ITW(US:ITW) ZACKSยท2024-10-30 17:01Core Viewpoint - Illinois Tool Works Inc. (ITW) reported third-quarter 2024 adjusted earnings of $2.65 per share, exceeding the Zacks Consensus Estimate of $2.53, with a year-over-year increase of 4% [1]. Financial Performance - Revenues for ITW were $3.97 billion, falling short of the consensus estimate of $4.01 billion, representing a 1.6% decline year over year due to a 1.4% decrease in organic sales [2]. - The revenue from the Test & Measurement and Electronics segment decreased by 0.2% year over year to $697 million, slightly above the estimate of $696.5 million [3]. - Automotive Original Equipment Manufacturer revenues dropped 3.3% year over year to $772 million, below the estimate of $813.8 million [3]. - Food Equipment revenues were $677 million, down 0.2% year over year, also missing the estimate of $700.2 million [4]. - Welding revenues decreased by 1.3% year over year to $462 million, slightly above the estimate of $452.9 million [4]. - Construction Products revenues fell 8.1% year over year to $479 million, below the estimate of $510.1 million [5]. - Specialty Products revenues increased by 5.7% year over year to $438 million, exceeding the estimate of $417.5 million [5]. - Polymers & Fluids revenues declined by 1.9% year over year to $448 million, below the estimate of $463.6 million [5]. Margin Profile - ITW's cost of sales decreased by 3.8% year over year to $2.23 billion, while selling, administrative, and research and development expenses increased by 7% year over year to $658 million [6]. - The operating margin remained stable at 26.5%, with enterprise initiatives contributing 130 basis points to the operating margin [6]. Balance Sheet and Cash Flow - At the end of the third quarter, ITW had cash and equivalents of $947 million, down from $1.1 billion at the end of December 2023, and long-term debt increased to $6.6 billion from $6.3 billion [7]. - In the first nine months of 2024, ITW generated net cash of $2.2 billion from operating activities, reflecting a decline of 13.3% year over year [8]. - Capital spending on plant and equipment was $319 million, down 1.5% year over year, and free cash flow decreased by 15.1% year over year to $1.85 billion [8]. 2024 Guidance - ITW expects earnings to be in the range of $11.63-$11.73 per share, an increase from the earlier guidance of $10.30-$10.40 [9]. - Total revenues and organic revenues are anticipated to be flat, with an expected operating margin between 26.5% and 27% [9]. - Enterprise initiatives are projected to contribute more than 100 basis points to the operating margin [9]. - The company plans to repurchase approximately $1.5 billion worth of shares and expects free cash flow to be about 100% of net income [10].