Illinois Tool Works Inc. (NYSE: ITW) today reported its fourth
quarter and full year 2022 results and initiated guidance for full
year 2023.
“We delivered a robust finish to a strong year
of differentiated execution and performance by the ITW team. Fourth
quarter organic growth was 12 percent, operating margin was 24.8
percent, and earnings per share increased 21 percent excluding
divestiture gains,” said E. Scott Santi, Chairman and Chief
Executive Officer. We were very pleased with both our revenue
growth and margin performance in the fourth quarter as we delivered
eight percent overall revenue growth and a 210-basis point
operating margin improvement.”
“For all of 2022, in a year marked by
significant supply chain disruptions and cost inflation, ITW
delivered organic growth of 12 percent for the second year in a
row, operating margin of 24.4 percent in our base business, after
tax return on invested capital of 29.1 percent, and record GAAP EPS
of $9.77, an increase of 15 percent versus the prior year. There is
no question that our decision to stay invested in our enterprise
strategy and in our people throughout the pandemic and the quality
of our teams’ execution of our “Win the Recovery” focus coming out
of it are powering the strong growth and financial performance ITW
is currently delivering. As a result, we are very pleased with our
momentum and positioning heading into 2023. I want to again thank
my ITW colleagues around the world for their extraordinary
dedication and commitment to serving our customers and executing
our strategy with excellence,” Santi concluded.
Fourth Quarter 2022
ResultsFourth quarter revenue of $4.0 billion increased
eight percent with organic revenue growth of 12 percent. The net
impact from acquisitions and divestitures contributed one percent
to revenue. Unfavorable foreign currency translation reduced
revenue by five percent. Five of seven segments delivered
double-digit organic growth in the quarter, led by Automotive OEM
up 20 percent, Food Equipment up 17 percent, Welding up 15 percent,
Polymers & Fluids up 11 percent, and Test & Measurement and
Electronics up 10 percent. Construction Products was up four
percent, and Specialty Products was up three percent. On a
geographic basis, organic growth was 13 percent in North America,
11 percent in Europe, and nine percent in Asia Pacific.
GAAP EPS increased 53 percent to $2.95 and
included $0.61 of divestiture gains and $0.12 of unfavorable
foreign currency translation impact. Excluding divestiture gains
and foreign currency translation impact, EPS of $2.46 increased 27
percent. Operating income increased 18 percent to $986 million and
incremental margin was 52 percent. Operating margin of 24.8 percent
improved 210 basis points with enterprise initiatives contributing
110 basis points and favorable price/cost margin impact of 70 basis
points. Operating cash flow was $811 million, and free cash flow
was $655 million, a seven percent sequential improvement from the
third quarter and a conversion rate to net income of 72 percent.
Excluding the abovementioned divestiture gains, the conversion rate
to net income was 91 percent. The company repurchased $500 million
of its own shares and the effective tax rate was 19.1 percent,
which included a 2.9 percentage-point favorable impact from the
utilization of capital loss carryforwards related to the
divestitures.
Full Year 2022 ResultsFull year
revenue of $15.9 billion increased 10 percent with organic revenue
growth of 12 percent. The net impact from acquisitions and
divestitures contributed two percent to revenue. Unfavorable
foreign currency translation reduced revenue by four percent. Five
of seven segments delivered double-digit organic growth for the
year, led by Food Equipment up 23 percent, Welding up 16 percent,
Construction Products up 14 percent, Automotive OEM up 12 percent,
and Polymers & Fluids up 11 percent. Test & Measurement and
Electronics was up nine percent and Specialty Products was up 0.4
percent. On a geographic basis, organic growth was 14 percent in
North America, 10 percent in Europe, and eight percent in Asia
Pacific.
GAAP EPS increased 15 percent to $9.77 including
the abovementioned divestiture gains and $0.39 of unfavorable
foreign currency translation impact. Excluding divestiture gains
and foreign currency translation impact, EPS increased 12 percent.
Operating margin of 23.8 percent declined 30 basis points primarily
due to 150 basis points of combined unfavorable margin headwind
from price/cost and MTS acquisition impact. Operating cash flow was
$2.3 billion and free cash flow was $1.9 billion with a conversion
rate of 64 percent to net income, as the company continues to make
working capital investments to support double-digit organic revenue
growth and to mitigate supply chain risk in order to sustain
best-in-class customer service levels across our portfolio. The
company repurchased $1.75 billion of its own shares, and the
effective tax rate was 21 percent.
Fourth Quarter Divestiture
UpdateAs previously announced, on October 3, 2022, ITW
closed the sale of a $100 million revenue division within the
Polymers & Fluids segment for $220 million. On December 1,
2022, ITW closed the sale of a $35 million revenue business unit
within the Food Equipment segment for $59 million. The gains on
sale related to these two divestitures contributed $197 million to
non-operating income and $0.61 to fourth quarter EPS.
2023 GuidanceThe company is
initiating 2023 guidance including GAAP EPS in the range of $9.40
to $9.80 per share and organic growth of three to five percent
based on current levels of demand and anticipated further slowing
in certain end markets. Foreign currency translation and the
abovementioned divestitures are expected to reduce revenue by
approximately 0.75 percent each, resulting in total revenue growth
of 1.5 to 3.5 percent. Operating margin is projected to be in the
range of 24.5 to 25.5 percent, with approximately 100 basis points
contribution from enterprise initiatives. Free cash flow is
expected to be greater than 100 percent of net income and the
company plans to repurchase approximately $1.5 billion of its own
shares. The projected effective tax rate is approximately 24
percent.
Non-GAAP Measures This earnings
release contains certain non-GAAP financial measures. A
reconciliation of these measures to the most directly comparable
GAAP measures is included in the attached supplemental
reconciliation schedule. The estimated guidance of free cash flow
conversion rate is based on assumptions that are difficult to
predict, and estimated guidance for the most directly comparable
GAAP measure and a reconciliation of this forward-looking estimate
to its most directly comparable GAAP estimate have been omitted due
to the unreasonable efforts required in connection with such a
reconciliation and the lack of reliable forward-looking cash flow
information.
Forward-looking StatementsThis
earnings release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements may include, without limitation, statements
regarding the duration and potential effects of the COVID-19
pandemic and global supply chain challenges, related government
actions and the company’s strategy in response thereto on the
company’s business, expected impact of inflation including raw
material inflation and rising interest rates, enterprise
initiatives, future financial and operating performance, free cash
flow and free cash flow conversion rate, organic and total revenue,
operating and incremental margin, price/cost impact, diluted income
per share, restructuring expenses and related benefits, expected
dividend payments, expected repatriation of overseas cash,
after-tax return on invested capital, effective tax rates, exchange
rates, expected access to liquidity sources, expected capital
allocation, expected timing and amount of share repurchases, end
market economic and regulatory conditions, potential acquisitions
and divestitures and related impact on financial results, including
statements with respect to the impact of the 2021 acquisition of
the MTS Test & Simulation business and the 2022 divestitures,
and the company’s 2023 guidance. These statements are subject to
certain risks, uncertainties, assumptions, and other factors that
could cause actual results to differ materially from those
anticipated. Such factors include those contained in ITW's Form
10-K for 2021 and subsequent reports filed with the SEC.
About Illinois Tool WorksITW
(NYSE: ITW) is a Fortune 200 global multi-industrial manufacturing
leader with revenues totaling $15.9 billion in 2022. The company’s
seven industry-leading segments leverage the unique ITW Business
Model to drive solid growth with best-in-class margins and returns
in markets where highly innovative, customer-focused solutions are
required. ITW’s approximately 46,000 dedicated colleagues around
the world thrive in the company’s decentralized and entrepreneurial
culture. www.itw.com
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSTATEMENT OF INCOME
(UNAUDITED)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
In millions except per share amounts |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Operating Revenue |
$ |
3,971 |
|
|
$ |
3,679 |
|
|
$ |
15,932 |
|
|
$ |
14,455 |
|
Cost of revenue |
|
2,309 |
|
|
|
2,191 |
|
|
|
9,429 |
|
|
|
8,489 |
|
Selling, administrative, and research and development expenses |
|
644 |
|
|
|
621 |
|
|
|
2,579 |
|
|
|
2,356 |
|
Amortization and impairment of intangible assets |
|
32 |
|
|
|
33 |
|
|
|
134 |
|
|
|
133 |
|
Operating Income |
|
986 |
|
|
|
834 |
|
|
|
3,790 |
|
|
|
3,477 |
|
Interest expense |
|
(56 |
) |
|
|
(49 |
) |
|
|
(203 |
) |
|
|
(202 |
) |
Other income (expense) |
|
191 |
|
|
|
7 |
|
|
|
255 |
|
|
|
51 |
|
Income Before Taxes |
|
1,121 |
|
|
|
792 |
|
|
|
3,842 |
|
|
|
3,326 |
|
Income taxes |
|
214 |
|
|
|
183 |
|
|
|
808 |
|
|
|
632 |
|
Net Income |
$ |
907 |
|
|
$ |
609 |
|
|
$ |
3,034 |
|
|
$ |
2,694 |
|
|
|
|
|
|
|
|
|
Net Income Per Share: |
|
|
|
|
|
|
|
Basic |
$ |
2.96 |
|
|
$ |
1.94 |
|
|
$ |
9.80 |
|
|
$ |
8.55 |
|
Diluted |
$ |
2.95 |
|
|
$ |
1.93 |
|
|
$ |
9.77 |
|
|
$ |
8.51 |
|
|
|
|
|
|
|
|
|
Cash Dividends Per Share: |
|
|
|
|
|
|
|
Paid |
$ |
1.31 |
|
|
$ |
1.22 |
|
|
$ |
4.97 |
|
|
$ |
4.64 |
|
Declared |
$ |
1.31 |
|
|
$ |
1.22 |
|
|
$ |
5.06 |
|
|
$ |
4.72 |
|
|
|
|
|
|
|
|
|
Shares of Common Stock Outstanding During the Period: |
|
|
|
|
|
|
|
Average |
|
306.8 |
|
|
|
313.6 |
|
|
|
309.6 |
|
|
|
315.1 |
|
Average assuming dilution |
|
307.9 |
|
|
|
315.0 |
|
|
|
310.7 |
|
|
|
316.4 |
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSTATEMENT OF FINANCIAL POSITION
(UNAUDITED)
In millions |
December 31, 2022 |
|
December 31, 2021 |
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and equivalents |
$ |
708 |
|
|
$ |
1,527 |
|
Trade receivables |
|
3,171 |
|
|
|
2,840 |
|
Inventories |
|
2,054 |
|
|
|
1,694 |
|
Prepaid expenses and other current assets |
|
329 |
|
|
|
313 |
|
Assets held for sale |
|
8 |
|
|
|
— |
|
Total current assets |
|
6,270 |
|
|
|
6,374 |
|
|
|
|
|
Net plant and equipment |
|
1,848 |
|
|
|
1,809 |
|
Goodwill |
|
4,864 |
|
|
|
4,965 |
|
Intangible assets |
|
768 |
|
|
|
972 |
|
Deferred income taxes |
|
494 |
|
|
|
552 |
|
Other assets |
|
1,178 |
|
|
|
1,405 |
|
|
$ |
15,422 |
|
|
$ |
16,077 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Current Liabilities: |
|
|
|
Short-term debt |
$ |
1,590 |
|
|
$ |
778 |
|
Accounts payable |
|
594 |
|
|
|
585 |
|
Accrued expenses |
|
1,728 |
|
|
|
1,648 |
|
Cash dividends payable |
|
400 |
|
|
|
382 |
|
Income taxes payable |
|
147 |
|
|
|
77 |
|
Liabilities held for sale |
|
1 |
|
|
|
— |
|
Total current liabilities |
|
4,460 |
|
|
|
3,470 |
|
|
|
|
|
Noncurrent Liabilities: |
|
|
|
Long-term debt |
|
6,173 |
|
|
|
6,909 |
|
Deferred income taxes |
|
484 |
|
|
|
654 |
|
Noncurrent income taxes payable |
|
273 |
|
|
|
365 |
|
Other liabilities |
|
943 |
|
|
|
1,053 |
|
Total noncurrent liabilities |
|
7,873 |
|
|
|
8,981 |
|
|
|
|
|
Stockholders' Equity: |
|
|
|
Common stock |
|
6 |
|
|
|
6 |
|
Additional paid-in-capital |
|
1,501 |
|
|
|
1,432 |
|
Retained earnings |
|
25,799 |
|
|
|
24,325 |
|
Common stock held in treasury |
|
(22,377 |
) |
|
|
(20,636 |
) |
Accumulated other comprehensive income (loss) |
|
(1,841 |
) |
|
|
(1,502 |
) |
Noncontrolling interest |
|
1 |
|
|
|
1 |
|
Total stockholders' equity |
|
3,089 |
|
|
|
3,626 |
|
|
$ |
15,422 |
|
|
$ |
16,077 |
|
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSEGMENT DATA (UNAUDITED)
Three Months Ended December 31, 2022 |
Dollars in millions |
TotalRevenue |
OperatingIncome |
OperatingMargin |
Automotive OEM |
$ |
745 |
|
$ |
128 |
|
17.1 |
% |
Food Equipment |
|
631 |
|
|
173 |
|
27.6 |
% |
Test & Measurement and Electronics |
|
732 |
|
|
198 |
|
26.9 |
% |
Welding |
|
481 |
|
|
152 |
|
31.6 |
% |
Polymers & Fluids |
|
455 |
|
|
117 |
|
25.8 |
% |
Construction Products |
|
470 |
|
|
120 |
|
25.5 |
% |
Specialty Products |
|
462 |
|
|
119 |
|
25.7 |
% |
Intersegment |
|
(5 |
) |
|
— |
|
— |
% |
Total Segments |
|
3,971 |
|
|
1,007 |
|
25.4 |
% |
Unallocated |
|
— |
|
|
(21 |
) |
— |
% |
Total Company |
$ |
3,971 |
|
$ |
986 |
|
24.8 |
% |
Twelve Months Ended December 31, 2022 |
Dollars in millions |
TotalRevenue |
OperatingIncome |
OperatingMargin |
Automotive OEM |
$ |
2,969 |
|
$ |
499 |
|
16.8 |
% |
Food Equipment |
|
2,444 |
|
|
618 |
|
25.3 |
% |
Test & Measurement and Electronics |
|
2,828 |
|
|
684 |
|
24.2 |
% |
Welding |
|
1,894 |
|
|
583 |
|
30.8 |
% |
Polymers & Fluids |
|
1,905 |
|
|
479 |
|
25.2 |
% |
Construction Products |
|
2,113 |
|
|
548 |
|
25.9 |
% |
Specialty Products |
|
1,799 |
|
|
481 |
|
26.7 |
% |
Intersegment |
|
(20 |
) |
|
— |
|
— |
% |
Total Segments |
|
15,932 |
|
|
3,892 |
|
24.4 |
% |
Unallocated |
|
— |
|
|
(102 |
) |
— |
% |
Total Company |
$ |
15,932 |
|
$ |
3,790 |
|
23.8 |
% |
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSEGMENT DATA (UNAUDITED)
Q4 2022 vs. Q4 2021 Favorable/(Unfavorable) |
Operating Revenue |
AutomotiveOEM |
FoodEquipment |
Test &MeasurementandElectronics |
Welding |
Polymers &Fluids |
ConstructionProducts |
SpecialtyProducts |
Total ITW |
Organic |
19.6 % |
16.8 % |
10.4 % |
15.4 % |
10.8 % |
4.2 % |
2.9 % |
11.9 % |
Acquisitions/Divestitures |
— % |
(0.4)% |
10.1 % |
— % |
(4.7)% |
— % |
— % |
1.2 % |
Translation |
(7.3)% |
(5.5)% |
(5.2)% |
(1.7)% |
(4.3)% |
(6.2)% |
(3.9)% |
(5.2)% |
Operating Revenue |
12.3 % |
10.9 % |
15.3 % |
13.7 % |
1.8 % |
(2.0)% |
(1.0)% |
7.9 % |
Q4 2022 vs. Q4 2021 Favorable/(Unfavorable) |
Change in Operating Margin |
AutomotiveOEM |
FoodEquipment |
Test &Measurementand Electronics |
Welding |
Polymers &Fluids |
Construction Products |
SpecialtyProducts |
Total ITW |
Operating Leverage |
350 bps |
310 bps |
220 bps |
210 bps |
190 bps |
70 bps |
50 bps |
230 bps |
Changes in Variable Margin & OH Costs |
(320) bps |
130 bps |
130 bps |
(90) bps |
(70) bps |
(90) bps |
(110) bps |
20 bps |
Total Organic |
30 bps |
440 bps |
350 bps |
120 bps |
120 bps |
(20) bps |
(60) bps |
250 bps |
Acquisitions/Divestitures |
— |
10 bps |
(290) bps |
— |
50 bps |
— |
— |
(40) bps |
Restructuring/Other |
— |
20 bps |
(10) bps |
40 bps |
— |
(10) bps |
(20) bps |
— |
Total Operating Margin Change |
30 bps |
470 bps |
50 bps |
160 bps |
170 bps |
(30) bps |
(80) bps |
210 bps |
|
|
|
|
|
|
|
|
|
Total Operating Margin % * |
17.1% |
27.6% |
26.9% |
31.6% |
25.8% |
25.5% |
25.7% |
24.8% |
|
|
|
|
|
|
|
|
|
* Includes unfavorable operating margin impact of amortization
expense from acquisition-related intangible assets |
30 bps |
50 bps |
180 bps |
10 bps |
220 bps |
20 bps |
60 bps |
90 bps ** |
** Amortization expense from acquisition-related intangible assets
had an unfavorable impact of ($0.08) on GAAP earnings per share for
the fourth quarter of 2022. |
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESSEGMENT DATA (UNAUDITED)
Full Year 2022 vs Full Year 2021
Favorable/(Unfavorable) |
Operating Revenue |
AutomotiveOEM |
FoodEquipment |
Test &MeasurementandElectronics |
Welding |
Polymers &Fluids |
ConstructionProducts |
SpecialtyProducts |
Total ITW |
Organic |
11.7 % |
22.9 % |
9.0 % |
16.0 % |
10.5 % |
14.4 % |
0.4 % |
12.1 % |
Acquisitions/Divestitures |
— % |
(0.1)% |
15.9 % |
— % |
(1.2)% |
— % |
— % |
2.4 % |
Translation |
(5.7)% |
(5.2)% |
(4.3)% |
(1.3)% |
(3.7)% |
(5.8)% |
(3.3)% |
(4.3)% |
Operating Revenue |
6.0 % |
17.6 % |
20.6 % |
14.7 % |
5.6 % |
8.6 % |
(2.9)% |
10.2 % |
Full Year 2022 vs Full Year 2021
Favorable/(Unfavorable) |
Change in Operating Margin |
AutomotiveOEM |
FoodEquipment |
Test &Measurementand Electronics |
Welding |
Polymers &Fluids |
ConstructionProducts |
SpecialtyProducts |
Total ITW |
Operating Leverage |
190 bps |
430 bps |
190 bps |
220 bps |
170 bps |
220 bps |
— |
220 bps |
Changes in Variable Margin & OH Costs |
(370) bps |
(150) bps |
(160) bps |
(140) bps |
(200) bps |
(350) bps |
(60) bps |
(180) bps |
Total Organic |
(180) bps |
280 bps |
30 bps |
80 bps |
(30) bps |
(130) bps |
(60) bps |
40 bps |
Acquisitions/Divestitures |
— |
— |
(350) bps |
— |
20 bps |
— |
— |
(60) bps |
Restructuring/Other |
(90) bps |
(10) bps |
— |
30 bps |
(10) bps |
— |
10 bps |
(10) bps |
Total Operating Margin Change |
(270) bps |
270 bps |
(320) bps |
110 bps |
(20) bps |
(130) bps |
(50) bps |
(30) bps |
|
|
|
|
|
|
|
|
|
Total Operating Margin % * |
16.8% |
25.3% |
24.2% |
30.8% |
25.2% |
25.9% |
26.7% |
23.8% |
|
|
|
|
|
|
|
|
|
* Includes unfavorable operating margin impact of amortization
expense from acquisition-related intangible assets |
30 bps |
50 bps |
190 bps |
10 bps |
220 bps |
20 bps |
70 bps |
90 bps ** |
** Amortization expense from acquisition-related intangible assets
had an unfavorable impact of ($0.33) on GAAP earnings per share for
2022. |
ILLINOIS TOOL WORKS INC. and
SUBSIDIARIESGAAP to NON-GAAP RECONCILIATIONS
(UNAUDITED)
AFTER-TAX RETURN ON AVERAGE INVESTED
CAPITAL (UNAUDITED)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
Dollars in millions |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Numerator: |
|
|
|
|
|
|
|
Net income |
$ |
907 |
|
|
$ |
609 |
|
|
$ |
3,034 |
|
|
$ |
2,694 |
|
Discrete tax benefit related to the fourth quarter 2022 |
|
(32 |
) |
|
|
— |
|
|
|
(32 |
) |
|
|
— |
|
Discrete tax benefit related to the second quarter 2022 |
|
— |
|
|
|
— |
|
|
|
(51 |
) |
|
|
— |
|
Discrete tax benefit related to the third quarter 2021 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(21 |
) |
Discrete tax benefit related to the second quarter 2021 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(112 |
) |
Interest expense, net of tax (1) |
|
44 |
|
|
|
38 |
|
|
|
156 |
|
|
|
157 |
|
Other (income) expense, net of tax (1) |
|
(147 |
) |
|
|
(5 |
) |
|
|
(196 |
) |
|
|
(40 |
) |
Operating income after taxes |
$ |
772 |
|
|
$ |
642 |
|
|
$ |
2,911 |
|
|
$ |
2,678 |
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
Invested capital: |
|
|
|
|
|
|
|
Cash and equivalents |
$ |
708 |
|
|
$ |
1,527 |
|
|
$ |
708 |
|
|
$ |
1,527 |
|
Trade receivables |
|
3,171 |
|
|
|
2,840 |
|
|
|
3,171 |
|
|
|
2,840 |
|
Inventories |
|
2,054 |
|
|
|
1,694 |
|
|
|
2,054 |
|
|
|
1,694 |
|
Net assets held for sale |
|
7 |
|
|
|
— |
|
|
|
7 |
|
|
|
— |
|
Net plant and equipment |
|
1,848 |
|
|
|
1,809 |
|
|
|
1,848 |
|
|
|
1,809 |
|
Goodwill and intangible assets |
|
5,632 |
|
|
|
5,937 |
|
|
|
5,632 |
|
|
|
5,937 |
|
Accounts payable and accrued expenses |
|
(2,322 |
) |
|
|
(2,233 |
) |
|
|
(2,322 |
) |
|
|
(2,233 |
) |
Debt |
|
(7,763 |
) |
|
|
(7,687 |
) |
|
|
(7,763 |
) |
|
|
(7,687 |
) |
Other, net |
|
(246 |
) |
|
|
(261 |
) |
|
|
(246 |
) |
|
|
(261 |
) |
Total net assets (stockholders' equity) |
|
3,089 |
|
|
|
3,626 |
|
|
|
3,089 |
|
|
|
3,626 |
|
Cash and equivalents |
|
(708 |
) |
|
|
(1,527 |
) |
|
|
(708 |
) |
|
|
(1,527 |
) |
Debt |
|
7,763 |
|
|
|
7,687 |
|
|
|
7,763 |
|
|
|
7,687 |
|
Total invested capital |
$ |
10,144 |
|
|
$ |
9,786 |
|
|
$ |
10,144 |
|
|
$ |
9,786 |
|
|
|
|
|
|
|
|
|
Average invested capital (2) |
$ |
10,006 |
|
|
$ |
9,421 |
|
|
$ |
10,017 |
|
|
$ |
9,087 |
|
|
|
|
|
|
|
|
|
Net income to average invested capital (3) |
|
36.3 |
% |
|
|
25.8 |
% |
|
|
30.3 |
% |
|
|
29.6 |
% |
After-tax return on average invested capital (3) |
|
30.8 |
% |
|
|
27.2 |
% |
|
|
29.1 |
% |
|
|
29.5 |
% |
(1) Effective tax rate used for interest
expense and other (income) expense for the three months ended
December 31, 2022 and 2021 was 22.0% and 23.1%, respectively,
and 23.2% and 23.0% for the twelve months ended December 31, 2022
and 2021, respectively.
(2) Average invested capital is
calculated using the total invested capital balances at the start
of the period and at the end of each quarter within each of the
periods presented.
(3) Returns for the three months ended
December 31, 2022 and 2021 were converted to an annual rate by
multiplying the calculated return by 4.
A reconciliation of the effective tax rate for the
three and twelve month periods ended December 31, 2022, excluding
the fourth quarter 2022 discrete tax benefit of $32 million related
to the utilization of capital loss carryforwards and the second
quarter 2022 discrete tax benefit of $51 million related to the
resolution of a U.S. tax audit, is as follows:
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2022 |
|
December 31, 2022 |
Dollars in millions |
Income Taxes |
|
Tax Rate |
|
Income Taxes |
|
Tax Rate |
As reported |
$ |
214 |
|
19.1 |
% |
|
$ |
808 |
|
21.0 |
% |
Discrete tax benefit related to the fourth quarter 2022 |
|
32 |
|
2.9 |
% |
|
|
32 |
|
0.8 |
% |
Discrete tax benefit related to the second quarter 2022 |
|
— |
|
— |
% |
|
|
51 |
|
1.4 |
% |
As adjusted |
$ |
246 |
|
22.0 |
% |
|
$ |
891 |
|
23.2 |
% |
A reconciliation of the effective tax rate for the
twelve month period ended December 31, 2021, excluding the third
quarter 2021 discrete tax benefit of $21 million related to the
utilization of capital loss carryforwards and the second quarter
2021 discrete tax benefit of $112 million related to a change in
the U.K. income tax rate, is as follows:
|
Twelve Months Ended |
|
December 31, 2021 |
Dollars in millions |
Income Taxes |
|
Tax Rate |
As reported |
$ |
632 |
|
19.0 |
% |
Discrete tax benefit related to the third quarter 2021 |
|
21 |
|
0.6 |
% |
Discrete tax benefit related to the second quarter 2021 |
|
112 |
|
3.4 |
% |
As adjusted |
$ |
765 |
|
23.0 |
% |
FREE CASH FLOW (UNAUDITED)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
Dollars in millions |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by operating activities |
$ |
811 |
|
|
$ |
774 |
|
|
$ |
2,348 |
|
|
$ |
2,557 |
|
Less: Additions to plant and equipment |
|
(156 |
) |
|
|
(79 |
) |
|
|
(412 |
) |
|
|
(296 |
) |
Free cash flow |
$ |
655 |
|
|
$ |
695 |
|
|
$ |
1,936 |
|
|
$ |
2,261 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
907 |
|
|
$ |
609 |
|
|
$ |
3,034 |
|
|
$ |
2,694 |
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities to net income conversion rate |
|
89 |
% |
|
|
127 |
% |
|
|
77 |
% |
|
|
95 |
% |
Free cash flow to net income conversion rate |
|
72 |
% |
* |
|
114 |
% |
|
|
64 |
% |
|
|
84 |
% |
* Excluding the net impact of the two divestiture
gains on net income, the free cash flow to net income conversion
rate would have been 91% for the three months ended December 31,
2022.
ADJUSTED NET INCOME PER SHARE - DILUTED
(UNAUDITED)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, 2022 |
|
December 31, 2022 |
As reported |
$ |
2.95 |
|
|
$ |
9.77 |
|
Net impact of gains from two divestitures in the fourth quarter
2022 |
|
(0.61 |
) |
|
|
(0.60 |
) |
As adjusted |
$ |
2.34 |
|
|
$ |
9.17 |
|
ITW |
ITW |
Media
Contact |
Investor
Relations |
Tel: 224.661.7451 |
Karen Fletcher |
mediarelations@itw.com |
Tel: 224.661.7433 |
|
investorrelations@itw.com |
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