ITW Clocks 8% Revenue Growth In Q3; Chops FY21 Outlook Citing Lower Automotive Production

Illinois Tool Works Inc. ITW reported third-quarter FY21 revenue growth of 8% year-over-year to $3.56 billion, +6% on an organic basis, beating the consensus of $3.56 billion.
Automotive OEM revenue was $647 million (-9 Y/Y), and operating margin declined by 350 bps to 17.3%
Food Equipment revenue was $544 million (+21% Y/Y), and the operating margin expanded by 430 bps to 23.9%.
Test & Measurement and Electronics revenue were $552 million (+13% Y/Y), and the operating margin expanded by 310 bps to 26.8%.
Welding revenue was $425 million (+23% Y/Y), and operating margin expanded by 210 bps to 30%.
Polymers & Fluids revenue was $456 million (+4% Y/Y), and operating margin contracted by 240 bps to 24.2%.
Construction Products revenue was $478 million (+5% Y/Y), and operating margin contracted 30 bps to 27.8%.
Specialty Products revenue was $459 million (+9% Y/Y) and the operating margin expanded by 210 bps to 27.3%.
GAAP EPS for the quarter was $2.02 versus $1.83 last year.
The operating income increased 7.1% Y/Y to $845 million, and the margin was at 23.8%.
Illinois Tool generated cash from operating activities year-to-date of $1.78 billion, compared to $2.03 billion a year ago. Free cash flow of $1.57 billion.
The company is on pace to repurchase ~$1 billion of its shares in 2021, having repurchased $750 million year-to-date.
FY21 Outlook: ITW expects total revenue growth of 13% - 14% and organic growth of 11%-12% (prior 11%-13% organic growth).
It lowered GAAP EPS outlook to $8.30 - $8.50 (prior view $8.55-$8.95) due to lower automotive production in Q3 and Q4, an operating margin of 23.5% - 24.5% (prior 24.5% - 25.5%).
Price Action: ITW shares closed higher by 1.95% at $226.54 on Thursday.

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