GLENVIEW, Ill. — Illinois Tool Works Inc. reported 2010 second-quarter diluted income per share from continuing operations of $0.83, a 131 percent improvement versus diluted income per share of $0.36 in the 2009 second quarter.
The growth in earnings was achieved even though the company experienced a higher than expected tax rate, which had a negative impact of $0.03 per share. The 2010 second-quarter tax rate of 31.6 percent was 260 basis points higher than the rate the company originally forecasted in April of 2010.
The company’s second-quarter revenues of $4.076 billion were 20.1 percent higher than the year-ago period. Base revenues grew 15.1 percent in the second quarter, with North American base revenues increasing 15.8 percent and international base revenues growing 14.2 percent. Notably, international end markets showed no discernable signs of slowing as the second quarter progressed. Acquisitions and currency translation added 3.0 percent and 2.3 percent, respectively, to second quarter revenues.
Second-quarter operating income of $652.7 million was 95 percent higher than the year-ago period. Income from continuing operations totaled $420.8 million, a 135 percent improvement versus the year-earlier period. Second-quarter operating margins of 16.0 percent were 610 basis points higher than the year-ago period, with base businesses accounting for 470 basis points of improvement. Restructuring benefits added 160 basis points to second-quarter operating margins.
"Our very strong second-quarter operating performance was due to a combination of better than expected end market demand as well as contributions from restructuring programs over the past two years," said David B. Speer, chairman and chief executive officer. "Notably, end markets associated with the automotive OEM, industrial packaging, welding, electronics and polymers and fluids businesses all showed strength in the quarter. Our second half forecast indicates base revenue growth in a range of 7 percent to 10 percent compared to the 2009 second half. Acquisition activity continues to show improvement as we closed approximately $280 million in annualized revenues in the first half of the year."
Segment highlights for the 2010 second quarter include:
Total worldwide revenues for the Power Systems and Electronics segment grew 24.6 percent in the second quarter versus the year-ago period. Base revenues increased 22.6 percent in the quarter due to strong end market demand associated with both the welding and electronics businesses. Worldwide welding base revenues grew 13.5 percent in the second quarter versus the year-ago period, with North American welding increasing 20.6 percent. International welding base revenues were flat. The welding base revenue performance represented a significant improvement versus the first quarter of 2010. Driven by ongoing strong consumer electronics demand, the PC board fabrication business grew its base revenues 89.8 percent versus the 2009 second quarter.
Total worldwide revenues for the Industrial Packaging segment increased 23.5 percent in the second quarter compared to the year-earlier period. Base revenues grew 17.7 percent in the quarter largely as a result of increased demand in key North American industries such as automotive, construction and appliance for plastic and steel strapping consumables. As a result, total North American industrial packaging base revenues grew 22.5 percent in the second quarter versus the year-ago period. Total international industrial packaging base revenues increased 11.9 percent in the second quarter compared to the 2009 second quarter.
The company is forecasting third-quarter 2010 diluted income per share from continuing operations to be in a range of $0.72 to $0.84. The 2010 third quarter forecast assumes a total revenue growth range of 9 percent to 13 percent. For full-year 2010, the company is forecasting diluted income per share from continuing operations to be in a range of $2.82 to $3.08. The 2010 full-year forecast assumes a total revenue growth range of 11 percent to 13 percent. The new full-year midpoint guidance represents an upward adjustment from the company’s prior full-year earnings range of $2.72 to $3.08. In addition, the company has raised its forecasted range of annualized acquired revenues to $500 million – $700 million from $300 million – $500 million.
With $13.9 billion in 2009 revenues, ITW is a multi-national manufacturer of a diversified range of value-adding and short-lead time industrial products and equipment. The company consists of nearly 800 business units in 57 countries and employs approximately 59,000 people.
