ITW(ITW) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1. Financial Statements This section presents the unaudited interim financial statements and their accompanying notes, providing an overview of the company's financial performance and position Statement of Income (Unaudited) This statement summarizes the company's revenues, expenses, and net income for the reported periods Statement of Income Highlights (Unaudited) | In millions except per share amounts | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating Revenue | $4,053 | $4,027 | $7,892 | $8,000 | | Operating Income | $1,068 | $1,054 | $2,019 | $2,181 | | Net Income | $755 | $759 | $1,455 | $1,578 | | Diluted Net Income Per Share | $2.58 | $2.54 | $4.95 | $5.27 | Statement of Comprehensive Income (Unaudited) This statement details net income and other comprehensive income components for the reported periods Statement of Comprehensive Income Highlights (Unaudited) | In millions | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $755 | $759 | $1,455 | $1,578 | | Other comprehensive income (loss) | $10 | $(41) | $9 | $(91) | | Comprehensive Income | $765 | $718 | $1,464 | $1,487 | Statement of Financial Position (Unaudited) This statement provides a snapshot of the company's assets, liabilities, and equity at specific dates Statement of Financial Position Highlights (Unaudited) | In millions | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total current assets | $6,234 | $5,856 | | Total assets | $16,048 | $15,067 | | Total current liabilities | $3,932 | $4,308 | | Total noncurrent liabilities | $8,905 | $7,442 | | Total stockholders' equity | $3,211 | $3,317 | Statement of Changes in Stockholders' Equity (Unaudited) This statement outlines changes in stockholders' equity resulting from net income, stock repurchases, and dividends Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | In millions | Total Stockholders' Equity | | :-------------------------------- | :------------------------- | | Balance at December 31, 2024 | $3,317 | | Net income | $1,455 | | Repurchases of common stock | $(750) | | Dividends declared | $(877) | | Other comprehensive income (loss) | $9 | | Other, net | $57 | | Balance at June 30, 2025 | $3,211 | Statement of Cash Flows (Unaudited) This statement reports cash inflows and outflows from operating, investing, and financing activities Statement of Cash Flows Highlights (Six Months Ended June 30) | In millions | 2025 | 2024 | | :-------------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $1,142 | $1,276 | | Net cash provided by (used for) investing activities | $(184) | $(321) | | Net cash provided by (used for) financing activities | $(1,151) | $(1,125) | | Increase (decrease) in cash and equivalents | $(160) | $(203) | | Cash and Equivalents, End of period | $788 | $862 | Notes to Financial Statements (Unaudited) This section provides additional details and explanations for the financial statements (1) Significant Accounting Policies This note details key accounting principles and recent changes - The Company changed its inventory costing method from LIFO to FIFO for certain U.S. businesses in Q1 2024 to improve consistency and comparability, resulting in a pre-tax cumulative effect of $117 million reduction in Cost of revenue in Q1 2024[26][27][91] - New FASB guidance on segment disclosures was adopted retrospectively for annual reporting beginning December 31, 2024, with no impact on financial results; further guidance on income tax disclosures (effective 2025) and income statement expense disaggregation (effective 2027) are being assessed[28][29][30] (2) Acquisitions This note summarizes recent acquisition activities - In 2024, the Company completed two acquisitions in the Test & Measurement and Electronics segment for a total of $116 million (net of cash acquired), which were not material to the Company's financial results[31][90] (3) Operating Revenue This note breaks down operating revenue by segment and outlines recognition policies Operating Revenue by Segment (In millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Automotive OEM | $845 | $815 | $1,631 | $1,631 | | Food Equipment | $680 | $667 | $1,307 | $1,298 | | Test & Measurement and Electronics | $686 | $678 | $1,338 | $1,374 | | Welding | $479 | $466 | $951 | $942 | | Polymers & Fluids | $438 | $454 | $867 | $886 | | Construction Products | $473 | $504 | $916 | $992 | | Specialty Products | $455 | $449 | $890 | $889 | | Total operating revenue | $4,053 | $4,027 | $7,892 | $8,000 | - The Company's seven segments have distinct product offerings, end markets, and revenue recognition policies, generally recognizing revenue at shipment, with exceptions for installation or highly customized systems[32][33][35][36][37][38][42][44] (4) Income Taxes This note discusses effective tax rates and significant tax events Effective Tax Rates | Period | 2025 | 2024 | | :------------------------- | :---- | :---- | | Three months ended June 30 | 24.4% | 24.4% | | Six months ended June 30 | 23.1% | 24.0% | - The effective tax rate for the six months ended June 30, 2025, included a $21 million discrete tax benefit from the reversal of a valuation allowance on net operating loss carryforwards[45] - The 'One Big Beautiful Bill Act' enacted on July 4, 2025, is not expected to materially impact the Company's financial results for the twelve months ending December 31, 2025, but its future impact is being assessed[47][93] (5) Net Income Per Share This note presents basic and diluted earnings per share calculations Net Income Per Share (In millions except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $755 | $759 | $1,455 | $1,578 | | Weighted-average common shares (Basic) | 292.3 | 297.6 | 292.9 | 298.3 | | Net income per share—Basic | $2.58 | $2.55 | $4.97 | $5.29 | | Weighted-average common shares (Diluted)| 292.9 | 298.5 | 293.7 | 299.3 | | Net income per share—Diluted | $2.58 | $2.54 | $4.95 | $5.27 | (6) Inventories This note details the composition of the company's inventories Inventories (In millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Raw material | $648 | $635 | | Work-in-process | $212 | $193 | | Finished goods | $850 | $777 | | Total inventories | $1,710 | $1,605 | (7) Pension and Other Postretirement Benefits This note outlines net periodic benefit costs and expected contributions for pension and postretirement plans Total Net Periodic Benefit Cost (Income) (In millions) | Benefit Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Pension | $1 | $1 | $1 | $2 | | Postretirement | $(1) | $1 | $(3) | $2 | - The Company expects to contribute approximately $22 million to its pension plans and $31 million to its other postretirement benefit plans in 2025[53] (8) Debt This note provides details on the company's short-term and long-term debt obligations Total Debt (In millions) | Debt Type | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Short-term debt | $1,242 | $1,555 | | Long-term debt | $7,695 | $6,308 | | Total debt | $8,937 | $7,863 | - Short-term debt included $1.2 billion in commercial paper as of June 30, 2025, with a weighted-average interest rate of 4.35%[54] - The Euro Credit Agreement was amended in February 2025, extending its termination date to February 28, 2027, and decreasing the interest rate spread; as of June 30, 2025, $884 million was outstanding under this agreement, reclassified to long-term debt[55] - In May 2024, the Company issued €1.5 billion in Euro notes (due 2028 and 2032) for general corporate purposes, including debt repayment[56] - The Company maintains a $3.0 billion revolving credit facility, with no outstanding amounts as of June 30, 2025[57] (9) Accumulated Other Comprehensive Income (Loss) This note explains changes in the components of accumulated other comprehensive income (loss) Changes in Accumulated Other Comprehensive Income (Loss) (In millions) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $(1,878) | $(1,884) | $(1,877) | $(1,834) | | Total foreign currency translation adjustments, net of tax | $10 | $(42) | $10 | $(93) | | Total pension and other postretirement benefit adjustments, net of tax | $0 | $1 | $(1) | $2 | | Ending balance | $(1,868) | $(1,925) | $(1,868) | $(1,925) | - Euro-denominated debt is designated as a hedge for net investment in Euro-denominated foreign operations, with changes in its value due to exchange rate fluctuations resulting in a pre-tax loss of $411 million for Q2 2025 and $607 million for YTD 2025[60] (10) Segment Information This note presents detailed financial performance by operating segment Segment Operating Revenue (In millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Automotive OEM | $845 | $815 | $1,631 | $1,631 | | Food Equipment | $680 | $667 | $1,307 | $1,298 | | Test & Measurement and Electronics | $686 | $678 | $1,338 | $1,374 | | Welding | $479 | $466 | $951 | $942 | | Polymers & Fluids | $438 | $454 | $867 | $886 | | Construction Products | $473 | $504 | $916 | $992 | | Specialty Products | $455 | $449 | $890 | $889 | | Total segments | $4,056 | $4,033 | $7,900 | $8,012 | Segment Operating Income (In millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Automotive OEM | $180 | $157 | $331 | $319 | | Food Equipment | $189 | $180 | $355 | $344 | | Test & Measurement and Electronics | $157 | $159 | $296 | $322 | | Welding | $159 | $153 | $312 | $309 | | Polymers & Fluids | $121 | $128 | $235 | $239 | | Construction Products | $145 | $148 | $275 | $291 | | Specialty Products | $148 | $144 | $283 | $274 | | Total segments | $1,099 | $1,069 | $2,087 | $2,098 | - The President & CEO, as CODM, uses operating income and margins to assess segment performance and guide enterprise strategies focused on profitable growth and continuous improvement[68] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, highlighting key performance drivers, strategic initiatives, and future outlook Introduction This introduction provides an overview of Illinois Tool Works Inc. and the key metrics management monitors - Illinois Tool Works Inc. (ITW) is a global manufacturer of diversified industrial products and equipment, operating 86 divisions across seven segments in 51 countries[74] - Management monitors key metrics including operating revenue, operating income, operating margin, variable cost of revenue, overhead expenses, inventory levels, days sales outstanding, past due receivables, and return on invested capital[75] THE ITW BUSINESS MODEL This section describes the company's core value creation strategy, emphasizing its unique elements - The ITW Business Model, a core source of value creation, comprises three unique elements: the proprietary 80/20 Front-to-Back process, Customer-back Innovation, and a Decentralized, Entrepreneurial Culture[76][78] - The 2012-2023 Enterprise Strategy focused on portfolio management, business structure simplification, strategic sourcing, and the diligent re-application of the 80/20 process to drive above-market organic growth and improve margins and returns[76][77][87] OUR NEXT PHASE: 2024 - 2030 This section outlines the company's strategic objectives and growth focus for the 2024-2030 period - In the 2024-2030 phase, ITW aims to build organic growth into a core strength, leveraging its decentralized entrepreneurial culture for adaptability and consistent execution through business cycles[81][82] - The Company will continue to drive 80/20 Front-to-Back practice excellence and maintain portfolio discipline, focusing on high-quality businesses in diverse end markets with positive long-term fundamentals[83][84][85][86] Terms Used by ITW This section defines key financial and operational terminology used by the company - Key terms defined include 'Organic business' (acquired businesses included for >12 months on constant currency), 'Operating leverage' (effect of organic revenue volume changes on operating income), 'Price/cost' (net impact of material cost vs. selling price changes), and 'Product line simplification (PLS)' (eliminating complexity for focus on largest customers/products)[94] Consolidated Results of Operations This section analyzes the company's overall financial performance, including revenue, income, and operating margin - The Company delivered solid financial results in Q2 and YTD 2025, driven by enterprise initiatives and the ITW Business Model, despite an uncertain external environment[95] Consolidated Operating Results (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Inc (Dec) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Inc (Dec) | | :---------------- | :------------------------------- | :------------------------------- | :-------- | :----------------------------- | :----------------------------- | :-------- | | Operating revenue | $4,053 | $4,027 | 0.7 % | $7,892 | $8,000 | (1.3)% | | Operating income | $1,068 | $1,054 | 1.2 % | $2,019 | $2,181 | (7.4)% | | Operating margin %| 26.3 % | 26.2 % | 10 bps | 25.6 % | 27.3 % | (170) bps | - Organic revenue decreased 0.4% in Q2 and 1.0% YTD, impacted by product line simplification activities (70 bps in Q2, 60 bps YTD); Asia Pacific organic revenue grew significantly (9.0% in Q2, 7.9% YTD), particularly in China (14.9% in Q2, 13.4% YTD)[100] - Operating margin increased 10 bps in Q2 due to enterprise initiatives and lower restructuring, but decreased 170 bps YTD (or 20 bps excluding the Q1 2024 LIFO accounting change) primarily due to higher employee-related expenses and unfavorable operating leverage[100] - Diluted EPS increased 1.6% in Q2 2025 to $2.58 but decreased 6.1% YTD to $4.95 (or 0.6% excluding the Q1 2024 LIFO accounting change)[103] Results of Operations by Segment This section provides detailed performance analysis for each of the company's business segments Total Segment Operating Revenue and Income (In millions) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | Q2 2025 Income | Q2 2024 Income | YTD 2025 Revenue | YTD 2024 Revenue | YTD 2025 Income | YTD 2024 Income | | :---------------------------- | :-------------- | :-------------- | :------------- | :------------- | :--------------- | :--------------- | :-------------- | :-------------- | | Automotive OEM | $845 | $815 | $180 | $157 | $1,631 | $1,631 | $331 | $319 | | Food Equipment | $680 | $667 | $189 | $180 | $1,307 | $1,298 | $355 | $344 | | Test & Measurement and Electronics | $686 | $678 | $157 | $159 | $1,338 | $1,374 | $296 | $322 | | Welding | $479 | $466 | $159 | $153 | $951 | $942 | $312 | $309 | | Polymers & Fluids | $438 | $454 | $121 | $128 | $867 | $886 | $235 | $239 | | Construction Products | $473 | $504 | $145 | $148 | $916 | $992 | $275 | $291 | | Specialty Products | $455 | $449 | $148 | $144 | $890 | $889 | $283 | $274 | AUTOMOTIVE OEM This subsection details the financial performance of the Automotive OEM segment - Automotive OEM operating revenue increased 3.8% in Q2 2025 (2.4% organic) and 0.1% YTD (0.6% organic), driven by market penetration gains in Europe and Asia Pacific, particularly China's EV market (21.6% Q2, 17.9% YTD), despite product line simplification reducing organic revenue by 140 bps in Q2 and 120 bps YTD[104] - Operating margin for Automotive OEM increased 190 bps in Q2 to 21.3% and 70 bps YTD to 20.3%, primarily due to enterprise initiatives, favorable operating leverage, lower restructuring, and favorable price/cost[104] FOOD EQUIPMENT This subsection details the financial performance of the Food Equipment segment - Food Equipment operating revenue increased 2.1% in Q2 2025 (0.8% organic) and 0.7% YTD (1.0% organic); North American organic revenue grew 4.5% in Q2 and 2.7% YTD, driven by higher demand in institutional, independent restaurant, quick serve, and food retail end markets[107] - Operating margin for Food Equipment increased 60 bps in both Q2 and YTD to 27.7% and 27.1% respectively, primarily due to benefits from enterprise initiatives and favorable operating leverage[107] TEST & MEASUREMENT AND ELECTRONICS This subsection details the financial performance of the Test & Measurement and Electronics segment - Test & Measurement and Electronics operating revenue increased 1.2% in Q2 2025 but declined 2.6% YTD, primarily due to lower organic revenue (-0.7% Q2, -3.1% YTD), driven by decreased demand in MTS Test & Simulation and general industrial markets, partially offset by growth in the semiconductor end market, especially in Asia Pacific[113] - Operating margin decreased 70 bps in Q2 to 22.8% and 130 bps YTD to 22.1%, mainly due to higher employee-related expenses, unfavorable operating leverage, product mix, and unfavorable price/cost, partially offset by enterprise initiatives and lower intangible asset amortization[113][115] WELDING This subsection details the financial performance of the Welding segment - Welding operating revenue grew 2.9% in Q2 2025 (2.8% organic) and 1.0% YTD (1.4% organic), driven by higher equipment sales and strong international demand, particularly in Asia Pacific and the Middle East[118] - Operating margin increased 20 bps in Q2 to 33.1% and remained flat YTD at 32.8%, benefiting from enterprise initiatives, favorable operating leverage, and favorable price/cost, despite higher employee-related expenses[118] POLYMERS & FLUIDS This subsection details the financial performance of the Polymers & Fluids segment - Polymers & Fluids operating revenue decreased 3.4% in Q2 2025 (-3.7% organic) and 2.1% YTD (-1.1% organic), primarily due to lower demand in North America and Europe across polymers, fluids, and automotive aftermarket businesses; product line simplification reduced organic revenue by 90 bps in Q2 and 60 bps YTD[122] - Operating margin decreased 50 bps in Q2 to 27.7% due to unfavorable operating leverage and higher employee-related expenses, but increased 10 bps YTD to 27.1% driven by enterprise initiatives[122][123] CONSTRUCTION PRODUCTS This subsection details the financial performance of the Construction Products segment - Construction Products operating revenue decreased 6.1% in Q2 2025 (-6.9% organic) and 7.6% YTD (-7.2% organic), driven by lower demand across all major regions, particularly in North American residential and commercial end markets; product line simplification reduced organic revenue by 120 bps in Q2 and 90 bps YTD[126] - Operating margin increased 140 bps in Q2 to 30.8% and 60 bps YTD to 30.0%, primarily due to enterprise initiatives and lower restructuring expenses, partially offset by unfavorable operating leverage and price/cost[126] SPECIALTY PRODUCTS This subsection details the financial performance of the Specialty Products segment - Specialty Products operating revenue increased 1.1% in Q2 2025 (0.3% organic) and 0.1% YTD (0.6% organic), with equipment sales growth offsetting declines in consumables; North American organic revenue grew due to consumer packaging and specialty films, while international organic revenue declined[130] - Operating margin increased 70 bps in Q2 to 32.6% and 100 bps YTD to 31.8%, driven by enterprise initiatives, favorable price/cost, and lower restructuring expenses, partially offset by higher employee-related expenses and product mix[130] OTHER FINANCIAL HIGHLIGHTS This section covers the company's liquidity, capital resources, and other key financial metrics Liquidity and Capital Resources This subsection discusses the company's sources and uses of cash and capital allocation priorities - The Company's primary liquidity sources are free cash flow and short-term credit facilities, with $788 million cash on hand and no outstanding borrowings on its $3.0 billion revolving credit facility as of June 30, 2025[132] - Capital allocation priorities include internal investments for organic growth, attractive dividend payments, selective strategic acquisitions, and an active share repurchase program[134] Free Cash Flow (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $550 | $687 | $1,142 | $1,276 | | Additions to plant and equipment | $(101) | $(116) | $(197) | $(211) | | Free cash flow | $449 | $571 | $945 | $1,065 | Stock Repurchase Programs This subsection details the company's common stock repurchase activities - Under the 2023 Program, the Company repurchased approximately 1.5 million shares for $375 million in Q2 2025 and 3.0 million shares for $750 million YTD 2025; approximately $2.7 billion remains authorized under the program as of June 30, 2025[136] Share Repurchase Activity (Q2 2025) | Period | Total Number of Shares Purchased (millions) | Average Price Paid Per Share | | :--------- | :------------------------------------------ | :--------------------------- | | April 2025 | 0.6 | $234.10 | | May 2025 | 0.5 | $245.35 | | June 2025 | 0.4 | $245.01 | | Total | 1.5 | | After-tax Return on Average Invested Capital This subsection presents the company's after-tax return on average invested capital (ROIC) metrics After-tax Return on Average Invested Capital (ROIC) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income to average invested capital | 27.4 % | 29.0 % | 27.1 % | 30.5 % | | After-tax return on average invested capital | 29.4 % | 30.4 % | 28.5 % | 32.0 % | - After-tax ROIC for the six months ended June 30, 2024, included a 170 basis points favorable impact from the LIFO to FIFO accounting method change[138] Working Capital This subsection analyzes the company's current assets and liabilities, and net working capital Net Working Capital (In millions) | Category | June 30, 2025 | December 31, 2024 | Increase/ (Decrease) | | :------------------------ | :------------ | :---------------- | :------------------- | | Total current assets | $6,234 | $5,856 | $378 | | Total current liabilities | $3,932 | $4,308 | $(376) | | Net working capital | $2,302 | $1,548 | $754 | - A significant portion of cash and equivalents is held by international subsidiaries, typically used for international operations or reinvestment, and may be subject to foreign withholding taxes if repatriated[140] Debt This subsection provides details on the company's debt levels and key debt ratios Total Debt (In millions) | Debt Type | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Short-term debt | $1,242 | $1,555 | | Long-term debt | $7,695 | $6,308 | | Total debt | $8,937 | $7,863 | Total Debt to EBITDA Ratio | Period | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total debt to EBITDA ratio | 2.0 | 1.7 | Stockholders' Equity This subsection summarizes changes in the company's stockholders' equity Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | In millions | Total Stockholders' Equity | | :-------------------------------- | :------------------------- | | Total stockholders' equity, December 31, 2024 | $3,317 | | Net income | $1,455 | | Repurchases of common stock | $(750) | | Dividends declared | $(877) | | Other comprehensive income (loss) | $9 | | Other, net | $57 | | Total stockholders' equity, June 30, 2025 | $3,211 | Forward-Looking Statements This subsection cautions investors regarding future-oriented information and associated risks - The report contains forward-looking statements subject to various risks and uncertainties, including market downturns, geopolitical conditions, foreign currency fluctuations, and the effectiveness of enterprise strategy initiatives; investors are cautioned not to place undue reliance on these statements[149] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the Company's exposures to market risk since the last annual report - No material changes to market risk exposures have occurred since the Company's 2024 Annual Report on Form 10-K[152] ITEM 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes to internal control over financial reporting - The Company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[153] - No changes in internal control over financial reporting were identified that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting during the quarter ended June 30, 2025[154] PART II – OTHER INFORMATION ITEM 1. Legal Proceedings This section states that there are no material legal proceedings to report - There are no material legal proceedings to disclose; the Company's disclosure threshold for environmental legal proceedings is $1 million[157] ITEM 1A. Risk Factors This section indicates that there have been no material changes to the risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K - No material changes to the risk factors described in the Company's 2024 Annual Report on Form 10-K have occurred[158] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's common stock repurchase activities under its 2023 program - The Company repurchased 1.5 million shares of common stock in Q2 2025 under the 2023 Program, with approximately $2.7 billion remaining authorized for repurchases as of June 30, 2025[159][160] Share Repurchase Activity (Q2 2025) | Period | Total Number of Shares Purchased (millions) | Average Price Paid Per Share | | :--------- | :------------------------------------------ | :--------------------------- | | April 2025 | 0.6 | $234.10 | | May 2025 | 0.5 | $245.35 | | June 2025 | 0.4 | $245.01 | | Total | 1.5 | | ITEM 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and financial information formatted in iXBRL - Exhibits include Rule 13a-14(a) and Section 1350 Certifications, and financial information formatted in Inline Extensible Business Reporting Language (iXBRL)[161] SIGNATURES - The report was signed on July 31, 2025, by Randall J. Scheuneman, Vice President & Chief Accounting Officer[165]