Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q3 2011 Earnings Presentation
23 slides from Illinois Tool Works's earnings presentation, Oct 25, 2011
Slide 1: ITW Conference Call Third Quarter 2011
ITW Conference Call Third Quarter 2011 October 25, 2011 1 Q3 2011 Conference Call
Slide 2: Agenda
ITW Agenda 1. Introduction…………………...….. John Brooklier 2. Third Quarter Highlights………... David Speer 3. Financial Overview…………..….. Ron Kropp 4. Reporting Segments………....…. John Brooklier 5. 2011 Forecasts…..……….….…… Ron Kropp 6. Q & A………………......……...…... John Brooklier/Ron Kropp/David Speer 2 Q3 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: 203-369-0637; No pass code necessary Telephone replay available through midnight of Nov. 8, 2011 Webcast / PowerPoint replay available at www.itw.com Supplemental financial and investor information will be available on the ITW website under the “Investor Relat
Slide 5: Q3 2011 Highlights
Q3 2011 Highlights • Total revenues grew 16.2%; Organic revenues increased 6.2% • Overall end market demand in Q3 was largely in line with Q2 levels and our forecast expectations • Produced diluted EPS growth of 25% • Generated $704 million in free operating cash flow – Raised our annual dividend pa
Slide 6: Quarterly Highlights
ITW Quarterly Highlights $ in Millions 2010 2011 F(U) Last Year Q3 Q3 Amount % Operating Revenues 3,941.1 4,580.5 639.4 16.2% Operating Income 619.7 714.3 94.6 15.3% % of Revenues 15.7% 15.6% (0.1) pts Income from Continuing Operations Income Amount 403.1 490.1 87.0 21.6% Income Per Share-Diluted 0.
Slide 7: Quarterly Operating Analysis
ITW Quarterly Operating Analysis % F(U) Prior Year Operating Operating Operating Revenues Income Margins Base Manufacturing Business Operating Leverage 6.2% 16.2% 1.5% Changes in VM & OH costs - -7.8% -1.2% Total 6.2% 8.4% 0.3% Acquisitions/Divestitures 5.3% 3.1% -0.3% Translation 4.7% 4.9% 0.1% Imp
Slide 8: Non Operating & Taxes
ITW Non Operating & Taxes $ in Millions 2010 2011 F(U) Last Year Q3 Q3 Amount % Operating Income 619.7 714.3 94.6 15.3% Interest Expense (43.5) (48.6) (5.1) Other Income / (Expense) 1.0 24.7 23.7 Income from Continuing Operations - Pretax 577.2 690.4 113.2 19.6% Income Taxes 174.1 200.3 (26.2) Tax R
Slide 9: Invested Capital
ITW Invested Capital $ in Millions 9/30/10 6/30/11 9/30/11 Trade Receivables 2,747.5 3,146.0 2,985.4 Days Sales Outstanding 61.0 * 61.4 58.7 Inventories 1,612.7 1,919.7 1,794.3 Months on Hand 1.8 ** 1.9 1.8 Prepaids and Other Current Assets 294.5 507.4 498.1 Accounts Payable & Accrued Expenses (2,22
Slide 10: Debt & Equity
ITW Debt & Equity $ in Millions 9/30/10 6/30/11 9/30/11 Short Term Debt 639.4 1,450.4 1,040.8 Long Term Debt 2,812.1 2,622.8 3,522.1 Total Debt 3,451.5 4,073.2 4,562.9 Stockholders' Equity 9,266.7 10,422.0 9,852.0 Total Capital 12,718.2 14,495.2 14,414.9 Less: Cash (1,725.3) (1,230.7) (1,318.9) Net
Slide 11: Cash Flow
ITW Cash Flow $ in Millions 2010 2011 Q3 Q3 Net Income 422.0 507.6 Adjust for Non-Cash Items 126.0 167.3 Changes in Trade Receivables 34.1 58.3 Changes in Inventories (38.9) 65.0 Changes in all other Operating Assets & Liabilities (19.3) (11.0) Net Cash From Operating Activities 523.9 787.2 Addition
Slide 12: Acquisitions
ITW Acquisitions $ in Millions 2010 2011 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Annual Revenues Acquired 26 253 120 131 530 329 156 296 Purchase Price Cash Paid 27 199 145 160 531 556 190 480 Number of Acquisitions 4 7 5 8 24 6 7 8 12 Q3 2011 Conference Call
Slide 13: Transportation Quarterly Analysis Q3 2011
Transportation Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs Q3’10) Revenues Income Margins 2011 Q3 790.6 120.9 15.3% • Segment organic revenues: 9.5% 2010 Q3 628.4 92.0 14.6% • Auto OEM/Tiers: Worldwide base $ Inc(Dec) 162.2 28.9 0.7% revenue growth of
Slide 14: Industrial Packaging Quarterly Analysis Q3 2011
Industrial Packaging Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs. Q3’10) Revenues Income Margins 2011 Q3 664.3 70.4 10.6% • Segment organic revenues: 6.3% reflected reasonable industrial 2010 Q3 575.1 63.4 11.0% production activity worldwide, $ Inc(Dec
Slide 15: Power Systems and Electronics Quarterly Analysis Q3 2011
Power Systems and Electronics Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs. Q3’10) Revenues Income Margins 2011 Q3 750.5 147.8 19.7% • Segment organic revenues: 11.7% largely due to strong contributions 2010 Q3 619.3 128.0 20.7% from worldwide welding a
Slide 16: Food Equipment Quarterly Analysis Q3 2011
Food Equipment Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs. Q3’10) Revenues Income Margins 2011 Q3 511.5 83.1 16.3% • Segment organic revenues: -0.5% as equipment sales were weak in 2010 Q3 487.5 86.2 17.7% North America and Europe; service $ Inc(Dec)
Slide 17: Construction Products Quarterly Analysis Q3 2011
Construction Products Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs. Q3’10) Revenues Income Margins 2011 Q3 513.8 63.7 12.4% • Segment organic revenues: 2.9% as North America and Europe 2010 Q3 455.8 52.7 11.6% both post positive organic revenue growth $
Slide 18: Polymers and Fluids Quarterly Analysis Q3 2011
Polymers and Fluids Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs Q3’10) Revenues Income Margins 2011 Q3 362.4 61.8 17.1% • Segment organic revenues: 8.2% reflected stronger 2010 Q3 277.7 49.9 18.0% industrial and niche end market demand for both polymer
Slide 19: Decorative Surfaces Quarterly Analysis Q3 2011
Decorative Surfaces Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs. Q3’10) Revenues Income Margins 2011 Q3 283.2 34.2 12.1% • Segment organic revenues: 8.7% 2010 Q3 251.4 31.5 12.5% • North America laminate base $ Inc(Dec) 31.8 2.7 -0.4% revenues: 7.0% du
Slide 20: All Other Quarterly Analysis Q3 2011
All Other Quarterly Analysis Q3 2011 $ in Millions Operating Operating Operating Key Points (Q3’11 vs. Q3’10) Revenues Income Margins • Segment organic revenues: 2011 Q3 725.7 132.3 18.2% 3.1% 2010 Q3 669.0 115.9 17.3% $ Inc(Dec) 56.7 16.4 0.9% • Worldwide test and measurement base revenues: % Inc(D
Slide 21: 2011 Forecast
ITW 2011 Forecast Mid Low High Point 4th Quarter 2011 Total Revenues 9.5% 12.5% 11.0% Diluted Income per Share from Continuing Operations $0.86 $0.94 $0.90 % F(U) 4th Quarter 2010 30% 42% 36% Full Year 2011 Total Revenues 15.1% 15.9% 15.5% Diluted Income per Share from Continuing Operations $4.04 $4
Slide 22: 2011 Forecast Key Assumptions
ITW 2011 Forecast Key Assumptions • Exchange rates hold at current levels • Acquired revenues in the $800 million to $1 billion range for the year • Restructuring costs of $50 to $60 million for the full year • Tax rate range of 28.5% to 29.5% for Q4 and full year (excludes the impact of the Q1 Aust
Slide 23: ITW Conference Call Q&A
ITW Conference Call Q&A Third Quarter 2011 October 25, 2011 23 Q3 2011 Conference Call