ITW(ITW) - 2024 Q3 - Quarterly Results

Revenue and Growth - Revenue of $4.0 billion, a decrease of 2% as organic growth declined 1%[1] - Total revenue for the nine months ended September 30, 2024, was $11,966 million, with an operating income of $3,233 million and an operating margin of 27.0%[14] Operating Performance and Margins - Operating margin of 26.5% with enterprise initiatives contributing 130 basis points[1] - Operating income was $1.05 billion, with six of seven segments expanding operating margin[4] - Operating margin is projected to be in the range of 26.5 to 27%, an improvement of 165 basis points at the midpoint[7] - Automotive OEM segment revenue for the nine months ended September 30, 2024, was $2,403 million, with an operating income of $469 million and an operating margin of 19.5%[14] - Food Equipment segment revenue for the nine months ended September 30, 2024, was $1,975 million, with an operating income of $537 million and an operating margin of 27.2%[14] - Test & Measurement and Electronics segment revenue for the nine months ended September 30, 2024, was $2,071 million, with an operating income of $501 million and an operating margin of 24.2%[14] - Welding segment revenue for the nine months ended September 30, 2024, was $1,404 million, with an operating income of $458 million and an operating margin of 32.6%[14] - Polymers & Fluids segment revenue for the nine months ended September 30, 2024, was $1,334 million, with an operating income of $364 million and an operating margin of 27.3%[14] - Construction Products segment revenue for the nine months ended September 30, 2024, was $1,471 million, with an operating income of $436 million and an operating margin of 29.6%[14] - Specialty Products segment revenue for the nine months ended September 30, 2024, was $1,327 million, with an operating income of $410 million and an operating margin of 30.9%[14] Earnings Per Share (EPS) and Net Income - GAAP EPS of $3.91 included a divestiture gain of $1.26; ex-gain EPS of $2.65, an increase of 4%[1] - Full year GAAP EPS guidance raised by $1.33 to a range of $11.63 to $11.73 per share[1] - Net income for the nine months ended September 30, 2024, was $2,738 million, compared to $2,240 million for the same period in 2023[17] - Net income for the twelve months ended December 31, 2023, was $2,957 million, with an after-tax return on average invested capital of 30.4%[24] - Adjusted net income per share diluted for the three months ended September 30, 2024, was $2.65, after adjusting for the impact of the sale of noncontrolling interest in Wilsonart[27] Cash Flow and Capital Management - Operating cash flow was $891 million, and free cash flow was $783 million, with a conversion rate to adjusted net income of 102%[5] - The company repurchased $375 million of its own shares and raised its dividend by 7% to an annualized $6.00 per share[5] - Free cash flow for the nine months ended September 30, 2023, was $2,176 million, with a free cash flow to net income conversion rate of 97%[26] - Net cash provided by operating activities for the nine months ended September 30, 2023, was $2,500 million, with a net cash to net income conversion rate of 112%[26] - Free cash flow for the three months ended September 30, 2024, was $783 million, with a free cash flow to net income conversion rate of 68% excluding certain discrete items[26] Divestitures and Tax Impact - Proceeds from the Wilsonart divestiture were $395 million, resulting in a pre-tax gain of $363 million and a favorable GAAP EPS impact of $1.26[6] - The effective tax rate for the third quarter was 14.9%[5] - Reported income taxes for the nine months ended September 30, 2023, were $656 million with a tax rate of 22.7%, adjusted to $676 million and 23.4% after including a discrete tax benefit of $20 million[23] - Effective tax rate for the year ended December 31, 2023, excluding the discrete tax benefit, was 23.2%[25] Return on Invested Capital - After-tax return on average invested capital for the nine months ended September 30, 2024, was 31.3%, compared to 30.5% for the same period in 2023[17] - Net income to average invested capital for the twelve months ended December 31, 2023, was 29.0%[24] - Average invested capital for the twelve months ended December 31, 2023, was $10,214 million[24] - Total invested capital as of December 31, 2023, was $10,112 million, including cash and equivalents of $1,065 million and debt of $8,164 million[24]