Illinois Tool Works Inc. (ITW) today reported its first-quarter 2017 results.
First-quarter GAAP earnings were $1.54 per share, an increase of 19 percent versus the first quarter of 2016. Excluding the impact of foreign currency translation, earnings per share (EPS) grew 21 percent year-over-year. Revenue grew 6 percent to $3.5 billion. Organic revenue increased 3.5 percent while the 2016 acquisition of Engineered Fasteners & Components (EF&C) added 3.8 percent to revenue. Foreign currency translation reduced revenue by 1.3 percent.
“Our record results in the first quarter reflect strong execution across the company and further progress in our efforts to leverage ITW’s highly differentiated and proprietary business model to drive solid growth with best-in-class margins and returns,” said E. Scott Santi, chairman and CEO. “We are off to a strong start in 2017 and the company is well-positioned to deliver continued progress and differentiated performance through the balance of 2017 and beyond.”
Operating income was $809 million, an increase of 12 percent, and operating margin for the quarter was 23.3 percent, an increase of 120 basis points.
Organic revenue growth was positive in six of seven segments: 9 percent in Automotive OEM, 6 percent in Test & Measurement/Electronics, 3 percent in Construction Products, 2 percent in Food Equipment and Polymers & Fluids and 1 percent in Specialty Products. Welding was flat.
Full-Year and Second Quarter 2017 Guidance
As a result of the company’s strong first quarter results, ITW is raising its 2017 full-year guidance. The company now expects earnings to be in the range of $6.20 to $6.40 per share, up from prior guidance of $6 to $6.20 per share, with organic growth of 2 to 4 percent, up from 1.5 to 3.5 percent. ITW expects operating margin to exceed 23.5 percent and free cash flow to exceed 100 percent of net income. The company now expects an effective tax rate of approximately 29 percent, down from prior guidance of 29 to 30 percent, resulting in an EPS benefit of 4 cents per share.
For the second quarter 2017, the company expects earnings to be in the range of $1.55 to $1.65 per share with organic growth of 2 to 4 percent.