Slide 1: ITW Conference Call Second Quarter 2004
Exhibit 99.2 ITW Conference Call Second Quarter 2004
Slide 2: Agenda
ITW Agenda 1. Introduction……………………..John Brooklier 2. Financial Overview……………...Jon Kinney 3. Manufacturing Segments……… John Brooklier 4. Forecast 2004………………….…Jon Kinney 5. Q & A………………...…………Kinney/Brooklier
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 end market conditions and base business expectations for full year 2004 and the Comp
Slide 4: Conference Call Playback
Conference Call Playback Replay number: 203-369-1569 No pass code necessary Telephone replay available through midnight of August 4, 2004 Webcast / PowerPoint replay available at itw.com website
Slide 5: Quarterly Highlights
ITW Quarterly Highlights 2003 2004 F(U) Last Year Q2 Q2 Amount % Operating Revenues 2,564.0 3,002.3 438.3 17.1% Operating Income 454.1 561.5 107.4 23.7% % of Revenues 17.7% 18.7% 1.0% Income From Continuing Operations Income Amount 284.0 360.4 76.4 26.9% Income Per Share-Diluted 0.92 1.16 0.24 26.1%
Slide 6: Quarterly Operating Analysis
ITW Quarterly Operating Analysis Revenue Income Margins Base Manufacturing Business Operating Leverage 8.4% 19.1% 1.8% Nonvolume-related - -2.8% -0.5% Total 8.4% 16.3% 1.3% Acquisitions / Divestitures 5.7% 2.4% -0.6% Translation 4.2% 3.8% -0.1% Impairment - - - Restructuring - 1.9% 0.3% Leasing & In
Slide 7: Leasing & Investments
ITW Leasing & Investments 2003 2004 F(U) Last Year Q2 Q2 Amount % Operating Revenues 65.8 53.2 (12.6) -19.1% Operating Income 52.1 48.7 (3.4) -6.5% Operating Margins 79.2% 91.5% 12.3%
Slide 8: Non Operating & Taxes
ITW Non Operating & Taxes 2003 2004 F(U) Last Year Q2 Q2 Amount % Operating Income 454.1 561.5 107.4 23.7% Interest Expense (19.1) (18.9) 0.2 Other Income 2.0 3.5 1.5 Income From Continuing Operations-P/T 437.0 546.1 109.1 25.0% Income Taxes 152.9 185.7 (32.8) % to Pre Tax Income 35.0% 34.0% 1.0% In
Slide 9: Invested Capital
ITW Invested Capital 6/30/03 3/31/04 6/30/04 Trade Receivables 1,709.7 1,909.6 1,979.8 Days Sales Outstanding 60.0 63.4 59.3 Inventories 1,011.7 1,070.5 1,098.2 Months on Hand 1.8 1.8 1.7 Other Current Assets 367.0 386.2 383.5 Accounts Payable & Accruals (1,414.5) (1,647.4) (1,729.9) Operating Worki
Slide 10: Debt & Equity
ITW Debt & Equity 6/30/03 3/31/04 6/30/04 Total Capital Short Term Debt 116.8 51.4 60.0 Long Term Debt 1,446.0 920.8 923.5 Total Debt 1,562.8 972.2 983.5 Stockholders' Equity 7,295.3 8,234.1 8,210.2 Total Capital 8,858.1 9,206.3 9,193.7 Less: Leasing & Investments Debt (761.8) (191.8) (143.7) Cash (
Slide 11: Cash Flow
ITW Cash Flow 2003 2004 Q2 Q2 Net Income 276.1 360.4 Adjust for Non-Cash Items 49.8 52.0 Changes in Operating Assets & Liab. (49.6) (49.6) Net Cash From Operating Activities 276.3 362.8 Additions to Plant & Equipment (66.0) (69.3) Proceeds from investments 7.4 20.7 Free Operating Cash Flow 217.7 314
Slide 12: Return on Average Invested Capital
ITW Return on Average Invested Capital 2003 2004 F(U) Current Quarter Q2 Q2 Prior Yr. Operating Income after taxes 295.1 370.6 75.5 Operating Margins 11.5% 12.3% 0.8% Average Invested Capital 6,698.2 7,399.2 701.0 Capital Turnover 1.53 1.62 0.09 Return on Average Invested Capital 17.6% 20.0% 2.4% 20
Slide 13: Acquisitions
ITW Acquisitions 2003 2004 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Annual Revenues Acquired 49 35 231 32 247 168 - - Purchase Price Cash Paid 44 30 74 56 184 183 - - Stock Issued - - - - 2 - - - Total 44 30 74 56 186 183 - - Number of Acquisitions North America Engineered Products 1 - 3 3 2 1 - - Specialty Systems
Slide 14: Key Economic Data
Key Economic Data • June ’04 ISM: 61.1% is down only slightly from 62.5% in March ’04 • US Industrial Production (ex. Tech.): +5.0% in May ’04 compared to +2.2% in March ’04 • Euro-Zone Purchasing Managers’ Index: 54.4% in June ’04 vs. 52.5% in February ’04 • Euro-Zone Industrial Production: +1.6% i
Slide 15: Engineered Products – North America
ITW Engineered Products – North America 2003 2004 F(U) Last Year Q2 Q2 Amount % Operating Revenues 781.7 845.4 63.7 8.1% Operating Income 133.3 149.7 16.4 12.2% Operating Margins 17.1% 17.7% 0.6%
Slide 16: Engineered Products-North America Quarterly Analysis
Engineered Products-North America Quarterly Analysis % F(U) Prior Year Operating Operating Operating Revenue Income Margins Base Business Operating Leverage 8.5% 20.6% 1.9% Nonvolume-related - -11.1% -1.8% Total 8.5% 9.5% 0.1% Acquisitions / Divestitures -0.4% -0.4% - Translation - - - Impairment -
Slide 17: Engineered Products-North America Key Points
Engineered Products-North America Key Points • Total Construction: +11% • ITW construction (Paslode/Buildex/Ramset/ITW Brands) base revenues: +17% for Q2 • Wilsonart base revenues: +6% ; Flooring grows 10+% ; basic laminate increases 5% • Total construction: new housing +15%; renovation/rehab +15%;
Slide 18: Engineered Products-North America Key Points
Engineered Products-North America Key Points • Auto base revenues: +3% for Q2 • Big 3 build rates: -2% for Q2 – GM: -1% – Ford: -5% – Chrysler: +2% • June Big 3 inventories: 85 days – GM: 89 days – Ford: 88 days – Chrysler: 73 days • ITW estimate for 2004: – Q3: -4% – FY: -3% • Industrial: base reve
Slide 19: Engineered Products – International
ITW Engineered Products – International 2003 2004 F(U) Last Year Q2 Q2 Amount % Operating Revenues 470.8 645.6 174.8 37.1% Operating Income 68.2 101.1 32.9 48.3% Operating Margins 14.5% 15.7% 1.2%
Slide 20: Engineered Products-International Quarterly Analysis
Engineered Products-International Quarterly Analysis % F(U) Prior Year Operating Operating Operating Revenue Income Margins Base Business Operating Leverage 9.8% 27.2% 2.3% Nonvolume-related - -0.2% - Total 9.8% 27.0% 2.3% Acquisitions / Divestitures 15.5% 9.5% -0.9% Translation 11.8% 13.9% 0.1% Imp
Slide 21: Engineered Products-International Key Points
Engineered Products-International Key Points • Construction base revenues: +12% in Q2 – Europe: +11% growth (strength in France, Germany, UK, Italy and Denmark) – Austral-Asia: +9% (Paslode/Buildex in Australia) – Wilsonart Intl.: +16% (good activity in China) • Automotive base revenues: +7% in Q2 –
Slide 22: Specialty Systems-North America
ITW Specialty Systems-North America 2003 2004 F(U) Last Year Q2 Q2 Amount % Operating Revenues 842.2 972.2 130.0 15.4% Operating Income 142.7 177.7 35.0 24.6% Operating Margins 16.9% 18.3% 1.4%
Slide 23: Specialty Systems-North America Quarterly Analysis
Specialty Systems-North America Quarterly Analysis % F(U) Prior Year Operating Operating Operating Revenue Income Margins Base Business Operating Leverage 10.8% 26.7% 2.4% Nonvolume-related - -4.2% -0.6% Total 10.8% 22.5% 1.8% Acquisitions / Divestitures 4.6% 2.3% -0.4% Translation - 0.1% - Impairme
Slide 24: Specialty Systems-North America Key Points
Specialty Systems-North America Key Points • Welding base revenues: 20+% in Q2 due primarily to stronger equipment sales to construction and other end markets; consumables and components units also grew sales • Industrial packaging: Signode base revenue grew +13% in Q2; consumables / machinery both
Slide 25: Specialty Systems-International
ITW Specialty Systems-International 2003 2004 F(U) Last Year Q2 Q2 Amount % Operating Revenues 498.4 598.4 100.0 20.1% Operating Income 57.8 84.3 26.5 45.9% Operating Margins 11.6% 14.1% 2.5%
Slide 26: Specialty Systems-International Quarterly Analysis
Specialty Systems-International Quarterly Analysis % F(U) Prior Year Operating Operating Operating Revenue Income Margins Base Business Operating Leverage 2.2% 7.0% 0.6% Nonvolume-related - 12.4% 1.4% Total 2.2% 19.4% 2.0% Acquisitions / Divestitures 7.6% 3.0% -0.7% Translation 10.3% 12.9% - Impairm
Slide 27: Specialty Systems-International Key Points
Specialty Systems-International Key Points • Signode base revenues strengthen in Q2: -Europe: +4% -Asia/Pacific: +10% • Food Equipment: base revenues +2%; operating margins improve 250 basis points in Q2 • Finishing: base revenues +4% in Q2; operating margins improve 180 basis points • Welding: base
Slide 28: 2004 Forecast
ITW 2004 Forecast Mid Low High Point 3rd Quarter Base Revenues 6.5% 8.5% 7.5% Income Per Share-Diluted $1.05 $1.11 $1.08 %F(U) 2003 21% 28% 24% Full Year Base Revenues 6.6% 7.8% 7.2% Income Per Share-Diluted $4.21 $4.35 $4.28 %F(U) 2003 25% 29% 27%
Slide 29: 2004 Forecast Key Assumptions
ITW 2004 Forecast Key Assumptions • Exchange rates hold at current levels. • Acquired revenues in the $500 to $700 million range. • Restructuring cost of $20 to $30 million. • No further goodwill or intangible impairment cost. • Share repurchase will add 5 to 7 cents per share for the year. • Tax ra
Slide 30: ITW Conference Call Q&A
ITW Conference Call Q&A Second Quarter 2004