Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q2 2009 Earnings Presentation
30 slides from Illinois Tool Works's earnings presentation, Jul 22, 2009
Slide 1: ITW Conference Call Second Quarter 2009
Exhibit 99.2 ITW Conference Call Second Quarter 2009 1
Slide 2: Agenda
ITW Agenda 1. Introduction…………………...….. John Brooklier/David Speer 2. Financial Overview…………..….. Ron Kropp 3. Reporting Segments………....…. John Brooklier 4. 2009 Third Quarter Forecast…… Ron Kropp 5. Q & A………………......……...…... John Brooklier/Ron Kropp/David Speer 2
Slide 3: Forward-Looking Statements
ITW Forward - Looking Statements This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding operating performance, revenue growth, diluted income per share from continuing ope
Slide 4: Conference Call Playback
Conference Call Playback Replay number: 203-369-3416 No pass code necessary Telephone replay available through midnight of August 5, 2009 Webcast / PowerPoint replay available at itw.com website 4
Slide 5: Quarterly Highlights
ITW Quarterly Highlights 2008 2009 F(U) Last Year Q2 Q2 Amount % Operating Revenues 4,555.9 3,392.9 (1,163.0) -25.5% Operating Income 757.2 334.8 (422.4) -55.8% % of Revenues 16.6% 9.9% -6.7% Income from Continuing Operations Income Amount 528.7 178.9 (349.8) -66.2% Income Per Share-Diluted 1.01 0.3
Slide 6: Quarterly Operating Analysis
ITW Quarterly Operating Analysis % F(U) Prior Year Operating Operating Operating Revenues Income Margins Base Manufacturing Business Operating Leverage -22.2% -55.3% -7.1% Changes in VM & OH costs - 14.6% 3.1% Total -22.2% -40.7% -4.0% Acquisitions/Divestitures 5.3% -0.2% -0.8% Translation -8.8% -8.
Slide 7: Non Operating & Taxes
ITW Non Operating & Taxes 2008 2009 F(U) Last Year Q2 Q2 Amount % Operating Income 757.2 334.8 (422.4) -55.8% Interest Expense (36.6) (43.9) (7.3) Other Income (Expense) 24.3 (19.8) (44.1) Income from Continuing Operations-Pretax 744.9 271.1 (473.8) -63.6% Income Taxes 216.2 92.2 124.0 % to Pretax I
Slide 8: Invested Capital
ITW Invested Capital 6/30/08 3/31/09 6/30/09 Trade Receivables 3,302.3 2,209.7 2,393.2 Days Sales Outstanding 65.2 63.2 63.5 Inventories 1,845.6 1,566.6 1,438.6 Months on Hand 1.9 2.2 1.9 Prepaids and Other Current Assets 408.4 372.2 453.4 Accounts Payable & Accrued Expenses (2,364.4) (1,712.0) (1,9
Slide 9: Debt & Equity
ITW Debt & Equity 6/30/08 3/31/09 6/30/09 Total Capital Short Term Debt 1,465.9 1,131.2 180.5 Long Term Debt 1,462.4 2,744.4 2,855.8 Total Debt 2,928.3 3,875.6 3,036.3 Stockholders' Equity 9,506.9 7,373.7 7,926.1 Total Capital 12,435.2 11,249.3 10,962.4 Less: Cash (640.2) (1,121.1) (616.4) Net Debt
Slide 10: Cash Flow
ITW Cash Flow 2008 2009 Q2 Q2 Net Income 528.1 176.6 Adjust for Non-Cash Items 123.3 204.5 Changes in Operating Assets & Liabilities (201.3) 243.0 Net Cash From Operating Activities 450.1 624.1 Additions to Plant & Equipment (96.0) (57.4) Free Operating Cash Flow 354.1 566.7 Stock Repurchases (200.0
Slide 11: Acquisitions
ITW Acquisitions 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Annual Revenues Acquired 230 308 847 154 75 54 Purchase Price Cash Paid 223 439 745 190 65 35 Number of Acquisitions 16 10 14 10 6 5 11
Slide 12: Industrial Packaging Quarterly Analysis
Industrial Packaging Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 718.0 94.5 13.2% 2009 Q2 460.3 16.3 3.5% $ F(U) (257.7) (78.2) -9.7% % F(U) -35.9% -82.8% % F(U) Prior Year Base Business Operating Leverage -26.1% -84.7% -10.5% Changes in VM & OH costs - 19.2% 3.4
Slide 13: Industrial Packaging Key Points
Industrial Packaging Key Points • Total segment base revenues: -26.1% for Q2 ’09 vs. -24.5% for Q1 ’09 • Q2 North America base revenues declined 31.9% as U.S. industrial production declined further to -15.2% in June 2009 vs. -14.6% in March 2009 – Base revenue declined largely due to notable fall-of
Slide 14: Power Systems and Electronics Quarterly Analysis
Power Systems and Electronics Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 648.8 142.1 21.9% 2009 Q2 398.5 61.2 15.3% $ F(U) (250.3) (80.9) -6.6% % F(U) -38.6% -57.0% % F(U) Prior Year Base Business Operating Leverage -36.5% -62.9% -9.1% Changes in VM & OH costs -
Slide 15: Power Systems and Electronics Key Points
Power Systems and Electronics Key Points • Total segment base revenues: -36.5% in Q2 ’09 vs. -31.9% in Q1 ’09 • In Q2, Welding’s worldwide base revenues: -37% – Q2 North America base revenues:-41.3% – Q2 International base revenues:-26.4% • PC board base revenues declined 59.2% in Q2 due to fall-off
Slide 16: Transportation Quarterly Analysis
Transportation Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 630.4 99.7 15.8% 2009 Q2 502.3 24.3 4.8% $ F(U) (128.1) (75.4) -11.0% % F(U) -20.3% -75.6% % F(U) Prior Year Base Business Operating Leverage -23.7% -55.9% -6.7% Changes in VM & OH costs - 0.2% - Total -2
Slide 17: Transportation Key Points
Transportation Key Points • Total segment base revenues improved quarter to quarter: -23.7% in Q2 ’09 vs. -35.5% in Q1 ’09 • Auto OEM/Tiers: – International Auto Q2 base revenues: -22.5% in Q2 ’09 vs. -44.1% in Q1 ’09 • European Q2 builds: Improve to 4.1 million units in Q2 ‘09 vs. 3.0 million units
Slide 18: Food Equipment Quarterly Analysis
Food Equipment Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 538.5 73.7 13.7% 2009 Q2 451.4 58.4 12.9% $ F(U) (87.1) (15.3) -0.8% % F(U) -16.2% -20.7% % F(U) Prior Year Base Business Operating Leverage -8.5% -25.5% -2.6% Changes in VM & OH costs - 18.5% 2.8% Total
Slide 19: Food Equipment Key Points
Food Equipment Key Points • Total segment base revenues: -8.5% in Q2 ’09 vs. -9.2% in Q1 ’09 • North America Q2 base revenues: -8.4% as demand for equipment declined but better than the -13.7% decrease in Q1 ‘09 – Q2 Institutional/restaurant base revenues: -13.2% vs. -18.1% in Q1 ’09 • International
Slide 20: Construction Products Quarterly Analysis
Construction Products Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 566.2 80.0 14.1% 2009 Q2 370.7 21.7 5.9% $ F(U) (195.5) (58.3) -8.2% % F(U) -34.5% -72.8% % F(U) Prior Year Base Business Operating Leverage -22.1% -65.1% -7.8% Changes in VM & OH costs - 11.4% 2.1
Slide 21: Construction Products Key Points
Construction Products Key Points • Total segment base revenues: -22.1% in Q2 ’09 vs. -21.2% in Q1 ’09 • North America Q2 base revenues: -34% vs. -31% in Q1 ‘09 – Q2 Residential: -43% base revenues; same as Q1 ‘09 – Q2 Commercial Construction base revenues: -32.7% vs. -32.0% in Q1 ‘09 – Q2 Renovation
Slide 22: Polymers and Fluids Quarterly Analysis
Polymers and Fluids Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 299.2 53.7 17.9% 2009 Q2 278.7 28.9 10.4% $ F(U) (20.5) (24.8) -7.5% % F(U) -6.9% -46.1% % F(U) Prior Year Base Business Operating Leverage -15.1% -37.0% -4.6% Changes in VM & OH costs - 14.1% 3.0% T
Slide 23: Polymers and Fluids Key Points
Polymers and Fluids Key Points • Total segment base revenues: -15.1% in Q2 ’09 vs. -16.9% in Q1 ’09 as industrial production rates and MRO demand continued to be under pressure in the second quarter • Worldwide Fluids: -15.9% in Q2 ’09 vs. -19.9% in Q1 ‘09 – Intl: -11.2% in Q2 vs. -16.4% in Q1 – NA:
Slide 24: Decorative Surfaces Quarterly Analysis
Decorative Surfaces Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 336.0 46.8 13.9% 2009 Q2 257.3 34.0 13.2% $ F(U) (78.7) (12.8) -0.7% % F(U) -23.4% -27.2% % F(U) Prior Year Base Business Operating Leverage -16.0% -45.8% -4.9% Changes in VM & OH costs - 32.2% 5.3%
Slide 25: Decorative Surfaces Key Points
Decorative Surfaces Key Points • Total segment base revenues: -16.0% in Q2 ’09 vs. -17.1% in Q1 ‘09 • North America laminate Q2 base revenues: -20.0% in Q2 ’09 vs. -18.6% in Q1 ‘09 – Q2 laminate sales helped by larger commercial construction exposure and success of premium priced high definition lam
Slide 26: All Other Quarterly Analysis
All Other Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q2 833.8 166.7 20.0% 2009 Q2 681.8 90.0 13.2% $ F(U) (152.0) (76.7) -6.8% % F(U) -18.2% -46.0% % F(U) Prior Year Base Business Operating Leverage -20.0% -46.4% -6.6% Changes in VM & OH costs - 14.2% 3.6% Total -2
Slide 27: All Other Key Points
All Other Key Points • Total segment base revenues: -20.0% in Q2 ’09 vs. -18.9% in Q1 ’09 – Q2 worldwide test and measurement base revenues: -15.3% vs. -13.2% in Q1 ’09; weakening “cap ex” spending in North America, Europe and Asia slowing sales – Q2 worldwide consumer packaging base revenues: -12.9
Slide 28: 3rd Quarter 2009 Forecast
ITW 3rd Quarter 2009 Forecast Mid Low High Point 3rd Quarter 2009 (versus 3rd Quarter 2008) Total Revenues -26% -20% -23% Diluted Income per Share - Continuing $0.39 $0.51 $0.45 % F(U) 3rd Quarter 2008 -56% -43% -49% 3rd Quarter 2009 (versus 2nd Quarter 2009) Total Revenues -2% 4% 1% Diluted Income
Slide 29: 3rd Quarter 2009 Forecast Key Assumptions
ITW 3rd Quarter 2009 Forecast Key Assumptions • Exchange rates hold at current levels • Restructuring costs of $30 to $50 million (versus $65 million in 2nd quarter 2009) • Net nonoperating expense, including interest expense and other nonoperating income, of $40 to $45 million (versus $64 million i
Slide 30: ITW Conference Call Q&A
ITW Conference Call Q&A Second Quarter 2009 30