ITW Reports Diluted Income Per Share from Continuing Operations of $1.00 in 2011 Third Quarter, a 25 Percent Increase; Total Revenues Grow 16.2 Percent and Organic Revenues Increase 6.2 Percent; Company Repurchases $400 Million of Shares in the Quarter

GLENVIEW, Ill., Oct. 25, 2011 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported  third quarter 2011 diluted income per share from continuing operations of $1.00, a 25 percent increase compared to the 2010 third quarter. Total revenues of $4.581 billion increased 16.2 percent versus the year-ago period.

Third quarter 2011 financial highlights versus the prior-year period included:

• Organic or base revenues grew 6.2 percent, with North American organic revenues increasing 7.8 percent and international organic revenues growing 4.2 percent. In Europe and China, organic revenues increased 3.8 percent and 16.2 percent, respectively.
• Acquisitions net of divestitures added 5.3 percent to revenues. Currency translation contributed 4.7 percent to total revenues. Contributions from currency translation moderated as the quarter progressed.
• While total Company operating margins of 15.6 percent decreased 10 basis points, base operating margins increased 30 basis points. The dilutive impact of acquisitions negatively impacted operating margins by 30 basis points.
• Free operating cash flow totaled $704 million in the third quarter, representing a free operating cash flow conversion ratio of 139 percent versus net income. Free cash flow was utilized to support dividends of $167 million, acquisitions of $451 million and share repurchase of $400 million in the quarter.  The Company also announced a 6 percent dividend increase in August 2011. For the full year, the Company has finalized 21 acquisitions with total annualized revenues of $781 million, and has spent $950 million to repurchase 18.1 million shares.

Operating highlights for the 2011 third quarter compared to the year-ago period included:

• Total revenues for the Power Systems and Electronics segment increased 21.2 percent.  Segment organic revenues grew 11.7 percent largely due to contributions from the worldwide welding equipment and consumables businesses. Worldwide welding grew organic revenues 20.2 percent, with North American welding increasing organic revenues 26.1 percent. Organic revenues for international welding increased 6.3 percent, with organic welding revenues in China growing 19.0 percent. Key end market growth for the welding businesses continued to include oil and gas as well as heavy equipment manufacturers. Organic revenues for the total electronics businesses increased 1.7 percent, with the PC board fabrication businesses growing organic revenues 9.1 percent as consumer electronics demand remained solid. Segment operating margins of 19.7 percent were 100 basis points lower mainly due to the dilutive impact of acquisitions.
• Total revenues for the Transportation segment increased 25.8 percent. Segment organic revenues grew 9.5 percent mainly due to ongoing strength in the automotive OEM car builds and the Company's related product penetration. The Company's worldwide automotive OEM organic revenues grew 9.2 percent compared to the worldwide car build increase of 5 percent in the comparative period. North American automotive organic revenues grew 6.9 percent and international automotive organic revenues increased 11.3 percent. Notably, the Company's Asian auto business grew organic revenues 26.5 percent. Organic revenues for the auto aftermarket businesses also contributed to growth, with organic revenues increasing 5.4 percent. Segment operating margins of 15.3 percent were 70 basis points higher mainly due to improvement in base margins.

"Our financial performance in the third quarter was helped by solid growth in both our total revenues and our organic revenues," said David B. Speer, chairman and chief executive officer. "Overall, end market demand in the quarter was essentially in line with second quarter levels and our forecast expectations. We also generated strong free operating cash flow in the quarter, allowing us to continue to have a well balanced capital allocation approach around dividends, acquisitions and share repurchase."

Unlike the prior 2011 quarters, based on current exchange rates we expect no contribution from currency translation in the 2011 fourth quarter versus the year-ago period. Additionally, the Company expects modestly lower European organic revenues and increased restructuring costs in the fourth quarter of 2011. As a result, the Company is forecasting 2011 fourth quarter diluted income per share from continuing operations to be in a range of $0.86 to $0.94. The fourth quarter forecast assumes a total revenue growth range of 9.5 percent to 12.5 percent. For the 2011 full-year, the Company is forecasting diluted income per share from continuing operations to be in the range $4.04 to $4.12 and assumes a total revenue growth range of 15.1 percent to 15.9 percent. The full-year forecast includes the $0.33 per share one-time tax benefit recorded in the 2011 first quarter.  Excluding the one-time tax gain in the 2011 first quarter, the midpoint of the full-year earnings range would be $3.75.

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, end markets, product penetration, total revenue growth, organic or base revenue growth, currency exchange rates, restructuring costs, capital allocation and future growth prospects. The 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 Form 10-K for 2010.

With nearly 100 years of history, ITW is a Fortune 200 global diversified industrial manufacturer. The Company's value-added consumables, equipment and service businesses serve customers in developed as well as emerging markets around the globe. ITW's key business platforms, including Welding, Automotive OEM, Industrial Packaging, Food Equipment, Construction, Polymers and Fluids, Test and Measurement, Electronics, Decorative Surfaces and Automotive Aftermarket,  employ more than 60,000 people worldwide. ITW's revenues totaled $15.4 billion in 2010, with more than half of these revenues generated outside of the United States.

SOURCE Illinois Tool Works Inc.