Good morning or good afternoon, and welcome to ITT’s 2022 Third Quarter Conference Call. Today is Thursday, November 3, 2022. Today’s call is being recorded and will be available for replay beginning at 12:00 p.m. ET. [Operator Instructions] It is now my pleasure to turn the floor over to Mark Macaluso, Vice President, Investor Relations. You may begin..

Thank you, and good morning. Welcome to ITT’s Third Quarter 2022 Earnings Conference Call. Joining here this morning 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 3-month period ending October 1, which we announced this morning.

Today’s remarks may contain forward-looking statements that are subject to certain risks and uncertainties including comments related to company performance, strategic priorities, business mix, market conditions and the effects of COVID-19 on ITT.

These statements are not a guarantee of future performance or events and are based on management’s current expectations. Actual results may vary materially due to, among other items, the factors described in our 2021 annual report on Form 10-K and other recent SEC filings.

ITT is not under and expressly disclaims any obligation to update forward-looking statements, whether as a result of new information, future events or otherwise. Except for otherwise noted, the third quarter results we present this morning will be compared to the third quarter of 2021 and are based on non-GAAP financial measures.

These adjusted results exclude certain nonoperating and nonrecurring items, including, but not limited to, charges related to the suspension of operations in Russia, restructuring, acquisition-related charges and certain tax items and in 2021, asbestos-related charges.

All adjustments in the quarter are detailed along with the reconciliation of such measures to the most comparable GAAP figures in our press release and presentation, both of which are available on our website. It is now my pleasure to turn the call over to Luca, who will begin on Slide number 3..

a, development of innovative products; b, the investments in technologies to engineer a more sustainable future; and c, our social commitment to build a more diverse, inclusive and talented workforce.

Rather than issuing long-term inspirational targets, we are announcing credible and measurable near-term diversity, equity and inclusion goals and targets for greenhouse gas emissions reduction. On emissions after a 32% reduction in 2021 versus pre-pandemic levels in 2019, we are targeting an incremental 10% reduction by 2026.

ITT’s emerging sustainability profile, a sustained differentiation that we demonstrated through our stepped-up execution and our sound capital deployment strategy such as with the acquisition of Habonim, will continue to drive long-term growth and value creation for all our stakeholders.

Let me now turn the call over to Emmanuel to discuss the Q3 results in more detail..

persistent inflation, which is not abating at the pace we had anticipated, and unfavorable mix mainly in CCT and in MT given the lower aftermarket volumes. By segment, for the full year, we expect that Industrial Process and CCT margin will expand to close to 18%, and MT’s margin should end close to 16%.

The combination of the margin drivers I mentioned and lower aftermarket volumes in Friction, offset by increased price recovery in IP, results in our revised EPS range of $4.35 to $4.45. This is within our original outlook established in February prior to consideration of a number of headwinds that Luca mentioned earlier.

On cash, we now expect that free cash flow will be approximately $150 million at the midpoint given the higher inventory levels required to meet customer demand and timing of cash collections.

We are clearly not performing up to expectations, and we’re taking steps to address this including weekly cash collection progress calls, deep dive in inventory, further review of customer and supplier payments and where necessary, stopping shipments. Let me spend a minute discussing the dynamics of the fourth quarter.

Organic sales growth is expected to be in the high teens, thanks to growth in IP and CCT and to a lesser degree, in MT, where revenues will grow organically but declined sequentially to lower friction aftermarket. IP will again be the standout with organic growth well above 20%.

Total revenue growth in the quarter will be approximately 13% despite an FX headwind of roughly 9 points. MT margin will be approximately flat to Q3 and given the firming of our pricing benefits, offset by persistent inflation and lower aftermarket volumes while both IP and CCT will expand sequentially in Q4 to exit the year above 20%.

This will drive EPS growth in Q4 of roughly 18% at the midpoint year-over-year, the strong performance given the uncertainty we and others face today. For the quarter, we will overcome an approximate $0.12 headwind from FX. With that, let me pass it over to Luca..

Thanks, Emmanuel. As we approach 2023, let me highlight a few points on the end markets that will eventually help inform our 2023 outlook. We are completing our annual planning process. And there is still a lot of uncertainty due to supply chain, a potential economic slowdown, the impact of higher interest rates and the cost of energy, to name a few.

These items will evolve over time and will certainly impact the fourth quarter and next year. Auto production has been very volatile due to continued supply chain disruptions. However, low inventory levels, especially in North America, should continue to drive demand.

Our current thought is that North American production will show improvement, while Europe might remain at current low levels and demand in China could still be impacted by further COVID lockdowns. We expect to continue to outperform the market in all geographies.

In our industrial markets, we have seen an improvement in project activity, especially in North America, while we are seeing signs of sequential slowing in baseline pumps and industrial connectors. We continue to monitor distributor inventory levels to stay ahead of any potential slowdown.

The aerospace recovery continues, notwithstanding some of the lingering supply chain challenges in the industry. This is evidenced by the continued strong order rates we are generating in CCT. Furthermore, defense demand should remain robust which will drive orders for KONI shock absorbers and for CCT connectors that support soldier’s modernization.

Lastly, our rail business was hit the hardest by the loss of Russia revenues in 2022. However, global investments in rail infrastructure, including as part of the Inflation Reduction Act in the U.S. should spur more spending. Also, as Emmanuel noted, foreign currency will likely be a headwind to revenue and earnings next year, given the stronger U.S.

dollar and the expiration of the hedge protection at year-end. Now let’s turn to Slide 10 to recap. As I think about Q3, there is a lot to be proud of. Our pricing recovery actions are ramping with a notable step-up in Industrial Process, which, coupled with exceptional execution contributed to IP’s margin in Q3 above 20%.

We are advancing our sustainability strategy and announcing 2026 environmental and social targets that are grounded in projects and specific action plans with dedicated teams in place to execute.

We are encouraged by the strong demand across the portfolio and by our team’s ability to deliver for our customers while gaining share in all our businesses. However, we’re seeing signs of slowing in certain shorter-cycle markets, which we are watching on a daily basis.

We stay cautious and ready to act in the event of a prolonged slowdown and we will continue to work hard on what we can control and on achieving our long-term financial target and generating value for all stakeholders in the process. As ever, it has been my pleasure speaking with you this morning, and we will happily take your questions now.

Adam, please open the line for Q&A..

[Operator Instructions] Our first question today comes from Joe Giordano from Cowen..

I wanted to start on the industrial connectors and the commentary around that.

How much of that do you see as like real market deterioration or versus like it was just a buildup of inventory and people were over-ordering previously and maybe the market is okay, but there’s just too much out there?.

Okay. So let me start saying a couple of points, Joe. When we look at our industrial connectors, including, for instance, also the EV, the electrification connectors, industry connectors grew up. It grew actually in Q3. But then when you peel the onion, and this is why we’re talking about the purely industrial connectors, we saw the softening.

Now when we look at the inventory levels, talking to our distributors, we do not see a huge level of inventory in our distribution. And we still see good orders on that front. So we believe that, that is more a kind of softening on that side. And those are what we call the canary in the coal mine that tells a little bit about the economy..

Perfect. And then just a follow-up on price more broadly.

Is it becoming more challenging? Are people still -- are customers still as willing to take price as they were a couple of months ago when things were clearly -- like everything was kind of spiraling? Or are people a little bit more judicious with taking that -- accepting that kind of price increases now?.

Well, I would say when it comes to price, Joe, it has been for ITT a very long journey, particularly from a Motion Technologies point of view. So I think that there has always been a lagging.

And I must say I’m incredibly proud of what we’ve been able to achieve in Q3 because when you look at the ITT level, in Q3, it’s the first time ever that we’ve been price cost neutral. So we expect that actually to improve a little bit in Q4.

Obviously, there are customers that are start seeing easing on the commodity side and therefore, there is some talk and some negotiation going on, particularly when you start looking at 2023, but also on the other side as there was a lagging in getting into, we are negotiating a lagging also in getting out of this.

Did that answer your question, Joe?.

Yes. Thank you very much, Luca..

The next question comes from Jeff Hammond from KeyBanc Capital Markets..

Just on MT, it seems like that the margin progression is maybe a little bit less than you had hoped -- and I’m just kind of wondering, is it more kind of the mix dynamic? Is it more kind of pricing coming through slower? And just how should we think about margin progression into ‘23? I know you said kind of flattish sequentially into 4Q..

Yes. So, Jeff. So yes, we’re seeing a significant pressure -- continued pressure from commodities. We had expected that the commodity pricing pressure would abate a little bit in the second half. And because we had secured and booked a lot of materials to protect our customers ahead, we’re not seeing that impact yet.

And we expect to see an improved benefit from commodity pricing in 2023..

And you also hit the nail on the head in terms of there was a negative impact on the mix in Q3, and we will see the negative impact on the mix also in Q4, as Emmanuel said in the prepared remarks..

Okay. Great. And then just on IP, margins just exceptional. And I think you said there were some one-timers. Just maybe talk about sustainability of that. And then I think you mentioned CCT to follow.

Should we expect kind of more accelerating momentum in CCT along the same lines as IP?.

Yes. IP is definitely the highlight. I mean if you think about growth of 15% and growth of [indiscernible] by 59%, outstanding. Now one-offs. So if you look at the sustainability of the margin, it’s probably something around -- today around 18%, okay? This is between 18% and 19%.

But I would say I’m extremely proud of the result that IP is delivering because when you look at that margin, is really solid. It’s based on strong pillars being the pricing, the pricing discipline in projects, the project execution, the throughput, the velocity out of the plant being Seneca Falls or other plants in Germany.

So if you think about the journey, Jeff, that we had in IP since 2017 when we were mid-single-digit margins. And since then, we are posting 21% growing year-after-year, COVID, no COVID, didn’t matter. It has been an incredible journey and it’s solid.

I hope that now you and many of you guys have even more confidence in our ability to achieve our long-term target of 20% operating margin..

Yes, it’s been a great story to follow..

Next question is from Mike Halloran from Baird..

So on the pump side of things. Luca, on the pump side of things, why don’t we just start with the kind of a twofold question here. One, the market share side remains a really nice story for you -- maybe just talk a little bit more about why the energy piece is yellow? Is it literally just things are getting pushed a little bit.

And I guess, I would like a little color on why they’re getting pushed at this point? And then any other kind of sequential concerns you’re seeing on the pump side on the order base?.

Okay. So when we look at the pumps, I would say the short-cycle is definitely a great story. If you look at the Q3, we have another quarter of more than $200 million of orders. So the growth -- year-over-year growth sequentially. And as Emmanuel said, is the growth in terms of Parts and Service at 24%, which was roughly half volume and half price.

So that’s incredibly good. When you look at the project side of the business, the projects I’ve recovered. If you look at year-to-date, our orders on the projects are up more than roughly 36%. And we see the projects, the funnel getting stronger in geographies like North America, like Middle East.

The only geography where actually we see both the orders and the projects as well as the sign-offs going down is actually Europe, and this is where we start seeing some weakness.

I don’t know, Emmanuel, if you want to add anything to that?.

And then specifically, in terms of energy, I think what we’re seeing is that some projects that were discussed with customers are taking longer to materialize and to come to the budgetary phase.

So we are very well positioned with LNG and so we’re ready to capture a lot of the business, including the fact that we’re getting engineering-only orders while the customer is waiting to finalize their budget for their projects. So that should help us with the project acquisition when the project comes to the market.

But in general, energy, we believe, is strong. There’s secular growth there, but it’s going to take a little longer, especially on the project side..

And then your point, Mike, that you were talking about something concern on the pump side is probably on the short-cycle. If you look at the baseline. The baseline at softening -- are softening. This is what we said in Q2 last quarter and also what we have seen it also in Q3..

Appreciate the detail there. That was great. And then on the Motion side of things, I obviously appreciate the prepared remarks on the Friction side of things and the underlying demand you’re seeing regionally.

Were those thoughts kind of your initial trajectory into next year? Or are those more 4Q oriented in? And Luca, you always gave some really good color on your view versus what the kind of consensus production numbers look out -- look like from an environment perspective. And any -- any deviation that you see there would be great as well..

Sure. Thanks, Mike. So when you look at 2022, has been an interesting year because it pan out to be quite different from what we thought at the beginning. Look at Europe. We thought that Europe was going to grow double-digit. It ended the first half at minus 11%. So is recovering in Q3, is going to recover in H2.

But overall, Europe will probably end up to negative low-single digit for 2022. China, we thought was going to be flat or negative 1%, something like that. And then with the lockdown in Shanghai, we thought it was going to be even worse.

As a matter of fact, China recovered strongly, finished the half plus 1% and strong Q3, will have a strong Q4, will end the year 2022 probably a positive mid-single digits. North America was the one that was closest in their prediction to the reality, and that will finish the year to positive double single-digit.

Overall, probably 82 million vehicles produced for 2022. Now looking at 2023, what we think, what we are thinking right now, even though it’s too early to tell, Mike, is low single-digit growth for Europe. China probably stays flat to low single-digit and North America mid single-digit growth.

So overall, for the full 2023 worldwide, a low single-digit growth..

And then your share gains will be on top of that, right?.

Absolutely, Mike. Well said..

Awesome. Really appreciate it. Thanks, everyone..

The next question comes from Damian Karas from UBS..

Just a follow-up question on Friction. I appreciate the color you’ve already provided. But curious -- so normally, you’ll have kind of this fourth quarter ramp-up in capital investment. I think that’s what you had kind of previously baked into the guidance.

Are you still expecting that investment ramp as we exit the year? And on these EV wars, you’re winning a boatload of them.

Just curious if there’s any risk that you could see some of these new platforms ultimately get delayed or even dropped?.

Yes. So -- so on CapEx, yes, we expect a relatively stronger Q4 than what we’ve seen so far. I would say that we are trying to be balanced with the fact that we need to drive productivity, we certainly need to support the growth of all the awards, especially in Friction that we’ve won.

But at the same time, we know that there is a looming recession in the future. And so we want to make sure that we don’t set ourselves with really higher fixed costs when it comes to the moment of lower volumes due to the recession. So we’re going to focus on productivity.

We’re going to focus on really driving capacity where we have won the business while staying mindful of the fact that 2023 could start the year of maybe a recession -- a worldwide recession..

And following up the second part of the question, Damian, on the delays or lower SOP on the EV. Well, first of all, let me share what has happened in 2022. When we -- because we look -- we do the SOP analysis on a quarterly basis. And for 2022, there has been particularly zero delay worldwide. Picture a little bit different in different regions.

So we look at Europe. There has been delays in the SOP. There has been lower SOP in terms of volume at the start of production. But this has been more than compensated in China, where actually the SOP accelerated and they were larger. So overall neutral. When we look at the EV, we don’t see that happening.

And if it happens, it’s going to be, we believe, immaterial. Also because you look at the adoption, you look at how many EV get bought or produced in the quarter. Last Q3 in North America, was exceptionally high. So we don’t see that happening. And electrification for us will be good..

And one thing that was notable this quarter also, Damian, is the fact that we won significant new platforms with BYD which is really the leading EV manufacturer in China. So as we discussed in the past, we have a really strong position and growing position with Tesla and the same is happening with BYD..

The next question comes from Nathan Jones from Stifel..

This is Matt on for Nathan Jones. Follow up question.

I think I might have missed it in the earlier remarks, but what was the impact of price cost on the incremental margins in MT?.

So I would say that, as Luca mentioned, price cost for the quarter at ITT level was neutral. And this is the first quarter that we’ve seen this since the high cost inflation we’ve been facing since mid 2021. For MT -- so -- and the results, obviously, by business are a little bit different.

For MT, we’re not yet at a point where the cost -- the price cost impact is neutral. And so it has a negative impact in dollars and a negative impact, obviously, from a margin standpoint. The margin impact for Q3 from price -- negative price cost was something like 100 -- a lot less than 200 basis points for MT..

Okay.

And then -- when -- back on MT again, when does -- when do you guys expect to reach neutrality on a dollar to margin basis? Is it sometime late 2023? Any color you could provide there?.

And you mean for MT, specifically, correct?.

Correct..

Yes. So for MT, I think that we could be really close to neutrality in Q4 as we are -- we will be having the benefit of incremental price recovery from our customers as well as a little bit of slowdown from a commodity price standpoint from a sequential basis..

The next question comes from Vlad Bystricky from Citi..

Just looking at the longer-cycle project orders in Industrial Process, you’ve had several quarters now of really nice growth on the order side there.

So can you just talk a little about the expected type deliveries on these longer-cycle project orders? And how much visibility this orders give you into ‘23 IP demand?.

Yes. So -- as we discussed, we have a really strong backlog in IP, 600 -- close to $600 million up, I think, something like 50%. Of that -- of that backlog, a lot less than 50% is from project. So this is the result of really a lot of share gains we have had from a project standpoint.

Typically, for us, project between the time we take the order and the time we deliver can be between 10 months to 24 months.

I think that right now, given the supply chain issues that we’ve been facing -- that we are facing and that our customers also are facing, I think that could be -- we could be on the longer side of the conversion timing -- but I think that remains probably between a little bit more than a year to 2 years..

And Vlad, if I may add some color to that is that in addition to the timing, I would like to give some color on the margin because the project backlog margins are at historic high. And we and you know that the profitable growth really start on the pricing discipline on these projects.

And you will not be able to deliver this kind of margin if you really don’t have that.

Okay?.

No, that’s great, great color. And then maybe just [indiscernible]. If I look at your market outlook slide on Page 9, there’s more yellow and red versus green.

So -- just given what you’re seeing in the macro in your various end markets, can you just talk about how you’re thinking about the potential for growth or a more significant slowdown in ‘23 and sort of how you’re balancing, planning for what seems like a potentially a wide range of scenarios into next year?.

Yes. So let me walk through the different end markets. So in terms of automotive, Luca already talked about what we expect for 2023 between 84 million, 85 million vehicles, low single-digit growth versus 2022. We obviously expect to continue to outperform like we’ve done in the past.

And so I think that while auto won’t recover to pre-pandemic level before 2024, 2025, we expect that we’ll be able to continue to grow and outperform the market.

I would say from an aerospace standpoint, the production of air framers is still very much below what it was from pre-pandemic -- before pre-pandemic and so we think that there’s going to be a continuum of production increase from those customers into 2023.

And we expect by the end of 2024, aerospace -- commercial aerospace production to be at the level of pre-pandemic. And then from an energy standpoint, I would say that -- there’s a lot of concern around energy security and energy availability.

And we feel that given that we -- given that the transition still needs to happen because there’s not enough renewable production capacity for the moment, that should lead to further investment in oil and gas and we’ll be ready to support that. As I mentioned, there’s some concern about project timing.

But I would say, overall, the energy market is still going to be on a positive track. And then for rail, for rail and general industrial in general, I would say, steady in line with GDP growth. I think a little bit more upside in the U.S. than in Europe..

That’s great color. Thanks Emmanuel..

The next question comes from Bryan Blair of Oppenheimer..

I guess the level set a little bit more on your outlook in Friction. You’ve walked through the market growth expectations. You said that outperformance should be in line with historical experience.

Just curious if there’s any nuance to that across regions based on trailing wins, the EV platforms that should be ramping thinking about Europe, China, North America outgrowth through ‘23?.

Okay. So I would say we had an exceptional outperformance in Europe, I would say but the outperformance is across the board, I would say, Bryan. No substantial difference. And I would say, when you talk about the dynamic behind it, let me give you a couple of examples on that front.

One, of course, are the continuous awards, conquer awards that we do have and electrification on that front is key because we won last year, many electrified platforms. We are winning many electrified platforms this year, which -- and our win rate is considerably higher than our market share today. So that will keep on feeding the outperformance.

In other, I’ll give you more color is an example that has happened last month really where Friction, [indiscernible] and Luca Martinotto, the Head of R&D and the Head of Friction won an award that we lost 2 years ago. So 2 years ago, we lost this award, but what the team did, they kept on working on the product.

At our own cost they kept on developing the product performing problem, knowing perfectly well that might have been just an investment and nothing came out of that. As a matter of fact, last month, the customer, Tier 1 and OEM came back.

The current supplier is facing some issues and they’re looking to accelerate our qualification and here we go, we won another award, very good judgment call from [indiscernible] and Luca, and this is how you win, conquer and outperform the market..

Very helpful color as always. Emmanuel, wondering if you could walk us through price cost progression in Motion Tech for the year. You mentioned a little under 200 basis points impact Q3 moving toward neutrality Q4.

What was the hit in Q1, Q2, moving into the back half? And with progression toward neutrality in Q4, I think you said that the top line should be relatively similar.

Why would there not be sequential margin expansion along the lines of that price cost improvements next quarter or this quarter?.

Yes. So as I mentioned, Bryan, the price/cost equation is improving in Q4 versus Q3, but this is not a massive improvement. This is more incremental improvement, and that’s where we’re going to be neutral in Q4 from a dollar standpoint. We have seen a significant improvement in the second half compared to the first half.

In fact, in Q1 we had made a lot of progress versus 2021. But -- and -- but you still -- we were still largely negative from a price cost standpoint. So in we got $20 million more or less from our customers, and that was the same amount that we got for the entire year 2021.

So significant progress, but compared to our cost inflation, nowhere near to cover it. We made incremental progress in ‘22 -- in Q2 -- sorry, Q2 of ‘22 where we were around $25 million of price recovery. And in Q3, we went all the way up to close to $40 million.

We’re going to continue to build that up in Q4 a little bit and then have the positive impact of commodities. So this is kind of the time line from a price cost standpoint. When you look at Q4, there’s a couple of things that are happening in MT, and this is why we’re not expecting to have a significant margin progression from a sequential standpoint.

The first one is volume. So we have less volume in Q4 than what we had in -- we’re going to have less volume in Q4 than what we had in Q3. The reason for this is because we have less volume, mostly coming from aftermarket. And aftermarket has a double impact, obviously, the first one is the fact that we have lower volume to absorb our fixed costs.

And the second one is that aftermarket has a better margin than OE. And as a result, this is a headwind to MT’s margin expansion. Obviously, as we look to 2023, we expect that this will improve. The lower aftermarket demand is really due to -- you know that our aftermarket is mainly in Europe.

The lower aftermarket demand is mainly due to higher inventory. And I think that’s a function of the incoming recession, especially in Europe and also the Russia business. So our customers were exporting indirectly to Russia and this business has disappeared..

The next question comes from Andrew Obin from Bank of America..

So I think you guys are like some of the smartest operators out there. So I’m going to make you answer questions that I think other people just want answer or probably one know the answer, sorry for that. So the first question was interest rates going up, right? A lot of companies use floor financing or sort of if they finance their working capital.

What are you guys thinking about your strategy for working capital? And what do you see your channel and your suppliers do in this high interest rate environment? And what does it do to the ecosystem?.

Yes. So I think you’re pointing out a real issue for us in terms of our free cash flow generation and the impact it has on our interest expense and for a lot of other companies as well. So what we are doing is we’re really driving a recovery in the cash performance. We are disappointed with the cash performance year-to-date.

And so we’re really focusing on getting that cash in. We have more or less $100 million of AR past due with our customers. 75% roughly a little bit more than 75% of it is paid within the first 2 months. So this is not a long-term issue. This is just customers adjusting their cash generation for quarter end.

And so we’re going to really drive the fact that they need to pay us on time. And as I mentioned -- as mentioned before, we are ready to take action from a stop-ship standpoint in order to get paid on time. There’s a lot of work that needs to happen also from an inventory standpoint, where we need to work on material planning effectiveness.

We need to work on excess inventory reviews and making sure that we lower that inventory. And we’re doing that. But -- the reality is that this is going to bring benefit in 2023, not so much in 2022.

And then in terms of the pricing agreements that we’ve had, we also have a timing delay between the actual agreement, the formal agreement and the fact that the customer is paying us. So we’re going to go after that roughly $15 million of pricing recovery that we need to collect.

So I would say for us, we are really focused on getting the cash in so that we don’t have to really have to use financing like we’re doing today..

Wow, that’s a great answer. I appreciate it. Second question is also on M&A. How has M&A environment because maybe you don’t generate as much cash as you would like to these days, but you still have a nice balance sheet and you are generating cash.

But how does the -- what do you see in the M&A environment? What do you see in terms of availability? What do you see in terms of competition from private equity? What you’re seeing -- does it make it more likely or less likely to sort of see a deal from ITT in the next 12 to 18 months?.

Thanks, Andrew. The deal is -- I wouldn’t say more likely like, let’s say, the competition from [ PE ] probably has more challenges today because of the environment. So you might see more strategic, really competition on that front. But we know that M&A is strategic for ours for what we need to do -- the deployment of the capital.

So I would say, when you look at this environment, we -- in terms of capital deployment, we will keep on investing organically in the business, maybe focusing more on productivity than if you look at the balance. But on the M&A, we will continue and probably the only thing that you will say is maybe with more of a prudent approach.

But we are really looking at the space in flow. We are looking at the space in CCT on the connector side of the business. And our funnel of opportunities is rich of opportunities that fit our strategy and that both for IP and CCT..

Our final question today comes from Matt Summerville from D.A. Davidson..

Just 2 quick ones. Just to put a finer point on pricing. When you look across the 3 segments, each one grew organically at about 15%. We come back into what price realization was in percentage terms in MT based on the $40 million figure a manual game.

But can you provide what was price realization in IP? What was price realization in CCT, is 8% of the 15% organic you put in each segment? And then I have a quick follow-up..

Yes. So thanks, Matt. So if we look at pricing realization out of the 15%, as you know, is 15% across the board. That’s easy to remember. So 50% of that was priced, 50% was volume, overall. And I would say that the pricing recovery was the strongest in IP followed by MT and CCT..

Got it.

And then maybe if you could just comment a little bit on the incoming order cadence you saw in the third quarter and what you maybe experienced in October? And does that sort of inform you the slowdown you’re seeing in some of the general industrial side of things, is it getting worse? Is it sort of flattish? I guess I’m trying to get a sense for whether or not there’s real momentum behind that slowdown that building?.

Sure, Matt. So when we look at the -- there was no really big seasonality when you look at Q3. Of course, Q3 in Europe, you got the August, so there is a little bit of that, but no really big seasonality you will see different month from another. I would say, when you look at the dynamic within the quarter, in Q3, we see that, that trend continues.

It really didn’t deteriorate. Parts and Service in IP stays strong across the quarter and the baseline was softening. So that has been happening regularly in Q3. And I would say, when you look at October, October orders for ITT are a nice growth year-over-year and are confirming the trends that we saw in Q3.

Not really a deterioration and not really any change, but more of the same..

Thank you. This concludes today’s Q&A session, and this concludes today’s teleconference. Please disconnect your lines at this time, and have a wonderful day..