Slide 1: ITW Conference Call Fourth Quarter 2008
Exhibit 99.2 ITW Conference Call Fourth Quarter 2008 1
Slide 2: Agenda
ITW Agenda 1. Introduction…………………….. John Brooklier/David Speer 2. Financial Overview…………….. Ron Kropp 3. Reporting Segments………..…. John Brooklier 4. Forecast 2009……….…….….… 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 operating performance, revenue growth, operating income, income from continuing ope
Slide 4: Conference Call Playback
Conference Call Playback Replay number: 203-369-0593 No pass code necessary Telephone replay available through midnight of February 12, 2009 Webcast / PowerPoint replay available at itw.com website 4
Slide 5: Quarterly Highlights
ITW Quarterly Highlights 2007 2008 F(U) Last Year Q4 Q4 Amount % Operating Revenues 3,908.4 3,678.4 (230.0) -5.9% Operating Income 618.7 414.1 (204.6) -33.1% % of Revenues 15.8% 11.3% -4.5% Income from Continuing Operations Income Amount 443.5 273.3 (170.2) -38.4% Income Per Share-Diluted 0.82 0.54
Slide 6: Quarterly Operating Analysis
ITW Quarterly Operating Analysis % F(U) Prior Year Operating Operating Operating Revenues Income Margins Base Manufacturing Business Operating Leverage -9.2% -24.4% -2.6% Changes in VM & OH costs - - - Total -9.2% -24.4% -2.6% Acquisitions/Divestitures 7.8% 0.3% -0.9% Translation -4.5% -4.7% -0.2% I
Slide 7: Non Operating & Taxes
ITW Non Operating & Taxes 2007 2008 F(U) Last Year Q4 Q4 Amount % Operating Income 618.7 414.1 (204.6) -33.1% Interest Expense (26.2) (40.3) (14.1) Other Income (expense) 4.2 (14.5) (18.7) Income from Continuing Operations-Pretax 596.7 359.3 (237.4) -39.8% Income Taxes 153.2 86.0 67.2 % to Pretax In
Slide 8: Full Year Highlights
ITW Full Year Highlights 2007 2008 F(U) Last Year Amount % Operating Revenues 14,871.1 15,869.4 998.3 6.7% Operating Income 2,448.9 2,338.2 (110.7) -4.5% % of Revenues 16.5% 14.7% -1.8% Income from Continuing Operations Income Amount 1,711.9 1,583.3 (128.6) -7.5% Income Per Share-Diluted 3.08 3.04 (
Slide 9: Full Year Operating Analysis
ITW Full Year Operating Analysis % F(U) Prior Year Operating Operating Operating Revenues Income Margins Base Manufacturing Business Operating Leverage -2.5% -6.5% -0.7% Changes in VM & OH costs - -1.0% -0.2% Total -2.5% -7.5% -0.9% Acquisitions/Divestitures 6.5% 1.5% -0.7% Translation 2.8% 2.6% - I
Slide 10: Invested Capital
ITW Invested Capital 12/31/07 9/30/08 12/31/08 Trade Receivables 2,915.5 2,981.7 2,426.1 Days Sales Outstanding 62.7 64.7 59.4 Inventories 1,625.8 1,835.5 1,673.2 Months on Hand 1.8 2.0 2.1 Prepaids and Other Current Assets 464.1 505.9 367.7 Accounts Payable & Accrued Expenses (2,190.1) (2,240.9) (1
Slide 11: Debt & Equity
ITW Debt & Equity 12/31/07 9/30/08 12/31/08 Total Capital Short Term Debt 410.5 2,197.1 2,433.5 Long Term Debt 1,888.8 1,398.2 1,243.7 Total Debt 2,299.3 3,595.3 3,677.2 Stockholders' Equity 9,351.3 9,095.9 7,663.5 Total Capital 11,650.6 12,691.2 11,340.7 Less: Cash (827.5) (867.6) (743.0) Net Debt
Slide 12: Cash Flow
ITW Cash Flow 2007 2008 Q4 Q4 Net Income 470.7 233.8 Adjust for Non-Cash Items 142.1 107.4 Changes in Operating Assets & Liabilities 180.6 248.9 Net Cash From Operating Activities 793.4 590.1 Additions to Plant & Equipment (98.7) (81.2) Free Operating Cash Flow 694.7 508.9 Stock Repurchases (798.9)
Slide 13: Acquisitions
ITW Acquisitions 2007 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Annual Revenues Acquired 399 213 218 165 230 308 847 154 Purchase Price Cash Paid 263 216 235 163 223 439 745 190 Stock Issued - - - - - - - - Total 263 216 235 163 223 439 745 190 Number of Acquisitions 9 10 18 15 16 10 14 10 13
Slide 14: Macro Data and End Markets Continued to Deteriorate in Q4
Macro Data and End Markets Continued to Deteriorate in Q4 • Since December 2008 Investor Meeting in New York City, macro and end market trends have continued to deteriorate • U.S. Data – Industrial production: -6.1% in October 2008 vs. -10.2% in December 2008 – ISM Index: 36.2% in November 2008 vs.
Slide 15: Industrial Packaging Quarterly Analysis
Industrial Packaging Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q4 626.3 76.8 12.3% 2008 Q4 568.8 38.4 6.8% $ F(U) (57.5) (38.4) -5.5% % F(U) -9.2% -50.0% % F(U) Prior Year Base Business Operating Leverage -5.7% -18.2% -1.6% Changes in VM & OH costs - -16.2% -2.1%
Slide 16: Industrial Packaging Key Points
Industrial Packaging Key Points • Total segment base revenues: -5.7% for Q4 ’08 vs. +5.2 % in Q3 ’08 • Q4 North America base revenues: -12.3% for Q4 ’08 – Base revenue decline largely due to notable fall-off in demand for consumable plastic and steel strapping products • Q4 International base revenu
Slide 17: Power Systems and Electronics Quarterly Analysis
Power Systems and Electronics Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q4 558.4 107.5 19.2% 2008 Q4 504.9 77.7 15.4% $ F(U) (53.4) (29.8) -3.8% % F(U) -9.6% -27.7% % F(U) Prior Year Base Business Operating Leverage -10.8% -21.9% -2.4% Changes in VM & OH costs - 0
Slide 18: Power Systems and Electronics Key Points
Power Systems and Electronics Key Points • Total segment base revenues: -10.8% in Q4 ’08 vs. +3.1% in Q3 ’08 • In Q4, Welding’s worldwide base revenues: -9.0% – Welding’s Q4 North America base revenues declined 15.7% as underlying industrial production and related end markets continue to slow in U.S
Slide 19: Transportation Quarterly Analysis
Transportation Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q4 567.8 94.4 16.6% 2008 Q4 541.0 16.9 3.1% $ F(U) (26.8) (77.5) -13.5% % F(U) -4.7% -82.1% % F(U) Prior Year Base Business Operating Leverage -20.3% -46.9% -5.6% Changes in VM & OH costs - -16.9% -3.5% Tota
Slide 20: Transportation Key Points
Transportation Key Points • Total segment base revenues: -20.3% in Q4 ’08 vs. -9.6% in Q3 ’08 • Auto OEM/Tiers: – North America Q4 base revenues: -26.5% • Q4 combined build: -26% • Q4 Detroit 3 builds decline 28%: GM: -23%; Ford: -29%; Chrysler: -37% • Q4 New Domestics: -22% • FY 2008 combined build
Slide 21: Construction Products Quarterly Analysis
Construction Products Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q4 532.3 73.7 13.9% 2008 Q4 415.5 35.7 8.6% $ F(U) (116.8) (38.0) -5.3% % F(U) -21.9% -51.6% % F(U) Prior Year Base Business Operating Leverage -14.6% -44.8% -4.9% Changes in VM & OH costs - 7.5% 1.2%
Slide 22: Construction Products Key Points
Construction Products Key Points • Total segment base revenues: -14.6% in Q4 ’08 vs. -4.4% in Q3 ’08 • North America Q4 base revenues: -23.4% vs. -6.2% in Q3 ’08 – Q4 Residential: -29% base revenues vs. -41% Q4 housing starts – Q4 Commercial Construction base revenues: -16% as Dodge Index data shows
Slide 23: Food Equipment Quarterly Analysis
Food Equipment Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q4 565.7 80.2 14.2% 2008 Q4 542.3 87.8 16.2% $ F(U) (23.4) 7.7 2.0% % F(U) -4.1% 9.6% % F(U) Prior Year Base Business Operating Leverage 1.7% 4.8% 0.4% Changes in VM & OH costs - 13.4% 1.9% Total 1.7% 18.2%
Slide 24: Food Equipment Key Points
Food Equipment Key Points • Total segment base revenues: +1.7% in Q4 ’08 vs. -1.7% in Q3 ’08 • International Q4 base revenues: +3.2% – Europe base revenues increased 3.0% while Asia-Pacific base revenues grew 6.4% • North America Q4 base revenues: -0.7% – Q4 Institutional/restaurant base revenues: -
Slide 25: Polymers and Fluids Quarterly Analysis
Polymers and Fluids Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q4 261.1 40.8 15.6% 2008 Q4 327.2 36.3 11.1% $ F(U) 66.1 (4.5) -4.5% % F(U) 25.3% -11.0% % F(U) Prior Year Base Business Operating Leverage -7.9% -22.5% -2.5% Changes in VM & OH costs - 2.2% 0.4% Total
Slide 26: Polymers and Fluids Key Points
Polymers and Fluids Key Points • Total segment base revenues: -7.9% in Q4 ’08 vs. +3.5% in Q3 ’08 as industrial markets notably slow • Product breakdown: – Worldwide Polymers base revenues: -7.8% – Worldwide Fluids base revenues: -8.0% • North America: – Polymers Q4 base revenues: -5.4% – Fluids Q4
Slide 27: All Other Quarterly Analysis
All Other Quarterly Analysis Operating Operating Operating Revenues Income Margins 2007 Q4 807.9 145.3 18.0% 2008 Q4 789.6 121.4 15.4% $ F(U) (18.3) (24.0) -2.6% % F(U) -2.3% -16.5% % F(U) Prior Year Base Business Operating Leverage -7.5% -19.5% -2.3% Changes in VM & OH costs - 5.7% 1.1% Total -7.5%
Slide 28: All Other Key Points
All Other Key Points • Total segment base revenues: -7.5% in Q4 ’08 vs. -0.7% in Q3 ’08 – Q4 worldwide test and measurement base revenues: +3.0% due to Asian operations – Q4 worldwide consumer packaging base revenues: -7.6% as demand for graphics, foils and marking weakened; Hi-Cone & Zip-Pak units
Slide 29: 2009 Forecast
ITW 2009 Forecast Mid Low High Point 1st Quarter Total Revenues -17% -11% -14% Diluted Income per Share - Continuing $0.26 $0.42 $0.34 % F(U) 2008 -63% -40% -51% Full Year Total Revenues -12% -6% -9% Diluted Income per Share - Continuing $1.84 $2.48 $2.16 % F(U) 2008 -39% -18% -29% 29
Slide 30: 2009 Forecast Key Assumptions
ITW 2009 Forecast Key Assumptions • Exchange rates hold at current levels. • Acquired revenues in the $400 to $600 million range. • No share repurchases planned for the year. • Restructuring costs of $60 to $100 million • Net nonoperating expense, including interest expense and other nonoperating in
Slide 31: ITW Conference Call Q&A
ITW Conference Call Q&A Fourth Quarter 2008 31