GLENVIEW, Ill. – Illinois Tool Works Inc. (ITW) has reported second quarter 2012 diluted income per share from continuing operations of $1.11, a 16 percent increase versus the 2011 second quarter.
While revenue growth moderated in the second quarter due to the higher-than-expected negative impact of currency translation and slowing demand in a variety of international end-markets, the company says operating margins of 16.5 percent improved 110 basis points versus the year-ago period.
ITW reported total revenues of $4.655 billion, an increase of 0.9 percent. Organic or base revenues grew 2.3 percent, with North American organic revenues increasing 5.3 percent and international organic revenues declining 0.8 percent. European organic revenues decreased 1.7 percent. Asia Pacific organic revenues underperformed company expectations, growing only 1.8 percent. Notably, China organic revenues declined 0.5 percent.
The company also reported operating income of $770 million, which grew 8.3 percent.
ITW said it returned nearly $700 million to shareholders through share repurchases of $526 million and dividends paid of $172 million. At the end of the 2012 second quarter, the company had $2.9 billion remaining in its share repurchase authorization.
"Despite slowing in a variety of international end-markets and significant currency translation headwinds, we were very pleased with our second quarter operating performance," said David Speer, chairman and CEO. "Based on our differentiated 80/20 operational focus, our businesses produced very strong operating margin improvement in the quarter with excellent management of input and overhead costs. In addition, we continued to return significant levels of cash to our shareholders through our share repurchase program as well as our strong dividend payout."
Given the ongoing negative impact of currency translation, additional restructuring expenditures that will now total more than $100 million for the year, and expected continued sluggish demand in international markets, the company is lowering its forecast for revenue growth from continuing operations to be in a range of 1 percent to 3 percent versus the prior range of 5 percent to 7 percent.
As a result, full-year diluted income per share from continuing operations is expected to be in a range of $4.03 to $4.19 versus the prior range of $4.14 to $4.38.
For third quarter 2012, the company is forecasting revenue growth to be in a range from -1 percent to 1 percent and diluted income per share from continuing operations to be in a range of $1.03 to $1.11.
