Slide 1: Second Quarter 2016 Conference Call
Second Quarter 2016 Conference Call July 20, 2016
Slide 2: Forward Looking Statement & Non-GAAP Measures
Q2 2016 Forward Looking Statement & Non-GAAP Measures 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 of product line simp
Slide 3: Q2 2016 Highlights
Q2 2016 Highlights ● Strong results: – GAAP EPS of $1.46 … +12% – $0.07 above guidance mid-point • $0.04 operating margin • $0.01 revenue • $0.02 non-operating – 2% organic revenue growth excluding Product Line Simplification (PLS) impact, 1% net organic growth ● Record Quarterly Performance: – Oper
Slide 4: Making good progress in pivot to accelerating organic growth
Making good progress in pivot to accelerating Q2 2016 organic growth Organic Revenue Growth By Segment FY’15 1H’16 V bps Automotive OEM 5.8% 3.4% (240) bps Food Equipment 3.4 4.0 +60 T&M and Electronics (5.2) 0.5 +570 Welding (7.6) (9.9) (230) Polymers & Fluids (2.0) 1.2 +320 Construction Products 3
Slide 5: Financial Performance
Q2 2016 Financial Performance Q2 Results Highlights EPS +12% ● GAAP EPS of $1.46 +12%, $0.07 above guidance mid-point $1.46 GAAP EPS $1.30 ● 1% organic revenue growth, 2% excluding PLS – 6 of 7 seven segments with positive organic growth $3.4B $3.4B – Consumer facing +3%, Industrial facing (2)% – EM
Slide 6: Operating Margin Performance
Q2 2016 Operating Margin Performance Q2 Operating Margin Key Margin Drivers +180 bps Q2'16 Enterprise Initiatives +120 bps 23.1% 21.3% Price/Cost +20 Volume/Other +40 Margin Expansion +180 bps Q2'15 Q2'16 Enterprise Initiatives drive record operating margin performance 6
Slide 7: Segment Performance
Q2 2016 Segment Performance Q2 Operating Margin by Segment Automotive OEM $670 +4% +130 bps $649 25.8% 24.5% OM% V bps Automotive OEM 25.8% +130 bps Food Equipment 25.0 +300 Q2'15 Q2'16 Q2'15 Q2'16 Total Revenue Operating Margin T&M and Electronics 18.6* +250 Highlights Welding 24.9 (120) ● Organic
Slide 8: Segment Performance
Q2 2016 Segment Performance Food Equipment Test & Measurement/Electronics +4% +300 bps +2% +250 bps $535 25.0% $507 18.6% $518 22.0% $496 16.1% Q2'15 Q2'16 Q2'15 Q2'16 Q2'15 Q2'16 Q2'15 Q2'16 Total Revenue Operating Margin Total Revenue Operating Margin Highlights Highlights ● Organic revenue +5% …
Slide 9: Segment Performance
Q2 2016 Segment Performance Welding Polymers & Fluids (12)% (120) bps $446 (1)% - bps $443 $426 26.1% $375 24.9% 20.9% 20.9% Q2'15 Q2'16 Q2'15 Q2'16 Q2'15 Q2'16 Q2'15 Q2'16 Total Revenue Operating Margin Total Revenue Operating Margin Highlights Highlights ● Organic revenue (11)% … Equipment (13)%,
Slide 10: Segment Performance
Q2 2016 Segment Performance Construction Products Specialty Products +1% +440 bps (0.4)% +250 bps $486 $484 26.0% $419 $424 24.3% 23.5% 19.9% Q2'15 Q2'16 Q2'15 Q2'16 Q2'15 Q2'16 Q2'15 Q2'16 Total Revenue Operating Margin Total Revenue Operating Margin Highlights Highlights ● Organic revenue +3% ● Or
Slide 11: Acquisition of EF&C completed July 1, 2016
Q2 2016 Acquisition of EF&C completed July 1, 2016 ● Highly complementary ~$470 million addition to ITW’s Automotive OEM segment ● Broadens our ability to serve global and regional customers and expands our long-term growth potential – Expands ITW’s ability to drive additional growth in global conte
Slide 12: 2016 Financial Outlook (incl. EF&C acquisition)
Q2 2016 2016 Financial Outlook (incl. EF&C acquisition) 2016 Guidance Highlights EPS +9% ● Raising guidance $0.10 to GAAP EPS $5.50 to $5.70 $5.50 - $5.70 – Strong Q2 results and continued strong operating margin performance GAAP EPS $5.13 – Expect that demand remains stable and assuming current for
Slide 13: Q&A
WTA/ Q&A