Illinois Tool Works Inc. ITW reported third-quarter 2024 adjusted earnings of $2.65 per share, which surpassed the Zacks Consensus Estimate of $2.53. Earnings increased 4% year over year.

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Illinois Tool’s revenues of $3.97 billion missed the consensus estimate of $4.01 billion. The top line declined 1.6% year over year owing to a decrease of 1.4% in organic sales. While acquisition increased revenues by 0.2%, unfavorable foreign currency translation had an adverse impact of 0.4%.

ITW’s Segmental Performance

Test & Measurement and Electronics’ revenues were down 0.2% year over year to $697 million. Our estimate for segmental revenues was $696.5 million. Revenues from Automotive Original Equipment Manufacturer decreased 3.3% year over year to $772 million. Our estimate for segmental revenues was $813.8 million.

Food Equipment generated revenues of $677 million, down 0.2% year over year. Our estimate for segmental revenues was $700.2 million. Welding revenues were $462 million, down 1.3% year over year. Our estimate for segmental revenues was $452.9 million.

Construction Products’ revenues were down 8.1% year over year to $479 million. Our estimate for segmental revenues was $510.1 million. Revenues of $438 million from Specialty Products reflected an increase of 5.7% year over year. Our estimate for segmental revenues was $417.5 million. Polymers & Fluids’ revenues of $448 million declined 1.9% year over year. Our estimate for segmental revenues was $463.6 million.

Illinois Tool Works Inc. Price, Consensus and EPS Surprise

Illinois Tool Works Inc. price-consensus-eps-surprise-chart | Illinois Tool Works Inc. Quote

ITW’s Margin Profile

Illinois Tool’s cost of sales decreased 3.8% year over year to $2.23 billion. Selling, administrative and research and development expenses increased 7% year over year to $658 million. The operating margin was 26.5%, stable from the year-ago quarter. Enterprise initiatives contributed 130 basis points (bps) to the operating margin.

Balance Sheet and Cash Flow

At the end of the third quarter, Illinois Tool had cash and equivalents of $947 million compared with $1.1 billion at the end of December 2023. Long-term debt was $6.6 billion compared with $6.3 billion at the end of December 2023.

In the first nine months of 2024, Illinois Tool generated net cash of $2.2 billion from operating activities, reflecting a decline of 13.3% from the year-ago number. Capital spending on the purchase of plant and equipment was $319 million, down 1.5% year over year. Free cash flow of $1.85 billion decreased 15.1% year over year.