GLENVIEW, Ill. — Illinois Tool Works Inc. (ITW) today reported 2010 third quarter diluted income per share from continuing operations of 83 cents, a 38 percent increase versus the year-ago period. The company said this growth in earnings was largely driven by strong organic revenue performance and ongoing contributions from restructuring activities.
The company’s third quarter revenues of $4.018 billion were 12.2 percent higher than the year-earlier period. Organic or base revenues grew 11.2 percent in the quarter, with North American base revenues increasing 11.5 percent and international base revenues growing 10.8 percent. While all of the reporting segments produced positive organic revenue growth in the third quarter, the strongest organic revenue increases were produced by the Power Systems and Electronics, Industrial Packaging and Transportation segments. Acquisitions added 3.6 percent to third quarter revenues. Currency translation negatively impacted revenues by 2.4 percent.
Third quarter operating income of $640.5 million was 32 percent higher than the year-ago period. Income from continuing operations was $419.3 million, a 38 percent improvement versus a year ago. Third quarter operating margins of 15.9 percent were 240 basis points higher than the year-ago period, with organic revenues and restructuring activities accounting for 160 basis points and 60 basis points of improvement, respectively. Notably, third quarter operating margins were only 10 basis points lower than the 16 percent operating margins produced in the 2010 second quarter.
"ITW’s third quarter financial results represented strong operating performance amid end markets that largely performed to our expectations," said David Speer, chairman and CEO. "We were pleased, however, that both our organic revenues and operating margins came in at higher than expected levels. While acquired revenues in the third quarter were relatively modest, we remain optimistic that acquisition activity will continue to improve as the year progresses and we move into 2011. Given our existing cash position, we repurchased 8.1 million shares for $350 million in the quarter. We consider our share repurchase program an ongoing part of our capital allocation process and we remain committed to being opportunistic as to its use."
The company is forecasting fourth quarter 2010 diluted income per share from continuing operations to be in a range of 74 cents to 82 cents. The 2010 fourth quarter forecast assumes a total revenue growth range of 7 percent to 9 percent. For full-year 2010, the company is forecasting diluted income per share from continuing operations to be in a range of $2.99 to $3.07. The 2010 full-year forecast assumes a total revenue growth range of 13 percent to 14 percent.
