ITW's 2012 Third Quarter Diluted Income Per Share from Continuing Operations of $1.12 Increases 12 Percent Versus Prior-Year Period; Excluding Impact of Divestiture Gains, EPS Totals $1.09; Operating Margins of 16.9 Percent Improve 130 Basis Points; Company Repurchases $416 Million of Shares in Third Quarter and $1.4 Billion of Shares Year to Date

23 Oct, 2012, 08:00 ET from Illinois Tool Works Inc.

GLENVIEW, Ill., Oct. 23, 2012 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported third quarter 2012 diluted income per share from continuing operations of $1.12, a 12 percent increase versus the 2011 third quarter. Excluding the impact of divestiture gains in the third quarter, diluted income per share from continuing operations totaled $1.09. While third quarter total revenues and organic revenues were lower than anticipated due to the negative impact of currency translation and slowing demand in a variety of international end markets, operating margins of 16.9 percent outperformed expectations and reflected improvement across all segments.

Third quarter 2012 financial and operating highlights versus the prior-year period included:

*Total revenues of $4.501 billion decreased 1.7 percent. Notably, currency translation negatively impacted revenues by 4.1 percent largely based on a weaker Euro versus last year. Organic or base revenues grew 0.9 percent, with North American organic revenues increasing 3.9 percent and international organic revenues declining 2.7 percent. European and Asia Pacific organic revenues decreased 3.7 percent and 1.5 percent, respectively. Acquisitions net of divestitures added 1.4 percent to revenues.

*Operating income of $763 million increased 6.8 percent. Operating margins of 16.9 percent improved 130 basis points due to favorable raw material price/cost trends as well as effective management of overhead costs within the businesses.

*Total revenues for the Power Systems and Electronics segment increased 4.6 percent. Segment organic revenues grew 4.5 percent due to contributions from both the electronics and welding businesses. Total organic revenues for electronics grew 10.5 percent due to strong contributions from the electronic assembly businesses. Organic revenues for worldwide welding increased 1.9 percent, with North American welding growing 4.6 percent and international welding decreasing 5.6 percent. Segment operating margins of 22.0 percent improved 220 basis points.

*The Company returned nearly $600 million to shareholders via share repurchases of $416 million and dividends paid of $169 million.

"Even with end markets slowing in a number of international geographies, we were pleased by the consistent level of end market demand in North America," said E. Scott Santi, president and acting chief executive officer. "From a profitability standpoint, we continued to focus on our differentiated 80/20 business process and, as a result, we produced very strong operating margin gains in the quarter. We also continued to return significant levels of cash to our shareholders through our share repurchase and dividend programs."

Looking ahead, the Company believes international end markets will continue to be sluggish and the impact of currency translation will be modestly negative in the 2012 fourth quarter.  As a result, we now expect full-year total revenue growth to be in a range of 0 percent to 1 percent.  Full-year diluted income per share from continuing operations is forecasted to be in a range of $4.06 to $4.14.  For the 2012 fourth quarter, the Company is forecasting diluted income per share from continuing operations to be in a range of $0.86 to $0.94 and total revenues to decline in a range of 1 percent to 4 percent.  The Company expects the previously announced Decorative Surfaces divestiture transaction to close in the fourth quarter.  Both the full year and fourth quarter forecasts exclude two months of operating contributions from the Decorative Surfaces segment, gains and expenses related to the transaction, as well as the impact from the 49 percent ongoing equity interest in the new Decorative Surfaces entity.

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, total revenue growth, and the impact of currency translation and international end market conditions. 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 and 2012 third quarter 10-Q.

Celebrating its 100-year anniversary in 2012, ITW is a Fortune 150 global diversified industrial manufacturer of value-added consumables and specialty equipment with related service businesses. The Company focuses on profitable growth with 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)

Three Months Ended

Nine Months Ended

(In millions except per share amounts)

September 30,

September 30,

2012

2011

2012

2011

Operating Revenues

$

4,501

$

4,580

$

13,703

$

13,467

Cost of revenues

2,855

2,962

8,730

8,720

Selling, administrative, and research and development expenses

811

836

2,516

2,477

Amortization of intangible assets

70

68

217

186

Impairment of goodwill and other intangible assets

2

2

Operating Income

763

714

2,238

2,084

Interest expense

(53)

(49)

(153)

(138)

Other income (expense)

29

25

60

46

Income from Continuing Operations

Before Income Taxes

739

690

2,145

1,992

Income Taxes

214

200

622

412

Income from Continuing Operations

525

490

1,523

1,580

Income from Discontinued Operations

(1)

17

368

49

Net Income

$

524

$

507

$

1,891

$

1,629

Income Per Share from Continuing Operations:

Basic

$

1.13

$

1.01

$

3.22

$

3.20

Diluted

$

1.12

$

1.00

$

3.20

$

3.17

Income Per Share from Discontinued Operations:

Basic

$

$

0.04

$

0.78

$

0.10

Diluted

$

$

0.04

$

0.77

$

0.10

Net Income Per Share:

Basic

$

1.13

$

1.04

$

4.00

$

3.30

Diluted

$

1.12

$

1.04

$

3.97

$

3.27

Shares of Common Stock Outstanding

During the Period:

Average

464.8

486.3

473.2

494.2

Average assuming dilution

468.1

488.8

476.6

497.9

FREE OPERATING CASH FLOW

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Net cash provided by operating activities

$

635

$

787

$

1,467

$

1,244

Less: Additions to plant and equipment

(90)

(83)

(274)

(259)

Free operating cash flow

$

545

$

704

$

1,193

$

985

 

 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

STATEMENT OF FINANCIAL POSITION (UNAUDITED)

(In millions)

September 30,

2012

December 31,

2011

ASSETS

Current Assets:

Cash and equivalents

$

2,054

$

1,178

Trade receivables

3,062

2,819

Inventories

1,760

1,716

Deferred income taxes

410

366

Prepaid expenses and other current assets

364

384

Assets held for sale

386

Total current assets

7,650

6,849

Net Plant and Equipment

2,081

2,025

Investments

226

409

Goodwill

5,506

5,198

Intangible Assets

2,302

2,233

Deferred Income Taxes

473

634

Other Assets

785

636

$

19,023

$

17,984

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Short-term debt

$

424

$

502

Accounts payable

770

697

Accrued expenses

1,504

1,435

Cash dividends payable

176

174

Income taxes payable

48

57

Deferred income taxes

6

5

Liabilities held for sale

107

Total current liabilities

2,928

2,977

Noncurrent Liabilities:

Long-term debt

4,572

3,488

Deferred income taxes

120

117

Other liabilities

1,141

1,368

Total noncurrent liabilities

5,833

4,973

Stockholders' Equity:

Common stock

5

5

Additional paid-in-capital

921

686

Income reinvested in the business

13,168

11,794

Common stock held in treasury

(4,118)

(2,692)

Accumulated other comprehensive income

277

224

Noncontrolling interest

9

17

Total stockholders' equity

10,262

10,034

$

19,023

$

17,984

 

 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

SEGMENT DATA (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 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

$

858

$

135

15.7%

(2.2)%

1.4%

(1.8)%

0.1%

1.1%

Power Systems & Electronics

813

179

22.0%

4.6%

4.5%

16.6%

2.2%

2.9%

Industrial Packaging

599

77

12.8%

(4.6)%

0.2%

19.2%

2.6%

2.5%

Food Equipment

491

93

18.8%

(4.0)%

0.3%

11.3%

2.6%

2.3%

Construction

477

60

12.6%

(7.2)%

(2.8)%

(5.4)%

0.1%

0.7%

Polymers & Fluids

308

53

17.4%

(7.3)%

(6.7)%

(5.3)%

0.5%

1.2%

Decorative Surfaces

267

35

13.0%

(5.7)%

(1.7)%

1.8%

1.0%

0.8%

All Other

704

131

18.6%

4.1%

4.5%

7.8%

0.6%

2.5%

Intersegment

(16)

Total Company

4,501

763

16.9%

(1.7)%

0.9%

6.8%

1.3%

2.0%

NINE MONTHS ENDED SEPTEMBER 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

$

2,677

$

428

16.0%

2.5%

3.3%

4.3%

0.3%

1.0%

Power Systems & Electronics

2,414

520

21.6%

7.7%

5.5%

13.4%

1.1%

2.1%

Industrial Packaging

1,838

221

12.0%

(2.3)%

0.8%

13.2%

1.6%

1.8%

Food Equipment

1,440

244

16.9%

(2.5)%

1.1%

12.3%

2.2%

2.1%

Construction

1,435

156

10.9%

(4.2)%

(1.0)%

(10.3)%

(0.6)%

0.1%

Polymers & Fluids

945

156

16.5%

(1.3)%

(1.9)%

2.2%

0.5%

1.2%

Decorative Surfaces

828

112

13.5%

(0.8)%

2.4%

8.0%

1.2%

0.9%

All Other

2,175

401

18.4%

7.3%

2.8%

7.7%

—%

2.1%

Intersegment

(49)

Total Company

13,703

2,238

16.3%

1.7%

2.1%

7.4%

0.8%

1.6%

 

 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION (UNAUDITED)

Three Months Ended

September 30, 2012

Diluted EPS from Continuing Operations - As Reported

$

1.12

Impact of Divestitures, Net of Tax

(0.03)

Diluted EPS from Continuing Operations

Adjusted to Exclude the Net Impact of Divestitures After Tax

$

1.09

 

SOURCE Illinois Tool Works Inc.



RELATED LINKS

http://www.itw.com