UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~April 2, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from to

Commission File Number: 001-05672

ITT INC.


State of Indiana						81-1197930
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

1133 Westchester Avenue, White Plains, NY 10604

(Principal Executive Office)

Telephone Number: (914) 641-2000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	ITT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

☑

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~November~~May 2, ~~2021,~~2022, there were ~~85.6~~83.5 million shares of Common Stock (par value $1.00 per share) of the issuer outstanding.

TABLE OF CONTENTS


ITEM	ITEM		PAGE	ITEM		PAGE
PART I – FINANCIAL INFORMATION	PART I – FINANCIAL INFORMATION			PART I – FINANCIAL INFORMATION
1.	1.	Financial Statements (unaudited)		1.	Financial Statements (unaudited)
					Consolidated Condensed Statements of Operations	1
		Consolidated Condensed Statements of Operations	1		Consolidated Condensed Statements of Comprehensive Income	2
		Consolidated Condensed Statements of Comprehensive Income	2		Consolidated Condensed Balance Sheets	3
		Consolidated Condensed Balance Sheets	3		Consolidated Condensed Statements of Cash Flows	4
		Consolidated Condensed Statements of Cash Flows	4		Consolidated Condensed Statements of Changes in Shareholders’ Equity	5
		Consolidated Condensed Statements of Changes in Shareholders’ Equity	5		Notes to Consolidated Condensed Financial Statements:
		Notes to Consolidated Condensed Financial Statements:			Note 1. Description of Business and Basis of Presentation	6
		Note 1. Description of Business and Basis of Presentation	6		Note 2. Recent Accounting Pronouncements	7
		Note 2. Recent Accounting Pronouncements	7		Note 3. Segment Information	7
		Note 3. Segment Information	7		Note 4. Revenue	8
		Note 4. Revenue	9
		Note 5. Restructuring Actions	10		Note 5 . Income Taxes	9
		Note 6. Income Taxes	11		Note 6 . Earnings Per Share Data	10
		Note 7. Earnings Per Share Data	12		Note 7 . Receivables, Net	10
		Note 8. Receivables, Net	12		Note 8 . Inventories, Net	11
		Note 9. Inventories, Net	13		Note 9 . Other Current and Non-Current Assets	11
		Note 10. Other Current and Non-Current Assets	13		Note 1 0 . Plant, Property and Equipment, Net	12
		Note 11. Plant, Property and Equipment, Net	14		Note 1 1 . Goodwill and Other Intangible Assets, Net	12
		Note 12. Goodwill and Other Intangible Assets, Net	14		Note 1 2 . Accrued Liabilities and Other Non-Current Liabilities	13
		Note 13. Accrued Liabilities and Other Non-Current Liabilities	15		Note 1 3 . Debt	13
		Note 14. Debt	16
		Note 15. Postretirement Benefit Plans	17		Note 14. Long-Term Incentive Employee Compensation	14
		Note 16. Long-Term Incentive Employee Compensation	18		Note 15. Capital Stock	15
		Note 17. Capital Stock	18		Note 16. Accumulated Other Comprehensive Loss	15
		Note 18. Accumulated Other Comprehensive Loss	19		Note 17. Commitments and Contingencies	16
		Note 19. Commitments and Contingencies	19		Note 18. Derivative Financial Instruments	17
		Note 20. Derivative Financial Instruments	22		Note 19. Acquisitions	17

2.	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
		Overview	23		Overview	18
		Discussion of Financial Results	25		Discussion of Financial Results	19
		Liquidity	30		Liquidity	23
		Key Performance Indicators and Non-GAAP Measures	32		Key Performance Indicators and Non-GAAP Measures	25
		Recent Accounting Pronouncements	35		Recent Accounting Pronouncements	28
		Critical Accounting Estimates	35		Critical Accounting Estimates	28
3.	3.	Quantitative and Qualitative Disclosures about Market Risk	35	3.	Quantitative and Qualitative Disclosures about Market Risk	28
4.	4.	Controls and Procedures	35	4.	Controls and Procedures	28
PART II – OTHER INFORMATION	PART II – OTHER INFORMATION			PART II – OTHER INFORMATION
1.	1.	Legal Proceedings	36	1.	Legal Proceedings	29
1A.	1A.	Risk Factors	36	1A.	Risk Factors	29
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	37	2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
3.	3.	Defaults Upon Senior Securities	37	3.	Defaults Upon Senior Securities	29
4.	4.	Mine Safety Disclosures	37	4.	Mine Safety Disclosures	30
5.	5.	Other Information	37	5.	Other Information	30
6.	6.	Exhibits	38	6.	Exhibits	31
		Signature	39		Signature	32

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the SEC). The SEC maintains a website at www.sec.gov on which you may access our SEC filings. In addition, we make available free of charge at ~~www.itt.com/investors~~www.investors.itt.com copies of materials we file with, or furnish to, the SEC as soon as reasonably practical after we electronically file or furnish these reports, as well as other important information that we disclose from time to time. Information contained on our website, or that can be accessed through our website, does not constitute a part of this Quarterly Report on Form 10-Q (this Report). We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website.

Our corporate headquarters are located at 1133 Westchester Avenue, White Plains, New York 10604 and the telephone number of this location is (914) 641-2000.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

Some of the information included herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather represent only a belief regarding future events based on current expectations, estimates, assumptions and projections about our business, future financial results and the industry in which we operate, and other legal, regulatory and economic developments. These forward-looking statements include, but are not limited to, future strategic plans and other statements that describe the company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future events and future operating or financial performance.

We use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “future,” “may,” “will,” “could,” “should,” “potential,” “continue,” “guidance” and other similar expressions to identify such forward-looking statements. Forward-looking statements are uncertain and, by their nature, many are inherently unpredictable and outside of ITT’s control, and involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements.

Where in any forward-looking statement we express an expectation or belief as to future results or events, such expectation or belief is based on current plans and expectations of our management, expressed in good faith and believed to have a reasonable basis. However, ~~there can be no~~we cannot provide any assurance that the expectation or belief will occur or that anticipated results will be achieved or accomplished.

Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:

•impacts on our business due to the COVID-19 pandemic, including:

◦variant strains of the virus, as well as the timing, effectiveness and availability of, and people’s receptivity to, vaccines or other medical remedies;

◦disruptions to our operations and demand for our products, increased costs, disruption of supply chain and other constraints in the availability of key commodities and other necessary services;

◦government-mandated site closures, employee illness, skilled labor shortages, the impact of potential travel restrictions, stay-in-place restrictions, and vaccination requirements on our business and workforce; and

◦customer and supplier bankruptcies, impacts to the global economy and financial markets, and liquidity challenges in accessing capital markets;

•uncertain global economic and capital markets conditions, including those due to COVID-19, trade disputes between the U.S. and its trading partners, ~~the new U.S. administration,~~ political and social unrest, and the availability and fluctuations in prices of steel, oil, copper, tin, and other commodities;

•volatility in raw material prices and our suppliers’ ability to meet quality and delivery requirements;

•failure to manage the distribution of products and services effectively;

•failure to compete successfully and innovate in our markets;

•failure to protect our intellectual property rights or violations of the intellectual property rights of others;

•the extent to which there are quality problems with respect to manufacturing processes or finished goods;

•the risk of cybersecurity breaches;

•loss of or decrease in sales from our most significant customers;

•risks due to our operations and sales outside the U.S. and in emerging markets;

•the impacts on our business from Russia’s invasion of Ukraine, and the global response to it;

•fluctuations in foreign currency exchange rates and the impact of such fluctuations on our ~~effective tax rate, including as a result~~hedging arrangements;

•fluctuations in interest rates and the impact of ~~possible tax reform legislation in the U.S.;~~such fluctuations on our cost of debt;

•fluctuations in demand or customers’ levels of capital investment and maintenance expenditures, especially in the oil and gas, chemical, and mining markets, or changes in our customers’ anticipated production schedules, especially in the commercial aerospace market;

•~~failure to manage the distribution of products and services effectively;~~

•the risk of material business interruptions, particularly at our manufacturing facilities;

•~~risks due to our operations~~risk of liabilities from past divestitures and ~~sales outside the U.S. and in emerging markets;~~

•~~the extent to which there are quality problems with respect to manufacturing processes or finished goods;~~

•~~loss of or decrease in sales from our most significant customers;~~

•~~fluctuations in foreign currency exchange rates;~~spin-offs;

•failure of portfolio management strategies, including cost-saving initiatives, to ~~compete successfully and innovate in our markets;~~meet expectations;

•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, including the impact of the COVID-19 vaccine mandate on our ability to continue to participate in federal contracting;~~government;

•~~failure to protect~~fluctuations in our ~~intellectual property rights or violations~~effective tax rate, including as a result of possible tax reform legislation in the ~~intellectual property rights of others;~~

•~~the risk of cybersecurity breaches;~~

•~~changes in laws relating to the use and transfer of personal~~U.S. and other ~~information;~~

•~~failure of portfolio management strategies, including cost-saving initiatives, to meet expectations;~~jurisdictions;

•changes in environmental laws or regulations, discovery of previously unknown or more extensive contamination, or the failure of a potentially responsible party to perform;

•failure to comply with the U.S. Foreign Corrupt Practices Act (or other applicable anti-corruption legislation), export controls and trade sanctions, including tariffs;

•risk of product liability claims and litigation; and

•~~risk~~changes in laws relating to the use and transfer of ~~liabilities from past divestitures~~personal and ~~spin-offs.~~other information.

More information on factors that could cause actual results or events to differ materially from those anticipated is included in Part II, Item 1A, “Risk Factors” herein, as well as in our reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (particularly under the caption “Risk Factors”), our Quarterly Reports on Form 10-Q and in other documents we file from time to time with the SEC.

The forward-looking statements included in this Report speak only as of the date of this Report. We undertake no obligation (and expressly disclaim any obligation) to update any forward-looking statements, whether written or oral or as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Revenue $ 689.6 $ 591.2 $ 2,079.6 $ 1,769.2
Costs of revenue 467.6 400.6 1,404.0 1,205.6
Gross profit 222.0 190.6 675.6 563.6
General and administrative expenses 55.9 47.1 168.2 148.8
Sales and marketing expenses 37.4 33.4 112.4 110.7
Research and development expenses 22.5 19.7 70.0 61.3
Asbestos-related costs (benefit), net — 141.4 (74.4) 116.7
Restructuring costs 4.5 11.5 8.2 42.5
Asset impairment charges — — — 16.3
Operating income (loss) 101.7 (62.5) 391.2 67.3
Interest and non-operating expenses (income), net 0.5 1.2 (4.3) 4.0
Income (loss) from continuing operations before income tax expense (benefit) 101.2 (63.7) 395.5 63.3
Income tax expense (benefit) 14.1 (16.2) 182.7 (19.6)
Income (loss) from continuing operations 87.1 (47.5) 212.8 82.9
Income from discontinued operations, net of tax benefit (expense) of $0.5, $0.5, $0.5, and $(0.2), respectively 0.9 1.2 0.9 3.9
Net income (loss) 88.0 (46.3) 213.7 86.8
Less: Income attributable to noncontrolling interests 0.5 0.5 1.0 0.8
Net income (loss) attributable to ITT Inc. $ 87.5 $ (46.8) $ 212.7 $ 86.0
Amounts attributable to ITT Inc.:
Income (loss) from continuing operations, net of tax $ 86.6 $ (48.0) $ 211.8 $ 82.1
Income from discontinued operations, net of tax 0.9 1.2 0.9 3.9
Net income (loss) attributable to ITT Inc. $ 87.5 $ (46.8) $ 212.7 $ 86.0
Earnings (loss) per share attributable to ITT Inc.:
Basic:
Continuing operations $ 1.01 $ (0.55) $ 2.46 $ 0.95
Discontinued operations 0.01 0.01 0.01 0.04
Net income (loss) $ 1.02 $ (0.54) $ 2.47 $ 0.99
Diluted:
Continuing operations $ 1.00 $ (0.55) $ 2.45 $ 0.94
Discontinued operations 0.01 0.01 0.01 0.04
Net income (loss) $ 1.01 $ (0.54) $ 2.46 $ 0.98
Weighted average common shares – basic 85.9 86.4 86.1 86.8
Weighted average common shares – diluted 86.3 86.4 86.6 87.4



For the Three Months Ended	April 2, 2022		April 3, 2021
Revenue	$	726.2	$	698.4
Cost of revenue	507.8		469.4
Gross profit	218.4		229.0
General and administrative expenses	60.4		58.1
Sales and marketing expenses	38.4		36.7
Research and development expenses	25.0		24.3



Operating income	94.6		109.9
Interest and non-operating income, net	(0.2)		(1.3)
Income from continuing operations before income tax expense	94.8		111.2
Income tax expense	19.5		24.7


Net income	75.3		86.5
Less: Income attributable to noncontrolling interests	0.5		0.3
Net income attributable to ITT Inc.	$	74.8	$	86.2






Earnings per share attributable to ITT Inc.:
Basic	$	0.88	$	1.00



Diluted	$	0.88	$	0.99




Weighted average common shares – basic	84.8		86.3
Weighted average common shares – diluted	85.2		86.9

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Operations.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(IN MILLIONS)

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Net income (loss) $ 88.0 $ (46.3) $ 213.7 $ 86.8
Other comprehensive (loss) income:
Net foreign currency translation adjustment (21.5) 23.5 (43.1) (25.7)
Net change in postretirement benefit plans, net of tax expense of $0.8, $0.6, $0.6, and $1.2, respectively 3.1 1.8 3.1 3.6
Other comprehensive (loss) income (18.4) 25.3 (40.0) (22.1)
Comprehensive income (loss) 69.6 (21.0) 173.7 64.7
Less: Comprehensive income attributable to noncontrolling interests 0.5 0.5 1.0 0.8
Comprehensive income (loss) attributable to ITT Inc. $ 69.1 $ (21.5) $ 172.7 $ 63.9
Disclosure of reclassification and other adjustments to postretirement benefit plans:
Reclassification adjustments (see Note 15):
Amortization of prior service benefit, net of tax expense of $(0.2), $(0.3), $(0.8) and $(0.9), respectively $ (0.7) $ (1.0) $ (2.6) $ (2.9)
Amortization of net actuarial loss, net of tax benefit of $0.1, $0.6, $0.5 and $1.8, respectively 0.9 1.8 2.8 5.5
Other adjustments:
Net actuarial gain, net of tax expense of $0.9, $0.3, $0.9 and $0.3, respectively 2.9 1.0 2.9 1.0
Net change in postretirement benefit plans, net of tax $ 3.1 $ 1.8 $ 3.1 $ 3.6



For the Three Months Ended	April 2, 2022		April 3, 2021
Net income	$	75.3	$	86.5
Other comprehensive (loss):
Net foreign currency translation adjustment	(11.7)		(30.0)
Net change in postretirement benefit plans, net of tax expense of $(0.2) and $(0.1), respectively	(0.3)		—

Other comprehensive (loss)	(12.0)		(30.0)
Comprehensive income	63.3		56.5
Less: Comprehensive income attributable to noncontrolling interests	0.5		0.3
Comprehensive income attributable to ITT Inc.	$	62.8	$	56.2
Disclosure of reclassification adjustments to postretirement benefit plans:

Amortization of prior service benefit, net of tax expense of $(0.3) and $(0.3), respectively	$	(1.0)	$	(1.0)
Amortization of net actuarial loss, net of tax benefit of $0.1 and $0.2, respectively	0.7		1.0


Net change in postretirement benefit plans, net of tax	$	(0.3)	$	—

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Comprehensive Income.

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)


		October 2, 2021		December 31, 2020
As of the Period Ended						As of the Period Ended	April 2, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	585.8	$	859.8	Cash and cash equivalents	$	710.4	$	647.5
Receivables, net	Receivables, net	560.2		507.5		Receivables, net	615.8		555.1
Inventories, net	Inventories, net	413.7		360.5		Inventories, net	475.6		430.9
Other current assets	Other current assets	82.1		189.5		Other current assets	102.7		88.6
Total current assets	Total current assets	1,641.8		1,917.3		Total current assets	1,904.5		1,722.1
Non-current assets:						Non-current assets:
Plant, property and equipment, net	Plant, property and equipment, net	494.7		525.1		Plant, property and equipment, net	504.9		509.1
Goodwill	Goodwill	929.1		944.8		Goodwill	918.5		924.3
Other intangible assets, net	Other intangible assets, net	90.8		106.4		Other intangible assets, net	80.9		85.7
Asbestos-related assets		—		353.7
Deferred income taxes		36.9		158.3
Other non-current assets	Other non-current assets	260.9		272.0		Other non-current assets	316.8		324.2
Total non-current assets	Total non-current assets	1,812.4		2,360.3		Total non-current assets	1,821.1		1,843.3
Total assets	Total assets	$	3,454.2	$	4,277.6	Total assets	$	3,725.6	$	3,565.4
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Commercial paper and current maturities of long-term debt	Commercial paper and current maturities of long-term debt	$	198.6	$	106.8	Commercial paper and current maturities of long-term debt	$	487.0	$	197.6
Accounts payable	Accounts payable	342.0		306.8		Accounts payable	411.0		373.4
Accrued liabilities	Accrued liabilities	358.6		457.4		Accrued liabilities	344.3		357.3
Total current liabilities	Total current liabilities	899.2		871.0		Total current liabilities	1,242.3		928.3
Asbestos-related liabilities		—		840.6
Non-current liabilities:						Non-current liabilities:
Postretirement benefits	Postretirement benefits	215.1		227.5		Postretirement benefits	196.4		199.9
Other non-current liabilities	Other non-current liabilities	194.9		210.6		Other non-current liabilities	196.7		206.5
Total non-current liabilities	Total non-current liabilities	410.0		1,278.7		Total non-current liabilities	393.1		406.4
Total liabilities	Total liabilities	1,309.2		2,149.7		Total liabilities	1,635.4		1,334.7
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Common stock:	Common stock:					Common stock:
Authorized – 250.0 shares, $1 par value per share	Authorized – 250.0 shares, $1 par value per share					Authorized – 250.0 shares, $1 par value per share
Issued and outstanding – 85.6 shares and 86.5 shares, respectively		85.6		86.5
Issued and outstanding – 83.6 shares and 85.5 shares, respectively						Issued and outstanding – 83.6 shares and 85.5 shares, respectively	83.6		85.5
Retained earnings	Retained earnings	2,376.8		2,319.3		Retained earnings	2,334.6		2,461.6
Total accumulated other comprehensive loss	Total accumulated other comprehensive loss	(319.4)		(279.4)		Total accumulated other comprehensive loss	(333.3)		(321.3)
Total ITT Inc. shareholders’ equity	Total ITT Inc. shareholders’ equity	2,143.0		2,126.4		Total ITT Inc. shareholders’ equity	2,084.9		2,225.8
Noncontrolling interests	Noncontrolling interests	2.0		1.5		Noncontrolling interests	5.3		4.9
Total shareholders’ equity	Total shareholders’ equity	2,145.0		2,127.9		Total shareholders’ equity	2,090.2		2,230.7
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	3,454.2	$	4,277.6	Total liabilities and shareholders’ equity	$	3,725.6	$	3,565.4

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Balance Sheets.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN MILLIONS)


		Nine Months Ended
		October 2, 2021		September 26, 2020
For the Three Months Ended						For the Three Months Ended	April 2, 2022		April 3, 2021
Operating Activities	Operating Activities					Operating Activities
Income from continuing operations attributable to ITT Inc.	Income from continuing operations attributable to ITT Inc.	$	211.8	$	82.1	Income from continuing operations attributable to ITT Inc.	$	74.8	$	86.2
Adjustments to income from continuing operations:	Adjustments to income from continuing operations:					Adjustments to income from continuing operations:
Depreciation and amortization	Depreciation and amortization	85.3		82.0		Depreciation and amortization	27.3		28.5
Equity-based compensation	Equity-based compensation	11.8		9.7		Equity-based compensation	3.7		3.3

Asbestos-related (benefit) costs, net		(74.4)		116.7

Asset impairment charges		—		16.3

Other non-cash charges, net	Other non-cash charges, net	17.9		33.5		Other non-cash charges, net	10.2		6.3
Asbestos-related payments, net		(14.9)		(8.9)
Divestiture of asbestos-related assets and liabilities		(398.0)		—

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Change in receivables	Change in receivables	(63.0)		77.8		Change in receivables	(70.7)		(50.1)
Change in inventories	Change in inventories	(62.6)		13.8		Change in inventories	(48.4)		(21.2)

Change in contract assets						Change in contract assets	(1.7)		0.6
Change in contract liabilities						Change in contract liabilities	11.8		(2.7)
Change in accounts payable	Change in accounts payable	48.1		(34.8)		Change in accounts payable	48.6		36.6
Change in accrued expenses	Change in accrued expenses	9.5		17.3		Change in accrued expenses	(42.5)		(12.4)
Change in income taxes	Change in income taxes	129.4		(63.9)		Change in income taxes	10.1		10.4
Other, net	Other, net	(28.8)		(23.5)		Other, net	(25.9)		(14.7)
Net Cash – Operating Activities	Net Cash – Operating Activities	(127.9)		318.1		Net Cash – Operating Activities	(2.7)		70.8
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(52.6)		(47.6)		Capital expenditures	(30.0)		(17.2)

Other, net	Other, net	(1.3)		(2.8)		Other, net	0.6		0.1
Net Cash – Investing Activities	Net Cash – Investing Activities	(53.9)		(50.4)		Net Cash – Investing Activities	(29.4)		(17.1)
Financing Activities	Financing Activities					Financing Activities
Commercial paper, net borrowings	Commercial paper, net borrowings	95.4		30.7		Commercial paper, net borrowings	290.7		(42.6)
Short-term revolving loans, borrowings		—		495.8
Short-term revolving loans, repayments		—		(524.7)
Long-term debt, issued		—		1.5

Long-term debt, repayments	Long-term debt, repayments	(1.3)		(1.3)		Long-term debt, repayments	—		(0.1)
Repurchase of common stock		(111.7)		(83.9)

Share repurchases under repurchase plan						Share repurchases under repurchase plan	(163.9)		(50.0)
Share repurchases from net settlement of employee stock incentive plans						Share repurchases from net settlement of employee stock incentive plans	(8.4)		(11.0)
Dividends paid	Dividends paid	(57.0)		(29.7)		Dividends paid	(22.4)		(19.1)
Other, net	Other, net	0.4		1.7		Other, net	0.6		—
Net Cash – Financing Activities	Net Cash – Financing Activities	(74.2)		(109.9)		Net Cash – Financing Activities	96.6		(122.8)
Exchange rate effects on cash and cash equivalents	Exchange rate effects on cash and cash equivalents	(18.5)		12.2		Exchange rate effects on cash and cash equivalents	(1.5)		(10.4)
Net cash – operating activities of discontinued operations	Net cash – operating activities of discontinued operations	0.7		0.2		Net cash – operating activities of discontinued operations	(0.1)		(0.1)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(273.8)		170.2		Net change in cash and cash equivalents	62.9		(79.6)
Cash and cash equivalents – beginning of year (includes restricted cash of $0.8 and $0.8, respectively)	Cash and cash equivalents – beginning of year (includes restricted cash of $0.8 and $0.8, respectively)	860.6		612.9		Cash and cash equivalents – beginning of year (includes restricted cash of $0.8 and $0.8, respectively)	648.3		860.6
Cash and Cash Equivalents – End of Period (includes restricted cash of $1.0 and $0.8, respectively)		$	586.8	$	783.1
Cash and Cash Equivalents – End of Period (includes restricted cash of $0.8 and $0.8, respectively)						Cash and Cash Equivalents – End of Period (includes restricted cash of $0.8 and $0.8, respectively)	$	711.2	$	781.0
Supplemental Disclosures of Cash Flow Information	Supplemental Disclosures of Cash Flow Information					Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:	Cash paid during the year for:					Cash paid during the year for:
Interest	Interest	$	3.3	$	2.6	Interest	$	0.5	$	0.2
Income taxes, net of refunds received	Income taxes, net of refunds received	$	50.2	$	40.9	Income taxes, net of refunds received	$	8.5	$	13.4

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Cash Flows.

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

As of and for the Three Months Ended
October 2, 2021
Common Stock Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Shareholders' Equity
(Shares) (Dollars)
July 3, 2021 86.1 86.1 $ 2,353.1 $ (301.0) $ 2.1 $ 2,140.3
Net income — — 87.5 — 0.5 88.0
Activity from stock incentive plans 0.1 0.1 4.9 — — 5.0
Share repurchases (0.6) (0.6) (49.7) — — (50.3)
Dividends declared ($0.22 per share) — — (19.0) — — (19.0)
Dividends to noncontrolling interest — — — — (0.4) (0.4)
Total other comprehensive loss, net of tax — — — (18.4) — (18.4)
Other — — — — (0.2) (0.2)
October 2, 2021 85.6 $ 85.6 $ 2,376.8 $ (319.4) $ 2.0 $ 2,145.0


As of and for the Three Months Ended April 2, 2022	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Shareholders' Equity
	(Shares)	(Dollars)












December 31, 2021	85.5	$	85.5	$	2,461.6	$	(321.3)	$	4.9	$	2,230.7
Net income	—	—		74.8		—		0.5		75.3
Shares issued and activity from stock incentive plans	0.3	0.3		4.1		—		—		4.4
Share repurchases under repurchase plan	(2.1)	(2.1)		(175.7)		—		—		(177.8)
Share repurchases from net settlement of employee stock incentive plans	(0.1)	(0.1)		(8.3)		—		—		(8.4)
Dividends declared ($0.264 per share)	—	—		(21.9)		—		—		(21.9)

Total other comprehensive loss, net of tax	—	—		—		(12.0)		—		(12.0)



April 2, 2022	83.6	$	83.6	$	2,334.6	$	(333.3)	$	5.3	$	2,090.2

As of and for the Nine Months Ended
October 2, 2021
December 31, 2020 86.5 $ 86.5 $ 2,319.3 $ (279.4) $ 1.5 $ 2,127.9
Net income — — 212.7 — 1.0 213.7
Activity from stock incentive plans 0.4 0.4 12.5 — — 12.9
Share repurchases (1.3) (1.3) (110.4) — — (111.7)
Dividends declared ($0.66 per share) — — (57.3) — — (57.3)
Dividends to noncontrolling interest — — — — (0.4) (0.4)
Total other comprehensive loss, net of tax — — — (40.0) — (40.0)
Other — — — — (0.1) (0.1)
October 2, 2021 85.6 $ 85.6 $ 2,376.8 $ (319.4) $ 2.0 $ 2,145.0

As of and for the Three Months Ended
September 26, 2020
June 27, 2020 86.3 $ 86.3 $ 2,398.2 $ (432.7) $ 3.2 $ 2,055.0
Net (loss) income — — (46.8) — 0.5 (46.3)
Activity from stock incentive plans 0.1 0.1 5.4 — — 5.5
Share repurchases — — (0.2) — — (0.2)
Dividends declared ($0.169 per share) — — (14.7) — — (14.7)
Total other comprehensive income, net of tax — — — 25.3 — 25.3
Other — — — — (0.1) (0.1)
September 26, 2020 86.4 $ 86.4 $ 2,341.9 $ (407.4) $ 3.6 $ 2,024.5

As of and for the Nine Months Ended
September 26, 2020
December 31, 2019 87.8 $ 87.8 $ 2,372.4 $ (385.3) $ 2.9 $ 2,077.8
Net income — — 86.0 — 0.8 86.8
Activity from stock incentive plans 0.5 0.5 10.9 — — 11.4
Share repurchases (1.9) (1.9) (82.0) — — (83.9)
Cumulative adjustment for accounting change — — (1.2) — — (1.2)
Dividends declared ($0.507 per share) — — (44.2) — — (44.2)
Total other comprehensive loss, net of tax — — — (22.1) — (22.1)
Other — — — — (0.1) (0.1)
September 26, 2020 86.4 $ 86.4 $ 2,341.9 $ (407.4) $ 3.6 $ 2,024.5















As of and for the Three Months Ended April 3, 2021
December 31, 2020	86.5	$	86.5	$	2,319.3	$	(279.4)	$	1.5	$	2,127.9
Net income	—	—		86.2		—		0.3		86.5
Shares issued and activity from stock incentive plans	0.3	0.3		3.2		—		—		3.5
Share repurchases under repurchase plan	(0.6)	(0.6)		(49.4)		—		—		(50.0)
Share repurchases from net settlement of employee stock incentive plans	(0.1)	(0.1)		(10.9)		—		—		(11.0)
Dividends declared ($0.22 per share)	—	—		(19.0)		—		—		(19.0)


Total other comprehensive loss, net of tax	—	—		—		(30.0)		—		(30.0)


April 3, 2021	86.1	$	86.1	$	2,329.4	$	(309.4)	$	1.8	$	2,107.9

The accompanying Notes to the Consolidated Condensed Financial Statements are an integral part of the Statements of Changes in Shareholders’ Equity.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLARS AND SHARES (EXCEPT PER SHARE AMOUNTS) IN MILLIONS, UNLESS OTHERWISE STATED)

NOTE 1

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

ITT Inc. is a diversified manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and energy markets. Unless the context otherwise indicates, references herein to “ITT,” “the Company,” and such words as “we,” “us,” and “our” include ITT Inc. and its subsidiaries. ITT operates through three reportable segments: Motion Technologies (MT), consisting of friction and shock and vibration equipment; Industrial Process (IP), consisting of industrial flow equipment and services; and Connect & Control Technologies (CCT), consisting of electronic connectors, fluid handling, motion control, composite materials and noise and energy absorption products. Financial information for our segments is presented in Note 3, Segment Information.

Russia-Ukraine Conflict

In ~~March 2020,~~February 2022, the ~~World Health Organization declared~~United States announced targeted economic sanctions on Russia and certain Russian citizens in response to Russia’s invasion of Ukraine. As described in Part I, Item IA, “Risk Factors” in our 2021 Annual Report for the ~~outbreak~~fiscal year ended December 31, 2021, our business may be sensitive to global economic conditions, which can be negatively impacted by instability in the geopolitical environment. Our annual sales directly to customers in Russia and Ukraine were approximately $38 for 2021.

During the first quarter of 2022, we recorded total charges of $8.8, primarily related to inventory and accounts receivable reserves, as a result of suspending our operations in Russia and to reflect the current macroeconomic conditions impacting some of our customers that sell or supply into this region. If circumstances worsen, we may experience a further reduction in demand and incur additional charges, including potential fixed asset impairments, severance and other reserves, which could have a material adverse impact on our business and financial results. For additional discussion of the ~~novel coronavirus (COVID-19) a pandemic, resulting in certain local government-mandated site closures. While most of our businesses were deemed essential, we have experienced and continue~~risks related to experience disruption in our operations due to supply chain challenges, decreased customer demand, and elevated safety standards to keep our employees safe. The Company continues to face certain risks and uncertainties resulting from the COVID-19 pandemic, including variant strains of the virus, as well as the timing, effectiveness, and availability of, and people’s receptivity to, COVID-19 vaccines or other medical remedies and potential impacts from mandatory vaccination requirements. Due to these uncertainties, the severity and extent of future impacts from COVID-19, including from variant strains of the virus, cannot be reasonably estimated at this time.Russia-Ukraine conflict, see Part II, Item 1A, “Risk Factors” herein.

Basis of Presentation

The unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the SEC and, in the opinion of management, reflect all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions) necessary to state fairly the financial position, results of operations, and cash flows for the periods presented. The Consolidated Condensed Balance Sheet as of December 31, ~~2020,~~2021, presented herein, has been derived from our audited balance sheet included in our Annual Report on Form 10-K (~~2020~~2021 Annual Report) for the year ended December 31, ~~2020~~2021 but does not include all disclosures required by ~~GAAP.~~accounting principles generally accepted in the United States (GAAP). We consistently applied the accounting policies described in the ~~2020~~2021 Annual Report in preparing these unaudited financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in our ~~2020~~2021 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes ~~available and may be impacted by the duration and severity of the COVID-19 pandemic.~~available. Estimates and assumptions are used for, but not limited to, revenue recognition, unrecognized tax benefits, deferred tax valuation allowances, projected benefit obligations for postretirement plans, accounting for business combinations, goodwill and other intangible asset impairment testing, environmental liabilities and assets, allowance for credit losses and inventory valuation. Actual results could differ from these estimates.

Effective July 1, 2021, the Company divested the entity holding legacy asbestos-related assets and liabilities to a third-party. As a result of the transaction, all associated asbestos-related assets and liabilities were removed from the Company’s consolidated balance sheet. See Note 19, ~~Commitments and Contingencies, for further information.~~

ITT’s quarterly financial periods end on the Saturday that is closest to the last day of the calendar quarter, except for the last quarterly period of the fiscal year, which ends on December ~~31st.~~31st. ITT’s ~~third~~first quarter for ~~2021~~2022 and ~~2020~~2021 ended on ~~October~~April 2, 2022 and April 3, 2021, ~~and September 26, 2020, respectively, and were both thirteen-week periods.~~respectively.

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2

RECENT ACCOUNTING PRONOUNCEMENTS

The Company considers the applicability and impact of all accounting standard updates (ASUs). ASUs not listed below were assessed and determined to be either not applicable or are expected to not have a material impact on our consolidated financial position or results of operations.

Recent Accounting Pronouncements Not Yet Adopted:

In ~~March 2020 and January~~October 2021, the FASB issued ASU ~~2020-04,~~ 2021-08~~Reference Rate Reform~~, Business Combinations (Topic ~~848)~~805): ~~Facilitation~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquiror on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current guidance, such assets and liabilities are recognized by the acquiror at fair value as of the ~~Effects of Reference Rate Reformon Financial Reporting~~acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. We are currently evaluating this guidance and ~~ASU 2021-01,~~ ~~Reference Rate Reform (Topic 848): Scope~~, respectively. Together, the ASUs provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance was effective beginning on March 12, 2020, and the Company may electplan to apply ~~the amendments prospectively through December 31, 2022.~~it during future periods in which we execute acquisitions. We do not expect that this guidance towill have a significant impact on our operating results, financial position, or cash ~~flows; however, we will continue to monitor the potential impact, if adopted.~~flows.

NOTE 3

SEGMENT INFORMATION

The Company’s segments are reported on the same basis used by our Chief Executive Officer, who is also our chief operating decision maker, for evaluating performance and for allocating resources. Our 3 reportable segments are referred to as Motion Technologies, Industrial Process, and Connect & Control Technologies.

Motion Technologies manufactures brake components and specialized sealing solutions, shock absorbers and damping technologies primarily for the global automotive, truck and trailer, public bus and rail transportation markets.

Industrial Process manufactures engineered fluid process equipment serving a diversified mix of customers in global industries such as chemical, energy, mining, and other industrial process markets and is a provider of plant optimization and efficiency solutions and aftermarket services and parts.

Connect & Control Technologies manufactures harsh-environment connector solutions, critical energy absorption, flow control components, and composite materials for the aerospace and defense, general industrial, medical, and energy markets.

Corporate and Other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, M&A due diligence, and other administrative costs, as well as charges related to certain matters, such as ~~asbestos~~environmental liabilities, and, ~~environmental liabilities,~~for 2021, asbestos-related impacts, that are managed at a corporate level and are not included in segment results when evaluating performance or allocating resources. Corporate and Other also includes research and development-related expenses associated with a subsidiary that does not constitute a reportable segment. Assets of the segments exclude general corporate assets, which principally consist of cash, investments, ~~asbestos-related receivables,~~ deferred taxes, and certain property, plant and equipment.

The following ~~tables present~~table presents our revenue, operating income, and operating margin for each segment.


	Revenue				Operating Income				Operating Margin
For the Three Months Ended	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Motion Technologies	$	370.1	$	369.1	$	59.7	$	76.0	16.1	%	20.6	%
Industrial Process	202.2		202.3		20.4		31.0		10.1	%	15.3	%
Connect & Control Technologies	154.6		127.3		25.7		11.8		16.6	%	9.3	%
Eliminations	(0.7)		(0.3)		—		—		—		—
Total segment results	726.2		698.4		105.8		118.8		14.6	%	17.0	%
Asbestos-related costs, net	—		—		—		(2.4)		—		—
Corporate and Other	—		—		(11.2)		(6.5)		—		—
Total Corporate and other costs	—		—		(11.2)		(8.9)		—		—
Total	$	726.2	$	698.4	$	94.6	$	109.9	13.0	%	15.7	%

The following table presents our total assets, capital expenditures, and depreciation & amortization expense for each segment.


As of and for the Three Months Ended	Total Assets				Capital Expenditures				Depreciation & Amortization
	April 2, 2022		December 31, 2021		April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Motion Technologies	$	1,336.1	$	1,272.8	$	22.8	$	13.5	$	15.8	$	15.7
Industrial Process	1,073.5		1,030.0		2.6		1.6		5.4		5.6
Connect & Control Technologies	724.7		719.3		2.5		1.9		5.4		5.5
Corporate and Other	591.3		543.3		2.1		0.2		0.7		1.7
Total	$	3,725.6	$	3,565.4	$	30.0	$	17.2	$	27.3	$	28.5

Revenue Operating Income Operating Margin
For the Three Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Motion Technologies $ 332.3 $ 271.8 $ 53.6 $ 50.4 16.1 % 18.5 %
Industrial Process 210.7 194.1 32.4 17.1 15.4 % 8.8 %
Connect & Control Technologies 147.1 125.9 25.2 16.4 17.1 % 13.0 %
Eliminations (0.5) (0.6) — — — —
Total segment results 689.6 591.2 111.2 83.9 16.1 % 14.2 %
Asbestos-related costs, net(a)
— — — (141.4) — —
Other Corporate costs — — (9.5) (5.0) — —
Total Corporate and other costs — — (9.5) (146.4) — —
Total $ 689.6 $ 591.2 $ 101.7 $ (62.5) 14.7 % (10.6) %

Revenue Operating Income Operating Margin
For the Nine Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Motion Technologies $ 1,045.0 $ 769.0 $ 194.3 $ 113.9 18.6 % 14.8 %
Industrial Process 626.9 614.7 94.9 44.5 15.1 % 7.2 %
Connect & Control Technologies 408.9 387.5 54.9 40.7 13.4 % 10.5 %
Eliminations (1.2) (2.0) — — — —
Total segment results 2,079.6 1,769.2 344.1 199.1 16.5 % 11.3 %
Asbestos-related benefit (costs), net(a)(b)
— — 74.4 (116.7) — —
Other Corporate costs — — (27.3) (15.1) — —
Total Corporate and other benefit (costs) — — 47.1 (131.8) — —
Total $ 2,079.6 $ 1,769.2 $ 391.2 $ 67.3 18.8 % 3.8 %

~~(a)~~The 2020 period includes the impact of extending the net asbestos measurement over the full time period we expected claims to be filed against InTelCo Management LLC (InTelCo), the entity holding legacy asbestos-related assets and liabilities.

~~(b)The 2021 period includes a pre-tax gain of $88.8 resulting from the divestiture of InTelCo. See Note 19,~~ ~~Commitments and Contingencies, for further information.~~

As of and for the Nine Months Ended Total Assets Capital
Expenditures Depreciation &
Amortization
October 2, 2021 December 31, 2020 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Motion Technologies $ 1,267.4 $ 1,202.3 $ 42.1 $ 32.0 $ 47.8 $ 44.5
Industrial Process 1,007.9 1,069.6 4.1 6.2 16.7 18.0
Connect & Control Technologies 721.7 720.5 5.3 8.4 16.6 17.5
Corporate(c)
457.2 1,285.2 1.1 1.0 4.2 2.0
Total $ 3,454.2 $ 4,277.6 $ 52.6 $ 47.6 $ 85.3 $ 82.0

~~(c)~~The decrease in Corporate total assets as of October 2, 2021 is primarily due to the divestiture of InTelCo, which occurred on July 1, 2021 and included a cash contribution of $398 to fund the entity. See Note 19, ~~Commitments and Contingencies, for further information.~~

NOTE 4

REVENUE

The following tables ~~represent~~present our revenue disaggregated by end market.


For the Three Months Ended October 2, 2021	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total
Auto and rail		$	323.7		$	—		$	—		$	(0.1)		$	323.6
Chemical and industrial pumps		—			164.6			—			—			164.6
Aerospace and defense		1.5			—			67.3			—			68.8
Oil and gas		—			46.1			10.0			—			56.1
General industrial		7.1			—			69.8			(0.4)			76.5
Total		$	332.3		$	210.7		$	147.1		$	(0.5)		$	689.6
Three Months Ended April 2, 2022																Three Months Ended April 2, 2022	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total

Auto and rail																Auto and rail		$	360.4		$	—		$	—		$	—		$	360.4
Chemical and industrial pumps																Chemical and industrial pumps		—			167.2			—			—			167.2
Aerospace and defense																Aerospace and defense		1.5			—			74.9			—			76.4
Energy																Energy		—			35.0			10.0			—			45.0
General industrial																General industrial		8.2			—			69.7			(0.7)			77.2
Total																Total		$	370.1		$	202.2		$	154.6		$	(0.7)		$	726.2

For the Nine Months Ended
October 2, 2021 Motion Technologies Industrial Process Connect & Control Technologies Eliminations Total
Auto and rail $ 1,021.9 $ — $ — $ (0.1) $ 1,021.8
Chemical and industrial pumps — 492.0 — — 492.0
Aerospace and defense 5.7 — 191.4 — 197.1
Oil and gas — 134.9 27.4 — 162.3
General industrial 17.4 — 190.1 (1.1) 206.4
Total $ 1,045.0 $ 626.9 $ 408.9 $ (1.2) $ 2,079.6


For the Three Months Ended September 26, 2020	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total
Auto and rail		$	268.6		$	—		$	—		$	—		$	268.6
Chemical and industrial pumps		—			154.3			—			—			154.3
Aerospace and defense		1.0			—			67.1			—			68.1
Oil and gas		—			39.8			7.4			—			47.2
General industrial		2.2			—			51.4			(0.6)			53.0
Total		$	271.8		$	194.1		$	125.9		$	(0.6)		$	591.2

Three Months Ended April 3, 2021																Three Months Ended April 3, 2021	Motion Technologies			Industrial Process			Connect & Control Technologies			Eliminations			Total

Auto and rail																Auto and rail		$	364.0		$	—		$	—		$	—		$	364.0
Chemical and industrial pumps																Chemical and industrial pumps		—			159.7			—			—			159.7
Aerospace and defense																Aerospace and defense		1.6			—			60.2			—			61.8
Energy																Energy		—			42.6			8.5			—			51.1
General industrial																General industrial		3.5			—			58.6			(0.3)			61.8
Total																Total		$	369.1		$	202.3		$	127.3		$	(0.3)		$	698.4

For the Nine Months Ended
September 26, 2020 Motion Technologies Industrial Process Connect & Control Technologies Eliminations Total
Auto and rail $ 756.6 $ — $ — $ (0.1) $ 756.5
Chemical and industrial pumps — 474.4 — — 474.4
Aerospace and defense 5.5 — 217.8 — 223.3
Oil and gas — 140.3 22.9 — 163.2
General industrial 6.9 — 146.8 (1.9) 151.8
Total $ 769.0 $ 614.7 $ 387.5 $ (2.0) $ 1,769.2

Contract Assets and Liabilities

Contract assets consist of unbilled amounts where revenue recognized exceeds customer billings, net of allowances for credit losses. Contract assets are included in other current assets and other non-current assets in our Consolidated Condensed Balance Sheet. Contract liabilities consist of advance customer payments and billings in excess of revenue recognized. Contract liabilities are included in accrued liabilities and other non-current liabilities in our Consolidated Condensed Balance Sheet.

The following table represents our net contract assets and liabilities.


		October 2, 2021			December 31, 2020			April 2, 2022		December 31, 2021
Current contract assets, net	Current contract assets, net		$	17.6		$	19.1		Current contract assets, net	$	22.0	$	20.6
Non-current contract assets, net	Non-current contract assets, net		0.3			—			Non-current contract assets, net	0.3		0.3
Current contract liabilities	Current contract liabilities		(39.9)			(56.2)			Current contract liabilities	(58.8)		(46.6)
Non-current contract liabilities	Non-current contract liabilities		(4.4)			(0.1)			Non-current contract liabilities	(4.4)		(4.4)
Net contract liabilities	Net contract liabilities		$	(26.4)		$	(37.2)		Net contract liabilities	$	(40.9)	$	(30.1)

During the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, we recognized revenue of ~~$8.3 and $46.0, respectively,~~$13.0 related to contract liabilities as of December 31, ~~2020.~~2021. The aggregate amount of the transaction price allocated to unsatisfied or partially satisfied performance obligations as of ~~October~~April 2, ~~2021~~2022 was ~~$861.6.~~$972.6. Of this amount, we expect to recognize approximately ~~$400~~$730 to ~~$420~~$750 of revenue ~~in the fourth quarter of 2021 and the remainder in 2022 and 2023.~~

~~NOTE 5~~

~~RESTRUCTURING ACTIONS~~

We have initiated various restructuring actions throughout our businesses during the past two years, including the 2020 Global Restructuring Plan described below. There are no other restructuring actions that are considered individually significant. The following table summarizes our total restructuring costs, which are presented separately in our Consolidated Condensed Statements of Operations.

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Severance and other employee-related $ 4.3 $ 10.9 $ 6.7 $ 41.8
Asset write-offs — — 0.6 —
Other 0.2 0.6 0.9 0.7
Total restructuring costs $ 4.5 $ 11.5 $ 8.2 $ 42.5
By segment:
Motion Technologies $ 4.1 $ — $ 4.1 $ 14.0
Industrial Process 0.5 10.2 1.4 18.1
Connect & Control Technologies (0.1) 1.3 2.4 8.0
Corporate and Other — — 0.3 2.4

~~The following table displays a rollforward of our restructuring liability, which is included within accrued liabilities on our Consolidated Condensed Balance Sheet.~~

October 2, 2021 September 26, 2020
Beginning balance - January 1 $ 19.1 $ 7.5
Restructuring costs 9.9 43.3
Reversal of prior accruals (1.7) (0.8)
Cash payments (11.3) (24.5)
Asset write-offs (0.6) —
Foreign exchange translation and other (0.7) 0.7
Ending balance $ 14.7 $ 26.2
By accrual type:
Severance and other employee-related $ 14.5 $ 25.8
Other 0.2 0.4

~~2020 Global Restructuring Plan~~

During 2020, we initiated an organizational-wide restructuring plan to reduce the overall cost structure of the Company primarily in response to a reduction in demand due to the COVID-19 pandemic. Through October 2, 2021, we have recognized restructuring charges of $45.6, including $43.8 in 2020, which are primarily related to involuntary severance costs. We expect to incur additional restructuring charges of approximately $2 during the remainder of 2021 to complete this action. Cash payments during the nine months ended October 2, 2021 were $10.3. The restructuring liability as of October 2, 2021 was $7.2, which we expect to be substantially paid by 2022.

NOTE 65

INCOME TAXES

The following table summarizes our income tax expense ~~(benefit)~~ and effective tax rate.


		Three Months Ended						Nine Months Ended
		October 2, 2021			September 26, 2020				October 2, 2021			September 26, 2020
Income tax expense (benefit)		$	14.1		$	(16.2)			$	182.7		$	(19.6)
For the Three Months Ended															For the Three Months Ended	April 2, 2022			April 3, 2021
Income tax expense															Income tax expense	$	19.5		$	24.7
Effective tax rate	Effective tax rate	13.9		%	25.4		%		46.2		%	(31.0)		%	Effective tax rate	20.6		%	22.2		%

The ~~income tax expense and~~ effective tax rate for the three months ended ~~October~~April 2, ~~2021 reflects a reduction in the current forecasted full-year effective tax rate primarily~~2022 declined 160 basis points to 20.6% due to ~~earnings mix, as well as a $1.9~~an increase in permanent tax ~~benefit from a valuation allowance reversal in Brazil.~~

~~The income tax expense and effective tax rate for the nine months ended October 2, 2021 reflects the reversal of previously recorded deferred tax assets of $116.9~~benefits, primarily related to ~~the Company’s divestiture of InTelCo. See Note 19,~~ ~~Commitments~~research and ~~Contingencies, for further information.~~

~~The income tax benefit~~development incentives in both foreign and effective tax rate for the three and nine months ended September 26, 2020 is primarily due to the tax benefit resulting from the asbestos remeasurement charge of $135.9 in the third quarter. Additionally, the effective tax rate during the three-month period in 2020 includes a benefit of $3.2 related to previously unrecognized tax benefits from statute of limitations expirations. The effective tax rate for the nine-month period in 2020 also includes tax benefits of $27.2 resulting from an internal reorganization in Europe. This reorganization resulted in a refined projection of future earnings, which will result in the realization of a portion of our deferred tax assets.

On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA), a $1.9 trillion COVID-19 stimulus bill to accelerate the United States' recovery from the economic and health effects of the COVID-19 pandemic. ARPA builds upon many of the measures in the Coronavirus Aid, Relief, and Economic Security Act from March 2020 (the 2020 CARES Act) and the Consolidated Appropriations Act from December 2020. The Act extends the employee retention credit through the end of 2021 and maintains the credit per employee per quarter initially included in the Consolidated Appropriations Act. During the three and nine months ended October 2, 2021, the Company recognized a benefit of $0.9 and $5.0, respectively, from the employee retention credit. During the three and nine months ended September 26, 2020, the Company recognized a benefit of $1.8 and $8.7, respectively. The benefit was recorded in operating income and related to the employer portion of payroll taxes. Certain non-U.S. jurisdictions have enacted similar stimulus measures. We continue to monitor any effects that may result from the ARPA and 2020 CARES Act or other similar legislation globally.U.S. jurisdictions.

The Company operates in various tax jurisdictions and is subject to examination by tax authorities in these jurisdictions. The Company is currently under examination in several jurisdictions including the Czech Republic, Germany, ~~Hong Kong,~~ India, Italy, and the U.S. The estimated tax liability calculation for unrecognized tax benefits considers uncertainties in the application of complex tax laws and regulations in various tax jurisdictions. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the 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 could decrease by approximately ~~$17~~$2 due to changes in audit status, expiration of statutes of limitations and other events. ~~In addition, the settlement of any future examinations relating to the 2011 and prior tax years could~~

119

~~result in changes in amounts attributable to the Company under its Tax Matters Agreement with Exelis Inc. and Xylem Inc. relating to the Company’s 2011 spin-off of those businesses.~~

NOTE 76

EARNINGS PER SHARE DATA

The following table provides a reconciliation of the data used in the calculation of basic and diluted earnings per share from continuing operations attributable to ITT.


		Three Months Ended		Nine Months Ended
		October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020
For the Three Months Ended						For the Three Months Ended	April 2, 2022	April 3, 2021
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	85.9	86.4	86.1	86.8	Basic weighted average common shares outstanding	84.8	86.3
Add: Dilutive impact of outstanding equity awards	Add: Dilutive impact of outstanding equity awards	0.4	—	0.5	0.6	Add: Dilutive impact of outstanding equity awards	0.4	0.6
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	86.3	86.4	86.6	87.4	Diluted weighted average common shares outstanding	85.2	86.9

~~The~~There were zero and 0.2 anti-dilutive shares related to equity stock unit awards excluded from the computation of diluted earnings per share for the three months ended September 26, 2020, excludes 0.5 of outstanding equity awards that, if included, would have an anti-dilutive effect on the diluted earnings per share. There were no anti-dilutive shares in any other periods.April 2, 2022 and April 3, 2021, respectively.

NOTE 87

RECEIVABLES, NET

The following table summarizes our receivables and associated allowance for credit losses.

October 2,
2021 December 31,
2020
Trade accounts receivable $ 536.5 $ 492.5
Notes receivable 20.5 11.0
Other 14.7 19.1
Receivables, gross 571.7 522.6
Less: Allowance for credit losses - receivables (11.5) (15.1)
Receivables, net $ 560.2 $ 507.5


	April 2, 2022			December 31, 2021
Trade accounts receivable		$	597.3		$	530.4
Notes receivable		18.4			19.2
Other		15.5			17.5
Receivables, gross		631.2			567.1
Less: Allowance for credit losses - receivables(a)		(15.4)			(12.0)
Receivables, net		$	615.8		$	555.1

The following table displays our allowance for credit losses for receivables and contract assets.

October 2,
2021 December 31,
2020
Allowance for credit losses - receivables $ 11.5 $ 15.1
Allowance for credit losses - contract assets 0.5 0.5
Total allowance for credit losses $ 12.0 $ 15.6


	April 2, 2022			December 31, 2021
Allowance for credit losses - receivables(a)		$	15.4		$	12.0
Allowance for credit losses - contract assets		0.5			0.5
Total allowance for credit losses		$	15.9		$	12.5

The following table displays a rollforward of our total allowance for credit losses.


		October 2, 2021			September 26, 2020				April 2, 2022			April 3, 2021
Total allowance for credit losses - January 1	Total allowance for credit losses - January 1		$	15.6		$	12.8	Total allowance for credit losses - January 1		$	12.5		$	15.6
Impact of adoption of ASU 2016-13			—			1.7
(Recoveries) charges to income			(2.7)			9.2

Charges (recoveries) to income(a)								Charges (recoveries) to income(a)		3.8			(0.2)
Write-offs	Write-offs		(0.8)			(5.1)		Write-offs		(0.3)			(0.1)
Foreign currency and other	Foreign currency and other		(0.1)			0.1		Foreign currency and other		(0.1)			(0.1)
Total allowance for credit losses - ending balance	Total allowance for credit losses - ending balance		$	12.0		$	18.7	Total allowance for credit losses - ending balance		$	15.9		$	15.2

(a) During the three months ended April 2, 2022, we recorded bad debt expense of $3.0 to reflect the current macroeconomic conditions impacting some of our customers in light of the Russia-Ukraine conflict. See Note 1, Description of Business and Basis of Presentation, for further information.

NOTE 98

INVENTORIES, NET

The following table summarizes our net inventories.


		October 2, 2021			December 31, 2020				April 2, 2022			December 31, 2021
Finished goods	Finished goods		$	73.5		$	63.1	Finished goods		$	76.1		$	73.0
Work in process	Work in process		84.9			77.5		Work in process		103.1			92.3
Raw materials	Raw materials		255.3			219.9		Raw materials		296.4			265.6
Inventories, net(a)	Inventories, net(a)		$	413.7		$	360.5	Inventories, net(a)		$	475.6		$	430.9

(a) During the three months ended April 2, 2022, we recorded inventory reserves of $5.4 primarily related to finished goods inventories that we had previously intended to deliver to customers in Russia. See Note 1, Description of Business and Basis of Presentation, for further information.

NOTE 109

OTHER CURRENT AND NON-CURRENT ASSETS

The following table summarizes our other current and non-current assets.


		October 2, 2021			December 31, 2020				April 2, 2022			December 31, 2021

Advance payments and other prepaid expenses	Advance payments and other prepaid expenses		$	35.9		$	39.6	Advance payments and other prepaid expenses		$	57.6		$	44.1
Current contract assets, net								Current contract assets, net		22.0			20.6
Prepaid income taxes	Prepaid income taxes		19.7			29.0		Prepaid income taxes		6.9			10.4
Current contract assets, net			17.6			19.1
Asbestos-related assets (see Note 19)			—			91.0

Other	Other		8.9			10.8		Other		16.2			13.5
Other current assets	Other current assets		$	82.1		$	189.5	Other current assets		$	102.7		$	88.6
Other employee benefit-related assets	Other employee benefit-related assets		$	117.4		$	113.9	Other employee benefit-related assets		$	117.9		$	118.4
Operating lease right-of-use assets	Operating lease right-of-use assets		76.4			87.3		Operating lease right-of-use assets		75.3			78.0
Deferred income taxes								Deferred income taxes		61.8			63.4
Equity method and other investments								Equity method and other investments		15.2			14.5
Capitalized software costs	Capitalized software costs		18.6			23.9		Capitalized software costs		14.8			16.7
Equity method and other investments			14.2			11.7
Environmental-related assets	Environmental-related assets		8.9			10.6		Environmental-related assets		8.1			8.5
Other	Other		25.4			24.6		Other		23.7			24.7
Other non-current assets	Other non-current assets		$	260.9		$	272.0	Other non-current assets		$	316.8		$	324.2

1311

NOTE 1110

PLANT, PROPERTY AND EQUIPMENT, NET

The following table summarizes our property, plant, and equipment, net of accumulated depreciation.


		Useful life (in years)	October 2, 2021			December 31, 2020				Useful life (in years)	April 2, 2022			December 31, 2021
Machinery and equipment	Machinery and equipment	2 - 10		$	1,210.1		$	1,205.7	Machinery and equipment	2 - 10		$	1,198.1		$	1,202.0
Buildings and improvements	Buildings and improvements	5 - 40		267.5			273.9		Buildings and improvements	5 - 40		270.2			265.5
Furniture, fixtures and office equipment	Furniture, fixtures and office equipment	3 - 7		80.7			82.0		Furniture, fixtures and office equipment	3 - 7		78.8			78.3
Construction work in progress	Construction work in progress			40.0			44.7		Construction work in progress			64.7			62.8
Land and improvements	Land and improvements			32.9			34.6		Land and improvements			31.9			32.5
Other	Other			4.9			5.0		Other			3.3			4.3
Plant, property and equipment, gross	Plant, property and equipment, gross			1,636.1			1,645.9		Plant, property and equipment, gross			1,647.0			1,645.4
Less: Accumulated depreciation	Less: Accumulated depreciation			(1,141.4)			(1,120.8)		Less: Accumulated depreciation			(1,142.1)			(1,136.3)
Plant, property and equipment, net	Plant, property and equipment, net			$	494.7		$	525.1	Plant, property and equipment, net			$	504.9		$	509.1

Depreciation expense was ~~$21.3~~$21.0 and ~~$64.2~~$21.4 for the three ~~and nine~~ months ended ~~October~~April 2, 2022 and April 3, 2021, ~~respectively, and $21.0 and $62.2 for the three and nine months ended September 26, 2020,~~ respectively.

During the first quarter of 2020, we recorded an impairment of $4.0 for a business within the IP segment due to challenging economic conditions in the upstream oil and gas market combined with impacts associated with the COVID-19 pandemic. Long-lived assets of the business, with a carrying value of $14.0, primarily building and improvements, machinery and equipment, were reduced to their current estimated fair value of $10.0. The estimate of fair value, categorized within Level 3 of the fair value hierarchy, was determined based on a market approach estimating the net proceeds that would be received for the sale of the assets. Significant additional adverse changes to the economic environment or future cash flows of our businesses could cause us to record additional impairment charges in future periods, which may be material.

NOTE 1211

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following table provides a rollforward of the carrying amount of goodwill by segment.

Motion
Technologies Industrial
Process Connect & Control
Technologies Total
Goodwill - December 31, 2020 $ 298.1 $ 365.4 $ 281.3 $ 944.8
Foreign exchange translation (4.6) (9.7) (1.4) (15.7)
Goodwill - October 2, 2021 $ 293.5 $ 355.7 $ 279.9 $ 929.1


	Motion Technologies			Industrial Process			Connect & Control Technologies			Total
Goodwill - December 31, 2021		$	292.3		$	352.4		$	279.6	$	924.3



Foreign exchange translation		(2.2)			(3.0)			(0.6)		(5.8)
Goodwill - April 2, 2022		$	290.1		$	349.4		$	279.0	$	918.5

Other Intangible Assets, Net

The following table summarizes our other intangible assets, net of accumulated amortization.

October 2, 2021 December 31, 2020
Gross
Carrying
Amount Accumulated Amortization Net Intangibles Gross
Carrying
Amount Accumulated Amortization Net Intangibles
Customer relationships $ 162.4 $ (110.7) $ 51.7 $ 163.3 $ (101.7) $ 61.6
Proprietary technology 46.2 (26.0) 20.2 46.7 (23.4) 23.3
Patents and other 16.3 (13.9) 2.4 16.2 (11.5) 4.7
Finite-lived intangible total 224.9 (150.6) 74.3 226.2 (136.6) 89.6
Indefinite-lived intangibles 16.5 — 16.5 16.8 — 16.8
Other intangible assets $ 241.4 $ (150.6) $ 90.8 $ 243.0 $ (136.6) $ 106.4

As a result of the global COVID-19 pandemic combined with a decline in the upstream oil and gas market, during the first quarter of 2020, we determined that certain intangible assets within the IP segment, including an indefinite-lived trademark, customer relationships and proprietary technology, would not be recoverable, resulting in an impairment of $12.3. Significant additional adverse changes to the economic environment or future cash flows of our businesses could cause us to record additional impairment charges in future periods, which may be material.


	April 2, 2022									December 31, 2021
	Gross Carrying Amount			Accumulated Amortization			Net Intangibles			Gross Carrying Amount			Accumulated Amortization			Net Intangibles
Customer relationships		$	161.9		$	(116.8)		$	45.1		$	162.1		$	(113.7)		$	48.4
Proprietary technology		45.9			(27.7)			18.2			46.1			(26.9)			19.2
Patents and other		15.5			(14.2)			1.3			15.7			(14.0)			1.7
Finite-lived intangible total		223.3			(158.7)			64.6			223.9			(154.6)			69.3
Indefinite-lived intangibles		16.3			—			16.3			16.4			—			16.4
Other intangible assets		$	239.6		$	(158.7)		$	80.9		$	240.3		$	(154.6)		$	85.7

Amortization expense related to finite-lived intangible assets was ~~$4.7~~$4.2 and ~~$14.7~~$5.1 for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021, respectively,~~2022 and ~~$4.4 and $13.4 for the three and nine months ended September 26, 2020,~~April 3, 2021, respectively.

NOTE 1312

ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES

The following table summarizes our accrued liabilities and other non-current liabilities.


		October 2, 2021			December 31, 2020				April 2, 2022			December 31, 2021
Compensation and other employee-related benefits	Compensation and other employee-related benefits		$	153.0		$	137.3	Compensation and other employee-related benefits		$	115.6		$	155.2
Contract liabilities and other customer-related liabilities	Contract liabilities and other customer-related liabilities		59.3			73.7		Contract liabilities and other customer-related liabilities		82.6			69.1
Accrued income taxes and other tax-related liabilities	Accrued income taxes and other tax-related liabilities		37.3			36.9		Accrued income taxes and other tax-related liabilities		37.3			33.6
Operating lease liabilities								Operating lease liabilities		19.4			20.1
Accrued warranty costs	Accrued warranty costs		20.6			23.1		Accrued warranty costs		17.0			17.7
Operating lease liabilities			19.2			19.8
Environmental liabilities and other legal matters	Environmental liabilities and other legal matters		14.5			19.1		Environmental liabilities and other legal matters		10.3			13.5
Accrued restructuring costs	Accrued restructuring costs		14.7			19.1		Accrued restructuring costs		6.5			11.0
Asbestos-related liabilities (See Note 19)			—			91.4

Other	Other		40.0			37.0		Other		55.6			37.1
Accrued liabilities	Accrued liabilities		$	358.6		$	457.4	Accrued liabilities		$	344.3		$	357.3
Operating lease liabilities	Operating lease liabilities		$	62.6		$	72.4	Operating lease liabilities		$	60.4		$	64.0
Environmental liabilities	Environmental liabilities		47.7			50.1		Environmental liabilities		48.1			50.1
Compensation and other employee-related benefits	Compensation and other employee-related benefits		29.0			29.4		Compensation and other employee-related benefits		27.0			29.2
Deferred income taxes and other tax-related liabilities	Deferred income taxes and other tax-related liabilities		12.1			11.9		Deferred income taxes and other tax-related liabilities		28.5			29.0
Non-current maturities of long-term debt	Non-current maturities of long-term debt		11.3			13.0		Non-current maturities of long-term debt		9.6			9.9
Other	Other		32.2			33.8		Other		23.1			24.3
Other non-current liabilities	Other non-current liabilities		$	194.9		$	210.6	Other non-current liabilities		$	196.7		$	206.5

NOTE 1413

DEBT

The following table summarizes our outstanding debt obligations.


		October 2, 2021			December 31, 2020				April 2, 2022			December 31, 2021
Commercial paper	Commercial paper		$	196.4		$	104.3	Commercial paper		$	484.9		$	195.4

Current maturities of long-term debt and finance leases	Current maturities of long-term debt and finance leases		2.2			2.5		Current maturities of long-term debt and finance leases		2.1			2.2
Commercial paper and current maturities of long-term debt	Commercial paper and current maturities of long-term debt		198.6			106.8		Commercial paper and current maturities of long-term debt		487.0			197.6
Non-current maturities of long-term debt	Non-current maturities of long-term debt		11.3			13.0		Non-current maturities of long-term debt		9.6			9.9
Total debt and finance leases	Total debt and finance leases		$	209.9		$	119.8	Total debt and finance leases		$	496.6		$	207.5

Commercial Paper

~~Commercial~~The following table presents our outstanding commercial paper ~~outstanding of $196.4 as of October 2, 2021 was issued through both the Company’s U.S.~~borrowings and ~~Euro programs. Commercial paper outstanding under the U.S. program was $150.0, with a~~associated weighted average interest ~~rate of 0.21%. Commercial paper outstanding under the Euro program was $46.4, with a weighted average negative interest rate of (0.43)%. Commercial paper outstanding of $104.3~~rates as of April 2, 2022 and December 31, ~~2020 was issued entirely under the Company’s Euro program and had a weighted average negative interest rate of (0.06)%.~~ 2021.


	April 2, 2022			December 31, 2021
Commercial Paper Outstanding - U.S. Program	$	324.7		$	150.0
Commercial Paper Outstanding - Euro Program	160.2			45.4
Total Commercial Paper Outstanding	$	484.9		195.4
Weighted Average Interest Rate - U.S. Program	0.79		%	0.28		%
Weighted Average Interest Rate - Euro Program	(0.11)		%	(0.47)		%

Outstanding commercial paper for both periods had maturity terms less than three months from the date of issuance.

The increase in commercial paper outstanding from December 31, 2021 to April 2, 2022 was primarily related to funding our share repurchase activity as well as our acquisition of Habonim Industrial Valves and Actuators Ltd. (Habonim), which occurred on April 4, 2022. See Note 19, Acquisitions, to the Consolidated Condensed Financial Statements for further information.

Short-term Loans

The interest rate per annum on the 2021 Revolving Credit Agreement is based on the LIBOR rate of the currency we borrow in, plus a margin of 1.1%, with applicable benchmark replacement rates for the currencies available when LIBOR is phased out as a result of the impending reference rate reform. As of ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, we had no outstanding ~~obligations~~borrowings under the ~~current or former revolving credit facility.~~2021 Revolving Credit Agreement. There is a 0.15% fee per annum applicable to the commitments under the 2021 Revolving Credit Agreement. The margin and fees are subject to adjustment should the Company’s credit ratings change.

The 2021 Revolving Credit Agreement contains customary affirmative and negative covenants that, among other things, will limit or restrict our ability to: incur additional debt or issue guarantees; create certain liens; merge or consolidate with another person; sell, transfer, lease or otherwise dispose of assets; liquidate or dissolve; and enter into restrictive covenants. Additionally, the 2021 Revolving Credit Agreement requires us not to permit the ratio of consolidated total indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (leverage ratio) to exceed 3.50 to 1.00, with a qualified acquisition step up immediately following such qualified acquisition of 4.00 to 1.00 for four quarters, 3.75 to 1.00 for two quarters thereafter, and returning to 3.50 to 1.00 thereafter.

As of ~~October~~April 2, ~~2021, our~~2022, all financial covenants (e.g., leverage ~~ratio~~ratio) associated with the 2021 Revolving Credit Agreement ~~was~~were within the prescribed ~~threshold.~~thresholds.

On April 29, 2020, we entered into two 364-day term revolving credit agreements totaling $200 (the Incremental Revolving Credit Agreements) which provided the Company with additional liquidity in excess of the 2014 Revolving Credit Agreement. The credit agreements expired in April 2021 and we did not renew the agreements. Borrowings were available in U.S. dollars and the interest rate per annum was based on the LIBOR rate, adjusted for statutory reserve requirements, plus a margin of up to 1.55%. The Incremental Revolving Credit Agreements were subject to fees of up to 0.35% per annum. The fees and margin were subject to adjustment should the Company’s credit ratings change. In addition, the Incremental Revolving Credit Agreements did not violate any negative covenants associated with the 2014 Revolving Credit Agreement.

NOTE 15

~~POSTRETIREMENT BENEFIT PLANS~~

In the fourth quarter of 2020, the Company terminated its U.S. qualified pension plan by purchasing a group annuity contract from MassMutual Life Insurance Company (MassMutual), which fully assumed the responsibility for paying and administering pension benefits to approximately five thousand plan participants and their beneficiaries. In connection with the plan termination, the Company settled all future obligations under the plan by providing lump sum payments to eligible participants who elected to receive them, and by transferring the remaining projected benefit obligation to the insurance company. The termination was initially funded with plan assets of approximately $320 and cash of $8.4. During the second quarter of 2021, the funding was finalized, resulting in a gain of $3.4 presented within the interest and non-operating expenses (income) line in the Consolidated Statements of Operations.

~~The following tables summarize the components of net periodic benefit cost for pension plans and other employee-related benefit plans.~~

October 2, 2021 September 26, 2020
For the Three Months Ended Pension Other
Benefits Total Pension Other
Benefits Total
Service cost $ 0.4 $ 0.2 $ 0.6 $ 0.4 $ 0.2 $ 0.6
Interest cost 0.3 0.4 0.7 2.2 0.8 3.0
Expected return on plan assets — — — (2.2) — (2.2)
Amortization of prior service benefit — (0.9) (0.9) — (1.3) (1.3)
Amortization of net actuarial loss 0.5 0.5 1.0 1.8 0.6 2.4
Total net periodic benefit cost $ 1.2 $ 0.2 $ 1.4 $ 2.2 $ 0.3 $ 2.5

October 2, 2021 September 26, 2020
For the Nine Months Ended Pension Other
Benefits Total Pension Other
Benefits Total
Service cost $ 1.1 $ 0.6 $ 1.7 $ 1.0 $ 0.6 $ 1.6
Interest cost 0.8 1.3 2.1 6.8 2.2 9.0
Expected return on plan assets — — — (6.5) — (6.5)
Amortization of prior service benefit — (3.4) (3.4) — (3.8) (3.8)
Amortization of net actuarial loss 1.5 1.8 3.3 5.3 2.0 7.3
Total net periodic benefit cost $ 3.4 $ 0.3 $ 3.7 $ 6.6 $ 1.0 $ 7.6

We made contributions to our global postretirement plans of $8.1 and $7.2 during the nine months ended October 2, 2021 and September 26, 2020, respectively. We expect to make contributions of approximately $3 to $5 during the remainder of 2021, principally related to our other employee-related benefit plans.

Amortization from accumulated other comprehensive income into earnings related to prior service benefit and net actuarial loss, net of tax, was $0.2 and $0.2 during the three and nine months ended October 2, 2021, respectively, and $0.8 and $2.6 during the three and nine months ended September 26, 2020, respectively. No other reclassifications from accumulated other comprehensive income into earnings were recognized during any of the presented periods.

~~NOTE 16~~14

LONG-TERM INCENTIVE EMPLOYEE COMPENSATION

Our long-term incentive plan (LTIP) costs are primarily recorded within general and administrative expenses in our Consolidated Condensed Statements of Operations. The following table summarizes our LTIP costs.


		Three Months Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
For the Three Months Ended										For the Three Months Ended	April 2, 2022		April 3, 2021
Equity-based awards	Equity-based awards	$	4.4	$	3.9	$	11.8	$	9.7	Equity-based awards	$	3.7	$	3.3
Liability-based awards	Liability-based awards	0.2		0.3		1.3		0.2		Liability-based awards	0.6		0.8
Total share-based compensation expense	Total share-based compensation expense	$	4.6	$	4.2	$	13.1	$	9.9	Total share-based compensation expense	$	4.3	$	4.1

The increase in share-based compensation expense for equity-based awards during the three- and nine-month periods was primarily driven by the likelihood of achieving certain performance targets. The increase in share-based compensation expense for liability-based awards during the nine-month period was driven by the change in ITT’s stock price. At ~~October~~April 2, ~~2021,~~2022, there was ~~$23.8~~$37.6 of total unrecognized compensation cost related to non-vested equity awards. This cost is expected to be recognized ratably over a weighted-average period of ~~1.9~~2.2 years. Additionally, unrecognized compensation cost related to liability-based awards was ~~$1.8,~~$1.7, which is expected to be recognized ratably over a weighted-average period of ~~2.0~~2.5 years.

Year-to-Date ~~2021~~2022 LTIP Activity

The majority of our LTIP awards are granted during the first quarter of each year and have three-year service periods. These awards either vest onequally each year or at the completion of athe three-year service period. During the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, we granted the following LTIP awards as provided in the table below:


		# of Awards Granted	Weighted Average Grant Date Fair Value Per Share				# of Awards Granted	Weighted Average Grant Date Fair Value Per Share

Restricted stock units (RSUs)	Restricted stock units (RSUs)	0.2		$	85.84	Restricted stock units (RSUs)	0.1		$	79.86
Performance stock units (PSUs)	Performance stock units (PSUs)	0.1		$	84.48	Performance stock units (PSUs)	0.1		$	77.50

During the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, a nominal amount of non-qualified stock options were exercised resulting in proceeds of ~~$1.1~~$0.7 and ~~$1.7,~~$0.2, respectively. During the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, RSUs of 0.1 and ~~0.3,~~0.1, respectively, vested and were issued. During the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, PSUs of 0.1 and 0.2 that vested on December 31, ~~2020~~2021 and ~~2019,~~2020, respectively, were issued.

NOTE 1715

CAPITAL STOCK

~~On October 27, 2006, our Board of Directors approved a three-year, $1,000 open-market share repurchase program (the 2006 Plan), which it modified in 2008 to make the term indefinite.~~ On October 30, 2019, the Board of Directors approved ~~a new~~an indefinite term $500 open-market share repurchase program (the 2019 Plan). During the ~~first quarter of 2020, we completed the 2006 Plan and commenced repurchases under the 2019 Plan. During the~~ three ~~and nine~~ months ended ~~October~~April 2, 2022 and April 3, 2021, wethe Company repurchased and retired ~~0.5~~2.1 and ~~1.1~~0.6 shares of common stock for $177.8 and $50.0, ~~and $100.0, respectively. During~~respectively, under the ~~nine months ended September 26, 2020, we repurchased and retired 1.7 shares of common stock for $73.2. There were no open-market share repurchases in the third quarter of 2020.~~2019 Plan.

Separate from the open-market share repurchase program, the Company repurchases shares of common stock in settlement of employee tax withholding obligations due upon the vesting of equity-based compensation awards. During the three ~~and nine~~ months ended ~~October~~April 2, 2022 and April 3, 2021, the Company repurchased 0.1 shares and ~~0.2~~0.1 shares of common stock for ~~$0.3~~$8.4 and ~~$11.7, respectively. During~~$11.0, respectively, in connection with the ~~three and nine months ended September 26, 2020, the Company repurchased a nominal number~~net settlement of ~~shares and 0.2 shares of common stock for $0.2 and $10.7, respectively.~~employee LTIP awards.

NOTE 1816

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables summarize the changes within each component of accumulated other comprehensive loss.

As of and for the Three Months Ended October 2, 2021 Postretirement Benefit Plans Cumulative Translation Adjustment Accumulated Other Comprehensive Loss
July 3, 2021 $ (55.9) $ (245.1) $ (301.0)
Net change in postretirement benefit plans, net of tax 3.1 — 3.1
Net foreign currency translation adjustment — (21.5) (21.5)
October 2, 2021 $ (52.8) $ (266.6) $ (319.4)


As of and for the Three Months Ended April 2, 2022	Postretirement Benefit Plans		Cumulative Translation Adjustment		Accumulated Other Comprehensive Loss
December 31, 2021	$	(40.8)	$	(280.5)	$	(321.3)
Net change in postretirement benefit plans, net of tax	(0.3)		—		(0.3)
Net foreign currency translation adjustment	—		(11.7)		(11.7)
April 2, 2022	$	(41.1)	$	(292.2)	$	(333.3)

As of and for the Nine Months Ended October 2, 2021
December 31, 2020 $ (55.9) $ (223.5) $ (279.4)
Net change in postretirement benefit plans, net of tax 3.1 — 3.1
Net foreign currency translation adjustment — (43.1) (43.1)
October 2, 2021 $ (52.8) $ (266.6) $ (319.4)

As of and for the Three Months Ended September 26, 2020
June 27, 2020 $ (131.5) $ (301.2) $ (432.7)
Net change in postretirement benefit plans, net of tax 1.8 — 1.8
Net foreign currency translation adjustment — 23.5 23.5
September 26, 2020 $ (129.7) $ (277.7) $ (407.4)
0


As of and for the Three Months Ended April 3, 2021
December 31, 2020	$	(55.9)	$	(223.5)	$	(279.4)

Net foreign currency translation adjustment	—		(30.0)		(30.0)
April 3, 2021	$	(55.9)	$	(253.5)	$	(309.4)

As of and for the Nine Months Ended September 26, 2020
December 31, 2019 $ (133.3) $ (252.0) $ (385.3)
Net change in postretirement benefit plans, net of tax 3.6 — 3.6
Net foreign currency translation adjustment — (25.7) (25.7)
September 26, 2020 $ (129.7) $ (277.7) $ (407.4)

NOTE 1917

COMMITMENTS AND CONTINGENCIES

From time to time, we are involved in legal proceedings that are incidental to the operation of our business. Historically, these proceedings have alleged damages relating to asbestos and environmental exposures, intellectual property matters, copyright infringement, personal injury claims, employment and employee benefit matters, government contract issues and commercial or contractual disputes and acquisitions or divestitures. We will continue to defend vigorously against all claims. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, as well as our current reserves and insurance coverage, we do not expect that existing legal proceedings will have a material adverse impact on our financial statements, unless otherwise noted below.

Asbestos Matters

Prior to the divestiture described below, former subsidiaries of ITT, including ITT LLC and Goulds Pumps LLC, have been sued along with many other companies in product liability lawsuits alleging personal injury due to purported asbestos exposure. These claims generally allege that certain products sold by these entities or their subsidiaries prior to 1985 contained a part manufactured by a third party (e.g., a gasket) which contained asbestos. To the extent these third-party parts may have contained asbestos, it was encapsulated in the gasket (or other) material and was non-friable. ITT LLC and Goulds Pumps LLC are wholly owned subsidiaries of InTelCo Management LLC (InTelCo), a former subsidiary of ITT.

On June 30, 2021, the Company entered into a Membership Interest Purchase Agreement (the Purchase Agreement) with Sapphire TopCo, Inc. (Buyer), a wholly owned subsidiary of Delticus HoldCo, L.P., which is a portfolio company of the private equity firm Warburg Pincus LLC. Under the Purchase Agreement, the Company transferred 100% of the equity interests of InTelCo to the Buyer, effective as of July 1, 2021, along with a cash contribution from the Company of $398 to InTelCo. As InTelCo was the obligor for the Company's asbestos-related liabilities and policyholder of the related insurance assets through its subsidiaries ITT LLC and Goulds Pumps LLC, the rights and obligations related to these items transferred upon the sale. In addition, pursuant to the Purchase Agreement, the Buyer and InTelCo have indemnified the Company and its affiliates for legacy asbestos-related liabilities and other product liabilities, and the Company has indemnified InTelCo and its affiliates for all other historical liabilities of InTelCo. This indemnification is not subject to any cap or time limitation. In connection with the sale, the Company and its Board of Directors received a solvency opinion from an independent advisory firm that InTelCo was solvent and adequately capitalized after giving effect to the transaction.

~~Following the completion~~As a result of the transfer, the Company has no ~~longer has any~~subsequent obligation with respect to pending and future asbestos claims relating to these matters. As such, InTelCo ~~has been~~was deconsolidated from our ~~2021~~ financial results ~~as we no longer maintain control of the entity. Therefore, all associated assets and liabilities are no longer reported on the consolidated balance sheet.~~ The transaction resulted in a pre-tax gain of $88.8. Additionally, the Company recorded tax expense as a result of the reversal of previously recorded deferred tax assets of $116.9, resulting in an after-tax loss of $28.1 recordedbeginning in the second quarter of ~~2021.~~

~~The following is a summary~~2021, as we no longer maintained control of the ~~impacts of the divestiture of InTelCo:~~


~~Cash and cash equivalents~~	$	~~(398.0)~~
~~Current asbestos-related assets~~	~~(91.0)~~
~~Long-term asbestos-related assets~~	~~(310.4)~~
~~Accrued liabilities~~	~~91.2~~
~~Long-term asbestos-related liabilities~~	~~797.0~~
~~Gain on divestiture of legacy asbestos-related assets and liabilities before income tax~~	$	~~88.8~~
~~Less: income tax expense~~	~~116.9~~
~~Loss on divestiture of legacy asbestos-related assets and liabilities, net of tax~~	$	~~(28.1)~~

~~Asbestos-Related Costs (Benefit), Net~~

~~Prior to the divestiture of the entity holding legacy~~entity. Accordingly, we have no asbestos-related assets ~~and~~or liabilities ~~the Company recognized an estimated asbestos liability for pending claims and claims expected to be filed in the future, including legal fees. In the third quarter~~as of 2020, we extended the measurement period over which we estimate the legacy asbestos liability to include pending claims and claims estimated to be filed through 2052, including legal fees, reflecting the full time period over which we expected claims to be filed against InTelCo. Previous estimates included pending claims and claims expected to be filed over the next 10 years. Additionally, prior to the divestiture of the entity holding legacy asbestos-related assets and liabilities, the Company recorded an asbestos-related asset composed of probable insurance recoveries.December 31, 2021 or April 2, 2022.

~~The following table summarizes our total net asbestos-related~~Asbestos-related costs ~~(benefit).~~

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Asbestos provision(a)
$ — $ 5.5 $ 14.4 $ 29.1
Gain on divestiture before income tax — — (88.8) —
Net asbestos remeasurement cost(b)
— 135.9 — 135.9
Insurance settlement agreements(c)
— — — (48.3)
Asbestos-related costs (benefit), net $ — $ 141.4 $ (74.4) $ 116.7

~~(a)~~Includes certain administrative costs such as legal-related costs for insurance asset recoveries and transaction costs related to the divestiture of the entity holding legacy asbestos-related assets and liabilities. The asbestos provisionwere $2.4 for the three ~~and nine~~ months ended ~~September 26, 2020 includes amounts to maintain a rolling 10-year provision prior to the transition to a full horizon estimate.~~

~~(b)In the third quarter of 2020, we extended our projection to include pending claims~~April 3, 2021, and ~~claims expected to be filed through 2052, reflecting the full time period over which we expected asbestos claims to be filed against InTelCo.~~

~~(c)~~In March 2020, we finalized a settlement agreement with a group of insurers to settle responsibility for claims under certain insurance policies for a lump sum payment of $66.4, resulting in a benefit of $52.5. During June 2020, we entered into a settlement agreement with an insurer accelerating payments previouslywere included in ~~a buyout agreement, resulting in a loss of $4.2.~~

~~The following table provides a rollforward of the estimated legacy asbestos liability~~general and ~~related assets.~~

October 2, 2021 September 26, 2020
For the Nine Months Ended Liability Asset Net Liability Asset Net
Beginning balance $ 932.0 $ 444.7 $ 487.3 $ 817.6 $ 386.8 $ 430.8
Asbestos provision(a)
13.4 (1.0) 14.4 35.4 6.3 29.1
Asbestos remeasurement(b)
— — — 155.7 19.8 135.9
Insurance settlement agreements — — — — 48.3 (48.3)
Net cash activity(a)
(57.2) (42.3) (14.9) (60.7) (51.8) (8.9)
Divestiture of legacy asbestos-related assets and liabilities (888.2) (401.4) (486.8) — — —
Ending balance $ — $ — $ — $ 948.0 $ 409.4 $ 538.6
Current portion $ — $ — $ 91.3 $ 91.0
Noncurrent portion $ — $ — $ 856.7 $ 318.4
administrative expenses.

Environmental Matters

In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and site remediation. These sites are in various stages of investigation or remediation and in many of these proceedings our liability is considered de minimis. We have received notification from the U.S. Environmental Protection Agency, and from similar state and foreign environmental agencies, that a number of sites formerly or currently owned or operated by ITT, and other properties or water supplies that may be or have been impacted from those operations, contain disposed or recycled materials or wastes and require environmental investigation or remediation. These sites include instances where we have been identified as a potentially responsible party under federal and state environmental laws and regulations.

2116

The following table provides a rollforward of our estimated environmental liability.


For the Nine Months Ended		October 2, 2021		September 26, 2020
For the Three Months Ended						For the Three Months Ended	April 2, 2022		April 3, 2021
Environmental liability - beginning balance	Environmental liability - beginning balance	$	58.3	$	61.9	Environmental liability - beginning balance	$	54.1	$	58.3
Change in estimates for pre-existing accruals:	Change in estimates for pre-existing accruals:					Change in estimates for pre-existing accruals:
Continuing operations	Continuing operations	—		1.2		Continuing operations	—		(0.1)
Discontinued operations		(0.1)		(1.6)
Accruals added during the period for new matters		1.0		—

Payments	Payments	(7.2)		(2.9)		Payments	(1.9)		(2.0)
Foreign currency	Foreign currency	(0.2)		—		Foreign currency	(0.1)		(0.1)
Environmental liability - ending balance	Environmental liability - ending balance	$	51.8	$	58.6	Environmental liability - ending balance	$	52.1	$	56.1

Environmental-related assets, including a Qualified Settlement Fund and estimated recoveries from insurance providers and other third parties, were ~~$12.9~~$12.1 and ~~$19.6~~$16.5 as of ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, respectively.

We are currently involved with 2726 active environmental investigation and remediation sites. As of ~~October~~April 2, ~~2021,~~2022, we have estimated the potential high-end liability range of environmental-related matters to be ~~$90.3.~~$89.4.

As actual costs incurred at identified sites in future periods may vary from our current estimates given the inherent uncertainties in evaluating environmental exposures, management believes it is possible that the outcome of these uncertainties may have a material adverse effect on our financial statements.

NOTE 2018

DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, the Company may use derivative financial instruments, primarily foreign currency forward and option contracts, to mitigate exposure from foreign currency exchange rate fluctuations as it pertains to receipts from customers, payments to suppliers and intercompany transactions, as well as from commodity price fluctuations. We record derivatives at their fair value as either an asset or liability. For derivatives not designated as hedges, adjustments to reflect changes in the fair value of our derivatives are included in earnings. For cash flow hedges that qualify and are designated for hedge accounting, the effective portion of the change in fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently recognized in earnings when the hedged transaction affects earnings. Any ineffective portion is recognized immediately in earnings. As of ~~October~~April 2, 2021 and December 31, 2020, no derivatives were designated as hedges. Derivative contracts involve the risk of non-performance by the counterparty. The fair value of our foreign currency contracts are determined using the net position of the contracts and the applicable spot rates and forward rates as of the reporting date.

~~As of October 2, 2021,~~2022, the U.S. dollar equivalent notional value of our outstanding foreign currency forward and option contracts, which are denominated in euros, was ~~$60.3~~$157.8 and the fair value was ~~$2.6,~~$3.8, recorded within other current assets. ~~There were no derivative contracts outstanding as~~As of December 31, ~~2020.~~2021, the U.S. dollar equivalent notional value of our outstanding foreign currency forward and option contracts was $24.2 and the fair value was $1.9. During the three ~~and nine~~ months ended ~~October~~April 2, ~~2021,~~2022, we recognized ~~losses~~gains related to foreign currency derivatives not designated as hedges of ~~$1.1 and $3.3, respectively,~~$2.3 within general and administrative expenses. During the three ~~and nine~~ months ended ~~September 26, 2020,~~April 3, 2021, we recognized a ~~gain of $0.1 and a~~ loss of ~~$3.7, respectively.~~$2.0.

From time to time, we enter into call option contracts to mitigate exposure to commodity price fluctuations. As of ~~October~~April 2, ~~2021,~~2022, call option contracts were nominal. There were no call option contracts outstanding as of December 31, ~~2020.~~2021.

We utilize market approaches to estimate the fair value of our derivative instruments by discounting anticipated future cash flows derived from the derivative’s contractual terms and observable foreign exchange rates. The fair values of the derivatives summarized above are determined based on Level 2 inputs in the fair value hierarchy.

NOTE 19

ACQUISITIONS

Subsequent Event

On April 4, 2022, we completed the acquisition of 100% of the privately held stock of Habonim for a purchase price of $140. Habonim is a designer and manufacturer of valves, valve automation and actuation for the gas distribution (including liquified natural gas), biotech and harsh application service sectors. Habonim sells directly to original equipment manufacturers and integrators for customized solutions. Habonim has operations in Israel, the U.S., and the Netherlands, reported annual sales of $44 in 2021, and has a workforce of approximately 200 employees. Habonim’s results will be reported within the Industrial Process segment beginning in the second quarter.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except per share amounts, unless otherwise stated)

OVERVIEW

ITT Inc. is a diversified manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and energy markets. We manufacture components that are integral to the operation of systems and manufacturing processes in these key markets. Our products enable functionality for applications where reliability and performance are critically important to our customers and the users of their products.

Our businesses share a common, repeatable operating model centered on our engineering capabilities. Each business applies its technology and engineering expertise to solve our customers’ most pressing challenges. Our applied engineering provides a valuable business relationship with our customers given the critical nature of their applications. This in turn provides us with unique insight to our customers’ requirements and enables us to develop solutions to assist our customers in achieving their business goals. Our technology and customer intimacy ~~together~~ produce opportunities to capture recurring revenue streams, aftermarket opportunities and long-lived platforms from original equipment manufacturers (OEMs).

Our product and service offerings are organized into three reportable segments: Motion Technologies (MT), Industrial Process (IP), and Connect & Control Technologies (CCT). See Note 3, Segment Information, in this Report for a summary description of each segment. Additional information is also available in our ~~2020~~2021 Annual Report within Part I, Item 1, “Description of ~~Business”.~~Business.”

All comparisons included within Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to the comparable three ~~and nine~~ months ended ~~September 26, 2020,~~April 3, 2021, unless stated otherwise.

COVID-19 Update:

The Company continues to respond to and recover from the challenges stemming from the COVID-19 pandemic, including managing significant market headwinds, supply chain disruptions, shipping delays, and reduced availability of skilled labor. We continue to be proactive in responding to these challenges, including working closely with our suppliers to minimize disruptions within our global supply chain. As a result, ~~we’ve~~we have been able to continue delivering high quality products to our customers.

Future impacts of COVID-19 on our business and ~~financials~~financial results remain uncertain and will be dependent on the effect and duration of ~~the COVID-19 pandemic, including~~ variant strains of the virus, including Omicron and BA.2. As a result of some of these variants, certain countries around the ~~timing, effectiveness and availability~~world in which we operate, such as China, are reinstituting previously-lifted restrictive measures that were initially implemented to curtail the spread of ~~and people’s receptivity to, vaccines or other medical remedies, potential impacts~~the virus. Continued challenges resulting from ~~mandatory vaccination requirements, and our ability to respond to future challenges posed by~~ the COVID-19 ~~pandemic.~~pandemic have adversely impacted, and may continue to adversely impact, our business and financial results. For additional discussion of risks related to COVID-19, see Part I, Item IA, “Risk Factors” in our 2021 Annual Report.

Russia-Ukraine Conflict:

In February 2022, the United States announced targeted economic sanctions on Russia and certain Russian citizens in response to Russia’s invasion of Ukraine. As described in Part I, Item IA, “Risk Factors” in our 2021 Annual Report for the fiscal year ended December 31, 2021, our business may be sensitive to global economic conditions, which can be negatively impacted by instability in the geopolitical environment. Our annual sales directly to customers in Russia and Ukraine were approximately $38 for 2021. Annual sales to customers in Russia and Ukraine, including sales to customers selling or supplying to Russia or Ukraine, were expected to be approximately $60 for 2022. In addition, this year we expect an indirect sales impact of approximately $25 stemming from a reduction in supply of auto components made in Ukraine.

During the first quarter of 2022, we recorded total charges of $8.8, primarily related to inventory and account receivable reserves, as a result of suspending our operations in Russia and to reflect the current macroeconomic conditions impacting some of our customers that sell or supply into this region. If circumstances worsen, we may experience a further reduction in demand and could incur additional charges, including potential fixed asset impairments, severance and other reserves, which could have a material adverse impact

on our business and financial results. For additional discussion of the risks related to the Russia-Ukraine conflict, see Part II, Item 1A, “Risk Factors” ~~herein, as well as Part I, Item IA, “Risk Factors” in our~~ ~~2020 Annual Report~~.herein.

Executive Summary

~~During the third quarter of 2021, we delivered strong results, growing our revenue across all three segments and expanding our operating margin.~~ The following table provides a summary of key performance indicators for the ~~third~~first quarter of ~~2021~~2022 as compared to the ~~third~~first quarter of ~~2020.~~2021.

Summary of Key Performance Indicators for the Third Quarter of 2021
Revenue Segment Operating Income Segment Operating Margin EPS
$690 $111 16.1% $1.00
17% Increase 33% Increase 190bp Increase 282% Increase
Organic Revenue Adjusted Segment Operating Income Adjusted Segment Operating Margin Adjusted
EPS
$684 $116 16.8% $0.99
16% Increase 21% Increase 60bp Increase 21% Increase


Summary of Key Performance Indicators for the First Quarter of 2022
Revenue	Segment Operating Income	Segment Operating Margin	EPS
$726	$106	14.6%	$0.88
4% Increase	-11% Decrease	-240bp Decrease	-11% Decrease
Organic Revenue	Adjusted Segment Operating Income	Adjusted Segment Operating Margin	Adjusted EPS
$746	$116	16.0%	$0.97
7% Increase	-5% Decrease	-150bp Decrease	-8% Decrease

Further details related to these results are contained elsewhere in the Discussion of Financial Results section. Refer to the section titled “Key Performance Indicators and Non-GAAP Measures” for definitions and reconciliations between GAAP and non-GAAP metrics.

Our ~~third~~first quarter ~~2021~~2022 results include:

•Revenue of ~~$689.6~~$726.2 increased ~~$98.4, including favorable~~$27.8 due to strong CCT growth in both connectors and components, as well as strength in MT’s Friction business driven by aftermarket sales, partially offset by unfavorable foreign exchange of ~~$5.9. Organic~~$19.9. Excluding the impact of foreign currency, organic revenue improved 15.6%, as a result of strong top line growth across all our segments. In particular, our MT segment saw strong growth in Friction aftermarket and continued to significantly outperform the global OE automotive market. Additionally, we experienced significant growth in our CCT segment due to continued strength in connector sales, and our IP segment grew thanks to short cycle products, including pump parts and valves, as a result of strong performance in the industrial and biopharmaceutical markets.increased 6.8%.

•Segment operating income of ~~$111.2 increased $27.3,~~$105.8 decreased $13.0, primarily driven by significantly higher ~~sales volume, strategic commercial actions,~~raw material and ~~savings~~overhead costs stemming from ~~productivity. These items were~~supply chain challenges. In addition, we recorded charges of $8.8 related to the Russia-Ukraine conflict. This was partially offset by ~~supply chain disruptions resulting in increased raw material~~pricing actions, productivity savings, and ~~shipping costs, strategic growth investments and a reversal of temporary cost reductions that were executed in 2020.~~higher sales volume.

•Income from continuing operations of ~~$1.00~~$0.88 per diluted share ~~increased $1.55~~decreased $0.11 as compared to the prior year ~~loss~~ of ~~$0.55~~$0.99 per share, mainly due to the ~~negative impact of asbestos charges of $135.9~~decline in ~~the prior year period and higher~~ segment operating income. The prior year asbestos costs relate to extending the projection period over which we expect asbestos claims to be filed against InTelCo Management, LLC (InTelCo), the entity holding legacy asbestos-related assets and liabilities. Since then, we have divested our entire net asbestos liability. Adjusted income from continuing operations was ~~$0.99~~$0.97 per diluted share, ~~an improvement~~a reduction of ~~$0.17.~~$0.09 as compared to the prior year.

~~In terms of capital deployment, during~~During the ~~third~~first quarter of ~~2021~~2022, we repurchased ~~0.5~~2.1 shares of common stock on the open-market for ~~$50, bringing our total year-to-date open-market share repurchases to $100.~~$178. In addition, in the ~~third~~first quarter of ~~2021~~2022 we declared a dividend of ~~$0.22~~$0.264 per share, which was a ~~30%~~20% increase from the quarterly ~~dividends declared~~dividend in ~~2020, bringing our total year-to-date dividend payments to $57.~~2021.

DISCUSSION OF FINANCIAL RESULTS



For the Three Months Ended	April 2, 2022			April 3, 2021			Change
Revenue	$	726.2		$	698.4		4.0	%
Gross profit	218.4			229.0			(4.6)	%
Gross margin	30.1		%	32.8		%	(270)	bp
Operating expenses	123.8			119.1			3.9	%
Operating expense to revenue ratio	17.0		%	17.1		%	(10)	bp
Operating income	94.6			109.9			(13.9)	%
Operating margin	13.0		%	15.7		%	(270)	bp
Interest and non-operating (income) expenses, net	(0.2)			(1.3)			(84.6)	%
Income tax expense (benefit)	19.5			24.7			(21.1)%
Effective tax rate	20.6		%	22.2		%	(160)	bp

Net income attributable to ITT Inc.	74.8			86.2			(13.2)	%

2419

~~DISCUSSION OF FINANCIAL RESULTS~~

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 Change October 2, 2021 September 26, 2020 Change
Revenue $ 689.6 $ 591.2 16.6 % $ 2,079.6 $ 1,769.2 17.5 %
Gross profit 222.0 190.6 16.5 % 675.6 563.6 19.9 %
Gross margin 32.2 % 32.2 % — bp 32.5 % 31.9 % 60 bp
Operating expenses(a)(b)
120.3 253.1 (52.5) % 284.4 496.3 (42.7) %
Operating expense to revenue ratio 17.4 % 42.8 % (2,540) bp 13.7 % 28.1 % (1,440) bp
Operating income (loss)(a)(b)
101.7 (62.5) 262.7 % 391.2 67.3 481.3 %
Operating margin 14.7 % (10.6) % 2,530 bp 18.8 % 3.8 % 1,500 bp
Interest and non-operating expenses (income), net 0.5 1.2 (58.3) % (4.3) 4.0 207.5 %
Income tax expense (benefit) 14.1 (16.2) (187.0) % 182.7 (19.6) **
Effective tax rate 13.9 % 25.4 % (1,150) bp 46.2 % (31.0) % **
Income (loss) from continuing operations attributable to ITT Inc. 86.6 (48.0) 280.4 % 211.8 82.1 158.0 %
Net income (loss) attributable to ITT Inc. 87.5 (46.8) 287.0 % 212.7 86.0 147.3 %

** Resulting percentage or basis point change not considered meaningful.

~~(a) Operating expenses and operating income for the nine months ended October 2, 2021 include the impact of the divestiture of InTelCo. See~~ ~~Operating Expenses~~ ~~section below for further information.~~

(b) Operating expenses and operating income for the three and nine months ended September 26, 2020 include the impact of extending the projection period over which we expect asbestos claims to be filed against InTelCo. See ~~Operating Expenses~~ ~~section below for further information.~~

REVENUE

The following table illustrates the revenue derived from each of our segments.


For the Three Months Ended	For the Three Months Ended	October 2, 2021		September 26, 2020		Change		Organic Growth (Decline)(a)		For the Three Months Ended	April 2, 2022		April 3, 2021		Change		Organic Growth(a)
Motion Technologies	Motion Technologies	$	332.3	$	271.8	22.3	%	20.3	%	Motion Technologies	$	370.1	$	369.1	0.3	%	4.0	%
Industrial Process	Industrial Process	210.7		194.1		8.6	%	8.1	%	Industrial Process	202.2		202.3		—	%	1.9	%
Connect & Control Technologies	Connect & Control Technologies	147.1		125.9		16.8	%	17.0	%	Connect & Control Technologies	154.6		127.3		21.4	%	23.2	%
Eliminations	Eliminations	(0.5)		(0.6)						Eliminations	(0.7)		(0.3)
Total Revenue	Total Revenue	$	689.6	$	591.2	16.6	%	15.6	%	Total Revenue	$	726.2	$	698.4	4.0	%	6.8	%

For the Nine Months Ended		October 2, 2021		September 26, 2020		Change		Organic Growth (Decline)(a)
Motion Technologies		$	1,045.0	$	769.0	35.9	%	30.3	%
Industrial Process		626.9		614.7		2.0	%	0.5	%
Connect & Control Technologies		408.9		387.5		5.5	%	4.6	%
Eliminations		(1.2)		(2.0)
Total Revenue		$	2,079.6	$	1,769.2	17.5	%	14.4	%

(a)See the section titled “Key Performance Indicators and Non-GAAP Measures” for a definition and reconciliation of organic revenue.

Motion Technologies

MT revenue for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 increased ~~$60.5 and $276.0, respectively.~~$1.0. Excluding the impact of ~~favorable~~unfavorable foreign currency translation of ~~$5.3 and $43.1 for the three and nine months ended October 2, 2021,~~$13.9, organic revenue increased ~~$55.2 and $232.9, respectively. Sales from~~$14.9, primarily due to growth in our Friction business ~~grew 21% and 35%, respectively, during the three- and nine-month periods~~of 5% driven by strength in ~~aftermarket and continued OE outperformance versus automotive production rates.~~aftermarket. In addition, our Wolverine ~~sales improved 33% and 30%, respectively, during the three- and nine-month periods~~business increased 5% due to growth in ~~sealings and shims. KONI & Axtone sales increased 5% for both the three- and nine-month periods, primarily from strength in automotive aftermarket equipment, partially offset by a decline in rail.~~sealings.

The automotive industry ~~is currently experiencing~~has been, and continues to be, impacted by a global semiconductor supply shortage. This shortage has created supply chain disruptions for our automotive OEM customers, resulting in temporary declines in production. As a result, demand for our OEM brake pads and parts has been and may continue to be adversely affected until the shortage is resolved. While this shortage has had and may continue to have a negative impact on revenue, we continue to significantly outperform automotive production rates globally.

Industrial Process

IP revenue for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021 increased $16.6 and $12.2, respectively. Both periods included favorable~~2022 was flat compared to the prior year. Excluding the impact of unfavorable foreign currency translation ~~impacts~~ of ~~$0.8 and $9.4, respectively. Organic~~$3.9, organic revenue increased by ~~$15.8 during the three-month period,~~$3.8 primarily driven by growth in our short cycle business of ~~10%~~13% due to strength inwithin the general industrial and ~~mining markets. Organic revenue for the nine-month period increased $2.8, primarily driven by growth in pump projects of 12% due to strength in the oil and gas and general industrial~~chemical markets. This was partially offset by a decline in ~~our short-cycle business~~pump projects of 2%30%, ~~attributable to~~principally within the ~~first half of the year.~~energy and chemical markets.

The level of order and shipment activity at IP can vary significantly from period to period due to pump projects which are highly engineered, customized to customer needs, and have longer lead times. Total orders during the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 were ~~$242.5 and $689.2, respectively,~~$260.1, an increase of ~~25.5% and 12.2%~~20.7% as compared to the respective prior year ~~periods.~~period. Backlog as of ~~October~~April 2, ~~2021~~2022 was ~~$412.0,~~$502.2, an increase of ~~$44.6,~~$57.8, or ~~12.1%~~13.0%, as compared to December 31, ~~2020.~~2021. Our backlog represents firm orders that have been received, acknowledged, and entered into our production systems.

Connect & Control Technologies

CCT revenue for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 increased ~~$21.2 and $21.4, respectively,~~$27.3, which included unfavorable foreign currency translation impacts of ~~$(0.2) and $3.6, respectively.~~$2.2. Organic revenue increased ~~$21.4 and $17.8 during the three- and nine-month periods, respectively. The increase in both periods was~~$29.5, primarily driven by a strong performance in connector sales ~~which~~of 28%, particularly within the industrial market. Additionally, component sales grew ~~29% and 18%~~by 16%, ~~respectively. The nine-month period was negatively impacted by a 10% revenue decline within~~with particular strength in the aerospace and defense markets. ~~Although we have seen an increase in commercial air travel, as airframers work through high levels of inventory, we do not expect to see a significant improvement in sales until 2022.~~

2620

GROSS PROFIT

Gross profit for the three months ended ~~October~~April 2, 2022 and April 3, 2021 was $218.4 and ~~September 26, 2020 was $222.0 and $190.6,~~$229.0, respectively, reflecting a gross margin of ~~32.2% in both periods. Gross profit for the nine months ended October 2, 2021~~30.1% and ~~September 26, 2020 was $675.6 and $563.6, respectively, reflecting a gross margin of 32.5% and 31.9%~~32.8%, respectively. The ~~increase~~decrease in gross profit ~~for the three- and nine-month periods~~ was primarily driven by ~~higher sales volume, productivity savings and strategic commercial actions. These items were partially offset by~~significant increases in raw material, shipping, and labor costs, as discussed further ~~below.~~ below, as well as a $5.4 inventory write-down related to the Russia-Ukraine conflict. These items were partially offset by pricing actions and productivity savings.

Since 2020, the cost of raw materials we use in our production processes, including commodities such as steel, ~~used in our production processes~~oil, copper, and tin, has significantly increased. Accordingly, gross profit and operating income within our businesses have been and may continue to be negatively impacted. The rising prices are mainly a result of increased demand ~~fueled~~coupled with reduced supply caused by ~~economic recovery from~~supply chain disruptions primarily as a result of the COVID-19 pandemic ~~as well as lower~~and the Russia-Ukraine conflict. Raw materials inflation and supply ~~since global production capacity was cut in 2020. The~~chain constraints may continue to unfavorably impact ~~of higher commodity prices on~~ our financial results during the ~~third quarter~~remainder of 2021 was partially mitigated by fixed-price supply contracts with suppliers, especially in the first half of 2021. The expiration of these fixed-price contracts, continued raw materials inflation, and supply constraints had a negative impact on our third quarter financial results and are expected to have an unfavorable impact on our fourth quarter financial results.2022. We have been able to offset some of this impact through ~~price increases~~pricing actions and productivity savings, ~~and~~which we ~~expect~~continue to ~~be able to do so in the fourth quarter and in 2022.~~pursue.

During 2021 and 2022, worldwide supply chain challenges exacerbated by the COVID-19 pandemic and the rising demand for ~~raw materials, as discussed above,~~physical goods have created upward pressure on shipping costs globally. These supply chain disruptions have contributed to congested shipping ports around the world, causing shipping delays and, in many cases, additional costs to be incurred in order to meet customer demand. As a result of these external pressures, our shipping costs, including for inbound and outbound freight, have increased, ~~as compared to the prior year,~~ which has negatively impacted our gross profit. ~~At this time, we are unable to predict when these issues will be resolved.~~ Continued supply chain ~~challenges resulting in incremental~~and shipping ~~costs~~challenges could have a material impact on our future financial results.

The manufacturing industry is also currently experiencing a skilled labor shortage. This shortage has created difficulties for the Company in attracting and retaining factory employees and in meeting customer demand, resulting in additional labor costs. ~~Additionally,~~Accordingly, our revenue, gross profit, and operating expenses at each of our businesses have been and may continue to be negatively impacted as a result of difficulties in ~~September~~fulfilling customer orders and increased labor costs.

Certain of our businesses have experienced high levels of employee absenteeism resulting from regional COVID-19 outbreaks and government mandated workplace safety measures. For example, in Italy and Germany, which comprised 24% and 11%, respectively, of our consolidated revenue in 2021, the ~~current U.S. administration issued~~government has mandated proof of vaccination, a ~~mandate on~~negative rapid swab test, or recent recovery from COVID-19 ~~vaccinations as well as requirements for unvaccinated employees~~ to be ~~tested weekly for COVID-19. Such requirements could result~~able to return to the workplace. The majority of government mandates went into effect during the fourth quarter of 2021 and have remained in ~~employee attrition~~place during the first quarter of 2022. Additionally, some governments around the world, including China, have instituted COVID-19 lockdowns that are expected to lead to further absenteeism, global supply chain challenges, and, ~~further difficulty~~potentially, temporary negative impacts on demand in ~~securing future labor needs.~~some of our end-markets, such as passenger vehicles. As a result of these circumstances, our financial results have been, and may continue to be, negatively impacted. For additional information regarding ~~the government-mandate on~~risks related to COVID-19, ~~vaccination,~~ see Part ~~II,~~I, Item 1A, ““Risk Factors,” of our ~~Risk Factors~~2021 Annual Report”.

OPERATING EXPENSES

The following table summarizes our operating expenses, including by segment.

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 Change October 2, 2021 September 26, 2020 Change
General and administrative expenses $ 55.9 $ 47.1 18.7 % $ 168.2 $ 148.8 13.0 %
Sales and marketing expenses 37.4 33.4 12.0 % 112.4 110.7 1.5 %
Research and development expenses 22.5 19.7 14.2 % 70.0 61.3 14.2 %
Asbestos-related costs (benefit), net — 141.4 (100.0) % (74.4) 116.7 163.8 %
Restructuring costs 4.5 11.5 (60.9) % 8.2 42.5 (80.7) %
Asset impairment charges — — — % — 16.3 (100.0) %
Total operating expenses $ 120.3 $ 253.1 (52.5) % $ 284.4 $ 496.3 (42.7) %
Total Operating Expenses By Segment:
Motion Technologies $ 43.5 $ 31.8 36.8 % $ 126.5 $ 111.7 13.2 %
Industrial Process 38.7 47.9 (19.2) % 114.7 161.5 (29.0) %
Connect & Control Technologies 28.6 27.0 5.9 % 90.3 91.3 (1.1) %
Corporate & Other 9.5 146.4 (93.5) % (47.1) 131.8 (135.7) %



For the Three Months Ended	April 2, 2022		April 3, 2021		Change
General and administrative expenses	$	60.4	$	58.1	4.0	%
Sales and marketing expenses	38.4		36.7		4.6	%
Research and development expenses	25.0		24.3		2.9	%



Total operating expenses	$	123.8	$	119.1	3.9	%
Total operating expenses by segment:
Motion Technologies	$	41.2	$	41.6	(1.0)	%
Industrial Process	40.9		36.3		12.7	%
Connect & Control Technologies	30.6		32.3		(5.3)	%
Corporate & Other	11.1		8.9		24.7	%

General and administrative (G&A) expenses increased $2.3 for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021 increased $8.8 and $19.4, respectively. The increase~~2022. This was ~~primarily~~ due to ~~higher incentive-based compensation as well as lower prior year personnel costs from proactive actions taken~~an increase in ~~response~~bad debt expense of $4.0, primarily related to the ~~COVID-19 pandemic, which included a temporary reduction in executive compensation~~Russia-Ukraine conflict, and suspension of select 401(k) benefits for certain U.S. employees that have since been reinstated. Last year, we also benefited from higher employee retention credits for the three- and nine-month periods, in connection with the 2020 CARES Act. Thean increase in ~~both periods~~strategic M&A-related costs of $2.3. The increase was partially offset by a ~~decline~~decrease in ~~bad debt expense. In addition, environmental costs were higher for the nine-month period by $4.5, primarily due to prior year insurance-related recoveries.~~restructuring expense of $3.3.

Sales and marketing expenses increased ~~$4.0 and~~ $1.7 for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021, respectively,~~2022, primarily driven by ~~benefits~~temporary spending controls still in place during the ~~prior year period from discretionary spending reductions and temporary personnel cost actions~~first quarter of 2021 taken in response to the COVID-19 pandemic.

Research and development expenses increased $0.7 for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021 increased $2.8 and $8.7, respectively,~~2022, due to continued strategic investments in innovation and new product development to drive future growth.

Asbestos-related matters resulted in a net benefit of $74.4 for the nine months ended October 2, 2021, due to the recognition of a pre-tax gain of $88.8 from the divestiture of InTelCo, which was executed on July 1, 2021. During the three and nine months ended September 26, 2020, we recognized costs of $135.9 as a result of extending our projection period to include pending claims and claims expected to be filed through 2052, reflecting the full time period over which we expected asbestos claims to be filed against InTelCo. The nine months ended September 26, 2020 benefited from insurance settlements resulting in a net gain of $48.3. See Note 19, ~~Commitments and Contingencies, to the Consolidated Condensed Financial Statements for further information.~~

Restructuring costs decreased $7.0 and $34.3, respectively, during the three and nine months ended October 2, 2021. Restructuring costs recorded during the prior year were primarily related to cost actions taken as part of our 2020 Global Restructuring Plan, which is an organizational-wide restructuring plan to reduce the overall cost structure of the Company in response to challenges caused by the COVID-19 pandemic. See Note 5, ~~Restructuring Actions, to the Consolidated Condensed Financial Statements for further information.~~

~~Asset impairment charges during the nine months ended September 26, 2020 were related to a business within IP that primarily serves the global upstream oil and gas market. See Note 11,~~ ~~Plant, Property and Equipment, net, and Note 12,~~ ~~Goodwill and Other intangible assets, net, to the Consolidated Condensed Financial Statements for further information.~~

OPERATING INCOME

The following table summarizes our operating income and margin by segment.

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 Change October 2, 2021 September 26, 2020 Change
Motion Technologies $ 53.6 $ 50.4 6.3 % $ 194.3 $ 113.9 70.6 %
Industrial Process 32.4 17.1 89.5 % 94.9 44.5 113.3 %
Connect & Control Technologies 25.2 16.4 53.7 % 54.9 40.7 34.9 %
Segment operating income 111.2 83.9 32.5 % 344.1 199.1 72.8 %
Asbestos-related (costs) benefit, net — (141.4) (100.0) % 74.4 (116.7) (163.8) %
Other corporate costs (9.5) (5.0) 90.0 % (27.3) (15.1) 80.8 %
Total corporate and other (costs) benefit, net (9.5) (146.4) (93.5) % 47.1 (131.8) (135.7) %
Total operating income (loss) $ 101.7 $ (62.5) 262.7 % $ 391.2 $ 67.3 481.3 %
Operating margin:
Motion Technologies 16.1 % 18.5 % (240) bp 18.6 % 14.8 % 380 bp
Industrial Process 15.4 % 8.8 % 660 bp 15.1 % 7.2 % 790 bp
Connect & Control Technologies 17.1 % 13.0 % 410 bp 13.4 % 10.5 % 290 bp
Segment operating margin 16.1 % 14.2 % 190 bp 16.5 % 11.3 % 520 bp
Consolidated operating margin 14.7 % (10.6) % 2,530 bp 18.8 % 3.8 % 1,500 bp



For the Three Months Ended	April 2, 2022			April 3, 2021			Change
Motion Technologies	$	59.7		$	76.0		(21.4)	%
Industrial Process	20.4			31.0			(34.2)	%
Connect & Control Technologies	25.7			11.8			117.8	%
Segment operating income	105.8			118.8			(10.9)	%
Asbestos-related benefit (costs), net	—			(2.4)			(100.0)	%
Other corporate costs	(11.2)			(6.5)			72.3	%
Total corporate and other costs, net	(11.2)			(8.9)			25.8	%
Total operating income	$	94.6		$	109.9		(13.9)	%
Operating margin:
Motion Technologies	16.1		%	20.6		%	(450)	bp
Industrial Process	10.1		%	15.3		%	(520)	bp
Connect & Control Technologies	16.6		%	9.3		%	730	bp
Segment operating margin	14.6		%	17.0		%	(240)	bp
Consolidated operating margin	13.0		%	15.7		%	(270)	bp

MT operating income for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021 increased $3.2 and $80.4, respectively,~~2022 decreased $16.3, primarily due to significantly higher ~~sales volume, strategic commercial actions~~raw material costs from continued supply chain challenges, as well as inventory and ~~savings from net productivity. These items were~~accounts receivable reserves of $4.2 related to the Russia-Ukraine conflict. The decrease was partially offset by ~~higher raw material~~pricing actions and ~~shipping costs due to supply chain challenges and strategic growth investments.~~net productivity savings.

IP operating income for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021 increased $15.3~~2022 decreased $10.6, primarily due to higher raw material and ~~$50.4, respectively.~~overhead costs. In addition, we recorded reserves of $4.6 primarily related to inventory and accounts receivables in connection with the Russia-Ukraine conflict. The ~~three-month period benefited from~~decrease was partially offset by net productivity savings ~~higher sales volume,~~ and favorable product mix. ~~The nine-month period benefited from net productivity savings, prior year cost actions, a decline in bad debt expense and prior period asset impairments of $16.3.~~

The increases for both periods were partially offset by unfavorable raw material prices, shipping, and labor costs. The nine-month period also experienced unfavorable product mix due to higher pump project sales.

CCT operating income for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 increased ~~$8.8 and $14.2, respectively,~~$13.9, driven by ~~higher sales~~increased volume and ~~savings from net productivity.~~productivity savings. These were partially offset by unfavorable raw material costs and ~~labor costs.~~sales mix.

Other corporate costs for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 increased ~~$4.5 and $12.2, respectively. The increase for both periods was~~$4.7, primarily driven by ~~higher incentive-based compensation,~~lower corporate-owned life insurance investment gains of $1.1, as well as ~~lower prior year personnel costs from proactive actions taken in response to the COVID-19 pandemic. The~~an increase in ~~other corporate costs for the nine-month period also reflected higher environmental-related costs of $4.5 due to insurance-related recoveries in the prior year.~~strategic M&A-related costs.

INTEREST AND NON-OPERATING EXPENSES AND INCOME, NET

The following table summarizes our net interest and non-operating expenses (income).

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 Change October 2, 2021 September 26, 2020 Change
Interest and non-operating expenses (income), net $ 0.5 $ 1.2 (58.3) % $ (4.3) $ 4.0 207.5 %



For the Three Months Ended	April 2, 2022		April 3, 2021		Change
Interest and non-operating income, net	$	(0.2)	$	(1.3)	(84.6)	%

The change during the three ~~and nine~~ months ended ~~October~~April 2, ~~2021 was~~2022 is primarily due to ~~a decline in postretirement-related costs mainly resulting from the termination~~higher interest expense of our U.S. qualified pension plan, which occurred in the fourth quarter of 2020. The nine-month period also benefited from a $3.4 gain from the final pricing adjustment in the second quarter of 2021 related to the plan termination.$0.5 associated with greater outstanding commercial paper borrowings.

INCOME TAX EXPENSE

The following table summarizes our income tax expense (benefit) and effective tax rate.


		Three Months Ended						Nine Months Ended
		October 2, 2021			September 26, 2020				October 2, 2021			September 26, 2020
Income tax expense (benefit)		$	14.1		$	(16.2)			$	182.7		$	(19.6)
For the Three Months Ended															For the Three Months Ended	April 2, 2022			April 3, 2021
Income tax expense															Income tax expense	$	19.5		$	24.7
Effective tax rate	Effective tax rate	13.9		%	25.4		%		46.2		%	(31.0)		%	Effective tax rate	20.6		%	22.2		%

~~This reorganization resulted in a refined projection of future earnings, which will result in the realization of a portion of our deferred tax assets.~~U.S. jurisdictions.

We are closely monitoring the potential passage of new U.S. tax legislation, which could result in substantial changes to the current U.S. tax system, including changes to the statutory corporate tax rate. Further, changes in tax laws resulting from the Organization for Economic Cooperation and Development’s (“OECD”) multi-jurisdictional plan of action to address base erosion and profit shifting could adversely impact our effective tax rate. As the effects of a change in U.S. 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.

See Note 6,5, Income Taxes, to the Consolidated Condensed Financial Statements for further information.

LIQUIDITY

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. Significant factors that affect our overall management of liquidity include our cash flow from operations, credit ratings, the availability of commercial paper, access to bank lines of credit, term loans, and the ability to attract long-term capital on satisfactory terms. We assess these factors along with current market conditions on a continuous basis, and as a result, may alter the mix of our short- and long-term financing when it is advantageous to do so. We expect to have enough liquidity to fund operations for at least the next 12 months and beyond.

We manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We ~~have identified and continue to look for opportunities to access cash balances in excess of local operating requirements to meet~~support our global liquidity needs in a cost-efficient manner. We plan to continue to transfer cash between certain international subsidiaries and the U.S. when it is cost effective to do so. We will also continue to support growth and expansion in markets outside of the U.S. through the enhancement of existing products and development of new products, increased capital spending, and potential foreign acquisitions. We look for opportunities to access cash balances in excess of local operating requirements to meet our global liquidity needs in a cost-efficient manner. We transfer cash between certain international subsidiaries and the U.S. when it is cost effective to do so. During the ~~nine months~~year ended ~~October 2,~~December 31, 2021, we had net cash distributions from foreign countries to the U.S. of ~~$48.3. During the year ended December 31, 2020, we had net cash~~$116.9. We did not have any distributions ~~from foreign countries~~ to the U.S. ~~of $498.2.~~during the three months

ended April 2, 2022. The timing and amount of any additional future distributions ~~remains under evaluation~~will be evaluated based on our jurisdictional cash needs.

The Company also continues to evaluate the various global governmental programs instituted in response to COVID-19, including the American Rescue Plan Act of 2021 (ARPA). ARPA builds upon many of the measures in the CARES Act from March 2020 and the Consolidated Appropriations Act from December 2020. ARPA and various global programs in the jurisdictions in which we operate generally provide for employee retention credits, workforce incentives, and incentive financing programs backed by governmental agencies. During the three and nine months ended October 2, 2021, the Company recognized a benefit of $0.9 and $5.0, respectively, from the employee retention credit. During the three and nine months ended September 26, 2020, the Company recognized a benefit of $1.8 and $8.7, respectively. The benefit was recorded in operating income and related to the employer portion of payroll taxes. Certain non-U.S. jurisdictions have enacted similar stimulus measures. As of October 2, 2021, we have not incurred any borrowings under governmental loan programs. We continue to monitor any effects that may result from the ARPA and 2020 CARES Act or other similar legislation globally.

The amount and timing of dividends payable on our common stock are within the sole discretion of our Board of Directors and will be based on, and affected by, a number of factors, including our financial position and results of operations, available cash, expected capital spending plans, prevailing business conditions and other factors the Board of Directors deems relevant. Therefore, ~~there can be no~~we cannot provide any assurance as to what level of dividends, if any, will be paid in the future. In the ~~third~~first quarter of ~~2021,~~2022, we declared a dividend of ~~$0.22~~$0.264 per share for shareholders of record on ~~September 13, 2021,~~March 9, 2022, which was a ~~30%~~20% increase from the quarterly dividends declared in ~~2020.~~2021. Dividend payments during the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 amounted to ~~$57.0.~~$22.4.

During the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, we repurchased and retired ~~1.1~~2.1 and ~~1.7~~0.6 shares of common stock for ~~$100.0~~$177.8 and ~~$73.2,~~$50.0, respectively, under our share repurchase plans.

Separate from our share repurchase plans, the Company repurchased ~~0.2~~0.1 shares and ~~0.2~~0.1 shares during the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, respectively, for an aggregate price of ~~$11.7~~$8.4 and ~~$10.7,~~$11.0, respectively, in settlement of employee tax withholding obligations due upon the vesting of RSUs and PSUs. All repurchased shares are ~~canceled~~retired immediately following the repurchases.

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. ~~Commercial~~

The following table presents our outstanding commercial paper borrowings.


	April 2, 2022		December 31, 2021
Commercial Paper Outstanding - U.S. Program	$	324.7	$	150.0
Commercial Paper Outstanding - Euro Program	160.2		45.4
Total Commercial Paper Outstanding	$	484.9	195.4

The increase in commercial paper outstanding from December 31, 2021 to April 2, 2022 was primarily related to funding our share repurchase activity as well as our acquisition of ~~$196.4 as of October 2, 2021 was issued through both the Company’s U.S.~~Habonim Industrial Valves and ~~Euro programs. Commercial paper outstanding under the U.S. program was $150.0, and was used to partially fund the divestiture of the entity holding legacy asbestos-related assets and liabilities (see~~Actuators Ltd. (Habonim), which occurred on April 4, 2022. See Note 19, ~~Commitments and Contingencies~~Acquisitions~~). Commercial paper outstanding under~~, to the ~~Euro program was $46.4. As of December 31, 2020, we had commercial paper outstanding of $104.3, issued entirely under the Company’s Euro program.~~ Consolidated Condensed Financial Statements for further information.

All outstanding commercial paper for both periods had maturity terms of less than three months from the date of issuance.

Revolving Credit ~~Agreements~~Agreement

On August 5, 2021, we entered into a revolving credit facility agreement with a syndicate of third party lenders including Bank of America, N.A., as administrative agent (the 2021 ~~Revolving Credit Agreement). Upon its effectiveness, this agreement replaced our existing $500 revolving credit facility due November 2022 (the 2014~~ Revolving Credit Agreement). The 2021 Revolving Credit Agreement matures in August 2026 and provides for an aggregate principal amount of up to $700 of (i) revolving extensions of credit (the revolving loans) outstanding at any time, and (ii) letters of credit for a face amount of up to $100 at any time outstanding. 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. 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. 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 ~~October~~April 2, ~~2021~~2022 and December 31, ~~2020,~~2021, we had no outstanding borrowings under the ~~current or former revolving credit facility.~~2021 Revolving Credit Agreement. See Note ~~14,~~13, Debt, to the Consolidated Condensed Financial Statements for further information.

Sources and Uses of Liquidity

Our principal source of liquidity is our cash flow generated from operating activities, which provides us with the ability to meet the majority of our short-term funding requirements. The following table summarizes net cash derived from or used in operating, investing, and financing activities from continuing operations, as well as net cash from discontinued operations.


For the Nine Months Ended		October 2, 2021		September 26, 2020
For the Three Months Ended						For the Three Months Ended	April 2, 2022		April 3, 2021
Operating activities	Operating activities	$	(127.9)	$	318.1	Operating activities	$	(2.7)	$	70.8
Investing activities	Investing activities	(53.9)		(50.4)		Investing activities	(29.4)		(17.1)
Financing activities	Financing activities	(74.2)		(109.9)		Financing activities	96.6		(122.8)
Foreign exchange	Foreign exchange	(18.5)		12.2		Foreign exchange	(1.5)		(10.4)
Total net cash (used in) provided by continuing operations	Total net cash (used in) provided by continuing operations	(274.5)		170.0		Total net cash (used in) provided by continuing operations	63.0		(79.5)
Net cash (used in) provided by discontinued operations	Net cash (used in) provided by discontinued operations	0.7		0.2		Net cash (used in) provided by discontinued operations	(0.1)		(0.1)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	(273.8)	$	170.2	Net change in cash and cash equivalents	$	62.9	$	(79.6)

Operating Activities

The decrease in net cash from operating activities of ~~$446~~$73.5 was primarily due to ~~a one-time cash payment of $398.0 during the second quarter of 2021 related to the divestiture of the entity holding legacy asbestos-related assets and liabilities. In addition, we made~~increased working capital investments ~~in our business~~ to support sales ~~growth. These items were partially offset~~growth and mitigate continued supply chain disruptions, and the timing of accounts receivable collections. In addition, incentive compensation payments increased in the current year due to ITT’s financial performance in 2021 versus prior year, which was significantly impacted by ~~an increase in~~the COVID-19 pandemic. Additionally, segment operating ~~income.~~

income decreased from the prior year.

Investing Activities

The increase in net cash used in investing activities was driven by an increase in capital expenditures ~~which were $52.6 and $47.6 during the nine months ended 2021 and 2020, respectively.~~of $12.8.

Financing Activities

The ~~decrease~~increase in net cash ~~used in~~from financing activities of ~~$35.7~~$219.4 was ~~primarily driven by~~due to an increase in net commercial paper borrowings of ~~$64.7 and prior year revolver repayments, net of borrowings, of $28.9. These items were~~$333.3, partially offset by an increase in repurchases of ITT common stock ~~and dividends paid.~~of $113.9.

KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES

Management reviews a variety of key performance indicators including revenue, segment operating income and margins, and earnings per share, some of which are calculated with accounting principles other than those generally accepted in the United States of America (GAAP). In addition, we consider certain measures to be useful to management and investors when evaluating our operating performance for the periods presented. These measures provide a tool for evaluating our ongoing operations and management of assets from period to period. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including, but not limited to, acquisitions, dividends, and share repurchases. Some of these metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for measures determined in accordance with GAAP. We consider the following non-GAAP measures to be key performance indicators. These measures may not be comparable to similarly titled measures reported by other companies.

•“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. We believe 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.

The following tables include a reconciliation of revenue to organic revenue by segment.


Three Months Ended October 2, 2021		Motion Technologies				Industrial Process				Connect & Control Technologies				Eliminations			Total ITT
2021 Revenue			$	332.3			$	210.7			$	147.1			$	(0.5)		$	689.6
Three Months Ended April 2, 2022																					Three Months Ended April 2, 2022	Motion Technologies				Industrial Process				Connect & Control Technologies				Eliminations			Total ITT

2022 Revenue																					2022 Revenue		$	370.1			$	202.2			$	154.6			$	(0.7)		$	726.2

Foreign currency translation	Foreign currency translation		(5.3)				(0.8)				0.2				—			(5.9)			Foreign currency translation		13.9				3.9				2.2				(0.1)			19.9
2021 Organic revenue			$	327.0			$	209.9			$	147.3			$	(0.5)		$	683.7
2020 Revenue			$	271.8			$	194.1			$	125.9			$	(0.6)		$	591.2
Organic growth			55.2				15.8				21.4				0.1			92.5
Percentage change			20.3		%		8.1		%		17.0		%					15.6		%

Nine Months Ended October 2, 2021
2022 Organic revenue																					2022 Organic revenue		$	384.0			$	206.1			$	156.8			$	(0.8)		$	746.1
2021 Revenue	2021 Revenue		$	1,045.0			$	626.9			$	408.9			$	(1.2)		$	2,079.6		2021 Revenue		$	369.1			$	202.3			$	127.3			$	(0.3)		$	698.4

Foreign currency translation			(43.1)				(9.4)				(3.6)				—			(56.1)
2021 Organic revenue			$	1,001.9			$	617.5			$	405.3			$	(1.2)		$	2,023.5
2020 Revenue			$	769.0			$	614.7			$	387.5			$	(2.0)		$	1,769.2
Organic growth (decline)	Organic growth (decline)		232.9				2.8				17.8				0.8			254.3			Organic growth (decline)		14.9				3.8				29.5				(0.5)			47.7
Percentage change	Percentage change		30.3		%		0.5		%		4.6		%					14.4		%	Percentage change		4.0		%		1.9		%		23.2		%					6.8		%

•“Adjusted operating income” and “Adjusted segment operating income” are defined as operating income, adjusted to exclude special items that include, but are not limited to, ~~asbestos-related impacts,~~ restructuring, severance, certain asset impairment charges, certain acquisition-related impacts, ~~and~~ unusual or infrequent operating ~~items.~~items and, for 2021, asbestos-related impacts. 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” and “Adjusted segment operating margin” are defined as adjusted operating income or adjusted segment operating income divided by revenue. 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 evaluating operating performance in relation to our competitors.

The following tables include a reconciliation of operating income to adjusted operating income by segment.

Three Months Ended October 2, 2021 Motion
Technologies Industrial
Process Connect & Control
Technologies Total
Segment Corporate Total ITT
Operating income (loss) $ 53.6 $ 32.4 $ 25.2 $ 111.2 $ (9.5) $ 101.7
Restructuring costs 4.1 0.5 (0.1) 4.5 — 4.5
Other(b)
— — — — 0.6 0.6
Adjusted operating income (loss) $ 57.7 $ 32.9 $ 25.1 $ 115.7 $ (8.9) $ 106.8
Adjusted operating margin 17.4 % 15.6 % 17.1 % 16.8 % 15.5 %
Nine Months Ended October 2, 2021
Operating income $ 194.3 $ 94.9 $ 54.9 $ 344.1 $ 47.1 $ 391.2
Asbestos-related benefit, net(a)
— — — — (74.4) (74.4)
Restructuring costs 4.1 1.4 2.4 7.9 0.3 8.2
Other(b)
— — — — 2.3 2.3
Adjusted operating income (loss) $ 198.4 $ 96.3 $ 57.3 $ 352.0 $ (24.7) $ 327.3
Adjusted operating margin 19.0 % 15.4 % 14.0 % 16.9 % 15.7 %


Three Months Ended April 2, 2022	Motion Technologies				Industrial Process				Connect & Control Technologies				Total Segment				Corporate			Total ITT











Operating income		$	59.7			$	20.4			$	25.7			$	105.8			$	(11.2)		$	94.6
Impacts related to Russia-Ukraine conflict		4.2				4.6				—				8.8				—			8.8
Restructuring costs		—				0.2				0.1				0.3				—			0.3

Other(a)		0.9				0.6				—				1.5				0.9			2.4
Adjusted operating income		$	64.8			$	25.8			$	25.8			$	116.4			$	(10.3)		$	106.1

Adjusted operating margin		17.5		%		12.8		%		16.7		%		16.0		%					14.6		%

Three Months Ended September 26, 2020 Motion
Technologies Industrial
Process Connect & Control
Technologies Total
Segment Corporate Total ITT
Operating income (loss) $ 50.4 $ 17.1 $ 16.4 $ 83.9 $ (146.4) $ (62.5)
Restructuring costs — 10.2 1.3 11.5 — 11.5
Asbestos-related costs, net(a)
— — — — 141.4 141.4
Other(c)
— 0.1 — 0.1 0.3 0.4
Adjusted operating income (loss) $ 50.4 $ 27.4 $ 17.7 $ 95.5 $ (4.7) $ 90.8
Adjusted operating margin 18.5 % 14.1 % 14.1 % 16.2 % 15.4 %
Nine Months Ended September 26, 2020
Operating income (loss) $ 113.9 $ 44.5 $ 40.7 $ 199.1 $ (131.8) $ 67.3
Restructuring costs 14.0 18.1 8.0 40.1 2.4 42.5
Asbestos-related costs, net(a)
— — — — 116.7 116.7
Asset impairment charges(d)
— 16.3 — 16.3 — 16.3
Other(c)
— 0.6 0.2 0.8 — 0.8
Adjusted operating income (loss) $ 127.9 $ 79.5 $ 48.9 $ 256.3 $ (12.7) $ 243.6
Adjusted operating margin 16.6 % 12.9 % 12.6 % 14.5 % 13.8 %


Three Months Ended April 3, 2021	Motion Technologies				Industrial Process				Connect & Control Technologies				Total Segment				Corporate			Total ITT











Operating income		$	76.0			$	31.0			$	11.8			$	118.8			$	(8.9)		$	109.9
Restructuring costs		—				0.9				2.4				3.3				0.3			3.6
Asbestos-related costs, net		—				—				—				—				2.4			2.4


Other(a)		—				—				—				—				1.1			1.1
Adjusted operating income		$	76.0			$	31.9			$	14.2			$	122.1			$	(5.1)		$	117.0

Adjusted operating margin		20.6		%		15.8		%		11.2		%		17.5		%					16.8		%

(a)~~See Note 19,~~ ~~Commitments and Contingencies, for further information.~~

~~(b)~~Includes accelerated amortization of an intangible ~~asset.~~asset and severance charges.

~~(c)Primarily includes acquisition-related costs and a gain on sale of excess property.~~

~~(d)Asset impairment charges are related to a business within IP that primarily serves the global upstream oil and gas market.~~

3326

•“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, ~~asbestos-related impacts,~~ restructuring, severance, certain asset impairment charges, ~~pension termination and settlement impacts,~~ certain acquisition-related impacts, income tax settlements or adjustments, ~~and~~ unusual or infrequent ~~items.~~items and, for 2021, asbestos-related impacts. 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. “Adjusted income from continuing operations per diluted share” (Adjusted EPS) is defined as adjusted income from continuing operations divided by diluted weighted average common shares outstanding. We believe that adjusted income from continuing operations and adjusted EPS 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.

The following table includes reconciliations of income from continuing operations to adjusted income from continuing operations.

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020
Income (loss) from continuing operations attributable to ITT Inc. $ 86.6 $ (48.0) $ 211.8 $ 82.1
Net asbestos-related costs, net of tax expense (benefit) of $0.0, ($33.8), $113.5 and ($28.4), respectively(a)
— 107.6 39.1 88.3
Tax-related special items(b)
(4.7) (0.1) 2.9 (33.3)
Restructuring costs, net of tax benefit of $1.5, $0.9, $2.1 and $8.5, respectively 3.0 10.6 6.1 34.0
Asset impairment charges, net of tax benefit of $0.0, $0.0, $0.0 and $0.1, respectively(c)
— — — 16.2
Other, net of tax (benefit) expense of ($0.1), ($0.4), $0.3 and ($1.0), respectively(d)
0.5 1.4 (0.8) 4.0
Adjusted income from continuing operations $ 85.4 $ 71.5 $ 259.1 $ 191.3
Income (loss) from continuing operations attributable to ITT Inc. per diluted share (EPS) $ 1.00 $ (0.55) $ 2.45 $ 0.94
Adjusted EPS $ 0.99 $ 0.82 $ 2.99 $ 2.19



For the Three Months Ended	April 2, 2022		April 3, 2021
Income from continuing operations attributable to ITT Inc.	$	74.8	$	86.2
Impacts related to Russia-Ukraine conflict, net of tax benefit of $(1.7) and $0.0, respectively	7.1		—
Net asbestos-related costs, net of tax benefit of $0.0 and $(0.5), respectively(a)	—		1.9
Tax-related special items	(1.2)		—
Restructuring costs, net of tax benefit of $(0.1) and $(0.5), respectively	0.2		3.1



Other special items, net of tax benefit of $(0.4) and $(0.3), respectively	2.0		0.8
Adjusted income from continuing operations	$	82.9	$	92.0
Income from continuing operations attributable to ITT Inc. per diluted share (EPS)	$	0.88	$	0.99
Adjusted EPS	$	0.97	$	1.06

(a)See Note ~~19,~~17, Commitments and Contingencies, for further information.

~~(b)Tax-related special items primarily reflect the impacts of valuation allowances.~~

~~(c)Asset impairment charges are related to a business within IP that primarily serves the global upstream oil and gas market.~~

~~(d)~~Other special items for the three- and nine-month periods of 2021 include accelerated amortization of an intangible asset. The nine-month period also includes a benefit from the finalization of the U.S. qualified pension plan termination. Other special items for the three- and nine-month periods of 2020 primarily include costs associated with the termination of U.S. qualified pension plan.

3427

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2, Recent Accounting Pronouncements, to the Consolidated Condensed Financial Statements for information on recent accounting pronouncements.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Company’s financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. The Company believes the most complex and sensitive judgments, because of their significance to the Consolidated Condensed Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the ~~2020~~2021 Annual Report describes the critical accounting estimates that are used in the preparation of the Consolidated Condensed Financial Statements. Actual results in these areas could differ from management’s estimates. There have been no material changes concerning the Company’s critical accounting estimates as described in our ~~2020~~2021 Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the information concerning market risk as stated in our ~~2020~~2021 Annual Report. See Note ~~20,~~18, Derivative Financial Instruments, to the Consolidated Condensed Financial Statements for information on the Company’s use of derivative financial instruments to mitigate exposure from foreign currency exchange rate fluctuations and commodity price fluctuations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) as of the end of the period covered by this Report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this Report, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

3528

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in legal proceedings that are incidental to the operation of our business. For a discussion of legal proceedings, see Note ~~19,~~17, Commitments and Contingencies to the Consolidated Condensed Financial Statements.

~~As described in Note 19,~~ ~~Commitments and Contingencies~~, on July 1, 2021, we completed the divestiture of InTelCo Management LLC (InTelCo), a former subsidiary which held our legacy asbestos-related assets and liabilities. In connection with the divestiture, we contributed approximately $398 to InTelCo. Pursuant to the purchase agreement, the buyer and InTelCo agreed to indemnify the Company and its affiliates for all legacy asbestos-related and other product liabilities, while the Company agreed to indemnify InTelCo and its affiliates for all other historical liabilities of InTelCo, which includes any losses with respect to release of, or exposure to, hazardous materials. These indemnification obligations are not subject to any cap or time limitation. As a result of the divestiture, we believe we have resolved our involvement in material legal proceedings related to asbestos exposure.

ITEM 1A. RISK FACTORS

Reference is made to the risk factors set forth in Part I, Item 1A, “Risk Factors”, of our ~~2020~~2021 Annual Report, which are incorporated by reference herein. There have been no material changes with regard to the risk factors disclosed in such report, other than as noted below and our risk factor regarding exposure to legacy asbestos claims and related assets, liabilities and cash flows that no longer applies to the Company after the divestiture of the entity holding asbestos-related assets and liabilities, as discussed in Note 19, ~~Commitments and Contingencies~~ ~~to the Consolidated Condensed Financial Statements, other than as noted~~ below.

~~The U.S. presidential executive order concerning mandatory COVID-19 vaccination~~Russia’s invasion of ~~U.S.-based employees of certain companies that are suppliers~~Ukraine, and the global response to it, could adversely impact our financial results.

Beginning in February 2022, the U.S. government and other nations have imposed significant restrictions on most companies’ ability to do business in Russia as a result of Russia’s invasion of Ukraine. It is not possible to predict the broader or longer-term consequences of this conflict, which could include further sanctions, embargoes, regional instability and geopolitical shifts which could have further adverse effects on macroeconomic conditions, security conditions, currency exchange rates and financial markets. Furthermore, such events have the potential to adversely impact the availability of commodities, commodity prices, and exacerbate global inflationary pressures. Such geopolitical instability and uncertainty has had and could continue to have a ~~material adverse~~negative impact on our ~~business~~ability to sell to, ship products to, collect payments from, and ~~results~~support customers in certain regions based on trade restrictions, embargoes and export control law restrictions. Logistics restrictions, including closures of ~~operations.~~

~~On September 9, 2021, U.S. President Biden issued an executive order requiring all employers with U.S. government contracts~~air space, could increase the costs, risks, and adverse impacts from these new challenges. War-related inflationary pressures could further reduce our gross margins as a result of rising input costs. We may also be the subject of increased cyber-attacks as a result of the Russia-Ukraine conflict. In the first quarter of 2022, we suspended our operations in Russia and recorded charges of $8.8 primarily related to ~~ensure that their U.S.-based employees, contractors,~~inventory and ~~subcontractors, that work on~~bad debt reserves. Annual sales to customers selling or supplying products to Russia or Ukraine, and reduced production of auto components made in ~~support~~Ukraine, were expected to be approximately $60 to $85 during 2022.A significant escalation or expansion of U.S. government contracts, are fully vaccinated by December 8, 2021, and it only permits limited exceptions for medical and religious reasons. In addition, on September 9, 2021, U.S. President Biden announced that he has directed the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) to develop an Emergency Temporary Standard (ETS) mandating either full vaccination or at least weekly testing of employees for employers with 100 or more employees. Although OSHA has not yet issued the ETS, it sent a proposed ETS to the U.S. White House’s Office of Management and Budget for review on October 12, 2021.

~~We cannot currently predict the impact that the executive order~~economic disruption or the OSHA ETS will have on our workforce or business operations. Certain of our businesses, including CCT, are U.S. government contractors with U.S.-based employees, contractors and/or subcontractors that service or support U.S. government contracts. Furthermore, employees not subject to the executive order requirement and who are not fully vaccinated may be subject to the ETS that will require them to get a COVID-19 test at least once a week. Additional vaccine mandates may be announced in jurisdictions in which our businesses operate. Our implementation of these requirements may result in attrition, including attrition of critically skilled labor, and difficulty securing future labor needs. In addition, if we are not able to meet the requirements for government contractors we may lose these orders. These requirementsconflict's current scope could have a material adverse effect on our business, financial condition, and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On October 30, 2019, the Board of Directors approved an indefinite term $500 share repurchase program (the 2019 Plan). We intend to utilize the 2019 Plan in a manner that is consistent with our capital allocation process, which has centered on those investments necessary to grow our businesses organically and through acquisition, while also providing cash returns to shareholders.

Purchases of equity securities by the issuer and affiliated purchasers

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

PERIOD TOTAL
NUMBER
OF SHARES
PURCHASED
AVERAGE
PRICE
PAID
PER SHARE(1)
TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS
7/4/2021 - 7/31/2021 — $ — — $ 438.7
8/1/2021 - 9/4/2021 0.2 $ 98.93 0.2 $ 413.7
9/5/2021 - 10/2/2021 0.3 $ 89.57 0.3 $ 388.7


(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) PERIOD	TOTAL NUMBER OF SHARES PURCHASED(1)	AVERAGE PRICE PAID PER SHARE(2)			TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS		APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS
1/1/2022 - 1/29/2022	0.3		$	102.12		0.3		$	357.3
1/30/2022 - 2/26/2022	0.8		$	87.23		0.8		$	286.2
2/27/2022 - 4/2/2022	1.0		$	80.24		1.0		$	206.2

(1)Includes shares purchased in settlement of employee tax withholding obligations due upon the vesting of RSUs and PSUs.

(2)Average price paid per share is calculated on a settlement basis and includes commissions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Disclosure pursuant to Section 219 of the Iran Threat Reduction & Syria Human Rights Act (ITRA)

This disclosure is made pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 which added subsection (r) to Section 13 of the Exchange Act (Section 13(r)). Section 13(r) requires an issuer to disclose in its annual or quarterly reports whether it or any of its affiliates have knowingly engaged in certain activities, transactions or dealings relating to Iran. Disclosure of such activities, transactions or dealings is required even when conducted outside the United States by non-U.S. persons in compliance with applicable law, and whether or not such activities are sanctionable under U.S. law.

In its 2012 Annual Report, ITT described its acquisition of all the shares of Joh. Heinr. Bornemann GmbH (Bornemann) in November 2012, as well as certain activities of Bornemann in Iran and the wind down of those activities in accordance with a General License issued on December 26, 2012 by the Office of Foreign Assets Control (the General License). As permitted by the General License, on or before March 8, 2013, Bornemann completed the wind-down activities and ceased all activities in Iran. As required to be disclosed by Section 13(r), the gross revenues and operating income to Bornemann from its Iranian activities subsequent to its acquisition by ITT were €2.2 million euros and €1.5 million euros, respectively. Prior to its acquisition by ITT, Bornemann issued a performance bond to its Iranian customer in the amount of €1.3 million euros (the Bond). Bornemann requested that the Bond be canceled prior to March 8, 2013; however, the former customer refused this request and as a result the Bond remains outstanding. Bornemann did not receive gross revenues or operating income, or pay interest, with respect to the Bond in any subsequent periods through ~~October~~April 2, ~~2021,~~2022, however, Bornemann did pay fees of approximately €8€1 thousand euros during the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and approximately ~~€11~~€10 thousand euros during ~~2020~~2021 to the German financial institution which is maintaining the Bond.

3730

ITEM 6. EXHIBITS


EXHIBIT NUMBER						DESCRIPTION

(10.1)*						Form of 2022 Performance Unit Award Agreement

(10.2)*						Form of 2022 Restricted Stock Unit Agreement

(31.1)						Certification pursuant to Rule 13a-14(a)/15d-14 (a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(31.2)						Certification pursuant to Rule 13a-14(a)/15d-14 (a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32.1)						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(32.2)						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(101)						The following materials from ITT Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~October~~April 2, ~~2021,~~2022, formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) Consolidated Condensed Statements of Operations, (ii) Consolidated Condensed Statements of Comprehensive Income, (iii) Consolidated Condensed Balance Sheets, (iv) Consolidated Condensed Statements of Cash Flows, (v) Consolidated Condensed Statements of Changes in Shareholders’ Equity, (vi) Notes to Consolidated Condensed Financial Statements, and (vii) Cover Page

(104)						The cover page from the Quarterly Report on Form 10-Q for the quarter ended ~~October~~April 2, ~~2021,~~2022, formatted in Inline XBRL (included in Exhibit 101).

*Management compensatory plan

3831

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



						ITT Inc.

						(Registrant)

By:						/s/ John Capela
						John Capela
						Chief Accounting Officer
						(Principal Accounting Officer)

~~November 4, 2021~~May 3, 2022

3932


As of and for the Three Months Ended September 26, 2020
June 27, 2020	86.3	$	86.3	$	2,398.2	$	(432.7)	$	3.2	$	2,055.0
Net (loss) income	—	—		(46.8)		—		0.5		(46.3)
Activity from stock incentive plans	0.1	0.1		5.4		—		—		5.5
Share repurchases	—	—		(0.2)		—		—		(0.2)

Dividends declared ($0.169 per share)	—	—		(14.7)		—		—		(14.7)

Total other comprehensive income, net of tax	—	—		—		25.3		—		25.3
Other	—	—		—		—		(0.1)		(0.1)
September 26, 2020	86.4	$	86.4	$	2,341.9	$	(407.4)	$	3.6	$	2,024.5


As of and for the Nine Months Ended September 26, 2020
December 31, 2019	87.8	$	87.8	$	2,372.4	$	(385.3)	$	2.9	$	2,077.8
Net income	—	—		86.0		—		0.8		86.8
Activity from stock incentive plans	0.5	0.5		10.9		—		—		11.4
Share repurchases	(1.9)	(1.9)		(82.0)		—		—		(83.9)
Cumulative adjustment for accounting change	—	—		(1.2)		—		—		(1.2)
Dividends declared ($0.507 per share)	—	—		(44.2)		—		—		(44.2)

Total other comprehensive loss, net of tax	—	—		—		(22.1)		—		(22.1)
Other	—	—		—		—		(0.1)		(0.1)
September 26, 2020	86.4	$	86.4	$	2,341.9	$	(407.4)	$	3.6	$	2,024.5


As of and for the Nine Months Ended	Total Assets				Capital Expenditures				Depreciation & Amortization
	October 2, 2021		December 31, 2020		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Motion Technologies	$	1,267.4	$	1,202.3	$	42.1	$	32.0	$	47.8	$	44.5
Industrial Process	1,007.9		1,069.6		4.1		6.2		16.7		18.0
Connect & Control Technologies	721.7		720.5		5.3		8.4		16.6		17.5
Corporate(c)	457.2		1,285.2		1.1		1.0		4.2		2.0
Total	$	3,454.2	$	4,277.6	$	52.6	$	47.6	$	85.3	$	82.0


	October 2, 2021		September 26, 2020
Beginning balance - January 1	$	19.1	$	7.5
Restructuring costs	9.9		43.3
Reversal of prior accruals	(1.7)		(0.8)
Cash payments	(11.3)		(24.5)
Asset write-offs	(0.6)		—
Foreign exchange translation and other	(0.7)		0.7
Ending balance	$	14.7	$	26.2
By accrual type:
Severance and other employee-related	$	14.5	$	25.8
Other	0.2		0.4


As of and for the Three Months Ended September 26, 2020
June 27, 2020	$	(131.5)	$	(301.2)	$	(432.7)
Net change in postretirement benefit plans, net of tax	1.8		—		1.8
Net foreign currency translation adjustment	—		23.5		23.5
September 26, 2020	$	(129.7)	$	(277.7)	$	(407.4)


As of and for the Nine Months Ended September 26, 2020
December 31, 2019	$	(133.3)	$	(252.0)	$	(385.3)
Net change in postretirement benefit plans, net of tax	3.6		—		3.6
Net foreign currency translation adjustment	—		(25.7)		(25.7)
September 26, 2020	$	(129.7)	$	(277.7)	$	(407.4)


Three Months Ended September 26, 2020	Motion Technologies				Industrial Process				Connect & Control Technologies				Total Segment				Corporate			Total ITT
Operating income (loss)		$	50.4			$	17.1			$	16.4			$	83.9			$	(146.4)		$	(62.5)
Restructuring costs		—				10.2				1.3				11.5				—			11.5
Asbestos-related costs, net(a)		—				—				—				—				141.4			141.4


Other(c)		—				0.1				—				0.1				0.3			0.4
Adjusted operating income (loss)		$	50.4			$	27.4			$	17.7			$	95.5			$	(4.7)		$	90.8

Adjusted operating margin		18.5		%		14.1		%		14.1		%		16.2		%					15.4		%

Nine Months Ended September 26, 2020
Operating income (loss)		$	113.9			$	44.5			$	40.7			$	199.1			$	(131.8)		$	67.3
Restructuring costs		14.0				18.1				8.0				40.1				2.4			42.5
Asbestos-related costs, net(a)		—				—				—				—				116.7			116.7
Asset impairment charges(d)		—				16.3				—				16.3				—			16.3

Other(c)		—				0.6				0.2				0.8				—			0.8
Adjusted operating income (loss)		$	127.9			$	79.5			$	48.9			$	256.3			$	(12.7)		$	243.6

Adjusted operating margin		16.6		%		12.9		%		12.6		%		14.5		%					13.8		%


(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) PERIOD	TOTAL NUMBER OF SHARES PURCHASED	AVERAGE PRICE PAID PER SHARE(1)			TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS		APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS






7/4/2021 - 7/31/2021	—		$	—		—		$	438.7
8/1/2021 - 9/4/2021	0.2		$	98.93		0.2		$	413.7
9/5/2021 - 10/2/2021	0.3		$	89.57		0.3		$	388.7