Illinois Tool Works Q4: Revenue Declines, EPS Tops Estimates, 2025 Outlook Signals Modest Growth & More

Illinois Tool Works Inc. ITW reported fourth-quarter revenue of $3.932 billion, a decline of 1.3% year over year and missing the consensus of $3.99 billion.

Organic growth dropped 0.5% in revenue; excluding a 0.9% impact from Product Line Simplification, organic growth was positive at 0.4%.

Revenue By Segments: Automotive OEM $785 million (-4% YoY), Food Equipment $672 million (+3% YoY), Test & Measurement and Electronics $747 million (+2% YoY), Welding $447 million (-1% YoY), Polymers & Fluids $430 million (-2% YoY), Construction Products $438 million (-5% YoY) and Specialty Products $416 million (-5% YoY).

Operating income increased 4.4% year over year to $1.031 billion, and the operating margin expanded 140 bps to 26.2%. EPS for the quarter stood at $2.54, up 7% YoY, and above the consensus of $2.50.

ITW’s operating cash flow reached $1.1 billion, while free cash flow rose 10% to $1.0 billion, with a conversion of 133% to net income. The company repurchased $375 million in shares during the quarter, with an effective tax rate of 23.7%.

“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,” commented Christopher A. O’Herlihy, President and Chief Executive Officer.        

2025 Guidance: ITW expects GAAP EPS of $10.15 – $10.55 versus the consensus of $10.62. The company projects above-market organic growth of 0% – 2% based on current levels of demand. The company sees organic growth of 1 to 3% excluding PLS reduction of approximately 1%-point.

Based on current foreign exchange rates, foreign currency translation is expected to reduce revenue by 3%, resulting in a projected total revenue decline of 1% – 3%.

The company’s operating margin is expected between 26.5% and 27.5%, improving by 100 basis points, supported by enterprise initiatives.

Free cash flow is projected to exceed net income, with $1.5 billion in planned share repurchases and an effective tax rate of 24% – 24.5%.

Price Action: ITW shares traded lower by 1.66% at $250.44 at the last check Wednesday.

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