Illinois Tool Works Inc. · NYSE:ITW

Illinois Tool Works — Q4 2016 Earnings Presentation

14 slides from Illinois Tool Works's earnings presentation, Jan 25, 2017

  1. Slide 1: Fourth Quarter 2016 Conference Call

    Fourth Quarter 2016 Conference Call January 25, 2017

  2. 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 the expected impact of product line simplification activities and e

  3. Slide 3: Q4 2016 Performance

    Q4 2016 CONFERENCE CALL Q4 2016 Performance Financial Results Highlights EPS +18%  GAAP EPS of $1.45 vs. $1.36 guidance mid-point – $0.03 from better than expected organic growth and margin $1.45 – $0.06 net benefit from non-recurring items GAAP EPS $1.23  Total revenue growth was 4%; organic grow

  4. Slide 4: Operating Margin Expansion

    Q4 2016 CONFERENCE CALL Q4 2016 Operating Margin Expansion Operating Margin Key Margin Drivers Q4‘16 +150 bps Enterprise Initiatives +130 bps 22.2% Ex. EF&C Price/Cost (10) EF&C Impact +110 bps 21.8% As Reported Volume/Other +30 20.7% Margin Expansion +150 bps EF&C Margin Impact (40) Total Margin Ex

  5. Slide 5: Segment Performance: Automotive OEM and Food Equipment

    Q4 2016 CONFERENCE CALL Segment Performance Automotive OEM Food Equipment 25.2% +320 bps $773 +26% Ex. EF&C +80 bps EF&C 24.7% 22.0% ~Flat 23.9% $615 $532 $532 23.0% +100 bps Q4‘15 Q4‘16 Q4‘15 Q4‘16 Q4‘15 Q4‘16 Q4‘15 Q4‘16 Total Revenue Operating Margin Total Revenue Operating Margin Highlights High

  6. Slide 6: Segment Performance: Test & Measurement/Electronics and Welding

    Q4 2016 CONFERENCE CALL Segment Performance Test & Measurement/Electronics Welding 20.1% +200 bps +190 bps 24.4% $500 18.1% $395 22.5% $487 (2)% $361 (9)% Q4‘15 Q4‘16 Q4‘15 Q4‘16 Q4‘15 Q4‘16 Q4‘15 Q4‘16 Total Revenue Operating Margin Total Revenue Operating Margin Highlights Highlights  Organic gro

  7. Slide 7: Segment Performance: Polymers & Fluids and Construction Products

    Q4 2016 CONFERENCE CALL Segment Performance Polymers & Fluids Construction Products +80 bps 21.4% +150 bps 19.0% +2% +1% 18.2% 19.9% $402 $408 $378 $386 Q4‘15 Q4‘16 Q4‘15 Q4‘16 Q4‘15 Q4‘16 Q4‘15 Q4‘16 Total Revenue Operating Margin Total Revenue Operating Margin Highlights Highlights  Organic growt

  8. Slide 8: Segment Performance: Specialty Products and Margin Improvement

    Q4 2016 CONFERENCE CALL Segment Performance Specialty Products Margin Improvement by Segment 24.0% +100 bps (1)% 23.0% Operating Margin $458 $456 FY 2016 vs. ‘15 vs. ‘12 Automotive OEM 24.1%* (10) bps +470 bps Q4‘15 Q4‘16 Q4‘15 Q4‘16 Food Equipment 25.4 +170 +830 Total Revenue Operating Margin T&M a

  9. Slide 9: Progress on Organic Growth

    Q4 2016 CONFERENCE CALL Progress on Organic Growth Organic Revenue Growth by Segment FY 2016 FY 2015 Change Automotive OEM 5.1% 5.8% (70) bps Food Equipment 2.8 3.4 (60) T&M and Electronics 1.8 (5.2) +700 Polymers & Fluids 1.3 (2.0) +330 Welding (9.1) (7.6) (150) Construction Products 3.0 3.7 (70) S

  10. Slide 10: 2016 Performance

    Q4 2016 CONFERENCE CALL 2016 Performance Financial Results Highlights EPS +11%  Organic growth of 2% excluding ~1% PLS impact $5.70 – North America 1%, EMEA 2%, Asia Pacific 3% GAAP EPS – 6 of 7 segments with positive organic growth $5.13  Record operating margin of 22.5%; 22.8% excluding EF&C $13

  11. Slide 11: Enterprise Strategy Progress – End of Year 4

    Q4 2016 CONFERENCE CALL Enterprise Strategy Progress – End of Year 4 Operating Margin After-tax ROIC** Earnings per Share +660 +760 15% bps bps CAGR 22.5% 22.1% $5.70 15.9% 14.5% $3.21 2012* 2016 2012 2016 2012** 2016 *As reported in the 2012 Form 10-K **See ITW’s fourth quarter 2016 press release f

  12. Slide 12: ITW's Long Term Performance Goals

    Q4 2016 CONFERENCE CALL ITW’s Long Term Performance Goals 25%+ 20%+ 200+ bps 12-14% OPERATING MARGIN AFTER-TAX ROIC ORGANIC REVENUE TOTAL GROWTH ABOVE- SHAREHOLDER MARKET RETURNS EXITING 2018 CLEAR LINE OF SIGHT TO AT LEAST 200 BASIS POINTS OF ADDITIONAL STRUCTURAL MARGIN IMPROVEMENT POTENTIAL 12

  13. Slide 13: 2017 Guidance

    Q4 2016 CONFERENCE CALL 2017 Guidance Financial Guidance Highlights  GAAP EPS growth of 7% at guidance mid-point $6.00 to $6.20  Organic growth of 1.5 to 3.5% GAAP EPS $5.70  Record operating margin of 23.5%+ $13.8 - – 100 bps of margin expansion from Enterprise Initiatives $14.1B – ~30 bps of ma

  14. Slide 14: Q&A

    Q&A

Illinois Tool Works — Q4 2016 Earnings Presentation on 6ix