Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q4 2014 Earnings Presentation
15 slides from Illinois Tool Works's earnings presentation, Jan 27, 2015
Slide 1: Fourth Quarter 2014 Conference Call
Fourth Quarter 2014 Conference Call E. Scott Santi, President & CEO Michael M. Larsen, Senior Vice President & CFO Aaron H. Hoffman, Vice President, Investor Relations January 27, 2015
Slide 2: Forward Looking Statements
Forward Looking Statements Safe Harbor Statement This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the expected impact and timing of strategic initiatives and related
Slide 3: 2014 Highlights
2014 Highlights ● 2014 results driven by solid execution on enterprise strategy – $4.67 EPS +29%, 19.9% Operating Margin +210 bps, 18.9% ROIC* +260 bps ● Returned $5 billion to shareholders through share repurchases and dividends ● Significant progress on Portfolio Management, Business Structure Sim
Slide 4: Q4 2014 Financial Summary
Q4 2014 Financial Summary Q4 2014 Actuals Highlights ● Enterprise initiatives contribute 120 bps of margin EPS +28% $1.18 expansion EPS $0.92 ● Organic revenue up 2.3% … -1 percentage point drag $3.6B $3.5B from ongoing product line simplification ● Total revenue down 1.4% … -3.5% impact from foreig
Slide 5: Q4 2014 Organic Revenue Growth
Q4 2014 Organic Revenue Growth Growth by Geography Highlights ● North America up 3% Organic revenue +2.3% – Welding +10%, Food Equipment +5%, Automotive OEM +4% 3% ● International up 2% – Europe up 1% 2% 2% 2% • Automotive OEM +12% and Food Equipment +5% 1% – Asia Pacific up 2% • China +4%: Automoti
Slide 6: Q4 2014 Operating Margin
Q4 2014 Operating Margin Operating Margin Key Drivers 19.6% 17.7% Q4 Enterprise Initiatives +120 bps Q4‘13 Q4‘14 Volume +60 OM% V bps Automotive OEM 22.3% +190 Price/Cost +5 T&M and Electronics 15.1 (60) Food Equipment 21.7 +220 Other +5 Polymers & Fluids 17.5 +150 Margin Expansion +190 bps Welding
Slide 7: 2014 Financial Summary
2014 Financial Summary 2014 Actuals Highlights EPS +29% ● Record operating margin of 19.9% … enterprise initiatives $4.67 contribute 120 bps EPS $3.63 ● Organic revenue up 2.6% … -1 percentage point drag from $14.5B ongoing product line simplification … total revenue up 2.5% $14.1B ● 110% Free Opera
Slide 8: 2014 Segment Results
2014 Segment Results ($’s in millions) Full Year 2014 Actuals Automotive OEM Organic Operating Margin Organic +7% Total +3% +190 bps Revenue Growth OM% V bps $604 $620 22.3% 20.4% Automotive OEM +9% 23.2% +270 T&M and Electronics +2 15.4 +60 Q4‘13 Q4‘14 Q4‘13 Q4‘14 Food Equipment +5 20.8 +200 Total
Slide 9: Q4 2014 Segment Results
Q4 2014 Segment Results ($’s in millions) Test & Measurement and Electronics Food Equipment Organic -1% Organic +5% -60 bps +220 bps Total -3% Total +1% 21.7% $559 $541 15.7% 15.1% $554 $547 19.5% Q4‘13 Q4‘14 Q4‘13 Q4‘14 Q4‘13 Q4‘14 Q4‘13 Q4‘14 Total Revenue Operating Margin Total Revenue Operating
Slide 10: Q4 2014 Segment Results
Q4 2014 Segment Results ($’s in millions) Polymers & Fluids Welding Organic +1% Organic +4% +150 bps +230 bps Total -4% Total +2% 17.5% 25.4% $472 $447 $458 23.1% $452 16.0% Q4‘13 Q4‘14 Q4‘13 Q4‘14 Q4‘13 Q4‘14 Q4‘13 Q4‘14 Total Revenue Operating Margin Total Revenue Operating Margin Highlights Highl
Slide 11: Q4 2014 Segment Results
Q4 2014 Segment Results ($’s in millions) Construction Products Specialty Products Organic +2% Organic -3% +190 bps +110 bps Total -5% Total -5% 15.7% $510 19.0% $422 $482 17.9% $402 13.8% Q4‘13 Q4’14 Q4‘13 Q4‘14 Q4‘13 Q4‘14 Q4‘13 Q4‘14 Total Revenue Operating Margin Total Revenue Operating Margin H
Slide 12: 2015 Financial Guidance
2015 Financial Guidance 2015 Guidance Q1 2015 Guidance EPS +12% EPS +16% at mid-point at mid-point $5.15 - $5.35 $1.13 - $1.21 EPS $4.67 EPS $1.01 Organic +2.5 - 3.5% Organic +2 - 3% $14.5B Total -1 to -2% $3.6B Total -2 to -3% Total Total Revenue Revenue 2014 2015F Q1’14 Q1’15F ● ~21% operating mar
Slide 13: Questions
Questions
Slide 14: Appendix
Appendix
Slide 15: Additional Segment Detail
Additional Segment Detail Q4 2014 vs. Q4 2013 Favorable / (Unfavorable) Automotive T&M and Food Polymers & Construction Specialty Total Revenue OEM Electronics Equipment Fluids Welding Products Products Organic 7.3% (0.5)% 4.7% 0.7% 4.2% 1.6% (2.6)% Divestitures (0.4) - - - - (1.3) - Translation (4.