GLENVIEW, Ill. — Illinois Tool Works Inc. (ITW) has reported 2009 fourth quarter diluted income per share from continuing operations of 98 cents, a 66 percent increase compared to the 2008 fourth quarter. The company said it continued to see the benefits of ongoing restructuring activities and improvements in discrete end-markets in the most recent quarter.
Fourth quarter 2009 operating revenues of $3.8 billion were 5 percent lower than the year-ago period. However, fourth quarter operating revenues were 5 percent higher than the 2009 third quarter mainly due to an increase in automotive OEM builds, a modest improvement in worldwide end-markets and the positive impact of currency translation. The company’s base revenues declined 10 percent in the 2009 fourth quarter versus the year-ago period, with North American base revenues declining 10.9 percent and international base revenues decreasing 9 percent. Acquisitions and currency translation added 1.7 percent and 3.3 percent to revenues, respectively, in the quarter. By comparison, total company base revenues decreased 17.9 percent in the 2009 third quarter versus the 2008 third quarter. Fourth quarter operating margins of 12.7 percent were 120 basis points higher than the year-ago period, with base margins contributing 160 basis points.
Full-year 2009 operating revenues of $13.9 billion were 18.8 percent lower than 2008. Base revenues fell 18.4 percent for the full year, with North American base revenues decreasing 21.6 percent and international base revenues declining 14.9 percent. Acquisitions added 4.2 percent to revenues while currency translation negatively impacted revenues by 4.8 percent. Full-year diluted income per share from continuing operations totaled $1.93, a 40 percent decline versus 2008. Full-year operating margins of 10 percent were 460 basis points lower than 2008.
The company’s fourth quarter free operating cash flow of $434 million was once again driven by improvement in operating margins and ongoing reductions in working capital. For full-year 2009, free operating cash flow totaled $1.9 billion, representing a free operating cash flow to net income conversion rate of 201 percent.
"Given the ongoing modest recovery in many of our worldwide end-markets, we are very pleased with the performance of our global businesses and our operating results in the fourth quarter," said Chairman and Chief Executive Officer David Speer. "We continued investing in worldwide restructuring projects, incurring $33 million of expense in the quarter and $161 million of restructuring expense for the full year. We believe these restructuring initiatives, coupled with numerous long-term growth investments in our businesses led by our operating managers, position ITW very well for enhanced top line growth and operating margin performance in 2010 and beyond."
The company believes most end-markets have stabilized and anticipates modest expansion in a variety of worldwide end-markets in 2010. The company is estimating first quarter 2010 diluted income per share from continuing operations to be in a range of 48 cents to 60 cents. The 2010 first quarter forecast assumes a total revenue growth range of 14 percent to 18 percent. For full-year 2010, the company is forecasting diluted income per share from continuing operations to be in a range of $2.43 to $2.93. The 2010 full-year forecast assumes a total revenue growth range of 10 percent to 14 percent.
