ITT Q2 2026 earnings: SPX FLOW drives growth but weighs on GAAP margin

ITT Inc. (NYSE: ITT) reported Q2 2026 revenue of $1.473 billion, up 51.5% year over year, while diluted EPS fell 37.5% to $0.95 from $1.52. Adjusted EPS increased 18.2% to $2.08, reflecting organic growth and the first full-quarter contribution from SPX FLOW, while acquisition-related expenses weighed on GAAP profitability.

Core earnings data

Reported growth benefited substantially from SPX FLOW, but ITT also generated 12.7% organic revenue growth. Higher volume, pricing and productivity lifted adjusted operating income, while intangible amortization and other acquisition-related costs limited GAAP operating income growth to 3.0%.

The resulting gap between GAAP and adjusted results was the defining feature of the quarter.

Business and segment performance

Total orders increased 53%, including 13% organic growth, supported by SPX FLOW and continued aerospace and defense demand. Segment results were uneven on a GAAP basis because most acquisition-related amortization and inventory step-up costs affected Flow Technologies.

Flow Technologies added $437 million of revenue, reflecting SPX FLOW’s first full-quarter contribution and organic demand for energy-transition pump projects and valves. However, organic orders declined 3% against strong prior-year energy-transition and oil-and-gas project activity. Reported operating income fell 17.9% because of acquisition-related intangible amortization and inventory step-up costs, even as adjusted operating income increased 107.8%.

Motion Technologies’ organic revenue rose 1.6%, led by the Friction aftermarket and KONI defense operations. Productivity, volume and favorable foreign exchange lifted operating income 15.3% and expanded operating margin by 180 basis points to 21.3%.

Connect & Control Technologies produced 17.3% organic growth as defense programs, industrial connectors and aerospace components contributed. Operating income increased 35.4%, while margin expanded 280 basis points to 20.6% despite higher costs and strategic investments.

SPX FLOW lifted revenue while acquisition costs compressed GAAP margins

The SPX FLOW acquisition expanded ITT’s reported revenue and adjusted operating income, but it also increased intangible amortization to $62.6 million from $11.6 million. That helped push GAAP operating margin down 580 basis points even though adjusted operating margin improved by 40 basis points.

The acquisition also affected results below operating income. Interest expense rose to $49.7 million from $12.6 million, while the effective tax rate and diluted weighted-average share count increased. These factors explain why adjusted operating income grew 54.9% but adjusted EPS increased by a more moderate 18.2%.

Cash flow and balance sheet

Quarterly operating cash flow rose 24.3% to $191.1 million, and free cash flow increased 18.0% to $162.0 million. Operating performance and the addition of SPX FLOW supported cash generation, although higher interest and income-tax payments offset part of the benefit.

The acquisition materially changed the balance sheet. Cash and equivalents declined to $590.8 million at July 4 from $1.743 billion at the end of 2025, while short-term borrowings increased to $858.4 million and long-term debt reached $2.870 billion. Goodwill rose to $3.874 billion and other intangible assets increased to $3.076 billion, largely reflecting the acquired business.

For the first six months of 2026, ITT recorded $3.543 billion of acquisition-related cash outflows. The company also issued $2.868 billion of long-term debt and recorded $506.1 million of net commercial-paper borrowings during that six-month period.

2026 guidance

ITT raised its full-year revenue, margin, EPS and cash outlook, citing year-to-date commercial and operational performance. The release did not provide the previous numeric ranges, so the size of each revision cannot be calculated.

Management perspective

CEO and President Luca Savi said ITT’s legacy operations generated double-digit organic order and revenue growth, with defense programs gaining momentum in Connect & Control Technologies. He also noted that SPX FLOW’s Nutrition and Health and Mixers businesses helped produce a book-to-bill ratio above 1.1, while the integration was progressing ahead of the company’s plan.

Risks investors need to watch

• SPX FLOW integration: Future performance depends on ITT integrating the acquired operations and realizing expected synergies within the planned timeframe.
• Acquisition-related earnings pressure: Intangible amortization, acquisition costs, higher interest expense and a larger share count are weighing on GAAP EPS despite adjusted profit growth.
• Flow Technologies orders: Organic orders in the segment declined 3% against strong prior-year project activity, creating a potential source of revenue volatility if project demand does not replenish the backlog.
• Inflation and trade costs: Inflation already offset part of Flow Technologies’ adjusted profit growth. Tariffs, raw-material volatility and supply-chain disruption could add further cost or demand pressure.

Summary

ITT’s Q2 2026 results combined double-digit organic growth with a substantial first full-quarter contribution from SPX FLOW. Adjusted profitability and cash flow improved, but acquisition amortization, financing costs and related items sharply reduced GAAP margins and EPS. The main issues to monitor are whether SPX FLOW integration converts the larger revenue base into stronger GAAP profitability, whether Flow Technologies’ organic orders recover, and how effectively cash generation offsets the acquisition-related increase in debt.