ITW Reports Third Quarter 2024 Results

Core Insights - Illinois Tool Works Inc. (ITW) reported third quarter 2024 revenue of $4.0 billion, a decrease of 2% year-over-year, with organic growth declining by 1% [1][3] - The operating margin was 26.5%, with enterprise initiatives contributing 130 basis points [1][5] - GAAP EPS increased to $3.91, including a divestiture gain of $1.26; excluding this gain, EPS was $2.65, reflecting a 4% increase [1][4] - The company raised its full-year GAAP EPS guidance by $1.33 to a range of $11.63 to $11.73 per share [1][8] Financial Performance - Revenue for the third quarter was $4.0 billion, down 1.6% due to a 1.4% decline in organic growth, with foreign currency translation impacting revenue by 0.4% and acquisitions contributing 0.2% [3] - Operating income was $1.05 billion, with an operating margin of 26.5%, unchanged from the prior year; six of seven segments expanded their operating margins [5] - Operating cash flow was $891 million, and free cash flow was $783 million, with a conversion rate to adjusted net income of 102% [6] Divestiture Impact - The company completed the sale of its noncontrolling equity interest in Wilsonart, generating proceeds of $395 million and a pre-tax gain of $363 million, which positively impacted GAAP EPS by $1.26 [7][8] - The divestiture is not expected to materially affect the company's financial results in future quarters [7] Guidance and Future Outlook - ITW is maintaining its guidance for flat revenue and organic growth for 2024, with an operating margin projected between 26.5% and 27% [8] - The company plans to repurchase approximately $1.5 billion of its own shares and has raised its dividend by 7% to an annualized $6.00 per share [6][8] Segment Performance - In the third quarter, the Automotive OEM segment reported revenue of $772 million with an operating margin of 19.4%, while Food Equipment generated $677 million with a margin of 28.4% [19] - Specialty Products segment saw a revenue increase of 6.0%, while Construction Products experienced a decline of 8.8% [21]