Investment Thesis - Illinois Tool Works Inc. (ITW) is expected to experience revenue growth due to easier year-over-year comparisons and stable underlying demand in upcoming quarters [2] - The Product Line Simplification initiative may impact sales in the Specialty Products business for a few more quarters, but it is anticipated to position the company for medium to long-term growth once completed [2][7] - Focus on Customer-Back Innovation and new product launches is expected to help ITW gain market share and grow revenues [2][8] - The company's valuation appears attractive compared to historical averages, supporting a buy rating on ITW stock [2] Revenue Analysis and Outlook - In Q1 2024, ITW's revenue declined by 1.1% year-over-year to $3.973 billion, with organic revenue declining by 0.6% year-over-year [3] - The Automotive OEM segment saw a revenue increase of 2.5% year-over-year, driven by 23.2% organic growth in China [3][10] - The Food Equipment segment experienced a revenue decline of 0.7% year-over-year, impacted by tough comparisons from a 16% organic growth in Q1 2023 [3][10] - The Specialty Products segment's revenue increased by 3.8% year-over-year, driven by higher equipment sales in Europe and North America [6][10] Margin Analysis and Outlook - In Q1 2024, ITW reported a 420 basis points year-over-year increase in operating margin to 28.4%, benefiting from a change in inventory accounting methods [12] - Operating margin expansion was observed across several segments, including 370 basis points in Automotive OEM and 390 basis points in Specialty Products [13] - The company expects margin improvement from operating leverage as organic sales growth recovers, with incremental margins typically ranging from 35-40% [12][16] Growth Agenda - ITW has set long-term organic growth targets of 4-7%, with contributions from market growth/pricing, net market penetration, and customer-back innovation [9][11] - The company is in the early stages of achieving these growth targets, with expectations for acceleration in revenue growth as product line simplification and innovation initiatives gain traction [9][20] Valuation - ITW is currently trading at a forward P/E of 24.52x for FY24 and 22.61x for FY25, which is lower than its 5-year average of 25.54x [17] - The company has a forward dividend yield of 2.25% and a strong track record of increasing dividends [17] - A potential re-rating of the P/E multiple is anticipated as growth improves, with a one-year forward target price of $281, indicating a 12.5% upside [18]

Illinois Tool Works Inc. (ITW) is poised to gain from strength in the Automotive OEM (Original Equipment Manufacturer) segment, stable underlying demand and improving supply chains despite softness in the semiconductor end market and foreign currency woes.What’s Aiding ITW?Business Strength: Illinois Tool is benefiting from stable underlying demand and improving supply chains. Strong momentum in the EV markets, customer mix and product line simplification activities are boosting revenues in the Automotive O ...

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividen ...

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.It also includes access to the Zacks Style Scores.What are the Zacks Style Scores?The Zacks Style Sco ...

GLENVIEW, Ill., May 03, 2024 (GLOBE NEWSWIRE) -- The Board of Directors of Illinois Tool Works Inc. (NYSE:ITW) declared a dividend on the company's common stock of $1.40 per share for the 2nd quarter of 2024. The dividend equates to $5.60 per share on a full-year basis. The dividend will be paid on July 11, 2024 to shareholders of record as of June 28, 2024. About Illinois Tool WorksITW (NYSE:ITW) is a Fortune 200 global multi-industry manufacturing leader with revenue of $16.1 billion in 2023. The company' ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number: 1-4797 ILLINOIS TOOL WORKS INC. (Exact name of registrant as specified in its charter) | Delaware | ...

Illinois Tool Works Inc. (ITW) reported first-quarter 2024 adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate of $2.35. Earnings increased 5% year over year.Illinois Tool’s revenues of $3.97 billion missed the consensus estimate of $4.02 billion. The top line inched down 1.1% year over year due to an unfavorable foreign currency translation of 0.4%. Also, organic sales decreased 0.5% and divestitures reduced revenues by 0.6%.Segmental PerformanceTest & Measurement and Electro ...

Illinois Tool Works Inc. (NYSE:ITW) Q1 2024 Earnings Conference Call April 30, 2024 10:00 AM ET Company Participants Erin Linnihan - VP, IR Karen Fletcher - VP, IR Christopher O'Herlihy - President and CEO Michael Larsen - SVP and CFO Conference Call Participants Jamie Cook - Truist Securities Tami Zakaria - JPMorgan Steve Volkmann - Jefferies Andy Kaplowitz - Citigroup Sabrina Abrams - Bank of America Mig Dobre - Baird Matthew Pan - Barclays Operator Good morning. My name is Krista, and I will be your conf ...

Illinois Tool Works (ITW) reported $3.97 billion in revenue for the quarter ended March 2024, representing a year-over-year decline of 1.1%. EPS of $2.44 for the same period compares to $2.33 a year ago.The reported revenue represents a surprise of -1.18% over the Zacks Consensus Estimate of $4.02 billion. With the consensus EPS estimate being $2.35, the EPS surprise was +3.83%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall St ...

[Performance Overview and Outlook](index=1&type=section&id=Performance%20Overview%20and%20Outlook) ITW delivered solid Q1 2024 performance with operating income and adjusted EPS growth, margin expansion, and raised full-year guidance [First Quarter 2024 Results](index=1&type=section&id=First%20Quarter%202024%20Results) ITW's Q1 revenue declined slightly, but adjusted operating income and EPS grew, with operating margin expanding 120 basis points to 25.4% Q1 2024 Financial Highlights (vs. Q1 2023) | Metric | Q1 2024 Value | Change (YoY) | Note | | :--- | :--- | :--- | :--- | | **Revenue** | $4.0 billion | -1.0% | Organic growth declined (0.6)% | | **GAAP Operating Income** | $1.13 billion | +16% | Includes $117 million one-time benefit | | **Adjusted Operating Income** | $1.01 billion | +4% | Excludes one-time item | | **GAAP Operating Margin** | 28.4% | +420 bps | - | | **Adjusted Operating Margin** | 25.4% | +120 bps | Enterprise initiatives contributed 140 bps | | **GAAP EPS** | $2.73 | +17% | Includes $0.29 one-time benefit | | **Adjusted EPS** | $2.44 | +5% | Excludes one-time item | - Free cash flow was **$494 million**, with a conversion of **68%** to net income when excluding the one-time accounting item[5](index=5&type=chunk) - The company repurchased **$375 million** of its own shares during the first quarter[5](index=5&type=chunk) [One-Time LIFO Inventory Accounting Change](index=1&type=section&id=One-Time%20LIFO%20Inventory%20Accounting%20Change) ITW changed inventory accounting from LIFO to FIFO for certain U.S. businesses, resulting in a **$117 million** pre-tax benefit and impacting 23% of inventories - The company changed its inventory accounting method from LIFO to FIFO for certain U.S. businesses[6](index=6&type=chunk) - This change impacted approximately **23%** of total inventories as of December 31, 2023[6](index=6&type=chunk) - The accounting change resulted in a pre-tax cumulative benefit of **$117 million**, recorded as a reduction in cost of revenue[6](index=6&type=chunk) [2024 Guidance](index=1&type=section&id=2024%20Guidance) ITW raised full-year 2024 GAAP EPS guidance, projecting 2-4% total revenue growth, 1-3% organic growth, 26-27% operating margin, and **$1.5 billion** in share repurchases Full-Year 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | **GAAP EPS** | $10.30 to $10.70 | | **Operating Margin** | 26% to 27% | | **Revenue Growth** | 2% to 4% | | **Organic Growth** | 1% to 3% | | **Share Repurchases** | ~$1.5 billion | | **Effective Tax Rate** | 24% to 24.5% | - Enterprise initiatives are expected to contribute more than **100 basis points** to the full-year operating margin[7](index=7&type=chunk) - Free cash flow is projected to exceed **100%** of net income for the full year[7](index=7&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) Unaudited Q1 2024 financial statements show higher net income from lower cost of revenue, stable total assets, and slight increases in inventories and short-term debt [Statement of Income](index=3&type=section&id=Statement%20of%20Income) Q1 2024 operating revenue slightly decreased, but operating income and net income rose significantly due to reduced cost of revenue, with diluted EPS reaching **$2.73** Q1 Statement of Income (in millions, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Operating Revenue** | $3,973 | $4,019 | | **Cost of revenue** | $2,145 | $2,341 | | **Operating Income** | $1,127 | $972 | | **Net Income** | $819 | $714 | | **Diluted EPS** | $2.73 | $2.33 | [Statement of Financial Position](index=4&type=section&id=Statement%20of%20Financial%20Position) As of March 31, 2024, ITW's total assets were **$15.65 billion**, with inventories and short-term debt increasing, while total stockholders' equity remained stable Key Balance Sheet Items (in millions) | Metric | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $6,371 | $6,235 | | **Total Assets** | $15,653 | $15,518 | | **Total current liabilities** | $4,844 | $4,675 | | **Total Liabilities** | $12,632 | $12,505 | | **Total stockholders' equity** | $3,021 | $3,013 | [Segment Performance](index=5&type=section&id=Segment%20Performance) ITW's segments showed varied Q1 2024 performance, with Automotive OEM and Specialty Products achieving positive organic growth, and Welding reporting the highest operating margin [Segment Financials (Q1 2024)](index=5&type=section&id=Segment%20Financials%20%28Q1%202024%29) In Q1 2024, Automotive OEM generated the most revenue, while Welding was the most profitable segment with an operating margin of **32.7%** Q1 2024 Performance by Segment (in millions) | Segment | Total Revenue (in millions) | Operating Income (in millions) | Operating Margin | | :--- | :--- | :--- | :--- | | **Automotive OEM** | $816 | $162 | 19.8% | | **Food Equipment** | $631 | $164 | 26.0% | | **Test & Measurement and Electronics** | $696 | $163 | 23.4% | | **Welding** | $476 | $156 | 32.7% | | **Polymers & Fluids** | $432 | $111 | 25.8% | | **Construction Products** | $488 | $143 | 29.4% | | **Specialty Products** | $440 | $130 | 29.7% | [Segment Growth and Margin Analysis (YoY)](index=6&type=section&id=Segment%20Growth%20and%20Margin%20Analysis%20%28YoY%29) Year-over-year, Specialty Products and Automotive OEM showed organic growth and significant margin expansion, while Construction Products experienced a decline Q1 2024 vs. Q1 2023 Segment Changes | Segment | Organic Revenue Change | Operating Margin Change | | :--- | :--- | :--- | | **Automotive OEM** | 3.4% | +370 bps | | **Food Equipment** | (1.4)% | (70) bps | | **Test & Measurement and Electronics** | (1.3)% | (110) bps | | **Welding** | (3.5)% | +80 bps | | **Polymers & Fluids** | (0.9)% | +140 bps | | **Construction Products** | (7.0)% | +190 bps | | **Specialty Products** | 5.5% | +410 bps | [Non-GAAP Reconciliations and Key Metrics](index=7&type=section&id=Non-GAAP%20Reconciliations%20and%20Key%20Metrics) This section reconciles key non-GAAP metrics including After-Tax ROIC, Free Cash Flow, and Adjusted EPS, adjusted for the one-time LIFO-to-FIFO accounting change [After-Tax Return on Average Invested Capital (ROIC)](index=7&type=section&id=After-Tax%20Return%20on%20Average%20Invested%20Capital%20%28ROIC%29) For Q1 2024, ITW's after-tax return on average invested capital improved to **30.1%** from **29.4%** in Q1 2023, adjusted for the inventory accounting change After-Tax Return on Average Invested Capital | Period | ROIC | | :--- | :--- | | **Three Months Ended Mar 31, 2024** | 30.1% | | **Three Months Ended Mar 31, 2023** | 29.4% | [Free Cash Flow](index=9&type=section&id=Free%20Cash%20Flow) Q1 2024 free cash flow was **$494 million**, a decrease from Q1 2023, with a GAAP conversion rate of **60%** to net income, or **68%** adjusted Free Cash Flow (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $589 | $728 | | **Additions to plant and equipment** | $(95) | $(113) | | **Free cash flow** | $494 | $615 | - Excluding the impact of the LIFO-to-FIFO accounting change, the free cash flow to net income conversion rate would have been **68%**[25](index=25&type=chunk) [Adjusted EPS Reconciliation](index=9&type=section&id=Adjusted%20EPS%20Reconciliation) Q1 2024 GAAP diluted EPS was **$2.73**, adjusted to **$2.44** after accounting for the **$0.29** per share net-of-tax benefit from the inventory accounting change Q1 2024 EPS Reconciliation | Description | Per Share Amount | | :--- | :--- | | **As reported (GAAP EPS)** | $2.73 | | **Cumulative effect of change in inventory accounting method, net of tax** | $(0.29) | | **As adjusted (Non-GAAP EPS)** | $2.44 | [Standard Disclosures](index=2&type=section&id=Standard%20Disclosures) This section provides legal and informational disclosures, clarifying non-GAAP financial measures, offering a safe harbor statement for forward-looking statements, and describing ITW - The earnings release contains non-GAAP financial measures, with reconciliations to comparable GAAP measures included in supplemental schedules[9](index=9&type=chunk) - Forward-looking statements regarding future performance are subject to risks and uncertainties, detailed in ITW's Form 10-K and other SEC filings[10](index=10&type=chunk) - ITW is a Fortune 200 global multi-industrial manufacturer with seven industry-leading segments and **$16.1 billion** in 2023 revenue[11](index=11&type=chunk)