Illinois Tool Works Inc. (ITW) has reported its second quarter 2017 results.
Second quarter GAAP earnings were $1.69 per share, an increase of 16 percent versus the second quarter of 2016. Revenue grew 4.9 percent to $3.6 billion. Organic revenue increased 2.6 percent while the 2016 acquisition of Engineered Fasteners & Components (EF&C) added 3.5 percent to revenue. Foreign currency translation reduced revenue by 1.2 percent.
Operating income of $874 million for the second quarter was up 10 percent and was the highest quarterly income total in the company’s history.
“Our second quarter performance reflects continued progress in our focus on leveraging ITW’s differentiated business model and diversified high-quality business portfolio to full potential,” said E. Scott Santi, chairman and CEO. “I once again thank the entire ITW team for the great job that they continue to do in serving our customers and executing our strategy with excellence. Due to their efforts, ITW is well-positioned to continue to deliver differentiated performance through the balance of 2017 and beyond.”
Organic revenue growth was positive in six of seven segments: 4 percent in Automotive OEM, 4 percent in Test & Measurement/Electronics, 4 percent in Specialty Products, 3 percent in Welding, 2 percent in Construction Products and 1 percent in Food Equipment. Polymers & Fluids was down 1 percent.
During the second quarter, the company recorded an earnings per share benefit of 3 cents per share related to a legal settlement. Excluding this item, second quarter earnings were $1.66 per share, an increase of 14 percent versus the prior year.
Full-Year and Third Quarter 2017 Guidance
As a result of the company’s strong second quarter results, ITW is raising its 2017 full-year EPS guidance by 12 cents at the mid-point. The company now expects earnings to be in the range of $6.32 to $6.52 per share, up from prior guidance of $6.20 to $6.40 per share, with organic revenue growth of 2 to 4 percent. ITW expects operating margin of approximately 24 percent and free cash flow to exceed 100 percent of net income. The company expects an effective tax rate of approximately 29 percent.
For the third quarter 2017, the company expects earnings to be in the range of $1.57 to $1.67 per share with organic growth of 1 to 3 percent.
The company’s third quarter and revised full-year EPS guidance does not include any EPS benefit from the previously disclosed legal settlement beyond the 3 cents per share recorded in the second quarter.
