ITT Inc. (ITT) Earnings Call Transcript & Summary

All right. Good morning, everybody. Welcome to the UBS Global Industrials and Transportation Conference. My name is Amit Mehrotra. I lead the multi-industry franchise here at UBS. Very happy to have ITT. We've got a really full lineup today and tomorrow. So I appreciate folks here in the audience and then obviously, folks dialing in on the webcast. We've got ITT, a great company, a really interesting kind of growth story, really good technology. Happy to have Emmanuel Caprais here, Chief Financial Officer. Alex Sherk, Executive Director of FP&A Investor Relations. Alex is going to read very, very important disclosures. We'll get into maybe a few minutes of prepared remarks, and then we'll dive right into Q&A. Go ahead, Alex.

All right, great. Our presentation and comments may contain forward-looking statements which are based on our best view of the world and our businesses as we see them today. These assumptions and expectations can change, and we ask that you view them in that light. We encourage you to review the latest risks and uncertainties in our Form 10-K and other SEC filings available on our website. Thank you.

All right. Thanks, Emmanuel, why don't you go ahead? .

Good morning. Thank you for being here. All right. So let's talk about ITT. So as you may know, ITT is a roughly $4 billion revenue company. We are split into 3 segments. The largest 2 segments are industrial process, which makes pumps and valves. And the second largest segment is Motion Technologies that makes brake pads and shock absorbers for the transportation industry. And then we have CCT that is the smallest segment focused on aerospace, defense and industrial making connectors as well as control components. From an end market standpoint, as you can see, we're very exposed to general industrial, but also aerospace and defense. Some exposure to automotive as well through the Motion Technologies segment. And we talked about in our Capital Markets Day, we talked about how we are trying to really expand within defense with our connectors business within industrial and industrial markets with our pumps and valves business in order to shrink our automotive portion of total revenue. From a geographical standpoint, we're very present, as you know, in North America as well as in Europe and Asia Pacific. From a performance standpoint, I think what's really important to underline is that we've been growing organically, outperforming our respective markets. So 3% organic growth from a revenue standpoint -- over -- I'm sorry, 9% organic growth from a revenue standpoint over the past 3 years and adjusted EPS growth of roughly low teens. If we move to the characterization of each business, as you can see, we -- in our industrial process business is very present in chemical, in general, industrial as well as in energy. We have over 1 million pumps that are installed, which are providing a lot of aftermarket revenue stream, so resilient revenue stream and high margin as well. Our friction business is outperforming markets year after year. So if you look at the past 10 years, we are outperforming -- we've been outperforming the OE production by roughly 800 basis points every year on average. And our connector and Control Technologies business is very heavy on defense. We've acquired kSARIA, which is a cable company, a specialty cable company focused on defense, which has allowed us to increase our defense exposure, which is, for us, a very good market in which we're also performing -- outperforming with our connectors business. And then so we -- as we released our Q3 numbers, we continue on our CMD growth objectives. So 6% organic growth. We almost hit the $1 billion mark from a revenue standpoint. Our ROI grew 2x our organic revenue growth. We delivered really strong cash generation, and we are on track to be -- to deliver $0.5 billion of cash for the full year. And as a result, and for the third time in a row, we raised our EPS guidance range. So with that...

Can you go back to the first slide on quickly. One thing -- second yes. The one thing I noticed is 9% compounded annual growth, double-digit compounded EPS growth. I don't typically associate that with a company with a lot of general industrial exposure, certainly not with a lot of auto exposure, more like a data center company. And so that's kind of what stands out at me. And there's obviously something that you're doing in terms of the recurring model, the technology you have, which I think is maybe a really key component. But maybe just talk about the end markets that you serve are clearly undergrowing those numbers significantly so. So what's kind of the secret sauce, if you will.

Yes, Amit. The -- so ITT has been focused really on outperforming our markets, and the recipe is really simple. First, we need to deliver for our customers. So that means for us, it means SQDC, Safety, Quality, Delivery and Cost, where quality is more important than delivery and delivery is more important than cost. And the focus on this is really key because that creates customer satisfaction. So the customer wants to come back to us. So from a quality standpoint, we have businesses that are leading in terms of quality performance. Our friction business, for instance, has one parts per million defect.

Billion or million?

One part per million and then actually less. And then so much so that our teams came back to us and say, "Well, I want parts per million, there's not much we can do. So we said, okay, let's measure parts per billion." And all of a sudden, we have 1,000 parts per billion to work with. And so that has been really a key success for us. And then so as a result, we've been deploying that quality approach to all the different -- our other businesses. And so we're making progress in industrial process. We're making progress in connectors. We're not to the point of the less than 1 part per million in terms of quality, but we are better than the competition. And that's what really matters. The customer can rely on us. And they know that when they order product from ITT, the quality is going to be there and it's going to be delivered on time. So that's really important. The first -- the second thing is customer centricity, where we really focus on serving our customers to the best of our ability. So here, for instance, the example of our project management practices, in industrial process where we've been able to really gain a lot of market share because we manage our projects in a way that is collaborative with our customers. That is very precise in terms of the specification that we accept to deliver to our customers. And as a result, there's no surprise for the customer. And when they have to manage a lot of different suppliers for really large projects, they are happy that they can rely on ITT for the pump side or the valve side of it. So really, there's no super secret. It's just making sure that we deliver on our commitments and that we are differentiated from a quality and from a delivery standpoint compared to the rest. Once we are able to really display the differentiation, then we reinvest some of our profits that we generated into innovation that allows us to create new products, which allows us to elicit even more interest from our customers.

And you have this long-term kind of framework to think about, I guess this compounded growth of high single digits you expect to be able to -- be able to sustain it over the next several years?

So in our Capital Markets Day earlier this year, we outlined the fact that until 2030, we expect to be able to grow organically around 5%, which is a little lower than what we've been able to do. But we like to under promise and over deliver. But -- and in addition to this, because of our capital deployment, we are in a very good position from a capital deployment standpoint. We have minimal levels of debt. We plan to add 500 basis points of growth to that 5%, so we get 10% -- 10% on average every year until 2030.

And we're here in December 2, 2025. So 2030 is a long ways away. We've got '26 to deal with. Do you think it's a linear progression? Or do you think there's maybe some opportunities because the general industrial market is still pretty weak. And maybe there's a little bit of a rising tide there next year, hopefully.

Yes. So I think that for sure, when you think about 2026, we expect 2026 to be a growth year also for ITT. There's no reason. When you think about IP, we accumulated significant backlog, especially in projects. So we'll be focused on converting the backlog into revenue. Part of that backlog that we acquired came from [ Svanehøj ], which is our latest acquisition. And so we expect Svanehøj to contribute and generate -- help us generate nice revenue growth next year. If you look at Motion Technologies. So here, the -- it's pretty much secured because we have one, the platforms that we need to be able to show growth next year. So we won those platforms 3 or 4 years ago. We're now entering mass production and so the growth is kind of baked in already. We still have to deliver. We still have to make sure that from a production standpoint, production improves because today, if you look at the overall production. This is mostly driven by China, Europe and the U.S. are taking a back seat. So we expect probably Europe and the U.S. to do a little bit better next year. But still here, being able to outperform by roughly 400 basis points in the market. And then from a CCT standpoint, we have been awarded significant defense OE platforms in price. And then so those defense platforms are around 1 to 2 years in terms of time line to between order and delivery. And so we'll see -- we won significant content on the F-35 for instance. And so 2026 will be a year where we've been -- we'll be able to convert some of that backlog too.

Can we just talk about maybe go through the segment? So in IP, talk about orders a little bit. I think there's been maybe some chatter about large overseas energy orders, maybe getting pushed to the right. Maybe break that down because that is kind of one of the most diversified end market segments you have, where are you seeing pockets of improvement versus pockets of maybe stagnation or even deceleration?

Yes. So it's true when you look at the funnel, we are seeing an improvement sequentially. So for instance, when you look at end of Q3 compared to Q2, the project funnel, so budgeted projects is improving. But if you look year-over-year, there's a decline, and it's a decline of probably mid-teens. For us, we're focused on our differentiation. And so we continue to find whether it is because of our technology. So for instance, our Bornemann business, which is a twin- screw business that's a pump that is able to push forward liquid as well as gas together. We're finding a lot of discrete opportunities in the traditional conventional energy sector, but also in the decarbonization. So this is very positive for us. In the rest of the, let's say, conventional projects for our Goulds pumps brand, we're able also to find some good projects, we're able to differentiate. And that differentiation really gets us market share gains. And we see it because, for instance, in Q2 -- in Q3, our project sales went up 50%. And so we continue to gain market share from a short cycle standpoint, short cycle has been pretty stable. It was -- it's been increasing significantly over the past 2 to 3 years, and we were expecting maybe things to go down from there, but it's been stable at a high level. And so we're really happy with this. Here, we're talking about spare parts that are doing really well. Baseline pumps, which are our standard pumps. And in our valves business. So valves business is doing extremely well because a couple of years ago, we got this massive GLP-1 order from a customer that wanted to expand capacity. And then as a result now, we are helping in building out that capacity in their plants in the U.S.

So where do you think -- if we were to look at IP in '26, you've talked about these new VIDAR game-changing platform. Maybe talk a little bit about that, because I feel like you're so technology front footed, and that's really part of your success. And to me outgrow the market. When you talk about a new product being a game changer kind of really perks my interest up -- and maybe kind of correlate that with where you think IP could end up for 2026.

Yes. So VIDAR, we're really excited about VIDAR. VIDAR is a motor that has integrated in it a variable frequency drive. So in essence, today, when you want to make a motor intelligent, you add a VFD that is usually separated from the motor. What we've been able to do is to package everything into a regular motor package. And that's really important, because today, a lot of the motors are working 100%. Whether you need 100% of the flow or not, they're working 100%. So it's like -- when you -- and when you don't need that more than 100%, you put a valve downstream, that regulates the flow and reduces the flow. So it's again -- if you think about it, it's again driving to driving a car with your foot on accelerator. And when you need to slow down, you keep your foot pressed on the accelerator, but you push the brake. And so that's not efficient, right? And so our motor -- our VIDAR motor is able to make that motor smart and reduce the velocity of the motor when we need it. And so as a result, we've been registering with our customers between 50% and 80% energy savings on applications that do not have variable frequency drive. So it's an important innovation. It allows our customers not to have any clean rooms in their facilities and their production facilities. They can just plug in the motor and the motor is going to have variable speed. In terms of impact on revenue, I think that right now, so we launched it in June, we're getting some orders. So today, that motor is installed in a little bit more than 20 different facilities. So here, we're not going for -- to deploy that product at a large volume with one customer. What's really important for us is to deploy that product with all customers possible. So we get once it to these orders per customer, but for them -- for us, it's really important that the experience of what VIDAR can offer. And so as a result, we expect more orders as there is a really large portion of the park that today could be equipped with variable frequency drive and that is not because of size.

And is there -- I mean, I think about kind of like the gas furnace industry when efficiencies, there's a variable mess to it that drives a lot of efficiency. Is there a lot of competition in the space? Or is this kind of a protected product?

Yes. So that's a great question because we are the only industrial motor available on the marketplace today. There are some commercial applications, but they are for smaller horsepower and so we're the only industrial application and we're competing with giants, right, the Siemens, the ABB -- but we're convincing those -- our customers that we really have a differentiated and innovative product. And I think for us, what's really important is to put those products in their facilities so they can experience the benefits and then they'll come back and then we'll see from there. But in terms of what we expect as a contribution to revenue, I would say, realistically, probably will have a meaningful contribution between '27 and '28.

Okay. Maybe just finishing up on IP, I have a couple of more questions, then we can move to motion is I guess, 2 sexy -- 3 sexy words, data centers and nuclear, other opportunities to kind of penetrate those markets more meaningfully? Or is that just kind of not part of the story?

So at ITT, we try to avoid buzzwords, because they distract from taking care of business. However, I have to say that over the past probably 3 to 4 months, I'm seeing when we do our business reviews, I'm seeing a lot of orders for data centers for pumps. So it's probably in the cooling side of the data. And so we're seeing a lot of those orders. I'm not saying they represent a large percentage, but it's interesting to see that.

So what would you do like you introduce valves that take the water from the chiller through the...

Process. On the process side, yes. And so from a cooling standpoint, I think our pumps have something to play. And what's good about this is that we didn't have to invent new products. We just repurpose existing products. From a nuclear standpoint, we have a small product family in our valve business that -- where we are certified and we play there. From a pump standpoint, we don't have the offering, but we're working with a partner right now to identify how we can deploy that technology to small and medium reactor opportunities. .

And just the last question on IP before we move on. So the -- it's -- the vast majority, I guess, is short cycle, it's pretty diversified across a few different end markets. We're all trying to hear at this conference kind of figure out the tempo of the short cycle industrial economy. You guys are a little bit different, because you're winning -- you're winning share in the market. But maybe if you just step back for a second. It didn't seem like you were talking about any real activity acceleration, albeit stability at kind of high levels. Is that a fair characterization? Or are you seeing some signs of maybe some optimism or concern out there with respect to the short-cycle stuff?

Yes. So the market, we're not seeing any -- in terms of the market, we're not seeing any signs of pickup for sure. However, because we've been really working on lead times working on delivering -- improving our on-time delivery, we're seeing a bunch of demand from customers that can get the product as fast with other buyers. And so we're able -- even on the short cycle to gain market share.

On the motion side, one thing that's interesting is that it hasn't been clear that you guys have been outperforming auto production. I don't know if that's an EV issue or anything like that. But talk about why what's going on there and your ability to kind of outperform underlying auto production?

Yes. So in -- so we had two decent quarters of outperformance. So in Q2, I think we outperformed by 400 and then similar number in Q3. So outperformance there. Q1 was a little lower. We see -- we see the outperformance over several quarters, not just one quarter -- so we expect for the full year to be able to outperform between 300 and 400 basis points, the OE production. So Q4, we're counting on Q4. Q4 will be a very strong quarter from a China automotive production, we'll be able to outperform that as well. Europe is picking up a little bit, both in terms of production and also outperformance. So I think that this will be probably a year where we are probably on the low end of our guidance, which was 400 to 500. But 300 to 400 is not bad, when the market is bad we're running -- we're growing 4% so.

And when you benchmark that, is that just total production? Or do you weight it for your regional exposure or are we exposure.

No total.

Total production.

Yes. Total production. So we compare the car produced to the units, the volume we sell. And so -- to your point, I think when you know that we're not present in Japan, where we're not really present in India, where we are not as present in Latin America that outperformance is very meaningful. .

Yes, it's even more pronounced. Yes. Interesting. One of the things that you've talked about more recently is introducing the products into the commercial vehicle market, trucking market. Maybe just talk about kind of why you haven't been in that market in the past and maybe kind of what the opportunity going forward is?

So historically, in our brake pad business, we've been more on the rear axle than on the front axle. And so here, the light commercial vehicle really is driven by front axle production. The reason for this is because you have those mini vans that are starting and stopping all the time to deliver -- mostly to deliver package in the city. So we've been focusing on this, because we think that we have the same differentiation with the other type of products, but also because it is high in aftermarket. They start and stop, generate a lot of break aftermarket. So I think I would say we have been pretty successful, especially in Europe, but those type of vehicles have also expanded in the U.S. and then so we've been applying the same recipe as we do for the rest of the platforms and getting market share. The other thing I would say is that recently also, we've invested in high-performance type of break pads. So we have a brand-new expansion in our [indiscernible] facility to cater high-performance cars. So you're talking about the Ferrari, the Maserati, but also high performance with Mercedes and Hyundai. And so this is an area where we were not present at all. We had 0% market share. And customers have come to us because they weren't supplied adequately. The current suppliers were unable to provide the performance that was needed and the on-time delivery. So they came to us. We looked at it -- it was a little bit of a question mark, because those are small series production, so kind of different from our model, because we rely on large series -- and so we found an industrialization proposal that would allow us to maintain the efficiency that we need on our equipment and deliver those small series, the smaller batches. And so -- now we -- based on the awards that we accumulated, we gained more or less between 5% and 7% of the market and we'll continue to go after a new platform.

And it feels like sometimes maybe the cyclicality of some of these end markets, your ability to kind of win market share during the downturn because of that on time in full ability and the capacity. Just talk about that and how differentiated that is in the market? Because it feels like in tough times where people just model revenue to end market, you're actually doing the opposite of that.

Yes. So if we -- if you talk to our CEO, Luca, he will say that his focus has been to really reduce the cyclicality of ITT by outperforming our markets, and this is very true for our friction business. And so here, really, we're driving differentiated performance. And the recipe is defend our existing business, so not lose anything so that everything that we gain that is new is incremental. And it's working really well. We came out recently with a new formulation, which we call the Geo-Pad.

That's what I was going to ask you about. Yes, talk about Geo-Pads and maybe what the sales are going to be like. .

Yes, yes. So our Geo-Pads products, we're very excited about this because think about it, it's a product that from 15 different friction components as less than 10, much more simplified supply chain. It doesn't require heat treatment -- and so you get rid of all these ovens that are costing millions and is allowing us to reduce also the cycle time. So this is a product that performs better because from a noise standpoint, even like static noise, it really helps. It is greener, because it has less emission of friction dust, and it will be cheaper for us to produce. So really a super, super proposal for our customer, in a win-win, win, win. Exactly. Exactly. So right now, we're testing with one OEM and they're going to give us -- we expect that they're going to give us a platform probably towards the end of the year, probably beginning of next year. And then well -- the automotive cycle is pretty long. So we're entering production a few years from now. And then once this is proven, hopefully, we'll get new customers.

And with the less -- I'm sorry to interrupt, the less complexity in all the different supply chain parts I assume that the margins -- there's a mix benefit from this just given everything you just said.

Yes, there will be, for sure, a margin enhancement because there's a lot of value that we propose to our customer -- and so the cost base will be lower than our existing pads. So yes, we expect a significant improvement from a mix standpoint.

And I used to cover the auto industry 20 years ago, and I remember like the product cycles are very, very long. And so it's almost like you're kind of building the detracts for 2030, 2031 in terms of what the next leg of outgrowth is going to be -- is that the right way to think about it?

Absolutely. Absolutely.

And do you think that as these OEMs are building new platforms like this has an opportunity to kind of be spec-ed in as the standard across the industry? Or is it just going to take a little bit of more of an education it's an old industry, sometimes it's tough to change.

Very conservative. So we're trying -- we're certainly trying to do that. So far, our electric vehicle brake pads, we were able to qualify our -- in China, our EV friction mix as the Chinese reference mix. And so that has been -- that has worked really well for us as we see our outperformance really ramping in China. . So with Geo-Pad, we -- especially because we have a lot of patents around this friction material, we're expecting that this will be the superior friction material recipe for -- in the future. But there's a lot of work and it still needs to be.

Yes. And do you think -- I guess, maybe for auto production kind of flat is kind of the new paradigm over time? Do you think next year, if auto production is flat, we can still kind of outgrow by 400, 500 basis points? Is that the right algorithm for the business?

Yes. I would say probably, yes, around that number. I think that over the years, we have been used to not relying on our production to grow in order to show growth ourselves. So next year, I think that's probably Europe and the U.S. will be -- will show a little bit of growth from a production standpoint. What China may be a little bit more stable. China was expecting to be really flat this year in 2025, and it surprised us to the upside. Next year, we expect China to be stable.

Cool. Any questions? I'm going to continue. But if you have any questions, please raise your hand in the audience, and we'll bring the mic around to you. Moving to CCT. I mean you talked about defense. Obviously, aerospace and defense has -- that portfolio has been kind of evolving. Just talk about how you're positioned. I think you talked about the Joint Strike Fighter -- sorry, F-35 -- Joint Strike Fighter, so what's kind of that end market looking like? Are you feeling good about where you are right now, any more work to do there? .

Yes. So I think -- so specifically on the JSF, we're doing really well with -- especially with our kSARIA business. kSARIA has been able to rewin the F-35 platform that we're in. But also on top of that, get more content. And so today -- so as of the first quarter, we won roughly $40 million over the next 2 years. And then we keep on rewinning a new set of connectors and cable. And same thing for our connector business. So JSF for us is a really good platform that should help us grow in the future. From a defense standpoint, overall, we are winning defense OE contracts in our connector business or with our kSARIA business in existing application, but also new applications. So for instance, our kSARIA business won a vertical launch business with the customers that we have never done business with. And so all this is incremental in terms of market share, obviously.

And the the connectors business, I mean, you've got some large-scale competitors out there. How do you guys kind of stack up against the competitive landscape there?

I would say that for us, compared to Amphenol or TE, we are focused on smaller platforms, very customized platforms. Platforms where we can really differentiate from a fast prototyping standpoint, from a customization standpoint, where maybe the others are not really focused on. And we're able to show the differentiation. Our people, our engineers, they like to say when we go and visit customers, we try to understand what are they working on, whether it is like a radio business or more of an aerospace business. and we sit down with them and we listen to them about what they need from a connector standpoint and right there on their desk, we design more or less the connector. And then a week later, we're able to give them a full functional prototype and that really makes the difference. The customer feels that they are listened to. They are someone that is there to serve them and that they have a quick product in their hands to be able to test their solution. And so this is, for us, what's winning, what has been allowing us to win market share on those defense platforms.

Got it. That makes sense. And just tying it all together, we've talked about the different businesses. I'm just trying to understand, if we kind of step back -- what I find interesting is this conference so far, only about a day in the word tariff has not come up at all, which is bizarre, given the history that we've had this year. Is that a consideration for you guys now? I mean what -- how do you manage that? And where are we in relation to maybe where we were in April, May, thinking about this?

So tariffs continue to be very disruptive to the industry. There's no doubt about this. However, we learned how to deal with them and to react very quickly. So either we are protected through USMCA exemptions, and that's very true for our friction business, for instance. On our friction business, we have -- most of the content is USMCA protected or our conditions are delivery or plant. So that means that customer is taking care of tariffs. So USMCA exemptions has been working really well for our friction business, but as well as our IP and CCT business. Now we are not able to get USMCA exemptions, and this is because we have components coming from China, components coming from India that represent a large amount in the overall cost of the product. We are passing that through price increases. Thank god, we don't have to do it in the automotive industry, because that is extremely difficult. But for our CCT and IP business, we've been able to pass those price increases pretty seamlessly. And I would say based on the latest tariffs that they were implemented, I think maybe probably 1.5 months ago, we reacted and in a matter of days, we were passing those price increases.

But like I get that the USMCA exemption. Thank God, to your point, but there was a moment there where it was concerning. Has that changed your -- I always think about management, it's somewhat like a risk management exercise as well. There's so much volatility. Does it make any -- has it driven you to rethink kind of how you source maybe more locally within the borders of the U.S.? Or is it still kind of not really economically viable to do that?

No, yes. So on our friction business, for instance, we are actively working. Because today, the requirement is around 70% North American content, and we think that it's going to increase to 80%. So we're actively working to get supplies from either Mexico or the U.S. But the key here is to make sure that we don't get a price increase. And so we're working with our suppliers, we have good opportunities, especially that allows us to challenge some sole source position for some imposed suppliers by our customers and put that on the table and say, okay, you want us to increase our USMCA content. You told us to work with this supplier -- can we work with a Mexican supplier. Can we work with the U.S. supplier instead of bringing this product to -- from Europe in order to increase our USMCA content.

Got it. Very helpful. Maybe just as a final topic of conversation, M&A side of it. Both in terms of addressing your own diversified model, but also obviously, if you marked, I don't know what is $500, $700 million a year towards acquisitions. So maybe first, I mean, -- it seems like you guys have a really good thing going, investing a lot in technology, driving above-market growth really across a lot of your businesses -- does it make sense to have the model it has today? Or does it maybe -- is there an argument to be made to kind of separate?

So when you look at our businesses, we believe that there's a lot of runway, both from a growth standpoint and from a margin expansion standpoint. So it makes sense from that point of view. We're not going to get rid of a business that has a lot of potential in front of them. We've demonstrated that. And -- and if you look at our Capital Markets Day targets, our MT business today, which is around 20% margin is expected to go to 23% and our IP and CCT business to 25%. And so -- that is the proof that we think there's so much more runway. Now we emphasized the need for us to reduce our weighting of automotive revenue, and so that's what we're doing with M&A by going after targets in pumps and valves for our IP business and in connected for our CCT business. So we're going to emphasize the flow business and the connector business for sure through M&A. And as a result, we expect our automotive participation to be around 20% of our total revenue, which is very much reasonable, I would say. So I would say, for us, the M&A imperative is about deploying effectively cash, it's about shifting our portfolio away from automotive even though we are very happy with our automotive business. And then compound the growth, the organic growth that we have been able to deliver the 9% over the past 2 years to more than that. And to be able to deliver even more synergies, even more margin improvement as we integrate those businesses and put them under the ITT way.

And you sold Wolverine last year. Is that a you just talked about kind of lowering auto through addition of other businesses. But is there any pruning that can happen?

So the Wolverine divestiture was really important because Wolverine model was concentrated in production in the U.S. exporting to everywhere else, exporting to Europe, exporting to China and it's in the world of tariffs. That is really damaging. And then it was also very much automotive centric, so we get rid of that exposure. When we look at the rest of the portfolio for the moment, we don't see large opportunities like the Wolverine divestiture and to prune part of our portfolio. So we're happy with what we have. We're happy with our aerospace and defense exposure. We're happy with our flow exposure. And then we're going to continue to expand on that.

And just as a last question, I had a dinner with the CEO of an industrial company last night, and they have a lot of spare balance sheet capacity, like you guys do a good balance sheet. And -- but, but they're buying back their own stock because in their words, the valuations are nutty, literally. So how do you view that in terms of the pipeline of opportunities? Are you able -- do you think the funnel, the acquisition pipeline has opportunities at a reasonable price point that's going to allow you guys to move.

So let me start by saying that on Liberation Day, we saw a major opportunity when everybody's stock went down. So a major opportunity including ours to buy back shares. And we bought back $500 million in one go in over the course of a week. From an M&A standpoint, the funnel is healthy. We have good opportunities, mostly bolt-ons. We have a few larger deals, but they are harder to execute. And then so we're confident that we're going to be able to convert some of that -- those opportunities into transactions over the near future.

Got it. All right. Great. I think we're at time now. But listen, I think -- I think you guys are all good businesses, companies that I've seen manage well into the future, which is clearly what you guys are doing. So I wish you guys the best of luck, and thanks for participating at our conference.

Thank you, Amit.