Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q2 2018 Earnings Presentation
12 slides from Illinois Tool Works's earnings presentation, Jul 23, 2018
Slide 1: Second Quarter 2018 Earnings Conference Call
Second Quarter 2018 Earnings Conference Call July 23, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements NON-GAAP MEASURES The company uses certain non-GAAP measures in discussing the company’s performance. The reconciliation of those measures to the most comparable GAAP measures is detailed in ITW’s press release for the second quarter of 2018, which is available at www.itw.
Slide 3: Q2 2018 Financial Performance
Q2 2018 Financial Performance Financial Results Highlights ▪ GAAP EPS of $1.97, an increase of 17% +17% $1.97 ▪ Total revenue grew 7%; organic growth of 4% EPS $1.69 – All 7 segments with positive organic growth; North America 5% ▪ Delivered second quarter records for key performance metrics REVENUE
Slide 4: Operating Margin
Q2 2018 Operating Margin Operating Margin Key Margin Drivers Q2'18 +10 bps Enterprise Initiatives +110 bps 24.2% 24.3% +50 bps Volume +70 Legal +40 bps ex. legal Price/Cost (70) 23.8% Growth Investments / Other (60) Margin Expansion +50 bps Q2 2017 Legal Settlement (40) Q2'17 Q2'18 Total Margin Expa
Slide 5: 1H 2018 Financial Performance
1H 2018 Financial Performance Financial Results 1H Highlights +20% ▪ Good growth momentum with organic growth of 3% $3.87 – All segments with positive organic growth EPS $3.23 – North America 4%, International 2% REVENUE $7.1B $7.6B ▪ Excellent operational execution with continued margin improvement
Slide 6: Segment Performance: Automotive OEM and Sequential Summary
Q2 2018 Segment Performance Sequential Segment Performance Automotive OEM Organic Growth Operating Margin +7% +20 bps $879 22.5% 22.3% Q1’18 Q2’18 Q1’18 Q2’18 $820 Automotive OEM 1% 3% 24.1% 22.5% Food Equipment ~flat 2 24.6 25.4 T&M and Q2'17 Q2'18 Q2'17 Q2'18 8 4 23.4 23.5 Electronics Total Revenu
Slide 7: Segment Performance: Food Equipment and Test & Measurement/Electronics
Q2 2018 Segment Performance Food Equipment Test & Measurement/Electronics +5% (100) bps $554 +7% +160 bps $553 26.4% 23.5% $529 25.4% 21.9% $519 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Total Revenue Operating Margin Total Revenue Operating Margin Q2 Performance Q2 Performance ▪ Organic growt
Slide 8: Segment Performance: Welding and Polymers & Fluids
Q2 2018 Segment Performance Welding Polymers & Fluids +14% 29.3% +210 bps +2% (20) bps 27.2% $437 $445 21.4% 21.2% $440 $385 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Total Revenue Operating Margin Total Revenue Operating Margin Q2 Performance Q2 Performance ▪ Organic growth of 13%; Equipment
Slide 9: Segment Performance: Construction Products and Specialty Products
Q2 2018 Segment Performance Construction Products Specialty Products +4% +50 bps +7% (20) bps 24.0% 24.5% 28.3% 28.1% $522 $444 $490 $425 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Total Revenue Operating Margin Total Revenue Operating Margin Q2 Performance Q2 Performance ▪ Organic growth of 2%
Slide 10: Raw Material Cost/Tariff Update
Raw Material Cost/Tariff Update ▪ Continue to execute well on our strategy to offset raw material cost inflation with pricing actions on a $ for $ basis − Raw material cost inflation is manageable ... increases represent ~3% of total spend − No negative earnings impact in FY’18 (same as 1H’18) … dil
Slide 11: 2018 Guidance
2018 Guidance Financial Guidance Highlights +15% ▪ Adjusting GAAP EPS guidance by $0.10 $7.50 - $7.70 − ($0.12) currency impact in 2nd Half vs. prior guidance EPS $6.59* − 15% EPS growth at the midpoint $14.9 - ▪ Solid underlying demand trends, resilient business portfolio $15.1B − Total revenue gro
Slide 12: Q&A
THY Q&A