Illinois Tool Works Inc. · NYSE:ITW

Illinois Tool Works — Jefferies 2018 Global Industrials Conference

12 slides from Illinois Tool Works's conference presentation, Aug 8, 2018

  1. Slide 1: Jefferies 2018 Global Industrials Conference

    Jefferies 2018 Global Industrials Conference August 8, 2018

  2. Slide 2: Forward-Looking Statements

    FORWARD-LOOKING STATEMENTS NON-GAAP MEASURES The Company uses certain non-GAAP measures in discussing the Company’s performance. The reconciliation of those measures to the most comparable GAAP measures is detailed in ITW’s Form 10-K for 2017, subsequently filed Form 10-Qs, and subsequent press rele

  3. Slide 3: Our Business Model Is Our Competitive Advantage

    OUR BUSINESS MODEL IS OUR COMPETITIVE ADVANTAGE 80/20 Front to Back Process: HOW WE OPERATE Customer-Back Innovation: HOW WE INNOVATE Decentralized, Entrepreneurial Culture: HOW WE EXECUTE Jefferies Global Industrials Conference August-2018 3

  4. Slide 4: Objectives of Our 2011-2012 Strategy Refresh

    OBJECTIVES OF OUR 2011-2012 STRATEGY “REFRESH” 1 2 Maximize ITW’s potential Best position ITW to consistently deliver AND as a highly valued core Differentiated holding Performance for long-term oriented investors IN AN INCREASINGLY COMPETITIVELY INTENSE AND VOLATILE GLOBAL MARKET ENVIRONMENT Jeffer

  5. Slide 5: Our Strategic Framework

    OUR STRATEGIC FRAMEWORK $ INVEST ONLY OUR BUSINESS GROWTH: “DO WHAT WE SAY” = WHERE WE HAVE MODEL IS OUR QUALITY EXECUTION IS COMPELLING COMPETITIVE OVER A CRITICAL COMPETITIVE ADVANTAGE QUANTITY DIFFERENTIATOR ADVANTAGE SOLID GROWTH WITH BEST-IN-CLASS MARGINS AND RETURNS Jefferies Global Industrial

  6. Slide 6: 1H 2018 Financial Performance

    1H 2018 FINANCIAL PERFORMANCE Financial Results 1H Highlights +20%  Good growth momentum with organic growth of 3% $3.87 – All segments with positive organic growth EPS $3.23 – North America 4%, International 2% REVENUE $7.1B $7.6B  Excellent operational execution with continued margin improvement

  7. Slide 7: Raw Material Cost/Tariff Update

    RAW MATERIAL COST/TARIFF UPDATE  Continue to execute well on our strategy to offset raw material cost inflation with pricing actions on a $ for $ basis − Raw material cost inflation is manageable ... increases represent ~3% of total spend − No negative earnings impact in FY’18 (same as 1H’18) … dil

  8. Slide 8: 2018 Guidance

    2018 GUIDANCE Financial Guidance Highlights +15% $7.50 - $7.70  Solid underlying demand, resilient business portfolio EPS $6.59* − Total revenue growth of 4 - 5%; organic growth of 3 - 4% $14.9 - $15.1B  Strong execution and margin expansion REVENUE $14.3B − 100 bps+ from Enterprise Initiatives −

  9. Slide 9: Disciplined Capital Allocation

    DISCIPLINED CAPITAL ALLOCATION OUR PRIORITIES: % OF OPERATING CASH FLOW 1 INTERNAL INVESTMENTS to support organic 25-30% growth and sustain core businesses 2 An ATTRACTIVE DIVIDEND 35-40% 3 EXTERNAL INVESTMENTS: Acquisitions that 30-40% expand ITW’s long-term organic growth potential and an active s

  10. Slide 10: 50+ Year History of Dividend Growth

    50+ YEAR HISTORY OF DIVIDEND GROWTH ANNUALIZED DIVIDEND PER SHARE $4.00 ~50% Dividend Payout $3.12 Ratio* 17% CAGR $2.60 +28% $2.20 $1.94 +20% $1.68 +18% $1.52 +13% +15% +11% 2012 2013 2014 2015 2016 2017 2018E *Dividend payout ratio = Annual dollars paid as a % of Free Cash Flow. 10

  11. Slide 11: Strategy Execution: Position ITW as a Highly Valued Core Holding

    STRATEGY EXECUTION: POSITION ITW AS A HIGHLY VALUED CORE HOLDING FOR LONG-TERM ORIENTED INVESTORS Strong, Enduring and Adaptable Diversified High-Quality Competitive Advantage: Business Portfolio: • Highly differentiated Business Model • Consistent above-market organic growth • Best-in-class margins

  12. Slide 12: Q&A

    ITV Q&A

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