Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q2 2020 Earnings Presentation
15 slides from Illinois Tool Works's earnings presentation, Jul 31, 2020
Slide 1: Second Quarter 2020 Earnings Conference Call
SECOND QUARTER 2020 EARNINGS CONFERENCE CALL JULY 31, 2020 1
Slide 2: Forward-Looking Statement, Safe Harbor Statement
F O RWA R D - L O O K I N G S TAT E M E N T SAFE HARBOR STATEMENT This presentation and related conference call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding the pot
Slide 3: Containment Phase (Q2)
C O N TA I N M E N T P H A S E ( Q 2 ) KEY STRATEGIES: 1. Full compensation/benefits support for all ITW colleagues 2. Maintain capacity/flexibility to serve our customers with excellence while keeping our people safe 3. Adjust costs “smartly” in response where possible and without negatively impact
Slide 4: ITW's Strategy for Managing Through the Pandemic
I T W ’s S T R AT E G Y F O R M A N A G I N G T H R O U G H T H E PA N D E M I C 1 Protect the health and support the well-being of our people 2 Continue to serve our customers with excellence 3 Maintain financial strength, liquidity, and strategic optionality 4 Win the recovery (not the contraction
Slide 5: Q2 Financial Performance
Q2 FINANCIAL PERFORMANCE COMMENTARY GAAP EPS $1.91 $1.01 • Organic revenue declined 27% - Revenues improved as the quarter progressed - Benefited from diversified, high-quality business portfolio • Operating income of $449M REVENUE $3.6B $2.6B • Operating margin of 17.5% - Operating expense reductio
Slide 6: Revenue by Geography and Month
REVENUE BY GEOGRAPHY AND MONTH Q2’20 ORGANIC REVENUE BY REGION AVG. REVENUE PER WORKING DAY $59M $56M $53M $47M North China $40M America EMEA APAC +1% $33M (7)% (26)% (37)% April May June 2019 (adjusted for divestitures) 2020 UNPRECEDENTED GLOBAL DEMAND ENVIRONMENT … SEQUENTIAL IMPROVEMENT SINCE APR
Slide 7: Q2 2020 Segment Performance
Q2 2020 SEGMENT PERFORMANCE RESILIENT MARGIN PERFORMANCE AUTOMOTIVE OEM Organic Operating Revenue Margin $788 (54)% 22.1% T&M / Electronics (11)% 25.7% $361 (7.8)% Specialty Products (16)% 25.4% Q2’19 Q2’20 Q2’19 Q2’20 Construction Products (9)% 23.7% Total Revenue Operating Margin Polymers & Fluids
Slide 8: Q2 2020 Segment Performance
Q2 2020 SEGMENT PERFORMANCE FOOD EQUIPMENT TEST & MEASUREMENT/ELECTRONICS (39)% (15)% $548 25.6% $533 25.7% $455 24.5% $336 9.2% Q2’19 Q2’20 Q2’19 Q2’20 Q2’19 Q2’20 Q2’19 Q2’20 Total Revenue Operating Margin Total Revenue Operating Margin • Organic revenue (38)% • Organic revenue (11)% • Equipment (
Slide 9: Q2 2020 Segment Performance
Q2 2020 SEGMENT PERFORMANCE WELDING POLYMERS & FLUIDS (29)% (17)% $422 28.8% $427 22.8% 23.1% $354 $298 21.6% Q2’19 Q2’20 Q2’19 Q2’20 Q2’19 Q2’20 Q2’19 Q2’20 Total Revenue Operating Margin Total Revenue Operating Margin • Organic revenue (25)% • Organic revenue (14)% • Equipment (28)%, Consumables (
Slide 10: Q2 2020 Segment Performance
Q2 2020 SEGMENT PERFORMANCE CONSTRUCTION PRODUCTS SPECIALTY PRODUCTS (11)% (18)% $473 $424 $376 25.0% 26.1% $387 25.4% 23.7% Q2’19 Q2’20 Q2’19 Q2’20 Q2’19 Q2’20 Q2’19 Q2’20 Total Revenue Operating Margin Total Revenue Operating Margin • Organic revenue (9)% • Organic revenue (16)% • North America 1%
Slide 11: Updated Performance Scenarios
U P D AT E D 2 0 2 0 P E R F O R M A N C E S C E N A R I O S 2020 FINANCIAL PERFORMANCE RANGES UNDER VARIOUS REVENUE SCENARIOS: 2H Organic FY Organic FY Operating FY Operating Revenues Revenues Margin Income (7)% (12)% 21 - 23% $2.6 - 2.8B (12)% (14.5)% 20 – 22% $2.4 - 2.6B (17)% (17)% 19 – 21% $2.2
Slide 12: Early Stage Recovery Phase Priorities
E A R LY S TA G E R E C O V E RY P H A S E P R I O R I T I E S “WIN THE RECOVERY (NOT THE CONTRACTION)” • Protecting our people and serving our customers with excellence remains “Job #1” • Lean in to the upside: - Remain resourced and staffed to support expected demand 2-3 quarters out - Focused pro
Slide 13: Lean in to the Upside: Share Gain Opportunities Brought About by the Pandemic
L E A N I N TO T H E U P S I D E : S H A R E G A I N O P P O RT U N I T I E S B R O U G H T A B O U T B Y T H E PA N D E M I C AREAS OF OPPORTUNITY ALREADY EMERGING: 1. ITW’s undisrupted ability to supply/deliver - Some meaningful early ‘wins’ 2. Customer Supply Chain Localization - Long-standing “p
Slide 14: Managing Through the Pandemic
M A N A G I N G T H R O U G H T H E PA N D E M I C • We thank the entire ITW team for the exceptional job they have done in adapting to the very unusual and challenging circumstances brought about by the pandemic • While significant uncertainty remains, the strength and resilience of ITW’s powerful
Slide 15: Q&A
Q&A 15