Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q4 2010 Earnings Presentation
32 slides from Illinois Tool Works's earnings presentation, Jan 31, 2011
Slide 1: ITW Conference Call Fourth Quarter 2010
Exhibit 99.2 ITW Conference Call Fourth Quarter 2010 1
Slide 2: Agenda
ITW Agenda 1. Introduction…………………...….. John Brooklier/David Speer 2. Financial Overview…………..….. Ron Kropp pp 3. Reporting Segments………....…. John Brooklier 4 2011 Forecasts 4. Forecasts…………………… Ron Kropp 5. Q & A………………......……...…... John Brooklier/Ron Kropp/David Speer 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 performance, revenue growth, growth diluted income per share
Slide 4: Conference Call Playback
Conference Call Playback Replay number: 402-998-1344 No pass code necessary Telephone replay available through midnight of February 14, 2011 Webcast / PowerPoint replay available at www.itw.com 4
Slide 5: Quarterly Highlights
ITW Quarterly Highlights 2009 2010 F(U) Last Year Q4 Q4 Amount % Operating Revenues 3,757.4 4,169.3 411.9 11.0% Operating Income 476 3 476.3 579 5 579.5 103 2 103.2 21 7% 21.7% % of Revenues 12.7% 13.9% 1.2% Income from Continuing Operations Income Amount 495.6 392.8 ((102.8)) -20.7% Income Per Shar
Slide 6: Quarterly Operating Analysis
ITW Q Quarterly t l Operating O ti Analysis A l i % F(U) Prior Year Operating Operating Operating Revenues Income Margins Base Manufacturing Business Operating Leverage 9.1% 29.5% 2.4% Changes in VM & OH costs - -16.1% 16 1% -1.9% 1 9% Total 9.1% 13.4% 0.5% Acquisitions/Divestitures 3.4% 1.0% -0.3%
Slide 7: Non Operating & Taxes
ITW Non Operating & Taxes 2009 2010 F(U) Last Year Q4 Q4 Amount % Operating Income 476.3 579.5 103.2 21.7% Interest Expense (43.8) (44.0) (0.2) Other Income (expense) 5.6 3.1 (2.5) Income from Continuing Operations-Pretax 438.1 538.6 100.5 22.9% Income Taxes (57.5) 145.8 (203.3) % to Pretax Income -
Slide 8: Full Year Highlights
ITW Full Year Highlights 2009 2010 F(U) Last Year Amount % Operating Revenues 13,877.1 15,870.4 1,993.3 14.4% Operating Income 1 386 0 1,386.0 2 356 7 2,356.7 970 7 970.7 70 0% 70.0% % of Revenues 10.0% 14.8% 4.8% Income from Continuing Operations Income Amount 969.5 1,527.2 , 557.7 57.5% Income Per
Slide 9: Full Year Operating Analysis
ITW F ll Year Full Y Operating O ti Analysis A l i % F(U) Prior Year Operating Operating Operating R Revenues I Income M Margins i Base Manufacturing Business Operating Leverage 10.8% 44.2% 3.0% Changes in VM & OH costs - 6.0% 0.6% Total 10.8% 50.2% 3.6% Acquisitions/Divestitures 3.0% 1.9% -0.2% Tra
Slide 10: Invested Capital
ITW Invested Capital 12/31/09 9/30/10 12/31/10 Trade Receivables 2,491.5 2,627.7 2,678.1 Days Sales Outstanding 59.7 58.9 57.8 Inventories 1,356.2 1,544.7 1,547.4 Months on Hand 17 1.7 18 1.8 17 1.7 Prepaids and Other Current Assets 276.2 286.0 251.2 Accounts Payable & Accrued Expenses (2,049.0) (2,
Slide 11: Debt & Equity
ITW Debt & Equity 12/31/09 9/30/10 12/31/10 Total Capital Short Term Debt 213.7 644.9 317.8 Long Term Debt 2 914 9 2,914.9 2 737 3 2,737.3 2 512 0 2,512.0 Total Debt 3,128.6 3,382.2 2,829.8 Stockholders' Equity 8,817.9 8,890.8 9,381.2 Total Capital 11,946.5 12,273.0 12,211.0 Less: Cash (1,318.8) (1,
Slide 12: Cash Flow
ITW Cash Flow 2009 2010 Q4 Q4 Net Income 507.4 392.8 Adjust for Non-Cash Items (233.1) 28.9 Changes g in Operating p g Assets & Liabilities 232.0 37.3 Net Cash From Operating Activities 506.3 459.0 Additions to Plant & Equipment (72.7) (90.6) Free Operating Cash Flow 433.6 368.4 Acquisitions (163.3)
Slide 13: Acquisitions
ITW Acquisitions 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 A Annual lRRevenues A Acquired i d 75 54 6 155 26 253 120 131 Purchase Price Cash Paid 65 33 3 185 27 199 145 160 Number of Acquisitions 6 5 2 7 4 7 5 8 13
Slide 14: Transportation Quarterly Analysis
Transportation Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q4 592 2 592.2 86 5 86.5 14 6% 14.6% 2010 Q4 644.1 91.2 14.2% $ F(U) 51.9 4.7 -0.4% % F(U) 8.8% 5.4% % F(U) Prior Year Base Business O Operating ti Leverage L 7.1% 7 1% 17.9% 17 9% 1.5% 1 5% Changes in VM &
Slide 15: Transportation Key Points
Transportation Key Points • Transportation segment Q4 ’10 organic revenues: +7 +7.1% 1% vs vs. Q4 ’09 • Auto OEM/Tiers: Worldwide base revenue growth of 8.5% in Q4 ’10 vs. vs Q4 ’09 highlighted ITW product penetration capabilities in environment of more difficult auto build “comps” – North American
Slide 16: Industrial Packaging Quarterly Analysis
Industrial Packaging Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q4 529 1 529.1 37 9 37.9 7 2% 7.2% 2010 Q4 595.5 56.1 9.4% $ F(U) 66.4 18.2 2.2% % F(U) 12.6% 48.0% % F(U) Prior Year Base Business Operating Leverage 12.6% 72.5% 3.8% Changes in VM & OH costs - -63.3%
Slide 17: Industrial Packaging Key Points
Industrial Packaging Key Points • Segment Q4 ’10 organic revenues: +12.6% reflected strong industrial production activity and related growth for many of our businesses – Total Q4 ’10 10 North America industrial packaging base revenues: +15.3% vs. Q4 ’09 – Total Q4 ’10 international industrial packag
Slide 18: Food Equipment Quarterly Analysis
Food Equipment Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q4 489.4 68.6 14.0% 2010 Q4 511.3 64.3 12.6% $ F(U) 21.9 (4.3) -1.4% % F(U) 4.4% -6.3% % F(U) Prior Year Base Business Operating Leverage 5.5% 16.6% 1.5% Changes in VM & OH costs - -22.8% -3.0% Total 5.5% -6
Slide 19: Food Equipment Key Points
Food Equipment Key Points • Segment Q4 ’10 10 organic revenues: +5.5% +5 5% vs vs. Q4 ’09; 09; equipment sales improved in Q4 • North America Q4 ’10 base revenues: +0.8% vs. Q4 ’09 – Equipment base revenues: +3.3% in Q4 ’10 vs. Q4 ’09 – Service base revenues: -1.2% in Q4 ’10 vs. Q4 ’09 • Internation
Slide 20: Power Systems and Electronics Quarterly Analysis
Power Systems and Electronics Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q Q4 411.8 60.7 14.7% 2010 Q4 505.7 101.0 20.0% $ F(U) 93.9 40.3 5.3% % F(U) 22.8% 66.5% % F(U) Prior Year Base Business Operating Leverage 21.4% 21 4% 55.9% 55 9% 4.2% 4 2% Changes in VM & OH
Slide 21: Power Systems and Electronics Key Points
Power Systems and Electronics Key Points • Segment Q4 ’10 organic revenues: +21.4% due to strong contributions from welding and PC board fabrication units • In Q4 ’10, ’10 worldwide welding base revenues: +18 +18.1% 1% vs vs. Q4 ’09 – Q4 ’10 North America welding base revenues: +23.3% vs. Q4 ’09 due
Slide 22: Construction Products Quarterly Analysis
Construction Products Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q4 432.3 42.6 9.9% 2010 Q4 479.2 55.3 11.5% $ F(U) 46.9 12.7 1.6% % F(U) 10.8% 29.7% % F(U) Prior Year Base Business O Operating ti Leverage L 2.6% 2 6% 10.5% 10 5% 0.8% 0 8% Changes in VM & OH costs
Slide 23: Construction Products Key Points
Construction Products Key Points • Segment Q4 ’10 organic revenues: +2.6% due to the positive international (European) construction environment • International Q4 ’10 base revenues: +4.2% vs. Q4 ’09 – Q4 ’10 Europe base revenues: +8.3% vs. Q4 ‘09 – Q4 ’10 Asia Pacific base revenues: -0.2% vs. Q4 ’09
Slide 24: Polymers and Fluids Quarterly Analysis
Polymers and Fluids Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q4 332 3 332.3 46 3 46.3 13 9% 13.9% 2010 Q4 366.6 49.4 13.5% $ F(U) 34.3 3.1 -0.4% % F(U) 10.3% 6.6% % F(U) Prior Year Base Business Operating Leverage 5.2% 5 2% 15.8% 15 8% 1.4% 1 4% Changes in VM & O
Slide 25: Polymers and Fluids Key Points
Polymers and Fluids Key Points • Segment Q4 ’10 organic revenues: +5.2% +5 2% reflected better industrial demand for both polymers and fluids products in international end markets • Q4 ’10 worldwide polymers: – International base revenues: +6.6% vs. Q4 ’09 due to strength in Latin America and Asia P
Slide 26: Decorative Surfaces Quarterly Analysis
Decorative Surfaces Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q4 255 9 255.9 24 0 24.0 9 4% 9.4% 2010 Q4 255.6 23.5 9.2% $ F(U) (0.3) (0.5) -0.2% % F(U) -0.1% -2.4% % F(U) Prior Year Base Business Operating Leverage 2.3% 9.7% 0.7% Changes in VM & OH costs - -31.3%
Slide 27: Decorative Surfaces Key Points
Decorative Surfaces Key Points • Segment Q4 ’10 organic revenues: +2.3% vs. Q4 ’09 • North America laminate Q4 ’10 base revenues: +6 +6.5% 5% vs. Q4 ’09 due to improved commercial construction environment and ongoing product innovation by Wilsonart • International Q4 ’10 base revenues: +2.4% vs. Q4
Slide 28: All Other Quarterly Analysis
All Other Quarterly Analysis Operating Operating Operating Revenues Income Margins 2009 Q4 733 8 733.8 109 6 109.6 14 9% 14.9% 2010 Q4 836.3 138.7 16.6% $ F(U) 102.5 29.1 1.7% % F(U) 14 0% 14.0% 26 6% 26.6% % F(U) Prior Year Base Business Operating Leverage 11.2% 11 2% 35.0% 35 0% 3.2% 3 2% Changes
Slide 29: All Other Key Points
All Other Key Points • Segment Q4 ’10 organic revenues: +11.2% vs. Q4 ’09 • Q4 ’10 worldwide test and measurement base revenues: +19.5% vs. Q4 ’09; equipment orders improved in Asia Pacific (China) • Q4 ’10 worldwide finishing base revenues: +16.7% vs. Q4 ’09; strong growth driven by both internatio
Slide 30: 2011 Forecast
ITW 2011 F Forecastt Mid Low High Point 1st Quarter 2011 Total Revenues vs vs. 2010 (Estimated)* (Estimated) 12% 15% 13.5% 13 5% Diluted Income per Share - Continuing $0.81 $0.87 $0.84 Full Year 2011 Total Revenues vs. 2010 (Estimated)* 11.5% 14.5% 13% Diluted Income per Share - Continuing $3.60 $3.
Slide 31: 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 $30 to $40 million for the full year • Tax rate range of 29.0% to 30.0% for the 1st quarter and full year 31
Slide 32: ITW Conference Call Q&A
ITW Conference Call Q&A Fourth Quarter 2010 32