ITW's 2012 Second Quarter Diluted Income Per Share from Continuing Operations Increases 16 Percent to $1.11; Organic Revenues Increase 2.3 Percent; Operating Margins Improve 110 Basis Points to 16.5 Percent; Company Repurchases $526 Million of Shares; Company Lowers Full-Year Earnings Forecast

24 Jul, 2012, 08:00 ET from Illinois Tool Works Inc.

GLENVIEW, Ill., July 24, 2012 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported second quarter 2012 diluted income per share from continuing operations of $1.11, a 16 percent increase versus the 2011 second quarter. While revenue growth moderated in the second quarter due to the higher-than-expected negative impact of currency translation and slowing demand in a variety of international end markets, operating margins of 16.5 percent improved 110 basis points versus the year-ago period.

Second quarter 2012 financial and operating highlights versus the prior year included:

  • Total revenues of $4.655 billion increased 0.9 percent. Organic or base revenues grew 2.3 percent, with North American organic revenues increasing 5.3 percent and international organic revenues declining 0.8 percent. European organic revenues decreased 1.7 percent. Asia Pacific organic revenues underperformed company expectations, growing only 1.8 percent.  Notably, China organic revenues declined 0.5 percent.
  • Acquisitions net of divestitures added 3.0 percent to revenues while currency translation negatively impacted revenues by 4.5 percent. The declining value of the Euro accounted for the major currency headwind in the quarter.
  • Operating income of $770.0 million grew 8.3 percent.
  • Operating margins improved due to favorable raw material price/cost dynamics as well as effective management of overheads within the decentralized businesses.
  • Total revenues for the Power Systems and Electronics segment increased 7.7 percent. Segment organic revenues grew 5.2 percent based on continuing strength in the worldwide welding businesses and improvement in the electronics assembly businesses. Worldwide welding's organic revenues grew 8.8 percent, with North American and international growing 11.4 percent and 2.1 percent, respectively. Segment operating margins of 21.2 percent improved 60 basis points from the prior year period.
  • The Company returned nearly $700 million to shareholders through share repurchases of $526 million and dividends paid of $172 million. At the end of the 2012 second quarter, the Company had $2.9 billion remaining in its share repurchase authorization.

"Despite slowing in a variety of international end markets and significant currency translation headwinds, we were very pleased with our second quarter operating performance," said David B. Speer, chairman and chief executive officer.  "Based on our differentiated 80/20 operational focus, our businesses produced very strong operating margin improvement in the quarter with excellent management of input and overhead costs.  In addition, we continued to return significant levels of cash to our shareholders through our share repurchase program as well as our strong dividend payout."

Given the ongoing negative impact of currency translation, additional restructuring expenditures that will now total over $100 million for the year, and expected continued sluggish demand in international markets, the Company is lowering its forecast for revenue growth from continuing operations to be in a range of 1 percent to 3 percent versus the prior range of 5 percent to 7 percent.  As a result, full-year diluted income per share from continuing operations is expected to be in a range of $4.03 to $4.19 versus the prior range of $4.14 to $4.38.  For third quarter 2012, the Company is forecasting revenue growth to be in a range from -1 percent to 1 percent and diluted income per share from continuing operations to be in a range of $1.03 to $1.11.

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding diluted income per share from continuing operations and total revenue growth. These statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially from those anticipated. Such factors include those contained in ITW's 2011 Form 10-K.

Celebrating its 100-year anniversary in 2012, ITW is a Fortune 200 global diversified industrial manufacturer of value-added consumables and specialty equipment with related service businesses. The Company focuses on profitable growth and strong returns across worldwide platforms and businesses. The businesses serve local customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW's revenues totaled $17.8 billion in 2011, with more than half of the revenues generated outside of the United States.

ILLINOIS TOOL WORKS INC. AND SUBSIDIARIES

STATEMENT OF INCOME (UNAUDITED)

(In millions except per share amounts)

 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2012

2011

2012

2011

Operating Revenues

$

4,655

$

4,615

$

9,202

$

8,887

Cost of revenues

2,964

2,996

5,875

5,758

Selling, administrative, and research and

  development expenses

846

845

1,705

1,641

Amortization of intangible assets

75

63

147

118

Operating Income

770

711

1,475

1,370

Interest expense

(50)

(45)

(100)

(89)

Other income (expense)

23

15

31

21

Income from Continuing Operations   Before Income Taxes

743

681

1,406

1,302

Income Taxes

216

197

408

212

Income from Continuing Operations

527

484

998

1,090

Income from Discontinued Operations

354

15

369

32

Net Income

$

881

$

499

$

1,367

$

1,122

Income Per Share from Continuing

 Operations:

Basic

$1.12

$0.97

$2.09

$2.19

Diluted

$1.11

$0.96

$2.08

$2.17

Income Per Share from Discontinued

 Operations:

Basic

$0.75

$0.03

$0.77

$0.06

Diluted

$0.74

$0.03

$0.77

$0.06

Net Income Per Share:

Basic

$1.86

$1.00

$2.86

$2.25

Diluted

$1.85

$0.99

$2.84

$2.23

Shares Outstanding During the Period:

Average

472.9

497.8

477.4

498.2

Average assuming dilution

476.1

501.9

480.9

502.3

FREE OPERATING CASH FLOW

 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2012

2011

2012

2011

Net cash provided by operating activities

$

509

$

312

$

832

$

457

Less:  Additions to plant and equipment

(100)

(87)

(184)

(176)

Free operating cash flow

$

409

$

225

$

648

$

281

ILLINOIS TOOL WORKS INC. AND SUBSIDIARIES

STATEMENT OF FINANCIAL POSITION (UNAUDITED)

(In millions)

JUNE 30,

DECEMBER 31,

ASSETS

2012

2011

Current Assets:

Cash and equivalents

$

1,692

$

1,178

Trade receivables

3,164

2,819

Inventories

1,796

1,716

Deferred income taxes

373

366

Prepaid expenses and other current assets

449

384

Assets held for sale

77

386

Total current assets

7,551

6,849

Noncurrent Assets:

Net plant and equipment

2,067

2,025

Investments

271

409

Goodwill

5,456

5,198

Intangible assets

2,368

2,233

Deferred income taxes

514

634

Other assets

694

636

$

18,921

$

17,984

LIABILITIES and STOCKHOLDERS' EQUITY

Current Liabilities:

Short-term debt

$

1,438

$

502

Accounts payable

785

697

Accrued expenses

1,479

1,435

Cash dividends payable

169

174

Income taxes payable

54

57

Deferred income taxes

5

5

Liabilities held for sale

6

107

Total current liabilities

3,936

2,977

Noncurrent Liabilities:

Long-term debt

3,468

3,488

Deferred income taxes

118

117

Other liabilities

1,298

1,368

Total noncurrent liabilities

4,884

4,973

Stockholders' Equity:

Common stock

5

5

Additional paid-in-capital

825

686

Income reinvested in the business

12,821

11,794

Common stock held in treasury

(3,702)

(2,692)

Accumulated other comprehensive income

135

224

Noncontrolling interest

17

17

Total stockholders' equity

10,101

10,034

$

18,921

$

17,984

ILLINOIS TOOL WORKS INC. AND SUBSIDIARIES

SEGMENT DATA

THREE MONTHS ENDED JUNE 30, 2012

% F(U) vs. prior year

$ in Millions

Total Revenue

Operating Income

Operating Margin

Total Revenue

Organic (Base) Revenue

Operating Income

Operating Margin

Organic (Base) Op Margin

Transportation

$

896

$

143

16.0%

0.1%

3.4%

4.4%

0.7%

1.0%

Power Systems & Electronics

810

172

21.2%

7.7%

5.2%

11.0%

0.6%

1.6%

Industrial Packaging

627

76

12.1%

-5.1%

0.2%

8.6%

1.5%

1.8%

Food Equipment

476

75

15.8%

-3.3%

1.3%

11.9%

2.1%

2.2%

Construction

489

59

12.1%

-6.0%

-0.5%

-7.8%

-0.2%

-0.3%

Polymers & Fluids

334

57

17.1%

-0.9%

-0.4%

1.8%

0.4%

1.2%

Decorative Surfaces

286

41

14.3%

0.4%

4.8%

17.1%

2.1%

1.4%

All Other

755

147

19.5%

8.8%

2.6%

15.7%

1.2%

2.5%

Intersegment

(18)

Total Company

4,655

770

16.5%

0.9%

2.3%

8.3%

1.1%

1.5%

SIX MONTHS ENDED JUNE 30, 2012

% F(U) vs. prior year

$ in Millions

Total Revenue

Operating Income

Operating Margin

Total Revenue

Organic (Base) Revenue

Operating Income

Operating Margin

Organic (Base) Op Margin

Transportation

$

1,819

$

294

16.2%

4.9%

4.2%

7.3%

0.4%

0.9%

Power Systems & Electronics

1,601

341

21.3%

9.4%

6.1%

11.8%

0.5%

1.8%

Industrial Packaging

1,239

144

11.6%

-1.1%

1.0%

10.8%

1.2%

1.6%

Food Equipment

949

151

15.9%

-1.7%

1.4%

12.7%

2.0%

1.9%

Construction

958

95

9.9%

-2.5%

0.0%

-13.6%

-1.3%

-0.3%

Polymers & Fluids

637

103

16.2%

1.9%

0.6%

6.2%

0.6%

1.3%

Decorative Surfaces

561

77

13.7%

1.4%

4.6%

11.6%

1.2%

0.8%

All Other

1,471

270

18.4%

8.8%

1.9%

7.6%

-0.2%

1.9%

Intersegment

(33)

Total Company

9,202

1,475

16.0%

3.5%

2.7%

7.7%

0.6%

1.3%

SOURCE Illinois Tool Works Inc.



RELATED LINKS

http://www.itw.com