Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q1 2012 Earnings Presentation
19 slides from Illinois Tool Works's earnings presentation, Apr 24, 2012
Slide 1: ITW Conference Call First Quarter 2012
ITW Conference Call First Quarter 2012 April 24, 2012 100 YEARS STRONG
Slide 2: Forward-Looking Statements
Forward-Looking Statements Safe Harbor Statement This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding strategic initiatives and related benefits, operating performance,
Slide 3: Conference Call Playback
Conference Call Playback • Replay number: 866-365-2451; No pass code necessary • Telephone replay available through midnight of May 8, 2012 • Webcast / PowerPoint replay available at www.itw.com • Supplemental financial and investor information will be available on the ITW website under the “Investo
Slide 4: Key Long-Term Initiatives
Key Long-Term Initiatives • Launched “scale up” of decentralized business unit structure to better Business leverage resources and costs as well as focus on long-term profitable growth opportunities Simplification • Action steps rollout in ’12; operational benefits start accruing in ’13 • Retained a
Slide 5: Q1 2012 Highlights
Q1 2012 Highlights $ in Millions, except per share amounts Q1 2012 Q1 2011 Inc/(Dec) • Total revenue growth of 6.4%, with mix of organic and acquired revenues Operating Revenues $ 4,547 $ 4,272 6.4% • Strong North America Operating Income 705 659 7.0% (US) demand drives performance % of Revenues 15.
Slide 6: Q1 2012 vs. Q1 2011 Operating Results
Q1 2012 vs. Q1 2011 Operating Results F(U) to Prior Year • Organic revenue growth: 3.2% Total Operating Operating Revenue Income Margin • Price / cost margin Organic (Base) Business impact: +40 bps Operating Leverage 3.2% 8.5% 0.8% • Acquisition margins Changes in Variable excluding amortization: Ma
Slide 7: Working Capital & Cash Flow
Working Capital & Cash Flow Net Trade Receivables & DSO Inventory & MOH Invested Capital & ROIC * $3,134 $1,824 $13,597 $2,902 $1,768 $12,643 62.0 61.1 15.7% 15.1% 1.9 1.9 Q1 2011 Q1 2012 Q1 2011 Q1 2012 Q1 2011 Q1 2012 Trade Receivables DSO Inventory MOH Invested Capital ROIC * $ In Millions $ In M
Slide 8: Capital Structure
Capital Structure Capital Allocation Priorities • Organic investments focused on key growth platforms and emerging market 1. Organic Investments opportunities 2. Dividends $174M YTD • Over $600M returned to shareholders • $275M annualized revenues acquired in 3. External Investments Q1; led by Brook
Slide 9: Portfolio Management: Divestiture Finishing
Portfolio Management: Divestiture Finishing • On April 2nd, completed sale of the $375 million Finishing businesses to Graco Inc. – $650 million cash transaction – Estimated pretax gain of $450 million to be recorded in the second quarter in discontinued operations – Brands include Gema, Ransburg, D
Slide 10: Revenue Growth by Geography Q1 2012 vs. Q1 2011
Revenue Growth by Geography Q1 2012 vs. Q1 2011 Worldwide International 19% • North America (US) drives organic growth • European performance 12% slightly negative but at forecasted levels 7% • Asia Pacific reflects 3% 3% 4% moderating growth in 2% China and Australia 0% -1% -2% North International
Slide 11: Q1 2012 Segment Results
Q1 2012 Segment Results Q1 2012 % inc (dec) vs. prior year $ in Millions Total Operating Operating Total Organic Operating Organic Revenue Income Margin Revenue (Base) Margin (Base) Revenue * Op Margin * Transportation $ 923 $ 151 16.3% 10.0% 5.1% 0.0% 0.7% Power Systems & 791 169 21.4% 11.1% 6.9% 0
Slide 12: 2012 Guidance
2012 Guidance Full Year Prior Current Q2 Forecast Forecast Forecast Total Revenue 3.5% - 6.0% 5% - 8% 5% - 7% Diluted EPS from Continuing Ops $1.08 - $1.16 $4.02 - $4.26 $4.14 - $4.38 Diluted EPS from Continuing Operations adjusted to exclude Q1 2011 tax matter 12% - 20% 7% - 13% 10% - 16% % F/(U) t
Slide 13: Q&A
Q&A 100 YEARS STRONG PROFITABLE GROWTH, STRONG RETURNS 13
Slide 14: Appendix: GAAP to Non-GAAP Reconciliations
Appendix: GAAP to Non-GAAP Reconciliations 100 YEARS STRONG PROFITABLE GROWTH, STRONG RETURNS 14
Slide 15: Appendix: Income from Continuing Operations
Appendix Income from Continuing Operations * Q1 2011 excludes a $166 million tax benefit, or $0.33 per share, associated with an Australian tax matter. $ in Millions, except per share amounts Q1 2012 Q1 2011 Inc/(Dec) Income from Continuing Operations $ 471 $ 606 -22.4% Adjustment for Q1 2011 Austra
Slide 16: Appendix: Return on Average Invested Capital
Appendix Return on Average Invested Capital The Company uses return on average invested capital (“ROIC”) to measure the effectiveness of its operations' use of invested capital to generate profits. Invested capital represents the net assets of the Company, excluding cash and cash equivalents and out
Slide 17: Appendix: Free Operating Cash Flow
Appendix Free Operating Cash Flow The Company uses free operating cash flow to measure cash flow generated by operations that is available for dividends, acquisitions, share repurchases and debt repayment. Free operating cash flow represents net cash provided by operating activities less additions t
Slide 18: Appendix: Total Debt to EBITDA
Appendix Total Debt to EBITDA The Company uses the ratio of total debt to EBITDA to measure its ability to repay its outstanding debt obligations. The ratio of total debt to EBITDA represents total debt divided by income from continuing operations before interest expense, other income (expense), inc
Slide 19: Appendix: Results by Segment Q1 2012 vs. Q1 2011
Appendix Results by Segment Q1 2012 vs. Q1 2011 Power Total Revenue Systems & Industrial Food Polymers & Decorative Transportation Electronics Packaging Equipment Construction Fluids Surfaces All Other Total Organic (Base) 5.1% 6.9% 1.9% 1.6% 0.5% 1.8% 4.3% 1.1% Acquisitions & Divestitures 6.6% 4.8%