Core Viewpoint - Illinois Tool Works Inc. reported second-quarter 2024 adjusted earnings of $2.54 per share, exceeding the Zacks Consensus Estimate of $2.45, with a year-over-year increase of 2% [1] - However, revenues of $4.0 billion fell short of the consensus estimate of $4.1 billion, reflecting a 1.2% year-over-year decline due to unfavorable foreign currency translation [1] Financial Performance - The company's cost of sales decreased by 3.5% year over year to $2.26 billion, while selling, administrative, and research and development expenses decreased by 0.6% to $686 million [5] - The operating margin improved to 26.2%, up 140 basis points from the previous year, with enterprise initiatives contributing 140 basis points to this margin [5] Segmental Performance - Test & Measurement and Electronics revenues decreased by 3% year over year to $678 million, missing the estimate of $711 million [2] - Automotive Original Equipment Manufacturer revenues fell by 1% year over year to $815 million, below the estimate of $855.9 million [2] - Food Equipment revenues increased by 2% year over year to $667 million, slightly above the estimate of $665 million [3] - Welding revenues declined by 5% year over year to $466 million, missing the estimate of $493.9 million [3] - Construction Products revenues decreased by 4% year over year to $504 million, below the estimate of $510.7 million [4] - Specialty Products revenues increased by 6% year over year to $449 million, exceeding the estimate of $412.5 million [4] - Polymers & Fluids revenues declined by 1% year over year to $454 million, slightly below the estimate of $460.1 million [4] Balance Sheet and Cash Flow - At the end of the second quarter, cash and equivalents stood at $862 million, down from $1.1 billion at the end of December 2023 [6] - Long-term debt increased to $6.4 billion from $6.3 billion at the end of December 2023 [6] - In the first half of 2024, net cash generated from operating activities was $1.3 billion, a decline of 15.9% year over year [7] - Capital spending on plant and equipment was $211 million, up 6.6% year over year, while free cash flow decreased by 19.3% year over year to $1.1 billion [7] 2024 Guidance - The company expects earnings to be in the range of $10.30-$10.40 per share, with total revenues and organic revenues anticipated to be flat [8] - Operating margin is projected to be between 26.5% and 27%, with enterprise initiatives expected to contribute more than 100 basis points [8] - Free cash flow is expected to exceed 100% of net income, and the company plans to repurchase approximately $1.5 billion worth of shares [8] - The expected tax rate is between 24% and 24.5% [8]

Financial Data and Key Metrics Changes - Second quarter organic revenue was flat year-over-year, with a slight improvement from a decline of 0.6% in Q1 [5][8] - Operating income grew 4.5% to a record $1.05 billion, and GAAP EPS increased to $2.54 from $2.48 last year [6][32] - Free cash flow was $571 million, representing a 75% conversion of net income, slightly below the historical range of 80% [9] Business Line Data and Key Metrics Changes - Food Equipment organic revenue grew 2.5%, with equipment up 1% and service up 5% [12] - Test & Measurement and Electronics saw a 3% decline in organic revenue, impacted by softness in semiconductor and electronics markets [13] - Polymers & Fluids increased 3% in organic revenue, with Polymers up 10% and Fluids up 4% [14] - Specialty products achieved 7% organic revenue growth, driven by strength in aerospace equipment [15] Market Data and Key Metrics Changes - North America experienced a 2% decline in organic revenue, an improvement from a 3% decline in Q1 [10] - Europe grew 1% and Asia Pacific grew 3%, with China up 5% [10] - Automotive OEM segment delivered flat organic growth, with North America down 4% and Europe down 2% [34] Company Strategy and Development Direction - The company aims to build above-market organic growth through customer-backed innovation, focusing on long-term growth despite current challenges [7][18] - Margin guidance was raised to 26.5% to 27%, with a goal of achieving 30% operating margin by 2030 [17][18] - The company is focused on disciplined portfolio management and high-quality acquisitions to extend long-term growth potential [49][60] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging near-term environment due to moderating manufacturing CapEx demand and lower automotive build forecasts [7][40] - The company expects flat organic growth for the full year, adjusting guidance based on current demand levels [30][41] - Management expressed confidence in the company's competitive advantages and resilience in navigating economic conditions [18][40] Other Important Information - The effective tax rate increased to 24.4% from 21.4% in the prior year, impacting EPS by $0.10 [9] - The company repurchased $375 million of its own shares during the quarter as planned [9] Q&A Session Summary Question: Insights on Specialty Products Performance - Management highlighted strong demand in aerospace and favorable order timing contributing to the solid performance in specialty products [22] Question: Demand Cadence and Future Outlook - Management indicated that demand has moderated but noted easier comparisons in the second half of the year [24] Question: M&A Strategy - The company maintains a disciplined approach to M&A, focusing on high-quality acquisitions that align with its growth strategy [49] Question: North America Market Dynamics - Management clarified that the decline in North America is more related to demand rather than destocking, with specific segments like Welding and Automotive contributing to the decline [51] Question: Operating Margin Guidance - Management explained that the increase in operating margin guidance is primarily driven by enterprise initiatives, with modest contributions from price-cost dynamics [52] Question: Free Cash Flow Conversion Confidence - Management expressed confidence in generating above-average free cash flow in the second half, despite a lower conversion rate in the first half [96] Question: Segment Performance and Future Expectations - Management noted that while some segments are performing well, overall market conditions remain challenging, with expectations for modest growth in the second half [104]

6 • Europe (7)% • Australia/New Zealand (4)% GAAP EPS $9.74 $10.30 – $10.40 +6 - 7% • Revenue and organic growth projected to be ~flat - Based on current levels of demand exiting Q2 and declining automotive build forecast - Enterprise initiatives contribute more than 100 bps 2023 2024E +165 bps STRONG EXECUTION IN A CHALLENGING MACRO DEMAND ENVIRONMENT Revenue - Reduction of (1)% / $(0.15) at the mid-pt. vs. prior range Operating Margin 25.1% After-tax ROIC* 30.4% 31%+ *See ITW's Q2'24 press release for the ...

Illinois Tool Works (ITW) came out with quarterly earnings of $2.54 per share, beating the Zacks Consensus Estimate of $2.45 per share. This compares to earnings of $2.41 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 3.67%. A quarter ago, it was expected that this equipment manufacturer for the transportation, power, food and construction industries would post earnings of $2.35 per share when it actually produced earnings o ...

• Revenue of $4.0 billion, a decrease of 1% with flat organic growth • Operating income of $1.05 billion, an increase of 4.5% • Operating margin of 26.2%, an increase of 140 bps as enterprise initiatives contributed 140 bps • GAAP EPS of $2.54, an increase of 2%; Excl. a one-time 2023 tax item, EPS increased 5% • Narrowing full year GAAP EPS guidance to a range of $10.30 to $10.40 per share Second quarter revenue of $4.0 billion declined by 1.2 percent as organic growth declined 0.1 percent. Foreign currenc ...

Revenue of $4.0 billion, a decrease of 1% with flat organic growth Operating income of $1.05 billion, an increase of 4.5% Operating margin of 26.2%, an increase of 140 bps as enterprise initiatives contributed 140 bps GAAP EPS of $2.54, an increase of 2%; Excl. a one-time 2023 tax item, EPS increased 5% Narrowing full year GAAP EPS guidance to a range of $10.30 to $10.40 per share GLENVIEW, Ill., July 30, 2024 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its second quarter 2024 re ...

"While the demand environment continued to moderate across our portfolio, we delivered a solid quarter with strong operational execution and profitability," said Christopher A. O'Herlihy, President and Chief Executive Officer. "Our ability to overcome near-term macro challenges and expand our margin and profitability to record levels as evidenced by margin improvement of 140 basis points to 26.2 percent and EPS growth of more than five percent, is a direct result of the focused execution by our team of dedi ...

While investors typically use consensus earnings and revenue estimates as indicators of quarterly business performance, exploring analysts' projections for specific key metrics can offer valuable insights. In light of this perspective, let's dive into the average estimates of certain Illinois Tool Works metrics that are commonly tracked and forecasted by Wall Street analysts. Based on the collective assessment of analysts, 'Operating Revenues- Test & Measurement and Electronics' should arrive at $708.57 mil ...

The consensus estimate for revenues is pegged at $4.09 billion, up 0.4% from the year-ago quarter's reported figure. The consensus estimate for adjusted earnings is pinned at $2.46 per share, indicating 2.1% growth from the year-ago quarter's reported number. Factors to Note Increased equipment sales, driven by higher demand in Europe and North America, are likely to have driven the Specialty Products segment's growth. Also, strong momentum in the ground support equipment and consumer packaging businesses a ...

Zacks Consensus Estimate Revenues are expected to be $4.09 billion, up 0.4% from the year-ago quarter. Earnings Whisper A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. How Have the Numbers Shaped Up for Illinois Tool Works? O ...