ITW(US:ITW)2026-02-03 14:48Financial Performance - Fourth quarter revenue reached $4.1 billion, an increase of 4.1%, with organic revenue growth of 1.3%[6] - GAAP EPS for the fourth quarter was $2.72, reflecting a 7% increase, while full year GAAP EPS was $10.49, exceeding the prior guidance midpoint of $10.45[7][9] - Full year revenue totaled $16 billion, a 0.9% increase, with organic revenue growth flat[8] - Q4 2025 operating revenue increased by 4.1% compared to Q4 2024, with organic growth of 1.3% and a translation impact of 2.5%[25] - Full Year 2025 operating revenue grew by 0.9% compared to Full Year 2024, with organic growth of 0% and a translation impact of 0.8%[27] - Net income for Q4 2025 was $790 million, up from $750 million in Q4 2024, while full year net income decreased to $3,066 million from $3,488 million in 2024[28] - Adjusted net income per share for the twelve months ended December 31, 2024, was reported at $10.15 after accounting for specific adjustments[33] Operating Margin - Operating margin for the fourth quarter was 26.5%, up 30 basis points, with enterprise initiatives contributing 140 basis points[7] - The total operating margin for Q4 2025 was 26.5%, reflecting a 30 basis points increase from the previous year, despite an unfavorable impact of 50 basis points from amortization expenses related to acquisition-related intangible assets[25] - The total operating margin for Full Year 2025 was 26.3%, which includes a 50 basis points unfavorable impact from amortization expenses related to acquisition-related intangible assets[27] - Operating margin for 2026 is expected to be in the range of 26.5% to 27.5%, with enterprise initiatives contributing 100 basis points[13] - All seven segments are anticipated to deliver positive organic growth and operating margin expansion in 2026[14] - Operating leverage improved in several segments, with Automotive OEM and Measurement & Electronics both seeing a 40 basis points increase in operating margin[25] Cash Flow and Investments - Free cash flow is projected to exceed 100% of net income, with plans to repurchase approximately $1.5 billion of shares[14] - Net cash provided by operating activities for Q4 2025 was $963 million, compared to $1,114 million in Q4 2024, reflecting a decrease of 13.5%[31] - Free cash flow for the twelve months ended December 31, 2025, was $2,707 million, down from $2,844 million in 2024, indicating a decline of 4.8%[31] - The net cash provided by operating activities to net income conversion rate improved to 122% in Q4 2025, compared to 149% in Q4 2024[31] - The free cash flow to net income conversion rate was 109% for Q4 2025, down from 133% in Q4 2024[31] - The average invested capital for the twelve months ended December 31, 2025, was $10,959 million, with a return on average invested capital of 29.3%[28] - The company reported a total invested capital of $11,344 million as of December 31, 2025, compared to $10,232 million in 2024[28] Tax and Projections - The effective tax rate for 2026 is projected to be between 23.5% and 24.5%[14] - The effective tax rate for the twelve months ended December 31, 2025, was reported at 22.7%, adjusted to 23.9% after accounting for discrete tax benefits[29] Revenue Growth Initiatives - Customer-Back Innovation initiatives contributed 2.4% to revenue growth in 2025, enhancing overall performance[5][11] - The company projects 2026 revenue growth of 2% to 4% and organic growth of 1% to 3%[12] Nonrecurring Items - The impact of the sale of noncontrolling interest in Wilsonart reduced the reported net income per share by $1.26[33] - A cumulative effect of change in inventory accounting method resulted in a reduction of $0.30 in net income per share, net of tax[33] - The pre-tax gain on the sale of noncontrolling interest in Wilsonart was $363 million, contributing to the adjusted net income[33] - The change from LIFO to FIFO accounting method for certain U.S. businesses had a pre-tax impact of $117 million[33]