• ITW Reports Third Quarter 2021 Results

    المصدر: Nasdaq GlobeNewswire / 28 أكتوبر 2021 07:00:02   America/Chicago

    • Total revenue of $3.6 billion, an increase of 8% with organic revenue growth of 6%
    • Operating margin of 23.8%; Enterprise initiatives contributed 100 basis points
    • GAAP EPS of $2.02, an increase of 10%
    • Updated full year guidance with organic growth of 11 to 12% and EPS growth of 25 to 28%

    GLENVIEW, IL., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its third quarter 2021 results.

    “We saw continued strong growth momentum in six of our seven segments in the third quarter, while our Automotive OEM segment continued to be impacted by auto production reductions associated with the well-publicized supply chain challenges affecting our customers,” said E. Scott Santi, Chairman and Chief Executive Officer. “Our teams around the world continue to do an exceptional job of executing for our customers and for the company in a very challenging environment as evidenced by the six percent organic growth and ten percent earnings per share growth that ITW delivered in the quarter. Moving forward, we remain highly focused on fully leveraging the competitive strength of the ITW Business Model and the investments we have made, and continue to make, in support of the execution of our enterprise strategy and our ‘Win the Recovery’ positioning to their full potential.”

    Third Quarter 2021 Results
    Third quarter revenue grew eight percent to $3.6 billion, with six percent organic growth. Operating income grew seven percent to $845 million. Excluding Automotive OEM, revenue grew 12 percent and operating income grew 14 percent. Operating margin was 23.8 percent, flat year-over-year, with enterprise initiatives and volume leverage each contributing 100 basis points or more of positive margin impact offset by price/cost margin dilution impact of 200 basis points. Consistent with our strategy, price recovery actions offset raw material cost increases on a dollar-for-dollar basis in the third quarter. GAAP EPS of $2.02 increased 10 percent. The effective tax rate for the third quarter was 20.8 percent, in line with the third quarter of 2020, and included a $0.06 one-time tax benefit. Operating cash flow was $619 million, 97 percent of net income, and free cash flow was $548 million, 86 percent of net income.

    Six of seven segments delivered strong organic growth in the quarter, led by Welding up 22 percent, Food Equipment up 19 percent, Test & Measurement and Electronics up 12 percent, and Specialty Products up 8 percent. Polymers & Fluids and Construction Products were both up 3 percent. Automotive OEM declined 11 percent.

    Capital Allocation Update
    Pending final regulatory approvals, ITW expects to complete its previously announced acquisition of the MTS Test & Simulation business in the fourth quarter of 2021. On August 6, 2021, ITW raised its dividend by seven percent to an annualized rate of $4.88 per share. The company is on pace to repurchase approximately $1 billion of its shares in 2021, having repurchased $750 million year-to-date.

    2021 Guidance
    ITW expects total revenue growth of 13 to 14 percent and organic growth in the range of 11 to 12 percent. Foreign currency translation impact at current foreign exchange rates is projected to contribute two percentage points to revenue growth. GAAP EPS guidance is updated to a range of $8.30 to $8.50, due to actual and anticipated lower auto production levels in Q3 and Q4 versus previous guidance. Raw material cost increases are expected to be offset with price on a dollar-for-dollar basis and therefore EPS neutral. Full year margin dilution impact from price/cost is expected to be approximately 150 basis points, offset by more than 200 basis points of volume leverage and a contribution from enterprise initiatives of more than 100 basis points. Operating margin is expected to be in the range of 23.5 to 24.5 percent, an increase of more than 100 basis points at the midpoint versus 2020. Free cash flow is expected to be approximately 90 percent of net income adjusted for one-time tax benefits. Guidance excludes any impact from the acquisition of the MTS Test & Simulation business.

    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 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 estimated free cash flow to the most directly comparable GAAP measure have been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of availability of reliable forward-looking cash flow and operating information.

    Forward-looking Statement
    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 the duration and potential effects of the COVID-19 pandemic and global supply chain challenges, related government actions and the company’s strategy in response thereto on the company’s business, expected impact of tariffs and raw material inflation, product line simplification activities and enterprise initiatives, future financial and operating performance, free cash flow and free cash flow conversion rate, organic and total revenue, operating margin, price/cost impact, diluted income per share, restructuring expenses and related benefits, expected dividend payments, expected repatriation, after-tax return on invested capital, effective tax rates, exchange rates, expected access to liquidity sources, expected capital allocation, expected timing and amount of share repurchases, end market economic and regulatory conditions, potential acquisitions and dispositions and related impact on financial results, including statements with respect to the anticipated acquisition of the MTS Test & Simulation business, and the company’s 2021 guidance. These statements are subject to certain risks, uncertainties, assumptions 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 2020.

    About Illinois Tool Works
    ITW (NYSE: ITW) is a Fortune 200 global multi-industrial manufacturing leader with revenues totaling $12.6 billion in 2020. 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 43,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com

    Media Contact 
    Illinois Tool Works 
    Tel: 224.661.7451 
    mediarelations@itw.com    		Investor Relations 
    Illinois Tool Works
    Karen Fletcher
    Tel: 224.661.7433
    investorrelations@itw.com
      



    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    STATEMENT OF INCOME (UNAUDITED)

     Three Months Ended Nine Months Ended
     September 30, September 30,
    In millions except per share amounts2021 2020 2021 2020
    Operating Revenue$3,556   $3,307   $10,776   $9,099  
    Cost of revenue2,096   1,910   6,298   5,375  
    Selling, administrative, and research and development expenses581   560   1,735   1,606  
    Amortization and impairment of intangible assets34   48   100   119  
    Operating Income845   789   2,643   1,999  
    Interest expense(49)  (52)  (153)  (154) 
    Other income (expense)10   2   44   35  
    Income Before Taxes806   739   2,534   1,880  
    Income Taxes167   157   449   413  
    Net Income$639   $582   $2,085   $1,467  
            
    Net Income Per Share:       
    Basic$2.03   $1.84   $6.61   $4.63  
    Diluted$2.02   $1.83   $6.58   $4.61  
            
    Cash Dividends Per Share:       
    Paid$1.14   $1.07   $3.42   $3.21  
    Declared$1.22   $1.14   $3.50   $3.28  
            
    Shares of Common Stock Outstanding During the Period:       
    Average314.6   316.5   315.6   316.9  
    Average assuming dilution315.9   317.9   316.9   318.3  
                    


    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    STATEMENT OF FINANCIAL POSITION (UNAUDITED)

    In millionsSeptember 30, 2021 December 31, 2020
    Assets   
    Current Assets:   
    Cash and equivalents$1,987   $2,564  
    Trade receivables2,729   2,506  
    Inventories1,524   1,189  
    Prepaid expenses and other current assets337   264  
    Total current assets6,577   6,523  
        
    Net plant and equipment1,744   1,777  
    Goodwill4,610   4,690  
    Intangible assets683   781  
    Deferred income taxes580   533  
    Other assets1,323   1,308  
     $15,517   $15,612  
        
    Liabilities and Stockholders' Equity   
    Current Liabilities:   
    Short-term debt$579   $350  
    Accounts payable565   534  
    Accrued expenses1,399   1,284  
    Cash dividends payable383   361  
    Income taxes payable70   60  
    Total current liabilities2,996   2,589  
        
    Noncurrent Liabilities:   
    Long-term debt6,972   7,772  
    Deferred income taxes633   588  
    Noncurrent income taxes payable365   413  
    Other liabilities1,058   1,068  
    Total noncurrent liabilities9,028   9,841  
        
    Stockholders’ Equity:   
    Common stock6   6  
    Additional paid-in-capital1,416   1,362  
    Retained earnings24,098   23,114  
    Common stock held in treasury(20,390)  (19,659) 
    Accumulated other comprehensive income (loss)(1,638)  (1,642) 
    Noncontrolling interest1   1  
    Total stockholders’ equity3,493   3,182  
     $15,517   $15,612  
              


    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    SEGMENT DATA (UNAUDITED)

    Three Months Ended September 30, 2021
    Dollars in millionsTotal
    Revenue    		Operating
    Income    		Operating
    Margin
    Automotive OEM$647  $112  17.3%
    Food Equipment544  130  23.9%
    Test & Measurement and Electronics552  148  26.8%
    Welding425  128  30.0%
    Polymers & Fluids456  111  24.2%
    Construction Products478  133  27.8%
    Specialty Products459  126  27.3%
    Intersegment(5) —  —%
    Total Segments3,556  888  24.9%
    Unallocated—  (43) —%
    Total Company$3,556  $845  23.8%


    Nine Months Ended September 30, 2021
    Dollars in millionsTotal
    Revenue    		Operating
    Income    		Operating
    Margin
    Automotive OEM$2,137  $434  20.3%
    Food Equipment1,509  339  22.5%
    Test & Measurement and Electronics1,710  475  27.8%
    Welding1,228  364  29.6%
    Polymers & Fluids1,357  350  25.8%
    Construction Products1,465  406  27.7%
    Specialty Products1,387  380  27.4%
    Intersegment(17) —  —%
    Total Segments10,776  2,748  25.5%
    Unallocated—  (105) —%
    Total Company$10,776  $2,643  24.5%



    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    SEGMENT DATA (UNAUDITED)

    Q3 2021 vs. Q3 2020 Favorable/(Unfavorable)
    Operating RevenueAutomotive
    OEM    		Food
    Equipment    		Test &
    Measurement
    and
    Electronics    		WeldingPolymers
    & Fluids    		Construction
    Products    		Specialty
    Products    		Total
    ITW
    Organic(10.7)%18.9%11.8%22.0%3.4%3.4 %8.3%6.3%
    Acquisitions/Divestitures— %—%—%—%—%(0.1)%—%—%
    Translation1.3 %2.1%1.1%0.9%0.7%1.7 %1.1%1.2%
    Operating
    Revenue    		(9.4)%21.0%12.9%22.9%4.1%5.0 %9.4%7.5%


    Q3 2021 vs. Q3 2020 Favorable/(Unfavorable)
    Change in Operating MarginAutomotive
    OEM    		Food
    Equipment    		Test &
    Measurement
    and
    Electronics    		WeldingPolymers
    & Fluids    		Construction
    Products    		Specialty
    Products    		Total
    ITW
    Operating Leverage(240) bps410 bps290 bps290 bps70 bps50 bps180 bps130 bps
    Changes in Variable Margin & OH Costs(320) bps(140) bps(20) bps(40) bps(340) bps(120) bps30 bps(210) bps
    Total Organic(560) bps270 bps270 bps250 bps(270) bps(70) bps210 bps(80) bps
    Acquisitions/Divestitures————————
    Restructuring/Other210 bps160 bps40 bps(40) bps30 bps40 bps—80 bps
    Total Operating Margin Change(350) bps430 bps310 bps210 bps(240) bps(30) bps210 bps—
             
    Total Operating

    Margin % *    		17.3%23.9%26.8%30.0%24.2%27.8%27.3%23.8%
             
    *Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 40 bps 60 bps 170 bps 20 bps 240 bps 20 bps 80 bps 90 bps **
    ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.08) on GAAP earnings per share for the third quarter of 2021.



    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    SEGMENT DATA (UNAUDITED)

    YTD 2021 vs. YTD 2020 Favorable/(Unfavorable)
    Operating RevenueAutomotive
    OEM    		Food
    Equipment    		Test &
    Measurement
    and
    Electronics    		WeldingPolymers
    & Fluids    		Construction
    Products    		Specialty
    Products    		Total
    ITW
    Organic15.7%15.2%16.8%19.3%12.4%14.0 %10.8%14.9%
    Acquisitions/Divestitures—%—%—%—%—%(0.1)%—%—%
    Translation4.9%3.8%2.9%1.6%2.1%6.0 %2.8%3.5%
    Operating
    Revenue    		20.6%19.0%19.7%20.9%14.5%19.9 %13.6%18.4%


    YTD 2021 vs. YTD 2020 Favorable/(Unfavorable)
    Change in Operating MarginAutomotive
    OEM    		Food
    Equipment    		Test &
    Measurement
    and
    Electronics    		WeldingPolymers
    & Fluids    		Construction
    Products    		Specialty
    Products    		Total
    ITW
    Operating Leverage310 bps350 bps380 bps270 bps240 bps250 bps210 bps300 bps
    Changes in Variable Margin & OH Costs150 bps(20) bps(100) bps60 bps(130) bps(20) bps(20) bps(70) bps
    Total Organic460 bps330 bps280 bps330 bps110 bps230 bps190 bps230 bps
    Acquisitions/Divestitures————————
    Restructuring/Other70 bps60 bps20 bps(20) bps10 bps10 bps(20) bps20 bps
    Total Operating Margin Change 530 bps 390 bps 300 bps 310 bps 120 bps 240 bps 170 bps 250 bps
             
    Total Operating

    Margin % *    		20.3%22.5%27.8%29.6%25.8%27.7%27.4%24.5%
             
    *Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 40 bps 60 bps 160 bps 10 bps 250 bps 20 bps 70 bps 100 bps **
    ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.24) on GAAP earnings per share for the first nine months of 2021.



    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)

    AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)

     Three Months Ended Nine Months Ended
     September 30, September 30,
    Dollars in millions2021 2020 2021 2020
    Operating income$845   $789   $2,643   $1,999  
    Tax rate (as adjusted in 2021)23.4 % 21.3 % 22.9 % 22.0 %
    Income taxes(198)  (168)  (607)  (439) 
    Operating income after taxes$647   $621   $2,036   $1,560  
            
    Invested capital:       
    Trade receivables$2,729   $2,494   $2,729   $2,494  
    Inventories1,524   1,149   1,524   1,149  
    Net plant and equipment1,744   1,736   1,744   1,736  
    Goodwill and intangible assets5,293   5,405   5,293   5,405  
    Accounts payable and accrued expenses(1,964)  (1,784)  (1,964)  (1,784) 
    Other, net(269)  (527)  (269)  (527) 
    Total invested capital$9,057   $8,473   $9,057   $8,473  
            
    Average invested capital$9,084   $8,394   $8,912   $8,536  
    After-tax return on average invested capital28.5 % 29.6 % 30.5 % 24.4 %



    A reconciliation of the tax rate for the three and nine month periods ended September 30, 2021, excluding the third quarter 2021 discrete tax benefit of $21 million related to the utilization of capital losses and the second quarter 2021 discrete tax benefit of $112 million related to a change in the U.K. income tax rate, is as follows:

     Three Months Ended Nine Months Ended
     September 30, 2021 September 30, 2021
    Dollars in millionsIncome Taxes Tax Rate Income Taxes Tax Rate
    As reported$167  20.8% $449  17.7%
    Discrete tax benefit related to the third quarter 202121  2.6% 21  0.8%
    Discrete tax benefit related to the second quarter 2021—  —% 112  4.4%
    As adjusted$188  23.4% $582  22.9%



    ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
    GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)

    FREE CASH FLOW (UNAUDITED)

     Three Months Ended Nine Months Ended Twelve Months
     September 30, September 30, Ended
    Dollars in millions2021 2020 2021 2020 December 31, 2020
    Net cash provided by operating activities$619   $683   $1,783   $2,034   $2,807  
    Less: Additions to plant and equipment(71)  (52)  (217)  (168)  (236) 
    Free cash flow$548   $631   $1,566   $1,866   $2,571  
              
    Net income$639   $582   $2,085   $1,467   $2,109  
              
    Net cash provided by operating activities to Net income conversion rate97 % 117 % 86 % 139 % 133 %
    Free cash flow to Net income conversion rate86 % 108 % 75 % 127 % 122 %

     


    Primary Logo

شارك على،