Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q1 2020 Earnings Presentation
21 slides from Illinois Tool Works's earnings presentation, May 5, 2020
Slide 1: First Quarter 2020 Earnings Conference Call
FIRST QUARTER 2020 EARNINGS CONFERENCE CALL MAY 5, 2020 1
Slide 2: 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: Q1 2020 Financial Performance
Q1 2020 FINANCIAL PERFORMANCE (For Segmen t Det ai l please see t he Appen di x) COMMENTARY GAAP EPS $1.81 $1.77 (2)% • Organic revenue declined (6.6)% • Foreign currency translation (1.5)%, Divestitures (1)% (9)% • Resilient margin performance with continued strong REVENUE $3.6B $3.2B contributions
Slide 4: Managing Through the Global Pandemic
M A N A G I N G T H R O U G H T H E G L O B A L PA N D E M I C The progress we have made in executing our long-term enterprise strategy has put ITW in a position of significant strength in dealing with the global pandemic crisis: • Powerful ITW Business Model • Strong balance sheet • 80/20 FTB • Dec
Slide 5: ITW's Key Priorities
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 ITW’S KEY PRIORITIES: 1 Protect the health and support the well-being of our colleagues 2 Continue to serve our customers with excellence 3 Maintain financial strength, liquidity, and strategic optionality 4 Position the company to fully participate
Slide 6: Protect Health and Well-Being of Colleagues
I T W ’ S K E Y P R I O R I T I E S I N 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 Colleagues • Developed and deployed extensive prevention and response protocols for COVID-19 • Following CDC, WHO, and local government guidance • Adjustm
Slide 7: Continue to Serve our Customers with Excellence
I T W ’ S K E Y P R I O R I T I E S I N 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 2 Continue to Serve our Customers with Excellence • Although some facilities are subject to mandatory shutdowns, approximately 95% of global manufacturing capacity is currently available to serve our customers
Slide 8: Maintain Financial Strength, Liquidity, and Strategic Optionality
I T W ’ S K E Y P R I O R I T I E S I N 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 3 Maintain Financial Strength, Liquidity, and Strategic Optionality A. CONTAINMENT PHASE B. RECOVERY PHASE C. CAPITAL ALLOCATION 8
Slide 9: Containment Phase
M A I N TA I N F I N A N C I A L S T R E N G T H , L I Q U I D I T Y, A N D S T R AT E G I C O P T I O N A L I T Y A. CONTAINMENT PHASE • We currently expect a Q2 revenue decline of (30) to (40)% • Automotive OEM (60) to (70)% • ITW still makes Operating Income of $200 to $400 million and generates
Slide 10: Recovery Phase
M A I N TA I N F I N A N C I A L S T R E N G T H , L I Q U I D I T Y, A N D S T R AT E G I C O P T I O N A L I T Y B. RECOVERY PHASE • FY’20 operating margin ranges under various revenue scenarios: • Revenues down 15% = 19 to 21% operating margin • Revenues down 20% = 18 to 20% operating margin • Re
Slide 11: Capital Allocation: Healthy Balance Sheet
M A I N TA I N F I N A N C I A L S T R E N G T H , L I Q U I D I T Y, A N D S T R AT E G I C O P T I O N A L I T Y C. CAPITAL ALLOCATION ITW has a Healthy Balance Sheet, Generates Significant Free Cash Flow, and has Ample Liquidity Under a Wide Range of Scenarios • Strong balance sheet • More than $
Slide 12: Capital Allocation Priorities
M A I N TA I N F I N A N C I A L S T R E N G T H , L I Q U I D I T Y, A N D S T R AT E G I C O P T I O N A L I T Y C. CAPITAL ALLOCATION 1. We remain strongly committed to our dividend 2. We have ample capacity to execute on high quality strategic opportunities that may emerge 3. Share repurchases s
Slide 13: Leverage Strengths to Participate in the Recovery Phase
I T W ’ S K E Y P R I O R I T I E S I N 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 4 Leverage our Strengths to Position the Company to Fully Participate in the Recovery Phase 3 PRINCIPLES: 1. Make thoughtful and appropriate capacity, cost-structure, and investment adjustments based on recove
Slide 14: Long-Term Strategic Priorities Remain Unchanged
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 ITW’S LONG-TERM STRATEGIC PRIORITIES REMAIN UNCHANGED 1. Achieve and sustain full-potential performance 2. One of the world’s best performing, highest quality, and most respected industrial companies 14
Slide 15: Managing Through the Global Pandemic: Closing Remarks
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 • Stating the obvious, it remains highly uncertain as to how long this global pandemic
Slide 16: Q&A
Q&A 16
Slide 17: Q1 2020 Segment Detail
Q1 2020 SEGMENT DETAIL 17
Slide 18: Q1 2020 Segment Performance: Automotive OEM
Q1 2020 SEGMENT PERFORMANCE ORGANIC REVENUE AND MARGINS AUTOMOTIVE OEM Organic Operating Margin (14)% +30 bps Revenue Q1’20 VPY $806 20.9% 20.6% $696 Automotive OEM (12)% 20.9% +30 bps Food Equipment (6) 24.3 (60) T&M / Electronics (3) 25.1 +100 Q1’19 Q1’20 Q1’19 Q1’20 Total Revenue Operating Margin
Slide 19: Q1 2020 Segment Performance: Food Equipment, Test & Measurement
Q1 2020 SEGMENT PERFORMANCE FOOD EQUIPMENT TEST & MEASUREMENT/ELECTRONICS (7)% (60) bps (8)% +100 bps 24.9% 25.1% $518 $483 24.3% $524 24.1% $485 Q1’19 Q1’20 Q1’19 Q1’20 Q1’19 Q1’20 Q1’19 Q1’20 Total Revenue Operating Margin Total Revenue Operating Margin • Organic revenue (6)% • Organic revenue (3)
Slide 20: Q1 2020 Segment Performance: Welding, Polymers & Fluids
Q1 2020 SEGMENT PERFORMANCE WELDING POLYMERS & FLUIDS (13)% +100 bps (6)% +230 bps 23.6% 29.1% $427 28.1% $416 $393 21.3% $372 Q1’19 Q1’20 Q1’19 Q1’20 Q1’19 Q1’20 Q1’19 Q1’20 Total Revenue Operating Margin Total Revenue Operating Margin • Organic revenue (9)% • Organic revenue (3)% • Equipment (10)%
Slide 21: Q1 2020 Segment Performance: Construction, Specialty Products
Q1 2020 SEGMENT PERFORMANCE CONSTRUCTION PRODUCTS SPECIALTY PRODUCTS (3)% +170 bps (11)% (20) bps 23.4% $465 26.5% $401 $390 21.7% $414 26.3% Q1’19 Q1’20 Q1’19 Q1’20 Q1’19 Q1’20 Q1’19 Q1’20 Total Revenue Operating Margin Total Revenue Operating Margin • Organic revenue ~flat • Organic revenue (9)% •