Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q1 2010 Earnings Presentation
30 slides from Illinois Tool Works's earnings presentation, 2010
Slide 1: ITW Conference Call First Quarter 2010
ITVA/ ITW Conference Call First Quarter 2010
Slide 2: Agenda
ITW Agenda 1. Introduction…………………...….. John Brooklier/David Speer 2. Financial Overview…………..….. Ron Kropp 3. Reporting Segments………....…. John Brooklier 4. 2010 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, revenue growth, diluted income per share from continuing ope
Slide 4: Conference Call Playback
Conference Call Playback Replay number: 203-369-3795 No pass code necessary Telephone replay available through midnight of May 4, 2010 Webcast / PowerPoint replay available at itw.com website 4
Slide 5: Quarterly Highlights
ITW Quarterly Highlights 2009 2010 F(U) Last Year Q1 Q1 Amount % Operating Revenues 3,146.4 3,606.4 460.0 14.6% Operating Income 91.3 483.9 392.6 430.1% % of Revenues 2.9% 13.4% 10.5% Income from Continuing Operations Income (Loss) Amount (8.0) 294.3 302.3 NM Income (Loss) Per Share-Diluted (0.02) 0
Slide 6: Quarterly Operating Analysis
ITW Quarterly Operating Analysis Operating Operating Revenues Margins Base Manufacturing Business Operating Leverage 7.5% 2.6% Changes in VM & OH costs - 5.5% Total 7.5% 8.1% Acquisitions/Divestitures 2.0% -0.2% Translation 5.4% -0.3% Impairment - 2.7% Restructuring - 0.2% Other -0.3% - Total 14.6%
Slide 7: Non Operating & Taxes
ITW Non Operating & Taxes 2009 2010 F(U) Last Year Q1 Q1 Amount % Operating Income 91.3 483.9 392.6 430.1% Interest Expense (31.5) (44.6) (13.1) Other Income (expense) (4.3) 6.0 10.3 Income from Continuing Operations-Pretax 55.5 445.3 389.8 702.3% Income Taxes 63.5 151.0 (87.5) % to Pretax Income 11
Slide 8: Invested Capital
ITW Invested Capital 3/31/09 12/31/09 3/31/10 Trade Receivables 2,209.7 2,491.5 2,450.4 Days Sales Outstanding 63.2 59.7 61.2 Inventories 1,566.6 1,356.2 1,413.1 Months on Hand 2.2 1.7 1.8 Prepaids and Other Current Assets 372.2 276.2 282.2 Accounts Payable & Accrued Expenses (1,712.0) (2,049.0) (1,
Slide 9: Debt & Equity
ITW Debt & Equity 3/31/09 12/31/09 3/31/10 Total Capital 1,131.2 213.7 324.4 Long Term Debt 2,744.4 2,914.9 2,807.2 Total Debt 3,875.6 3,128.6 3,131.6 Stockholders' Equity 7,373.7 8,817.9 8,743.0 Total Capital 11,249.3 11,946.5 11,874.6 Less: Cash (1,121.1) (1,318.8) (1,417.6) Net Debt & Equity 10,1
Slide 10: Cash Flow
ITW Cash Flow 2009 2010 Q1 Q1 Net Income (Loss) (39.4) 294.3 Adjust for Non-Cash Items 236.1 149.6 Changes in Operating Assets & Liabilities 250.3 (164.5) Net Cash From Operating Activities 447.0 279.4 Additions to Plant & Equipment (63.9) (60.7) Free Operating Cash Flow 383.1 218.7 Acquisitions (64
Slide 11: Acquisitions
ITW Acquisitions 2009 2010 Q1 Q2 Q3 Q4 Q1 Annual Revenues Acquired 75 54 6 155 26 Purchase Price Cash Paid 65 33 3 185 25 Number of Acquisitions 6 5 2 7 4 11
Slide 12: Transportation Quarterly Analysis
Transportation Quarterly Analysis Ope ra ting Ope ra ting Ope ra ting Re ve nue s Incom e Ma rgins 2009 Q1 433.5 (19.1) -4.4% 2010 Q1 587.8 80.6 13.7% $ F(U) 154.3 99.7 18.1% 35.6% % F(U) Prior Ye a r Ba se Busine ss Ope ra ting Le ve ra ge 32.0% 8.8% - 7.2% Tota l 32.0% 16.0% Acquisitions/Dive stit
Slide 13: Transportation Key Points
Transportation Key Points • Total segment base revenues: +32.0% in Q1 ’10 as auto builds significantly ramped up in North America and Europe versus Q1 ’09 • Auto OEM/Tiers: Worldwide base revenues +39.1% in Q1 ’10 vs. Q1 ’09 – North American Q1 ’10 auto builds: 2.9 million vehicles vs. 1.7 million v
Slide 14: Industrial Packaging Quarterly Analysis
Industrial Packaging Quarterly Analysis Ope ra ting Ope ra ting Ope ra ting Re ve nue s Incom e Ma rgins 2009 Q1 432.4 (2.6) -0.6% 2010 Q1 523.4 51.4 9.8% $ F(U) 91.0 54.0 10.4% % F(U) 21.0% Ba se Busine ss Ope ra ting Le ve ra ge 10.9% 3.4% Cha nge s in VM & OH costs - 7.7% Tota l 10.9% 11.1% Acqui
Slide 15: Industrial Packaging Key Points
Industrial Packaging Key Points • Total segment base revenues continued to show signs of improvement: +10.9% in Q1 ’10 vs. Q1 ’09 as industrial production metrics in U.S. trend positive • Total North American industrial packaging base revenues: +19.8% in Q1 ’10 vs. Q1 ’09 – End markets associated wi
Slide 16: Food Equipment Quarterly Analysis
Food Equipment Quarterly Analysis O p e ra tin g O p e ra tin g O p e ra tin g Re ve n u e s In co m e M a rg in s 2009 Q 1 431.2 44.4 10.3% 2010 Q 1 429.4 50.6 11.8% $ F (U) (1.8) 6.2 1.5% % F (U) -0.4% Ba se Bu sin e ss O p e ra tin g L e ve ra g e -5.2% -1.7% Ch a n g e s in V M & O H co sts - 3.
Slide 17: Food Equipment Key Points
Food Equipment Key Points • Total segment Q1 ’10 base revenues: -5.2% vs. Q1 ’09 • North America Q1 ’10 base revenues: -2.7% vs. Q1 ’09 as customers continue to delay equipment purchases – Project side of business slower; replacement side of business stronger • North America Q1 ’10 service base reve
Slide 18: Power Systems and Electronics Quarterly Analysis
Power Systems and Electronics Quarterly Analysis Ope ra ting Ope ra ting Ope ra ting Re ve nue s Incom e Ma rgins 2009 Q1 391.6 25.0 6.4% 2010 Q1 445.4 92.5 20.8% $ F(U) 53.8 67.5 14.4% % F(U) 13.7% Ba se Busine ss Ope ra ting Le ve ra ge 10.7% 3.1% Cha nge s in VM & OH costs - 4.7% Tota l 10.7% 7.8
Slide 19: Power Systems and Electronics Key Points
Power Systems and Electronics Key Points • Total Q1 ’10 segment base revenues: +10.7% vs. Q1 ’09 • Q1 ’10 PC board fabrication base revenues significantly improved: +89.4% vs. Q1 ’09 as consumer electronics demand continues to be very strong • In Q1 ’10, worldwide welding base revenues: -1.4% vs. Q1
Slide 20: Construction Products Quarterly Analysis
Construction Products Quarterly Analysis Ope ra ting Ope ra ting Ope ra ting Re ve nue s Incom e M a rgins 2009 Q1 324.0 (10.2) -3.2% 2010 Q1 369.9 25.4 6.9% $ F(U) 45.9 35.6 10.1% % F(U) 14.2% % F(U) P rior Ye a r Ba se Busine ss Ope ra ting Le ve ra ge 0.5% 0.2% - 12.5% Tota l 0.5% 12.7% Acquisiti
Slide 21: Construction Products Key Points
Construction Products Key Points • Total segment base revenues: +0.5% in Q1 ’10 vs. Q1 ’09 • North America Q1 ’10 base revenues: -2.0% vs. Q1 ‘09 – Q1 ’10 residential base revenues: +7.6% vs. Q1 ’09; Q1 new housing starts at 617,000 units – Q1 ’10 renovation base revenues: -6.0% vs. Q1 ’09 – Q1 ’10
Slide 22: Polymers and Fluids Quarterly Analysis
Polymers and Fluids Quarterly Analysis Ope ra ting Ope ra ting Ope ra ting Re ve nue s Incom e M a rgins 2009 Q1 257.7 (48.1) -18.7% 2010 Q1 305.0 38.1 12.5% $ F(U) 47.3 86.2 31.2% 18.3% % F(U) P rior Ye a r Ba se Busine ss Ope ra ting Le ve ra ge 7.6% 4.2% - 4.4% Tota l 7.6% 8.6% Acquisitions 3.8%
Slide 23: Polymers and Fluids Key Points
Polymers and Fluids Key Points • Total Q1 ’10 segment base revenues: +7.6% vs. Q1 ’09 • Q1 ’10 base revenues for worldwide fluids: +13.9% vs. Q1 ’09 – International base revenues increased 15.1% in Q1 ’10; North America base revenues grew 11.5% • Q1 ’10 base revenues for worldwide polymers: +4.7% vs
Slide 24: Decorative Surfaces Quarterly Analysis
Decorative Surfaces Quarterly Analysis Ope ra ting Ope ra ting Ope ra ting Re ve nue s Incom e M a rgins 2009 Q1 232.1 28.0 12.1% 2010 Q1 235.6 22.4 9.5% $ F(U) 3.5 (5.6) -2.6% % F(U) 1.5% Ba se Busine ss Ope ra ting Le ve ra ge -2.6% -0.8% Cha nge s in V M & OH costs - 0.8% Tota l -2.6% 0.0% Acquis
Slide 25: Decorative Surfaces Key Points
Decorative Surfaces Key Points • Total Q1 ’10 segment base revenues: -2.6% vs. Q1 ’09 • North America laminate Q1 ’10 base revenues: -2.6% vs. Q1 ’09 – Due to North American commercial construction mix, demand for high pressure laminate remained constrained • International Q1 ’10 base revenues: -2.5
Slide 26: All Other Quarterly Analysis
All Other Quarterly Analysis O p e ra tin g O p e ra tin g O p e ra tin g Re ve n u e s In co m e M a rg in s 2 009 Q 1 656 .8 7 3.8 11 .2% 2 010 Q 1 731 .8 12 3.0 16 .8% $ F (U ) 75 .0 4 9.2 5 .6% % F (U ) 11 .4% % F (U ) P rio r Ye a r B a se B u sin e ss O p e ra tin g L e ve ra g e 2 .6% 0 .9% -
Slide 27: All Other Key Points
All Other Key Points • Total Q1 ’10 segment base revenues: +2.6% vs. Q1 ’09 – Q1 ’10 industrial/appliance base revenues: +12.9% vs. Q1 ’09; improvement still related to energy efficiency initiatives in appliance sector – Q1 ’10 worldwide consumer packaging base revenues: +4.2% vs. Q1 ’09 – Q1 ’10 wo
Slide 28: 2010 Forecast
ITW 2010 Forecast Mid Low High Point 2nd Quarter 2010 Total Revenues 15% 19% 17% Diluted Income per Share - Continuing $0.74 $0.86 $0.80 % F(U) 2nd Quarter 2009 106% 139% 122% Full Year 2010 Total Revenues 10% 14% 12% Diluted Income per Share - Continuing $2.72 $3.08 $2.90 % F(U) 2009 41% 60% 50% 28
Slide 29: 2010 Forecast Key Assumptions
ITW 2010 Forecast Key Assumptions • Exchange rates hold at current levels • Acquired revenues in the $300 to $500 million range for the year • Restructuring costs of $50 to $80 million for the full year • Tax rate range of 28.75% to 29.25% for the 2nd quarter and a range of 29.75% to 30.25% for the
Slide 30: Q&A
ITVA/ ITW Conference Call Q&A First Quarter 2010