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ITT Inc. (ITT) Q1 2019 Earnings Call Transcript

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ITT Inc.  (NYSE: ITT)
Q1 2019 Earnings Call
May. 03, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to ITT's 2019 First Quarter Conference Call. Today is Friday May 3, 2019. Today's call is being recorded and will be available for replay, beginning at 12:00 p.m. Eastern Time. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. (Operator Instructions)

It is now my pleasure to turn the floor over to Jessica Kourakos, ITT's Head of Investor Relations. You may begin.

Jessica Kourakos -- Head, Investor Relations

Thank you Christi, and good morning. Welcome to ITT's first quarter 2019 earnings call. I'm Jessica Kourakos, and with me today are Luca Savi, ITT's President and Chief Executive Officer; and Tom Scalera, ITT's Chief Financial Officer.

I'd like to highlight that this morning's presentation, press release and reconciliations of GAAP and non-GAAP financial measures can be found on our website at itt.com/ir.

Before we begin, please note that our discussion will exclusively focus on non-GAAP or adjusted measures, unless otherwise indicated.

During this call, we will make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. No forward-looking statements can be guaranteed and actual results may differ materially from those projected. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements made on this call should be evaluated together with the risks and uncertainties that affect our business, particularly those disclosed in our SEC filings.

With that, let me turn the call over to Luca.

Luca Savi -- Chief Executive Officer and President

Thank you Jessica, and hello everyone. Thank you for joining us today to discuss ITT's strong start to 2019. In the first quarter, ITT'ers all around the world delivered strong revenue and operating income growth by intensely focusing on our customers and by generating productivity with even greater speed. As you see in the results today, we're gaining share in our target growth markets and we are continuing to drive the cost and efficiency actions to deliver on our increased EPS commitments, despite the more volatile market conditions we face.

Our Q1 results demonstrated the depth of our diversification and the magnitude of our self-help warchest. This quarter includes a number of record setting performances that we will highlight this morning. But I strongly believe two things about our records. One, they're simply milestone on our journey of betterment and two, they're made to be broken.

So, let's take a look at the Q1 financial highlights on Slide 3. We grew organic revenue 5%. We grew segment operating income margins 120 basis points to a record 16.2%. We grew operating income margins 170 basis points to a record 15.1%. We grew earnings per share 18% to a record $0.91 per share and we grew free cash flow 154%. As a result of the Q1 execution and operating momentum, ITT's are generating everyday, we are raising the midpoint of our 2019 earnings guidance by $0.04 to $3.58 per share.

So, those highlights detail what we delivered in the quarter. Now I will discuss, how we did it. The how demonstrates the sustainability of our results in the face of more difficult market conditions. Specifically, we are focused on three key drivers in 2019 that will power our performance. Operational excellence, customer centricity and diversification and resilience.

Starting with operational excellence. In the quarter, all three segments delivered triple-digit margin expansion. These improvements were led by breakthrough execution at CCT Connectors locations around the world, well done Farrokh and team and at MT in both KONI and our new state-of-the-art friction facility in Silao, Mexico. And here at headquarters, we drove efficiency actions that reduce costs by over 40% compared to the prior year.

In addition to these significant gains in Q1, we remain opportunity rich with numerous self-help actions. So, let me list a few of our targeted initiative that will propel us to our 2019 ITT segment margin expansion goal of 60 to 120 basis points. At CCT, we are insourcing critical plating activities to improve lead times and reduce costs. We are driving best cost manufacturing strategy. We successfully moved four product lines and we have five more projects under way and we are driving operational leverage at our now high performing manufacturing location in Nogales, Mexico.

At IP, we are leading manufacturing of critical short-cycle product lines, optimizing supply chain effectiveness in critical areas such as castings and we are proactively adjusting our global footprint and cost structure. At MT, we are driving footprint optimization and productivity in our rail platform, reducing labor and structure cost in friction Europe to address market conditions and we are efficiently ramping production and speeding up profitability in Silao, Mexico. These are just few examples, and as I said before, we remain opportunity rich.

I will now move to the next driver of our performance, customer centricity. As you know by now, I believe that actions speak louder than words, so thus far in 2018, I personally met customers from each of our segments, on three different continents to get a first-hand appreciation for how we're doing and more importantly what we can do even better going forward.

The major thing that I heard from our global customers across end markets were superior technical solutions, frictionless customer experience and speed. We will keep working everyday to deliver on these customer expectations, and let me provide some examples of the progress we're making.

Here's an example of superior technical solutions from IP's Bornemann business. In oil and gas producer was facing the natural phenomenon of reduce well pressure that cause production to stop. Our Bornemann team was able to work with the customer to develop a technical solution to reactivate these wells and significantly extend their production life. These wells went from zero production to 35,000 barrels of oil and 21 million standard cubic feet of gas per day. As you can imagine, the customer was thrilled and is already looking into new ways to work with us. These kinds of technical solutions powered IP's 47% Q1 increase in project revenue.

At the Motion Technologies, our speed and technology coupled with our frictionless customer experience drove over 500 basis points of Q1 global OEM outperformance in our friction business. And in the quarter, friction produced 135% increase in awards that nicely exceeded our Q1 forecast and reflected continued customer alignment with our expanding front axle solutions. As validation, the Q1 wins included another major share gain win for 100% of the front and rear axle content on new North American SUV platform. It was the frictionless customer experience that we created that drove this win. Our R&D and testing capabilities and our manufacturing expertise, all smoothly merged into the ideal solution for our customer at the right value and at the right speed.

Lastly, let me provide an overview of how our diversification is bolstering our resilience in today's market. The strength of our diversification is a function of our unique geographic product aftermarket and end market mix. The Q1 MT results reflect a number of these elements. Our 30% growth in North America, our 19% growth in the independent aftermarket and our 13% growth in rail, effectively offset automotive conditions in Europe and China.

From a broader perspective, our project backlog continues to generate longer term visibility, despite short-term volatility. In Q1 project orders at IP increased 15%, backlog grew double digits and sales improved 47%. This trend of ITT's aftermarket representing over 30% of our revenue. We continue to provide additional resilience. And in Q1 it grew 5%.

Adding to our strong aftermarket and geographic diversification is acquisition of Rheinhutte Pumpen that closed this week. Let me officially welcome the newest ITT'ers at Rheinhutte. This great company with over 160 years of pump experience strategically expands ITT's specialty pump range and geographic reach in target growth markets. And I'm thrilled to have them as part of the family.

Lastly, ITT is benefiting from meaningful end market diversification. So, let me provide some perspective on what we are seeing across our key end markets. Oil and gas remain solid from the revenue perspective based on our backlog visibility in 2019. We've seen some pockets of moderation in the pipeline of opportunities that we are monitoring along with the recent increases in oil prices. Chemical revenue is expected to remain strong due to our backlog, but 2019 orders we'll have to contend with tough comparisons given the outstanding year we had in 2018.

Commercial aerospace and defense continue to look strong in both North America and Europe proposed by strong secular trends. General industrial is a mixed bag of short cycle businesses for us. That I would say are generally weaker in Europe and Asia giving global macro conditions. Lastly, in automotive, our preliminary Q2 visibility suggests some improvement in the order book over the next few months.

In North America, we are well positioned and ramping on some of the largest and fastest growing SUV truck and cross-over platforms. These will continue to drive our growth independently of the overall U.S. production rate. At this point, we still believe that our friction OEM growth in North America and China will outpace their combined market by double digits in total in 2019.

Our projections for China have moderated from prior expectations due to new platform push up. But this has been more than offset by increased demand for our ramping platforms in North America. Lastly, there is no change to our outperformance expectations in Europe that are expected to be momentum as platforms continue to ramp in 2019.

So, in conclusion, today's ITT is nicely diversified across end markets and geographies and we are opportunity rich with proactive approach to realize these opportunities with greater speed. This is how we are approaching the balance of 2019, following this strong start in Q1, and as a result of these trends, we are raising the midpoint of our guidance to $3.58, which represents solid 11% EPS growth.

With that, let me now turn it over to Tom, who will review the earnings results and guidance in more detail. Tom?

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thanks, Luca. Let me begin with a Q1 2019 results on Slide 4. Organic orders increased 1%, or 3% excluding a prior year Russian rail order. The growth was driven by 26 % oil and gas increase on project and short-cycle demand at IP. Transportation orders were up 1% and strong KONI rail and aerospace and defense demand, partially offset by auto and the $14 million prior year Russian rail order at Axtone. Excluding this order, transportation improved 4%. Project and short-cycle orders strength and industrial pump applications was more than offset by industrial connectors and components.

The organic revenue growth of 5% reflected broad-based growth across all major end markets. Oil and gas grew 11%, industrial grew 10% and transportation grew 2%. By geography, North America grew 14% in the quarter on strength across major end markets including chemical, oil and gas, auto, and aerospace and defense. Europe grew 1% on chemical and rail strength that was partially offset by lower auto production activity. Asia declined 4% and slower than anticipated auto production rates in China and delayed new platform launches.

Segment operating income improved 9% or 13%, excluding $4 million of unfavorable foreign exchange. The income expansion was driven by volume and productivity actions partially offset by higher commodity and tariff costs and mix. Strategic investments primarily at MT were more than offset by European Government innovation incentives.

In the quarter, we drove significant efficiency and cost reduction actions within our corporate functions. And we also drove interest, environmental and tax rate favorability. The combination of the strong segment operating income expansion and the effective below the line cost management, drove an 18% increase in earnings per share to an all time record of $0.91 per share.

Slide 5, shows our adjusted segment margin OP. Q1 margins improved 120 basis points to a record level of 16.2%. This growth was our seventh consecutive quarter of year-over-year margin improvement, and during this run, we averaged margin growth of 130 basis points per quarter. The Q1 expansion drivers were volume partially offset by mix and productivity, supply chain and restructuring actions that more than offset higher commodity, tariff and labor costs. Price was flat as IP and CCT offset MT.

Exceptional margin expansion was produced at MT's KONI and Silao facilities and at CCT's connector operations. In the quarter, connectors set another all time margin record. As Luca mentioned, our enhanced approach to driving operational excellence is clearly producing consistent results, as we continue to implement and execute on a significant set of self-help opportunities that should provide a solid margin tailwind in 2019 and beyond.

Next up is a review of the segment results starting with Motion Technologies on Slide 6. MT's organic revenue decreased 1% despite the over 500 points of global OEM market outperformance delivered by friction. The friction OEM performance included exceptional 30% growth in North America, powered by share gains produced in our new facility in Mexico that nearly offset market weakness in Europe and China.

In addition, we delivered double-digit friction growth in the independent aftermarket and lastly KONI delivered a 17% increase on rail strength in Europe and China that offset market related weakness at Wolverine. And from an award perspective, in Q1, the MT delivered a major new North American SUV platform share gain win with both front and rear axle content.

Adjusted segment operating income at MT decreased 2% to $62 million, reflecting incremental foreign exchange of $5 million. Excluding foreign exchange, segment OI increased 6%. The income growth was driven by operating and supply chain actions combined with proactive cost containment that more than offset higher commodity costs and tariffs. In addition, MT proactively offset strategic investments in the quarter by obtaining funding from European innovation incentives. Lastly, I'd like to highlight that MT's margins expanded 110 basis points to 19.5% on exceptional execution at KONI and MT Mexico.

Turning to Industrial Process on Slide 7. Organic revenue was up 16% on a 47% increase in projects combined with a 9% increase in short cycle businesses. The project strength was driven by chemical, mining, and oil and gas deliveries in the Americas. The 9% increase in short cycle activity reflected strength across all products categories and all geographies.

IP organic orders increased 6% due to a 15% increase in projects and a 4% increase in short cycle demand. Both increases were led by stronger oil and gas and industrial activity in the Americas. As a result, IP's backlog expanded 19% excluding foreign exchange, providing us a significant project revenue visibility for the balance of 2019. IP's adjusted segment operating income increased 35% to $23 million and margins improved 170 basis points to 10.7%. The improvements were driven by strong project and short cycle volumes, net productivity gains and price, partially offset by tariffs and unfavorable mix.

Next is Connect & Control Technologies on Slide 8. CCT organic revenue increased 6% and balanced growth of 7% in connectors and 5% in components. From an end market perspective, the growth was driven by broad-based 14% growth in aerospace and defense, as we benefited from strong secular trends in recent market share gains.

In the defense market, CCT grew 18% on global strength in connectors. Revenue in the commercial aerospace market grew 12% on connector composite and aftermarket strength across multiple platforms. These gains are partially offset by 4% decrease in general industrial markets and energy absorption weakness and soft EU demand that more than offset double-digit growth in medical and electric vehicles.

CCT's Q1 organic orders improved to 6%, led by 41% increase in aerospace and defense connector demand, partially offset by an 8% decline in industrial. Oil and gas connector orders improved 2% reflecting the recent increase in oil prices. Adjusted segment operating income at CCT increased 19% to $28 million and benefits from volume, net productivity and restructuring gains, partially offset by increased material costs. Segment operating margins expanded 200 basis points to 16.8% due to record setting margins at connectors.

Now this in mind, let's take a look at our updated 2019 guidance on Slide 9. We are increasing our total revenue guidance range to up 3% to up 5%, or approximately $2.85 billion at the midpoint. This increase includes $24 million of unfavorable incremental foreign exchange headwinds at current rates, more than offset by the incremental $40 million of revenue from the strategic Rheinhutte Pumpen acquisition that closed this week. Based on the strength of our diversified portfolio, we are not changing our organic revenue target range of up 3% to 5% for the year, despite the increasing market volatility.

From the adjusted EBITDA perspective, we are raising the midpoint of our previous guidance by $0.04 to $3.58, by raising the low end of our previous guidance by $0.08. We now expect to grow EPS 11% at the midpoint. The $0.04 midpoint increase was powered by our strong Q1 outperformance of $0.07 per share and incremental new Q2 to Q4 productivity and cost actions of $0.07. These gains are expected to more than offset incremental foreign exchange and tariff headwinds of $0.10.

From a segment perspective, these headwinds will primarily impact MT. Tariff costs are exceeding our prior expectations due to inequities in the application of the European steel quota system. Please note that the Rheinhutte Pumpen acquisition is not expected to have a meaningful impact on IP segment operating income, or ITT's EPS in 2019, but we'll provide a more detailed update on our Q2 earnings call.

Next I'd like to provide some Q2 perspective, before we wrap up. In Q2, we are projecting flat total revenue as a result of incremental unfavorable foreign exchange impacts, primarily at MT. From an organic revenue perspective, we are expecting low single-digit top-line organic growth to be driven by IP and CCT.

In Q2, we expect segment operating margins to align with Q1 levels on solid year-over-year and sequential improvements at IP and CCT. Margins at MT are expected to be flat to the prior year due to FX and tariff impacts. Corporate costs are expected to increase compared to Q1 that will be favorable to the prior year. In total and including $0.05 of unfavorable foreign exchange, we anticipate high single-digit EPS growth in Q2 compared to the prior year.

So with that, let me now turn it back to Christi to begin the Q&A session.

Operator

Thank you. The floor is now open for questions. (Operator Instruction) Thank you. Your first question is coming from Jeff Hammond of KeyBanc Capital Markets.

Jeffrey Hammond -- KeyBanc Capital Markets -- Analyst

Hey, good morning guys.

Luca Savi -- Chief Executive Officer and President

Good morning, Jeff.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Good morning, Jeff.

Jeffrey Hammond -- KeyBanc Capital Markets -- Analyst

Can you just talk about what you're seeing kind of in to 2Q on Europe and China, auto production demand? And then, just maybe reference on the North America facility it sounds like things are going very well there, where you stand on a profitability basis, and where you think you'll be run rate in kind of exiting the year? Thanks.

Luca Savi -- Chief Executive Officer and President

Okay. Thank you Jeff. So, when we look at the China and North America, we see that the trend in the European market that we saw in Q1, we probably continue in Q2 as well. And we expect to outperform that market the same or more than we've been outperforming in Q1. When we look at that end, we are comfortable with these visibility.

When we look at China, we see the situation improving from a market point of view from Q1 to Q2 and that's the market. And we will continue to outperform the market in China probably better in Q2 than we did in Q1. Now on China, I'll say probably we have also to bear in mind that China is more volatile. When China changes, it changes more and it changes faster. So, a little bit less stable than the European Union.

The other thing is that, you know, that there has been an incentive in terms of the reduction of the VAT in China is a RMB2 trillion package that will reduction of VAT, which would reflect a reduction in the calc price of roughly 2.5 %. It was implemented on the 1st of April and it's too early to see if really this has an impact or not. So, that is for Europe and China.

When it comes to the North American market, the North American market is, is going to be down. We think this is going to be down in Q2, as well as it was in Q1 and we think that we're going to outperform the market substantially. This is higher probably than our expectations, when we started -- we started the year and this is exactly because we are in very good platforms. As we said, before the largest and the fastest growing. And regard this the North American facility is doing very well. And I would say is meeting and/or exceeding our more beautiful expectations.

Jeffrey Hammond -- KeyBanc Capital Markets -- Analyst

Okay, great. And then Luca, you mentioned in the prepared comments some signs of moderation in project activity or pipeline. Can you just kind of expand on that where you're seeing that, and kind of how it plays out in your mind? Thanks.

Luca Savi -- Chief Executive Officer and President

Sure. So, when you look at IP, bear in mind that when we look at IP orders, we are 3% up sequentially from Q4 2018 to Q1 2019. And Q4 18 was already a very strong quarter in terms of orders. And when -- and the doors are mainly -- that is mainly in oil and gas story, because our orders were 31% up in oil and gas, mainly upstream and downstream.

So, with all these orders that good performance in 2018, good performance in Q4 '18, good performance on the orders and in the oil and gas in Q1 '18, when we look at our funnel of opportunities is resetting and is reshaping. Practically if you want a look visually it looks like it's a pear-shape reversed in terms of all that -- all the opportunity they were close to the -- closing a negotiation came into the orders and we are resetting. So, we now have more on the opportunities -- on the opportunity side.

And on the chemical side, I would say 2018 is going to be more of a revenue story because we had very good order performance in 2018 and here what we have -- we see, we see also the funnel of opportunities resetting, but it is going to be a very good revenue story for 2019.

Jeffrey Hammond -- KeyBanc Capital Markets -- Analyst

Okay. Thanks. I'll get back in queue.

Luca Savi -- Chief Executive Officer and President

Thanks, Jeff.

Operator

Thank you. Your next question is from John Inch of Gordon Haskett.

John G. Inch -- Gordon Haskett Research Advisors -- Analyst

Good morning, everybody.

Luca Savi -- Chief Executive Officer and President

Good morning.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Good morning, John.

John G. Inch -- Gordon Haskett Research Advisors -- Analyst

Good morning. I want to go back to the Silao plant. I think we were breakeven in 2018. Luca you mentioned or perhaps it was Tom or Luca mentioned that there was big profit improvement there. What sort of run rate are we at? And where would you expect to exit 2019 in that facility specifically, which I guess is reflective of your OE North American friction profitability?

Luca Savi -- Chief Executive Officer and President

Okay. So, when we look at the Silao facilities -- Silao facility, we started really mid -- in shipping the products mid of 2018 and we got it to breakeven in Q4 of 2018. Now it's the facility is -- as I said is already profitable and we are expecting to be in the mid-teens for 2019. Having said that Chaser (ph) and the team, if you're listening, if you want to beat that, please feel free.

John G. Inch -- Gordon Haskett Research Advisors -- Analyst

And that -- I'm assuming 2020 is you continue to see volume ramp in order wins. I'm assuming that, that threshold based on sort of your Italy targets right -- or your Italy profitability. I'm assuming those numbers keep moving higher potentially, or is there some sort of natural reinvestment barrier, if you will?

And the other thing is to look in to that -- plant have enough capacity to satisfy all of this growth? Or, would you have to expand it kind of in the future?

Luca Savi -- Chief Executive Officer and President

Okay. All right, John. So, first of all, we think that the Mexico facility is setting itself up to achieve the best profitability that we have it in other plants. So, that is a journey that will take probably another 18 to 24 months, I would say. And I've seen they are very well set to achieve that.

Now, when it comes to the investment, this is an area, where we will continue to invest organically because of the success that we are having on the awards, on the orders and the ramping up of the platforms.

So, we are going to put down this year in another couple of lines in the plant that whose production has already been allocated. So, when you talk about investment, no more investment in land, no more investment in plant, but that we're going to add just the lines of awards that we've already won.

John G. Inch -- Gordon Haskett Research Advisors -- Analyst

Got it. And then just as a follow up here. So, Parker and 3M each announced this earnings season some recent very nosebleed valuation deals. And you know many of us would like you to do deals. We think that you are setup to possibly and be in a position to do that, but nobody wants you to destroy shareholder value.

So, look how are you thinking about your opportunity set in acquisitions, particularly given the high valuation environment today juxtaposed against you know your own strategy maybe bolt-ons or how do you get around this and what kind of activity should we be expecting kind of in 2019, if anything?

Luca Savi -- Chief Executive Officer and President

Good to hear John about your support for M&A. As a matter of fact, M&A is a focus area for me, for Tom and for the entire team. I'm pleased to say that, first of all just a couple of days ago on April 30th, we closed the Rheinhutte Pumpen acquisition, which was a very good strategic acquisition for IP.

And I can say also that now all the three value centers, all the three businesses can now cultivate more actively and execute in acquisition and integrate. And this is exactly what they're doing.

Now, having said that, now more than ever, we need to stay very, very disciplined. And I agree with you in the sense that A) the target, the acquisition must be strategic of course and must create value. This is -- we really need to stay very focused on that one. And as a matter of fact, we walked away from a couple of deals in the last couple of months.

So, we definitely more than -- more active now than ever before across all the three different receipts, but we stay very disciplined in terms of generating value.

John G. Inch -- Gordon Haskett Research Advisors -- Analyst

Got it. Thanks very much. Appreciate it.

Operator

Thank you. Your next question comes from Mike Halloran of Baird.

Mike Halloran -- Robert W. Baird & Co. -- Analyst

Hey, good morning everyone.

Luca Savi -- Chief Executive Officer and President

Morning Mike.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Hi Mike.

Mike Halloran -- Robert W. Baird & Co. -- Analyst

So, on the -- first on the short cycle businesses, that you guys have broadly any discernible momentum or trend that you saw through the quarter in the first part of the second quarter here?

Luca Savi -- Chief Executive Officer and President

Okay. So, when we look at the -- as I said, the orders were positive, but also when you look at the short cycle order, Mike, those were positive. Those were up 4%. So, all of this is good and also the backlog of the short cycle order went up a bit. So, this is positive. So, it's not just kind of a revenue up, but also the orders. Having said that, we see some moderation here and there. But North America, we saw strong now if I look for reasons at the orders of parts from our distribution channel, those are the strong in the last three -- in the first quarter those have been the strongest that they've been in the last four years.

Mike Halloran -- Robert W. Baird & Co. -- Analyst

And then, specifically as you work through the quarter and then in the first part here, did you see sequential improvement, sequential moderation, normal seasonality? I mean how did the short cycle businesses, not just for IP, but also thinking on CCT, any kind of trend as you work through the quarter from that perspective?

Luca Savi -- Chief Executive Officer and President

That's a very sharp point, Mike. And I would say that, when we look at the distribution for reasons on the CCT front, we saw some moderation as we moved in to quarter. Now we are monitoring closely to try to understand how much of that is coming from really the end market and the market situation you know that is low in the growth or some specific resetting of the inventory levels at some of our distributors. That we've seen some of these signs.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Yeah and I would say Mike, you know, the key driver of our IP short cycle business as you know is our U.S. installed base. It's our largest market and increases in U.S. economic output capacity utilization broadly are positive for our short cycle business at IP. So, we're watching the signs, but we also think, we're playing in the right markets at the right times.

Mike Halloran -- Robert W. Baird & Co. -- Analyst

Okay. And then second one. When you think about the strong IP backlog growth up 14% organically, can you just unpack what that means for this year? How much of that you'd expect to book this year? What that means from a growth perspective for this year? Any kind of color around the implications there would be great. Thank you.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Sure. Mike, you know the backlog visibility has been fantastic. We indicated that we increased the backlog 19% in the quarter for IP. The good project volume that we generated from an order perspective added to our already strong position coming into the year. So, we've had very high confidence in our project backlog conversion to revenue. That's been an underpinning element of our 2019 guidance all year. So, we just need to execute and deliver and ship those projects. But I would say that we have more project visibility now and backlog now then.

Then we planned on coming into 2019, obviously some of that will stretch into 2020. So, we're starting to fill in a little bit into 2020. But I would say that what we've seen at this point gives us more confidence in the project element of our IP guidance for the year.

Mike Halloran -- Robert W. Baird & Co. -- Analyst

Appreciate it. Thanks.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thanks Mike.

Luca Savi -- Chief Executive Officer and President

Thanks Mike.

Operator

Thank you. Your next question is from Bryan Blair of Oppenheimer.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Good morning, everyone. Nice start to the year.

Luca Savi -- Chief Executive Officer and President

Thanks Brian.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Hi Brian.

Bryan Blair -- Oppenheimer & Co. -- Analyst

I just wanted to circle back to friction OE trends and levels have been in terms of expected revenue cadence throughout the year. I know there are a lot of moving parts here, but is it fair to expect kind of stabilization in terms of second quarter trends, then solid acceleration in the back half, given SOP timing obviously has a little bit easier comps in the second half?

Luca Savi -- Chief Executive Officer and President

Yes, that's absolutely fair. I think that the first half is going to be worse than second half and Q1 is probably worse than the Q2 in terms of also the our -- if I look at our platforms and our SOP. So, both from a market point of view and specifically for us ITT, the way that you described is spot on, Bryan.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Okay, very helpful. Thank you. And then aftermarket was slightly positive in the quarter and good to see that resiliency in a tough market backdrop. In Europe, how should we think about the core aftermarket growth outlook for this year? And then China's obviously early stage, but on the aftermarket side any color unexpected 2019 contribution, or potential 2020 ramp would be great as well.

Luca Savi -- Chief Executive Officer and President

Okay. So, when we look at Europe, the aftermarket overall was positive and this helped in terms of getting to in almost flat from a friction point of view, which in this market situation is really an outstanding performance. Now when you look at the aftermarket is the tale of two stories. One is the independent aftermarket, which was very, very positive in terms of growth. And the other one was the OES, which didn't grow at all.

So, overall positive aftermarket up more than 10% and when the OES because some specific dynamic with a couple of OEMs was actually negative. So, we see the aftermarket overall to keep on growing and should be a growth for the entire -- for entire year of roughly 3 percentage -- 3 percentage point -- up 3% for 2019.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Okay, got it. And then one last one if I may. Tom I'm sorry if I missed this, but strong cash generation in the quarter year-on-year improvements, I know it's a seasonally weaker conversion quarter. That trend there seems really solid. Have you updated the adjusted free cash conversion guidance for the year?

Tom Scalera -- Executive Vice President and Chief Financial Officer

We haven't yet Bryan, but I think we certainly are encouraged and feeling good about the momentum that we're generating. Our working capital improved by 40 basis points, as a percentage of sale, when you adjust for foreign exchange in the quarter. So, we're continuing to drive good working capital performance, you're seeing it flow through in the free cash flow improvement of 154% in Q1. So, we are feeling incrementally better about our progression of free cash flow generation and moving our conversion guidance up. We just haven't done it quite yet, but I think all the momentum is going in the right direction.

Luca Savi -- Chief Executive Officer and President

And on the working capital Bryan, I mean, one thing that I wanted to stress again the improvement at IP, where our working capital was 24.7% and there's an improvement of 200 basis points, well done IP.

Bryan Blair -- Oppenheimer & Co. -- Analyst

Very good. Thanks again, guys.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thanks Bryan.

Operator

Thank you. Your next question is from Matt Summerville of D.A. Davidson.

Matt J. Summerville -- D.A. Davidson & Co. -- Analyst

Thanks. Back to IP, given the growth you're seeing in projects, trying to balance out with the activity you're seeing in aftermarket. Can you maybe help us and talk through what the anticipated margin cadence in that business looks like in Q2 and into the back half of the year?

Tom Scalera -- Executive Vice President and Chief Financial Officer

Yeah Matt. So, from a margin perspective it's -- I'd say each quarter is going to have a different story from an IP perspective and some of that's going to be based on the mix of projects we had a very high project delivery mix in Q1 of this year, still outperformed last year. But in general, we expect IP margins to outperformed the prior year in every quarter.

Now this is before we add in the Rheinhutte Pumpen acquisition, which will have a little bit of an impact on margins. But the core business we expect it to outperform the prior year and every quarter, there's no real pattern that I could point you to as how it's going to roll out. I would say that Q2 and Q4 are going to be on the higher end of the margin profile. And Q3 I think just based on the shipments that we're seeing is going to be somewhere in the middle. But I would say overall good continued project execution and productivity initiatives that we're driving across the portfolio are going to give us that strong triple-digit margin expansion for the year with each quarter doing better than prior year.

Matt J. Summerville -- D.A. Davidson & Co. -- Analyst

Got it.

Luca Savi -- Chief Executive Officer and President

And Matt, I would say that, when you look at IP and the 170 basis points improvement that we have seen in IP and you look at the net productivity, the net productivity couple of those elements mainly are coming from the supply chain and a big one is also from better project execution that we see across the board.

Matt J. Summerville -- D.A. Davidson & Co. -- Analyst

Thank you for that color. And then just back over to friction OEM, you typically gave a regional sort of scorecard between how your business performed versus the market. And I think you gave a global view of 500 basis points plus, but I was hoping to maybe get some regional granularity there. Thank you.

Luca Savi -- Chief Executive Officer and President

Sure, of course. So, when we look at China, we outgrew the China market, but this was less than what we expected starting the year. And this is due mainly to some timing of some customers orders between Q4 of last year and Q1 of this year. And we expect it to go back to the normal beating in Q2 and Q3 of 2019. So, China our outgrow was at the lower end of our expectations.

When it comes to Europe, we outgrow the range that we said before in terms of exactly, where we expect it to be and this could be even more positive, as we move into Q2 and in the next few quarters.

And when we come to North America, we beated our expectation in terms of the range. So, when you look at globally, is exactly in the range of 500, but it didn't come in the same way that we expected. Less in China, the same in Europe, more in North America. This exactly the way that it worked out.

Matt J. Summerville -- D.A. Davidson & Co. -- Analyst

Got it. And then with respect I think you called out China, but maybe you're seeing some of this in Europe even, but we've heard from other companies that they're being negatively impacted by delays in platform launches, major model redesigns. I guess to what extent are you seeing that impact your business? And do you think, you'll be able to effectively recapture that in the year, or is it -- I guess help me understand the visibility you have on some of these new platforms particularly in China?

Luca Savi -- Chief Executive Officer and President

Sure. So, that's a very, very fair point, Matt. So, when we look at Europe, we have not seen a big movement in terms of SOP or a big implication for us so far. So, move Europe out of the way in the consideration for the moment for us at least right now.

And when you look at China, we have seen a little bit of that in terms of some of the SOP shifting to the right. And what this means is really usually a shift of three to six months. So, the impact is not a medium, long term, is a short term impact. These is usually what happens. And is not so much -- of course we will recapture that because we won those awards and we restarted the production, but maybe just start by three or six months later. And we saw a little bit of that in China and this is really also, why we are seeing China not to outgrowing the way that we are expecting at the beginning.

Matt J. Summerville -- D.A. Davidson & Co. -- Analyst

Got it. Thank you guys.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thanks Matt.

Luca Savi -- Chief Executive Officer and President

Thank you, Matt.

Operator

Thank you. Your next question is from Andrew Obin of Bank of America.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Hi guys, good morning. Great quarter.

Luca Savi -- Chief Executive Officer and President

Good morning, Andrew. Thank you.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Just kind of just you know back to China auto. Can you comment, because I was in China, I think back in March and I was just amazed by how bad March was and all the sort of percolations through the supply chain of production shortfall.

Can you just comment on what are you seeing in April in China production volumes? And if you're surprised, is it in line with your expectations? Is it worse? And then the follow-up question on China, what's your exposure in China? Could you remind us versus on JVs versus Chinese OEs, because our understanding is that market share is shifting toward Chinese OEs. Thank you.

Luca Savi -- Chief Executive Officer and President

Okay, sure. So, yes when you look at China, I think, that their consumer confidence is, has really been affected by everything that's going around in the world by the trade war between China and USA. And therefore, this has impacted the consumer confidence and you see translated in the market.

Now I think there was some economic indicators that came out just yesterday in terms of the China, that it was actually giving some positive sign about the China economy during the later -- the lattest compared to Q1. But we think that the situation will improve in Q2 and in the next few quarters, also favored by easy comparison, when you think about Q3 and Q4 of last year.

Now when you look at us, we are very well-spread across all the different OEMs, Andrew. And this is a strategy that we implemented at the beginning where -- at the beginning when we started to work in China. We started with Western OEMs and then we diversified going back to the concept of diversification and we went also to the Chinese OEMs.

Today, I would say probably we are 65, 35 something like that. Western OEMs and the Chinese OEM. And I would say Western and also Japanese OEM versus the Chinese OEM. It's true that you see this trend moving and as the Chinese OEM are gaining more share, they're getting also most sophisticated with the customer (ph) -- with their requirements and this is going to really play in our field. It's going to be very good for us.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Okay. That sounds great. And just a follow-up question. On IP capacity, looking at your bookings, looking I think one of your competitors had strong bookings this morning. What do you feel is the industry capacity? And how much flexibility is there to deliver on to sort of flex up on deliveries in 2019? And I'm specifically talking about process downstream all that good stuff and chemicals.

Luca Savi -- Chief Executive Officer and President

Personally Andrew, I don't see any any issue with that. So, I think that the industry and the market would be able to deliver and provide the good service to our customers. I don't see capacity issues.

Also in addition to that, when I look at ITT specifically because our productivity and all the initiatives that we put in place in all our plants that actually is going to be a nice tailwind for our numbers.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Congratulations on great execution. Thanks.

Luca Savi -- Chief Executive Officer and President

Thanks, Andrew.

Operator

Thank you. Your next question is from Nathan Jones of Stifel.

Adam M. Farley -- Stifel Nicolaus Weisel -- Analyst

Good morning, this is Adam Farley on for Nathan.

Luca Savi -- Chief Executive Officer and President

Hey Adam.

Adam M. Farley -- Stifel Nicolaus Weisel -- Analyst

You guys have provided a lot of updates on the auto markets within MT, which is very helpful. But shifting to the rail business, you guys called out some market share gains. So, my question is, if you could provide some color around what happened in the quarter, where you're taking share and then your expectations for the full year?

Luca Savi -- Chief Executive Officer and President

Thank you Adam. I was waiting for somebody to ask a question on rails you know. So, that I really, I really appreciate it. So, KONI had a great, great performance. So, I want just to congratulate David, (inaudible) and Charles because when I look at the order performance in a rail it was 31% year-over-year. And this is mainly because of rail where the orders grew more than 50%. This is mainly coming from two regions, Europe and China. Both Europe and China were strong.

So, when you look at China, mainly is a high-speed train and -- but also coach, which are -- which is a profitable, profitable, very profitable train for us. And when you look at customers, you are talking about customers, of course, CRCC in China, but also customers like (inaudible) in France, Bombardier, Siemens, Hyundai for Korea. So, it's across the board. This is a pure market share gains. Where this is coming from? is really thanks to the performance of the business.

When you look at this business has really turned around, if we think about six years ago KONI was losing money. We had quality issues. We had big delinquent backlogs. We had, I remember, in Austria, in the Czech Republic in 2012, we had 12,000 shock absorbers delinquency. So, that was, was really a pain, trust me on that.

Today our quality is -- and we have reduced our PPM by more than 70%. That quality is felt in the field, the customer seat, our on-time delivery is topnotch. And as you perform, the customer is rewarding and this is really why we're winning shares.

Adam M. Farley -- Stifel Nicolaus Weisel -- Analyst

It's really helpful. Thanks. And then on the Smart Pad, kind of a high level, it sounds like there's some incrementally positive developments there. Again on a high level (ph) if you could just tell us when you expect that to move to direct vehicle integration, or just provide any color on Smart Pad that would be great.

Luca Savi -- Chief Executive Officer and President

Sure. On the Smart Pad we keep on investing, so we are actually utilizing it as a development tool right now. Now we are keep on working to improve also the applications now because of the specific situation in the market in the automotive, many of the OEMs have actually slowed down, some of the investments. And because they shifted more on the electrification for instance. So, we saw some investment from OEM coming down. So, we see that these could be postponed a little bit further down. But we keep on investing and we have not slow down on the RND perspective.

Tom Scalera -- Executive Vice President and Chief Financial Officer

And one thing to add there Adam, you may have seen that we did receive some government incentives supporting our innovation efforts in Europe and that was a nice offset to the investments we've been making in Smart Pad, which as Luca indicated are going to be a longer term investment, but the right one, the right technology. But we'll go at the pace of the market and if we can gain incentives and support from the local European governments along the way, we'll certainly do that.

Adam M. Farley -- Stifel Nicolaus Weisel -- Analyst

Okay, great. Thank you.

Operator

Thank you. Your next question is from Joe Ritchie of Goldman Sachs.

Joe Ritchie -- Goldman Sachs. -- Analyst

Hi, good morning everyone and nice quarter.

Luca Savi -- Chief Executive Officer and President

Thanks Joe.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thank you, Joe.

Joe Ritchie -- Goldman Sachs. -- Analyst

So, my first question, Tom if I heard you correctly, on Q2 organic growth, it sounds like you were calling for low single-digit growth yet, you know the orders in IP were really good. It sounds like Motion Tech organic growth should be better in 2Q than 1Q. And obviously the Control Technologies business is still doing well.

So, I'm trying to understand like why should we see a desell. It only tough get -- comps get all that much harder in the second quarter. So I'm just wondering what I'm missing here for 2Q?

Tom Scalera -- Executive Vice President and Chief Financial Officer

Joe the biggest piece is probably just the timing of project shipments at IP compared to what we had queued up to go out in Q1. So, you know, we always kind of talk about the fact that with an IP, there's that the project variable, which is anywhere from $10 million to $20 million of revenue that moves based on the ultimate delivery dates with our customers that's probably one of the bigger variables, you'll see that the biggest change from Q2 growth rates compared to Q1 growth rates at IP. And I would tie that almost exclusively to project deliveries.

As far as Motion Technologies, we kind of indicated that it would be more in the flattish range from an organic perspective. And I think CCT is trending in line there's a little bit of adjustment on the short cycle that we're just being mindful of, I would say. You know we have pretty good visibility through Q2, but we certainly don't get too far ahead of ourselves in any of our short cycle projections. So, those are some of the elements from an organic perspective that, that we're looking at in Q2 versus Q1.

Joe Ritchie -- Goldman Sachs. -- Analyst

Okay. That makes sense, Tom. I guess so, in following up on that comment, if your projects then are going to be a little bit more back half weighted, you obviously it's a good growth here in the first quarter. Does that then naturally imply that your incremental margins in 2Q and IP are going to be better?

Tom Scalera -- Executive Vice President and Chief Financial Officer

Going back to yeah to the earlier comment on the trajectory and the progression of the margins, I think that's a good inference to make. And the opposite being true perhaps in Q3, where we have a higher project shipment, as a percent of the total, so you'll see kind of margins benefit from that mix in Q2, the next (ph) to be more project heavy in Q3 and kind of reflect that. And then in Q4, we're all in and working both fronts aggressively. So, that's why we do think Q3 and Q4 will be the stronger margin quarters of the year in 2019.

Joe Ritchie -- Goldman Sachs. -- Analyst

Got it. If I could ask one more just on Motion Tech in the Mexico facilities. Obviously it sounds like you guys are off to really great start there. I guess I'm trying to understand the longer term margin potential of that, of that facility and I know that currently you have some production for North America that is being manufactured in Europe.

So, maybe try to -- if you could provide maybe some color on how you see the margins tracjecting in that business over time? And how much better the margins can be potentially in Mexico versus where you're producing today in Europe for North America? Thank you.

Luca Savi -- Chief Executive Officer and President

Okay. So, when we look at Mexico, our expectation is for Mexico to be the best performing facility worldwide, both in terms of a quality service to our customers and profitability. So, these will be a journey, as I said of two to three years, that we will expect the profitability there to be the best in the world.

Now what was that the second part of that question, Joe? Just a bit. (ph)

Joe Ritchie -- Goldman Sachs. -- Analyst

Yeah. Look at just a piece that I know that you're producing right now in Europe, for North America as well.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Yes. That kind of things obviously we change a little bit Joe. But you may always have some pieces produced in Europe for North America or in China for North America, because when you win a global platform, you make the investment, unless it's really huge only in one plant. So, if you win a platform from there you're going to produce, for instance 4 million pads and 300 of -- 3 million pads of those -- of those are going to be for China and one for North America. You just do with the investment in China, produce everything over there, and then you ship them because you ship brake pads very easy to pack, you're not shipping air. So, obviously these going to reduce -- they are going to reduce, example , those situations, but you will always have a little bit of that. Does it make sense, Joe?

Joe Ritchie -- Goldman Sachs. -- Analyst

Yeah, that makes sense. Thanks. Thank you both for your answers.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thanks, Joe.

Operator

Thank you. Your next question is from Brett Linzey of Vertical Research.

Brett Linzey -- Vertical Research Partners, LLC -- Analyst

Hi, good morning. I appreciate just squeezing me in.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Hi Brett.

Luca Savi -- Chief Executive Officer and President

Hi Brett.

Brett Linzey -- Vertical Research Partners, LLC -- Analyst

Hey, just wanted to focus on price cost. Just wondering what gross price was in the quarter? And specific to IP projects, how's the pricing look in that, that particular business? And then within the guidance bridge you talk about productivity and cost actions, we should see some relief on input costs here. I mean is that included in that bucket some relief. And then just the follow-up to that is the, the RPG acquisition, I see you included in revenue. It doesn't look like there's any accretion in the guide. Is that just contingency? Any color will be good.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Sure, Brett. So, on price cost, I would say for us in total price was neutralized. You know we have the headwind from Motion Technologies every year and the actions we put in place at IP and CCT we are able to offset price at the overall ITT level. So, our price cost dynamic, I would say is always different because of the MT dynamic that we deal with.

Certainly we generated more than adequate productivity both in supply chain and in our facilities to offset the increase in commodity costs. So, a lot of that kind of combined into a very strong margin expansion that was really driven. I would say by net productivity that our actions and supply chain productivity more than offset material and labor cost escalation. That was the real driver behind the margin expansion in the quarter.

On the RPG front, I would say just maybe a little too early at this point Brett for us to think the purchase accounting and in some of the transitional issues early on. Let us get our hands through that, through those activities and we'll revisit in Q2. But we're certainly thrilled to have it closed and we know the revenue is going to be there and we'll work on the P&L impacts, we expect it to be EPS accretive certainly within year one. But we just didn't want to get too ahead of ourselves, given we just closed, we will have more updates shortly.

Brett Linzey -- Vertical Research Partners, LLC -- Analyst

Okay, understood. And then just one on Europe friction, appreciate the color on the market and what you guys did in terms of growth in the quarter. But just specifically on the outgrowth factors in Europe, I mean, you already have a high market share. Is there more room there? And I guess how do you think about the content multiple per vehicle as you expand the scope of the offerings? Can you size that, and can you sustain that outgrowth in Europe?

Luca Savi -- Chief Executive Officer and President

So, when we look at Europe, our expectation in terms of outgrow of the market are moderate exactly because as you say when already have that market share, you can outgrow only a certain amount. What we are pleased about is that we see, that we are meeting that and we are projecting beating that later on in the year.

What is influenced by that is the ramping up of some of the new platforms in the year, they are ramping up. They started in Q1 and we'll start also in Q2, where we have won a higher content and these obviously we keep on helping our market share there as well.

Tom Scalera -- Executive Vice President and Chief Financial Officer

And I would say Brett from front axle content rear axle. Certainly our biggest opportunities are in North America and in China to increase our front axle, you know, a content percentage and you're seeing some of that momentum build particularly in North America and in China. I would say in Europe, where we have a more established presence. We do have a higher weighting on the front axle than we have elsewhere in the world. But certainly all of those opportunities for us to continue to grow share as we move forward.

Brett Linzey -- Vertical Research Partners, LLC -- Analyst

Okay, great. I appreciate the insight. I'll leave it there.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thanks Brett.

Operator

Thank you. We do have time for one final question. That question will come from Joe Giordano with Cowen.

Joseph Giordano -- Cowen and Company -- Analyst

Good morning, everyone.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Hi, Joe.

Luca Savi -- Chief Executive Officer and President

Good morning Joe.

Joseph Giordano -- Cowen and Company -- Analyst

So, Parker -- Parker had been acquired one of your competitors in rotorcraft and I know it's a small area for you guys. That's the one we've been talking about it, gaining a lot of share over the last couple of quarters. Just curious of that acquisition changed the landscape at all?

Tom Scalera -- Executive Vice President and Chief Financial Officer

I think it's a validation Joe of you know the value of the platforms that we participate in. We do compete in some of the same spaces in particular rotorcraft, which is an area of where we generate a lot of growth lately and we're going to continue to go after market share in the global rotorcraft space. So, our goal is to maintain the technology and the overall performance that we've been generating, capture more and more share. So, we'll look forward to competing against any and all players in the space. But for us I think it's a validation that we do play in some very attractive spaces.

Luca Savi -- Chief Executive Officer and President

And Joe if I can build on that. This is an area where we have seen that our organic investment is really paying off. So, we have developed a great engineering team, a great R&D team, operations in Orchard Park. We had a very moderate investment. We've been able to penetrate the rotocraft organically and the return on investment of that initiative is really awesome.

Joseph Giordano -- Cowen and Company -- Analyst

Okay. And then if I can shift over to CCT. Some of the margin growth that you've had over the last bunch of quarters here, partially because of the comps you had. And now that Nogales is kind of at a normalized level. I'm just curious, I just want to understand the forward opportunities. I think when we were talking under the old segment structure, we were -- the move was conceived to kind of bring it to a, you know, like a 28%-ish kind of margin opportunity. Just kind of curious on an update there.

Luca Savi -- Chief Executive Officer and President

Sure. So, when you look at the profitability at CCT is a fantastic 200 basis points improvement, very good improvement. And these I'd say you have that the negative price and mix was compensated by volume. So, all of these -- all of the net productivity really dropped to the bottom line, coming from a lean project, coming from supply chain, coming from restructuring.

Now when you look at, we have -- as we described before, we have a warchest of opportunities in CCT. So, if I think about example, I share with you before in terms of the insourcing of the plating, this is something that is going to be implemented toward the end of the year. And that profitability will come in 2020.

In addition to that, is loading factories and moved some of the product lines to factories like Shenzhen or even more in Nogales. So, we have room to go, to achieve the target goal that we set ourselves for the long term.

Joseph Giordano -- Cowen and Company -- Analyst

Great. And if I can sneak in one last one. Just given the kind of the volatility in China, you guys spent a lot of money on Wuxi to ramp that facility up. Is there any opportunity now to kind of step back and take out? I know those the MT facilities run very lean anyway, but serious if there was any opportunities to kind of readdress, or maybe some costs in a more volatile market here?

Luca Savi -- Chief Executive Officer and President

No Joe, when I look at those lines that they're running fully in terms of five days per week in terms of three shifts. And we are looking at the structural costs this is what we have done in Europe. And this is also what has happened delivering this margin improvement and will help us deliver margin improvement in the next few quarters.

Joseph Giordano -- Cowen and Company -- Analyst

Great. Thanks guys.

Tom Scalera -- Executive Vice President and Chief Financial Officer

Thanks Joe.

Luca Savi -- Chief Executive Officer and President

So, let me close. So, before we break today, I would like to thank you all for being in the call. And particular I'd like to thank all of our customers they trust us to deliver their most critical and safety technical solutions. We will keep working faster and harder every day and we keep the customer at the center of all we do for our customer to succeed. And I'd like to thank all of our ITT'ers around the world, they deliver for our customers and they deliver this beautiful record results. Thank you.

Operator

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

Duration: 66 minutes

Call participants:

Jessica Kourakos -- Head, Investor Relations

Luca Savi -- Chief Executive Officer and President

Tom Scalera -- Executive Vice President and Chief Financial Officer

Jeffrey Hammond -- KeyBanc Capital Markets -- Analyst

John G. Inch -- Gordon Haskett Research Advisors -- Analyst

Mike Halloran -- Robert W. Baird & Co. -- Analyst

Bryan Blair -- Oppenheimer & Co. -- Analyst

Matt J. Summerville -- D.A. Davidson & Co. -- Analyst

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Adam M. Farley -- Stifel Nicolaus Weisel -- Analyst

Joe Ritchie -- Goldman Sachs. -- Analyst

Brett Linzey -- Vertical Research Partners, LLC -- Analyst

Joseph Giordano -- Cowen and Company -- Analyst

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