Welcome to ITT's 2026 First Quarter Conference Call. Today is Wednesday, May 6, 2026. Today's call is being recorded and will be available for replay beginning at 12 p.m. Eastern Time. 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. If you would like to ask a question at that time, please press star-11 on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 1-1 again. We ask that you please pick up your handset to allow optimal sound quality. It is now my pleasure to turn the call over to Carleen Salvage, Vice President, Investor Relations and FP&A. You may begin.

Thank you, Kathy, and good morning. Joining me in Stanford today are Luca Savi, ITT's Chief Executive Officer and President, President, and Emmanuel Capre, Chief Financial Officer. Today's call will cover ITT's financial results for the three-month period ended April 4th, 2026, 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 2025 annual report on Form 10-K and other recent SEC filings. Except where otherwise noted, the first quarter results we present this morning will be compared to the first quarter of 2025 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. As previously communicated during our fourth quarter 2025 earnings call, going forward ITT will include intangible amortization expenses related to acquisitions as a separate line item within the consolidated statement of operations and in its adjustments to earnings. In 2025, the impact of this reporting change on earnings per share was $0.13 in Q1 and $0.47 for the full year. All adjusted EPS figures presented going forward will be on this basis. A full reconciliation of the impact of the revision to adjusted operating income and margin, income from continuing operations, and EPS for each quarter in 2025 and the full year can be found in the supplemental materials at the end of our presentation available on our website. With that, it is now my pleasure to turn the call over to Luca, who will begin on slide three.

Thank you, Caroline, and good morning. Before I begin, I want to recognize our employees across ITT for delivering a very strong start to the year. In particular, our Middle East teams we delivered, despite the ongoing conflict and the challenges this has represented to their professional and thank you. In Q1, we demonstrated solid momentum across the portfolio, thanks to the disciplined execution and the tangible benefits of our M&A strategy. We delivered outstanding orders growth, above market revenue expansion, and robust earnings, exemplified by our 25% EPS growth in the quarter. We are truly pumped up. Here are some highlights. We grew orders 26% at 8% organically. We grew revenue 33% and 11% organically. We expanded margin by 130 basis points, and we delivered 25% adjusted EPS growth. In month one, we already produced net earnings, cash accretion, and promising top-line growth. This is all included in our newly formed flow technology segment that now combines industrial process and SPX flow. This was an outstanding quarter. Let's dive into the details. We grew revenue 33% and 11% organically with all businesses contributing. CCT, up 17%, grew industrial connector sales by 27%, and aerospace and defense by nearly 20%, and were already benefiting from the Boeing price negotiation clause last year. MT increased revenue by 15% and 5% organically, in an automotive market down 3%. as friction outperformed global vehicle production by more than 1,400 basis points. And to top it off, Flow Technologies' revenue was up 61% or 12% organically. The team delivered higher project sales, including from Zvaneo, which were up 44%. Well done, Glenn. Show cycle also grew 10% due to market share gains in all product categories. On orders, ITT grew 26% and 8% organically in Q1. Show in broad, CCT grew 10% organically on the back of strong aerospace demand and market share gains in industrial connectors. In flow technologies, we deliver 44% orders growth and 7% organically, driven by share gains in short cycle, including baseline pumps, continues to benefit from a GLP-1 project that keeps expanding in scope. And friction continues to gain market share with significant platform awards, including in the high performance segment. And last but not least, our book to build was 1.09. We delivered equally strong margin expansion of 130 basis points with all businesses contributing. Flow Technologies delivered 23.7% operating margin up 100 basis points thanks to significant contributions from volume and to a lesser extent, 21.1% MT delivered 130 basis points margin progression as productivity and volume growth more than offset price pressure. Finally, CCT expanded margin to 19.3% as volume growth and price both contributed. Moving to capital deployment, we closed the SPX flow acquisition one month ahead of schedule and with a leverage ratio comfortably below 3 at 2.7. The newly created flow technology segment boasts nearly $3 billion in revenue and is a global flow leader with premier brands in pumps, barbs, mixers, and other process solutions. The entire ITT leadership team actively participated in person to town hall meetings around the world with SPX Flow employees. We laid out our vision and our expectations and answered questions from highly engaged employees. I was fortunate enough to be in Delavan, Wisconsin, together with Rudy, our Waukesha Cherry Boral leader. I was encouraged by what I saw in the plant, by the enthusiasm of the local team, by their deep knowledge of the business, and their openness to do better and to do more. I also experienced this enthusiasm with Wendy, our mixing solutions leader, and our two other sites in Rochester, New York, and Palmyra, Pennsylvania. Their team has been working hard to improve material flows and overall equipment efficiency. Bartek, Wendy, Rudy, and I also share future growth plans. And whilst still early in the year, I'm heartened by the orders and sales growth we deliver in the first quarter to achieve high single-digit revenue growth for 2026. When it comes to synergies, the Flow Technologies team has been hard at work identifying and implementing actions to secure the $80 million cost of synergies. We've executed the first tranche related to corporate G&A cost reductions to deliver a third of the total synergies in year one. It's hard to deliver commercial synergies. And last week, the Waukesha Cherry Burrell business of SPX won its first order for an ITT Borderman Twin Screw Pump. Well done, Rudy and team. And Rodolfo, finally, a strategy to continue to cultivate and be active on smaller size M&A opportunities. In addition, in March, we also deployed $100 million towards share repurchases. On to guidance. Today we initiate on the new basis our full year adjusted EPS guidance with a range of $7.70 to $8, up 9% at the midpoint. We're guiding to 37% revenue growth and 5% organic growth at the midpoint with a book to build above 1%. and we expect SPX flow to contribute low-thens net-adjusted EPS accretion. This guidance builds on the profitable growth ITT has delivered over several years. Let us review our top-line growth trajectory since 2023 on slide 4. Over the past three years, we have delivered outstanding top-line growth with orders and revenue up over 9% on average every year, And we expect this strong growth trend to continue in 2026, bolstered by market share gains in our legacy businesses and the contribution of SPX flow. In CCT, for example, as defense spending ramps up, we've been awarded large multi-year contracts like F-35 and RSS in the U.S. And ground vehicles, radar, and precision-guided systems in Europe. were well-positioned to capture a significant portion of the incremental future spend out of our Weinstead facility in Germany. During my recent visit there, I sat down with our project managers who are collaborating with European contractors on the development of customized connectors for new defense applications. Well done, Marco and Junaid, on fostering this level of customer intimacy. In MT, our Coney business grew more than 30% over the last three years to become a $200 million platform, the shock absorber leader for high-speed trains in China. Moreover, our friction business continues to conquer platforms and win market share as demonstrated by the Q1 friction OE outperformance of over 1,400 basis points. At the end of last year, friction reached 32% of the global auto OE market and the share gain journey continues. Flow Technologies has been growing at a 15% revenue CAGR since 2023, in addition to the 12% organic growth and the 61% total revenue growth in Q1 this year. We continue to differentiate through a flawless project execution as demonstrated by Svanenhoi's growth of 44% with a book to build over 1.2%. Moving to backlog, we have nearly doubled it in the last three years. And it will continue to grow in 2026 as we strive towards a book-to-be-level one this year as well. With that, let me now turn the call over to Emmanuel to discuss Q1 results in detail on slide five.

Thank you, and good morning. As Luca highlighted, we kicked off the year with a very strong quarter. In Q1, we delivered outstanding growth across the business in orders, revenue, margin, and EPS. Our teams delivered $1.2 billion in revenue, up 33% in total and 11% organically. CCT grew 17% organically, fueled by strength in aerospace and defense and industrial, which were up approximately 20%. We're also realizing the benefits of the Boeing contract renewal. Flow technology grew 61% in total and 12% organically, driven by strong project shipments, including Svanahoy, which is up 44%, and short-cycle market share gains, especially in Valve, which is up 19%. MT grew 5% organically, a significant achievement in a down market. Friction OE outperformed global automotive production by over 1,400 basis points, with all regions above 1,000 basis points. And XPX flow added 17 points of growth to ITT. Profitability, operating income grew 42%, and margin expanded 130 basis points, primarily driven by strong operational performance in our legacy businesses and the XPX flow contribution. MT Operating Income grew 22% for a margin of 21.1% as the team drove net productivity of 220 basis points. Flow Technologies expanded margin 100 basis points to 23.7% driven by price and volume leverage. CCT delivered 20% income growth to a margin of 19.3% driven by aerospace volume growth and Boeing contract benefits. As previously stated, intangible amortization expense related to acquisitions is now excluded from adjusted operating income, including in the segment. EPS of $1.98 on the new basis was up an outstanding 25% versus the prior year. You will note the immediate net accretion of the XPX flow acquisition. Lastly, free cash flow of $14 million was impacted by $71 million of one-time acquisition-related expenses. Excluding these impacts, free cash flow was up 10% year-over-year. Let's now turn to the Q1 EPS bridge on slide 6. The 25% EPS growth was primarily driven by strong operational performance delivered by all businesses compounded by the month one net contribution of xpx flow included in the xpx flow contribution is income from operations partially offset by the higher interest expense and tax rate as well as the dilution from the december equity issuance and the equity given to loan star as part of the acquisition consideration four additional working days in q1 versus the prior that will be reabsorbed in Q4. Finally, we continue to invest in strategic programs such as VIDAR, FLARA, our friction high-performance segment, and the GeoPad onto slide 8 to discuss our 2026 outlook. With the XPX flow acquisition closed, we are now initiating our full-year outlook. We expect 37% total revenue growth and 5% organic at the midpoint, driven by aerospace and defense demand, strength in both flow projects and short cycle, and continued friction OE outperformance following an outstanding Q1. Continue to be ahead of expectations. We expect to deliver roughly 70 basis points of margin expansion to approximately 20% at the midpoint and productivity flow to deliver highs in 2026 and net adjusted EPS accretion in the low teams. Cost synergies are expected to be approximately $15 million in 2026. Regarding the Middle East, as a reminder, our overall exposure to the region is approximately 4% of total revenue and the conflict at minimal impact in our Q1 results. On cash, we expect to generate free cash flow of roughly $560 million at the midpoint, resulting in a free cash flow margin between 10 and 11%. Now, let's move to slide 9 to finish with the EPS outlook details. As you can see, the 9% EPS growth at the midpoint, much like Q1, will come from our differentiated execution comprised of above-market growth and productivity savings compounded by the XPX flow. The XPX flow contribution is net of higher interest expense due to the $2.9 billion debt debt we contracted in March, as well as a higher combined tax rate of 24.9%. It also includes a projected 90 million share count over the next three quarters. We will continue to invest part of the incremental profits generated to fund long-term growth initiatives. To briefly discuss, EPS is expected to be up high single digits in Q2 compared to the prior year we anticipate organic revenue growth in the mid single digits with flow technologies in the low double digits organically cct in the mid single digits and empty in the low single digits operating margin should extend by around 50 basis points compared to the prior year and approximately 20 percent expense is expected to increase meaningfully due to the acquisition of XPX flow. I now turn the call over to Luca to wrap up on slide 10.

Thanks, Emmanuel. A few points before Q&A. As you can see, we are pumped up for 2026. Our legacy business is firing on all cylinders. In Q1, we deliver 13% orders growth, 16% revenue growth, and continued margin expansion provided a boost with five percent orders growth in q1 14 revenue growth and the fast start in synergy capture strategy in action organic value creation through market share gains and relentless execution driving sustained margin expansion compounded by mna this is the commitment we made during our capital markets day and it remains our commitment today we do what we say And Q1, this is ITT. Before opening the line for Q&A, there is one more thing that we'd like to share. It's made even more bittersweet by the great results that we share with you all today. Our CFO for the last six years and my partner here at ITT for almost 14 years has told me that he's ready to take a break and will be leaving the company. Dear Emmanuel, thank you for everything you've done. As I told you, in the last 14 years, I probably spent more time with you than with my wife. I don't know if this tells more about our partnership or about my marriage. It has been a fantastic ride, full of challenges and achievements, the first day we met. You have always been there on my side, in the performed and in the transformed company indeed. In these 14 years, you made us better. I always knew I could count on you. you have been a real thought partner co-pilot to discuss with to work with to debate agree disagree with a real partner to bond with in these 14 years you made me much much better I was very fortunate to have found you that day Milan and work with you side by side for 14 years grazie di cuore in an advisory transition nelly vice president as interim cf connected to our call thank you for joining us today as always i appreciate your time and continued interest in itt kathy please open the line for q a Thank you.

The floor is now open for questions. At this time, if you do have a question or a comment, please press star one one on your touchtone phone. If your question has been answered, you may remove yourself by again pressing star one one. Again, we do ask that while you pose your question, you pick up your handset to provide optimal sound quality. Please limit your questions to one question and one follow-up thank you our first question comes to the line of Joe Giordani the line is now open hey guys good morning yeah Emmanuel I know you don't like the spotlight but you know you've been a great partner for all these years so I think we're all set to see you go so best of luck to you in the next.

Thank you, Joe.

Let's start. Luca, you never know everything about a deal, I guess, until you own it. So as SPX came into the portfolio, what was like a pleasant surprise to you versus what your initial views were? And was there anything there that you kind of realized, all right, maybe we have a little bit more work to do. Maybe this was a little different than what we thought.

That's very true, Joe. I think that we don't forget that we cultivated the SPX flow for three years. So we visited all the plants and we went deep dive on the due diligence. So we really have met many people and therefore we were able to find many things before the acquisition. I would say one thing that surprised me even more positively as I'd been able to walk the plant, to talk to the people on the shop floor, for example, in Delavan, is to see the commitment and the engagement of our workforce in the Delavan plant, in the Rochester plant, in the Palmyra plant in Pennsylvania. So the engagement of the workforce on the shop floor is something that I was able to experience and that definitely surprised me positively. I also was positively surprised by the growth potential that we have on the revenue synergies. We work hard on those. It's going to take more time because those are revenue synergies, but definitely there are there and more, and these are opportunities. Same on the cost. I think that all of those is good, and you start seeing good in the results. Good orders growth 5, revenue growth 15, accretive to APS, good pipeline visibility, and moving fast on the synergies. I think that from a cultural point of view, similar, but there are aspects that they do differently that both of us will have to adjust.

And then maybe your defense business has been doing great for a while now. If we have a larger trend here over the next several months towards like an ending of global hostilities, Does that create any sort of potential air pockets free anywhere?

No, we don't see that, Joe. I think that we have a portfolio that is broad in defense. And so we are on a lot of different applications. And so there's a lot of defense modernization. There's a large defense modernization trend that is happening both in the U.S. and in Europe. And we think that this is here to stay and this is a long-term trend.

Thanks, guys.

Thank you, Joe.

Thank you. Your next question comes from the line of Julian Mitchell with Barclays. Your line is now open.

Good morning, and thanks very much, and wish you all the best, Emmanuel. If we think about the first question really around the selling days dynamics, sorry for the fiddly question, but maybe help us understand, you know, how much of a contribution that was to sales or EPS in the first quarter and how we should think about the seasonality of EPS over the balance of the year as that selling days tailwind goes into reverse the country the contribution of the additional for selling days was around 5% five points of growth in the in the quarter from a revenue standpoint and then a little

less than ten cents from an EPS standpoint in Q1. When we think about the cadence of EPS I would say that the next few quarters are going to be you know around the 190 to 195 EPS Q3 and Q4.

That's really helpful thank you and then my follow-up would just be around if we're thinking about operating margins Kind of you know moving around a lot year on year Yeah, I think you guided up 50 bits in q2. They were up over a hundred in q1 and you've got a pretty wide Margin guide range for the year as a whole so maybe any sort of is there any phasing of investment spend to be aware of in the year and What are you assuming for the flow acquired?

Marge operating margin for the year as a whole including those synergies you mentioned please Yeah, I would say that from an operating margin standpoint, we expect continued progression during the year, and this is because of, obviously, the productivity improvements that we're driving in all the businesses, as well as some of the price actions that we're taking and that will have a full impact starting in Q2. So as of ITT, we drive margin progression year over year that is really key to our success. And then from an XPX flow standpoint, we had a really strong margin in Q1. And the reason for that is that we only had the month of March in there and March at five weeks, which is unusually large, so disproportionate impact in the quarter. We don't expect that margin to be the same in Q2, Q3, and Q4. However, we do expect that margin will continuously improve as we roll out our productivity plan as well as our growth initiatives. That's great. Thank you.

Thank you, Ian. Thank you for the next call.

Yes. Your next question comes from the line of Jeff Hammond with KeyBank Capital Markets. Your line is now open.

Hey, good morning, everyone, and good luck to Emmanuel. We're sad to hear you're leaving. As it sounds like, Luca, you are too. Just staying on SPX Flow, can you dig in a little more on, you know, the order trends in that business just from a market standpoint, And then it just, it seems like, you know, shorter term, you may be getting some early revenue synergies, but, you know, just the opportunities around, you know, leaning in on commercial excellence and starting to drive outgrowth. Because I think, you know, one of the early concerns with the acquisition was the legacy growth rate and how do you accelerate that? Thanks.

Sure. Thanks, Jeff. So when you look at the order's growth, was it good order growth of 5%? Now, that is overall for SPX flow in the quarter. When you look at the different businesses, you have Waukesha Cherry Burrell, our Eugenie Pumps, their orders were up double digits. Nutrition and Health Solution, their orders were up 3%. Mixers up 7%, and the Pumps up 2%. So, all the different businesses were up, actually, in terms of orders. and all of the four businesses were up also in revenue with nutrition and health and wakasha double digit and mixer and pump in the low single digit so but overall 15 percent okay we expect also the book to be for the full year to be above one for spx flow now this is very similar to what we said at the very beginning because during the due diligence we saw that pipeline and we believe in this growth. Now, this, to be honest, has got nothing to do with ITT. This is the good work that the SPX flow employees have done since nothing really has changed during the month of March. Now, if you top this off together with our approach, going after the 100%, not the 80-20, being more granular and being more decentralized, I will expect that performance to continue to improve.

Okay, great. And then just from a modeling standpoint, Emmanuel, you gave kind of the organic trends in the 2Q by segment, but how should we think about that with a note of four to six? And then just on the tax rate, is there an opportunity to bring that down over time? That was a little bit of a surprise that the tax rate's going up. Thanks.

Yeah. So for the four-year, After JAF, we expect both IP and CCT to lead the charge from an organic growth standpoint in the high single digits. And then motion technology is in the low single digits for the foyer because obviously there's a decline in automotive production and friction is really outperforming very, very nicely as we saw in Q1, but, you know, nonetheless, there's a global production that is down. And then from a tax rate standpoint, so today we stand at almost 25% at 24.9. This is the impact. This is directly the impact of XPX law. And so Mike and the team will work on tax opportunities in order to bring that tax rate down but I think with limited impact in 2026 and more to come in the years after thank you thank you your next question comes to the line of Nathan Jones with steeple your line is now open good morning everyone I'll add my best wishes to a manual um first question here on cct margins it seems over the you know the last few years you guys have

done done the work on improving the the value proposition to customers there even at i mean i'm talking outside of the the aerospace stuff uh improving the productivity improving uh the on-time delivery so i guess my question is about value-based pricing in cct and where you are in that process outside of the commercial OEM stuff and how much you think that could contribute to margins over the next you know two or three years thanks Nathan this is fair it's been also a good tailwind when you look at CCT in the last couple of years exactly for the reason that that you said price

negotiation with Boeing that we closed last year is a natural proof of what you just said having said that i think that there is more to do on the pricing on the on the cct front and this is what the team is working on i would say the largest opportunity to be fair nathan is probably in casaria so i think that casaria is providing a great service to our to our customers and i think that there is more to be done specifically in that part of cct i guess follow up question I'm always interested in revenue synergies out of this kind of deal and I'm sure

there is a lot of plans going on there I know they take longer to generate so I'm not going to ask you what they contribute to 2026 but maybe if you could just provide a little bit more color on on the things that you're working on where you see the opportunities to generate revenue synergies in and kind of if you have any target over time of of what that could add to the overall growth for ITC. Thanks.

Let's try to be specific. So when I was in Delavan together with Rudy and we were on the shop floor going around, we know that the Waukesha Cherry Burrell doesn't have the twin screw pumps. As a matter of fact, we were spending money in Waukesha to really develop a new twin screw pump. We did the assessment. Bornemann twin screw pumps are super good, very well recognized in the market, and therefore, you know, Waukesha will sell Bornemann twin screw pumps. That was just a small order that we had, but that is a start. And not only that we start selling, but then we will also localize our production of the twin screw in our plant in Delavan. That is a specific activity that I'm sure will deliver quite a bit of synergies latin america on the mixing front nico who's our leader in latin america is is working hard together with the leaders of the different units in from spx flow and i'm sure that as we localize more the decision making we speed it up the decision and the action in the region latin america and we get more intimate with the customers just be the fact that we are there That will provide good revenue synergies. The Middle East is another area where we're working on, but as you can imagine, that probably at this point in time is more planning and discussion. And then there are potential synergies happening just because now we have a base in Shidu, Shanghai, where we never had a plan before in the legacy flow technologies, in the legacy IP, and a plant in Poland where we never had in Europe a low-cost-based manufacturing. So we are working hard on all those fronts.

Thanks for taking the questions.

Thank you.

Thank you. Your next question comes to the line of Vlad Bistricchi with Citigroup. Your line is now open.

Good morning, guys. Thanks for taking my call. And I echo the sentiment. Congratulations, Emmanuel. We'll miss working with you tremendously. obviously.

Thank you.

Um, I guess, uh, my first question, um, just when I look at the organic growth outlook for the year, the plus four to six, it seems very consistent with what you were thinking coming into the year, but can you talk about whether, um, you know, there's been any sort of moving pieces underneath that, you know, businesses or regions that are trending better or worse versus three months ago, and I guess specifically whether you're baking in any incremental headwinds in the Middle East associated with conflict there.

No major, no major, and sure, the Middle East is something to watch, but now just to give you a perspective of the Middle East, which is 4% of total year revenue, we have an impact in Q2, but the impact in Q2 is probably less than 1% of the IT revenue. It's probably between 0.5 and 0.7 of the sales when it comes to the Middle East. I think that there is a very strong performance in the short cycle when you look at the spare parts, the baselines, and I want to tell you that growth is non-nominal growth. That is real growth. This is volume growth. There was a little bit of price, but that was minimum. And then also the connectors, industrial sales, both with the OEM and distribution. And those, Vlad, those are market share gains in flow and also the connector side.

That's really helpful, Luca. And I guess just following up on that one, on the industrial connectors, can you, you know, when you talk about market share gains there, Can you give us any more color on, you know, what specific end markets or verticals you're seeing share gains and any notable regional differences to call out there?

I think that there is a very good performance in Asia-Pacific where the team has worked really hard on the medical side. And medical has been growing incredibly, incredibly hard. And then also on the HVOR. So Asia Pacific and China has been definitely a good tailwind, whereas I would say when you look at Europe on the others' front, it's really working hard on the defense because of the defense ramp-up that is happening in Europe. And in North America, you have really – the distribution is wider, so it would be difficult really to really pointing out to any specific market. Thanks.

I'll hop back in here.

Thank you. Your next question comes to the line of Brad Hewitt with Wolf Research. Your line is now open.

Hey, good morning. Thanks for taking my questions.

Hi, Brad.

So you mentioned that your friction business outgrew auto-build by 1,400 basis points during the quarter. Curious if you expect that outgrowth versus builds to compress for the rest of the year, or could there perhaps be upside this year to the typical algorithm of 400 to 500 basis points of outgrowth?

Listen, this is an exceptional performance. How does in a market that was down 3.4 in the quarter actually to grow? Show the resilience of the team, the resilience of the business. I would say for the time being, this is only one quarter. So I would say we stick to our usually forecast of an outperformance between 500 and 700 basis points for the full year. What I really like about this outperformance was that it was spread within every region. was in China, it was in Europe, where we already had a high market share, and was also in North America. And last but not least is, you know, we won 39 platforms, electrified platforms in the quarter, which will feed, you know, future market share gains. And whilst production will be down this year to 91 million vehicles, the production of hybrid and the production of EV will actually grow double digit. And this is where we are particularly strong.

Okay, great. And then as we think about at the total company level, can you walk through your assumptions for the year in terms of the net price cost equation, as well as some of the moving pieces related to tariffs and material inflation? Thank you.

Sure. On the price cost, you really have the usual dynamic in terms of you have a very good price cost equation when it comes to IP and CCT because we've got more pricing power, less so in motion technology where we feel the price pressure. But overall, for the full year at ITT, the price cost is going to be positive. Now, when you look at the tariff, the situation is very fluid. I'm pretty sure the next few weeks is going to be different than what it is today. Now, we are actively pursuing any opportunity to recover any tariffs that we already paid, but we think that process will be long, and who knows how it's going to pan out. And then what I would like to highlight is that, as we demonstrated in 2025, we were able to offset all the tariffs with commercial and productivity actions. So we think that that would be a similar scenario in 2026.

Great. Thanks, Luca.

Thank you. Your next question is at Somerville with D.A. Davidson.

Your line is now open. thanks um echo similar sentiment uh emmanuel um just two quick ones for me can you talk about the core sort of industrial process funnel as you look ahead relative to maybe what you were seeing 90 days ago or a year ago whatever makes sense to drive the most informed sort of comparison as to how that's evolving and then have a follow-up it's very it's very healthy it's elevated and is actually year over year, potentially two.

Now, what is interesting is that then if you want to go a little bit more granular and you look at the region, I would say the region where the funnel is up the most is North America, which is interesting because this is where we had our largest orders growth in North America. And despite that, the funnel is up tremendously, which tells us something about the replenishment speed of the opportunity in North America the funnel is that down when you look at the Europe and the Middle East for obvious reasons because all the commercial conversation the investment that we had with Saudi Aramco for example all of those are frozen but we expect those to start quickly if you know the situation normalized thank you and then I was wondering if you could help sort of cadence out the flow accretion you expect for the year.

If we were at four cents in Q1, obviously you're assuming something more conservative on the look ahead out three quarters. So maybe help me understand kind of the logic behind that. Maybe it's just conservatism, but ultimately how we should be thinking about that cadence.

Yeah. So when you think about Q1, As I mentioned, in Q1, you have an outsized contribution from SPX flow, and the reason for this is because basically March is so disproportionate compared to the rest of the quarter. And then you also have less interest expense as well as a smaller share count. So as you ramp that in Q2, Q3, and Q4, you get your interest that increases roughly by 30 million dollars a quarter you get your share count that goes to 90 million shares and then so as a result xpx flow continues to deliver really strong performance but is kind of impacted by by these variables and the normalizing of the fact that we don't have just one month with fabric so i would say the continued progression of the performance of spx flow from a growth standpoint, as Lucas said, but also from a margin standpoint, and preparing the ground for further productivity as we hit 2027, including cost synergies.

Thank you. Your last question comes to the line of Scott Davis with Melia's Research. Your line is now open.

Hey, good morning. It's Jake on for Scott. but congrats on getting the SPX deal up across the goal line, and congrats Emmanuel as well. We appreciate all your help over the years, and hopefully you'll be on the beach in a few months with a nice Cabernet. Actually, I don't know what your drink is, but just on the Middle East, you made a few comments on that, But I'd have to imagine when you start turning on some of this production that's been shut in, you're going to have a lot of valves and pumps and other products that probably won't work as they should. And to say nothing of some of the infrastructure that's been destroyed. So I guess, is there a way to think about what the upside might be on the other side of this conflict?

Yeah, what you said is absolutely true. So I think that we expect that the investment that was supposed to happen, the conversation to start super quick, and then there should be some good service work that comes out of it. And this is where our team headed by, you know, Kalim, by Khaled, and by Hamdi to be able to perform because the service business is actually very, very good. and the Saudi expansion that we made will be perfect at that time. One thing also I want to remind is the incredible performance also that we had of the Auer Habanim valves in Israel. Despite what's going on and that war, this business has been able actually to grow orders despite the war, to grow revenue despite the war. And sure, we had the pressure on the margin, because of the cost of the containers, because of the transportation, etc., and the disruption on the operations, as you can imagine, but a great performance from the Habonim team over there in the Middle East as well.

That's a good caller. Thanks. And just a different topic. I was surprised to hear you mention small bolt-on deals on the call, just given all you have on your plate with SPX, and it seemed like a very deliberate comment, but I'm not sure if that's an indication that maybe there's some deals in your pipeline that you feel are actionable. So do you feel like you have the organizational capacity to be able to take on some more from here?

Yes, Jake. Yes, we do. Because when you think about the SPX flow, there are business units that are outstanding. The pumps of SPX flow, of course, will be integrated with our pumps business. But there are areas where the business and the business leader are running very well. They've got the capacity to really add to it. Think about Zvanoi. Zvanoi is performing incredibly well. 44% revenue growth, book to bill of 1.2. You know, the fundamentals are strong. They've been practically under SPX flow acquisition. So that management team, that business, have the capacity to really do a little bit more. And this is also why we kept that ratio to 2.7, to really have that flexibility. So we've got the financial capacity to do small bolt-ons and also the management capacity. Obviously, they're going to be small in size, right, not in large.

Okay. I appreciate it, Luca. Thank you. I'll pass it on.

Thank you, Jake.

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