StockSelector.com
  Research, Select, & Monitor Sunday, September 24, 2017 5:01:43 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Illinois Tool Works, Inc.$147.40$.06.04%

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 ITW Reports First-Quarter 2017 Results
   Monday, April 24, 2017 8:00:20 AM ET

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">First-quarter highlights:</span>

-- GAAP EPS of $1.54, an increase of 19%

-- Total revenue of $3.5 billion, an increase of 6.0%; organic growth of 3.5%

-- Operating margin of 23.3%, an increase of 120 bps and an all-time record for the company

-- Company now expects 2017 earnings to be in the range of $6.20 to $6.40 per share with organic growth of 2 to 4%

Illinois Tool Works Inc. (ITW ) today reported its first-quarter 2017 results.

First-quarter GAAP earnings were $1.54 per share, an increase of 19% versus the first quarter of 2016. Excluding the impact of foreign currency translation, EPS grew 21% year-on-year. Revenue grew 6.0% to $3.5 billion. Organic revenue increased 3.5% while the 2016 acquisition of Engineered Fasteners & Components (EF&C) added 3.8% to revenue. Foreign currency translation reduced revenue by 1.3%.

"Our record results in the first quarter reflect strong execution across the company and further progress in our efforts to leverage ITW’s highly differentiated and proprietary business model to drive solid growth with best-in-class margins and returns," said E. Scott Santi, Chairman and Chief Executive Officer. "We are off to a strong start in 2017 and the company is well-positioned to deliver continued progress and differentiated performance through the balance of 2017 and beyond."

Operating income was $809 million, an increase of 12%, and operating margin for the quarter was 23.3%, an increase of 120 basis points. Excluding the margin impact from the 2016 acquisition of EF&C, operating margin was 23.8%, an increase of 170 basis points year-on-year with 100 basis points of structural margin improvement from Enterprise Initiatives. After-tax return on invested capital was 23.8%, an improvement of 260 basis points. First-quarter net income was $536 million.

Organic revenue growth was positive in six of seven segments: 9% in Automotive OEM, 6% in Test & Measurement/Electronics, 3% in Construction Products, 2% in Food Equipment and Polymers & Fluids and 1% in Specialty Products. Welding was flat.

Effective January 1, 2017 the company adopted FASB guidance that requires that the income tax effects associated with the settlement of stock-based awards be recognized through income tax expense rather than equity. The first-quarter effective tax rate was 28.3%, in line with company expectations.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Full-Year and Second Quarter 2017 Guidance</span>

As a result of the company’s strong Q1 results, ITW is raising its 2017 full-year guidance. The company now expects earnings to be in the range of $6.20 to $6.40 per share, up from prior guidance of $6.00 to $6.20 per share, with organic growth of 2 to 4%, up from 1.5 to 3.5%. ITW expects operating margin to exceed 23.5% and free cash flow to exceed 100% of net income. The company now expects an effective tax rate of approximately 29%, down from prior guidance of 29 to 30%, resulting in an EPS benefit of $0.04 per share.

For the second quarter 2017, the company expects earnings to be in the range of $1.55 to $1.65 per share with organic growth of 2 to 4%.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Non-GAAP Measures</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Forward-looking Statement</span>

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding diluted earnings per share, organic revenue growth, operating margin, free cash flow, effective tax rate and after-tax return on invested capital. These statements are subject to certain risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated. Such factors include those contained in ITW’s Form 10-K for 2016.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">About ITW</span>

ITW (ITW ) is a Fortune 200 global multi-industrial manufacturing leader with revenues totaling $13.6 billion in 2016. 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 has more than 50,000 dedicated colleagues in operations around the world who thrive in the company’s unique, decentralized and entrepreneurial culture. To learn more about the company and the ITW Business Model, visit www.itw.com.

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
                                                               Three Months Ended
                                                               March 31,
In millions except per share amounts                           2017           2016
Operating Revenue                                              $     3,471    $     3,274
Cost of revenue                                                2,004          1,896
Selling, administrative, and research and development expenses 605            597
Amortization and impairment of intangible assets               53             59
Operating Income                                               809            722
Interest expense                                               (64         )  (58         )
Other income (expense)                                         4              4
Income Before Taxes                                            749            668
Income taxes                                                   213            200
Net Income                                                     $     536      $     468
Net Income Per Share:
Basic                                                          $     1.55     $     1.29
Diluted                                                        $     1.54     $     1.29
Cash Dividends Per Share:
Paid                                                           $     0.65     $     0.55
Declared                                                       $     0.65     $     0.55
Shares of Common Stock Outstanding During the Period:
Average                                                        346.2          362.0
Average assuming dilution                                      349.0          363.9
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In millions                                   March 31, 2017  December 31, 2016
Assets
Current Assets:
Cash and equivalents                          $     2,493     $     2,472
Trade receivables                             2,534           2,357
Inventories                                   1,158           1,076
Prepaid expenses and other current assets     245             218
Total current assets                          6,430           6,123
Net plant and equipment                       1,674           1,652
Goodwill                                      4,605           4,558
Intangible assets                             1,411           1,463
Deferred income taxes                         425             449
Other assets                                  984             956
                                              $     15,529    $     15,201
Liabilities and Stockholders’ Equity
Current Liabilities:
Short-term debt                               $     671       $     652
Accounts payable                              574             511
Accrued expenses                              1,149           1,202
Cash dividends payable                        225             226
Income taxes payable                          256             169
Total current liabilities                     2,875           2,760
Noncurrent Liabilities:
Long-term debt                                7,205           7,177
Deferred income taxes                         121             134
Other liabilities                             830             871
Total noncurrent liabilities                  8,156           8,182
Stockholders’ Equity:
Common stock                                  6               6
Additional paid-in-capital                    1,184           1,188
Retained earnings                             19,817          19,505
Common stock held in treasury                 (14,871      )  (14,638      )
Accumulated other comprehensive income (loss) (1,643       )  (1,807       )
Noncontrolling interest                       5               5
Total stockholders’ equity                    4,498           4,259
                                              $     15,529    $     15,201
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2017
Dollars in millions                Total          Operating    Operating
                                   Revenue        Income       Margin
Automotive OEM                     $   828        $   202      24.4%
Food Equipment                     497            125          25.1%
Test & Measurement and Electronics 480            96           20.0%
Welding                            387            107          27.7%
Polymers & Fluids                  426            88           20.6%
Construction Products              395            89           22.5%
Specialty Products                 463            124          26.9%
Intersegment                       (5        )    --           --%
Total Segments                     3,471          831          23.9%
Unallocated                        --             (22     )    --%
Total Company                      $   3,471      $   809      23.3%
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Q1 2017 vs. Q1 2016 Favorable/(Unfavorable)
Operating Revenue  Automotive  Food       Test &           Welding  Polymers &  Construction  Specialty  Total
                   OEM         Equipment  Measurement               Fluids      Products      Products   ITW
                                          and Electronics
Organic            9.0%        2.0%       5.5%             (0.3)%   1.5%        2.9%          0.8%       3.5%
Acquisitions/      19.4%       --%        --%              --%      --%         --%           (0.7)%     3.8%
Divestitures
Translation        (2.1)%      (2.4)%     (2.0)%           (0.3)%   0.5%        (0.2)%        (1.3)%     (1.3)%
Operating Revenue  26.3%       (0.4)%     3.5%             (0.6)%   2.0%        2.7%          (1.2)%     6.0%
Q1 2017 vs. Q1 2016 Favorable/(Unfavorable)
Change in Operating   Automotive  Food       Test &           Welding  Polymers &  Construction  Specialty  Total
Margin                OEM         Equipment  Measurement               Fluids      Products      Products   ITW
                                             and Electronics
Operating Leverage    120 bps     50 bps     170 bps          --       40 bps      80 bps        10 bps     80 bps
Changes in Variable   (30) bps    (30) bps   290 bps          220 bps  100 bps     120 bps       80 bps     90 bps
Margin & OH Costs
Total Organic         90 bps      20 bps     460 bps          220 bps  140 bps     200 bps       90 bps     170 bps
Acquisitions/         (260) bps   --         --               --       --          --            40 bps     (50) bps
Divestitures
Restructuring/Other   (30) bps    40 bps     (10) bps         160 bps  (100) bps   (50) bps      (50) bps   --
Total Operating       (200) bps   60 bps     450 bps          380 bps  40 bps      150 bps       80 bps     120 bps
Margin Change
Total Operating       24.4%       25.1%      20.0%            27.7%    20.6%       22.5%         26.9%      23.3%
Margin % *
*Includes unfavorable 50 bps      80 bps     350 bps          50 bps   420 bps     60 bps        140 bps    160 bps
operating margin
impact of
amortization expense
from acquisition-
related intangible
assets
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
ADJUSTED AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
                                                                    Three Months Ended            Twelve
                                                                                                  Months Ended
                                                                    March 31,                     December 31,
Dollars in millions                                                 2017           2016           2016
Operating income                                                    $     809      $     722      $     3,064
Tax rate                                                            28.3        %  30.0        %  30.0        %
Income taxes                                                        (229        )  (216        )  (919        )
Operating income after taxes                                        $     580      $     506      $     2,145
Invested capital:
Trade receivables                                                   $     2,534    $     2,394    $     2,357
Inventories                                                         1,158          1,134          1,076
Net plant and equipment                                             1,674          1,598          1,652
Goodwill and intangible assets                                      6,016          6,005          6,021
Accounts payable and accrued expenses                               (1,723      )  (1,611      )  (1,713      )
Other, net                                                          222            257            223
Total invested capital                                              $     9,881    $     9,777    $     9,616
Average invested capital                                            $     9,748    $     9,668    $     9,780
Adjustment for Wilsonart (formerly the Decorative Surfaces segment) --             (111        )  (91         )
Adjusted average invested capital                                   $     9,748    $     9,557    $     9,689
Adjusted return on average invested capital                         23.8        %  21.2        %  22.1        %
FREE CASH FLOW (UNAUDITED)
                                             Three Months Ended
                                             March 31,
Dollars in millions                          2017            2016
Net cash provided by operating activities    $   463         $   479
Less: Additions to plant and equipment       (64     )       (57     )
Free cash flow                               $   399         $   422
Net income                                   $   536         $   468
Free cash flow to net income conversion rate 74      %   *   90      %

* Excluding $87 million related to the timing of payments for income taxes and pension contributions, the free cash flow to net income conversion rate for the three months ended March 31, 2017 would have been 91%.

Contact: Mike Drazin 224.661.7433 or mdrazin@itw.com

https://resource.globenewswire.com/Resource/Download/5947b771-ca1d-4d68-8a54-06116e780a4e?size=1

<img src="http://www.globenewswire.com/newsroom/ti?ndecode=MTUwIzY3NDM2MjM=" alt="" width="1" height="1"/>



Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2017 StockSelector.com. All rights reserved.