• ITW Reports Fourth Quarter and Full Year 2024 Results

    ソース: Nasdaq GlobeNewswire / 05 2 2025 08:00:01   America/New_York

    Fourth Quarter 2024 Highlights

    • Revenue of $3.9 billion, a decrease of 1.3% as organic growth declined 0.5%; Organic growth of 0.4% turned positive excluding Product Line Simplification (PLS) reduction of 0.9%
    • Record operating margin of 26.2%, an increase of 140 bps as enterprise initiatives contributed 120 bps
    • Operating cash flow of $1.1B; record free cash flow of $1B, an increase of 10% with a conversion of 133%
    • GAAP EPS of $2.54, an increase of 7%

    2024 Highlights

    • Revenue of $15.9 billion, a decrease of 1.3% as organic growth declined 0.7% in markets that were down low to mid-single digits
    • Record operating margin of 26.8% as enterprise initiatives contributed 130 bps
    • Record GAAP EPS of $11.71, an increase of 20%

    2025 Guidance

    • Above-market organic growth of 0 to 2% based on current levels of demand; Organic growth of 1 to 3% excluding PLS reduction of approximately 1%-point
    • Enterprise initiatives contributing approximately 100 bps to margin improvement
    • GAAP EPS of $10.15 to $10.55 including foreign currency translation headwind of $0.30

    GLENVIEW, Ill., Feb. 05, 2025 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its fourth quarter and full year 2024 results and initiated guidance for full year 2025.

    “ITW delivered a solid finish to the year as we outperformed underlying end markets, expanded operating margin by 140 basis points, generated record free cash flow, and delivered seven percent earnings per share growth in the fourth quarter,” said Christopher A. O’Herlihy, President and Chief Executive Officer.

    “Throughout 2024, the ITW team delivered a year of solid operational and financial performance, achieving record financial results by consistently exceeding market growth and significantly improving profitability and margins. Building on this momentum, we will continue to outperform our key end markets in 2025 as we build above-market organic growth, driven by continuous improvement in Customer-Back Innovation, into a core ITW strength. I extend my sincere gratitude to our global colleagues for their unwavering dedication to serving our customers and executing our strategy with excellence,” O’Herlihy concluded.

    Fourth Quarter 2024 Results

    Fourth quarter revenue of $3.9 billion decreased by 1.3 percent as organic revenue declined 0.5 percent. Organic revenue growth was positive 0.4 percent adjusted for PLS reduction of 0.9 percent. Foreign currency translation reduced revenue by one percent and acquisitions added 0.2 percent.

    GAAP EPS of $2.54 increased seven percent. Operating margin of 26.2 percent increased 140 basis points as enterprise initiatives contributed 120 basis points. Operating cash flow was $1.1 billion, and free cash flow grew 10 percent to $1.0 billion, with a conversion of 133 percent to net income. During the quarter, the company repurchased $375 million of its own shares and the effective tax rate was 23.7 percent.

    Full Year 2024 Results

    Full year revenue of $15.9 billion declined 1.3 percent as organic revenue declined 0.7 percent. Organic revenue growth was essentially flat adjusted for PLS reduction of 0.6 percent. Foreign currency translation reduced revenue by 0.7 percent and acquisitions contributed 0.1 percent to revenues.

    GAAP EPS of $11.71 included two previously disclosed favorable one-time items; $0.30 from a LIFO inventory accounting change in the first quarter, and $1.26 from the sale of the Company’s equity interest in Wilsonart in the third quarter. Excluding these items, EPS was $10.15.

    Operating income of $4.3 billion grew six percent, and operating margin increased 170 basis points to 26.8 percent with enterprise initiatives contributing 130 basis points. Excluding 70 basis points of favorable impact from the above-mentioned LIFO inventory accounting change, operating margin increased 100 basis points to 26.1 percent. Six of seven segments expanded margins in 2024 with two segments achieving margins above 30 percent.

    Operating cash flow was $3.3 billion and free cash flow was $2.8 billion, with a conversion of 94 percent to adjusted net income. The company invested approximately $0.8 billion to support the long-term profitable growth of its businesses and returned $3.2 billion to shareholders through dividends and share repurchases. The effective tax rate was 21.1 percent.

    2025 Guidance

    The company is initiating 2025 guidance including GAAP EPS in the range of $10.15 to $10.55 per share which includes a foreign currency translation headwind of $0.30. The company projects above-market organic growth of zero to two percent based on current levels of demand, including an expected PLS reduction of approximately one percentage point. Organic revenue growth is projected to be one to three percent adjusted for the above-mentioned PLS. Based on current foreign exchange rates, foreign currency translation is expected to reduce revenue by three percent, resulting in a projected total revenue decline of one to three percent.

    Operating margin is projected to be in the range of 26.5 to 27.5 percent, an improvement of approximately 100 basis points excluding the above-mentioned 2024 LIFO inventory accounting change, with enterprise initiatives contributing approximately 100 basis points.

    Free cash flow is projected to be greater than 100 percent of net income, and the company plans to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is 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 adjusted 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 and specialty material inflation and fluctuating 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, restructuring expenses and related benefits, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates and the impact of foreign currency translation, expected access to liquidity sources, expected capital allocation, 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 2025 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 $15.9 billion in 2024. 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 44,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com

    Investor Relations & Media Contact:
    Erin Linnihan
    Tel: 224.661.7431
    investorrelations@itw.com | mediarelations@itw.com

     
    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    STATEMENT OF INCOME (UNAUDITED)
     
     Three Months Ended Twelve Months Ended
     December 31, December 31,
    In millions except per share amounts 2024   2023   2024   2023 
    Operating Revenue$3,932  $3,983  $15,898  $16,107 
    Cost of revenue 2,221   2,312   8,858   9,316 
    Selling, administrative, and research and development expenses 655   658   2,675   2,638 
    Amortization and impairment of intangible assets 25   25   101   113 
    Operating Income 1,031   988   4,264   4,040 
    Interest expense (68)  (70)  (283)  (266)
    Other income (expense) 20   9   441   49 
    Income Before Taxes 983   927   4,422   3,823 
    Income taxes 233   210   934   866 
    Net Income$750  $717  $3,488  $2,957 
            
    Net Income Per Share:       
    Basic$2.55  $2.39  $11.75  $9.77 
    Diluted$2.54  $2.38  $11.71  $9.74 
            
    Cash Dividends Per Share:       
    Paid$1.50  $1.40  $5.70  $5.33 
    Declared$1.50  $1.40  $5.80  $5.42 
            
    Shares of Common Stock Outstanding During the Period:       
    Average 294.7   300.1   296.8   302.6 
    Average assuming dilution 295.8   301.1   297.8   303.6 
                    


     
    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    STATEMENT OF FINANCIAL POSITION (UNAUDITED)
     
    In millionsDecember 31, 2024 December 31, 2023
    Assets   
    Current Assets:   
    Cash and equivalents$948  $1,065 
    Trade receivables 2,991   3,123 
    Inventories 1,605   1,707 
    Prepaid expenses and other current assets 312   340 
    Total current assets 5,856   6,235 
        
    Net plant and equipment 2,036   1,976 
    Goodwill 4,839   4,909 
    Intangible assets 592   657 
    Deferred income taxes 369   479 
    Other assets 1,375   1,262 
     $15,067  $15,518 
        
    Liabilities and Stockholders' Equity   
    Current Liabilities:   
    Short-term debt$1,555  $1,825 
    Accounts payable 519   581 
    Accrued expenses 1,576   1,663 
    Cash dividends payable 441   419 
    Income taxes payable 217   187 
    Total current liabilities 4,308   4,675 
        
    Noncurrent Liabilities:   
    Long-term debt 6,308   6,339 
    Deferred income taxes 119   326 
    Noncurrent income taxes payable —   151 
    Other liabilities 1,015   1,014 
    Total noncurrent liabilities 7,442   7,830 
        
    Stockholders' Equity:   
    Common stock 6   6 
    Additional paid-in-capital 1,669   1,588 
    Retained earnings 28,893   27,122 
    Common stock held in treasury (25,375)  (23,870)
    Accumulated other comprehensive income (loss) (1,877)  (1,834)
    Noncontrolling interest 1   1 
    Total stockholders' equity 3,317   3,013 
     $15,067  $15,518 
            


     
    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    SEGMENT DATA (UNAUDITED)
     


    Three Months Ended December 31, 2024
    Dollars in millionsTotal RevenueOperating IncomeOperating Margin
    Automotive OEM$785 $156 19.8%
    Food Equipment 672  182 27.2%
    Test & Measurement and Electronics 747  202 27.0%
    Welding 447  139 31.2%
    Polymers & Fluids 430  120 27.9%
    Construction Products 438  123 28.0%
    Specialty Products 416  118 28.4%
    Intersegment (3) — —%
    Total Segments 3,932  1,040 26.5%
    Unallocated —  (9)—%
    Total Company$3,932 $1,031 26.2%


    Twelve Months Ended December 31, 2024
    Dollars in millionsTotal RevenueOperating IncomeOperating Margin
    Automotive OEM$3,188 $62519.6%
    Food Equipment 2,647  71927.2%
    Test & Measurement and Electronics 2,818  70324.9%
    Welding 1,851  59732.3%
    Polymers & Fluids 1,764  48427.4%
    Construction Products 1,909  55929.3%
    Specialty Products 1,743  52830.3%
    Intersegment (22) ——%
    Total Segments 15,898  4,21526.5%
    Unallocated —  49—%
    Total Company$15,898 $4,26426.8%


     
    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    SEGMENT DATA (UNAUDITED)
     


    Q4 2024 vs. Q4 2023 Favorable/(Unfavorable)
    Operating RevenueAutomotive OEM Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW 
    Organic(2.3)%3.4 %1.7 %(0.4)%0.8 %(4.5)%(3.6)%(0.5)%
    Acquisitions/
    Divestitures    		— %— %0.9 %— %— %— %— %0.2 %
    Translation(1.4)%(0.7)%(0.4)%(0.6)%(3.2)%(0.2)%(1.0)%(1.0)%
    Operating Revenue(3.7)%2.7 %2.2 %(1.0)%(2.4)%(4.7)%(4.6)%(1.3)%


    Q4 2024 vs. Q4 2023 Favorable/(Unfavorable)
    Change in Operating MarginAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
    Operating Leverage(50) bps70 bps50 bps(10) bps20 bps(100) bps(70) bps(10) bps
    Changes in Variable Margin & OH Costs140 bps(60) bps160 bps150 bps(60) bps200 bps260 bps130 bps
    Total Organic90 bps10 bps210 bps140 bps(40) bps100 bps190 bps120 bps
    Acquisitions/
    Divestitures    		——(50) bps————(10) bps
    Restructuring/Other130 bps10 bps10 bps20 bps(20) bps10 bps(10) bps30 bps
    Total Operating Margin Change220 bps20 bps170 bps160 bps(60) bps110 bps180 bps140 bps
             
    Total Operating Margin % *19.8%27.2%27.0%31.2%27.9%28.0%28.4%26.2%
             
    * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 30 bps 50 bps 160 bps 10 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 fourth quarter of 2024.


     
    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    SEGMENT DATA (UNAUDITED)
     


    Full Year 2024 vs Full Year 2023 Favorable/(Unfavorable)
    Operating RevenueAutomotive OEM  Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW 
    Organic(0.4)%1.1 %(1.0)%(2.4)%0.9 %(6.1)%3.5 %(0.7)%
    Acquisitions/
    Divestitures    		— %— %0.9 %— %— %— %(0.6)%0.1 %
    Translation(1.1)%(0.1)%(0.4)%(0.3)%(3.1)%— %(0.2) %(0.7)%
    Operating Revenue(1.5)%1.0 %(0.5) %(2.7) %(2.2) %(6.1)%2.7 %(1.3) %


    Full Year 2024 vs Full Year 2023 Favorable/(Unfavorable)
    Change in Operating MarginAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
    Operating Leverage(10) bps20 bps(20) bps(40) bps20 bps(110) bps70 bps(20) bps
    Changes in Variable Margin & OH Costs190 bps(10) bps150 bps80 bps60 bps220 bps280 bps190 bps
    Total Organic180 bps10 bps130 bps40 bps80 bps110 bps350 bps170 bps
    Acquisitions/
    Divestitures    		——(50) bps———10 bps(10) bps
    Restructuring/Other50 bps(10) bps(10) bps10 bps(10) bps(20) bps20 bps10 bps
    Total Operating Margin Change230 bps—70 bps50 bps70 bps90 bps380 bps170 bps
             
    Total Operating Margin % *19.6%27.2%24.9%32.3%27.4%29.3%30.3%26.8%
             
    * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 30 bps 40 bps 180 bps 10 bps 160 bps 10 bps 20 bps 70 bps **
    ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.26) on GAAP earnings per share for 2024.


     
    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
     
    AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
        
     Three Months Ended Twelve Months Ended
     December 31, December 31,
    Dollars in millions 2024   2023   2024   2023 
    Numerator:       
    Net income$750  $717  $3,488  $2,957 
    Net discrete tax benefit related to the third quarter 2024 —   —   (121)  — 
    Discrete tax benefit related to the second quarter 2023 —   —   —   (20)
    Interest expense, net of tax (1) 51   54   215   204 
    Other (income) expense, net of tax (1) (16)  (7)  (336)  (38)
    Operating income after taxes$785  $764  $3,246  $3,103 
            
    Denominator:       
    Invested capital:       
    Cash and equivalents$948  $1,065  $948  $1,065 
    Trade receivables 2,991   3,123   2,991   3,123 
    Inventories 1,605   1,707   1,605   1,707 
    Net plant and equipment 2,036   1,976   2,036   1,976 
    Goodwill and intangible assets 5,431   5,566   5,431   5,566 
    Accounts payable and accrued expenses (2,095)  (2,244)  (2,095)  (2,244)
    Debt (7,863)  (8,164)  (7,863)  (8,164)
    Other, net 264   (16)  264   (16)
    Total net assets (stockholders' equity) 3,317   3,013   3,317   3,013 
    Cash and equivalents (948)  (1,065)  (948)  (1,065)
    Debt 7,863   8,164   7,863   8,164 
    Total invested capital$10,232  $10,112  $10,232  $10,112 
            
    Average invested capital (2)$10,511  $10,096  $10,419  $10,214 
            
    Net income to average invested capital (3) 28.6%  28.4%  33.5%  29.0%
    After-tax return on average invested capital (3) 29.9%  30.3%  31.2%  30.4%
     

    (1) Effective tax rate used for interest expense and other (income) expense for the three months ended December 31, 2024 and 2023 was 23.7% and 22.6%, respectively, and 23.8% and 23.2% for the twelve months ended December 31, 2024 and 2023, 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 December 31, 2024 and 2023 were converted to an annual rate by multiplying the calculated return by 4.

    A reconciliation of the 2024 effective tax rate excluding the third quarter 2024 net discrete tax benefit of $121 million, which included favorable discrete tax benefits of $107 million related to the utilization of capital loss carryforwards upon the sale of Wilsonart and $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, is as follows:

      
     Twelve Months Ended
     December 31, 2024
    Dollars in millionsIncome Taxes Tax Rate
    As reported$934 21.1%
    Net discrete tax benefit related to the third quarter 2024 121 2.7%
    As adjusted$1,055 23.8%
          

    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 millionsIncome 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 Twelve Months Ended
     December 31, December 31,
    Dollars in millions 2024   2023   2024   2023 
    Net cash provided by operating activities$1,114  $1,039  $3,281  $3,539 
    Less: Additions to plant and equipment (118)  (131)  (437)  (455)
    Free cash flow$996  $908  $2,844  $3,084 
            
    Net income$750  $717  $3,488  $2,957 
            
    Net cash provided by operating activities to net income conversion rate 149%  145%  94%  120%
    Free cash flow to net income conversion rate 133%  127%  82%(1) 104%
     

    (1) Excluding the impact of 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), the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes, and a discrete tax benefit of $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, the free cash flow to net income conversion rate would have been 94% for the twelve months ended December 31, 2024.

       
     Three Months Ended 
     March 31, June 30, September 30, 
    Dollars in millions 2024   2024   2024  
    Net cash provided by operating activities$589  $687  $891  
    Less: Additions to plant and equipment (95)  (116)  (108) 
    Free cash flow$494  $571  $783  
           
    Net income$819  $759  $1,160  
           
    Net cash provided by operating activities to net income conversion rate 72%  91%  77% 
    Free cash flow to net income conversion rate 60%(1) 75%  68%(2)
                   

    (1) Excluding the impact of 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), the free cash flow to net income conversion rate would have been 68% for the three months ended March 31, 2024.

    (2) Excluding the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes, and a discrete tax benefit of $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, the free cash flow to net income conversion rate would have been 102% for the three months ended September 30, 2024.

      
    ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED)
      
     Twelve Months Ended
     December 31, 2024
    As reported$11.71 
    Impact of sale of noncontrolling interest in Wilsonart (1) (1.26)
    Cumulative effect of change in inventory accounting method, net of tax (2) (0.30)
    As adjusted$10.15 
        

    (1) Includes the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes.

    (2) Represents 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).


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