ITT Inc.’s (ITT Quick QuoteITT - Free Report) fourth-quarter 2023 adjusted earnings (excluding 3 cents from non-recurring items) of $1.34 per share matched the Zacks Consensus Estimate. The bottom line jumped 3.9% year over year, owing to an increase in sales across each of the segments.

Total revenues of $829.1 million beat the consensus estimate of $812 million. The top line increased 7% year over year, owing to higher Friction original equipment volumes in the Motion Technologies segment, pricing actions in the Connect & Control Technologies segment and Industrial Process segment. The acquisition of Micro-Mode contributed 1% to the top line. Organic sales rose 4.5% year over year. Foreign currency translation had a 2% favorable impact on sales.

Segmental Results

Revenues from the Industrial Process segment totaled $289.7 million, up 3.2% year over year. Our estimate for Industrial Process’ revenues was $294.0 million.

Growth in aftermarket parts and services, pricing actions and favorable foreign currency impacts drove the segment’s performance. Organic sales increased 2.1%. The adjusted operating income decreased 5.9% year over year.

Revenues from the Motion Technologies segment totaled $364.7 million, reflecting a year-over-year increase of 10.4%. Our estimate for segmental revenues in the quarter was $342.1 million.

The impact of favorable foreign currency translation and higher sales volume in Friction original equipment aided the segment’s performance. Organic revenues inched up 7.4%. The adjusted operating income increased 28.5% year over year.

Revenues from the Connect & Control Technologies segment totaled $175.6 million, up 6.7% year over year, and up 2.5% organically. Our estimate for segmental revenues was $176.2 million.

Favorable pricing actions, volume growth in aerospace and defense components and the acquisition of Micro-Mode aided the segment’s performance. The adjusted operating income increased 5.7% year over year.

Margin Profile

During the fourth quarter, ITT’s cost of revenues increased 3.2% year over year to $543.1 million. The gross profit increased 15.2% to $286.0 million.

General and administrative expenses increased 90% year over year to $98.6 million, while sales and marketing expenses rose 12.4% year over year to $42.8 million. Research and development expenses increased 10.9% year over year to $25.0 million.

The adjusted operating income in the quarter inched up 3.6% year over year to $140.9 million. The margin decreased 60 basis points (bps) to 17%.

Balance Sheet and Cash Flow

Exiting the fourth quarter, ITT had cash and cash equivalents of $489.2 million compared with $561.2 million at the end of fourth-quarter 2022. The company’s short-term borrowings were $437.0 million compared with $451 million at the end of December 2022.

In 2023, ITT generated net cash of $538.0 million from operating activities compared with $277.7 million cash generated in the year-ago period. Capital expenditure totaled $107.6 million in the same period, up 3.6% year over year. Free cash flow was $430.4 million in 2023 compared with free cash flow of $173.8 million at the end of 2022.

During 2023, ITT, carrying a Zacks Rank #3 (Hold), paid out dividends of $95.8 million, up 9% year over year. Share repurchases were $60.0 million in the period compared with $245.3 million in the year-ago period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dividend Hike

ITT’s board announced a 10% hike in the quarterly dividend rate to 31.9 cents per share (annually: $1.28). The dividend will be paid to shareholders on Apr 1, of record as of Mar 08, 2024.

2024 Outlook

ITT expects adjusted earnings to be $5.45-$5.90 per share. The guided range reflects a 16-17% increase year over year. The Zacks Consensus Estimate of adjusted earnings is $5.85 per share.

ITT expects a 9-12% (3-6% organically) increase in revenues in 2024. Adjusted segment operating margin is estimated to be 16.9-17.5%. Free cash flow is estimated to be $435-$475 million in 2024. This indicates a free cash flow margin of 12-13%.

Performance of Other Conglomerates Companies

General Electric Company (GE Quick QuoteGE - Free Report) reported fourth-quarter 2023 adjusted earnings of $1.03 per share, which beat the Zacks Consensus Estimate of 90 cents. However, the bottom line decreased 16.9% year over year.

Total segment revenues of $18.5 billion beat the consensus estimate of $17.8 billion. The top line increased 15.3% year over year.

3M Company (MMM Quick QuoteMMM - Free Report) delivered adjusted earnings of $2.42 per share, surpassing the Zacks Consensus Estimate of $2.31 in the fourth quarter. The metric increased from earnings of $2.18 per share reported in the year-ago quarter.

The company’s net sales of $8.0 billion outperformed the consensus estimate of $7.7 billion. However, the top line declined 0.8% year over year due to a 1.9% decrease in organic sales. Foreign currency translation had a positive impact of 0.9%, while acquisitions boosted the top line by 0.2%.

Danaher Corporation’s (DHR Quick QuoteDHR - Free Report) fourth-quarter 2023 adjusted earnings (excluding 59 cents from non-recurring items) of $2.09 per share surpassed the Zacks Consensus Estimate of $1.90. The bottom line declined 17.7% year over year.

Danaher’s net sales of $6.4 billion outperformed the consensus estimate of $6.0 billion. However, the metric declined 10.2% year over year due to a decrease in the sales of COVID-related products and weakness in the Biotechnology and Diagnostics segments.