ITW(US:ITW)2025-10-24 20:15Financial Performance - Operating revenue for Q3 2025 was $4.059 billion, a 2.3% increase from $3.966 billion in Q3 2024[105] - Operating income for Q3 2025 was $1,112 million, reflecting a 5.7% increase compared to $1,052 million in Q3 2024[108] - Year-to-date operating revenue for 2025 was $11,951 million, a slight decline of 0.1% from $11,966 million in 2024[108] - Year-to-date operating income decreased by 3.2% to $3,131 million from $3,233 million in 2024[108] - Net income for Q3 2025 was $821 million, a decrease of 29.2% from $1,160 million in Q3 2024; year-to-date net income for 2025 was $2,276 million, down from $2,738 million in 2024[144] Revenue Segmentation - Organic revenue increased by 0.7% in Q3 2025, driven by growth in Automotive OEM, Welding, Specialty Products, and Food Equipment segments[108] - North American organic revenue was flat in Q3 2025, with a 1.7% decline year-to-date[108] - Asia Pacific organic revenue increased by 6.7% in Q3 2025, primarily due to growth in the Automotive OEM segment[108] - Automotive OEM segment operating revenue for Q3 2025 was $830 million, a 7.3% increase from $772 million in Q3 2024[111] - Food Equipment segment operating revenue for Q3 2025 was $694 million, a 2.5% increase from $677 million in Q3 2024[112] - Test & Measurement and Electronics segment operating revenue for Q3 2025 was $698 million, a slight increase of 0.3% from $697 million in Q3 2024[115] - Organic revenue for the Polymers & Fluids segment declined by 3.1% in Q3 2025, with a notable decrease in demand in Europe and North America[128] Expenses and Margins - Cost of revenue for Q3 2025 was $2.253 billion, representing 55.5% of operating revenue, down from 56.2% in Q3 2024[105] - Selling, administrative, and research and development expenses were $676 million in Q3 2025, flat as a percentage of operating revenue compared to Q3 2024[106] - Operating margin for the Food Equipment segment improved to 29.2% in Q3 2025, up 80 basis points from 28.4% in Q3 2024[112] - Operating margin for the Test & Measurement and Electronics segment was 25.4% in Q3 2025, down 30 basis points from 25.7% in Q3 2024[115] - Operating margin improved to 31.6% in Q3, up 140 basis points, driven by enterprise initiatives despite higher employee-related expenses[132] Tax and Earnings - The effective tax rate for Q3 2025 was 21.8%, up from 14.9% in Q3 2024, influenced by discrete tax benefits and expenses[110] - Diluted earnings per share (EPS) for Q3 2025 was $2.81, a decrease of 28.1%, or an increase of 6.0% excluding the impact of the Wilsonart transaction[110] - After-tax ROIC for Q3 2025 was 29.8%, compared to 30.0% in Q3 2024, while year-to-date After-tax ROIC for 2025 was 29.1%, down from 31.3% in 2024[144] Cash Flow and Capital Management - Free cash flow for Q3 was $904 million, up from $783 million in the prior year, while year-to-date free cash flow was $1,849 million[142] - The company maintained $924 million in cash and equivalents as of September 30, 2025, with no outstanding borrowings under its $3.0 billion revolving credit facility[139] - Common stock repurchases amounted to $1,125 million during the same period, indicating a significant return of capital to shareholders[155] - Dividends declared totaled $1,344 million, further impacting the reduction in stockholders' equity[155] Acquisitions and Investments - The company completed two acquisitions in the Test & Measurement and Electronics segment for a total of $116 million in early 2024[98] - The Company completed an acquisition in the Test & Measurement and Electronics segment for $59 million on April 1, 2024[118] Innovation and Strategy - The company aims to achieve high-quality organic growth through customer-back innovation, focusing on key customer relationships[90] - The company has approximately 20,900 granted and pending patents, reflecting its commitment to innovation[86] - The strategic sourcing initiative has delivered an average of 1% reduction in spend each year since 2013[95] - The company is focused on enterprise strategy initiatives, although their effectiveness on organic revenue growth remains uncertain[157] Risks and Challenges - The company anticipates potential impacts from global supply chain challenges and U.S. trade policy on future performance[156] - Risks include fluctuations in foreign currency, which could adversely affect financial results[157] - There are ongoing considerations regarding the introduction of new products and the protection of intellectual property, which are critical for future growth[157] - The company has not reported any material changes to market risk exposures since the 2024 Annual Report[160]