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ITW Reports Second Quarter Revenue of $4B

ITW is maintaining full-year 2022 guidance including organic revenue growth of 7% to 10% and record GAAP EPS of $9 to $9.40 per share.

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Illinois Tool Works (ITW) reported its second quarter 2022 results.

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Second Quarter 2022 Results
Second quarter revenue of $4 billion increased nine percent with organic revenue growth of 10 percent. The acquisition of MTS contributed three percent to revenue. Unfavorable foreign currency translation reduced revenue by four percent. Six of seven segments delivered positive organic growth in the quarter, led by Food Equipment up 25 percent, Welding up 22 percent, Construction Products up 15 percent, Polymers & Fluids up 10 percent, Automotive OEM up six percent, and Test & Measurement and Electronics up one percent due to a difficult year-over-year comparison. Specialty Products organic revenue was down less than two percent. On a geographic basis, organic growth was 14 percent in North America, 6 percent in Europe, and 3 percent in Asia Pacific.

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GAAP EPS was $2.37 and included $(0.05) of higher restructuring expenses related to 80/20 front-to-back projects, $(0.10) of unfavorable foreign currency translation, and a $0.16 one-time tax benefit related to the routine resolution of a U.S. tax audit. 

“In the current environment, our teams around the world continue to do an exceptional job of demonstrating the power and resilience of the ITW business model as evidenced by the more than 10 percent organic growth and 23 percent plus operating margin that they delivered in the second quarter,” said E. Scott Santi, chairman and CEO. “Across the company we continue to leverage our 80/20 front-to-back driven operational capabilities to support our customers and execute our ‘Win the Recovery’ strategy to accelerate profitable market penetration and organic growth across our portfolio. Looking ahead at the remainder of 2022, based on our first half results and current levels of demand, we are maintaining our current guidance for full-year 2022, including organic growth of 8.5 percent and record GAAP EPS of $9.20 at their respective mid-points. While the near-term environment has its challenges, we remain focused on delivering differentiated service to our customers, top-tier financial performance for our shareholders, and continued progress on our path to ITW’s full potential performance.”

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2022 Guidance
ITW is maintaining its full-year GAAP EPS guidance of $9 to $9.40 per share. Based on current levels of demand, the company is projecting full-year revenue growth in the range of six to nine percent, with organic growth of seven to 10 percent. At current foreign exchange rates, currency translation is projected to reduce revenue by four percent and EPS by approximately $(0.35). The acquisition of MTS is expected to add three percent to revenue. Operating margin is forecasted to be in the range of 24 to 25 percent, with enterprise initiatives contributing approximately 100 basis points and price/cost margin dilution impact of (100) basis points. Price is projected to exceed input cost inflation on a dollar-for-dollar basis. The expected free cash flow conversion rate is unchanged at 85 to 95 percent of net income, and the company is on pace to repurchase $1.5 billion of its own shares. The projected effective tax rate is 22 to 23 percent.

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