Welcome to ITT's 2023 Fourth Quarter Conference Call. Today is Thursday, February 8, 2024. Today's call is being recorded, and will be available for replay beginning at 12 PM Eastern. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. It is now my pleasure to turn the floor over to Mark Macaluso, Vice President, Investor Relations and Global Communications. You may begin.

Thank you, Kevin, and good morning. Joining me in Stamford today are Luca Savi, ITT's Chief Executive Officer and President; and Emmanuel Caprais, Chief Financial Officer. Today's call will cover ITT's financial results for the three and 12-month period ended December 31, 2023, which we announced this morning. Please refer to Slide 2 of the presentation available on our website, where we note that today's comments will include forward-looking statements that are based on our current expectations. Actual results may differ materially due to several risks and uncertainties, including those described in our 2023 annual report on Form 10-K and other recent SEC filings. Except where otherwise noted, the fourth quarter and full year results we present this morning will be compared to the fourth quarter and full year 2022 and include certain non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures are detailed in our press release and in the appendix of our presentation, both of which are available on our website. Before we begin, I want to call your attention to a change in the presentation of certain measures we have previously provided in ITT's earnings materials and SEC filings. The SEC has asked ITT to no longer disclose total segment operating income or margin, and total adjusted segment operating income or margin. We are therefore transitioning to operating income and margin, and adjusted operating income and margin on a consolidated basis. This metric is comprised of our previous segment operating income and adjusted segment operating income measures, respectively, minus corporate expense, which was previously presented below the segment operating income line in our earnings materials. Please note, this is not due to any error, correction or misstatement on ITT's behalf. We will continue to present the results for each segment individually, but because of this change, they will no longer be aggregated to disclose total segment operating income or margin. We believe that previous measures are easily derivable from our reported results. With that, it's now my pleasure to turn the call over to Luca, who'll begin on Slide 3.

Thank you, Mark, and good morning. 2023 was an outstanding year for ITT. I would like to thank all ITTers for their hard work and dedication in consistently serving our customers, with quality products delivered on time despite continued challenging supply chain conditions. It was your efforts that allowed ITT to surpass $3 billion in revenue in 2023. Here are the highlights: 8% organic revenue growth; nearly 17% operating margin, up 100 basis points; 17% adjusted EPS growth to a new record level of earnings at $5.21; free cash flow of $430 million, up more than $250 million; and on the M&A front, we announced two strategic acquisitions in flow and connectors, while divesting two non-core businesses. On revenue growth, Industrial Process led the way with 14% organic revenue growth, including 16% in parts and service and 31% growth in projects. The projects growth was due to significant share gains driven by flawless execution. In Motion Technologies, Friction OE grew 13%, outpacing global auto production by roughly 600 basis points for the year. In Connect and Control Technologies, our aerospace and defense components business was up 25%. On profitability, our productivity and pricing actions drove a 100-basis-point improvement in margin expansion for the full year, bolstered by the performance in Industrial Process. IP grew margin 330 basis points, eclipsing 22%, while we continue to invest in product redesign, key competencies and lean. We also successfully closed the Seneca Falls foundry, which will enable the business to operate with a more efficient cost structure. There was considerable progress at Motion Technologies as well. For the full year, MT delivered a 16.2% operating margin, improving sequentially every quarter in 2023 and exiting Q4 with a run rate above 17%. The performance at Wolverine also significantly improved to a high-teens operating margin in December. With this performance and a more favorable price-cost dynamic, we remain confident in MT's ability to reach 18% during 2024. Moving to capital deployment. We strategically deployed cash across all key priorities in 2023. We invested more than $100 million towards capacity expansion in Friction to support EV share gains, productivity improvements in all businesses, and R&D to fund our next product innovations. When we were in Italy, together with the team, we reviewed the progress of our investment into the high-performance segment. The team has developed new product formulations, while the site construction is progressing on time. Most importantly, we already won multiple awards that will feed the plant, slated to start production in the fourth quarter. On M&A, we acquired specialty connectors manufacturer, Micro-Mode, and in January, closed the acquisition of marine cryogenic pumps leader, Svanehøj. I was fortunate to join the Svanehøj integration kick-off together with Fernando as we begin executing our playbook. Both teams were excited, aligned, focused on the right priorities, and ready to hit the ground running on day one. We have a robust and active pipeline of M&A opportunities today. In terms of returning capital to shareholders, we announced a 10% dividend increase in 2024, and as already mentioned, with a new $1 billion share repurchase program, which will provide additional flexibility and capacity. In total, we have deployed over $2.5 billion since 2019, nearly 2 times our adjusted free cash flow over the same period. When it comes to our 2023 performance, I'm incredibly humbled by our team's commitment and results. It has been a difficult few years, given all the macro challenges put in front of us, and our teams have risen to the occasion time and time again. We recognized some of their exceptional achievements at the Annual ITT Awards in December. Let me share a few. Our team from Korea has been accident-free for more than six years. Our Wolverine team from Dearborn, Michigan swiftly developed a new product formulation to replace a key raw material, whose production was discontinued. Our team in Nogales, Mexico overhauled their production planning process to significantly improve our on-time delivery. Lastly, our IP team secured large awards with ExxonMobil and other leading oil and gas producers, placing ITT technology on groundbreaking energy projects around the world. We are proud and grateful for the efforts of all ITTers, which drove the results we are announcing today. Now to 2024. We are in a strong position to continue the progress we made last year. Our EPS outlook of $5.45 to $5.90 is up 9% at the midpoint. We expect total revenue growth of 10%, driven by more than 4% organic revenue growth, compounded by the contribution from the Svanehøj acquisition. We anticipate our operating margin to be above 17% at the midpoint, and we are driving towards $450 million of free cash flow, driven by higher income and working capital improvements. I'm encouraged by the opportunities ahead and confident in our ability to outperform. Now, let's turn to Slide 4 to talk more about growth. At ITT, our ability to outgrow the competition comes from our ability to differentiate. Our teams differentiate in both performance and innovation. Let me talk about the performance aspect first. On Monday, we announced a three-year $80 million award in our flow business with ExxonMobil. Under the agreement, IP will supply ExxonMobil with our highly-engineered API centrifugal pumps, aftermarket parts and services to their existing facilities. We displaced several incumbents by offering a superior solution that will lower the total cost of ownership for our customers by improving pump uptime, and the dedicated project management team will provide world-class customer service and flawless execution. Well done Kelly, Juan and the entire IP team for your perseverance and the close collaboration you built with ExxonMobil. Moving to Friction. Our teams continue to gain share in the electrified vehicle market through superior quality, on-time delivery and perfect execution. In 2023, we more than doubled the number of electrified platform awards with leading OEMs, including Tesla, BMW, BYD, Great Wall and Geely. I'd like to draw your attention to our incredible growth of 49% in EV brake pad deliveries as we continue to win market share. As we've mentioned many times, electrification is good for ITT. On top of that, we are winning on ICE too. Despite the declining ICE market, we grew our delivery by 7%. As a result of all this, our global OE share rose over 100 basis points to more than 29% globally in 2023, led by Europe and China. Continuing with China, in November, the ITT leadership team and I spent four days finalizing ITT's 2024 plan. During this visit, we were fortunate to spend time on the shop floor in Wuxi to see the latest improvements and new investments. The team showcased many new electric vehicles, where we won brake pad contracts. Our penetration of the China market has been outstanding, and both local and Western OEMs recognize the value we create. Specifically, our in-region for-region strategy enabled us to design products tailored for the China market. To further support our OEM customers, we made significant investments in the testing facility at our Yellow Mountains site in Eastern China. In October at this location, the Friction team launched a best-in-class testing center, where, together with our customers, we will monitor the performance of their braking systems and solve their problems with speed and flexibility. This local approach has been a key driver of our Friction OE outperformance and organic revenue growth of over 20% for the year. It's because of this that our business in China will continue to be a growth driver for ITT over the long term. Now, let's turn to Page 5 to discuss ITT's differentiation through innovation. When the connectors team saw an opportunity in the energy storage systems market, they acted in record time, quickly developing connectors from design concept to commercialized products, and building an automated assembly line that enables scalable production. Our connectors will be used on several applications, in commercial, industrial and residential battery storage systems. They enhance power and signal transmission in batteries used for renewable energy sources. A year ago, ITT had no products in this space. Now, we have more than 60, and our portfolio continues to expand. Well done to the team for decisively acting when you saw the opportunity. We are also making inroads in eVTOL applications. We recently engineered a conditioned air system and vibration isolation equipment on a zero-emissions short-haul travel project together with our customer Beta. This is a large potential market for CCT with commercial and defense applications. Continuing in sustainable transport, in rail, the Axtone team has developed a highly-engineered 1G Buffer for intermodal freight transport. The team acted quickly to address a problem for our customers who were underserved by a single supplier. This product is used to protect goods and rail infrastructure and allows for safer loading between road and rail. It represents a $50 million addressable market expansion for Axtone, and we have already secured a multi-million dollar backlog after displacing the single-source incumbent in this segment. And still, there are further customers for us to conquer. These innovations all support sustainability. Yes, sustainability too is good for ITT. With that, let me now turn the call over to Emmanuel to discuss our Q4 results and 2024 outlook.

Thank you, Luca, and good morning. Beginning with revenue, our teams delivered 4% organic growth, with price realization and higher sales volumes contributing equally to this quarter's growth. Motion Technologies grew 7%, driven by double-digit growth in Friction OEM, including 30% in China. Importantly, our independent aftermarket sales grew 9% this quarter. CCT grew 3% year-over-year, with strong aerospace shipments, despite continued challenges in the supply chain. Connectors declined in the high single-digit range, driven by continued destocking in European distribution, despite a strong December. This was partially offset by growth in commercial aero OEM in North America. We believe distribution destocking will most likely persist through the first half of 2024, as inventory levels remain elevated. Finally, IP revenue ended the fourth quarter up 2% above last year, with strong parts shipments, service activity and pricing realization, partially offset by weaker baseline pump sales due to production and supply constraints. Importantly, orders in IP were up 5%, thanks to strong short-cycle activity, while project orders were nearly flat. On profitability, operating income grew 4%. Productivity added 90 basis points, while volume, mix and price added 10 basis points, net of other cost increases. This was partially offset by 110 basis points from corporate expenses and M&A costs, and 50 basis points from strategic investments. By segment, MT and CCT's margins were 17% and 19%, respectively, aligned with our expectations and growing sequentially for the third consecutive quarter. IP was nearly at 21% and ended the year above 22%, up 330 basis points from the year to cap an impressive 2023. Lastly, on free cash flow, our performance rebounded significantly in 2023. Our teams generated $430 million for the year, mainly driven by higher income and improved collections. However, we still have a sizable opportunity in inventory, especially in IP and CCT, that will benefit cash generation in 2024. Let's move to Slide 8 to look quickly at the earnings bridge for Q4. EPS growth for the quarter came from our operational performance and price realization, which outpaced labor and overhead inflation. The $0.04 of strategic investments include our design for cost improvements in pumps and connectors, investments in the high-performance vehicle segments, and productivity related to our lean initiatives. The corporate and other costs relate to M&A expenses and higher variable compensation. With this result, we grew adjusted EPS to $5.21 for the year and exceeded the midpoint of our initial EPS guidance by more than $0.40, while also making significant investments for the future. Looking ahead, we have a positive view of 2024. There are some lingering headwinds related to destocking and muted growth in some markets, mostly in Europe. However, with our backlog, which increased 13% in 2023, we are well positioned to grow again this year. Let's talk about each business briefly. Beginning with Motion Technologies, we expect global auto production to be slightly down from the prior year, in line with the latest IHS forecast due to weaker demand in Europe, particularly in the first half, and a flattish market in China. However, our revenue will be significantly boosted by our anticipated outperformance of more than 400 basis points globally in 2024. On rail, after a rebound in demand last year, we expect our current backlog to drive top line growth in 2024. This continues to be an area of growth for ITT due to public mass-transit investments in the US, Europe and China. Moving to Industrial Process, we are entering 2024 with a record backlog of nearly $700 million, which increased 16% in 2023, powered by large awards on energy, mining, and decarbonization projects. Our project share gains should continue to ramp as we saw with the ExxonMobil award that will start delivering in 2024, and we expect continued robust demand for parts and service. We also expect to generate around $160 million of revenue from Svanehøj. In total, IP revenue will grow more than 20%, while organic growth will be up mid to high single digits. Lastly, on Connect and Control Technologies, defense demand continues to be strong, and we expect commercial aero growth to continue as supply chain constraints ease further. On industrial connectors, we expect that surplus in inventory will carry over into the first half, which will weigh on CCT's growth. We are deploying plans to capture original equipment opportunities in Europe and China, as we did successfully in North America last year. Let's turn to Slide 10 to discuss our 2024 guidance further. With the dynamics just discussed, we expect total ITT revenue growth of 9% to 12%, and organic revenue growth of 3% to 6% for the year. Higher volumes and pricing actions will continue to aid our growth in 2024. We expect that volume, productivity and pricing will drive margin expansion of 80 to 140 basis points, excluding the dilutive impact at Svanehøj. At the segment level, Motion Technologies margin should expand over 100 basis points and hit 18% at some point in 2024. We expect CCT margin will be roughly flat to 2023, with the strong aerospace profitability weighed down by the impact of continued destocking in connectors. Finally, we expect Industrial Process to be slightly below 21% due to the year one dilutive impact of the Svanehøj acquisition. However, over the long term, we expect Svanehøj to be in line with or accretive to IP's segment margin. As a reminder, our adjusted segment margin includes M&A cost and intangible amortization. Excluding the impact of these items related to the Svanehøj acquisition, IP's margin will likely be almost 23% in 2024, all else equal. This revenue growth and operating margin expansion is expected to drive adjusted EPS growth of 9% at the midpoint. This includes the impact of the Svanehøj acquisition funding. In January, we entered into a $275 million term loan to fund a large portion of the purchase, with the rest being funded with commercial paper in the US. At today's interest rates, that amounts to roughly $0.20 headwind. Finally, on cash, after a record year where we increased free cash flow by $250 million compared to the prior year and more than doubled our free cash flow margin, we expect to grow our free cash flow again to more than $450 million. Let's move to Slide 11 to review our 2024 EPS bridge. As you can see, once again, most of our earnings growth is expected to come from operations and, to a lesser degree, our pricing actions. We will continue to invest in high-return projects to support growth, new product development and disruptive innovations. In terms of the first quarter performance, we anticipate driving mid-teens EPS growth to begin the year. We expect mid-single-digit organic revenue growth at the ITT level and in each segment. Margin is expected to be up 100 basis points, led by Motion Technologies, and IP margin will likely decline roughly 100 basis points, due primarily to the year-one impact of the Svanehøj acquisition. So, as you can see, we are in a good position to execute and outperform again in 2024. Let me now turn the call over to Luca to wrap up.

Thanks, Emmanuel. Before moving to Q&A, a few key points. We executed in 2023 across all businesses with strong orders, strong revenue growth, 100 basis points of margin expansion and 17% EPS growth. Friction continued to outperform, whilst IP won considerable share, including its largest single award ever. We completed the largest acquisition to date at ITT. We are proud of what our team accomplished all over the world, and we entered 2024 with a record backlog and our M&A pipeline remains rich and active. I look forward to sharing our progress with you throughout the year. Thank you for your continued support of ITT. It has been my pleasure speaking with you all this morning. Kevin, please open the line for Q&A.

Thank you. The floor is now open for questions. Our first question comes from Damian Karas with UBS. Your line is open.

Good morning, Damian.

Hey. Good morning, guys.

Hi, Damian.

Hey. Bonjour, Luca. Sorry, I cut out a few times, so missed some of your comments. But maybe we could start with IP margins. I know you said that you're expecting that to be slightly below 21%, but maybe you could just unpack the moving pieces there. Svanehøj dilution is a little bit more than we anticipated, but maybe you could just talk about the opportunity to work some of those costs down, you said, over time, Emmanuel. And then, maybe just any other things there, the closing of the foundry mix, if you could just unpack that? Appreciate it.

Absolutely, Damian. So, our IP margin will be down next year in Q1 and for the full year. What you attribute this to is the year-one impact of Svanehøj. This is an impact of roughly more than 250 basis points of margin. The reason for this is because Svanehøj adds $160 million of revenue but zero income. That has a very dilutive impact on IP's margin. Other than this, we continue to expect to grow pricing, so pricing will be a net benefit of - a benefit of more than 150 basis points as well as volume. Keep in mind that IP is expected to grow 9% next year, which is a large number on top of the 14% organically we achieved in 2023. Obviously, we're going to continue to drive productivity and cost reductions.

Okay, great. And then switching gears to MT. So, on the sales guide, you mentioned kind of expecting Friction - auto production to be down slightly, but 400 to 500 basis points of outperformance. What's your expectation for the rest of the business, thinking about Friction aftermarket and rail? And I'm just curious how you guys are thinking about the China market in particular and any potential risks there.

Sure. When we look at the rail market, I think we are expecting the rail market to be stronger for ITT next year. We had a very good backlog and good awards across all geographies, China, Europe, and North America. That is going to be positive for us in 2024, the rail. When you specifically talk about China, I think that we are expecting the market to be flat in 2024, but we will continue to outperform the market in China next year as well. Just to give you an idea, Damian, the team performed incredibly well in 2023, outperformance of more than 1,000 basis points in China. In Q4, despite the fact that we had more than 80 process validations, the team was able to deliver more than 99.9% on-time delivery. Just in Q1 this year, they have more than 30 starts of productions. So, China will continue to be good for ITT.

Okay. And Friction aftermarket, are you kind of assuming that's flat or does that return to growth?

Sure. Yes. Sorry, I forgot about that. Sorry, Damian. When it comes to the China aftermarket, as you can see, the independent aftermarket grew in Q4, was an easy compare. We will see some - as the destocking has stopped, we got that confirmation with the customer, and we will start seeing some growth in Q1 and then we will see for the rest of the year.

Terrific. Appreciate the color. Thanks a lot, guys.

Thanks, Damian.

Our next question comes from Nathan Jones with Stifel. Your line is open.

Good morning, everyone.

Good morning, Nathan.

Hi, Nathan.

I wanted to follow up on the Svanehøj and the impact on the financials here. You said no income, you've got $0.20 of headwind from interest expense. Are you adding all of the charges for the inventory step-up as well as the continuing amortization on Svanehøj, and that's why it has zero income in 2024?

Yeah. That's correct, Nathan. We don't special-out backlog amortization or any other intangible amortization. So, when you think about 2024, we are hit by this backlog amortization, probably until the beginning of 2025. From there on, we'll have the regular intangible amortization.

Could you then maybe talk about what that reported margin looks like in 2025 once we get rid of this non-continuing amortization from that business?

Well, I mean, it's a little early. What we want to say is what we talked about when we signed the deal. EBITDA is above 20% at Svanehøj. This is a very strong business with a very competent management team. You remember that we said that we expect to grow low double-digits the revenue base in the next five years. So, in 2024, we have $160 million of sales contribution. Importantly, we expect to generate cash in 2024 between $20 million and $30 million. This is the year one difficulty that we have to get over with, specifically with the backlog amortization. Svanehøj will be accretive to IP over the long-term.

Yeah. Just want to make sure everyone understands, the minus $0.20 of dilution to earnings in 2024 is not really what the business is doing. My follow-up question, CCT destocking. What impact are you expecting for destocking in CCT, and if there's a destocking anywhere else to have on revenue in 2024?

What we've seen is a lot of destocking has happened in 2023. When we talk to our customers, we start seeing some lingering destocking a little bit in 2024, probably will be true in Q1, and maybe a little bit in Q2 as well. We are talking about really the connectors side of the business.

To put some numbers on that, so industrial connector orders in 2023 were down 6%. We expect them to be down high-teens in 2024 for industrial connectors. Overall connectors will be roughly flat or a little down in 2024 in terms of orders.

And you said industrial connector orders are expected down high-teens in 2024?

That's correct, yes.

Thanks. Hey, good morning, guys.

Good morning, Joe.

Hi, Joe.

Thanks for taking my questions. First, maybe a theoretical question since the balance sheet is in a great position, it seems like you're going to be doing a bunch more deals going forward. Have you thought about considering reporting a cash EPS number, maybe kind of eliminating some of the noise associated with the backlog amortization? Any thoughts around that?

You're right, Joe. We decided not to special-out any intangible amortization. This is what we've been doing in the past. It's true that we're getting more and more acquisitive, at least that's what we want to do, obviously, keeping our rigor and our discipline, so that we do good deals and we secure returns. For the moment, we haven't really thought about disclosing cash EPS, but I think that we provide visibility by really highlighting the impacts of those acquisitions, especially in terms of Svanehøj's year one impact.

Yeah. No, that's helpful, and do appreciate all the details that you do provide. Maybe my other question is just talking through IP, obviously, a great story there. You did mention the baseline pump business. It sounded like there were still some supply chain issues that you're seeing in that business. Can you maybe just elaborate on that a little bit more? And like, what the expectation is for that business in 2024?

Sure. When you look at the short cycle, the short cycle orders in Q4 were up 7%. For the full year, they were up something between 7% and 8%, so it's been the strongest year ever when it comes to the orders of IP, the highest ever, but also the highest ever for the short cycle.

When you look at our revenue, to add further details, so our short-cycle revenue in IP was up 2%, and we expect that short-cycle revenue in 2024 will be up 8%. We're working through the supply chain constraints we have, mainly with casting and logistics. Those are impacting our ability to ship, as expected, but we're working through those issues. This is why we are confident we can deliver growth in 2024.

Great. Thanks, guys.

Thanks, Joe.

Our next question comes from Joe Giordano with TD Cowen. Your line is open.

Hey, good morning, guys. How are you?

Hi, Joe. Good.

Can I start on Motion Technologies? Can you talk about it? All the Friction wins in EV is great to see. Obviously, some of these platforms are small and just starting, so they don't have the scale. So, can you talk about what margins on EV versus ICE look like now? And maybe how much of your 2023 Friction was EV related?

It's true. When you talk about 150 platforms, some of those are relatively small. If you think about 30 starts of production in China in Q1, some of those are small. But let's not forget that also during 2023, some of the awards were the largest ever, like with the German premium OEMs. We won almost 100% of all their future EV platforms that we make around the world in China and in other parts, the Tesla Cybertruck where we won the front axle. There are several awards, small and medium. Our market share with Tesla now is more than 20%, and we'll keep on ramping up with the awards. Our market share with BYD in 2023 is roughly now 10% and will double in the next couple of years.

If you look at our EV, the share of the EV out of our original equipment revenue has been growing really fast. You may remember during our Investor Day, we said that 21% of our OE revenue was EVs. That number for 2023 has jumped to 35%. We're really excited by the share gains in EV. Our market share in electrified vehicles is higher than our global market share. As Luca was saying, we are agnostic. We like to win in EV and we like to win in ICE as well.

And then just a follow-up, switching over to the connectors business. You gave some commentary about orders in industrial connectors down high-teens in 2024. I'm just curious how much of that - I know we talked through 2023 that you guys were kind of benefiting in '23 by pushing new products like first time ever into the distribution chain. So, how much of that is just impossible comps because last year was the first year you ever put some of this stuff in?

For industrial connectors, when we talk about the wins in OE, this is more for aerospace and defense. Industrial connectors are more distribution. So, what you're seeing here is that we continue to get slammed by destocking on our industrial connectors through the distribution channel, and we're trying to offset that with aerospace and defense connector original equipment space. I think when you look at 2023, we were successful in doing that in original equipment in North America, and we're going to try to do that especially for defense in Europe and then some other OE applications such as battery charging for OE applications in China as well.

Thanks, guys.

Thanks, Joe.

Our next question comes from Matt Summerville with D.A. Davidson. Your line is open.

Good morning. In the prepared remarks, you mentioned some supply chain constraints in the baseline pump business. I was hoping you could elaborate on that a little bit and whether or not that's going to continue to impact volume in '24. And then I have a follow-up.

Yeah. So, we expect this to continue a little bit maybe in Q1, a little bit in Q2, mainly driven by casting and also logistics; a lot of the supply chain routes were blocked, as you know. We expect things to improve, especially as we ramp up some of our casting suppliers in North America. We've been able to find, especially in Mexico, some really good suppliers. We think this is going to help us absorb the capacity that we need.

Got it. And then just with respect to Svanehøj, it would be helpful if you could parse out the dilutive impact to IP margins. How much of that is being driven, ideally in dollars, by the temporary inventory step-up cost and then what is the level of ongoing intangibles amortization? Thank you.

The impact of Svanehøj on IP's margin, the dilution is a little bit more than 250 basis points. We have a large number - this is a business that has a long-tail backlog because it's a long-cycle business, which is much different from what we've seen in Habonim. That backlog spreads until early 2025. I think that you should expect to see that dilution all the way in 2024 and a little bit in 2025. When it comes to 2025, we will be able to provide you with a better view of the impact without this backlog amortization.

Thanks for getting me in here. I wanted to ask you guys about the Exxon award that you announced and you've talked about today. Can you talk a little more about how that opportunity just evolved? You mentioned that you displaced some competitors. So, was that Exxon coming to the market with a tender, or just how did that come about? Do you see any other opportunities out in the marketplace for similar larger scale awards like that?

ExxonMobil was looking at a framework agreement that would make many of their projects faster, and they were looking for a partner. What we were able to work on was collaborating for a long time with them to ensure that our offerings would reduce the total cost of ownership by improving pump uptime and reliability. The team has really collaborated closely with the customer for probably nine months to a year to ensure that we were offering what they were looking for. This is a great award that will feed us growth in the next three years. When we look at our market share of the pumps installed in ExxonMobil for ITT, it's a small percentage, so this is a market share gain story. There are other big oil producers where we had special agreements, such as we talked about the Bornemann pumps. Others are standardizing their carbon capture and their stop flaring with our technology. We do not have an agreement in place like this one, but I will not exclude similar opportunities for the future.

Great. That's helpful color, Luca. I just wanted to ask you about the Termoli plant and the ramping there. Thinking production starts in October. I would imagine it's a small impact on '24. Given the awards that you have and the visibility you have there, is there a way to think about what kind of tailwind or revenue contribution you expect heading into '25 as that facility ramps production and hits its stride?

I would say 2025 will obviously be a bigger impact than 2024. I want just to remind you that when you're talking about these facilities, they're high performance. By definition, you do not have a high volume of brake pads, but the price of those brake pads is going to be higher. There won't be huge volume, but it will be with healthy margins. Expect more benefits from that front definitely in 2025.

Hey, good morning. You have Sabrina Abrams on for Andrew. Just a question about maybe seasonality and moving through the year about the comment you made about mid-teens growth in Q1, but 9% for the full year. Does that imply less visibility in the second half? How should we think about the cadence of earnings through 2024?

So, the first part of your question is referring to revenue?

I thought that you made a comment about EPS growth being mid-teens in Q1.

That's correct. Let's start with 2023. In 2023, we experienced a significant increase in EPS throughout the year. Therefore, based on our exit rate in Q4 of 2023, it's expected that our year-over-year Q1 performance will be substantially higher. We anticipate mid-teens EPS growth in Q1 and low single-digit growth in Q2. Overall, we expect low double-digit growth in the first half, which will then taper down to mid-single-digit growth year-over-year in the second half. The continued ramp from Q4 will provide considerable year-over-year increases in the first half, followed by a slightly less aggressive growth in the second half, considering our performance in 2023.

Great, thank you so much. And then, I guess, thinking about price and inflation, I know you mentioned still seeing some significant price increases on the aero side. But what are your expectations for inflation in 2024? Are you seeing it normalize? Could you give some color on price contribution that's implied in the guide for next year?

On the price-cost side, I would say price-cost in 2024 will be slightly positive. We're moving towards a normalization, and we will see inflation abating. Think about Motion Technologies, the last two quarters, we have seen that contributing positively. As inflation abates, the pricing will adjust accordingly, but 2024 will be slightly positive on the price-cost side.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.

Thank you.