Illinois Tool Works Reports Mixed Q2 Results and Revises EPS Guidance: Details

Illinois Tool Works Inc. ITW reported a second-quarter 2024 revenue of $4.027 billion, missing the consensus of $4.08 billion.

Revenue declined 1.2% year over year, and flat organic growth and the impact of foreign currency translation reduced revenue by 1.2%.

Revenue by segments: Automotive OEM $815 million (-1% Y/Y), Food Equipment $667 million (+2% Y/Y), Test & Measurement and Electronics $678 million (-3% Y/Y), Welding $466 million (-5% Y/Y), Polymers & Fluids $454 million (-1% Y/Y), Construction Products $504 million (-4% Y/Y) and Specialty Products $449 million (+6% Y/Y).

GAAP EPS was $2.54, up from $2.48 a year ago, beating the consensus of $2.47.

The operating income increased 4.5% YoY to $1.054 billion, and the operating margin expanded 138 bps YoY to 26.2%

ITW's operating cash flow was $687 million compared to $790 million a year ago, and free cash flow was $571 million, with a conversion rate to net income of 75%.

During the quarter, the company repurchased $375 million worth of shares.

“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," commented Christopher A. O'Herlihy, President and Chief Executive Officer.

2024 Guidance: Illinois Tool Works narrowed its GAAP EPS forecast to $10.30-$10.40 from $10.30-$10.70 versus consensus of $10.35.

The company is projecting revenue and organic growth to be approximately flat for 2024.

ITW narrows operating margin guidance to 26.5%- 27% (from 26%- 27%), up 165 bps at midpoint, with enterprise initiatives adding over 100 bps.

Free cash flow is expected to exceed 100% of net income, and the company plans to repurchase ~$1.5 billion in shares in 2024.

Price Action: ITW shares traded lower by 0.08% at $247.81 at the last check Tuesday.