Illinois Tool Works Inc. (NYSE: ITW) today reported its second
quarter 2024 results and updated guidance for full-year 2024.
“While the demand environment continued to
moderate across our portfolio, we delivered a solid quarter with
strong operational execution and profitability,” said Christopher
A. O’Herlihy, President and Chief Executive Officer. “Our ability
to overcome near-term macro challenges and expand our margin and
profitability to record levels as evidenced by margin improvement
of 140 basis points to 26.2 percent and EPS growth of more than
five percent, is a direct result of the focused execution by our
team of dedicated ITW professionals around the world.”
“Looking ahead, we are lowering the top-end of
our full year GAAP EPS guidance to reflect current levels of demand
partially offset by better margin performance. We remain focused on
managing and investing for the long-term as we build above-market
organic growth, fueled by customer-back innovation, into a core ITW
strength,” O’Herlihy concluded.
Second Quarter 2024
ResultsSecond quarter revenue of $4.0 billion declined by
1.2 percent as organic growth declined 0.1 percent. Foreign
currency translation impact reduced revenue by 1.2 percent and
acquisitions added 0.1 percent.
GAAP EPS increased 2.4 percent to $2.54 and
excluding a one-time tax item in 2023, EPS increased 5.4 percent.
Operating income increased 4.5 percent to $1.05 billion, a second
quarter record. Operating margin improved 140 basis points to 26.2
percent, a second quarter record, as enterprise initiatives
contributed 140 basis points. Operating cash flow was $687 million,
and free cash flow was $571 million with a conversion of 75 percent
to net income. During the quarter, the company repurchased $375
million of its own shares and the effective tax rate was 24.4
percent.
2024 GuidanceITW is lowering
the top-end of its full year GAAP EPS guidance range of $10.30 to
$10.70 per share to a narrower range of $10.30 to $10.40 per share,
an increase of six percent compared to the prior year at the
midpoint. Based on current levels of demand and foreign currency
exchange rates exiting the second quarter, the company is
projecting revenue growth and organic growth to be approximately
flat for 2024. ITW is raising its operating margin guidance from 26
to 27 percent to a narrower range of 26.5 to 27 percent, an
increase of 165 bps at the midpoint with enterprise initiatives
projected to contribute more than 100 basis points. Free cash flow
is expected to exceed 100 percent of net income and the company
plans to repurchase approximately $1.5 billion of its own shares.
The projected effective tax rate remains unchanged in the range of
24 to 24.5 percent.
Non-GAAP Measures This earnings
release contains certain non-GAAP financial measures. A
reconciliation of these measures to the most directly comparable
GAAP measures is included in the attached supplemental
reconciliation schedule. The estimated guidance of free cash flow
to net income conversion rate is based on assumptions that are
difficult to predict, and estimated guidance for the most directly
comparable GAAP measure and a reconciliation of this
forward-looking estimate to its most directly comparable GAAP
estimate have been omitted due to the unreasonable efforts required
in connection with such a reconciliation and the lack of reliable
forward-looking cash flow information. For the same reasons, the
company is unable to address the potential significance of the
unavailable information, which could be material to future
results.
Forward-looking Statements
This earnings release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements may include, without
limitation, statements regarding global supply chain challenges,
expected impact of inflation including raw material inflation and
rising interest rates, the impact of enterprise initiatives, future
financial and operating performance, free cash flow and free cash
flow to net income conversion rate, organic and total revenue,
operating and incremental margin, price/cost impact, statements
regarding diluted income per share, expected dividend payments,
after-tax return on invested capital, effective tax rates, exchange
rates, expected timing and amount of share repurchases, end market
economic and regulatory conditions, the impact of recent or
potential acquisitions and/or divestitures, and the Company’s 2024
guidance. These statements are subject to certain risks,
uncertainties, assumptions, and other factors, which could cause
actual results to differ materially from those anticipated.
Important risks that could cause actual results to differ
materially from the Company’s expectations include those that are
detailed in ITW’s Form 10-K for 2023 and subsequent reports filed
with the SEC.
About Illinois Tool Works
ITW (NYSE: ITW) is a Fortune 300 global
multi-industrial manufacturing leader with revenue of $16.1 billion
in 2023. The company’s seven industry-leading segments leverage the
unique ITW Business Model to drive solid growth with best-in-class
margins and returns in markets where highly innovative,
customer-focused solutions are required. ITW’s approximately 45,000
dedicated colleagues around the world thrive in the company’s
decentralized and entrepreneurial culture. www.itw.com
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSTATEMENT OF INCOME
(UNAUDITED) |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
In millions except per share amounts |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Operating Revenue |
$ |
4,027 |
|
|
$ |
4,074 |
|
|
$ |
8,000 |
|
|
$ |
8,093 |
|
|
Cost of revenue |
|
2,262 |
|
|
|
2,344 |
|
|
|
4,407 |
|
|
|
4,685 |
|
|
Selling, administrative, and research and development expenses |
|
686 |
|
|
|
690 |
|
|
|
1,362 |
|
|
|
1,365 |
|
|
Amortization and impairment of intangible assets |
|
25 |
|
|
|
30 |
|
|
|
50 |
|
|
|
61 |
|
|
Operating Income |
|
1,054 |
|
|
|
1,010 |
|
|
|
2,181 |
|
|
|
1,982 |
|
|
Interest expense |
|
(75 |
) |
|
|
(69 |
) |
|
|
(146 |
) |
|
|
(129 |
) |
|
Other income (expense) |
|
26 |
|
|
|
20 |
|
|
|
42 |
|
|
|
30 |
|
|
Income Before Taxes |
|
1,005 |
|
|
|
961 |
|
|
|
2,077 |
|
|
|
1,883 |
|
|
Income Taxes |
|
246 |
|
|
|
207 |
|
|
|
499 |
|
|
|
415 |
|
|
Net Income |
$ |
759 |
|
|
$ |
754 |
|
|
$ |
1,578 |
|
|
$ |
1,468 |
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share: |
|
|
|
|
|
|
|
|
Basic |
$ |
2.55 |
|
|
$ |
2.49 |
|
|
$ |
5.29 |
|
|
$ |
4.83 |
|
|
Diluted |
$ |
2.54 |
|
|
$ |
2.48 |
|
|
$ |
5.27 |
|
|
$ |
4.81 |
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends Per Share: |
|
|
|
|
|
|
|
|
Paid |
$ |
1.40 |
|
|
$ |
1.31 |
|
|
$ |
2.80 |
|
|
$ |
2.62 |
|
|
Declared |
$ |
1.40 |
|
|
$ |
1.31 |
|
|
$ |
2.80 |
|
|
$ |
2.62 |
|
|
|
|
|
|
|
|
|
|
|
Shares of Common Stock Outstanding During the Period: |
|
|
|
|
|
|
|
|
Average |
|
297.6 |
|
|
|
303.3 |
|
|
|
298.3 |
|
|
|
304.1 |
|
|
Average assuming dilution |
|
298.5 |
|
|
|
304.2 |
|
|
|
299.3 |
|
|
|
305.2 |
|
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSTATEMENT OF FINANCIAL POSITION
(UNAUDITED) |
|
|
|
In millions |
June 30, 2024 |
|
December 31, 2023 |
|
Assets |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and equivalents |
$ |
862 |
|
|
$ |
1,065 |
|
|
Trade receivables |
|
3,250 |
|
|
|
3,123 |
|
|
Inventories |
|
1,819 |
|
|
|
1,707 |
|
|
Prepaid expenses and other current assets |
|
325 |
|
|
|
340 |
|
|
Total current assets |
|
6,256 |
|
|
|
6,235 |
|
|
|
|
|
|
|
Net plant and equipment |
|
2,011 |
|
|
|
1,976 |
|
|
Goodwill |
|
4,910 |
|
|
|
4,909 |
|
|
Intangible assets |
|
641 |
|
|
|
657 |
|
|
Deferred income taxes |
|
448 |
|
|
|
479 |
|
|
Other assets |
|
1,311 |
|
|
|
1,262 |
|
|
|
$ |
15,577 |
|
|
$ |
15,518 |
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
Current Liabilities: |
|
|
|
|
Short-term debt |
$ |
2,044 |
|
|
$ |
1,825 |
|
|
Accounts payable |
|
576 |
|
|
|
581 |
|
|
Accrued expenses |
|
1,615 |
|
|
|
1,663 |
|
|
Cash dividends payable |
|
416 |
|
|
|
419 |
|
|
Income taxes payable |
|
153 |
|
|
|
187 |
|
|
Total current liabilities |
|
4,804 |
|
|
|
4,675 |
|
|
|
|
|
|
|
Noncurrent Liabilities: |
|
|
|
|
Long-term debt |
|
6,429 |
|
|
|
6,339 |
|
|
Deferred income taxes |
|
381 |
|
|
|
326 |
|
|
Noncurrent income taxes payable |
|
— |
|
|
|
151 |
|
|
Other liabilities |
|
1,001 |
|
|
|
1,014 |
|
|
Total noncurrent liabilities |
|
7,811 |
|
|
|
7,830 |
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
Common stock |
|
6 |
|
|
|
6 |
|
|
Additional paid-in-capital |
|
1,636 |
|
|
|
1,588 |
|
|
Retained earnings |
|
27,866 |
|
|
|
27,122 |
|
|
Common stock held in treasury |
|
(24,622 |
) |
|
|
(23,870 |
) |
|
Accumulated other comprehensive income (loss) |
|
(1,925 |
) |
|
|
(1,834 |
) |
|
Noncontrolling interest |
|
1 |
|
|
|
1 |
|
|
Total stockholders' equity |
|
2,962 |
|
|
|
3,013 |
|
|
|
$ |
15,577 |
|
|
$ |
15,518 |
|
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSEGMENT DATA (UNAUDITED) |
|
|
|
Three Months Ended June 30,
2024 |
|
Dollars in millions |
Total Revenue |
Operating Income |
Operating Margin |
|
Automotive OEM |
$ |
815 |
|
$ |
157 |
|
19.4 |
% |
|
Food Equipment |
|
667 |
|
|
180 |
|
27.1 |
% |
|
Test & Measurement and Electronics |
|
678 |
|
|
159 |
|
23.5 |
% |
|
Welding |
|
466 |
|
|
153 |
|
32.9 |
% |
|
Polymers & Fluids |
|
454 |
|
|
128 |
|
28.2 |
% |
|
Construction Products |
|
504 |
|
|
148 |
|
29.4 |
% |
|
Specialty Products |
|
449 |
|
|
144 |
|
31.9 |
% |
|
Intersegment |
|
(6 |
) |
|
— |
|
— |
% |
|
Total Segments |
|
4,027 |
|
|
1,069 |
|
26.6 |
% |
|
Unallocated |
|
— |
|
|
(15 |
) |
— |
% |
|
Total Company |
$ |
4,027 |
|
$ |
1,054 |
|
26.2 |
% |
|
Six Months Ended June 30,
2024 |
|
Dollars in millions |
Total Revenue |
Operating Income |
Operating Margin |
|
Automotive OEM |
$ |
1,631 |
|
$ |
319 |
19.6 |
% |
|
Food Equipment |
|
1,298 |
|
|
344 |
26.5 |
% |
|
Test & Measurement and Electronics |
|
1,374 |
|
|
322 |
23.4 |
% |
|
Welding |
|
942 |
|
|
309 |
32.8 |
% |
|
Polymers & Fluids |
|
886 |
|
|
239 |
27.0 |
% |
|
Construction Products |
|
992 |
|
|
291 |
29.4 |
% |
|
Specialty Products |
|
889 |
|
|
274 |
30.8 |
% |
|
Intersegment |
|
(12 |
) |
|
— |
— |
% |
|
Total Segments |
|
8,000 |
|
|
2,098 |
26.2 |
% |
|
Unallocated |
|
— |
|
|
83 |
— |
% |
|
Total Company |
$ |
8,000 |
|
$ |
2,181 |
27.3 |
% |
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSEGMENT DATA (UNAUDITED) |
|
|
|
Q2 2024 vs. Q2 2023 Favorable/(Unfavorable) |
|
Operating Revenue |
Automotive OEM |
Food Equipment |
Test & Measurement and Electronics |
Welding |
Polymers & Fluids |
Construction Products |
Specialty Products |
Total ITW |
|
Organic |
0.4 |
% |
2.5 |
% |
(3.1) % |
(4.7) % |
2.6 |
% |
(3.8) % |
6.7 |
% |
(0.1) % |
|
Acquisitions/Divestitures |
— |
% |
— |
% |
0.8 |
% |
— |
% |
— |
% |
— |
% |
— |
% |
0.1 |
% |
|
Translation |
(1.7) % |
(0.4) % |
(0.9) % |
(0.3) % |
(3.9) % |
(0.5) % |
(0.5) % |
(1.2) % |
|
Operating Revenue |
(1.3) % |
2.1 |
% |
(3.2) % |
(5.0) % |
(1.3) % |
(4.3) % |
6.2 |
% |
(1.2) % |
|
Q2 2024 vs. Q2 2023 Favorable/(Unfavorable) |
|
Change in Operating Margin |
Automotive OEM |
Food Equipment |
Test & Measurement and Electronics |
Welding |
Polymers & Fluids |
Construction Products |
Specialty Products |
Total ITW |
|
Operating Leverage |
— |
|
50 bps |
(90) bps |
(70) bps |
50 bps |
(80) bps |
130 bps |
— |
|
|
Changes in Variable Margin & OH Costs |
210 bps |
(100) bps |
190 bps |
(50) bps |
130 bps |
150 bps |
390 bps |
140 bps |
|
Total Organic |
210 bps |
(50) bps |
100 bps |
(120) bps |
180 bps |
70 bps |
520 bps |
140 bps |
|
Acquisitions/Divestitures |
— |
|
— |
|
(50) bps |
— |
|
— |
|
— |
|
— |
|
(10) bps |
|
Restructuring/Other |
50 bps |
(20) bps |
(20) bps |
20 bps |
50 bps |
(60) bps |
70 bps |
10 bps |
|
Total Operating Margin Change |
260 bps |
(70) bps |
30 bps |
(100) bps |
230 bps |
10 bps |
590 bps |
140 bps |
|
|
|
|
|
|
|
|
|
|
|
Total Operating Margin % * |
19.4 |
% |
27.1 |
% |
23.5 |
% |
32.9 |
% |
28.2 |
% |
29.4 |
% |
31.9 |
% |
26.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
* Includes unfavorable operating margin impact of amortization
expense from acquisition-related intangible assets |
20 bps |
40 bps |
190 bps |
— |
|
150 bps |
10 bps |
20 bps |
70 bps ** |
|
** Amortization expense from acquisition-related intangible assets
had an unfavorable impact of ($0.06) on GAAP earnings per share for
the second quarter of 2024. |
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSEGMENT DATA (UNAUDITED) |
|
|
|
H1 2024 vs. H1 2023 Favorable/(Unfavorable) |
|
Operating Revenue |
Automotive OEM |
Food Equipment |
Test & Measurement and Electronics |
Welding |
Polymers & Fluids |
Construction Products |
Specialty Products |
Total ITW |
|
Organic |
1.9 |
% |
0.6 |
% |
(2.2) % |
(4.1) % |
0.9 |
% |
(5.4) % |
6.1 |
% |
(0.4) % |
|
Acquisitions/Divestitures |
— |
% |
— |
% |
0.8 |
% |
— |
% |
— |
% |
— |
% |
(1.1 |
)% |
— |
% |
|
Translation |
(1.3) % |
0.1 |
% |
(0.7) % |
(0.1) % |
(3.2) % |
(0.4) % |
— |
% |
(0.8) % |
|
Operating Revenue |
0.6 |
% |
0.7 |
% |
(2.1) % |
(4.2) % |
(2.3) % |
(5.8) % |
5.0 |
% |
(1.2) % |
|
H1 2024 vs. H1 2023 Favorable/(Unfavorable) |
|
Change in Operating Margin |
Automotive OEM |
Food Equipment |
Test & Measurement and Electronics |
Welding |
Polymers & Fluids |
Construction Products |
Specialty Products |
Total ITW |
|
Operating Leverage |
40 bps |
20 bps |
(60) bps |
(60) bps |
20 bps |
(90) bps |
120 bps |
(20) bps |
|
Changes in Variable Margin & OH Costs |
250 bps |
(80) bps |
80 bps |
40 bps |
130 bps |
220 bps |
300 bps |
290 bps |
|
Total Organic |
290 bps |
(60) bps |
20 bps |
(20) bps |
150 bps |
130 bps |
420 bps |
270 bps |
|
Acquisitions/Divestitures |
— |
|
— |
|
(50) bps |
— |
|
— |
|
— |
|
30 bps |
— |
|
|
Restructuring/Other |
30 bps |
(10) bps |
(10) bps |
10 bps |
30 bps |
(30) bps |
50 bps |
10 bps |
|
Total Operating Margin Change |
320 bps |
(70) bps |
(40) bps |
(10) bps |
180 bps |
100 bps |
500 bps |
280 bps |
|
|
|
|
|
|
|
|
|
|
|
Total Operating Margin % * |
19.6 |
% |
26.5 |
% |
23.4 |
% |
32.8 |
% |
27.0 |
% |
29.4 |
% |
30.8 |
% |
27.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
* Includes unfavorable operating margin impact of amortization
expense from acquisition-related intangible assets |
30 bps |
50 bps |
190 bps |
— |
|
150 bps |
10 bps |
20 bps |
70 bps ** |
|
** Amortization expense from acquisition-related intangible assets
had an unfavorable impact of ($0.13) on GAAP earnings per share for
the first half of 2024. |
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESGAAP to NON-GAAP RECONCILIATIONS
(UNAUDITED)AFTER-TAX RETURN ON AVERAGE INVESTED
CAPITAL (UNAUDITED) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
Dollars in millions |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Numerator: |
|
|
|
|
|
|
|
|
Net Income |
$ |
759 |
|
|
$ |
754 |
|
|
$ |
1,578 |
|
|
$ |
1,468 |
|
|
Discrete tax benefit related to the second quarter 2023 |
|
— |
|
|
|
(20 |
) |
|
|
— |
|
|
|
(20 |
) |
|
Interest expense, net of tax (1) |
|
57 |
|
|
|
53 |
|
|
|
111 |
|
|
|
99 |
|
|
Other (income) expense, net of tax (1) |
|
(20 |
) |
|
|
(15 |
) |
|
|
(32 |
) |
|
|
(23 |
) |
|
Operating income after taxes |
$ |
796 |
|
|
$ |
772 |
|
|
$ |
1,657 |
|
|
$ |
1,524 |
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
Invested capital: |
|
|
|
|
|
|
|
|
Cash and equivalents |
$ |
862 |
|
|
$ |
922 |
|
|
$ |
862 |
|
|
$ |
922 |
|
|
Trade receivables |
|
3,250 |
|
|
|
3,216 |
|
|
|
3,250 |
|
|
|
3,216 |
|
|
Inventories |
|
1,819 |
|
|
|
1,921 |
|
|
|
1,819 |
|
|
|
1,921 |
|
|
Net plant and equipment |
|
2,011 |
|
|
|
1,901 |
|
|
|
2,011 |
|
|
|
1,901 |
|
|
Goodwill and intangible assets |
|
5,551 |
|
|
|
5,595 |
|
|
|
5,551 |
|
|
|
5,595 |
|
|
Accounts payable and accrued expenses |
|
(2,191 |
) |
|
|
(2,215 |
) |
|
|
(2,191 |
) |
|
|
(2,215 |
) |
|
Debt |
|
(8,473 |
) |
|
|
(8,222 |
) |
|
|
(8,473 |
) |
|
|
(8,222 |
) |
|
Other, net |
|
133 |
|
|
|
(24 |
) |
|
|
133 |
|
|
|
(24 |
) |
|
Total net assets (stockholders' equity) |
|
2,962 |
|
|
|
3,094 |
|
|
|
2,962 |
|
|
|
3,094 |
|
|
Cash and equivalents |
|
(862 |
) |
|
|
(922 |
) |
|
|
(862 |
) |
|
|
(922 |
) |
|
Debt |
|
8,473 |
|
|
|
8,222 |
|
|
|
8,473 |
|
|
|
8,222 |
|
|
Total invested capital |
$ |
10,573 |
|
|
$ |
10,394 |
|
|
$ |
10,573 |
|
|
$ |
10,394 |
|
|
|
|
|
|
|
|
|
|
|
Average invested capital (2) |
$ |
10,480 |
|
|
$ |
10,366 |
|
|
$ |
10,357 |
|
|
$ |
10,292 |
|
|
|
|
|
|
|
|
|
|
|
Net income to average invested capital (3) |
|
29.0 |
% |
|
|
29.1 |
% |
|
|
30.5 |
% |
|
|
28.5 |
% |
|
After-tax return on average invested capital (3) |
|
30.4 |
% |
|
|
29.8 |
% |
|
|
32.0 |
% |
|
|
29.6 |
% |
(1) Effective tax rate used for interest expense
and other (income) expense for the three months ended June 30,
2024 and 2023 was 24.4% and 23.6%, respectively. Effective tax rate
used for interest expense and other (income) expense for the six
months ended June 30, 2024 and 2023 was 24.0% and 23.1%,
respectively.
(2) Average invested capital is calculated using
the total invested capital balances at the start of the period and
at the end of each quarter within each of the periods
presented.
(3) Returns for the three months ended June 30,
2024 and 2023 were converted to an annual rate by multiplying the
calculated return by 4. Returns for the six months ended June 30,
2024 and 2023 were converted to an annual rate by multiplying the
calculated return by 2.After-tax ROIC for the six months ended June
30, 2024 included 170 basis points of favorable impact related to
the cumulative effect of the change from the LIFO method of
accounting to the FIFO method for certain U.S. businesses ($117
million pre-tax, or $88 million after-tax) in the first quarter of
2024.
A reconciliation of the tax rate for the three and
six months ended June 30, 2023, excluding the second quarter 2023
discrete tax benefit of $20 million related to amended 2021 U.S.
taxes, is as follows:
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2023 |
|
June 30, 2023 |
|
Dollars in millions |
Income Taxes |
|
Tax Rate |
|
Income Taxes |
|
Tax Rate |
|
As reported |
$ |
207 |
|
21.4 |
% |
|
$ |
415 |
|
22.0 |
% |
|
Discrete tax benefit related to the second quarter 2023 |
|
20 |
|
2.2 |
% |
|
|
20 |
|
1.1 |
% |
|
As adjusted |
$ |
227 |
|
23.6 |
% |
|
$ |
435 |
|
23.1 |
% |
|
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL
(UNAUDITED) |
|
|
Twelve Months Ended |
|
Dollars in millions |
December 31, 2023 |
|
Numerator: |
|
|
Net income |
$ |
2,957 |
|
|
Discrete tax benefit related to the second quarter 2023 |
|
(20 |
) |
|
Interest expense, net of tax (1) |
|
204 |
|
|
Other (income) expense, net of tax (1) |
|
(38 |
) |
|
Operating income after taxes |
$ |
3,103 |
|
|
|
|
|
Denominator: |
|
|
Invested capital: |
|
|
Cash and equivalents |
$ |
1,065 |
|
|
Trade receivables |
|
3,123 |
|
|
Inventories |
|
1,707 |
|
|
Net plant and equipment |
|
1,976 |
|
|
Goodwill and intangible assets |
|
5,566 |
|
|
Accounts payable and accrued expenses |
|
(2,244 |
) |
|
Debt |
|
(8,164 |
) |
|
Other, net |
|
(16 |
) |
|
Total net assets (stockholders' equity) |
|
3,013 |
|
|
Cash and equivalents |
|
(1,065 |
) |
|
Debt |
|
8,164 |
|
|
Total invested capital |
$ |
10,112 |
|
|
|
|
|
Average invested capital (2) |
$ |
10,214 |
|
|
|
|
|
Net income to average invested capital |
|
29.0 |
% |
|
After-tax return on average invested capital |
|
30.4 |
% |
(1) Effective tax rate used for interest expense
and other (income) expense for the year ended December 31, 2023 was
23.2%.
(2) Average invested capital is calculated using
the total invested capital balances at the start of the period and
at the end of each quarter within the period presented.
A reconciliation of the 2023 effective tax rate
excluding the second quarter 2023 discrete tax benefit of $20
million related to amended 2021 U.S. taxes is as follows:
|
|
Twelve Months Ended |
|
|
December 31, 2023 |
|
Dollars in millions |
Income Taxes |
|
Tax Rate |
|
As reported |
$ |
866 |
|
22.6 |
% |
|
Discrete tax benefit related to the second quarter 2023 |
|
20 |
|
0.6 |
% |
|
As adjusted |
$ |
886 |
|
23.2 |
% |
|
FREE CASH FLOW (UNAUDITED) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
Dollars in millions |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Net cash provided by operating activities |
$ |
687 |
|
|
$ |
790 |
|
|
$ |
1,276 |
|
|
$ |
1,518 |
|
|
Less: Additions to plant and equipment |
|
(116 |
) |
|
|
(85 |
) |
|
|
(211 |
) |
|
|
(198 |
) |
|
Free cash flow |
$ |
571 |
|
|
$ |
705 |
|
|
$ |
1,065 |
|
|
$ |
1,320 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
759 |
|
|
$ |
754 |
|
|
$ |
1,578 |
|
|
$ |
1,468 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities to net income conversion
rate |
|
91 |
% |
|
|
105 |
% |
|
|
81 |
% |
|
|
103 |
% |
|
Free cash flow to net income conversion rate |
|
75 |
% |
|
|
94 |
% |
|
|
67 |
% |
|
|
90 |
% |
|
ADJUSTED NET INCOME PER SHARE - DILUTED
(UNAUDITED) |
|
|
|
|
|
Three Months Ended |
|
|
June 30, 2023 |
|
As reported |
$ |
2.48 |
|
|
Discrete tax benefit related to the second quarter 2023 |
|
(0.07 |
) |
|
As adjusted |
$ |
2.41 |
|
Investor Relations & Media
Contact:Erin LinnihanTel: 224.661.7431
investorrelations@itw.com | mediarelations@itw.com
Illinois Tool Works (NYSE:ITW)
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Illinois Tool Works (NYSE:ITW)
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