ITT Inc (NYSE: ITT) reported Q4 EPS of $1.01, $0.09 better than the analyst estimate of $0.92. Revenue for the quarter came in at $708.6 million versus the consensus estimate of $656.97 million.

• Delivered 200 basis points improvement in segment operating margin, 150 basis points improvement in adjusted segment operating margin
• Generated full year operating cash flow of $436 million, up 22%; free cash flow of $372 million, up 40%
• Executed cost actions of over $100 million in 2020, producing incremental benefits in 2021
• Announces a 30% increase in quarterly dividend to $0.22 per share
• Initiates 2021 EPS guidance of $3.12 to $3.48, adjusted EPS guidance of $3.45 to $3.75, up 8% to 17% adjusted

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

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

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

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

GUIDANCE:

ITT Inc sees FY2021 EPS of $3.45-$3.75, versus the consensus of $3.60.

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

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