ITW Reports Second Quarter 2024 Results
Illinois Tool Works (ITW) reported its Q2 2024 results, showing a slight revenue decline of 1.2% to $4.0 billion, with flat organic growth. Despite challenging market conditions, ITW achieved strong operational performance:
- Operating income increased 4.5% to $1.05 billion
- Operating margin improved 140 basis points to 26.2%
- GAAP EPS rose 2.4% to $2.54 (5.4% increase excluding a one-time 2023 tax item)
- Free cash flow was $571 million with 75% conversion to net income
ITW narrowed its full-year 2024 GAAP EPS guidance to $10.30-$10.40 per share, projecting flat revenue growth and raising operating margin guidance to 26.5-27%. The company plans to repurchase approximately $1.5 billion of its own shares in 2024.
Illinois Tool Works (ITW) ha riportato i risultati del secondo trimestre 2024, evidenziando un leggero calo dei ricavi dell'1,2% a 4,0 miliardi di dollari, con una crescita organica stabile. Nonostante le difficoltà del mercato, ITW ha raggiunto una forte performance operativa:
- Il reddito operativo è aumentato del 4,5% a 1,05 miliardi di dollari
- Il margine operativo è migliorato di 140 punti base al 26,2%
- Il GAAP EPS è salito del 2,4% a 2,54 dollari (aumento del 5,4% escludendo un'unica voce fiscale del 2023)
- Flusso di cassa libero di 571 milioni di dollari con una conversione del 75% in reddito netto
ITW ha ristretto la sua guida per il GAAP EPS dell'intero anno 2024 a 10,30-10,40 dollari per azione, prevedendo una crescita dei ricavi stabile e alzando la guida per il margine operativo al 26,5-27%. L'azienda prevede di riacquistare circa 1,5 miliardi di dollari delle proprie azioni nel 2024.
Illinois Tool Works (ITW) reportó sus resultados del segundo trimestre de 2024, mostrando una ligera disminución en los ingresos del 1,2% a 4,0 mil millones de dólares, con un crecimiento orgánico estable. A pesar de las difíciles condiciones del mercado, ITW logró un sólido rendimiento operativo:
- El ingreso operativo aumentó un 4,5% a 1,05 mil millones de dólares
- El margen operativo mejoró en 140 puntos base al 26,2%
- El GAAP EPS subió un 2,4% a 2,54 dólares (un aumento del 5,4% excluyendo un ítem fiscal único de 2023)
- Flujo de caja libre de 571 millones de dólares con una conversión del 75% a ingresos netos
ITW ajustó su guía de GAAP EPS para todo el año 2024 a 10,30-10,40 dólares por acción, proyectando un crecimiento estable de ingresos y elevando la guía del margen operativo al 26,5-27%. La compañía planea recomprar aproximadamente 1,5 mil millones de dólares de sus propias acciones en 2024.
일리노이 툴 웍스 (ITW)는 2024년 2분기 실적을 발표하였으며, 수익이 1.2% 감소한 40억 달러로 나타났고, 유기적 성장률은 제자리 걸음을 하고 있습니다. 어려운 시장 상황에도 불구하고, ITW는 강력한 운영 성과를 달성했습니다:
- 운영 소득은 4.5% 증가하여 10억 5천만 달러에 이릅니다.
- 운영 마진은 140bp 개선되어 26.2%에 도달했습니다.
- GAAP EPS는 2.4% 증가하여 2.54달러에 이르며(2023년 비상 일회성 세금 항목을 제외하면 5.4% 증가)
- 자유 현금 흐름은 5억 7,100만 달러로, 순이익으로의 전환율은 75%입니다.
ITW는 2024년 전체 GAAP EPS 가이던스를 주당 10.30-10.40달러로 좁혔으며, 수익 성장률은 제자리에 머물 것으로 예상하고 운영 마진 가이던스를 26.5-27%로 상향 조정했습니다. 회사는 2024년에 약 15억 달러의 자사주 매입을 계획하고 있습니다.
Illinois Tool Works (ITW) a publié ses résultats du deuxième trimestre 2024, montrant une légère baisse du chiffre d'affaires de 1,2% à 4,0 milliards de dollars, avec une croissance organique stabilisée. Malgré des conditions de marché difficiles, ITW a réalisé une forte performance opérationnelle :
- Le résultat opérationnel a augmenté de 4,5% pour atteindre 1,05 milliard de dollars
- La marge opérationnelle s'est améliorée de 140 points de base à 26,2%
- Le GAAP EPS a augmenté de 2,4% pour atteindre 2,54 dollars (hausse de 5,4% en excluant un élément fiscal unique de 2023)
- Le flux de trésorerie libre s'est élevé à 571 millions de dollars avec une conversion de 75% en bénéfice net
ITW a resserré ses prévisions de GAAP EPS pour l'année complète 2024 à 10,30-10,40 dollars par action, prévoyant une croissance des revenus stable et augmentant la prévision de la marge opérationnelle à 26,5-27%. L'entreprise prévoit de racheter environ 1,5 milliard de dollars de ses propres actions en 2024.
Illinois Tool Works (ITW) hat seine Ergebnisse für das zweite Quartal 2024 veröffentlicht und einen leichten Rückgang des Umsatzes um 1,2% auf 4,0 Milliarden USD festgestellt, wobei das organische Wachstum stagnierte. Trotz herausfordernder Marktbedingungen erzielte ITW eine starke operative Leistung:
- Das Betriebsergebnis stieg um 4,5% auf 1,05 Milliarden USD
- Die operative Marge verbesserte sich um 140 Basispunkte auf 26,2%
- Der GAAP EPS stieg um 2,4% auf 2,54 USD (ein Anstieg um 5,4%, wenn man einen einmaligen Steuerposten von 2023 ausschließt)
- Der freie Cashflow betrug 571 Millionen USD mit einer Umwandlung von 75% in Nettogewinn
ITW hat seine Prognose für den GAAP EPS des Gesamtjahres 2024 auf 10,30-10,40 USD pro Aktie eingeschränkt, rechnet mit stagnierenden Umsätzen und hebt die Prognose für die operative Marge auf 26,5-27% an. Das Unternehmen plant, 2024 rund 1,5 Milliarden USD seiner eigenen Aktien zurückzukaufen.
- Operating income increased 4.5% to $1.05 billion, a second quarter record
- Operating margin improved 140 basis points to 26.2%, a second quarter record
- GAAP EPS increased 2.4% to $2.54 (5.4% increase excluding a one-time 2023 tax item)
- Free cash flow was $571 million with 75% conversion to net income
- Company raised operating margin guidance to 26.5-27% for 2024
- Planned share repurchases of approximately $1.5 billion for 2024
- Revenue declined by 1.2% to $4.0 billion
- Organic growth declined 0.1%
- Foreign currency translation impact reduced revenue by 1.2%
- Company lowered the top-end of full-year GAAP EPS guidance
- Projecting approximately flat revenue growth and organic growth for 2024
Insights
ITW's Q2 2024 results present a mixed picture, with some positive indicators amid a challenging economic environment. The company's ability to expand margins and profitability to record levels is noteworthy, especially given the moderating demand across its portfolio.
Key highlights:
- Revenue of
$4.0 billion , down1.2% year-over-year, with flat organic growth - Operating income increased by
4.5% to$1.05 billion - Operating margin improved by
140 basis points to26.2% , a Q2 record - GAAP EPS grew by
2.4% to$2.54 ; excluding a one-time tax item in 2023, EPS increased by5.4%
The company's ability to improve profitability despite flat revenue demonstrates strong cost management and operational efficiency. The
However, the narrowing of full-year GAAP EPS guidance from
The raised operating margin guidance (now
For investors, ITW's ability to maintain profitability and cash flow in a challenging environment is reassuring, but the muted growth outlook warrants careful consideration of the company's valuation and growth prospects.
ITW's Q2 2024 results offer valuable insights into broader industrial market trends. The flat organic growth and
The company's performance across its diverse portfolio provides a barometer for various industrial segments:
- Automotive OEM: Likely facing headwinds from shifting consumer demand and supply chain issues
- Food Equipment: Possibly benefiting from reopening trends but may see pressure from inflationary impacts on restaurants
- Test & Measurement and Electronics: Potentially mixed performance due to semiconductor shortages and varying demand in different end markets
- Welding: Could be seeing steady demand from infrastructure projects but may face challenges in energy-related sectors
- Polymers & Fluids: Possibly impacted by raw material costs and supply chain disruptions
- Construction Products: Likely influenced by housing market trends and commercial construction activity
- Specialty Products: Performance may vary widely given the diverse nature of this segment
The company's focus on "customer-back innovation" suggests a strategic emphasis on tailored solutions, which could be a differentiator in a competitive market. This approach, combined with ITW's decentralized business model, may provide resilience in facing sector-specific challenges.
The
- Revenue of
$4.0 billion , a decrease of1% with flat organic growth - Operating income of
$1.05 billion , an increase of4.5% - Operating margin of
26.2% , an increase of 140 bps as enterprise initiatives contributed 140 bps - GAAP EPS of
$2.54 , an increase of2% ; Excl. a one-time 2023 tax item, EPS increased5% - Narrowing full year GAAP EPS guidance to a range of
$10.30 t o$10.40 per share
GLENVIEW, Ill., July 30, 2024 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its second quarter 2024 results and updated guidance for full-year 2024.
“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 dedicated ITW professionals around the world.”
“Looking ahead, we are lowering the top-end of our full year GAAP EPS guidance to reflect current levels of demand partially offset by better margin performance. We remain focused on managing and investing for the long-term as we build above-market organic growth, fueled by customer-back innovation, into a core ITW strength,” O’Herlihy concluded.
Second Quarter 2024 Results
Second quarter revenue of
GAAP EPS increased 2.4 percent to
2024 Guidance
ITW is lowering the top-end of its full year GAAP EPS guidance range of
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 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 material inflation and rising 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, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates, 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 2024 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
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF INCOME (UNAUDITED) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| In millions except per share amounts | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Operating Revenue | $ | 4,027 | $ | 4,074 | $ | 8,000 | $ | 8,093 | |||||||
| Cost of revenue | 2,262 | 2,344 | 4,407 | 4,685 | |||||||||||
| Selling, administrative, and research and development expenses | 686 | 690 | 1,362 | 1,365 | |||||||||||
| Amortization and impairment of intangible assets | 25 | 30 | 50 | 61 | |||||||||||
| Operating Income | 1,054 | 1,010 | 2,181 | 1,982 | |||||||||||
| Interest expense | (75 | ) | (69 | ) | (146 | ) | (129 | ) | |||||||
| Other income (expense) | 26 | 20 | 42 | 30 | |||||||||||
| Income Before Taxes | 1,005 | 961 | 2,077 | 1,883 | |||||||||||
| Income Taxes | 246 | 207 | 499 | 415 | |||||||||||
| Net Income | $ | 759 | $ | 754 | $ | 1,578 | $ | 1,468 | |||||||
| Net Income Per Share: | |||||||||||||||
| Basic | $ | 2.55 | $ | 2.49 | $ | 5.29 | $ | 4.83 | |||||||
| Diluted | $ | 2.54 | $ | 2.48 | $ | 5.27 | $ | 4.81 | |||||||
| Cash Dividends Per Share: | |||||||||||||||
| Paid | $ | 1.40 | $ | 1.31 | $ | 2.80 | $ | 2.62 | |||||||
| Declared | $ | 1.40 | $ | 1.31 | $ | 2.80 | $ | 2.62 | |||||||
| Shares of Common Stock Outstanding During the Period: | |||||||||||||||
| Average | 297.6 | 303.3 | 298.3 | 304.1 | |||||||||||
| Average assuming dilution | 298.5 | 304.2 | 299.3 | 305.2 | |||||||||||
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (UNAUDITED) | |||||||
| In millions | June 30, 2024 | December 31, 2023 | |||||
| Assets | |||||||
| Current Assets: | |||||||
| Cash and equivalents | $ | 862 | $ | 1,065 | |||
| Trade receivables | 3,250 | 3,123 | |||||
| Inventories | 1,819 | 1,707 | |||||
| Prepaid expenses and other current assets | 325 | 340 | |||||
| Total current assets | 6,256 | 6,235 | |||||
| Net plant and equipment | 2,011 | 1,976 | |||||
| Goodwill | 4,910 | 4,909 | |||||
| Intangible assets | 641 | 657 | |||||
| Deferred income taxes | 448 | 479 | |||||
| Other assets | 1,311 | 1,262 | |||||
| $ | 15,577 | $ | 15,518 | ||||
| Liabilities and Stockholders' Equity | |||||||
| Current Liabilities: | |||||||
| Short-term debt | $ | 2,044 | $ | 1,825 | |||
| Accounts payable | 576 | 581 | |||||
| Accrued expenses | 1,615 | 1,663 | |||||
| Cash dividends payable | 416 | 419 | |||||
| Income taxes payable | 153 | 187 | |||||
| Total current liabilities | 4,804 | 4,675 | |||||
| Noncurrent Liabilities: | |||||||
| Long-term debt | 6,429 | 6,339 | |||||
| Deferred income taxes | 381 | 326 | |||||
| Noncurrent income taxes payable | — | 151 | |||||
| Other liabilities | 1,001 | 1,014 | |||||
| Total noncurrent liabilities | 7,811 | 7,830 | |||||
| Stockholders' Equity: | |||||||
| Common stock | 6 | 6 | |||||
| Additional paid-in-capital | 1,636 | 1,588 | |||||
| Retained earnings | 27,866 | 27,122 | |||||
| Common stock held in treasury | (24,622 | ) | (23,870 | ) | |||
| Accumulated other comprehensive income (loss) | (1,925 | ) | (1,834 | ) | |||
| Noncontrolling interest | 1 | 1 | |||||
| Total stockholders' equity | 2,962 | 3,013 | |||||
| $ | 15,577 | $ | 15,518 | ||||
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) | ||||||||
| Three Months Ended June 30, 2024 | ||||||||
| Dollars in millions | Total Revenue | Operating Income | Operating Margin | |||||
| Automotive OEM | $ | 815 | $ | 157 | 19.4 | % | ||
| Food Equipment | 667 | 180 | 27.1 | % | ||||
| Test & Measurement and Electronics | 678 | 159 | 23.5 | % | ||||
| Welding | 466 | 153 | 32.9 | % | ||||
| Polymers & Fluids | 454 | 128 | 28.2 | % | ||||
| Construction Products | 504 | 148 | 29.4 | % | ||||
| Specialty Products | 449 | 144 | 31.9 | % | ||||
| Intersegment | (6 | ) | — | — | % | |||
| Total Segments | 4,027 | 1,069 | 26.6 | % | ||||
| Unallocated | — | (15 | ) | — | % | |||
| Total Company | $ | 4,027 | $ | 1,054 | 26.2 | % | ||
| Six Months Ended June 30, 2024 | |||||||
| Dollars in millions | Total Revenue | Operating Income | Operating Margin | ||||
| Automotive OEM | $ | 1,631 | $ | 319 | 19.6 | % | |
| Food Equipment | 1,298 | 344 | 26.5 | % | |||
| Test & Measurement and Electronics | 1,374 | 322 | 23.4 | % | |||
| Welding | 942 | 309 | 32.8 | % | |||
| Polymers & Fluids | 886 | 239 | 27.0 | % | |||
| Construction Products | 992 | 291 | 29.4 | % | |||
| Specialty Products | 889 | 274 | 30.8 | % | |||
| Intersegment | (12 | ) | — | — | % | ||
| Total Segments | 8,000 | 2,098 | 26.2 | % | |||
| Unallocated | — | 83 | — | % | |||
| Total Company | $ | 8,000 | $ | 2,181 | 27.3 | % | |
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) | ||||||||||||||||
| Q2 2024 vs. Q2 2023 Favorable/(Unfavorable) | ||||||||||||||||
| Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||
| Organic | 0.4 | % | 2.5 | % | (3.1) % | (4.7) % | 2.6 | % | (3.8) % | 6.7 | % | (0.1) % | ||||
| Acquisitions/ Divestitures | — | % | — | % | 0.8 | % | — | % | — | % | — | % | — | % | 0.1 | % |
| Translation | (1.7) % | (0.4) % | (0.9) % | (0.3) % | (3.9) % | (0.5) % | (0.5) % | (1.2) % | ||||||||
| Operating Revenue | (1.3) % | 2.1 | % | (3.2) % | (5.0) % | (1.3) % | (4.3) % | 6.2 | % | (1.2) % | ||||||
| Q2 2024 vs. Q2 2023 Favorable/(Unfavorable) | ||||||||||||||||
| Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||
| Operating Leverage | — | 50 bps | (90) bps | (70) bps | 50 bps | (80) bps | 130 bps | — | ||||||||
| Changes in Variable Margin & OH Costs | 210 bps | (100) bps | 190 bps | (50) bps | 130 bps | 150 bps | 390 bps | 140 bps | ||||||||
| Total Organic | 210 bps | (50) bps | 100 bps | (120) bps | 180 bps | 70 bps | 520 bps | 140 bps | ||||||||
| Acquisitions/ Divestitures | — | — | (50) bps | — | — | — | — | (10) bps | ||||||||
| Restructuring/Other | 50 bps | (20) bps | (20) bps | 20 bps | 50 bps | (60) bps | 70 bps | 10 bps | ||||||||
| Total Operating Margin Change | 260 bps | (70) bps | 30 bps | (100) bps | 230 bps | 10 bps | 590 bps | 140 bps | ||||||||
| Total Operating Margin % * | 19.4 | % | 27.1 | % | 23.5 | % | 32.9 | % | 28.2 | % | 29.4 | % | 31.9 | % | 26.2 | % |
| * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 20 bps | 40 bps | 190 bps | — | 150 bps | 10 bps | 20 bps | 70 bps ** | ||||||||
| ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ( | ||||||||||||||||
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) | ||||||||||||||||
| H1 2024 vs. H1 2023 Favorable/(Unfavorable) | ||||||||||||||||
| Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||
| Organic | 1.9 | % | 0.6 | % | (2.2) % | (4.1) % | 0.9 | % | (5.4) % | 6.1 | % | (0.4) % | ||||
| Acquisitions/ Divestitures | — | % | — | % | 0.8 | % | — | % | — | % | — | % | (1.1 | )% | — | % |
| Translation | (1.3) % | 0.1 | % | (0.7) % | (0.1) % | (3.2) % | (0.4) % | — | % | (0.8) % | ||||||
| Operating Revenue | 0.6 | % | 0.7 | % | (2.1) % | (4.2) % | (2.3) % | (5.8) % | 5.0 | % | (1.2) % | |||||
| H1 2024 vs. H1 2023 Favorable/(Unfavorable) | ||||||||||||||||
| Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||
| Operating Leverage | 40 bps | 20 bps | (60) bps | (60) bps | 20 bps | (90) bps | 120 bps | (20) bps | ||||||||
| Changes in Variable Margin & OH Costs | 250 bps | (80) bps | 80 bps | 40 bps | 130 bps | 220 bps | 300 bps | 290 bps | ||||||||
| Total Organic | 290 bps | (60) bps | 20 bps | (20) bps | 150 bps | 130 bps | 420 bps | 270 bps | ||||||||
| Acquisitions/ Divestitures | — | — | (50) bps | — | — | — | 30 bps | — | ||||||||
| Restructuring/Other | 30 bps | (10) bps | (10) bps | 10 bps | 30 bps | (30) bps | 50 bps | 10 bps | ||||||||
| Total Operating Margin Change | 320 bps | (70) bps | (40) bps | (10) bps | 180 bps | 100 bps | 500 bps | 280 bps | ||||||||
| Total Operating Margin % * | 19.6 | % | 26.5 | % | 23.4 | % | 32.8 | % | 27.0 | % | 29.4 | % | 30.8 | % | 27.3 | % |
| * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 30 bps | 50 bps | 190 bps | — | 150 bps | 10 bps | 20 bps | 70 bps ** | ||||||||
| ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ( | ||||||||||||||||
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED) AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Numerator: | |||||||||||||||
| Net Income | $ | 759 | $ | 754 | $ | 1,578 | $ | 1,468 | |||||||
| Discrete tax benefit related to the second quarter 2023 | — | (20 | ) | — | (20 | ) | |||||||||
| Interest expense, net of tax (1) | 57 | 53 | 111 | 99 | |||||||||||
| Other (income) expense, net of tax (1) | (20 | ) | (15 | ) | (32 | ) | (23 | ) | |||||||
| Operating income after taxes | $ | 796 | $ | 772 | $ | 1,657 | $ | 1,524 | |||||||
| Denominator: | |||||||||||||||
| Invested capital: | |||||||||||||||
| Cash and equivalents | $ | 862 | $ | 922 | $ | 862 | $ | 922 | |||||||
| Trade receivables | 3,250 | 3,216 | 3,250 | 3,216 | |||||||||||
| Inventories | 1,819 | 1,921 | 1,819 | 1,921 | |||||||||||
| Net plant and equipment | 2,011 | 1,901 | 2,011 | 1,901 | |||||||||||
| Goodwill and intangible assets | 5,551 | 5,595 | 5,551 | 5,595 | |||||||||||
| Accounts payable and accrued expenses | (2,191 | ) | (2,215 | ) | (2,191 | ) | (2,215 | ) | |||||||
| Debt | (8,473 | ) | (8,222 | ) | (8,473 | ) | (8,222 | ) | |||||||
| Other, net | 133 | (24 | ) | 133 | (24 | ) | |||||||||
| Total net assets (stockholders' equity) | 2,962 | 3,094 | 2,962 | 3,094 | |||||||||||
| Cash and equivalents | (862 | ) | (922 | ) | (862 | ) | (922 | ) | |||||||
| Debt | 8,473 | 8,222 | 8,473 | 8,222 | |||||||||||
| Total invested capital | $ | 10,573 | $ | 10,394 | $ | 10,573 | $ | 10,394 | |||||||
| Average invested capital (2) | $ | 10,480 | $ | 10,366 | $ | 10,357 | $ | 10,292 | |||||||
| Net income to average invested capital (3) | 29.0 | % | 29.1 | % | 30.5 | % | 28.5 | % | |||||||
| After-tax return on average invested capital (3) | 30.4 | % | 29.8 | % | 32.0 | % | 29.6 | % | |||||||
(1) Effective tax rate used for interest expense and other (income) expense for the three months ended June 30, 2024 and 2023 was
(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 June 30, 2024 and 2023 were converted to an annual rate by multiplying the calculated return by 4. Returns for the six months ended June 30, 2024 and 2023 were converted to an annual rate by multiplying the calculated return by 2.
After-tax ROIC for the six months ended June 30, 2024 included 170 basis points of favorable impact related to the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses (
A reconciliation of the tax rate for the three and six months ended June 30, 2023, excluding the second quarter 2023 discrete tax benefit of
| Three Months Ended | Six Months Ended | ||||||||||
| June 30, 2023 | June 30, 2023 | ||||||||||
| Dollars in millions | Income Taxes | Tax Rate | Income Taxes | Tax Rate | |||||||
| As reported | $ | 207 | 21.4 | % | $ | 415 | 22.0 | % | |||
| Discrete tax benefit related to the second quarter 2023 | 20 | 2.2 | % | 20 | 1.1 | % | |||||
| As adjusted | $ | 227 | 23.6 | % | $ | 435 | 23.1 | % | |||
| AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) | |||
| Twelve Months Ended | |||
| Dollars in millions | December 31, 2023 | ||
| Numerator: | |||
| Net income | $ | 2,957 | |
| Discrete tax benefit related to the second quarter 2023 | (20 | ) | |
| Interest expense, net of tax (1) | 204 | ||
| Other (income) expense, net of tax (1) | (38 | ) | |
| Operating income after taxes | $ | 3,103 | |
| Denominator: | |||
| Invested capital: | |||
| Cash and equivalents | $ | 1,065 | |
| Trade receivables | 3,123 | ||
| Inventories | 1,707 | ||
| Net plant and equipment | 1,976 | ||
| Goodwill and intangible assets | 5,566 | ||
| Accounts payable and accrued expenses | (2,244 | ) | |
| Debt | (8,164 | ) | |
| Other, net | (16 | ) | |
| Total net assets (stockholders' equity) | 3,013 | ||
| Cash and equivalents | (1,065 | ) | |
| Debt | 8,164 | ||
| Total invested capital | $ | 10,112 | |
| Average invested capital (2) | $ | 10,214 | |
| Net income to average invested capital | 29.0 | % | |
| After-tax return on average invested capital | 30.4 | % | |
(1) Effective tax rate used for interest expense and other (income) expense for the year ended December 31, 2023 was
(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 the period presented.
A reconciliation of the 2023 effective tax rate excluding the second quarter 2023 discrete tax benefit of
| Twelve Months Ended | |||||
| December 31, 2023 | |||||
| Dollars in millions | Income 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 | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| Dollars in millions | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net cash provided by operating activities | $ | 687 | $ | 790 | $ | 1,276 | $ | 1,518 | |||||||
| Less: Additions to plant and equipment | (116 | ) | (85 | ) | (211 | ) | (198 | ) | |||||||
| Free cash flow | $ | 571 | $ | 705 | $ | 1,065 | $ | 1,320 | |||||||
| Net income | $ | 759 | $ | 754 | $ | 1,578 | $ | 1,468 | |||||||
| Net cash provided by operating activities to net income conversion rate | 91 | % | 105 | % | 81 | % | 103 | % | |||||||
| Free cash flow to net income conversion rate | 75 | % | 94 | % | 67 | % | 90 | % | |||||||
| ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED) | |||
| Three Months Ended | |||
| June 30, 2023 | |||
| As reported | $ | 2.48 | |
| Discrete tax benefit related to the second quarter 2023 | (0.07 | ) | |
| As adjusted | $ | 2.41 | |
Investor Relations & Media Contact:
Erin Linnihan
Tel: 224.661.7431
investorrelations@itw.com | mediarelations@itw.com
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