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ITW Reports Fourth Quarter and Full Year 2024 Results

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Illinois Tool Works (ITW) reported Q4 2024 and full-year results, showing mixed performance. Q4 revenue decreased 1.3% to $3.9 billion, with organic growth declining 0.5%. However, the company achieved a record operating margin of 26.2%, up 140 basis points, and record free cash flow of $1B, a 10% increase.

Full-year 2024 revenue was $15.9 billion, down 1.3%, with organic growth declining 0.7%. The company achieved record GAAP EPS of $11.71, a 20% increase, including one-time gains from LIFO inventory accounting ($0.30) and Wilsonart sale ($1.26).

For 2025, ITW projects organic growth of 0-2%, GAAP EPS of $10.15-$10.55 (including $0.30 forex headwind), and plans to repurchase approximately $1.5 billion of shares. Operating margin is expected to be 26.5-27.5%, with enterprise initiatives contributing about 100 basis points.

Illinois Tool Works (ITW) ha riportato i risultati del quarto trimestre 2024 e dell'intero anno, mostrando performance miste. Le entrate del Q4 sono diminuite dell'1.3% a $3.9 miliardi, con una crescita organica in calo dello 0.5%. Tuttavia, l'azienda ha raggiunto un margine operativo record del 26.2%, in aumento di 140 punti base, e un flusso di cassa libero record di $1 miliardo, con un incremento del 10%.

Le entrate dell'intero anno 2024 sono state di $15.9 miliardi, in diminuzione dell'1.3%, con una crescita organica in calo dello 0.7%. L'azienda ha raggiunto un GAAP EPS record di $11.71, con un incremento del 20%, inclusi guadagni una tantum dalla contabilizzazione LIFO dell'inventario ($0.30) e dalla vendita di Wilsonart ($1.26).

Per il 2025, ITW prevede una crescita organica dello 0-2%, un GAAP EPS di $10.15-$10.55 (incluso un impatto negativo di $0.30 dal cambio), e prevede di riacquistare circa $1.5 miliardi di azioni. Si prevede che il margine operativo sia compreso tra il 26.5% e il 27.5%, con iniziative aziendali che contribuiranno con circa 100 punti base.

Illinois Tool Works (ITW) reportó los resultados del cuarto trimestre de 2024 y del año completo, mostrando un rendimiento mixto. Los ingresos del cuarto trimestre disminuyeron un 1.3% a $3.9 mil millones, con un crecimiento orgánico en declive del 0.5%. Sin embargo, la compañía logró un margen operativo récord del 26.2%, un aumento de 140 puntos básicos, y un flujo de efectivo libre récord de $1 mil millones, un incremento del 10%.

Los ingresos del año completo 2024 fueron de $15.9 mil millones, con una disminución del 1.3%, y un crecimiento orgánico en declive del 0.7%. La compañía logró un GAAP EPS récord de $11.71, un aumento del 20%, incluyendo ganancias únicas de la contabilización LIFO de inventario ($0.30) y de la venta de Wilsonart ($1.26).

Para 2025, ITW proyecta un crecimiento orgánico del 0-2%, un GAAP EPS de $10.15-$10.55 (incluyendo un impacto negativo de $0.30 por cambio de divisas), y planea recomprar aproximadamente $1.5 mil millones de acciones. Se espera que el margen operativo esté entre el 26.5% y el 27.5%, con iniciativas empresariales que contribuirán aproximadamente con 100 puntos básicos.

일리노이 공구 회사(ITW)는 2024년 4분기 및 전체 연도 결과를 보고하며 혼합된 실적을 보여주었습니다. 4분기 매출은 39억 달러로 1.3% 감소했으며, 유기 성장률은 0.5% 하락했습니다. 그러나 회사는 기록적인 운영 마진 26.2%를 달성했으며, 이는 140베이시스 포인트 증가한 수치이고, 10억 달러의 기록적인 자유 현금 흐름을 기록했습니다. 이는 10% 증가한 수치입니다.

2024년 전체 연간 매출은 159억 달러로 1.3% 감소했으며, 유기 성장률은 0.7% 감소했습니다. 회사는 기록적인 GAAP EPS 11.71달러를 달성했으며, 이는 20% 증가한 수치입니다. 이는 LIFO 재고 회계($0.30)와 윌슨아트 판매($1.26)에서 발생한 일회성 이익을 포함합니다.

2025년을 위해 ITW는 유기 성장률을 0-2%로 예상하고, GAAP EPS를 10.15달러에서 10.55달러(0.30달러 외환 악영향 포함)로 예상하며, 약 15억 달러의 주식을 재매입할 계획입니다. 운영 마진은 26.5-27.5%로 예상되며, 기업 이니셔티브가 약 100 베이시스 포인트에 기여할 것으로 보입니다.

Illinois Tool Works (ITW) a rapporté les résultats pour le quatrième trimestre 2024 et l'année complète, montrant des performances variées. Les revenus du Q4 ont diminué de 1,3 % pour atteindre 3,9 milliards de dollars, avec une croissance organique en baisse de 0,5 %. Cependant, l'entreprise a obtenu un marge opérationnelle record de 26,2 %, en hausse de 140 points de base, ainsi qu'un flux de trésorerie disponible record de 1 milliard de dollars, soit une augmentation de 10 %.

Pour l'année 2024, les revenus étaient de 15,9 milliards de dollars, en baisse de 1,3 %, avec une croissance organique diminuant de 0,7 %. La société a enregistré un bénéfice net GAAP record de 11,71 $, soit une augmentation de 20 %, y compris des gains uniques liés à la comptabilité LIFO des inventaires (0,30 $) et à la vente de Wilsonart (1,26 $).

Pour 2025, ITW prévoit une croissance organique de 0 à 2 %, un bénéfice net GAAP de 10,15 $ à 10,55 $ (y compris une pression à la baisse de 0,30 $ due aux devises), et prévoit de racheter environ 1,5 milliard de dollars d'actions. La marge opérationnelle devrait se situer entre 26,5 % et 27,5 %, avec des initiatives d'entreprise contribuant à environ 100 points de base.

Illinois Tool Works (ITW) berichtete über die Ergebnisse des vierten Quartals 2024 und des gesamten Jahres und zeigte gemischte Leistungen. Der Umsatz im Q4 fiel um 1,3 % auf 3,9 Milliarden Dollar, während das organische Wachstum um 0,5 % zurückging. Das Unternehmen erzielte jedoch eine Rekord-Betriebsgewinnmarge von 26,2 %, was einem Anstieg von 140 Basispunkten entspricht, sowie einen Rekord-Freibetragsfluss von 1 Milliarde Dollar, was einem Anstieg von 10 % entspricht.

Der Gesamtjahresumsatz 2024 betrug 15,9 Milliarden Dollar, was einem Rückgang von 1,3 % entspricht, und das organische Wachstum ging um 0,7 % zurück. Das Unternehmen erzielte ein Rekord-GAAP EPS von 11,71 USD, was einem Anstieg von 20 % entspricht, einschließlich einmaliger Gewinne aus der LIFO-Inventarbewertung (0,30 USD) und dem Verkauf von Wilsonart (1,26 USD).

Für 2025 plant ITW ein organisches Wachstum von 0-2 %, ein GAAP EPS von 10,15 - 10,55 USD (inklusive eines Wechselkurs-Nachteils von 0,30 USD) und plant, etwa 1,5 Milliarden Dollar Aktien zurückzukaufen. Es wird erwartet, dass die Betriebsgewinnmarge zwischen 26,5 % und 27,5 % liegt, wobei Unternehmensinitiativen etwa 100 Basispunkte beitragen werden.

Positive
  • Record operating margin of 26.2% in Q4, up 140 basis points
  • Q4 free cash flow increased 10% to $1B with 133% conversion rate
  • Record GAAP EPS of $11.71 for 2024, up 20%
  • $3.2B returned to shareholders through dividends and share repurchases in 2024
  • Six of seven segments expanded margins in 2024
Negative
  • Q4 revenue declined 1.3% to $3.9B
  • Full-year 2024 revenue decreased 1.3% to $15.9B
  • Organic revenue declined 0.7% in 2024
  • Projected 3% foreign currency translation headwind for 2025
  • Expected total revenue decline of 1-3% for 2025

Insights

ITW's Q4 and FY2024 results demonstrate exceptional operational execution despite revenue headwinds. The company achieved record operating margins through its enterprise initiatives, contributing 120 basis points to Q4 margins and 130 basis points for the full year. This operational excellence translated into robust profitability metrics.

The revenue picture reveals important nuances. While headline organic growth declined 0.5 in Q4, adjusting for Product Line Simplification (PLS) shows positive growth of 0.4. This strategic pruning of lower-margin business lines, while temporarily impacting top-line growth, supports long-term margin expansion and operational efficiency.

Cash generation remains a standout strength, with Q4 free cash flow reaching $1.0 billion and showing an impressive 133 conversion rate. This robust cash generation supported $3.2 billion in shareholder returns through dividends and share repurchases in 2024, while maintaining $0.8 billion in business investments.

Looking ahead to 2025, the guidance reflects both opportunities and challenges. The projected organic growth of 0-2 (or 1-3 excluding PLS) suggests cautious optimism about market conditions. The commitment to further margin expansion through enterprise initiatives indicates continued focus on operational excellence. However, the $0.30 foreign currency translation headwind and projected 3 revenue reduction from forex highlight external pressures.

The planned $1.5 billion share repurchase program for 2025 demonstrates confidence in cash generation capabilities and commitment to shareholder returns. Six out of seven segments expanding margins in 2024, with two achieving >30% margins, indicates broad-based operational strength rather than isolated improvements.

Fourth Quarter 2024 Highlights

  • Revenue of $3.9 billion, a decrease of 1.3% as organic growth declined 0.5%; Organic growth of 0.4% turned positive excluding Product Line Simplification (PLS) reduction of 0.9%
  • Record operating margin of 26.2%, an increase of 140 bps as enterprise initiatives contributed 120 bps
  • Operating cash flow of $1.1B; record free cash flow of $1B, an increase of 10% with a conversion of 133%
  • GAAP EPS of $2.54, an increase of 7%

2024 Highlights

  • Revenue of $15.9 billion, a decrease of 1.3% as organic growth declined 0.7% in markets that were down low to mid-single digits
  • Record operating margin of 26.8% as enterprise initiatives contributed 130 bps
  • Record GAAP EPS of $11.71, an increase of 20%

2025 Guidance

  • Above-market organic growth of 0 to 2% based on current levels of demand; Organic growth of 1 to 3% excluding PLS reduction of approximately 1%-point
  • Enterprise initiatives contributing approximately 100 bps to margin improvement
  • GAAP EPS of $10.15 to $10.55 including foreign currency translation headwind of $0.30

GLENVIEW, Ill., Feb. 05, 2025 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its fourth quarter and full year 2024 results and initiated guidance for full year 2025.

“ITW delivered a solid finish to the year as we outperformed underlying end markets, expanded operating margin by 140 basis points, generated record free cash flow, and delivered seven percent earnings per share growth in the fourth quarter,” said Christopher A. O’Herlihy, President and Chief Executive Officer.

“Throughout 2024, the ITW team delivered a year of solid operational and financial performance, achieving record financial results by consistently exceeding market growth and significantly improving profitability and margins. Building on this momentum, we will continue to outperform our key end markets in 2025 as we build above-market organic growth, driven by continuous improvement in Customer-Back Innovation, into a core ITW strength. I extend my sincere gratitude to our global colleagues for their unwavering dedication to serving our customers and executing our strategy with excellence,” O’Herlihy concluded.

Fourth Quarter 2024 Results

Fourth quarter revenue of $3.9 billion decreased by 1.3 percent as organic revenue declined 0.5 percent. Organic revenue growth was positive 0.4 percent adjusted for PLS reduction of 0.9 percent. Foreign currency translation reduced revenue by one percent and acquisitions added 0.2 percent.

GAAP EPS of $2.54 increased seven percent. Operating margin of 26.2 percent increased 140 basis points as enterprise initiatives contributed 120 basis points. Operating cash flow was $1.1 billion, and free cash flow grew 10 percent to $1.0 billion, with a conversion of 133 percent to net income. During the quarter, the company repurchased $375 million of its own shares and the effective tax rate was 23.7 percent.

Full Year 2024 Results

Full year revenue of $15.9 billion declined 1.3 percent as organic revenue declined 0.7 percent. Organic revenue growth was essentially flat adjusted for PLS reduction of 0.6 percent. Foreign currency translation reduced revenue by 0.7 percent and acquisitions contributed 0.1 percent to revenues.

GAAP EPS of $11.71 included two previously disclosed favorable one-time items; $0.30 from a LIFO inventory accounting change in the first quarter, and $1.26 from the sale of the Company’s equity interest in Wilsonart in the third quarter. Excluding these items, EPS was $10.15.

Operating income of $4.3 billion grew six percent, and operating margin increased 170 basis points to 26.8 percent with enterprise initiatives contributing 130 basis points. Excluding 70 basis points of favorable impact from the above-mentioned LIFO inventory accounting change, operating margin increased 100 basis points to 26.1 percent. Six of seven segments expanded margins in 2024 with two segments achieving margins above 30 percent.

Operating cash flow was $3.3 billion and free cash flow was $2.8 billion, with a conversion of 94 percent to adjusted net income. The company invested approximately $0.8 billion to support the long-term profitable growth of its businesses and returned $3.2 billion to shareholders through dividends and share repurchases. The effective tax rate was 21.1 percent.

2025 Guidance

The company is initiating 2025 guidance including GAAP EPS in the range of $10.15 to $10.55 per share which includes a foreign currency translation headwind of $0.30. The company projects above-market organic growth of zero to two percent based on current levels of demand, including an expected PLS reduction of approximately one percentage point. Organic revenue growth is projected to be one to three percent adjusted for the above-mentioned PLS. Based on current foreign exchange rates, foreign currency translation is expected to reduce revenue by three percent, resulting in a projected total revenue decline of one to three percent.

Operating margin is projected to be in the range of 26.5 to 27.5 percent, an improvement of approximately 100 basis points excluding the above-mentioned 2024 LIFO inventory accounting change, with enterprise initiatives contributing approximately 100 basis points.

Free cash flow is projected to be greater than 100 percent of net income, and the company plans to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is 24 to 24.5 percent.

Non-GAAP Measures

This earnings release contains certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the attached supplemental reconciliation schedule. The estimated guidance of free cash flow to adjusted net income conversion rate is based on assumptions that are difficult to predict, and estimated guidance for the most directly comparable GAAP measure and a reconciliation of this forward-looking estimate to its most directly comparable GAAP estimate have been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of reliable forward-looking cash flow information. For the same reasons, the company is unable to address the potential significance of the unavailable information, which could be material to future results.

Forward-looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding global supply chain challenges, expected impact of inflation including raw and specialty material inflation and fluctuating interest rates, the impact of enterprise initiatives, future financial and operating performance, free cash flow and free cash flow to net income conversion rate, organic and total revenue, operating and incremental margin, price/cost impact, statements regarding diluted income per share, restructuring expenses and related benefits, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates and the impact of foreign currency translation, expected access to liquidity sources, expected capital allocation, expected timing and amount of share repurchases, end market economic and regulatory conditions, the impact of recent or potential acquisitions and/or divestitures, and the Company’s 2025 guidance. These statements are subject to certain risks, uncertainties, assumptions, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that could cause actual results to differ materially from the Company’s expectations include those that are detailed in ITW’s Form 10-K for 2023 and subsequent reports filed with the SEC.

About Illinois Tool Works

ITW (NYSE: ITW) is a Fortune 300 global multi-industrial manufacturing leader with revenue of $15.9 billion in 2024. The company’s seven industry-leading segments leverage the unique ITW Business Model to drive solid growth with best-in-class margins and returns in markets where highly innovative, customer-focused solutions are required. ITW’s approximately 44,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com

Investor Relations & Media Contact:
Erin Linnihan
Tel: 224.661.7431
investorrelations@itw.com | mediarelations@itw.com

 
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
 
 Three Months Ended Twelve Months Ended
 December 31, December 31,
In millions except per share amounts 2024   2023   2024   2023 
Operating Revenue$3,932  $3,983  $15,898  $16,107 
Cost of revenue 2,221   2,312   8,858   9,316 
Selling, administrative, and research and development expenses 655   658   2,675   2,638 
Amortization and impairment of intangible assets 25   25   101   113 
Operating Income 1,031   988   4,264   4,040 
Interest expense (68)  (70)  (283)  (266)
Other income (expense) 20   9   441   49 
Income Before Taxes 983   927   4,422   3,823 
Income taxes 233   210   934   866 
Net Income$750  $717  $3,488  $2,957 
        
Net Income Per Share:       
Basic$2.55  $2.39  $11.75  $9.77 
Diluted$2.54  $2.38  $11.71  $9.74 
        
Cash Dividends Per Share:       
Paid$1.50  $1.40  $5.70  $5.33 
Declared$1.50  $1.40  $5.80  $5.42 
        
Shares of Common Stock Outstanding During the Period:       
Average 294.7   300.1   296.8   302.6 
Average assuming dilution 295.8   301.1   297.8   303.6 
                


 
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
 
In millionsDecember 31, 2024 December 31, 2023
Assets   
Current Assets:   
Cash and equivalents$948  $1,065 
Trade receivables 2,991   3,123 
Inventories 1,605   1,707 
Prepaid expenses and other current assets 312   340 
Total current assets 5,856   6,235 
    
Net plant and equipment 2,036   1,976 
Goodwill 4,839   4,909 
Intangible assets 592   657 
Deferred income taxes 369   479 
Other assets 1,375   1,262 
 $15,067  $15,518 
    
Liabilities and Stockholders' Equity   
Current Liabilities:   
Short-term debt$1,555  $1,825 
Accounts payable 519   581 
Accrued expenses 1,576   1,663 
Cash dividends payable 441   419 
Income taxes payable 217   187 
Total current liabilities 4,308   4,675 
    
Noncurrent Liabilities:   
Long-term debt 6,308   6,339 
Deferred income taxes 119   326 
Noncurrent income taxes payable —   151 
Other liabilities 1,015   1,014 
Total noncurrent liabilities 7,442   7,830 
    
Stockholders' Equity:   
Common stock 6   6 
Additional paid-in-capital 1,669   1,588 
Retained earnings 28,893   27,122 
Common stock held in treasury (25,375)  (23,870)
Accumulated other comprehensive income (loss) (1,877)  (1,834)
Noncontrolling interest 1   1 
Total stockholders' equity 3,317   3,013 
 $15,067  $15,518 
        


 
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
 


Three Months Ended December 31, 2024
Dollars in millionsTotal RevenueOperating IncomeOperating Margin
Automotive OEM$785 $156 19.8%
Food Equipment 672  182 27.2%
Test & Measurement and Electronics 747  202 27.0%
Welding 447  139 31.2%
Polymers & Fluids 430  120 27.9%
Construction Products 438  123 28.0%
Specialty Products 416  118 28.4%
Intersegment (3) — —%
Total Segments 3,932  1,040 26.5%
Unallocated —  (9)—%
Total Company$3,932 $1,031 26.2%


Twelve Months Ended December 31, 2024
Dollars in millionsTotal RevenueOperating IncomeOperating Margin
Automotive OEM$3,188 $62519.6%
Food Equipment 2,647  71927.2%
Test & Measurement and Electronics 2,818  70324.9%
Welding 1,851  59732.3%
Polymers & Fluids 1,764  48427.4%
Construction Products 1,909  55929.3%
Specialty Products 1,743  52830.3%
Intersegment (22) ——%
Total Segments 15,898  4,21526.5%
Unallocated —  49—%
Total Company$15,898 $4,26426.8%


 
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
 


Q4 2024 vs. Q4 2023 Favorable/(Unfavorable)
Operating RevenueAutomotive OEM Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW 
Organic(2.3)%3.4 %1.7 %(0.4)%0.8 %(4.5)%(3.6)%(0.5)%
Acquisitions/
Divestitures		— %— %0.9 %— %— %— %— %0.2 %
Translation(1.4)%(0.7)%(0.4)%(0.6)%(3.2)%(0.2)%(1.0)%(1.0)%
Operating Revenue(3.7)%2.7 %2.2 %(1.0)%(2.4)%(4.7)%(4.6)%(1.3)%


Q4 2024 vs. Q4 2023 Favorable/(Unfavorable)
Change in Operating MarginAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
Operating Leverage(50) bps70 bps50 bps(10) bps20 bps(100) bps(70) bps(10) bps
Changes in Variable Margin & OH Costs140 bps(60) bps160 bps150 bps(60) bps200 bps260 bps130 bps
Total Organic90 bps10 bps210 bps140 bps(40) bps100 bps190 bps120 bps
Acquisitions/
Divestitures		——(50) bps————(10) bps
Restructuring/Other130 bps10 bps10 bps20 bps(20) bps10 bps(10) bps30 bps
Total Operating Margin Change220 bps20 bps170 bps160 bps(60) bps110 bps180 bps140 bps
         
Total Operating Margin % *19.8%27.2%27.0%31.2%27.9%28.0%28.4%26.2%
         
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 30 bps 50 bps 160 bps 10 bps 150 bps 10 bps 20 bps 70 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.06) on GAAP earnings per share for the fourth quarter of 2024.


 
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
 


Full Year 2024 vs Full Year 2023 Favorable/(Unfavorable)
Operating RevenueAutomotive OEM  Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW 
Organic(0.4)%1.1 %(1.0)%(2.4)%0.9 %(6.1)%3.5 %(0.7)%
Acquisitions/
Divestitures		— %— %0.9 %— %— %— %(0.6)%0.1 %
Translation(1.1)%(0.1)%(0.4)%(0.3)%(3.1)%— %(0.2) %(0.7)%
Operating Revenue(1.5)%1.0 %(0.5) %(2.7) %(2.2) %(6.1)%2.7 %(1.3) %


Full Year 2024 vs Full Year 2023 Favorable/(Unfavorable)
Change in Operating MarginAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
Operating Leverage(10) bps20 bps(20) bps(40) bps20 bps(110) bps70 bps(20) bps
Changes in Variable Margin & OH Costs190 bps(10) bps150 bps80 bps60 bps220 bps280 bps190 bps
Total Organic180 bps10 bps130 bps40 bps80 bps110 bps350 bps170 bps
Acquisitions/
Divestitures		——(50) bps———10 bps(10) bps
Restructuring/Other50 bps(10) bps(10) bps10 bps(10) bps(20) bps20 bps10 bps
Total Operating Margin Change230 bps—70 bps50 bps70 bps90 bps380 bps170 bps
         
Total Operating Margin % *19.6%27.2%24.9%32.3%27.4%29.3%30.3%26.8%
         
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 30 bps 40 bps 180 bps 10 bps 160 bps 10 bps 20 bps 70 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.26) on GAAP earnings per share for 2024.


 
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
 
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
    
 Three Months Ended Twelve Months Ended
 December 31, December 31,
Dollars in millions 2024   2023   2024   2023 
Numerator:       
Net income$750  $717  $3,488  $2,957 
Net discrete tax benefit related to the third quarter 2024 —   —   (121)  — 
Discrete tax benefit related to the second quarter 2023 —   —   —   (20)
Interest expense, net of tax (1) 51   54   215   204 
Other (income) expense, net of tax (1) (16)  (7)  (336)  (38)
Operating income after taxes$785  $764  $3,246  $3,103 
        
Denominator:       
Invested capital:       
Cash and equivalents$948  $1,065  $948  $1,065 
Trade receivables 2,991   3,123   2,991   3,123 
Inventories 1,605   1,707   1,605   1,707 
Net plant and equipment 2,036   1,976   2,036   1,976 
Goodwill and intangible assets 5,431   5,566   5,431   5,566 
Accounts payable and accrued expenses (2,095)  (2,244)  (2,095)  (2,244)
Debt (7,863)  (8,164)  (7,863)  (8,164)
Other, net 264   (16)  264   (16)
Total net assets (stockholders' equity) 3,317   3,013   3,317   3,013 
Cash and equivalents (948)  (1,065)  (948)  (1,065)
Debt 7,863   8,164   7,863   8,164 
Total invested capital$10,232  $10,112  $10,232  $10,112 
        
Average invested capital (2)$10,511  $10,096  $10,419  $10,214 
        
Net income to average invested capital (3) 28.6%  28.4%  33.5%  29.0%
After-tax return on average invested capital (3) 29.9%  30.3%  31.2%  30.4%
 

(1) Effective tax rate used for interest expense and other (income) expense for the three months ended December 31, 2024 and 2023 was 23.7% and 22.6%, respectively, and 23.8% and 23.2% for the twelve months ended December 31, 2024 and 2023, respectively.

(2) Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within each of the periods presented.

(3) Returns for the three months ended December 31, 2024 and 2023 were converted to an annual rate by multiplying the calculated return by 4.

A reconciliation of the 2024 effective tax rate excluding the third quarter 2024 net discrete tax benefit of $121 million, which included favorable discrete tax benefits of $107 million related to the utilization of capital loss carryforwards upon the sale of Wilsonart and $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, is as follows:

  
 Twelve Months Ended
 December 31, 2024
Dollars in millionsIncome Taxes Tax Rate
As reported$934 21.1%
Net discrete tax benefit related to the third quarter 2024 121 2.7%
As adjusted$1,055 23.8%
      

A reconciliation of the 2023 effective tax rate excluding the second quarter 2023 discrete tax benefit of $20 million related to amended 2021 U.S. taxes is as follows:

  
 Twelve Months Ended
 December 31, 2023
Dollars in millionsIncome Taxes Tax Rate
As reported$866 22.6%
Discrete tax benefit related to the second quarter 2023 20 0.6%
As adjusted$886 23.2%
      


    
FREE CASH FLOW (UNAUDITED)
    
 Three Months Ended Twelve Months Ended
 December 31, December 31,
Dollars in millions 2024   2023   2024   2023 
Net cash provided by operating activities$1,114  $1,039  $3,281  $3,539 
Less: Additions to plant and equipment (118)  (131)  (437)  (455)
Free cash flow$996  $908  $2,844  $3,084 
        
Net income$750  $717  $3,488  $2,957 
        
Net cash provided by operating activities to net income conversion rate 149%  145%  94%  120%
Free cash flow to net income conversion rate 133%  127%  82%(1) 104%
 

(1) Excluding the impact of the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax), the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes, and a discrete tax benefit of $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, the free cash flow to net income conversion rate would have been 94% for the twelve months ended December 31, 2024.

   
 Three Months Ended 
 March 31, June 30, September 30, 
Dollars in millions 2024   2024   2024  
Net cash provided by operating activities$589  $687  $891  
Less: Additions to plant and equipment (95)  (116)  (108) 
Free cash flow$494  $571  $783  
       
Net income$819  $759  $1,160  
       
Net cash provided by operating activities to net income conversion rate 72%  91%  77% 
Free cash flow to net income conversion rate 60%(1) 75%  68%(2)
               

(1) Excluding the impact of the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax), the free cash flow to net income conversion rate would have been 68% for the three months ended March 31, 2024.

(2) Excluding the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes, and a discrete tax benefit of $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, the free cash flow to net income conversion rate would have been 102% for the three months ended September 30, 2024.

  
ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED)
  
 Twelve Months Ended
 December 31, 2024
As reported$11.71 
Impact of sale of noncontrolling interest in Wilsonart (1) (1.26)
Cumulative effect of change in inventory accounting method, net of tax (2) (0.30)
As adjusted$10.15 
    

(1) Includes the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes.

(2) Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax).


FAQ

What was ITW's Q4 2024 revenue and how did it compare to previous year?

ITW's Q4 2024 revenue was $3.9 billion, representing a 1.3% decrease from the previous year, with organic revenue declining 0.5%.

What is ITW's EPS guidance for 2025?

ITW projects GAAP EPS of $10.15 to $10.55 for 2025, which includes a foreign currency translation headwind of $0.30.

How much did ITW return to shareholders in 2024?

ITW returned $3.2 billion to shareholders through dividends and share repurchases in 2024.

What is ITW's projected organic growth for 2025?

ITW projects organic growth of 0 to 2% for 2025, or 1 to 3% when excluding Product Line Simplification (PLS) reduction of approximately 1%.

What was ITW's operating margin performance in 2024?

ITW achieved a record operating margin of 26.8% in 2024, with enterprise initiatives contributing 130 basis points.
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NYSE:ITW

ITW Rankings

#165 Ranked by Market Cap
#1320 Ranked by Dividends

ITW Latest News

Feb 14, 2025
ITW Board of Directors Declares Quarterly Dividend
Jan 13, 2025
ITW Schedules Fourth Quarter and Full Year 2024 Earnings Webcast
Oct 30, 2024
ITW Reports Third Quarter 2024 Results
Oct 24, 2024
ITW Board of Directors Declares Quarterly Dividend
Oct 4, 2024
ITW Schedules Third Quarter 2024 Earnings Webcast

ITW Stock Data

66.03B
292.24M
0.76%
84.15%
2.26%
Specialty Industrial Machinery
General Industrial Machinery & Equipment
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United States
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