Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q1 2009 Earnings Presentation
29 slides from Illinois Tool Works's earnings presentation, Apr 16, 2009
Slide 1: ITW Conference Call First Quarter 2009
ITW Conference Call First Quarter 2009 1
Slide 2: Agenda
ITW Agenda 1. Introduction…………………...….. John Brooklier/David Speer 2. Financial Overview…………..….. Ron Kropp 3. Reporting Segments………....…. John Brooklier 4. 2009 Second Quarter Forecast… 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, revenue growth, operating income, income from continuing ope
Slide 4: Conference Call Playback
Conference Call Playback Replay number: 402-220-3690 No pass code necessary Telephone replay available through midnight of April 30, 2009 Webcast / PowerPoint replay available at itw.com website 4
Slide 5: 1Q '09 Impairment and Tax Charges
ITW 1Q ’09 Impairment and Tax Charges Less 1Q09 Charges Excluding As Discrete Tax 1Q09 Reported Impairment Adjustments Charges Revenues 2,914.3 2,914.3 Operating Income 57.6 (90.0) 147.6 Margins 2% 5% Pretax Income 22.6 (90.0) 112.6 Taxes (52.0) 5.1 (27.8) (29.3) 230% 5.7% 26.0% Income from Continui
Slide 6: Quarterly Highlights
ITW Quarterly Highlights 2008 2009 F(U) Last Year Q1 Q1 Amount % Operating Revenues 3,823.3 2,914.3 (909.0) -23.8% Operating Income 579.4 57.6 (521.8) -90.1% % of Revenues 15.2% 2.0% -13.2% Income from Continuing Operations Income Amount 521.3 22.6 (498.7) -95.7% Income (Loss) Per Share-Diluted 0.70
Slide 7: Quarterly Operating Analysis
ITW Quarterly Operating Analysis % F(U) Prior Year Operating Operating Operating Revenues Income Margins Base Manufacturing Business Operating Leverage -23.3% -64.3% -8.1% Changes in VM & OH costs - 3.7% 0.7% Total -23.3% -60.6% -7.4% Acquisitions/Divestitures 6.6% -1.6% -0.6% Translation -7.3% -7.5
Slide 8: Non Operating & Taxes
ITW Non Operating & Taxes 2008 2009 F(U) Last Year Q1 Q1 Amount % Operating Income 579.4 57.6 (521.8) -90.1% Interest Expense (37.4) (31.3) 6.1 Other Income (expense) (20.7) (3.7) 17.0 Income from Continuing Operations-Pretax 521.3 22.6 (498.7) -95.7% Income Taxes 151.4 52.0 99.4 % to Pretax Income
Slide 9: Invested Capital
ITW Invested Capital 3/31/08 12/31/08 3/31/09 Trade Receivables 3,014.4 2,426.1 2,076.0 Days Sales Outstanding 66.4 59.4 64.1 Inventories 1,766.0 1,673.2 1,470.9 Months on Hand 2.0 2.1 2.2 Prepaids and Other Current Assets 388.6 367.7 363.5 Accounts Payable & Accrued Expenses (2,218.7) (1,893.0) (1,
Slide 10: Debt & Equity
ITW Debt & Equity 3/31/08 12/31/08 3/31/09 Total Capital Short Term Debt 1,340.0 2,433.5 1,130.8 Long Term Debt 1,435.4 1,243.7 2,740.2 Total Debt 2,775.4 3,677.2 3,871.0 Stockholders' Equity 9,255.0 7,675.1 7,373.7 Total Capital 12,030.4 11,352.3 11,244.7 Less: Cash (927.4) (743.0) (1,121.1) Net De
Slide 11: Cash Flow
ITW Cash Flow 2008 2009 Q1 Q1 Net Income (Loss) 303.6 (39.4) Adjust for Non-Cash Items 230.8 236.7 Changes in Operating Assets & Liabilities (40.5) 249.9 Net Cash From Operating Activities 493.9 447.2 Additions to Plant & Equipment (89.0) (61.0) Free Operating Cash Flow 404.9 386.2 Stock Repurchases
Slide 12: Acquisitions
ITW Acquisitions 2008 2009 Q1 Q2 Q3 Q4 Q1 Annual Revenues Acquired 230 308 847 154 75 Purchase Price Cash Paid 223 439 745 190 64 Stock Issued - - - - - Total 223 439 745 190 64 Number of Acquisitions 16 10 14 10 6 12
Slide 13: Industrial Packaging Quarterly Analysis
Industrial Packaging Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q1 629.7 69.4 11.0% 2009 Q1 426.1 (4.4) -1.0% $ F(U) (203.6) (73.8) -12.0% % F(U) -32.3% -106.3% % F(U) Prior Year Base Business Operating Leverage -24.5% -92.0% -9.9% Changes in VM & OH costs - -4.7%
Slide 14: Industrial Packaging Key Points
Industrial Packaging Key Points • Total segment base revenues: -24.5% for Q1 ’09 vs. -5.7% for Q4 ’08 • Q1 North America base revenues declined 30% as U.S. industrial production declined further to -14.6% in March 2009 – Base revenue declined largely due to notable fall-off in demand for products in
Slide 15: Power Systems and Electronics Quarterly Analysis
Power Systems and Electronics Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q1 582.4 124.1 21.3% 2009 Q1 395.5 24.5 6.2% $ F(U) (186.9) (99.6) -15.1% % F(U) -32.1% -80.2% % F(U) Prior Year Base Business Operating Leverage -31.9% -57.9% -8.1% Changes in VM & OH costs -
Slide 16: Power Systems and Electronics Key Points
Power Systems and Electronics Key Points • Total segment base revenues: -31.9% in Q1 ’09 vs. -10.8% in Q4 ’08 • In Q1, Welding’s worldwide base revenues: -31% – Welding’s Q1 North America base revenues declined 36% as underlying industrial production and related end markets continue to slow in U.S.
Slide 17: Transportation Quarterly Analysis
Transportation Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q1 594.1 91.9 15.5% 2009 Q1 434.6 (17.2) -4.0% $ F(U) (159.5) (109.1) -19.5% % F(U) -26.8% -118.7% % F(U) Prior Year Base Business Operating Leverage -35.5% -88.5% -12.7% Changes in VM & OH costs - -8.3% -2.
Slide 18: Transportation Key Points
Transportation Key Points • Total segment base revenues: -35.5% in Q1 ’09 vs. -20.3% in Q4 ’08 • Auto OEM/Tiers: – North America Q1 base revenues: -46% • Q1 combined build: -51% • Q1 Detroit 3 builds -54%: GM: -59%; Ford: -49%; and Chrysler: -55% • Q1 New Domestics: -45% – International Q1 base reve
Slide 19: Food Equipment Quarterly Analysis
Food Equipment Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q1 509.7 69.6 13.7% 2009 Q1 431.2 43.6 10.1% $ F(U) (78.5) (26.0) -3.6% % F(U) -15.4% -37.4% % F(U) Prior Year Base Business Operating Leverage -9.2% -28.2% -2.9% Changes in VM & OH costs - 0.5% 0.1% Total -
Slide 20: Food Equipment Key Points
Food Equipment Key Points • Total segment base revenues: -9.2% in Q1 ’09 vs. 1.7% in Q4 ’08 • North America Q1 base revenues: -14% as demand for equipment declined – Q1 Institutional/restaurant base revenues: -18% as institutional customers (casual dining restaurants, airports, universities, hotels)
Slide 21: Construction Products Quarterly Analysis
Construction Products Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q1 484.0 50.6 10.4% 2009 Q1 324.0 (11.1) -3.4% $ F(U) (160.0) (61.7) -13.8% % F(U) -33.1% -121.9% % F(U) Prior Year Base Business Operating Leverage -21.2% -84.7% -8.4% Changes in VM & OH costs - -8.2
Slide 22: Construction Products Key Points
Construction Products Key Points • Total segment base revenues: -21.2% in Q1 ’09 vs. -14.6% in Q4 ’08 • North America Q1 base revenues: -31% – Q1 Residential: -43% base revenues vs. -51% Q1 housing starts – Q1 Commercial Construction base revenues: -32% as Dodge Index data shows year-to-date activit
Slide 23: Polymers and Fluids Quarterly Analysis
Polymers and Fluids Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q1 255.5 35.1 13.7% 2009 Q1 248.1 (51.5) -20.8% $ F(U) (7.4) (86.6) -34.5% % F(U) -2.9% -246.7% % F(U) Prior Year Base Business Operating Leverage -16.9% -53.8% -6.1% Changes in VM & OH costs - 11.1% 1.
Slide 24: Polymers and Fluids Key Points
Polymers and Fluids Key Points • Total segment base revenues: -16.9% in Q1 ’09 vs. -7.9% in Q4 ’08 as industrial production rates and MRO demand continued to decline in first quarter • Worldwide Polymers: -18% in Q1 ’09 – NA: -22% in Q1 – Intl: -15% in Q1 • Worldwide Fluids: -20% in Q1 ’09 – NA: -25
Slide 25: All Other Quarterly Analysis
All Other Quarterly Analysis Operating Operating Operating Revenues Income Margins 2008 Q1 781.9 138.7 17.7% 2009 Q1 661.8 73.7 11.1% $ F(U) (120.1) (65.0) -6.6% % F(U) -15.4% -46.9% % F(U) Prior Year Base Business Operating Leverage -18.9% -49.4% -6.7% Changes in VM & OH costs - 10.6% 2.3% Total -1
Slide 26: All Other Key Points
All Other Key Points • Total segment base revenues: -18.9% in Q1 ’09 vs. -7.5% in Q4 ’08 – Q1 worldwide test and measurement base revenues: -13% due to weakening “cap ex” spending in North America, Europe and Asia – Q1 worldwide consumer packaging base revenues: -15% as demand for graphics, decorati
Slide 27: 2nd Quarter 2009 Forecast
ITW 2nd Quarter 2009 Forecast Mid Low High Point 2nd Quarter 2009 (versus 2nd Quarter 2008) Total Revenues -28% -23% -25% Diluted Income per Share - Continuing $0.25 $0.37 $0.31 % F(U) 2nd Quarter 2008 -74% -61% -67% 2nd Quarter 2009 (versus 1st Quarter 2009) Total Revenues 5% 11% 8% Diluted Income
Slide 28: 2nd Quarter 2009 Forecast Key Assumptions
ITW 2nd Quarter 2009 Forecast Key Assumptions • Exchange rates hold at current levels. • Restructuring costs of $50 to $70 million (versus $33 million in 1st quarter 2009) • Net nonoperating expense, including interest expense and other nonoperating income, of $35 to $40 million (versus $35 million
Slide 29: ITW Conference Call Q&A
ITW Conference Call Q&A First Quarter 2009 29