GLENVIEW, Ill. – Illinois Tool Works (ITW) has reported first quarter 2014 diluted earnings per share (EPS) from continuing operations of $1.01, 15 percent higher than the prior year period. The company says this stronger-than-expected EPS was driven by meaningful contributions from ongoing enterprise initiatives and accelerated share repurchase.
Total revenues grew 4 percent to $3.6 billion and operating income increased 16 percent to $667 million. Organic revenues increased 3.3 percent, with international growing 6.3 percent and North America increasing 1 percent. Internationally, European and Asia Pacific organic revenues grew 4.8 percent and 7.2 percent, respectively. EPS of $1.01 was 15 percent higher than the prior-year period. Operating margins of 18.7 percent increased 180 basis points, with enterprise initiatives contributing 120 basis points.
ITW’s Automotive OEM segment shows organic revenue growth of 13 percent, significantly outpacing worldwide auto builds of 5 percent. Organic revenues grew 11 percent in North America, 14 percent in Europe and 28 percent in China. Operating margins of 23.3 percent increased 350 basis points.
"Underlying our strong first quarter financial results is our ongoing five-year enterprise strategy and related initiatives," said Scott Santi, president and CEO. "Thanks to the worldwide ITW team, we produced operating margins of nearly 19 percent, grew our EPS 15 percent and expanded adjusted after-tax ROIC to more than 17 percent in the quarter. Finally, we continued to focus on capital allocation during the quarter by returning significant amounts of free cash to our investors in the form of accelerated share repurchase and consistent dividend payout."
The company is raising its full-year EPS guidance to a range of $4.45 to $4.65, with the $4.55 mid-point representing a 25 percent increase versus 2013. ITW said the 15 cents guidance increase at the mid-point is driven by the accelerated share repurchase program as well as continued contributions from enterprise initiatives. Total revenue is expected to grow in the range of 3 percent to 4 percent. For the 2014 second quarter, the company is forecasting EPS to be in a range of $1.16 to $1.24 and expects total revenue growth in a range of 3 percent to 5 percent.
