GLENVIEW, Ill. – Illinois Tool Works Inc. (ITW) reported first quarter 2015 diluted earnings per share (EPS) from continuing operations of $1.21, which is 20 percent higher than the year-ago period. Reported EPS was 4 cents above the midpoint of company guidance despite 3 cents of incremental negative currency translation impact vs. the exchange rates in effect at the time the company issued guidance for the first quarter 2015 on Jan. 27.
ITW said organic revenue growth was up 1 percent in the quarter, reflecting lower demand in some of the company’s equipment-related businesses and ongoing product line simplification (PLS) activities.
“Despite currency translation headwinds and a challenging capital spending environment, ITW delivered record first quarter operating margin and 20 percent EPS growth,” said E. Scott Santi, president and CEO. “This performance reflects the continued progress that our business teams around the world are making in executing our strategy and leveraging ITW’s highly differentiated business model to its full potential. ITW is well-positioned for another year of strong progress in 2015 and we remain solidly on track to deliver on our 2017 performance goals.”
In North America, organic revenue growth was driven by continued strength in Automotive OEM and Food Equipment. Internationally, European and Asia Pacific organic revenues both increased 1 percent. As expected, the ongoing product line and customer base simplification activities associated with the portfolio management component of ITW’s Enterprise Strategy reduced organic revenue growth by approximately 1 percentage point. Total revenues of $3.3 billion were down 6 percent due to the impact of foreign currency translation.
Automotive OEM organic revenue growth of 7 percent outpaced first quarter worldwide auto builds of 1 percent. Organic revenues increased 13 percent in Europe, 3 percent in North America and 14 percent in China.
Guidance
The company is reducing its 2015 full-year EPS guidance by 15 cents to reflect current exchange rates. The updated EPS range is $5 to $5.20, an increase of 9 percent at the $5.10 midpoint. Organic revenue growth for the year is projected to be 1 to 2 percent, down slightly from the previous forecast due to a more challenging capital spending environment. Operating margin is projected to exceed 21 percent, and the company expects stronger margin performance to offset modestly lower revenue expectations. For the second quarter 2015, the company is expecting EPS to be in a range of $1.22 to $1.30. Organic revenue growth for the second quarter is forecast to be 1 to 2 percent.
