culture that supports our employees and recognizes merit, we positively impact the performance of our people and the global communities in which we operate. We align our efforts to our strategic workplace goals by building an environment where all ITTers feel empowered to fully engage, achieve their potential, and share ideas freely.
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.
In addition, we work closely with our customers to engineer solutions to fit their particular applications, thus enabling our customers to achieve their goals. For example, during 2024, we continued to invest in the Embedded Motor Drive (EMD), which is now in customer field trials.
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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.
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Additionally, in 2024, we continued our investments in solar energy by adding installations at our Orchard Park, New York, and Lancaster, Pennsylvania sites, with more efficiency projects planned. We are subject to stringent federal, state, local, and foreign environmental laws and regulations concerning air emissions, water discharges and waste disposal.
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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.
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The growing complexity and frequency of cyber threats underscore the need for robust cybersecurity and data governance across all business areas. ITT is dedicated to enhancing our cybersecurity measures to safeguard employee, customer, and partner data against current and future threats.
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Diversity, Equity and Inclusion Diversity, equity and inclusion (DEI) are key business priorities for ITT and core to our values as a company.
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Protecting data integrity is essential for fostering a high-performance culture, meeting customer needs, and ensuring our ongoing growth and success. For additional details regarding cybersecurity matters, see " Cybersecurity " within Item 1C.
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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.
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Higher Performance Culture & Engaged Meritocracy At ITT, fostering a high-performance culture and engaged meritocracy is core to our values and critical to our success as a company. We are committed to cultivating an environment where varied ideas and perspectives drive engagement, innovation, and better business outcomes.
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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.
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We believe our success is fueled by variety of thought, collaboration, and continuous learning from each other’s ideas and experiences. By fostering an engaged meritocracy, we position ourselves for sustained success in the global marketplace and the creation of long-term value for all stakeholders.
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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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur 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.
Biggest changeLegal 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.
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.
In addition, our existing competitors, or potential new competitors, may develop products that are cheaper and/or superior to our products, develop more efficient or effective methods of providing products and services, or adapt more quickly than we do to new technologies or evolving customer requirements.
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.
For example, the volatility of 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.
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.
The Company is dependent upon a variety of information technology IT systems, including business systems and communication systems, to operate its business. Over the past several years, we have been implementing new business systems at many of our sites, including within our shared services subsidiary, and we expect these implementations to continue for the next several years.
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. 18 Anti-takeover provisions in our organizational documents and Indiana law could delay or prevent a change in control.
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. Anti-takeover provisions in our organizational documents and Indiana law could delay or prevent a change in control.
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 14 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 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.
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.
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.
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 our third-party service providers will always be successful in eliminating or mitigating risks to our systems, networks or data.
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.
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, China, and elsewhere are uncertain, evolving and may be inconsistent across jurisdictions.
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.
Any disruptions, delays or deficiencies in the design or implementation of the new business 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.
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.
Given the AFSI threshold, the Corporate AMT was not applicable to the Company in 2024, 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.
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 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 2024 and 2023, approximately 67% of our total sales were to customers operating outside of the United States.
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.
The loss of this customer, or a reduction in this customer's market share could have a material adverse effect on our business, results of operations or financial condition. 15 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.
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.
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 2024.
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." 19
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." 20
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.
Refer to Note 21, 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.
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.
If our components fail to meet these standards or fail to adapt to evolving standards, it 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.
Maintaining and improving our competitive position will require our continued investment 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.
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.
We have divested a number of businesses, including as part of spin-offs in 1995, 2011, our sale of InTelCo Management LLC (InTelCo), the entity holding asbestos-related assets and liabilities in 2021, and Wolverine in 2024.
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.
Even the most well-protected information technology systems could be 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.
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.
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 and financial condition could be materially and adversely affected.
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.
In 2024, decreased availability of raw materials and component parts adversely affected our ability to deliver products to our customers and resulted in increased backlog.
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.
In addition, failure to implement the appropriate internal controls with respect to new business systems may result in the business systems producing inaccurate or unreliable information.
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.
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, the Middle East, and China-Taiwan), an epidemic or pandemic, 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, flood, 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.
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.
These implementations have required and will continue to require significant investment in capital and deployment of human resources. Potential flaws in implementing business systems or in the failure of any portion or module of the business system(s) may pose risks to our ability to operate successfully and efficiently.
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.
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 rates can negatively impact customer confidence, spending, and demand for our products and services.
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.
The primary foreign currencies to which we have exposure are the Euro, Chinese renminbi, Czech koruna, Danish krone, Singapore dollar, Polish zloty, South Korean won, Saudi riyal, Mexican peso, and Israeli new shekel.
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’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 business system, could adversely impact our business or financial results.
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.
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; and • our ability to hire and maintain qualified staff in these regions.
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.
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 2025.
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.
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 rule requiring extensive climate-related disclosures, California's Climate Accountability Laws, and the European Union's Corporate Sustainability Reporting Directive (CSRD), which will require third-party 17 assurance disclosures.
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.
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.
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.
Our customer's businesses, particularly those in the energy, chemical and mining industries, which represented approximately 11%, 8%, and 3%, respectively, of our 2024 revenue, are to varying degrees cyclical and have experienced, and may in the future experience, periodic downturns of varying severity.
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.
Although the counterparties to those divestitures may have agreed to indemnify us or assume certain liabilities relating to those divestitures, 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.
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.
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 the Middle East 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.
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.
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, impact our ability to sell products and control costs, thus our financial results have been, and may continue to be, adversely affected upon translation.
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.
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.
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.
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.
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.
Any new or continued trade disputes or increased tensions between the U.S. and other countries, and any governmental actions, including further increases of existing tariffs or the imposition of new tariffs, may continue to adversely impact demand for our products, increase our costs, and disrupt our supply chain.
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.
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. Countries are implementing legislation with widespread adoption of the Model GloBE Rules for Pillar Two. We continue to evaluate the Model GloBE Rules for Pillar Two and related legislation, and their potential impacts.
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.
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 20, Derivative Financial Instruments , for further information.
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.
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.
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.
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. Tariffs remain uncertain and may continue to have a negative impact to our business.
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.
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 2024 increases in raw material costs negatively impacted our financial results.
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.
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.
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.
In addition, although we have insurance for certain covered losses, there can be no assurance that such insurance will be sufficient. In addition, 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.
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.
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. 13 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.
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.
In response to prior tariffs, certain governments imposed retaliatory tariffs on various goods, and in response to new or increased U.S. tariffs, have threatened to similarly retaliate. Prior 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.
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 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.
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.
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.
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.
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. 12 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 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.
Failure to sustain our position in these matters could result in a material adverse effect on our financial statements. 18 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.
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.
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.
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.
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. From time to time, we enter into derivative contracts to hedge some of our foreign currency exposures.
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.
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 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.
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.
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.
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. 19 We are subject to laws, regulations and potential claims relating to product liability.
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 remainder of MT's sales to Continental in 2024 was generated from a 10-year agreement to supply Continental with aftermarket parts, which is effective through December 31, 2033, although there can be no assurance that we are able to retain this customer's business in the future.
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.
Continuing enactment of these regulations 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.
Third parties also could seek to hold us responsible for any of the liabilities that a counterparty agreed to assume.
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.
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.
We have experienced and in the future may continue to experience volatility in revenues, operating results and profitability primarily as a result of these uncertain global macroeconomic conditions. 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.
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 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.
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.
In addition, new laws and regulations that might reduce demand for oil and gas production or power generation may result in lower spending by some of 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 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.
Although we have been mitigating, and will continue attempting to mitigate, the impact of tariffs by supplier and customer negotiations, diversification strategies and pricing actions, there can be no assurance that our mitigation actions will be effective. At this time, it remains unclear what further measures will be implemented or if additional countries will impose retaliatory tariffs.
Removed
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.
Added
In addition, these conditions can negatively impact our customers and suppliers.
Removed
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.
Added
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.
Removed
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.
Added
Over the last seven years the U.S. government has undertaken a series of actions to increase tariffs on certain goods imported into the U.S. There is a possibility the current presidential administration may also impose new or increased U.S. import tariffs, initially focusing on goods from Mexico, Canada, and China, with the potential for additional countries to be affected.
Removed
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.
Added
These risks, in turn, could have a material adverse effect on our business results of operations and financial condition. 16 Our business is impacted by our customers' levels of capital investment, maintenance expenditures, production, and market cyclicality.
Removed
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.
Added
We have in the past and may in the future be subject to audits and investigations to evaluate our compliance with these requirements.
Removed
In addition, the counterparties to those divestitures may have agreed to indemnify us or assume certain liabilities relating to those divestitures.
Added
Although the impact of this provision was not material in 2024 and future impacts will be dependent on the extent of share repurchases made in future periods, there can be no assurance that our business operations and financial condition will not be materially impacted by this provision in the future.
Removed
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.
Added
Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.
Removed
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.
Removed
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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have established a proactive approach to identify and manage material cybersecurity threats which includes, but is not limited to, the following: • 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.
Biggest changeWe have established a proactive approach to identify and manage material cybersecurity threats which includes, but is not limited to, the following: • An end-user cybersecurity awareness program that requires annual training completion, monthly simulated phishing emails to assess user susceptibility and provide training on emerging threats, and ongoing awareness communications throughout the year to reinforce learnings and raise awareness of specific, actively exploited threat vectors; • 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.
During 2024, 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.
For a discussion of prospective risks related to potential cybersecurity incidents, please refer to Item 1A, Risk Factors . 21 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.
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).
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).
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.
These include GIAC Incident Handler Certification (GCIH), GIAC Certified Systems and Network Auditor (GSNA), GIAC Foundational Cybersecurity Technologies (GFACT) and others. 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.
Added
The qualifications of our cybersecurity team include the following industry-recognized certifications: ISC2 Certified Information Systems Security Professional (CISSP), Certified Cloud Security Professional (CCSP), Certified Ethical Hacker (C|EH), Security+, and IAPP Certified Information Privacy Professional (CIPP/US). Additionally, our cybersecurity team possesses several certifications from the SANS Institute’s Global Information Assurance Certification (GIAC) program, the top cybersecurity accreditation body in the world.
Added
The CIO has over 21 years of experience in information technology, including 14 years at ITT, while the CISO brings over 28 years of experience in information technology, with the last 22 years focused on information security and cybersecurity across various industries.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur material properties account for over 90% of the total square feet of our properties. Motion Technologies Industrial Process Connect & Control Technologies Total Number of Owned Locations 13 11 5 29 Number of Leased Locations 9 22 6 37 Total Locations 22 33 11 66 21
Biggest changeOur material properties account for over 95% of the total square feet of our properties. Motion Technologies Industrial Process Connect & Control Technologies Total Number of Owned Locations 11 17 3 31 Number of Leased Locations 6 24 12 42 Total Locations 17 41 15 73 22
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.
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, 2024. We consider our properties containing 25,000 square feet or more, which primarily consist of manufacturing locations, to be material.
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.
ITEM 2. PROPERTIES We own or lease approximately 180 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeImmediately 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.
Biggest changePrior 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 Chief Legal Officer since January 2023. She was appointed as Secretary and Chief Compliance Officer in October 2023. Ms.
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.
Savi is currently a director of MSA Safety Inc. and serves as the chair of 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.
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.
Descriptions of certain legal proceedings to which the Company is a party are contained in Note 18, Commitments and Contingencies , to the Consolidated Financial Statements. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of the Company as of February 3, 2025, are listed below.
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.
Caprais held leadership roles in finance at Marelli, and earlier held positions of increasing responsibility in finance at Valeo across North America and Europe. 23 Cheryl de Mesa Graziano has served as our Vice President and Chief Accounting Officer since November 2022.
Marino 49 Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer Fernando Roland 50 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.
Marino 50 Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Secretary Emrana Sheikh 53 Senior Vice President and Chief Human Resources Officer Luca Savi has served as our Chief Executive Officer, President and a director of the Company since January 2019.
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.
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. Emrana Sheikh joined ITT as our Senior Vice President and Chief Human Resources Officer in February 2025. Prior to joining ITT, Ms.
Name Age Current Title Luca Savi 58 President and Chief Executive Officer Davide Barbon 54 Senior Vice President and President, Motion Technologies and Asia Pacific Emmanuel Caprais 49 Senior Vice President and Chief Financial Officer Cheryl de Mesa Graziano 51 Vice President and Chief Accounting Officer Maurine C.
Name Age Current Title Luca Savi 59 President and Chief Executive Officer Davide Barbon 55 Senior Vice President and President, Motion Technologies and Asia Pacific Emmanuel Caprais 50 Senior Vice President and Chief Financial Officer Cheryl de Mesa Graziano 52 Vice President and Chief Accounting Officer Michael Guhde 55 Senior Vice President and President, Connect & Control Technologies Bartek Makowiecki 46 Senior Vice President, Chief Strategy Officer & President, Industrial Process Lori B.
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.
Makowiecki previously 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.
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.
Prior to joining ITT, she was Chief Accounting Officer of Party City Holdco Inc. where she held positions of increasing responsibility from November 2019 through October 2022. She previously held 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.
Removed
Lembesis 57 Senior Vice President and Chief Human Resources Officer Bartek Makowiecki 45 Senior Vice President, Strategy and Business Development Lori B.
Added
Before 2013, Ms. de Mesa Graziano held finance leadership roles at other companies including IBM and Financial Executives International. Michael Guhde has served as our Senior Vice President and President, Connect & Control Technologies since February 2024. Prior to joining ITT Mr.
Removed
(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.
Added
Guhde served as Vice President and General Manager at Illinois Tool Works (ITW) from June 2018 to February 2024. Prior to ITW, he spent more than twenty years at Parker Hannifin in general manager, global sales and operations roles. Bartek Makowiecki has served as our Senior Vice President, Chief Strategy Officer & President, Industrial Process since September 2024. Mr.
Removed
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.
Added
Sheikh served as Chief Talent & Diversity Officer at Kenvue Inc. since July 2024. Prior to that, Ms. Sheikh was Vice President – People Experience, Strategy and Innovation at Kenvue from May 2023 through July 2024. Ms. Sheikh also served in various roles of increasing responsibility in human resources at Johnson & Johnson from August 2018 to May 2023.
Removed
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.
Added
In addition, Ms. Sheikh held various leadership roles at Asian Paints, Mahindra & Mahindra and Federal Express Corporation.
Removed
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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe 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).
Biggest changeThere was $975 of remaining capacity left under the 2023 Plan as of December 31, 2024. We will utilize the 2023 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.
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.
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, 2024, the Company did not offer or sell any equity securities that were not registered under the Securities Act.
It shows the share price appreciation of a $100 investment made on December 31, 2018, assuming any dividends paid are reinvested.
It shows the share price appreciation of a $100 investment made on December 31, 2019, 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. $ 100.00 $ 154.58 $ 162.96 $ 218.32 $ 175.74 $ 261.68 S&P 400 Mid-Cap $ 100.00 $ 126.17 $ 143.39 $ 178.85 $ 155.42 $ 180.90 S&P 400 Capital Goods $ 100.00 $ 132.75 $ 159.09 $ 203.10 $ 182.76 $ 251.41 This graph is not, and is not intended to be, indicative of future performance of our common stock.
COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 ITT Inc. $ 100.00 $ 162.96 $ 218.32 $ 175.74 $ 261.68 $ 204.63 S&P 400 Mid-Cap $ 100.00 $ 143.39 $ 178.85 $ 155.42 $ 180.90 $ 163.30 S&P 400 Capital Goods $ 100.00 $ 159.09 $ 203.10 $ 182.76 $ 251.41 $ 218.29 This graph is not, and is not intended to be, indicative of future performance of our common stock.
There were approximately 5,706 holders of record of our common stock on February 9, 2024.
There were 5,358 holders of record of our common stock on February 7, 2025.
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.
In February 2025, the Company repurchased 0.2 shares for $25.6 under the 2023 Plan. 25 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, 2024.
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.
ISSUER PURCHASES OF EQUITY SECURITIES On October 30, 2019, the Board of Directors approved an indefinite term $500 share repurchase program (the 2019 Plan). During the second quarter of 2024, we exhausted the remaining capacity 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).
Removed
Repurchases under this authorization will begin upon the completion of the 2019 Plan.
Added
We made no open-market share repurchases of our common stock during the quarter ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating income (loss) $ 230.8 $ 243.6 $ 107.5 $ (53.7) $ 528.2 Loss on sale of business (a) — — 15.3 — 15.3 Restructuring costs 4.0 4.6 1.3 — 9.9 Impacts related to Russia-Ukraine war 1.3 1.2 — — 2.5 Acquisition- and divestiture-related costs — — 2.4 — 2.4 Other (b) 0.1 — (0.1) (3.7) (3.7) Adjusted operating income (loss) $ 236.2 $ 249.4 $ 126.4 $ (57.4) $ 554.6 Operating margin 15.8 % 21.6 % 15.4 % 16.1 % Adjusted operating margin 16.2 % 22.1 % 18.1 % 16.9 % Year Ended December 31, 2022 Operating income (loss) $ 208.5 $ 187.6 $ 115.8 $ (43.9) $ 468.0 Gain on sale of long-lived assets (c) — (15.5) — — (15.5) Impacts related to the Russia-Ukraine war 3.1 4.8 — — 7.9 Restructuring costs 2.7 1.3 — (0.2) 3.8 Acquisition-related costs — 3.2 — 0.5 3.7 Asset impairment charges — — — 1.7 1.7 Other (d) 1.3 1.2 — 1.7 4.2 Adjusted operating income (loss) $ 215.6 $ 182.6 $ 115.8 $ (40.2) $ 473.8 Operating margin 15.2 % 19.3 % 17.9 % 15.7 % Adjusted operating margin 15.7 % 18.8 % 17.9 % 15.9 % (a) Relates to the sale of our Matrix business in December 2023.
Biggest changeOperating income (loss) $ 314.6 $ 276.3 $ 146.1 $ (61.0) $ 676.0 Gain on sale of Wolverine business (47.8) — — — (47.8) Restructuring costs 2.7 3.0 2.4 — 8.1 Acquisition-related costs — 4.2 2.8 — 7.0 Impacts related to Russia-Ukraine war (0.6) — — — (0.6) Adjusted operating income (loss) $ 268.9 $ 283.5 $ 151.3 $ (61.0) $ 642.7 Operating margin 21.7 % 20.3 % 17.7 % 18.6 % Adjusted operating margin 18.6 % 20.8 % 18.3 % 17.7 % Year Ended December 31, 2023 Operating income (loss) $ 230.8 $ 243.6 $ 107.5 $ (53.7) $ 528.2 Loss on sale of Matrix business — — 15.3 — 15.3 Restructuring costs 4.0 4.6 1.3 — 9.9 Impacts related to Russia-Ukraine war 1.3 1.2 — — 2.5 Acquisition-related costs — — 2.4 — 2.4 Other (a) 0.1 — (0.1) (3.7) (3.7) Adjusted operating income (loss) $ 236.2 $ 249.4 $ 126.4 $ (57.4) $ 554.6 Operating margin 15.8 % 21.6 % 15.4 % 16.1 % Adjusted operating margin 16.2 % 22.1 % 18.1 % 16.9 % (a) Includes income from a recovery of costs associated with the 2020 lease termination of a legacy site. 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, restructuring, certain asset impairment charges, certain acquisition- and divestiture-related impacts, income tax settlements or adjustments, and unusual or infrequent items.
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 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 share of the relevant costs and that share can be reasonably estimated.
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.
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 33 agent and each lender.
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.
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 divided by revenue.
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.
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 multiple of $1 in excess thereof.
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.
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, 2024 and 2023, we had no outstanding borrowings under the 2021 Revolving Credit Agreement.
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.
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 2024, 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.
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.
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 (defined below), which may potentially be expanded to $1,050 under the agreement. In addition, we have market access to secure longer-term funding, if needed.
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.
See Note 5, 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.
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.
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 14, Debt , for further information.
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.
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 ( 2023 Annual Report ) for a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022.
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.
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 11, Goodwill and Other Intangible Assets, Net , to the Consolidated Financial Statements for more information.
(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.
(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 15, Postretirement Benefit Plans , for additional financial information related to our postretirement obligations.
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.
Our off-balance sheet arrangements as of December 31, 2024 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.
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.
See Note 18, 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.
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.
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 2024.
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.
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, 2024 compared to the year ended December 31, 2023, unless stated otherwise.
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.
We have not recorded any material loss contingencies under these guarantees, letters of credit and similar arrangements as of December 31, 2024 as the likelihood of nonperformance by the underlying obligors is considered remote.
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.
We believe 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, 2024 and 2023 are provided below.
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.
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, 2024 and 2023 are provided below.
(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.
(c) Other long-term obligations include amounts recorded in our Consolidated Balance Sheet as of December 31, 2024, including estimated environmental payments and employee compensation agreements. We estimate based on historical experience that we will spend, on average, approximately $5 per year on environmental investigation and remediation.
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.
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 and the tax deductibility under local tax rules.
The following table summarizes net cash derived from operating, investing, and financing activities for the years ended December 31, 2023 and 2022.
The following table summarizes net cash derived from operating, investing, and financing activities for the years ended December 31, 2024 and 2023.
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. 2023 2022 As of December 31 U.S. Pension Non-U.S. Pension Other Benefits Total U.S. Pension Non-U.S.
See Note 17, 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. 2024 2023 As of December 31 U.S. Pension Non-U.S. Pension Other Benefits Total U.S. Pension Non-U.S.
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.
Net cash distributions from foreign countries to the U.S. during the years ended December 31, 2024 and 2023 were $230.4 and $357.5, 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, 2024, we have access to short- and long-term funding sources.
The following table provides a summary of key performance indicators for 2023 in comparison to 2022.
The following table provides a summary of key performance indicators for 2024 in comparison to 2023.
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 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 $176.5 of guarantees, letters of credit and similar arrangements outstanding as of December 31, 2024, primarily pertaining to commercial or performance guarantees and insurance matters.
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.
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 2024, we delivered strong financial results, which included revenue and operating income growth, operating margin expansion, EPS growth and effective deployment of capital.
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.
See Note 17, Capital Stock , and Note 21, 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.
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.
We currently estimate 2025 contributions to our pension and other postretirement benefits plans of approximately $10. See Note 15, 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, 2024.
Year Ended December 31, 2023 Motion Technologies Industrial Process Connect & Control Technologies Corporate ITT Inc.
Year Ended December 31, 2024 Motion Technologies Industrial Process Connect & Control Technologies Corporate ITT Inc.
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 environmental reserve of $54.9 at December 31, 2024, 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.
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.
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, 2024 was $95.9. See Note 18, Commitments and Contingencies , to the Consolidated Financial Statements for more information.
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.
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, 2024, our recorded environmental liability was $54.9.
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).
In the first quarter of 2025, we declared a quarterly dividend of $0.351 per share for shareholders of record on March 6, 2025, which will be paid on March 31, 2025. 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).
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.
Therefore, we cannot provide any assurance as to what level of dividends, if any, will be paid in the future. Aggregate dividends declared in 2024 were $104.8, compared to $95.9 in 2023, reflecting annual per share amounts of $1.276 and $1.160, respectively.
(“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.
Italian Term Loan 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.
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.
See Note 14, 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 the outstanding U.S. term loan maturing in September 2027.
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.
Our other employee-related benefit plans are generally unfunded plans as well. The projected benefit obligation of these plans declined by $8.2 during 2024 due to an increase in the discount rate. Contributions to our U.S. and non-U.S. pension and other postretirement plans were $10.5 and $9.5 during 2024 and 2023, respectively, which were used to fund participant benefits.
For the Year Ended December 31 2023 2022 Change Organic growth (a) Motion Technologies $ 1,457.8 $ 1,374.0 6.1 % 4.9 % Industrial Process 1,129.6 971.0 16.3 % 14.3 % Connect & Control Technologies 699.4 645.6 8.3 % 5.7 % Eliminations (3.8) (2.9) Total Revenue $ 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.
For the Year Ended December 31 2024 2023 Change Organic growth (a) Motion Technologies $ 1,447.8 $ 1,457.8 (0.7) % 4.9 % Industrial Process 1,361.0 1,129.6 20.5 % 7.8 % Connect & Control Technologies 825.1 699.4 18.0 % 9.3 % Eliminations (3.2) (3.8) Total Revenue $ 3,630.7 $ 3,283.0 10.6 % 6.9 % (a) See the section titled " Key Performance Indicators and Non-GAAP Measures " for a definition and reconciliation of organic revenue.
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.
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.
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.
We believe that reporting organic revenue provides useful information to investors by helping identify underlying trends in our business and 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, 2024 is provided below.
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.
Our environmental accruals are reviewed quarterly and adjusted if needed based on 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.
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.
Our average daily outstanding commercial paper balance for the years ended 2024 and 2023 was $338.5 and $366.9, respectively, and the maximum outstanding commercial paper during each of those respective years was $455.0 and $669.9.
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.
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.
Per share amounts are reported in ones and may not calculate due to rounding. 2023 2022 Income from Continuing Operations EPS Income from Continuing Operations EPS Reported $ 411.4 $ 4.97 $ 368.3 $ 4.40 Loss on sale of business (a) 15.3 0.19 — — Restructuring costs 9.9 0.12 3.8 0.05 Impacts from Russia-Ukraine war 2.5 0.03 7.9 0.09 Acquisition- and divestiture-related costs 2.4 0.03 3.7 0.04 Gain on sale of long-lived assets (b) — — (15.5) (0.19) Asset impairment charges — — 1.7 0.02 Other (benefits) costs (c) (2.3) (0.04) 4.2 0.06 Total tax (benefit) expense of adjustments (d) (6.2) (0.07) (0.3) — Tax-related special items (e) (2.0) (0.02) (2.3) (0.03) Adjusted $ 431.0 $ 5.21 $ 371.5 $ 4.44 (a) Relates to the sale of our Matrix business in December 2023.
Per share amounts are reported in ones and may not calculate due to rounding. 2024 2023 Income from Continuing Operations EPS Income from Continuing Operations EPS Reported $ 518.4 $ 6.30 $ 411.4 $ 4.97 (Gain) loss on sale of businesses (a) (47.8) (0.58) 15.3 0.19 Restructuring costs 8.1 0.09 9.9 0.12 Acquisition-related expenses 7.0 0.08 2.4 0.03 Impacts from Russia-Ukraine war (0.6) (0.01) 2.5 0.03 Other pre-tax special items (b) — — (2.3) (0.04) Net tax benefit of pre-tax special adjustments (3.3) (0.04) (6.2) (0.07) Other tax-related special items (c)(d) 0.5 0.02 (2.0) (0.02) Adjusted $ 482.3 $ 5.86 $ 431.0 $ 5.21 (a) Relates to the sale of our Wolverine business in July 2024 and Matrix business in December 2023.
Our credit ratings as of December 31, 2023 were as follows: Rating Agency Short-Term Ratings Long-Term Ratings Standard & Poor’s A-2 BBB Moody’s Investors Service P-2 Baa2 Fitch Ratings F1 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.
Our credit ratings as of December 31, 2024 were as follows: Rating Agency Short-Term Ratings Long-Term Ratings Standard & Poor’s A-2 BBB Moody’s Investors Service P-2 Baa1 Fitch Ratings F1 BBB+ In November 2024, Moody's upgraded ITT's senior unsecured rating, from Baa2 to Baa1.
Payments Due By Period Total 2024 2025 to 2026 2027 to 2028 Beyond 2029 Long-term debt $ 8.0 $ 2.3 $ 4.7 $ 1.0 $ — Operating leases 104.9 23.1 37.1 21.7 23.0 Purchase obligations (a) 133.2 120.0 10.5 — 2.7 Postretirement benefit payments (b) 150.2 11.7 20.9 20.0 97.6 Other long-term obligations (c) 68.5 8.6 18.1 6.3 35.5 Total $ 464.8 $ 165.7 $ 91.3 $ 49.0 $ 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.
Payments Due By Period Total 2025 2026 to 2027 2028 to 2029 Beyond 2030 Long-term debt $ 233.7 $ 0.3 $ 232.9 $ 0.3 $ 0.2 Operating leases 111.6 26.8 41.0 20.8 23.0 Purchase obligations (a) 85.3 81.0 1.0 — 3.3 Postretirement benefit payments (b) 129.3 10.4 18.7 18.4 81.8 Other long-term obligations (c) 75.8 7.1 24.5 6.3 37.9 Total $ 635.7 $ 125.6 $ 318.1 $ 45.8 $ 146.2 In addition to the amounts presented in the table above, we have recorded liabilities for uncertain tax positions of $6.5 in our Consolidated Balance Sheet as of December 31, 2024.
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.
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. Countries are implementing legislation with widespread adoption of the Model GloBE Rules for Pillar Two. We continue to evaluate the Model GloBE Rules for Pillar Two and related legislation, and their potential impacts.
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.
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.
For the Year Ended December 31 2023 2022 Operating activities $ 538.0 $ 277.7 Investing activities (181.0) (255.1) Financing activities (432.3) (83.3) Foreign exchange 3.6 (25.8) Total net cash used in continuing operations $ (71.7) $ (86.5) Net cash from discontinued operations (0.3) 0.1 Net change in cash and cash equivalents $ (72.0) $ (86.4) Operating Activities 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.
For the Year Ended December 31 2024 2023 Operating activities $ 562.6 $ 538.0 Investing activities (817.9) (181.0) Financing activities 234.9 (432.3) Foreign exchange (29.0) 3.6 Total net cash used in continuing operations $ (49.4) $ (71.7) Net cash from discontinued operations (0.5) (0.3) Net change in cash and cash equivalents $ (49.9) $ (72.0) Operating Activities The increase in net cash from operating activities of $24.6 was primarily driven by higher operating income and favorable net working capital impacts primarily from focused inventory management and timing of accounts receivable collections, offset by higher compensation payments in the current year.
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.
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.
Environmental remediation reserves are subject to numerous inherent uncertainties that affect our ability to estimate our share of the costs.
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.
(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.
See Note 21, Acquisitions, Investments, and Divestitures , to the Consolidated Financial Statements for further information. (b) 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.
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.
Our dividends declared in 2024 of $1.28 per share represented a 10% increase over the dividends per share declared of $1.16 in 2023. Global Macroeconomic Conditions During 2024, geopolitical uncertainty, supply chain disruptions, labor shortages, and raw material constraints impacted the Company's performance. These items are described further below.
The increases in gross profit and gross margin were primarily driven by an increase in revenue, described above in the section titled "R evenue" , 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" .
The increases in gross profit and gross margin were primarily driven by higher revenue, including pricing actions, described above in the section titled "Revenue" , partially offset by increases in material and labor costs, as discussed above in the section titled "Global Macroeconomic Conditions" .
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.
The ITT Italia Credit Agreement had an initial maturity of three years and provided for term loan borrowings in an aggregate principal amount of €300 million (or $328.9), €275 million (or $301.5) of which were used to finance the Company’s acquisition of Svanehøj, which closed on January 19, 2024.
Pension Other Benefits Total Fair value of plan assets $ — $ 0.4 $ — $ 0.4 $ — $ 0.4 $ — $ 0.4 Projected benefit obligation 11.2 73.2 66.2 150.6 11.2 67.9 70.7 149.8 Funded status $ (11.2) $ (72.8) $ (66.2) $ (150.2) $ (11.2) $ (67.5) $ (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.
Pension Other Benefits Total Fair value of plan assets $ — $ 0.3 $ — $ 0.3 $ — $ 0.4 $ — $ 0.4 Projected benefit obligation 10.4 61.2 58.0 129.6 11.2 73.2 66.2 150.6 Funded status $ (10.4) $ (60.9) $ (58.0) $ (129.3) $ (11.2) $ (72.8) $ (66.2) $ (150.2) Our non-U.S. pension plans, which are typically not funded due to local regulations, had a decrease in projected benefit obligation of $12.0 during 2024, primarily due to foreign currency impacts, the settlement of a plan in connection with the divestiture of Wolverine and a higher discount rate.
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.
During 2024, we exhausted the remaining capacity under the 2019 Plan. All repurchased shares are retired immediately following the repurchases. During the years ended December 31, 2024 and 2023, we spent $104.5 and $60.0, respectively, on open-market share repurchases under the share repurchasing plans.
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.
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. As of December 31, 2024, Pillar Two taxes have not had a significant impact on ITT's financial statements.
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.
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.
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.
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.
DISCUSSION OF FINANCIAL RESULTS 2023 VERSUS 2022 For the Year Ended December 31 2023 2022 Change Revenue $ 3,283.0 $ 2,987.7 9.9 % Gross profit 1,107.3 922.3 20.1 % Operating expenses 579.1 454.3 27.5 % Operating income 528.2 468.0 12.9 % Interest and other non-operating expense, net 8.7 6.2 40.3 % Income tax expense 104.8 91.1 15.0 % Income from continuing operations attributable to ITT Inc. 411.4 368.3 11.7 % Net income attributable to ITT Inc. $ 410.5 $ 367.0 11.9 % Gross margin 33.7 % 30.9 % 280 bp Operating expense to revenue ratio 17.6 % 15.2 % 240 bp Operating margin 16.1 % 15.7 % 40 bp Effective tax rate 20.2 % 19.7 % 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.
For additional discussion of the risks related to global macroeconomic conditions, see Part I, Item 1A, Risk Factors , herein. 28 DISCUSSION OF FINANCIAL RESULTS 2024 VERSUS 2023 For the Year Ended December 31 2024 2023 Change Revenue $ 3,630.7 $ 3,283.0 10.6 % Gross profit 1,247.3 1,107.3 12.6 % Operating expenses 571.3 579.1 (1.3) % Operating income 676.0 528.2 28.0 % Interest and other non-operating expense, net 28.4 8.7 226.4 % Income tax expense 125.8 104.8 20.0 % Income from continuing operations attributable to ITT Inc. 518.4 411.4 26.0 % Net income attributable to ITT Inc. $ 518.3 $ 410.5 26.3 % Gross margin 34.4 % 33.7 % 70 bp Operating expense to revenue ratio 15.7 % 17.6 % (190) bp Operating margin 18.6 % 16.1 % 250 bp Effective tax rate 19.4 % 20.2 % (80) bp All comparisons included within the Discussion of Financial Results for 2024 versus 2023 refer to results for the year ended December 31, 2024 compared to the year ended December 31, 2023, unless stated otherwise.
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.
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, acquisitions, and divestitures that may or may not qualify as discontinued operations.
For the Year Ended December 31 2023 2022 Change Interest expense $ 19.2 $ 10.9 76.1 % Interest income (8.8) (4.5) 95.6 % Non-operating postretirement (benefit) costs, net (0.4) 1.1 136.4 % Other non-operating income, net (1.3) (1.3) — % Total interest and other non-operating expense, net $ 8.7 $ 6.2 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".
For the Year Ended December 31 2024 2023 Change Interest expense $ 36.6 $ 19.2 90.6 % Interest income (6.6) (8.8) (25.0) % Non-operating postretirement cost (benefit), net 0.2 (0.4) (150.0) % Other non-operating income, net (1.8) (1.3) 38.5 % Total interest and other non-operating expense, net $ 28.4 $ 8.7 226.4 % The increase in interest and other non-operating expense, net for the year ended December 31, 2024 was primarily due to higher interest expense related to our long-term debt in connection with our acquisitions of Svanehøj and kSARIA and a higher average interest rate on our commercial paper borrowings.
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.
Inflationary Pressures Inflationary pressures, driven by factors such as supply chain disruptions and the ongoing Russia-Ukraine and Middle East conflicts, have led to increased prices for energy and raw materials we use in our production processes, including commodities such as steel, oil, copper, and tin.
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%.
Excluding the impacts from acquisition, divestiture, and foreign currency translation, organic revenue increased $64.0 or 9.3%. GROSS PROFIT Gross profit for 2024 was $1,247.3, reflecting a gross margin of 34.4%. Gross profit for 2023 was $1,107.3, reflecting a gross margin of 33.7%.
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.
ITT also recognized tax benefits of $4.9 from the filing of an amended 2017 consolidated federal tax return in 2023. 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.
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 Corporate AMT was effective for the Company beginning in 2023. Given the AFSI threshold, the Corporate AMT was not applicable to the Company in 2024, but the Corporate AMT may have potential impacts on our future U.S. tax expense, cash taxes and effective tax rate.
Motion Technologies Industrial Process Connect & Control Technologies Eliminations Total ITT 2023 Revenue $ 1,457.8 $ 1,129.6 $ 699.4 $ (3.8) $ 3,283.0 Acquisitions — (15.0) (15.5) — (30.5) Foreign currency translation (17.0) (4.7) (1.4) — (23.1) 2023 Organic revenue 1,440.8 1,109.9 682.5 (3.8) 3,229.4 2022 Revenue 1,374.0 971.0 645.6 (2.9) 2,987.7 Organic revenue growth $ 66.8 $ 138.9 $ 36.9 $ (0.9) $ 241.7 Percentage change 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.
Motion Technologies Industrial Process Connect & Control Technologies Eliminations Total ITT 2024 Revenue $ 1,447.8 $ 1,361.0 $ 825.1 $ (3.2) $ 3,630.7 Less: Acquisitions — 156.2 73.9 — 230.1 Less: Foreign currency translation (9.7) (13.0) (2.0) — (24.7) 2024 Organic revenue 1,457.5 1,217.8 753.2 (3.2) 3,425.3 2023 Revenue 1,457.8 1,129.6 699.4 (3.8) 3,283.0 Less: Divestitures 68.7 — 10.2 0.1 79.0 2023 Organic revenue 1,389.1 1,129.6 689.2 (3.9) 3,204.0 Organic revenue growth $ 68.4 $ 88.2 $ 64.0 $ 221.3 Percentage change 4.9 % 7.8 % 9.3 % 6.9 % 38 • “Adjusted Operating Income” is defined as operating income adjusted to exclude special items that include, but are not limited to, restructuring, certain asset impairment charges, certain acquisition- and divestiture-related impacts, and unusual or infrequent operating items.
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.
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.
Program $ 184.9 $ 299.2 Commercial Paper Outstanding - Euro Program — 149.1 Total Commercial Paper Outstanding $ 184.9 448.3 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.
As of December 31 2024 2023 Commercial Paper Outstanding - U.S. Program $ 424.4 $ 184.9 The increase in commercial paper outstanding from December 31, 2023 to December 31, 2024 was primarily related to acquisition activity that was partially financed using commercial paper, and timing of repayments.
As of December 31 2023 2022 Current portion of long-term debt $ 2.3 $ 2.2 Non-current portion of long-term debt 5.7 7.7 Total long-term debt $ 8.0 $ 9.9 See Note 15, Debt , for further information. Term Loan On January 12, 2024, ITT Italia S.r.l.
The table below provides our long-term debt outstanding as of December 31, 2024 and 2023. As of December 31 2024 2023 Current portion of long-term debt $ 2.6 $ 2.3 Non-current portion of long-term debt 232.6 5.7 Total long-term debt $ 235.2 $ 8.0 See Note 14, Debt , for further information. U.S.
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.
Research and development (R&D) expenses increased $13.7 for the year ended December 31, 2024, primarily driven by acquisitions, higher personnel costs and continued strategic investments to support innovation and new product development, partially offset by the divestiture of the Wolverine business.
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 higher rate in 2023 was also due to expense 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.
Revenue Operating Income Operating Margin EPS $3,283 $528 16.1% $4.97 10% Increase 13% Increase 40bp Increase 13% Increase Organic Revenue Adjusted Operating Income Adjusted Operating Margin Adjusted EPS $3,229 $555 16.9% $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.
Revenue Operating Income Operating Margin EPS $3,631 $676 18.6% $6.30 10.6% Increase 28.0% Increase 250bp Increase 26.8% Increase Organic Revenue Adjusted Operating Income Adjusted Operating Margin Adjusted EPS $3,425 $643 17.7% $5.86 6.9% Increase 15.9% Increase 80bp Increase 12.5% 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.
For the Year Ended December 31 2023 2022 Change Motion Technologies $ 230.8 $ 208.5 10.7 % Industrial Process 243.6 187.6 29.9 % Connect & Control Technologies 107.5 115.8 (7.2) % Corporate & Other (53.7) (43.9) 22.3 % Total operating income $ 528.2 $ 468.0 12.9 % Operating Margin: Motion Technologies 15.8 % 15.2 % 60 bp Industrial Process 21.6 % 19.3 % 230 bp Connect & Control Technologies 15.4 % 17.9 % (250) bp Consolidated ITT 16.1 % 15.7 % 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.
For the Year Ended December 31 2024 2023 Change Motion Technologies $ 314.6 $ 230.8 36.3 % Industrial Process 276.3 243.6 13.4 % Connect & Control Technologies 146.1 107.5 35.9 % Corporate & Other (61.0) (53.7) 13.6 % Total operating income $ 676.0 $ 528.2 28.0 % Operating Margin: Motion Technologies 21.7 % 15.8 % 590 bp Industrial Process 20.3 % 21.6 % (130) bp Connect & Control Technologies 17.7 % 15.4 % 230 bp Consolidated ITT 18.6 % 16.1 % 250 bp MT operating income for the year ended December 31, 2024 increased $83.8 primarily due to a $47.8 gain on sale of the Wolverine business.
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.
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 Acquisitions, Goodwill and Other Intangible Assets Our business acquisitions typically result in the creation of goodwill and other intangible asset balances, and these balances affect the amount and timing of future period amortization expense, as well as expense we could possibly incur as a result of an impairment charge.
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.
Continuing enactment of these regulations 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.
For the Year Ended December 31 2023 2022 Change General and administrative expenses (a) $ 302.6 $ 217.2 39.3 % Sales and marketing expenses 174.0 156.9 10.9 % Research and development expenses 102.6 96.5 6.3 % Gain on sale of long-lived assets (0.1) (16.3) (99.4) % Total operating expenses $ 579.1 $ 454.3 27.5 % By Segment: Motion Technologies $ 173.7 $ 140.9 23.3 % Industrial Process 207.6 150.0 38.4 % Connect & Control Technologies 144.1 119.6 20.5 % Corporate & Other 53.7 43.8 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.
For the Year Ended December 31 2024 2023 Change General and administrative expenses $ 296.6 $ 294.5 0.7 % Sales and marketing expenses 205.7 174.0 18.2 % Research and development expenses 116.3 102.6 13.4 % (Gain) loss on sale of businesses (47.8) 8.1 ** (Gain) loss on sale of long-lived assets 0.5 (0.1) ** Total operating expenses $ 571.3 $ 579.1 (1.3) % By Segment: Motion Technologies $ 116.6 $ 173.7 (32.9) % Industrial Process 240.5 207.6 15.8 % Connect & Control Technologies 152.9 144.1 6.1 % Corporate & Other 61.3 53.7 14.2 % ** Percentage not deemed meaningful.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−1 removed7 unchanged
Biggest changeIn 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.
Biggest changeSince 2020, the cost of raw materials, including commodities such as steel, that we use in our production processes has increased. The impact of higher commodity prices on our financial results during 2024 was partially mitigated by fixed-price supply contracts with suppliers as well as by pricing actions.
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.
This calculation 44 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.
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.
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 $6 to $8. We estimate that a hypothetical 10% change in prices for any other commodity would not be material to our financial statements.
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.
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. During 2023, central banks around the world raised interest rates to counter inflation.
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.
Based on a sensitivity analysis, a hypothetical 10% change in the foreign currency exchange rates for the year ended December 31, 2024 would have impacted our pre-tax earnings by approximately $43.
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.
The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding floating rate, which consists primarily of commercial paper and the US term loan. While the Company is exposed to global interest rate fluctuations, it is most affected by fluctuations in U.S. interest rates.
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.
Despite the rate cuts in 2024, high interest rates continue to impact 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.
As of December 31, 2024, our outstanding commercial paper was $424.5, with a weighted average interest rate of 4.80%. We estimate that a hypothetical increase in interest rates of 100 basis points would result in approximately $4.3 of additional annual interest expense based on current borrowing levels.
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.
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, Danish krone, Singapore Dollar, Polish zloty, South Korean won, Saudi riyal, Mexican peso, and Israeli new shekel.
Removed
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.

Other ITT 10-K year-over-year comparisons