Illinois Tool Works Inc. (ITW) has reported first quarter 2016 diluted earnings per share (EPS) of $1.29, a 7 percent increase compared to the year-ago period. Operating margin increased 120 basis points to 22.1 percent and organic revenue increased 1 percent. ITW said its ongoing “Product Line Simplification” (PLS) activities reduced organic revenue growth by 1 percentage point.
“We are pleased with ITW’s strong start to 2016,” said E. Scott Santi, chairman and CEO. “In a challenging environment, the company continued to deliver meaningful improvement in all of our key performance metrics: organic growth, EPS, operating margin, return on invested capital and free cash flow. Consistent with our strategy, we continue to execute the steps necessary to position the company to deliver solid above-market organic growth with best-in-class margins and returns. In the current economic environment and over the long-term, ITW’s unique business model and our proven track record of operational execution position us very well for continued differentiated performance.”
The company is raising its 2016 full-year GAAP EPS guidance range by 5 cents, to $5.40 to $5.60, which represents a 7 percent increase at the mid-point. The organic revenue growth forecast is unchanged at 1 to 3 percent and includes approximately 1 percentage point of PLS impact. Operating margin is now projected to exceed 22.5 percent, an increase of more than 100 basis points. Enterprise initiatives are expected to improve operating margin by more than 100 basis points.
For the second quarter 2016, the company expects GAAP EPS to be in a range of $1.34 to $1.44, an increase of 7 percent at the mid-point, and operating margin to be approximately 22.5 percent. Organic revenue is forecast to be flat to up 2 percent.