Welcome!

.NET Authors: Liz McMillan, Jim Kaskade, Lori MacVittie, Yeshim Deniz, Ivan Antsipau

News Feed Item

ITW Reports Third Quarter 2013 Results

*Third quarter diluted EPS from continuing operations of $0.90 exceeds Company forecast midpoint of $0.88

GLENVIEW, Ill., Oct. 21, 2013 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported third quarter diluted earnings per share (EPS) from continuing operations of $0.90, two cents higher than the midpoint of the Company's forecast.  As noted in the Company's September 24, 2013 announcement, the third quarter forecasted EPS midpoint of $0.88 included a $0.14 reduction from the Industrial Packaging segment moving to discontinued operations and a $0.09 reduction related to a discrete tax charge.

Highlights for 2013 third quarter results versus the prior-year period included:

*Total Company operating revenues were $3.6 billion while operating income was $678 million. Excluding the impact of Decorative Surfaces 2012 results, total Company operating revenues grew 2.9 percent and operating income increased 8.4 percent.  Organic revenues grew 0.4 percent, with international organic revenues growing 2.9 percent and North American organic revenues declining 1.4 percent. Internationally, Asia Pacific organic revenues grew 6.9 percent, with China organic revenues increasing 21.5 percent.  In addition, European organic revenues grew 1.0 percent. The Company was faced with a difficult year-over-year comparison in its electronics assembly platform, which negatively impacted total Company organic revenue growth by 2.5 percent. Reconciliations of GAAP to Non-GAAP results, which exclude the 2012 impact of the divested Decorative Surfaces segment, are included in the attached exhibits.

*By segment, highlights included:

  • Automotive OEM's organic revenues increased 11.5 percent, with strong growth across all regions. By comparison, worldwide auto builds increased 4 percent in the quarter. Automotive OEM operating margins improved 200 basis points to 21.1 percent.
  • Food Equipment's organic revenues grew 4.4 percent, with across-the-board contributions from the North American and international equipment and service businesses. Food Equipment operating margins improved 90 basis points to 19.9 percent.
  • Construction Products organic revenues increased 3.3 percent due to 9.3 percent organic revenue growth in North America. Operating margins improved 250 basis points to 16.2 percent.

"We were pleased with our financial performance in the quarter and the progress we continue to make in executing our Enterprise initiatives," said Scott Santi, president and chief executive officer. "Third quarter operating margins of 19.0 percent were driven by an 80 basis point contribution from our enterprise initiatives.  On a year-to-date basis, free cash flow conversion was solidly above 100 percent of net income, and our adjusted after-tax return on average invested capital was 16.3 percent, up 110 basis points versus the same period last year.  In addition, we continued to make disciplined, return-oriented decisions with regard to capital allocation.  We completed two strategically targeted acquisitions in the quarter, and year-to-date we have returned nearly $1.6 billion to shareholders in the form of share repurchases and dividends."

The Company is now forecasting its full-year diluted income per share from continuing operations to be in a range of $3.56-$3.64. This EPS range assumes a full-year total revenue growth range of 1.0 percent to 2.0 percent. For the 2013 fourth quarter, the Company is forecasting diluted income per share from continuing operations to be in a range of $0.85-$0.93 and assumes a total revenue growth range of 2 percent to 5 percent.

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, the amount of expected share repurchases, statements regarding total revenue growth, diluted income per share from continuing operations, operating margin growth, return on invested capital and end market conditions. These statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially from those anticipated.  Such factors include those contained in ITW's 2012  Form 10-K.

ITW is a Fortune 200 global diversified industrial manufacturer of value added consumables and specialty equipment with related service businesses. The Company focuses on solid growth and strong returns across its worldwide platforms and businesses. The businesses serve local customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW's adjusted revenues totaled $13.9 billion in 2012, with approximately half of the revenues generated outside of the United States.

 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

STATEMENT OF INCOME (UNAUDITED)






Three Months Ended


Nine Months Ended

(In millions except per share amounts)

September 30,


September 30,


2013


2012


2013


2012

Operating Revenues

$

3,568


$

3,733


$

10,581


$

11,307

Cost of revenues

2,148


2,289


6,381


6,957

Selling, administrative, and research and development expenses

676


713


2,126


2,207

Amortization of intangible assets

64


62


186


190

Impairment of goodwill and other intangible assets

2


2


2


2

Operating Income

678


667


1,886


1,951

Interest expense

(60)


(52)


(179)


(152)

Other income (expense)

10


1


67


31

Income from Continuing Operations Before Income Taxes

628


616


1,774


1,830

Income Taxes

222


171


551


518

Income from Continuing Operations

406


445


1,223


1,312

Income from Discontinued Operations

46


79


48


579

Net Income

$

452


$

524


$

1,271


$

1,891









Income Per Share from Continuing Operations:








Basic

$

0.91


$

0.96


$

2.72


$

2.77

Diluted

$

0.90


$

0.95


$

2.70


$

2.75

Income Per Share from Discontinued Operations:








Basic

$

0.10


$

0.17


$

0.11


$

1.23

Diluted

$

0.10


$

0.17


$

0.11


$

1.22

Net Income Per Share:








Basic

$

1.01


$

1.13


$

2.83


$

4.00

Diluted

$

1.01


$

1.12


$

2.81


$

3.97









Shares of Common Stock Outstanding During the Period:








Average

445.9


464.8


449.0


473.2

Average assuming dilution

448.9


468.1


452.1


476.6









FREE OPERATING CASH FLOW

Three Months Ended


Nine Months Ended


September 30,


September 30,

(In millions)

2013


2012


2013


2012

Net cash provided by operating activities

$

811


$

635


$

1,820


$

1,467

Less: Additions to plant and equipment

(79)


(90)


(257)


(274)

Free operating cash flow

$

732


$

545


$

1,563


$

1,193

 

 


ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

STATEMENT OF FINANCIAL POSITION (UNAUDITED)


(In millions)

September 30, 2013


December 31, 2012





ASSETS




Current Assets:




Cash and equivalents

$

3,018


$

2,779

Trade receivables

2,493


2,742

Inventories

1,308


1,585

Deferred income taxes

391


332

Prepaid expenses and other current assets

421


522

Assets held for sale

1,951


Total current assets

9,582


7,960

Net Plant and Equipment

1,667


1,994

Goodwill

4,854


5,530

Intangible Assets

2,121


2,258

Deferred Income Taxes

353


391

Other Assets

1,174


1,176


$

19,751


$

19,309





LIABILITIES AND STOCKHOLDERS' EQUITY




Current Liabilities:




Short-term debt

$

1,328


$

459

Accounts payable

616


676

Accrued expenses

1,282


1,392

Cash dividends payable

187


Income taxes payable

75


116

Deferred income taxes

59


8

Liabilities held for sale

394


Total current liabilities

3,941


2,651





Noncurrent Liabilities:




Long-term debt

3,808


4,589

Deferred income taxes

453


244

Other liabilities

1,081


1,255

Total noncurrent liabilities

5,342


6,088





Stockholders' Equity:




Common stock

6


5

Additional paid-in-capital

1,032


1,012

Income reinvested in the business

14,716


13,973

Common stock held in treasury

(5,584)


(4,722)

Accumulated other comprehensive income

292


293

Noncontrolling interest

6


9

Total stockholders' equity

10,468


10,570


$

19,751


$

19,309

 

 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

GAAP to NON-GAAP RECONCILIATIONS


(In millions except per share amounts)

Three Months Ended


Three Months Ended


September 30, 2013


September 30, 2012


Total Revenue

Operating Income

Operating Margin

Diluted EPS


Total Revenue

Operating Income

Operating Margin

Diluted EPS

Actual Results (GAAP)

$

3,568


$

678


19.0

%

$

0.90



$

3,733


$

667


17.9

%

$

0.95


Discrete tax charge related to foreign earnings




(0.09)







Decorative Surfaces operating results






267


41



0.06


Adjusted Results (Non-GAAP)

$

3,568


$

678


19.0

%

$

0.99



$

3,466


$

626


18.1

%

$

0.89












Q3 2013 Growth vs. 2012 (GAAP)

(4.4)

%

1.8

%

+110 bps

(5.3)

%






Q3 2013 Growth vs. 2012 (Non-GAAP)

2.9

%

8.4

%

+90 bps

11.9

%






 


(In millions except per share amounts)

Three Months Ended


Twelve Months Ended


December 31, 2012


December 31, 2012


Total Revenue


Operating Income


Diluted EPS


Total Revenue

Operating Income


Diluted EPS

Actual Results (GAAP)

$

3,484


$

524


$

1.99


$

14,791


$

2,475


$

4.72

Decorative Surfaces net gain



1.37




1.34

Decorative Surfaces equity interest (2012)



(0.04)




(0.04)

Decorative Surfaces operating results

93


12


0.01


921


143


0.21

Adjusted Results (Non-GAAP)

$

3,391


$

512


$

0.65


$

13,870


$

2,332


$

3.21













 

 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

ADJUSTED RETURN ON AVERAGE INVESTED CAPITAL




Three Months Ended


Nine Months Ended

(Dollars in millions)

September 30,


September 30,


2013


2012


2013


2012

Operating income

$

678



$

667



$

1,886



$

1,951


Adjustment for Decorative Surfaces



(41)





(131)


Adjusted operating income

678



626



1,886



1,820


Tax rate (as adjusted for discrete tax charge in 2013)

29.0

%


27.8

%


28.8

%


28.3

%

Taxes

(196)



(174)



(543)



(515)


Adjusted operating income after taxes

$

482



$

452



$

1,343



$

1,305










Invested capital:








Trade receivables

$

2,493



$

3,062



$

2,493



$

3,062


Inventories

1,308



1,760



1,308



1,760


Net plant and equipment

1,667



2,081



1,667



2,081


Goodwill and intangible assets

6,975



7,808



6,975



7,808


Accounts payable and accrued expenses

(1,898)



(2,274)



(1,898)



(2,274)


Net assets held for sale

1,557





1,557




Other, net

484



767



484



767


Total invested capital

$

12,586



$

13,204



$

12,586



$

13,204










Average invested capital

$

12,560



$

13,260



$

12,648



$

13,241


Adjustment for Decorative Surfaces

(169)



(296)



(170)



(299)


Adjustment for Industrial Packaging

(1,468)



(1,500)



(1,482)



(1,508)


Adjusted average invested capital

$

10,923



$

11,464



$

10,996



$

11,434


Annualized return on average invested capital

17.6

%


15.8

%


16.3

%


15.2

%









 



Three Months Ended


(Dollars in millions)

September 30, 2013



Income from Continuing Operations Before Income Taxes


Income Taxes


Tax Rate

As reported

$

628



$

222



35.4

%

Discrete tax charge related to foreign earnings



(40)



(6.4)

%

As adjusted

$

628



$

182



29.0

%














Nine Months Ended


(Dollars in millions)

September 30, 2013



Income from Continuing Operations Before Income Taxes


Income Taxes


Tax Rate

As reported

$

1,774



$

551



31.1

%

Discrete tax charge related to foreign earnings



(40)



(2.3)

%

As adjusted

$

1,774



$

511



28.8

%







 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

SEGMENT DATA (UNAUDITED)


Three Months Ended September 30, 2013

% F(U) vs. prior year


(Dollars in millions)

Total Revenue

Operating Income

Operating Margin


Total Revenue

Organic (Base) Revenue

Operating Margin

Test & Measurement and Electronics

$

555


$

91


16.3

%


(10.9)

%

(11.8)

%

(190)

bps

Automotive OEM

589


124


21.1

%


13.2

%

11.5

%

200

bps

Polymers & Fluids

504


91


18.1

%


(1.1)

%

%

220

bps

Food Equipment

542


108


19.9

%


10.4

%

4.4

%

90

bps

Welding

438


111


25.4

%


(1.0)

%

(3.5)

%

90

bps

Construction Products

440


71


16.2

%


1.7

%

3.3

%

250

bps

Specialty Products

510


108


21.1

%


11.4

%

1.9

%

150

bps

Intersegment

(10)









Total Segments

3,568


704


19.7

%


2.9

%

0.4

%

110

bps

Decorative Surfaces





(100)

%

(100)

%


Unallocated


(26)








Total Company

$

3,568


$

678


19.0

%


(4.4)

%

0.4

%

110

bps



Nine Months Ended September 30, 2013

% F(U) vs. prior year


(Dollars in millions)

Total Revenue

Operating Income

Operating Margin


Total Revenue

Organic (Base) Revenue

Operating Margin

Test & Measurement and Electronics

$

1,617


$

233


14.4

%


(7.3)

%

(8.3)

%

(100)

bps

Automotive OEM

1,792


367


20.5

%


9.7

%

8.9

%

90

bps

Polymers & Fluids

1,521


259


17.1

%


(3.8)

%

(3.5)

%

120

bps

Food Equipment

1,500


278


18.5

%


4.2

%

1.1

%

130

bps

Welding

1,390


361


26.0

%


(1.2)

%

(3.1)

%

(20)

bps

Construction Products

1,295


180


13.9

%


(0.6)

%

0.1

%

200

bps

Specialty Products

1,497


317


21.2

%


6.7

%

1.3

%

100

bps

Intersegment

(31)









Total Segments

10,581


1,995


18.9

%


1.0

%

(0.6)

%

80

bps

Decorative Surfaces





(100)

%

(100)

%


Unallocated**


(109)








Total Company

$

10,581


$

1,886


17.8

%


(6.4)

%

(0.5)

%

50

bps

 ** Includes 2Q 2013 $34 million pension settlement charge

 

SOURCE Illinois Tool Works Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Noted IoT expert and researcher Joseph di Paolantonio (pictured below) has joined the @ThingsExpo faculty. Joseph, who describes himself as an “Independent Thinker” from DataArchon, will speak on the topic of “Smart Grids & Managing Big Utilities.” Over his career, Joseph di Paolantonio has worked in the energy, renewables, aerospace, telecommunications, and information technology industries. His expertise is in data analysis, system engineering, Bayesian statistics, data warehouses, business intelligence, data mining, predictive methods, and very large databases (VLDB). Prior to DataArcho...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water, are pursuing SmartGrid initiatives that represent one of the more mature examples of SAE. We have s...
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce the value of the network in helping organizations to maximize their company’s cloud experience.
Disruptive macro trends in technology are impacting and dramatically changing the "art of the possible" relative to supply chain management practices through the innovative use of IoT, cloud, machine learning and Big Data to enable connected ecosystems of engagement. Enterprise informatics can now move beyond point solutions that merely monitor the past and implement integrated enterprise fabrics that enable end-to-end supply chain visibility to improve customer service delivery and optimize supplier management. Learn about enterprise architecture strategies for designing connected systems tha...
IoT is still a vague buzzword for many people. In his session at Internet of @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, will discuss the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. The presentation will also discuss how IoT is perceived by investors and how venture capitalist access this space. Other topics to discuss are barriers to success, what is new, what is old, and what the future may hold.
Whether you're a startup or a 100 year old enterprise, the Internet of Things offers a variety of new capabilities for your business. IoT style solutions can help you get closer your customers, launch new product lines and take over an industry. Some companies are dipping their toes in, but many have already taken the plunge, all while dramatic new capabilities continue to emerge. In his session at Internet of @ThingsExpo, Reid Carlberg, Senior Director, Developer Evangelism at salesforce.com, to discuss real-world use cases, patterns and opportunities you can harness today.
All major researchers estimate there will be tens of billions devices – computers, smartphones, tablets, and sensors – connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be!
Software AG helps organizations transform into Digital Enterprises, so they can differentiate from competitors and better engage customers, partners and employees. Using the Software AG Suite, companies can close the gap between business and IT to create digital systems of differentiation that drive front-line agility. We offer four on-ramps to the Digital Enterprise: alignment through collaborative process analysis; transformation through portfolio management; agility through process automation and integration; and visibility through intelligent business operations and big data.
There will be 50 billion Internet connected devices by 2020. Today, every manufacturer has a propriety protocol and an app. How do we securely integrate these "things" into our lives and businesses in a way that we can easily control and manage? Even better, how do we integrate these "things" so that they control and manage each other so our lives become more convenient or our businesses become more profitable and/or safe? We have heard that the best interface is no interface. In his session at Internet of @ThingsExpo, Chris Matthieu, Co-Founder & CTO at Octoblu, Inc., will discuss how thes...
Last week, while in San Francisco, I used the Uber app and service four times. All four experiences were great, although one of the drivers stopped for 30 seconds and then left as I was walking up to the car. He must have realized I was a blogger. None the less, the next car was just a minute away and I suffered no pain. In this article, my colleague, Ved Sen, Global Head, Advisory Services Social, Mobile and Sensors at Cognizant shares his experiences and insights.
We are reaching the end of the beginning with WebRTC and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will want to use their existing identities, but these will have credentials already that are (hopefully) ir...
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. It also ensured scalability and better service for customers, including MUY! Companies, one of the country's largest franchise restaurant companies with 232 Pizza Hut locations. This is one example of WebRTC adoption today, but the potential is limitless when powered by IoT. Attendees will learn rea...
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at Internet of @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, will share some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder ...
The Internet of Things (IoT) promises to create new business models as significant as those that were inspired by the Internet and the smartphone 20 and 10 years ago. What business, social and practical implications will this phenomenon bring? That's the subject of "Monetizing the Internet of Things: Perspectives from the Front Lines," an e-book released today and available free of charge from Aria Systems, the leading innovator in recurring revenue management.
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges.
There’s Big Data, then there’s really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at 6th Big Data Expo®, Hannah Smalltree, Director at Treasure Data, to discuss how IoT, Big Data and deployments are processing massive data volumes from wearables, utilities and other mach...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at Internet of @ThingsExpo, Erik Lagerway, Co-founder of Hookflash, will walk through the shifting landscape of traditional telephone and voice s...
While great strides have been made relative to the video aspects of remote collaboration, audio technology has basically stagnated. Typically all audio is mixed to a single monaural stream and emanates from a single point, such as a speakerphone or a speaker associated with a video monitor. This leads to confusion and lack of understanding among participants especially regarding who is actually speaking. Spatial teleconferencing introduces the concept of acoustic spatial separation between conference participants in three dimensional space. This has been shown to significantly improve comprehe...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, will discuss single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example...