Illinois Tool Works Inc. · NYSE:ITW

Illinois Tool Works — Electrical Products Group Spring Conference 2019

13 slides from Illinois Tool Works's conference presentation, May 21, 2019

  1. Slide 1: E. Scott Santi, Chairman & CEO – EPG Conference

    E. SCOTT SANTI, CHAIRMAN & CEO • Powerful and Proprietary Business Model • Diversified High-Quality Business Portfolio EPG Conference • Strong Cash Generator and Disciplined Allocator of Capital 21 May 2019 • Selective High Quality Acquisitions • Consistent Top-tier Performance over the Long-term 1

  2. Slide 2: Forward-Looking Statement / Safe Harbor Statement

    F O RWA R D - L O O K I N G S TAT E M E N T SAFE HARBOR STATEMENT This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the expected impact of tariffs and raw material infla

  3. Slide 3: ITW's Business Model Is Our Competitive Advantage

    ITW’S BUSINESS MODEL IS OUR COMPETITIVE ADVANTAGE THE ITW BUSINESS MODEL DELIVERS: 80/20 Front to Back HOW WE 1 ADVANTAGED COMPETITIVE POSITION IN THE = INDUSTRIES IN WHICH WE OPERATE: Management Process OPERATE • Superior performance and value for our “80” customers Customer-Back HOW WE = • High qu

  4. Slide 4: ITW's Enterprise Strategy

    I T W ’ S E N T E R P R I S E S T R AT E G Y 1 PORTFOLIO DISCIPLINE: Operate only in industries where we can generate significant differentiated competitive advantage from the ITW Business Model long-term 2 QUALITY OF 80/20 FTB PRACTICE: Operate with excellence in the practice of the ITW’s 80/20 FTB

  5. Slide 5: ITW's Business Model Is Our Competitive Advantage: Segment Margin vs. Peers

    I T W ’ S B U S I N E S S M O D E L I S O U R C O M P E T I T I V E A D VA N TA G E ITW SEGMENT OPERATING MARGIN VS. PEER AVERAGE* 2018 27% 28% 27% 26% 25% 24% 23% 21% 17% 16% 14% 12% 13% 11% Auto OEM Test & Meas Food Polymers Welding Construction Specialty and Elect ** Equipment & Fluids ** Product

  6. Slide 6: 2012 to 2018 Performance

    2 0 1 2 TO 2 0 1 8 P E R F O R M A N C E OPERATING MARGIN AFTER-TAX ROIC** EARNINGS PER SHARE +840 +1370 15% bps bps CAGR 24.3% 28.2% $7.60 15.9% 14.5% $3.21 2012* 2018 2012 2018 2012** 2018 * As reported in the 2012 Form 10-K 6 ** See Appendix for the reconciliations from GAAP to non-GAAP measures

  7. Slide 7: Leveraging Our Business Model to Full Potential

    L E V E R A G I N G O U R B U S I N E S S M O D E L TO F U L L P O T E N T I A L PORTFOLIO DISCIPLINE + BUSINESS MODEL PRACTICE EXCELLENCE 2018 SEGMENT OPERATING MARGIN 27% 26% 28% 27% 23% 25% 24% Auto Test & Meas Food Polymers Welding Construction Specialty OEM and Electronics * Equipment & Fluids

  8. Slide 8: ITW's Enterprise Strategy

    I T W ’ S E N T E R P R I S E S T R AT E G Y 1 PORTFOLIO DISCIPLINE: ~90% Operate only in industries where we can generate complete significant differentiated competitive advantage from the ITW Business Model long-term MORE WORK TO BE DONE 2 QUALITY OF 80/20 FTB PRACTICE: ~70% IN ORDER TO Operate wi

  9. Slide 9: Finishing the Job

    FINISHING THE JOB = 1-2 percentage points of additional improvement in enterprise organic growth rate 3-4 percentage points of additional structural margin improvement 9

  10. Slide 10: Acquisitions

    ACQUISITIONS • TIGHT STRATEGIC FIT: Highly targeted acquisitions that expand ITW’s long-term organic growth potential WE WILL ONLY ACQUIRE BUSINESSES THAT AND ... ARE ACCRETIVE TO ITW’S 3-5% ANNUAL ORGANIC GROWTH GOAL • 80/20 IMPACT: The potential to generate significant margin improvement and ITW-c

  11. Slide 11: ITW's Core Business in 2023

    ITW’S CORE BUSINESS IN 2023: Finishing the job: 1-2 percentage points of additional improvement in enterprise organic growth rate 3-4 percentage points of additional structural margin improvement 100+% ~28% ~40% 3 - 5% Free Cash ~50% Operating After-tax Organic 35% 7 - 10% Flow as Dividend Margin RO

  12. Slide 12: Appendix

    APPEN DI X 12

  13. Slide 13: GAAP to Non-GAAP Reconciliations

    G A A P TO N O N - G A A P R E C O N C I L I AT I O N S Segment Peer Group Definitions Adjusted Return on Average Invested Capital For the Years Ended Automotive OEM: Actuant, Allison Transmission Holdings Inc., Anixter, Delphi and BorgWarner Dollars in millions December 31, 2012 December 31, 2018 T

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