Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q1 2008 Earnings Presentation
30 slides from Illinois Tool Works's earnings presentation, Apr 16, 2008
Slide 1: ITW Conference Call First Quarter 2008
Exhibit 99.2 ITW Conference Call First Quarter 2008 1
Slide 2: Agenda
ITW Agenda 1. Introduction…………………….. John Brooklier/David Speer 2. Financial Overview…………….. Ron Kropp 3. Operating Segments………..…. John Brooklier 4. Forecast 2008……….…….….… 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 end market conditions, revenue growth, earnings growth, operating income, tax rates
Slide 4: Conference Call Playback
Conference Call Playback Replay number: 203-369-1304 No pass code necessary Telephone replay available through midnight of April 30, 2008 Webcast / PowerPoint replay available at itw.com website 4
Slide 5: Quarterly Highlights
ITW Quarterly Highlights 2007 2008 F(U) Last Year Q1 Q1 Amount % Operating Revenues 3,716.6 4,139.4 422.8 11.4% Operating Income 568.5 520.0 (48.5) -8.5% % of Revenues 15.3% 12.6% -2.7% Income from Continuing Operations Income Amount 385.0 301.4 (83.6) -21.7% Income Per Share-Diluted 0.68 0.57 (0.11
Slide 6: Quarterly Operating Analysis
ITW Quarterly Operating Analysis % F(U) Prior Year Operating Operating Operating Revenues Income Margins Base Manufacturing Business Operating Leverage 0.4% 1.1% 0.1% Nonvolume-related - 0.5% 0.1% Total 0.4% 1.6% 0.2% Acquisitions/Divestitures 6.2% 0.6% -0.7% Translation 4.8% 4.8% 0.1% Impairment -
Slide 7: Non Operating & Taxes
ITW Non Operating & Taxes 2007 2008 F(U) Last Year Q1 Q1 Amount % Operating Income 568.5 520.0 (48.5) -8.5% Interest Expense (24.4) (37.5) (13.1) Other Income (Expense) 15.0 (21.4) (36.4) Income from Continuing Operations-Pretax 559.1 461.1 (98.0) -17.5% Income Taxes 174.1 159.7 14.4 % to Pretax Inc
Slide 8: Invested Capital
ITW Invested Capital 3/31/07 12/31/07 3/31/08 Trade Receivables 2,681.5 2,915.5 3,014.4 Days Sales Outstanding 64.2 61.8 65.5 Inventories 1,601.7 1,625.8 1,766.0 Months on Hand 2.0 1.8 2.0 Prepaids and Other Current Assets 444.2 607.7 529.9 Accounts Payable & Accrued Expenses (1,924.1) (2,196.0) (2,
Slide 9: Debt & Equity
ITW Debt & Equity 3/31/07 12/31/07 3/31/08 Total Capital Short Term Debt 577.1 410.5 1,340.0 Long Term Debt 956.3 1,888.8 1,435.4 Total Debt 1,533.4 2,299.3 2,775.4 Stockholders' Equity 9,156.8 9,351.3 9,248.0 Total Capital 10,690.2 11,650.6 12,023.4 Less: Cash (574.6) (827.5) (927.4) Net Debt & Equ
Slide 10: Cash Flow
ITW Cash Flow 2007 2008 Q1 Q1 Net Income 402.4 303.6 Adjust for Non-Cash Items 77.2 230.8 Changes in Operating Assets & Liabilities (56.8) (40.5) Net Cash From Operating Activities 422.8 493.9 Additions to Plant & Equipment (85.3) (89.0) Free Operating Cash Flow 337.5 404.9 Stock Repurchase (179.9)
Slide 11: Acquisitions
ITW Acquisitions 2007 2008 Q1 Q2 Q3 Q4 Q1 Annual Revenues Acquired 399 213 218 165 230 Purchase Price Cash Paid 263 216 235 163 219 Stock Issued - - - - - Total 263 216 235 163 219 Number of Acquisitions 9 10 18 15 16 11
Slide 12: Industrial Packaging Quarterly Analysis
Industrial Packaging Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 554.6 65.1 11.7% 2008 Q1 623.3 69.0 11.1% $ F(U) 68.7 3.9 -0.6% % F(U) 12.4% 6.1% % F(U) Prior Year Base Business Operating Leverage 0.7% 2.6% 0.2% Nonvolume-related - -7.1% -0.8% Total 0.7% -4.5% -
Slide 13: Industrial Packaging Key Points
Industrial Packaging Key Points • Total segment base revenues: +1% for Q1 ’08 – Strapping consumables/equipment base revenues: -1% – All other industrial packaging base revenues: +6% • Q1 International base revenues: +3% – Strapping consumables base revenues: -3% – Equipment base revenues: -2% • Q1
Slide 14: Power Systems and Electronics Quarterly Analysis
Power Systems and Electronics Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 554.4 116.1 20.9% 2008 Q1 582.4 124.8 21.4% $ F(U) 28.0 8.7 0.5% % F(U) 5.0% 7.5% % F(U) Prior Year Base Business Operating Leverage 0.9% 1.5% 0.1% Nonvolume-related - 3.9% 0.9% Total 0.9%
Slide 15: Power Systems and Electronics Key Points
Power Systems and Electronics Key Points • Total segment base revenues: +1% in Q1 ’08 • Welding accounts for nearly 75% of total segment revenues • In Q1, Welding’s worldwide base revenues: +3% – Welding’s Q1 International base revenues: +18% • Double digit growth in Asia due to high levels of deman
Slide 16: Transportation Quarterly Analysis
Transportation Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 529.3 84.3 15.9% 2008 Q1 594.3 91.7 15.4% $ F(U) 65.0 7.4 -0.5% % F(U) 12.3% 8.7% % F(U) Prior Year Base Business Operating Leverage 1.1% 2.6% 0.2% Nonvolume-related - -3.1% -0.5% Total 1.1% -0.5% -0.3% A
Slide 17: Transportation Key Points
Transportation Key Points • Total segment base revenues: +1% in Q1 ’08 – International base revenues: +6% – North America base revenues: -3% • Auto OEM/Tiers worldwide base revenues: slightly positive in Q1 – International Q1 base revenues: +6% • Growth driven by 7% increase in international builds:
Slide 18: Construction Products Quarterly Analysis
Construction Products Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 474.5 52.6 11.1% 2008 Q1 484.0 50.4 10.4% $ F(U) 9.5 (2.2) -0.7% % F(U) 2.0% -4.1% % F(U) Prior Year Base Business Operating Leverage -5.7% -21.0% -1.8% Nonvolume-related - -3.9% -0.5% Total -5.7%
Slide 19: Construction Products Key Points
Construction Products Key Points • Total segment base revenues: -6% in Q1 ’08 • North America Q1 base revenues: -18% – Q1 Residential: -20% vs. -29% housing start decrease in Q1 ’08 – Q1 Renovation: -16% due to weakness at Big Box stores – Q1 Commercial Construction base revenues: -8% largely due to
Slide 20: Food Equipment Quarterly Analysis
Food Equipment Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 390.6 69.4 17.8% 2008 Q1 509.7 71.0 13.9% $ F(U) 119.1 1.6 -3.9% % F(U) 30.5% 2.4% % F(U) Prior Year Base Business Operating Leverage 6.1% 15.0% 1.5% Nonvolume-related - -8.7% -1.5% Total 6.1% 6.3% 0.0% A
Slide 21: Food Equipment Key Points
Food Equipment Key Points • Total segment base revenues: +6% in Q1 ’08 • North America Q1 base revenues: +2% – Q1 Institutional base revenues: +1% – Q1 Service base revenues: +5% – Q1 Retail base revenues: +3% • International Q1 base revenues: +13% – Q1 Asia-Pacific: base revenues: +16% • Growth dri
Slide 22: Decorative Surfaces Quarterly Analysis
Decorative Surfaces Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 283.7 28.3 10.0% 2008 Q1 302.5 33.3 11.0% $ F(U) 18.8 5.0 1.0% % F(U) 6.6% 17.5% % F(U) Prior Year Base Business Operating Leverage 2.2% 9.0% 0.7% Nonvolume-related - 5.2% 0.5% Total 2.2% 14.2% 1.2%
Slide 23: Decorative Surfaces Key Points
Decorative Surfaces Key Points • Total segment base revenues: +2% in Q1 ’08 • North America Q1 base revenues: +1% in Q1 – Q1 laminate base revenues: flat due to larger commercial construction exposure and success of premium priced high definition laminate product line – Q1 flooring base revenues: +1
Slide 24: Polymers and Fluids Quarterly Analysis
Polymers and Fluids Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 201.7 30.4 15.1% 2008 Q1 256.8 37.3 14.5% $ F(U) 55.1 6.9 -0.6% % F(U) 27.3% 22.8% % F(U) Prior Year Base Business Operating Leverage 4.5% 13.1% 1.3% Nonvolume-related - -0.6% -0.1% Total 4.5% 12.5%
Slide 25: Polymers and Fluids Key Points
Polymers and Fluids Key Points • Total segment base revenues: +4% in Q1 ’08 – International Q1 base revenues: +7% – North America Q1 base revenues: +1% • Q1 worldwide polymers base revenues: +5% – International Q1 base revenues: +8% – North America Q1 base revenues: +2% • Industrial adhesives base r
Slide 26: All Other Quarterly Analysis
All Other Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q1 739.2 122.4 16.6% 2008 Q1 800.5 42.4 5.3% $ F(U) 61.3 (80.0) -11.3% % F(U) 8.3% -65.3% % F(U) Prior Year Base Business Operating Leverage -1.6% -4.4% -0.5% Nonvolume-related - 10.2% 1.7% Total -1.6% 5.8% 1.2%
Slide 27: All Other Key Points
All Other Key Points • Total segment base revenues: -2% in Q1 ’08 – North America Q1 base revenues: -2% – International Q1 base revenues: -3% • Q1 worldwide consumer packaging Q1 base revenues: -1% – Weakness in marking, labeling and coating offset strength in Hi- Cone and Zip-Pak • Q1 worldwide tes
Slide 28: 2008 Forecast
ITW 2008 Forecast Mid Low High Point 2nd Quarter Total Revenues 9% 12% 11% Diluted Income per Share - Continuing $0.94 $1.00 $0.97 % F(U) 2007 8% 15% 11% Full Year Total Revenues 8% 12% 10% Diluted Income per Share - Continuing $3.35 $3.49 $3.42 % F(U) 2007 2% 6% 4% 28
Slide 29: 2008 Forecast Key Assumptions
ITW 2008 Forecast Key Assumptions • Exchange rates hold at current levels. • Acquired revenues in the $0.8 billion to $1.2 billion range. • Share repurchases of $0.8 billion to $1.0 billion for the year. • No further impairment of goodwill/intangibles. • Net nonoperating expense, including interest
Slide 30: ITW Conference Call Q&A
ITW Conference Call Q&A First Quarter 2008 30