Revenue of $4.0 billion, a decrease of 1% with flat organic growth Operating income of $1.05 billion, an increase of 4.5% Operating margin of 26.2%, an increase of 140 bps as enterprise initiatives contributed 140 bps GAAP EPS of $2.54, an increase of 2%; Excl. a one-time 2023 tax item, EPS increased 5% Narrowing full year GAAP EPS guidance to a range of $10.30 to $10.40 per share GLENVIEW, Ill., July 30, 2024 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE:ITW) today reported its second quarter 2024 results and updated guidance for full-year 2024. "While the demand environment continued to moderate across our portfolio, we delivered a solid quarter with strong operational execution and profitability," said Christopher A. O'Herlihy, President and Chief Executive Officer. "Our ability to overcome near-term macro challenges and expand our margin and profitability to record levels as evidenced by margin improvement of 140 basis points to 26.2 percent and EPS growth of more than five percent, is a direct result of the focused execution by our team of dedicated ITW professionals around the world." "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," O'Herlihy concluded. Second Quarter 2024 ResultsSecond quarter revenue of $4.0 billion declined by 1.2 percent as organic growth declined 0.1 percent. Foreign currency translation impact reduced revenue by 1.2 percent and acquisitions added 0.1 percent. GAAP EPS increased 2.4 percent to $2.54 and excluding a one-time tax item in 2023, EPS increased 5.4 percent. Operating income increased 4.5 percent to $1.05 billion, a second quarter record. Operating margin improved 140 basis points to 26.2 percent, a second quarter record, as enterprise initiatives contributed 140 basis points. Operating cash flow was $687 million, and free cash flow was $571 million with a conversion of 75 percent to net income. During the quarter, the company repurchased $375 million of its own shares and the effective tax rate was 24.4 percent. 2024 GuidanceITW is lowering the top-end of its full year GAAP EPS guidance range of $10.30 to $10.70 per share to a narrower range of $10.30 to $10.40 per share, an increase of six percent compared to the prior year at the midpoint. Based on current levels of demand and foreign currency exchange rates exiting the second quarter, the company is projecting revenue growth and organic growth to be approximately flat for 2024. ITW is raising its operating margin guidance from 26 to 27 percent to a narrower range of 26.5 to 27 percent, an increase of 165 bps at the midpoint with enterprise initiatives projected to contribute more than 100 basis points. Free cash flow is expected to exceed 100 percent of net income and the company plans to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate remains unchanged in the range of 24 to 24.5 percent. Non-GAAP Measures 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. The estimated guidance of free cash flow to net income conversion rate is based on assumptions that are difficult to predict, and estimated guidance for the most directly comparable GAAP measure and a reconciliation of this forward-looking estimate to its most directly comparable GAAP estimate have been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of reliable forward-looking cash flow information. For the same reasons, the company is unable to address the potential significance of the unavailable information, which could be material to future results. Forward-looking Statements This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding global supply chain challenges, expected impact of inflation including raw material inflation and rising interest rates, the impact of enterprise initiatives, future financial and operating performance, free cash flow and free cash flow to net income conversion rate, organic and total revenue, operating and incremental margin, price/cost impact, statements regarding diluted income per share, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates, expected timing and amount of share repurchases, end market economic and regulatory conditions, the impact of recent or potential acquisitions and/or divestitures, and the Company's 2024 guidance. These statements are subject to certain risks, uncertainties, assumptions, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that could cause actual results to differ materially from the Company's expectations include those that are detailed in ITW's Form 10-K for 2023 and subsequent reports filed with the SEC. About Illinois Tool Works ITW (NYSE:ITW) is a Fortune 300 global multi-industrial manufacturing leader with revenue of $16.1 billion in 2023. 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's approximately 45,000 dedicated colleagues around the world thrive in the company's decentralized and entrepreneurial culture. www.itw.com ILLINOIS TOOL WORKS INC. and SUBSIDIARIESSTATEMENT OF INCOME (UNAUDITED)     Three Months Ended   Six Months Ended   June 30,   June 30, In millions except per share amounts   2024       2023       2024       2023   Operating Revenue $ 4,027     $ 4,074     $ 8,000     $ 8,093   Cost of revenue   2,262       2,344       4,407       4,685   Selling, administrative, and research and development expenses   686       690       1,362       1,365   Amortization and impairment of intangible assets   25       30       50       61   Operating Income   1,054       1,010       2,181       1,982   Interest expense   (75 )     (69 )     (146 )     (129 ) Other income (expense)   26       20       42       30   Income Before Taxes   1,005       961       2,077       1,883   Income Taxes   246       207       499       415   Net Income $ 759     $ 754     $ 1,578     $ 1,468                   Net Income Per Share:               Basic $ 2.55     $ 2.49     $ 5.29     $ 4.83   Diluted $ 2.54     $ 2.48     $ 5.27     $ 4.81                   Cash Dividends Per Share:               Paid $ 1.40     $ 1.31     $ 2.80     $ 2.62   Declared $ 1.40     $ 1.31     $ 2.80     $ 2.62                   Shares of Common Stock Outstanding During the Period:               Average   297.6       303.3       298.3       304.1   Average assuming dilution   298.5       304.2       299.3       305.2   ILLINOIS TOOL WORKS INC. and SUBSIDIARIESSTATEMENT OF FINANCIAL POSITION (UNAUDITED)   In millions June 30, 2024   December 31, 2023 Assets       Current Assets:       Cash and equivalents $ 862     $ 1,065   Trade receivables   3,250       3,123   Inventories   1,819       1,707   Prepaid expenses and other current assets   325       340   Total current assets   6,256       6,235           Net plant and equipment   2,011       1,976   Goodwill   4,910       4,909   Intangible assets   641       657   Deferred income taxes   448       479   Other assets   1,311       1,262     $ 15,577     $ 15,518           Liabilities and Stockholders' Equity       Current Liabilities:       Short-term debt $ 2,044     $ 1,825   Accounts payable   576       581   Accrued expenses   1,615       1,663   Cash dividends payable   416       419   Income taxes payable   153       187   Total current liabilities   4,804       4,675           Noncurrent Liabilities:       Long-term debt   6,429       6,339   Deferred income taxes   381       326   Noncurrent income taxes payable   —       151   Other liabilities   1,001       1,014   Total noncurrent liabilities   7,811       7,830           Stockholders' Equity:       Common stock   6       6   Additional paid-in-capital   1,636       1,588   Retained earnings   27,866       27,122   Common stock held in treasury   (24,622 )