Illinois Tool Works Clocks 9% Top-Line Growth In Q2

Illinois Tool Works Inc. ITW reported second-quarter FY22 revenue growth of 9.1% year-over-year to $4.01 billion, +10% on an organic basis, beating the consensus of $3.98 billion.
The acquisition of MTS contributed 3% to revenue, while unfavorable foreign currency translation reduced revenue by 4%.
Six of seven segments delivered positive organic growth in the quarter, led by Food Equipment +25% Y/Y, Welding +22%, Construction Products +15%, Polymers & Fluids +10%, Automotive OEM +6% Y/Y, and Test & Measurement and Electronics +1% Y/Y.
GAAP EPS was $2.37, compared to $2.45 in 2Q21.
The operating income increased 3.7% Y/Y to $926 million, and the operating margin was 23.1%, down 121 bps.
The operating margin of 23.1% included 200 bps of operating leverage offset by (160) bps of price/cost impact and (100) bps of headwind from the MTS acquisition and higher restructuring expenses.
ITW's operating cash flow was $501 million, and free cash flow was $420 million with a conversion rate of 57%.
FY22 Guidance: ITW expects total revenue growth of 6% - 9% with 7% - 10% organic growth.
ITW maintained the GAAP EPS forecast of $9.00 - $9.40. It expects an operating margin of 24% - 25%, with enterprise initiatives contributing 100 bps.
The company said it is on pace to repurchase about $1.5 billion of its shares.
Price Action: ITW shares traded higher by 0.65% at $208.69 on the last check Tuesday.

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