ITW(US:ITW)2024-10-30 19:57PART I - Financial Information Item 1. Financial Statements Unaudited financial statements and detailed notes are provided for the periods ended September 30, 2024 and 2023 Consolidated Statements of Income | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating Revenue | $3,966 | $4,031 | $11,966 | $12,124 | | Operating Income | $1,052 | $1,070 | $3,233 | $3,052 | | Net Income | $1,160 | $772 | $2,738 | $2,240 | | Basic EPS | $3.92 | $2.55 | $9.20 | $7.38 | | Diluted EPS | $3.91 | $2.55 | $9.17 | $7.36 | Statement of Comprehensive Income | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income | $1,160 | $772 | $2,738 | $2,240 | | Foreign currency translation adjustments, net of tax | $73 | $(82) | $(20) | $(61) | | Pension and other postretirement benefit adjustments, net of tax | $3 | — | $5 | — | | Other comprehensive income (loss) | $76 | $(82) | $(15) | $(61) | | Comprehensive Income | $1,236 | $690 | $2,723 | $2,179 | Consolidated Balance Sheets | Metric (in millions) | September 30, 2024 | December 31, 2023 | | :------------------- | :----------------- | :---------------- | | Assets: | | | | Total current assets | $6,304 | $6,235 | | Net plant and equipment | $2,071 | $1,976 | | Goodwill | $4,980 | $4,909 | | Intangible assets | $617 | $657 | | Total Assets | $15,824 | $15,518 | | Liabilities & Equity: | | | | Total current liabilities | $4,627 | $4,675 | | Total noncurrent liabilities | $7,805 | $7,830 |\ | Total stockholders' equity | $3,392 | $3,013 | | Total Liabilities & Stockholders' Equity | $15,824 | $15,518 | Statement of Changes in Stockholders' Equity | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Balance at beginning of period | $2,962 | $3,094 | $3,013 | $3,089 | | Net income | $1,160 | $772 | $2,738 | $2,240 | | Repurchases of common stock | $(375) | $(375) | $(1,125) | $(1,125) | | Dividends declared | $(443) | $(422) | $(1,277) | $(1,216) | | Other comprehensive income (loss) | $76 | $(82) | $(15) | $(61) | | Balance at end of period | $3,392 | $3,004 | $3,392 | $3,004 | Consolidated Statements of Cash Flows | Metric (in millions) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $2,167 | $2,500 | | Net cash provided by (used for) investing activities | $(27) | $(283) | | Net cash provided by (used for) financing activities | $(2,246) | $(1,905) | | Effect of Exchange Rate Changes on Cash and Equivalents | $(12) | $(30) | | Increase (decrease) during the period | $(118) | $282 | | Cash and Equivalents, End of period | $947 | $990 | Notes to Financial Statements (1) Significant Accounting Policies - The Company changed its inventory costing method for certain U.S. businesses from LIFO to FIFO in Q1 2024 to improve consistency, comparability, and reflect current inventory value, resulting in a $117 million pre-tax reduction in Cost of revenue161783 - New FASB guidance on segment and income tax disclosures will expand reporting requirements, with the Company currently assessing the impact1819 (2) Acquisitions - The Company completed two acquisitions in the Test & Measurement and Electronics segment in Q1 and Q2 2024 for a total of $116 million, which were not material to financial results2076 (3) Divestitures - A business in the Specialty Products segment, approved for divestiture in Q4 2022, was sold on April 3, 2023, contributing $9 million in operating revenue for the nine months ended September 30, 2023, with no significant gain or loss2275 (4) Sale of Noncontrolling Interest in Wilsonart International Holdings LLC - On August 5, 2024, the Company sold its noncontrolling equity interest in Wilsonart International Holdings LLC for $395 million (net of transaction costs), resulting in a pre-tax gain of $363 million included in Other income (expense)2477115 - The sale generated a discrete tax benefit of $107 million in Q3 2024 due to the utilization of capital loss carryforwards2477115 (5) Operating Revenue by Segment | Segment (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Automotive OEM | $772 | $799 | $2,403 | $2,421 | | Food Equipment | $677 | $678 | $1,975 | $1,967 | | Test & Measurement and Electronics | $697 | $698 | $2,071 | $2,101 | | Welding | $462 | $468 | $1,404 | $1,451 | | Polymers & Fluids | $448 | $458 | $1,334 | $1,364 | | Construction Products | $479 | $522 | $1,471 | $1,574 | | Specialty Products | $438 | $414 | $1,327 | $1,260 | | Total segments | $3,973 | $4,037 | $11,98