Lance Glinn:

Welcome into another episode of the Inside the Ice House podcast. Today's guest is Luca Savi, CEO and president of ITT. Luca, thanks so much for joining us inside the Ice House. Happy to have you here.

Luca Savi:

Thank you for having me.

Lance Glinn:

So I want to start with really the scope of this moment for ITT, having earlier this month completed the acquisition of SPX Flow. A significant move for the company, no doubt. Bring us into the room where this decision really took shape. What made SPX Flow, excuse me, the right company at the right moment for ITT to make this deal?

Luca Savi:

Sure. Well, first of all, we cultivated SPX Flow for three years. So we had the opportunity to know a lot about the company, to know the management, to visit all of their sites. So I think that we were mature in our decision making. In terms of the strategic importance of the deal, in terms of the portfolio reshaping, we communicated our strategy at the Capital Markets Day in 2025, reshaping the portfolio, shifted to higher growth, higher margin businesses. So this fit very well to our strategy. And then also after making few acquisitions in the last three years, Habonim in Valves, KSARIA in the interconnect solutions and Svanehoj in cryogenic pumps. I think that we were building the muscles and the credibility with our investors and with our board to make bigger acquisitions. So the timing was right. And of course, we were able to find an agreement also with the vendors, and that always helps.

Lance Glinn:

Sure, of course.

Luca Savi:

So that were really what led to the signing of the deal at the end of last year.

Lance Glinn:

And when you look at SPX Flow and then you see a natural fit within ITT's portfolio, I think there's an interconnectedness between obviously the two companies and the company you're bringing in, but I'd love to hear the rationale in your own words. What were the specific capabilities or the specific strengths within SPX Flow that really stood out and correlated with ITT's division and the goals that you have for the company?

Luca Savi:

Sure. So first of all, it fit the overall enterprise strategy portfolio in terms of we wanted to grow inorganically in the connector business here in the fence and inflow. And SPX Flow is, as many leading brands in flow in terms of mixer, workshop pumps, hygienic pumps, hygienic systems, processes, et cetera. So fits on that sense. So process. Second, they have leading brands. Waukesha in nutrition and health pumps is the number one pump leader, the leader in nutrition and health pumps in North America. Lightening in mixers, APV in systems in terms of nutrition and health in Europe. So we are always looking at leading brands of well-run companies and they will fit in the bill.

Now, if you look at the four businesses they're in, Waukesha Pumps, Bran+Luebbe, those are leading brands, centrifugal pumps. And this is what we do. So very close to the core. Mixer is a close adjacency. Nutrition and health systems are a close adjacency. So it fits very well from a product point of view. And the other thing is that good management team, all these businesses are run by strong management teams. So it ticked all the boxes, both from an enterprise strategy and also from a leadership and positioning of the business. Second, when you look at our flow business, our flow business plus the SPX Flow business is with this acquisition also more resilient in terms of we are now exposed also to the nutrition and health system market, and therefore we have a more diversified market based in flow, which will make the IP flow business, as I said, more resilient.

Lance Glinn:

What is your process or your philosophy when it just comes to M&A overall? How do you determine the right company and the right timer? Because sure, we talked earlier about why SPX Flow made sense right now, but just in general, how do you know when the right time is to make a move like this?

Luca Savi:

Sure. Hopefully we got that right, time will tell. But I would say there are some creek sim criteria. First of all, it has to tick all the strategic boxes and the SPX Flow data. Then you have to tick all the financial boxes in terms of returns and that data. And then you also need to be able internally as a company to absorb and to integrate this company. So it depends on your capabilities, on your management skills, on the maturity of your management team, on also the level of leverage that you might have or you might not have. And therefore, all of those dimensions need to come together. And in the case of SPX Flow, really we were able to get all those coming together at the right time.

Lance Glinn:

And you brought up integrating potential employees or integrating new employees, integrating a whole company now into what ITT does. I believe there were about 4,000 or so employees taken coming over from SPX Flow now to ITT. What is that like? How do you ensure that that process, because that's an important step of the process, is seamless, is efficient and is essentially smooth?

Luca Savi:

Sure. So from the day after we signed, we've been working hard and very closely with SPX Flow to ensure that we were ready day one. And by the way, the process doesn't finishing in day one, which was last Monday, of course. But the team really worked hard to ensure that, first of all, the processes that the company was running with, they will keep on working from day one. So there was a team of ITT people and SPX Flow people working together to ensure that that gets done, getting to the nitty-gritty into the detail so that when you talk about the internal process.

The process with the customer and you're ensuring that you keep on delivering service to the customer is the proper way. And then you do and those processes and those work were checked in every week by a steering committee of which I'm part of. Now, that process continues also from day one to day 30, day 90, and just to the end of 2027. So there are weekly steering committee where I participate, where we are checking the progress made in terms of reorganizing, in terms of ensuring that the cost synergies are achieved, ensuring that you're going to work on the revenue synergies, and ensuring that also culturally speaking and from a communication perspective, everything gets done. Did I answer your question?

Lance Glinn:

Yeah, absolutely. And look, it's great integrating employees. It's great bringing a new company, but I'm sure even you'd admit that the most important stakeholder in all of this is ultimately the customer at the end of the day.

Luca Savi:

Exactly.

Lance Glinn:

So with bringing in SPX Flow, what is that delivering new and meaningful to customers moving forward?

Luca Savi:

Yeah. So they've been pretty good in terms of delivering value to the customers in the years, and we've been able to appreciate some of the relationship they built with the customers directly because I met with some of them. So we had calls with some of these customers that were really concerned about an acquisition, et cetera. So to ensure them that the business will continue and that SPX Flow actually has found a house, found a home within ITT and that all the business that SPX Flow have are actually strategic for ITT. So we talk specifically with them and with some of these key customers. And listen, one thing that we have in common with SPX Flow is really the importance of customer. In IT, we call it customer centricity is one of our priority. So I think that that is something that the customers of SPX Flow will keep on experiencing within ITT.

Lance Glinn:

And so I want to shift the conversation now to ITT more holistically. And of course, the company besides SPX Flow has a vast portfolio covering a range of sectors, including automotive, chemical, aerospace, and defense, so on and so forth with a few others too. But through all this work holistically, how do you think about really the company's identity and its mission that you have to balance through operating all these different sectors? Because you're not just focused on one, you're focusing on a bunch, so how do you really stay true to that mission?

Luca Savi:

Sure. So when you look at, it's very true, when you look at ITT, we are a diversified company. So we are working across different sectors and we're making different products. But there is a one commonality if we look among all these different products, which really is our tagline, which is engineer for life. If you think about all our product, there is a lot of design, there's a lot of engineering behind it. And this is also what makes the difference and how we differentiate in the market from our competitors. If it is the speed of the engineering, if it's the quality of the engineering or the differentiates of the engineering. And now with the acquisition of SPX Flow, I would say engineer for life since they are in nutrition and health, a little more and more meaningful.

Lance Glinn:

For sure. And I want to talk a little bit about your journey too. You stepped into the CEO role in 2019, quickly found yourself obviously leading through really extraordinary times. I'm sure times that you didn't anticipate obviously when you first took on the role, once in a generation pandemic, obviously, but then there's also been supply chain whiplash, there's been historic inflation at times too. All these different issues that you have to balance, obviously leading this publicly traded company, yet ITT through those times has really continued to thrive and has continued to remain successful. So when you think back to those early days in 2019, how closely has your leadership, from what you envisioned it would be in those first days, how closely has that aligned with what you've experienced now here as we sit in 2026?

Luca Savi:

I would say, to be honest with you, the events and the circumstances actually accentuated the strengths that we have within ITT, which is really to be in the field with our customers and with our people. So we have a saying in Italy in ITT, which is not my quote. We got the quote from actually the previous Pope, which is the shepherd must smell like the sheep and in ITT with smell. We are in the field with our people, with our customers. And I think that in all those times, if you think about COVID, being there in the field with our people to ensure that they were safe in the factory, et cetera.

When they were operating every single day was important to ensure that you work close with your team and with your people when they were getting sick was important. Being close to your customer when there is a supply chain issues and ensuring that you have plan B, plan C, plan D, so that you continuously deliver on time, delivery 99.95% every single month, no matter what. And that being in the business and in the nitty-gritty and with your hands dirty at every level in the organization, from myself to the leadership team, to everybody down, I think there was a key strength that it is the way that we operated that actually was even more important with all those things going on.

Lance Glinn:

And did it instill, not that the culture wasn't strong already, but did it instill a stronger culture, at least a stronger camaraderie? Because it's not just you, you said it, it's yourself, it's the leadership team, it's everyone on down working together regardless of what the situation is. It could be COVID, it could be supply chain, it could be inflation, whatever. Does that build in your mind a stronger sense of camaraderie and partnership and teamwork within the company as a whole?

Luca Savi:

It does. And it also builds a strong sense of service that you're there really to serve. You're there to serve your shareholders, you're there to serve your customer, you're there to serve your people, and that's ingrained in ITT DNA today.

Lance Glinn:

And what first drew you to the company back in 2011?

Luca Savi:

It was probably luck, I would say.

Lance Glinn:

Okay. Dive further into that. Why luck?

Luca Savi:

Yeah, it was luck because to be honest with you, ITT was looking for a leader to manage the motion technology business, which was automotive and rail. And so they wanted somebody that knew the automotive business and they knew the automotive business. The headquarter of that business was based in Europe. And as you can guess from my Oxford accent, I'm Italian. They wanted somebody that knew how to work with American company, American governance. And I spent 11, 12 years in Honeywell in the 90s and they were thinking about opening a plant in China and they lived in China and then opened a business in China. So I was ticking all the boxes and I was at the right time, in the right place to look at the right people.

Lance Glinn:

And correct me if I'm wrong, but from what I read, you didn't have much experience specifically in motion technologies before coming in. So I guess specifically, you said you ticked all the boxes, you said there was a little bit of luck, and I feel like there's a little bit of luck in everything that we do, but besides the luck, besides taking those different boxes of what they were looking for, what interested you specifically in motion technologies and wanting to, because you said you obviously had a little bit of experience in automotive, but what about the motion technologies business of ITT brought you in?

Luca Savi:

Yeah, sure. I think that there were a couple of things. One is there was a lot of R&D in motion technologies. There is a lot of chemistry, motion technology, I'm a chemical engineer by background. So there is always that connection, I would say. I think that the idea of them opening a business in China, I lived in China for a few years, I opened a business, it was a great experience and they knew the potential and they knew I could have an impact and I could help on that front. And then also the idea to go back to an American company and with that type of governance was something that was very attractive to me. So all of those helped me made the decision to go to ITT.

Lance Glinn:

And so now we talked about, you've been CEO since 2019, you joined the company in 2011. It's been 15 years with ITT for you. And look, the question I'm about to ask you, we could probably do a full podcast on it for 35 minutes, talking about the changes from 2011 to 2026 for ITT. But if you could just describe in not a full podcast length, what have you seen as the biggest growth areas from when you began or what the company looked like back in the early 2010s to what it looks like right now in 2026?

Luca Savi:

Okay.

Lance Glinn:

And again, we could probably talk for 30 minutes about that alone.

Luca Savi:

Sure. So in 2011, there was the spinoff. And so ITT, let's face it the ITT was, we were the leftovers, all right. And with the leftovers, we had all these engineering business, which were some gem and some uncut gems, I would say. But also we were left with the liabilities. That we were left with the US pension liability. We were left with the all ITT legacy as best as liability. So I would say those initial year was really foundation year to ensure that we survived. Motion technology came out of those years being the real gem in the portfolio.

And also because of that, I had the opportunity to cover this position. So we come to 2019 and I was able to get into this role. And then in 2019, 2020, 21, we were able to really get rid of all those legacies liabilities. We sold the US pension liability, we sold that ITT legacy best liabilities. And then in 2021, we had a pristine balance sheet. And then you don't have the [inaudible 00:17:37] sold anymore. So that opened the door for an M&A strategy. But I would say in 2019, we also changed in terms of we started focusing on the fundamentals of the business all right, and to really run the business in a more entrepreneurial way with a lot of good sound common sense.

But as I say, focusing on the fundamentals, we call it safety, quality, delivering costs, the safety for our employees, the delivery, the quality and the cost for our customers. And if you focus on those fundamentals and made those foundations strong in the business, then you're able to create a lot of platforms for growth, which is what we did. So we have today a lot of platform for growth, if it's the rail, which was a losing money business. Now is a good platform for growth in the portfolio. If it is Doves was a forgotten plant in Pennsylvania, today is a platform for growth and we made an acquisition in there. So this is what today IT is good at. It's really in creating good platform for profitable growth.

Lance Glinn:

You had mentioned in that answer that when the spinoff happened, ITT was like the leftovers. And now ITT is a publicly traded company as it was then, but a publicly traded company, it's obviously seeing great success, making all these different acquisitions. Is there a level of pride or a sense of pride in you for essentially having been working with the leftovers or as they were looked at back then to now running this business that is incredibly successful?

Luca Savi:

Pride is a very dangerous thing. It's very dangerous. If there is one thing that what they learn is really, well, first of all, if you should be proud about something that you are going to build, not of something which is related to the past. And I would say one thing which is characteristic in ITT is always to be never, ever satisfied of what you've done. So sure, you can give yourself a pat on the shoulder for a few seconds, and then you really work hard to keep on improving everything that you've done. And I think that this is another thing that differentiates in ITT, we are really paranoid on continuous improvement and that paranoia we think is-

Lance Glinn:

Is a positive.

Luca Savi:

Could be painful, but it's really healthy. It's healthy for the way that you run your business.

Lance Glinn:

Yeah. And there's no complacency.

Luca Savi:

No, and there is no complacency. And we know that the moment that you sit down, there is somebody that is running on the side that is going to overtake you, so no way.

Lance Glinn:

And speaking of being overtaken, AI is a technology that has the power to, and frankly, is already dramatically disrupting industries of all kinds. Even the industry that I work in podcasts, we're seeing AI play a role. So it's not just large companies, it's industries like I am in media too. I think that if companies are unwilling to integrate AI in a number of different ways, whether it's on the backend or front end, they risk being passed over. They risk being left behind. First off, what are your thoughts on that? And then second, how is ITT integrating or implementing, again, whether it be on the backend or the front end, AI into what you do?

Luca Savi:

Sure. So I tend to agree with your statement. I think that AI is a powerful tool that can make the job of everybody more powerful, more meaningful, and more effective. And I'm not saying easier on purpose. I don't necessarily look into make my job easier or the job of our people easier. That's not what I'm looking for. I'm making more powerful, more impactful. Absolutely that yes.

Lance Glinn:

Would you use the word efficient?

Luca Savi:

More efficient. Not easier.

Lance Glinn:

Got it.

Luca Savi:

Okay. It's different. So I believe in all of that. Now, I think that within ITT, we are trying on many fronts from the R&D to the factory, to the back office, to the army, to the research, to the strategy to use these tools. I think that we are still learning in the process and I can see one day where actually our R&D is more efficient and faster and we get to some of the formulation in less iterations. And in some way, we already do that. I can see a world where our engineering is re-engineering and do VAV value analysis, value engineering of our products faster and come up with a product launch sooner. I can see a world where our customer's answer get replied, respond much faster. So all of that are areas where we are working in, and hopefully we're going to get more and more successes. As of today, I would say we're early in the process and we're still learning.

Lance Glinn:

And I use this quote often because a previous guest on our podcast used it and I thought it was great. He said, "AI is the worst it's ever been right now." It's only going to continue to grow.

Luca Savi:

Exactly going to get better and better.

Lance Glinn:

It's only going to continue to get better and better. So with that said, if we think, and we almost know at this point that AI is going to continue to evolve, how hard is it to make sure that ITT is evolving with it? Because some of these evolutions, we don't know what they're going to be. We don't know what new use cases are going to come about it, but it's important to quickly identify those and then adapt to the trends that make sense for your company. So how do you do that?

Luca Savi:

So to ensure that your workforce has the tools to use it and has got the training to use it and to use it properly, that's number one. So one is to have the tools. The tools are there. Second is to give those tools to your people. So this is what's happening if it is with one or another company or another one, okay. And train them. And third is also put around the proper governance to ensure that nothing wrongs can happen because AI can be used from either attack or cybersecurity and all this kind of stuff.

Lance Glinn:

For all the positives.

Luca Savi:

For all the positives. I mean, cybersecurity becomes much more difficult now also with AI and therefore putting the governance in place. So this is really the way that we're trying to make it work.

Lance Glinn:

So Luca, as we begin to wrap up our conversation, I wanted to look ahead to the remaining months of 2026 because we're recording in March. This episode will come out in the next couple of weeks. Obviously still a lot of months for growth and success in this current year. What does, or what would you describe as the major themes or forces that are really shaping ITT's rest of the year outlook?

Luca Savi:

I would say, listen, I think that when we look at the markets that we're in, I think that there are markets where we have some good win. I mean, forget about the geopolitical situation at this moment. Let's leave it there. But one market we're exposed to is aero and defense. The aero recovery provided that the geopolitical situation improves. The defense, I don't need to talk about it. The rail industry, continuous investment is happening over there. In terms of we look at the flow, the flow that now has nutrition and health has got a resilient portfolio in there.

So I think that from a market perspective, we're exposed to the right markets. And then adding to that, I think that what we are good at ITT is really to differentiate ourself in the market from our competitors. If it is differentiating through execution, because we're delivering in unmatched quality, a better delivery to the customer when they want in a consistent manner, or if we're differentiating through innovation, that will help us to outperform the markets that we're in. We have done it in the past, and there are all the ingredients to keep on happening in 2026 in the years to come.

Lance Glinn:

And so looking now at the years to come as we step even further back beyond what the remaining nine months are of this 2026, even further back than you can say 2027 to 2028 beyond, what does the next chapter of ITT look like?

Luca Savi:

I think that the next chapter is, first of all, there are one thing which will continue to happen. And this is what we are sharing with our investor, which is the organic value creation. So ITT will continue to grow organically in terms of mid-high single digit for the next few years because A, because of the market we're exposed to, and then because we will outperform those markets. So there is opportunity for us to deliver that organic growth. Then there is opportunity for us to continue to improve our margin. And that the message that we're giving to our investor is that listen, we are not even close to be done on that aspect.

So organic value creation keeps on happening. Now, obviously, when it comes to inorganic value creation, we've done well with a small acquisition. We have to deliver for our investor on SPX Flow. It's the larger acquisition we've ever made. So we need to deliver those cost synergy. We need to deliver that value. We need to deliver that growth, and this is what the investor we need to see. And if the first one will keep on happening, the second one the investor need to see, and we will execute and we will deliver, and that will keep on feeding value in the years to come.

Lance Glinn:

Well, good, congratulations on the completion of the acquisition of SPX Flow, and thank you so much for joining us inside The Ice House.

Luca Savi:

Thank you very much. Thank you for having us.

Speaker 3:

That's our conversation for this week. Remember to rate, review, and subscribe wherever you listen and follow us on X @icehousepodcast. From the New York Stock Exchange, we'll talk to you again next week inside The Ice House. Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither Ice nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.