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 ...

Exhibit 99.1 ITW Reports First Quarter 2024 Results GLENVIEW, IL., April 30, 2024 - Illinois Tool Works Inc. (NYSE: ITW) today reported its first quarter 2024 results and raised guidance for full-year 2024. "While the near-term demand environment across the majority of our segments was challenging as expected, the ITW team delivered a solid start to the year as operating income grew four percent, operating margin expanded 120 basis points to 25.4 percent, and EPS increased five percent to $2.44, excluding a ...

In its upcoming report, Illinois Tool Works (ITW) is predicted by Wall Street analysts to post quarterly earnings of $2.35 per share, reflecting an increase of 0.9% compared to the same period last year. Revenues are forecasted to be $4.02 billion, representing no change year over year.Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.Pr ...

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.While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 th ...

A downtrend has been apparent in Illinois Tool Works (ITW) lately with too much selling pressure. The stock has declined 5.7% over the past four weeks. However, given the fact that it is now in oversold territory and Wall Street analysts are majorly in agreement about the company's ability to report better earnings than they predicted earlier, the stock could be due for a turnaround.Guide to Identifying Oversold StocksWe use Relative Strength Index (RSI), one of the most commonly used technical indicators, ...

GLENVIEW, Ill., April 11, 2024 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE:ITW) will issue its first quarter 2024 results on Tuesday, April 30, 2024 at 7:00 a.m. CDT. Following the release, ITW will hold its first quarter 2024 earnings webcast at 9:00 a.m. CDT. To access the webcast for the event, please click on the following link:ITW Q1 2024 Earnings Webcast If you are a participant on the conference call, please dial 1-888-660-6652 (domestic) or 1-646-960-0554 (international) 10 minutes prior to t ...

GLENVIEW, Ill., April 11, 2024 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) will issue its first quarter 2024 results on Tuesday, April 30, 2024 at 7:00 a.m. CDT. Following the release, ITW will hold its first quarter 2024 earnings webcast at 9:00 a.m. CDT. To access the webcast for the event, please click on the following link:ITW Q1 2024 Earnings Webcast If you are a participant on the conference call, please dial 1-888-660-6652 (domestic) or 1-646-960-0554 (international) 10 minutes prior to ...

Illinois Tool Works Inc. (ITW) has been benefiting from strength in the Automotive OEM (Original Equipment Manufacturer) segment and enterprise initiatives despite continued softness in the semiconductor end market and foreign currency woes.What’s Aiding ITW?Business Strength: Illinois Tool has been benefiting from stable underlying demand and improving supply chains. Strong market share and penetration gains in the rapidly growing EV market are boosting revenues in the Automotive OEM segment. The Food Equi ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) ITW is a global diversified industrial manufacturer operating through seven segments, driven by its unique Business Model and enterprise strategy - ITW is a global manufacturer with **84 divisions** in **51 countries** and approximately **45,000 employees** as of December 31, 2023[12](index=12&type=chunk)[44](index=44&type=chunk) - The company operates through **seven distinct segments**: Automotive OEM, Food Equipment, Test & Measurement and Electronics, Welding, Polymers & Fluids, Construction Products, and Specialty Products[13](index=13&type=chunk)[14](index=14&type=chunk) - The ITW Business Model, a core competitive advantage, is built on **80/20 Front-to-Back process**, **Customer-back Innovation**, and a **Decentralized, Entrepreneurial Culture**[17](index=17&type=chunk)[19](index=19&type=chunk) - The 2024-2030 enterprise strategy aims to elevate **organic growth** as a core strength, driven by Customer-back Innovation (CBI)[23](index=23&type=chunk)[24](index=24&type=chunk) - ITW holds approximately **19,600 granted and pending patents** globally, forming a significant intellectual property portfolio[17](index=17&type=chunk)[38](index=38&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces economic, operational, strategic, and regulatory risks that could impact its business and financial results - Economic risks include global economic conditions, rising interest rates, and currency fluctuations, as over **50% of net sales** are from outside the U.S[57](index=57&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk) - Business and operational risks involve enterprise strategy failure, cybersecurity threats, and raw material price increases or supply shortages[62](index=62&type=chunk)[67](index=67&type=chunk)[69](index=69&type=chunk) - Strategic transaction risks include potential negative impacts from acquisitions like MTS Test & Simulation and retained liabilities from divestitures[71](index=71&type=chunk)[72](index=72&type=chunk) - Tax, legal, and regulatory risks stem from unfavorable changes in tax laws, adverse legal outcomes, and environmental regulations or climate change[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Unresolved Staff Comments](index=17&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None [Cybersecurity](index=17&type=section&id=Item%201C.%20Cybersecurity) ITW manages cybersecurity risk through a global enterprise program based on the NIST Cybersecurity Framework with Board oversight - The company's cybersecurity program is based on the **National Institute of Standards and Technology's Cybersecurity Framework (CSF)** and includes annual training, vulnerability management, and response planning[83](index=83&type=chunk)[84](index=84&type=chunk) - Oversight is provided by the **Board of Directors**, a Cybersecurity Governance Committee of senior executives, and a central Cyber Incident Response Team led by the Chief Information Security Officer[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - The company has not experienced any **material cybersecurity incidents** during 2023, 2022, or 2021[84](index=84&type=chunk) [Properties](index=19&type=section&id=Item%202.%20Properties) ITW operates approximately **410 plants and office facilities** globally, with production capacity generally exceeding current operating levels - The company operates approximately **410 plants and office facilities** globally, with principal foreign operations in China, Germany, France, and the United Kingdom[90](index=90&type=chunk) - Properties are considered to be in good operating condition, and production capacity currently exceeds operating levels[91](index=91&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material legal proceedings - None. The disclosure threshold for environmental legal proceedings involving a governmental authority is **$1 million**[92](index=92&type=chunk) [Mine Safety Disclosures](index=19&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - None Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) ITW's common stock trades on the NYSE, with a new **$5.0 billion** stock repurchase program announced in August 2023 - The company's common stock is listed on the New York Stock Exchange (NYSE) with the trading symbol **"ITW"**[96](index=96&type=chunk) - A new **$5.0 billion** stock repurchase program was announced on August 4, 2023, with approximately **$5.0 billion** remaining authorized as of December 31, 2023[100](index=100&type=chunk) Share Repurchases - Q4 2023 | Period | Total Number of Shares Purchased (millions) | Average Price Paid Per Share | Maximum Value of Shares That May Yet Be Purchased Under Programs ($ millions) | | :--- | :--- | :--- | :--- | | October 2023 | 0.6 | $229.18 | $5,227 | | November 2023 | 0.6 | $235.76 | $5,096 | | December 2023 | 0.4 | $253.48 | $4,990 | | **Total** | **1.6** | | | [Reserved](index=21&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, ITW achieved **$16.11 billion** operating revenue and **$4.04 billion** operating income, with strong liquidity and capital allocation [Consolidated Results of Operations](index=24&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) In 2023, ITW's operating revenue increased **1.1%** to **$16.1 billion**, with operating income up **6.6%** to **$4.0 billion** Consolidated Results: 2023 vs 2022 | Metric | 2023 | 2022 | % Change | Organic Change | Divestiture Impact | Foreign Currency Impact | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | $16,107M | $15,932M | 1.1% | 2.0% | (0.8)% | (0.1)% | | Operating Income | $4,040M | $3,790M | 6.6% | 7.6% | (0.5)% | (0.3)% | | Operating Margin | 25.1% | 23.8% | +130 bps | +130 bps | +10 bps | — | - In 2023, diluted EPS was **$9.74**, with **6.4 million shares** repurchased for **$1.5 billion** and **$1.6 billion** paid in dividends[137](index=137&type=chunk) Consolidated Results: 2022 vs 2021 | Metric | 2022 | 2021 | % Change | Organic Change | Acquisition Impact | Foreign Currency Impact | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | $15,932M | $14,455M | 10.2% | 12.1% | 2.4% | (4.3)% | | Operating Income | $3,790M | $3,477M | 9.0% | 14.3% | (0.1)% | (4.5)% | | Operating Margin | 23.8% | 24.1% | (30) bps | +40 bps | (60) bps | — | - In 2022, diluted EPS was **$9.77**, including a **$0.60 per share** favorable impact from divestiture gains, and **8.3 million shares** were repurchased for **$1.75 billion**[138](index=138&type=chunk) [Results of Operations by Segment](index=28&type=section&id=RESULTS%20OF%20OPERATIONS%20BY%20SEGMENT) In 2023, Automotive OEM and Food Equipment segments showed strong growth, while Construction Products and Specialty Products declined Operating Revenue by Segment (in millions) | Segment | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Automotive OEM | $3,235 | $2,969 | $2,800 | | Food Equipment | $2,622 | $2,444 | $2,078 | | Test & Measurement and Electronics | $2,832 | $2,828 | $2,346 | | Welding | $1,902 | $1,894 | $1,650 | | Polymers & Fluids | $1,804 | $1,905 | $1,804 | | Construction Products | $2,033 | $2,113 | $1,945 | | Specialty Products | $1,697 | $1,799 | $1,854 | Operating Income by Segment (in millions) | Segment | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Automotive OEM | $561 | $499 | $545 | | Food Equipment | $713 | $618 | $469 | | Test & Measurement and Electronics | $686 | $684 | $643 | | Welding | $605 | $583 | $490 | | Polymers & Fluids | $482 | $479 | $457 | | Construction Products | $578 | $548 | $530 | | Specialty Products | $449 | $481 | $504 | [Liquidity and Capital Resources](index=43&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity is strong, with **$3.08 billion** free cash flow in 2023 and a **30.4%** After-tax ROIC - Capital allocation priorities include internal investments for organic growth, attractive dividends, selective acquisitions, and an active share repurchase program[185](index=185&type=chunk) Cash Flow Summary (in millions) | Cash Flow | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $3,539 | $2,348 | $2,557 | | Additions to plant and equipment | $(455) | $(412) | $(296) | | **Free cash flow** | **$3,084** | **$1,936** | **$2,261** | After-tax Return on Average Invested Capital (ROIC) | Year | After-tax ROIC | | :--- | :--- | | 2023 | 30.4% | | 2022 | 29.1% | | 2021 | 29.5% | Total Debt to EBITDA Ratio | Year | Total Debt to EBITDA | | :--- | :--- | | 2023 | 1.8x | | 2022 | 1.8x | | 2021 | 2.0x | [Critical Accounting Estimates](index=50&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Management identifies Income Taxes, Goodwill and Intangible Assets, and Pension Benefits as critical accounting estimates - Income Taxes: Estimates involve interpretation of tax regulations, future taxable income, and uncertain tax positions[206](index=206&type=chunk) - Goodwill and Intangible Assets: Impairment testing relies on management's judgment to determine fair value; total goodwill and intangible assets were approximately **$5.6 billion** as of December 31, 2023[207](index=207&type=chunk)[208](index=208&type=chunk) - Pension and Other Postretirement Benefits: Expense and obligations are determined by actuarial valuations using key assumptions for discount rates, expected return on plan assets, and life expectancy[209](index=209&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate changes and foreign currency fluctuations, mitigated by Euro-denominated debt hedges - The company is exposed to **interest rate risk** related to its fixed-rate debt and variable-rate commercial paper and Euro term loans[213](index=213&type=chunk) - To reduce **foreign currency risk**, Euro-denominated notes and term loans are designated as hedges of net investment in Euro-denominated foreign operations[215](index=215&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes consolidated financial statements, auditor's report, and notes, with Income Taxes identified as a critical audit matter - Management assessed the company's internal control over financial reporting as **effective** as of December 31, 2023, based on the COSO framework[218](index=218&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an **unqualified opinion** on the financial statements and internal control over financial reporting[222](index=222&type=chunk) - The auditor identified **Income Taxes** as a Critical Audit Matter due to complex judgments required for determining tax expense and unrecognized tax benefits[229](index=229&type=chunk)[231](index=231&type=chunk) [Statement of Income](index=55&type=section&id=Statement%20of%20Income) For 2023, ITW reported **$16.107 billion** operating revenue, **$4.040 billion** operating income, and **$9.74** diluted EPS Statement of Income Highlights (in millions, except per share amounts) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Operating Revenue | $16,107 | $15,932 | $14,455 | | Operating Income | $4,040 | $3,790 | $3,477 | | Net Income | $2,957 | $3,034 | $2,694 | | Diluted EPS | $9.74 | $9.77 | $8.51 | [Statement of Financial Position](index=57&type=section&id=Statement%20of%20Financial%20Position) As of December 31, 2023, ITW had **$15.518 billion** total assets, **$12.505 billion** total liabilities, and **$3.013 billion** total equity Statement of Financial Position Highlights (in millions) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and equivalents | $1,065 | $708 | | Goodwill | $4,909 | $4,864 | | Total Assets | **$15,518** | **$15,422** | | **Liabilities & Equity** | | | | Total debt (Short & Long-term) | $8,164 | $7,763 | | Total Liabilities | $12,505 | $12,333 | | Total Stockholders' Equity | **$3,013** | **$3,089** | [Statement of Cash Flows](index=59&type=section&id=Statement%20of%20Cash%20Flows) In 2023, net cash from operations was **$3.539 billion**, with a **$357 million** increase in cash and equivalents during the year Statement of Cash Flows Highlights (in millions) | Activity | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $3,539 | $2,348 | $2,557 | | Net cash provided by (used for) investing activities | $(403) | $(110) | $(984) | | Net cash provided by (used for) financing activities | $(2,782) | $(3,000) | $(2,564) | | **Net increase (decrease) in cash** | **$357** | **$(819)** | **$(1,037)** | [Notes to Financial Statements](index=60&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed information on accounting policies, acquisitions, divestitures, revenue, income taxes, goodwill, debt, and pensions - Note 3 (Acquisitions): Details the December 1, 2021 acquisition of the MTS Test & Simulation business for **$750 million**, adding **$430 million** in goodwill and **$259 million** in intangible assets[269](index=269&type=chunk) - Note 4 (Divestitures): In 2022, two businesses were divested for **$279 million** proceeds, resulting in a **$197 million** pre-tax gain; another business was sold in April 2023 with no significant gain or loss[272](index=272&type=chunk)[273](index=273&type=chunk) - Note 11 (Debt): Total debt was **$8.164 billion** as of Dec 31, 2023; the company maintains a **$3.0 billion** revolving credit facility and borrowed **€1.3 billion** under a new Euro Credit Agreement in May 2023[308](index=308&type=chunk)[309](index=309&type=chunk)[317](index=317&type=chunk) - Note 14 (Stockholders' Equity): A new **$5.0 billion** share repurchase program was announced on August 4, 2023, completing the 2021 program in Q4 2023[340](index=340&type=chunk)[341](index=341&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=88&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None [Controls and Procedures](index=88&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2023, with no material changes to internal control - The President & CEO and Senior Vice President & CFO concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2023[365](index=365&type=chunk) - No changes in internal control over financial reporting were identified during Q4 2023 that materially affected or are reasonably likely to affect controls[367](index=367&type=chunk) [Other Information](index=88&type=section&id=Item%209B.%20Other%20Information) Executive Vice President Michael R. Zimmerman adopted a Rule 10b5-1 trading arrangement on December 6, 2023 - Executive Vice President Michael R. Zimmerman adopted a **Rule 10b5-1 trading arrangement** on December 6, 2023[368](index=368&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=88&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports no disclosures are required under this item - None Part III [Directors, Executive Officers and Corporate Governance](index=78&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information required by this item is incorporated by reference from the Company's **2024 Proxy Statement**[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) [Executive Compensation](index=78&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding director and executive compensation is incorporated by reference from the 2024 Proxy Statement - Information required by this item is incorporated by reference from the Company's **2024 Proxy Statement**[374](index=374&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=78&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related stockholder matters is incorporated by reference from the 2024 Proxy Statement - Information required by this item is incorporated by reference from the Company's **2024 Proxy Statement**[375](index=375&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=78&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2024 Proxy Statement - Information required by this item is incorporated by reference from the Company's **2024 Proxy Statement**[376](index=376&type=chunk) [Principal Accountant Fees and Services](index=78&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2024 Proxy Statement - Information required by this item is incorporated by reference from the Company's **2024 Proxy Statement**[377](index=377&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=79&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists financial statements and provides a detailed list of all exhibits filed with the report - This item lists the financial statements filed under Item 8 and notes that no financial statement schedules are included[379](index=379&type=chunk) - A comprehensive list of exhibits is provided, including credit agreements, indentures, incentive plans, and various certifications[380](index=380&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) [Form 10-K Summary](index=82&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None