ITW(US:ITW)2025-10-24 13:43Financial Performance - Third quarter revenue reached $4.1 billion, an increase of 2% with organic growth of 1%[4] - GAAP EPS was $2.81, a 6% increase year-over-year excluding a divestiture gain from the prior year[5] - Operating margin improved to a record 27.4%, an expansion of 90 basis points, with enterprise initiatives contributing 140 basis points[5] - Free cash flow increased by 15% to $904 million, with a conversion rate of 110% to net income[5] - The net income for Q3 2025 was $821 million, down from $1,160 million in Q3 2024, reflecting a decrease in earnings per share due to amortization expenses[22] - Net income for the twelve months ended December 31, 2024, was $3,488 million, with an operating income after taxes of $3,246 million[26] - Adjusted net income per share for the twelve months ended December 31, 2024, was $10.15, after accounting for the impact of the sale of noncontrolling interest in Wilsonart[30] - The company reported a net income of $2,738 million for the nine months ended September 30, 2024[28] Guidance and Projections - The company is narrowing its full year 2025 GAAP EPS guidance range to $10.40 to $10.50 per share[6] - Projected overall revenue growth for 2025 is 1% to 3%, incorporating organic growth of flat to 2%[6] - Operating margin for 2025 is projected to be in the range of 26% to 27%, with a contribution of 125 basis points or more from enterprise initiatives[6] - The company plans to repurchase approximately $1.5 billion of its own shares in 2025[6] Tax and Cash Flow - The effective tax rate for the quarter was 21.8%[5] - The company reported a net discrete tax benefit of $27 million for Q3 2025, impacting the effective tax rate to 21.8%[23] - The effective tax rate for the nine months ended September 30, 2025, was 24.3%, consistent with the previous year[23] - The effective tax rate for the year ended December 31, 2024, was 23.8%, adjusted for a net discrete tax benefit of $121 million related to the third quarter[26] - Free cash flow for the twelve months ended December 31, 2024, was $2,844 million, with a free cash flow to net income conversion rate of 82%[28] - The net cash provided by operating activities to net income conversion rate was 94% for the twelve months ended December 31, 2024[28] - The company reported a net cash provided by operating activities of $3,281 million for the twelve months ended December 31, 2024[28] Segment Performance - Q3 2025 operating revenue increased by 7.3% in Automotive OEM, while Food Equipment saw a 2.5% increase, and Test & Measurement grew by 3.3%[19] - The total operating margin for Q3 2025 was 27.4%, with Automotive OEM at 21.8% and Food Equipment at 29.2%[19] - Year-to-date (YTD) 2025 operating revenue for Automotive OEM grew by 2.4%, while Food Equipment increased by 1.3%, but Test & Measurement declined by 1.6%[21] - The total operating margin change for YTD 2025 was a decrease of 80 basis points, with significant impacts from restructuring and other costs[21] - The company experienced a 2.0% organic revenue growth in Automotive OEM for YTD 2025, while Polymers & Fluids saw a decline of 5.6%[21] Investment and Capital - The average invested capital for the nine months ended September 30, 2025, was $10,863 million, with a return on invested capital of 29.1%[22] - Average invested capital was $10,419 million, resulting in a net income to average invested capital ratio of 33.5% and an after-tax return on average invested capital of 31.2%[26] - Total invested capital as of December 31, 2024, was $10,232 million[26]