Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Electrical Products Group 2018 Annual Spring Conference
11 slides from Illinois Tool Works's conference presentation, May 23, 2018
Slide 1: Electrical Products Group Conference
Electrical Products Group Conference May 23, 2018
Slide 2: Forward-Looking Statements; Non-GAAP Measures
FORWARD-LOOKING STATEMENTS NON-GAAP MEASURES The Company uses certain non-GAAP measures in discussing the Company’s performance. The reconciliation of those measures to the most comparable GAAP measures is detailed in ITW’s Form 10-K for 2017 and form 10-Q for the first quarter of 2018, which are av
Slide 3: Our Business Model Is Our Competitive Advantage
OUR BUSINESS MODEL IS OUR COMPETITIVE ADVANTAGE 80/20 Front to Back Process: HOW WE OPERATE Customer-Back Innovation: HOW WE INNOVATE Decentralized, Entrepreneurial Culture: HOW WE EXECUTE EPG Conference May-2018 3
Slide 4: Objectives of Our 2011-2012 Strategy Refresh
OBJECTIVES OF OUR 2011-2012 STRATEGY “REFRESH” 1 2 Maximize ITW’s potential Best position ITW to consistently deliver AND as a highly valued core Differentiated holding Performance for long-term oriented investors IN AN INCREASINGLY COMPETITIVELY INTENSE AND VOLATILE GLOBAL MARKET ENVIRONMENT EPG Co
Slide 5: Our Strategic Framework
OUR STRATEGIC FRAMEWORK $ INVEST ONLY OUR BUSINESS GROWTH: “DO WHAT WE SAY” = WHERE WE HAVE MODEL IS OUR QUALITY EXECUTION IS COMPELLING COMPETITIVE OVER A CRITICAL COMPETITIVE ADVANTAGE QUANTITY DIFFERENTIATOR ADVANTAGE SOLID GROWTH WITH BEST-IN-CLASS MARGINS AND RETURNS EPG Conference May-2018 5
Slide 6: Strategy Execution: Phase II
STRATEGY EXECUTION: PHASE II Phase I Phase II 2012-2017 2018-2022 Operating Margin 16 24% 25%+ After-tax ROIC 15 24% 20%+ Annual Organic Growth (1) - 3% 3 - 5% Incremental Margin 30 - 35% ~35% Annual EPS Growth 10 - 29% 8 - 10% Free Cash Flow % of Net Income 100 - 119% 100%+ Dividend Payout Ratio 22
Slide 7: Strategy Execution: Position ITW as a Highly Valued Core Holding
STRATEGY EXECUTION: POSITION ITW AS A HIGHLY VALUED CORE HOLDING FOR LONG-TERM ORIENTED INVESTORS Strong, Enduring and Adaptable Diversified High-Quality Competitive Advantage: Business Portfolio: • Highly differentiated Business Model • Consistent above-market organic growth • Best-in-class margins
Slide 8: Q1 2018 Financial Performance
Q1 2018 FINANCIAL PERFORMANCE Financial Results Highlights +23% ▪ GAAP EPS of $1.90, an increase of 23% $1.54 $1.90 ▪ Solid demand trends; Revenue grew 8%; organic growth of 3% EPS – All 7 segments and major geographies with positive organic growth ▪ Delivered first quarter records for key performan
Slide 9: Q1 2018 Operating Margin
Q1 2018 OPERATING MARGIN Operating Margin Key Margin Drivers Q1'18 +90 bps Enterprise Initiatives +110 bps 24.1% 23.2% Volume/Other +30 Price/Cost (50) Margin Expansion +90 bps Q1'17 Q1'18 STRONG OPERATING MARGIN PERFORMANCE EPG Conference May-2018 9
Slide 10: 2018 Organic Growth by Segment
2018 ORGANIC GROWTH BY SEGMENT Test & Automotive Food Polymers Construction Specialty Measurement Welding OEM Equipment & Fluids Products Products Electronics 2017 4% 5% 1% 1% 3% 3% 4% 2018E 4 - 5% 4 - 5% 2 - 3% 2 - 3% 5 - 6% 3 - 4% 2 - 3% WELL-POSITIONED FOR CONTINUED PROGRESS IN 2018 EPG Conferenc
Slide 11: 2018 Guidance
2018 GUIDANCE Guidance Highlights ▪ EPS $7.60 - $7.80, up 17% $7.60 - $7.80 ▪ Revenue growth of 5 - 6% EPS $6.59* ▪ Organic growth of 3 - 4% $15.0 - ▪ Operating margin 25 - 25.5%; an increase of 100 - $15.2B REVENUE $14.3B 150 bps with 100 bps from Enterprise Initiatives ▪ After-tax ROIC 27 - 28%; a
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