Revenue of $3.8 billion, down 3.4%; organic growth down 1.6%, flat on an equal days’ basis
Operating margin of 24.8%; Enterprise Initiatives contribute 120 bps
GAAP EPS of $2.38, ahead of plan expectations
Maintaining full year 2025 guidance; ongoing pricing actions offset tariff cost impacts
GLENVIEW, Ill., April 30, 2025 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its first quarter 2025 results and maintained guidance for full year 2025.
“ITW commenced 2025 with solid execution, achieving financial results ahead of plan expectations as we continued to outperform underlying end markets,” said Christopher A. O’Herlihy, President and Chief Executive Officer. “Acknowledging the uncertain external environment, we are maintaining our full year 2025 guidance as we expect our ongoing pricing actions to offset tariff cost impacts. ITW is built to outperform in today's volatile environment. Our largely “produce where we sell” manufacturing strategy, decentralized operating culture which enables rapid “read and react” response, and diversified high-quality business portfolio all provide resilience during times of volatility and uncertainty. Our strong financial profile allows us to maintain our strategic investments and focus on driving continued progress on our long-term strategy to make above-market organic growth, fueled by Customer-back Innovation, into a core ITW strength,” O’Herlihy concluded.
First Quarter 2025 Results
First quarter revenue of $3.8 billion declined by 3.4 percent as organic revenue declined by 1.6 percent. On an equal days’ basis, organic revenue was essentially flat. Foreign currency translation impact reduced revenue by 1.8 percent.
First quarter 2024 GAAP EPS of $2.73 and operating margin of 28.4 percent included a one-time inventory accounting change which benefited EPS by $0.29 and operating margin by 300 basis points. For comparison purposes, the following year-over-year references exclude this one-time item.
GAAP EPS for the first quarter of 2025 of $2.38 declined two percent and included approximately $0.10 of headwind from higher restructuring expenses and unfavorable foreign currency translation impact. Operating margin of 24.8 percent declined 60 basis points as enterprise initiatives contributed 120 basis points, offset by higher restructuring expenses related to 80/20 Front-to-Back projects and other one-time items. Operating cash flow was $592 million, and free cash flow was $496 million with a conversion of 71 percent to net income. During the quarter, the company repurchased $375 million of its own shares. The effective tax rate was 21.7 percent which included a discrete tax benefit of $21 million related to the reversal of valuation allowances on net operating loss carryforwards.
2025 Guidance ITW is maintaining its full year 2025 GAAP EPS guidance range of $10.15 to $10.55 per share which includes on-going pricing actions that are projected to offset tariff cost impacts. The Company is projecting revenue and organic growth of zero to two percent based on current levels of demand adjusted for incremental pricing associated with tariffs and current foreign exchange rates. Operating margin is projected to be in the range of 26.5 to 27.5 percent, with enterprise initiatives contributing 100 basis points or more. 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 is approximately 24 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 potential impact of tariffs, the Company’s projected pricing actions, 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 2025 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 2024 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 $15.9 billion in 2024. 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 44,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF INCOME (UNAUDITED)
Three Months Ended
March 31,
In millions except per share amounts
2025
2024
Operating Revenue
$
3,839
$
3,973
Cost of revenue
2,161
2,145
Selling, administrative, and research and development expenses
706
676
Amortization and impairment of intangible assets
21
25
Operating Income
951
1,127
Interest expense
(68
)
(71
)
Other income (expense)
12
16
Income Before Taxes
895
1,072
Income Taxes
195
253
Net Income
$
700
$
819
Net Income Per Share:
Basic
$
2.39
$
2.74
Diluted
$
2.38
$
2.73
Cash Dividends Per Share:
Paid
$
1.50
$
1.40
Declared
$
1.50
$
1.40
Shares of Common Stock Outstanding During the Period:
Average
293.6
298.9
Average assuming dilution
294.5
300.0
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In millions
March 31, 2025
December 31, 2024
Assets
Current Assets:
Cash and equivalents
$
873
$
948
Trade receivables
3,153
2,991
Inventories
1,663
1,605
Prepaid expenses and other current assets
348
312
Total current assets
6,037
5,856
Net plant and equipment
2,085
2,036
Goodwill
4,903
4,839
Intangible assets
572
592
Deferred income taxes
440
369
Other assets
1,431
1,375
$
15,468
$
15,067
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term debt
$
981
$
1,555
Accounts payable
594
519
Accrued expenses
1,477
1,576
Cash dividends payable
439
441
Income taxes payable
289
217
Total current liabilities
3,780
4,308
Noncurrent Liabilities:
Long-term debt
7,282
6,308
Deferred income taxes
127
119
Other liabilities
1,037
1,015
Total noncurrent liabilities
8,446
7,442
Stockholders' Equity:
Common stock
6
6
Additional paid-in-capital
1,705
1,669
Retained earnings
29,154
28,893
Common stock held in treasury
(25,746
)
(25,375
)
Accumulated other comprehensive income (loss)
(1,878
)
(1,877
)
Noncontrolling interest
1
1
Total stockholders' equity
3,242
3,317
$
15,468
$
15,067
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED)
Three Months Ended March 31,2025
Dollars in millions
Total Revenue
Operating Income
Operating Margin
Automotive OEM
$
786
$
151
19.3
%
Food Equipment
627
166
26.5
%
Test & Measurement and Electronics
652
139
21.4
%
Welding
472
153
32.5
%
Polymers & Fluids
429
114
26.5
%
Construction Products
443
130
29.2
%
Specialty Products
435
135
30.9
%
Intersegment
(5
)
—
—
%
Total Segments
3,839
988
25.7
%
Unallocated
—
(37
)
—
%
Total Company
$
3,839
$
951
24.8
%
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED)
Q1 2025 vs. Q1 2024 Favorable/(Unfavorable)
Operating Revenue
Automotive OEM
Food Equipment
Test & Measurement and Electronics
Welding
Polymers & Fluids
Construction Products
Specialty Products
Total ITW
Organic
(1.2)
%
1.2
%
(5.4)
%
0.1
%
1.7
%
(7.4)
%
0.9
%
(1.6)
%
Acquisitions/ Divestitures
—
%
—
%
0.1
%
—
%
—
%
—
%
—
%
—
%
Translation
(2.5)
%
(1.9)
%
(1.0)
%
(1.0)
%
(2.5)
%
(1.8)
%
(1.9)
%
(1.8)
%
Operating Revenue
(3.7)
%
(0.7)
%
(6.3)
%
(0.9)
%
(0.8)
%
(9.2)
%
(1.0)
%
(3.4)
%
Q1 2025 vs. Q1 2024 Favorable/(Unfavorable)
Change in Operating Margin
Automotive OEM
Food Equipment
Test & Measurement and Electronics
Welding
Polymers & Fluids
Construction Products
Specialty Products
Total ITW
Operating Leverage
(30) bps
20 bps
(150) bps
—
30 bps
(140) bps
20 bps
(30) bps
Changes in Variable Margin & OH Costs
60 bps
20 bps
40 bps
(50) bps
50 bps
120 bps
140 bps
(290) bps
Total Organic
30 bps
40 bps
(110) bps
(50) bps
80 bps
(20) bps
160 bps
(320) bps
Acquisitions/ Divestitures
—
—
(30) bps
—
—
—
—
(10) bps
Restructuring/Other
(80) bps
10 bps
(60) bps
30 bps
(10) bps
—
(40) bps
(30) bps
Total Operating Margin Change
(50) bps
50 bps
(200) bps
(20) bps
70 bps
(20) bps
120 bps
(360) bps
Total Operating Margin % *
19.3%
26.5%
21.4%
32.5%
26.5%
29.2%
30.9%
24.8%
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets
20 bps
30 bps
150 bps
10 bps
150 bps
10 bps
20 bps
60 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.05) on GAAP earnings per share for the first quarter of 2025.
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
Three Months Ended
March 31,
Dollars in millions
2025
2024
Numerator:
Net Income
$
700
$
819
Discrete tax benefit related to the first quarter 2025
(21
)
—
Cumulative effect of change in inventory accounting method, net of tax (1)
—
(88
)
Interest expense, net of tax (2)
52
54
Other (income) expense, net of tax (2)
(9
)
(12
)
Operating income after taxes
$
722
$
773
Denominator:
Invested capital:
Cash and equivalents
$
873
$
959
Trade receivables
3,153
3,238
Inventories
1,663
1,825
Net plant and equipment
2,085
1,973
Goodwill and intangible assets
5,475
5,557
Accounts payable and accrued expenses
(2,071
)
(2,109
)
Debt
(8,263
)
(8,325
)
Other, net
327
(97
)
Total net assets (stockholders' equity)
3,242
3,021
Cash and equivalents
(873
)
(959
)
Debt
8,263
8,325
Total invested capital
$
10,632
$
10,387
Average invested capital (3)
$
10,432
$
10,249
Net income to average invested capital (4)
26.9
%
32.0
%
After-tax return on average invested capital (4)
27.7
%
30.1
%
(1) Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses in the first quarter of 2024 ($117 million pre-tax, or $88 million after-tax).
(2) Effective tax rate used for interest expense and other (income) expense for the three months ended March 31, 2025 and 2024 was 24.0% and 23.6%, respectively.
(3) Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of the periods presented.
(4) Returns for the three months ended March 31, 2025 and 2024 were converted to an annual rate by multiplying the calculated return by 4. A reconciliation of the tax rate for the three month period ended March 31, 2025, excluding the first quarter 2025 discrete tax benefit of $21 million related to the reversal of a valuation allowance on net operating loss carryforwards, is as follows:
Three Months Ended
March 31, 2025
Dollars in millions
Income Taxes
Tax Rate
As reported
$
195
21.7
%
Discrete tax benefit related to the first quarter 2025
21
2.3
%
As adjusted
$
216
24.0
%
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
Twelve Months Ended
Dollars in millions
December 31, 2024
Numerator:
Net income
$
3,488
Net discrete tax benefit related to the third quarter 2024
(121
)
Interest expense, net of tax (1)
215
Other (income) expense, net of tax (1)
(336
)
Operating income after taxes
$
3,246
Denominator:
Invested capital:
Cash and equivalents
$
948
Trade receivables
2,991
Inventories
1,605
Net plant and equipment
2,036
Goodwill and intangible assets
5,431
Accounts payable and accrued expenses
(2,095
)
Debt
(7,863
)
Other, net
264
Total net assets (stockholders' equity)
3,317
Cash and equivalents
(948
)
Debt
7,863
Total invested capital
$
10,232
Average invested capital (2)
$
10,419
Net income to average invested capital
33.5
%
After-tax return on average invested capital
31.2
%
(1) Effective tax rate used for interest expense and other (income) expense for the year ended December 31, 2024 was 23.8%.
(2) Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within the period presented. A reconciliation of the 2024 effective tax rate excluding the third quarter 2024 net discrete tax benefit of $121 million, which included favorable discrete tax benefits of $107 million related to the utilization of capital loss carryforwards upon the sale of Wilsonart and $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, is as follows:
Twelve Months Ended
December 31, 2024
Dollars in millions
Income Taxes
Tax Rate
As reported
$
934
21.1
%
Net discrete tax benefit related to the third quarter 2024
121
2.7
%
As adjusted
$
1,055
23.8
%
FREE CASH FLOW (UNAUDITED)
Three Months Ended
March 31,
Dollars in millions
2025
2024
Net cash provided by operating activities
$
592
$
589
Less: Additions to plant and equipment
(96
)
(95
)
Free cash flow
$
496
$
494
Net income
$
700
$
819
Net cash provided by operating activities to net income conversion rate
85
%
72
%
Free cash flow to net income conversion rate(1)
71
%
60
%
(1) Excluding the impact of the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses in the first quarter of 2024 ($117 million pre-tax, or $88 million after-tax), the free cash flow to net income conversion rate for the three months ended March 31, 2024 would have been 68%.
ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED)
Three Months Ended
Twelve Months Ended
March 31, 2024
December 31, 2024
As reported
$
2.73
$
11.71
Cumulative effect of change in inventory accounting method, net of tax (1)
(0.29
)
(0.30
)
Impact of sale of noncontrolling interest in Wilsonart (2)
—
(1.26
)
As adjusted
$
2.44
$
10.15
(1) Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses in the first quarter of 2024 ($117 million pre-tax, or $88 million after-tax).
(2) Includes the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes in the third quarter of 2024.
