07/30/2024 | Press release | Distributed by Public on 07/30/2024 07:19
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
In millions except per share amounts | 2024 | 2023 | 2024 | 2023 | ||||
Operating Revenue | $ | 4,027 | $ | 4,074 | $ | 8,000 | $ | 8,093 |
Cost of revenue | 2,262 | 2,344 | 4,407 | 4,685 | ||||
Selling, administrative, and research and development expenses | 686 | 690 | 1,362 | 1,365 | ||||
Amortization and impairment of intangible assets | 25 | 30 | 50 | 61 | ||||
Operating Income | 1,054 | 1,010 | 2,181 | 1,982 | ||||
Interest expense | (75) | (69) | (146) | (129) | ||||
Other income (expense) | 26 | 20 | 42 | 30 | ||||
Income Before Taxes | 1,005 | 961 | 2,077 | 1,883 | ||||
Income Taxes | 246 | 207 | 499 | 415 | ||||
Net Income | $ | 759 | $ | 754 | $ | 1,578 | $ | 1,468 |
Net Income Per Share: | ||||||||
Basic
|
$ | 2.55 | $ | 2.49 | $ | 5.29 | $ | 4.83 |
Diluted
|
$ | 2.54 | $ | 2.48 | $ | 5.27 | $ | 4.81 |
Cash Dividends Per Share: | ||||||||
Paid
|
$ | 1.40 | $ | 1.31 | $ | 2.80 | $ | 2.62 |
Declared
|
$ | 1.40 | $ | 1.31 | $ | 2.80 | $ | 2.62 |
Shares of Common Stock Outstanding During the Period: | ||||||||
Average
|
297.6 | 303.3 | 298.3 | 304.1 | ||||
Average assuming dilution
|
298.5 | 304.2 | 299.3 | 305.2 |
In millions | June 30, 2024 | December 31, 2023 | ||
Assets | ||||
Current Assets: | ||||
Cash and equivalents | $ | 862 | $ | 1,065 |
Trade receivables | 3,250 | 3,123 | ||
Inventories | 1,819 | 1,707 | ||
Prepaid expenses and other current assets | 325 | 340 | ||
Total current assets | 6,256 | 6,235 | ||
Net plant and equipment | 2,011 | 1,976 | ||
Goodwill | 4,910 | 4,909 | ||
Intangible assets | 641 | 657 | ||
Deferred income taxes | 448 | 479 | ||
Other assets | 1,311 | 1,262 | ||
$ | 15,577 | $ | 15,518 | |
Liabilities and Stockholders' Equity | ||||
Current Liabilities: | ||||
Short-term debt | $ | 2,044 | $ | 1,825 |
Accounts payable | 576 | 581 | ||
Accrued expenses | 1,615 | 1,663 | ||
Cash dividends payable | 416 | 419 | ||
Income taxes payable | 153 | 187 | ||
Total current liabilities | 4,804 | 4,675 | ||
Noncurrent Liabilities: | ||||
Long-term debt | 6,429 | 6,339 | ||
Deferred income taxes | 381 | 326 | ||
Noncurrent income taxes payable | - | 151 | ||
Other liabilities | 1,001 | 1,014 | ||
Total noncurrent liabilities | 7,811 | 7,830 | ||
Stockholders' Equity: | ||||
Common stock | 6 | 6 | ||
Additional paid-in-capital | 1,636 | 1,588 | ||
Retained earnings | 27,866 | 27,122 | ||
Common stock held in treasury | (24,622) | (23,870) | ||
Accumulated other comprehensive income (loss) | (1,925) | (1,834) | ||
Noncontrolling interest | 1 | 1 | ||
Total stockholders' equity | 2,962 | 3,013 | ||
$ | 15,577 | $ | 15,518 |
Three Months Ended June 30, 2024
|
||||||
Dollars in millions | Total Revenue | Operating Income | Operating Margin | |||
Automotive OEM | $ | 815 | $ | 157 | 19.4 | % |
Food Equipment | 667 | 180 | 27.1 | % | ||
Test & Measurement and Electronics | 678 | 159 | 23.5 | % | ||
Welding | 466 | 153 | 32.9 | % | ||
Polymers & Fluids | 454 | 128 | 28.2 | % | ||
Construction Products | 504 | 148 | 29.4 | % | ||
Specialty Products | 449 | 144 | 31.9 | % | ||
Intersegment | (6) | - | - | % | ||
Total Segments | 4,027 | 1,069 | 26.6 | % | ||
Unallocated | - | (15) | - | % | ||
Total Company | $ | 4,027 | $ | 1,054 | 26.2 | % |
Six Months Ended June 30, 2024
|
||||||
Dollars in millions | Total Revenue | Operating Income | Operating Margin | |||
Automotive OEM | $ | 1,631 | $ | 319 | 19.6 | % |
Food Equipment | 1,298 | 344 | 26.5 | % | ||
Test & Measurement and Electronics | 1,374 | 322 | 23.4 | % | ||
Welding | 942 | 309 | 32.8 | % | ||
Polymers & Fluids | 886 | 239 | 27.0 | % | ||
Construction Products | 992 | 291 | 29.4 | % | ||
Specialty Products | 889 | 274 | 30.8 | % | ||
Intersegment | (12) | - | - | % | ||
Total Segments | 8,000 | 2,098 | 26.2 | % | ||
Unallocated | - | 83 | - | % | ||
Total Company | $ | 8,000 | $ | 2,181 | 27.3 | % |
Q2 2024 vs. Q2 2023 Favorable/(Unfavorable) | ||||||||||||||||
Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||
Organic | 0.4 | % | 2.5 | % | (3.1) | % | (4.7) | % | 2.6 | % | (3.8) | % | 6.7 | % | (0.1) | % |
Acquisitions/ Divestitures |
- | % | - | % | 0.8 | % | - | % | - | % | - | % | - | % | 0.1 | % |
Translation | (1.7) | % | (0.4) | % | (0.9) | % | (0.3) | % | (3.9) | % | (0.5) | % | (0.5) | % | (1.2) | % |
Operating Revenue | (1.3) | % | 2.1 | % | (3.2) | % | (5.0) | % | (1.3) | % | (4.3) | % | 6.2 | % | (1.2) | % |
Q2 2024 vs. Q2 2023 Favorable/(Unfavorable) | ||||||||
Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW |
Operating Leverage | - | 50 bps | (90) bps | (70) bps | 50 bps | (80) bps | 130 bps | - |
Changes in Variable Margin & OH Costs | 210 bps | (100) bps | 190 bps | (50) bps | 130 bps | 150 bps | 390 bps | 140 bps |
Total Organic | 210 bps | (50) bps | 100 bps | (120) bps | 180 bps | 70 bps | 520 bps | 140 bps |
Acquisitions/ Divestitures |
- | - | (50) bps | - | - | - | - | (10) bps |
Restructuring/Other | 50 bps | (20) bps | (20) bps | 20 bps | 50 bps | (60) bps | 70 bps | 10 bps |
Total Operating Margin Change | 260 bps | (70) bps | 30 bps | (100) bps | 230 bps | 10 bps | 590 bps | 140 bps |
Total Operating Margin % * | 19.4% | 27.1% | 23.5% | 32.9% | 28.2% | 29.4% | 31.9% | 26.2% |
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 20 bps | 40 bps | 190 bps | - | 150 bps | 10 bps | 20 bps | 70 bps ** |
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.06) on GAAP earnings per share for the second quarter of 2024. |
H1 2024 vs. H1 2023 Favorable/(Unfavorable) | ||||||||||||||||
Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||
Organic | 1.9 | % | 0.6 | % | (2.2) | % | (4.1) | % | 0.9 | % | (5.4) | % | 6.1 | % | (0.4) | % |
Acquisitions/ Divestitures |
- | % | - | % | 0.8 | % | - | % | - | % | - | % | (1.1) | % | - | % |
Translation | (1.3) | % | 0.1 | % | (0.7) | % | (0.1) | % | (3.2) | % | (0.4) | % | - | % | (0.8) | % |
Operating Revenue | 0.6 | % | 0.7 | % | (2.1) | % | (4.2) | % | (2.3) | % | (5.8) | % | 5.0 | % | (1.2) | % |
H1 2024 vs. H1 2023 Favorable/(Unfavorable) | ||||||||
Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW |
Operating Leverage | 40 bps | 20 bps | (60) bps | (60) bps | 20 bps | (90) bps | 120 bps | (20) bps |
Changes in Variable Margin & OH Costs | 250 bps | (80) bps | 80 bps | 40 bps | 130 bps | 220 bps | 300 bps | 290 bps |
Total Organic | 290 bps | (60) bps | 20 bps | (20) bps | 150 bps | 130 bps | 420 bps | 270 bps |
Acquisitions/ Divestitures |
- | - | (50) bps | - | - | - | 30 bps | - |
Restructuring/Other | 30 bps | (10) bps | (10) bps | 10 bps | 30 bps | (30) bps | 50 bps | 10 bps |
Total Operating Margin Change | 320 bps | (70) bps | (40) bps | (10) bps | 180 bps | 100 bps | 500 bps | 280 bps |
Total Operating Margin % * | 19.6% | 26.5% | 23.4% | 32.8% | 27.0% | 29.4% | 30.8% | 27.3% |
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 30 bps | 50 bps | 190 bps | - | 150 bps | 10 bps | 20 bps | 70 bps ** |
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.13) on GAAP earnings per share for the first half of 2024. |
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
Dollars in millions | 2024 | 2023 | 2024 | 2023 | ||||
Numerator: | ||||||||
Net Income | $ | 759 | $ | 754 | $ | 1,578 | $ | 1,468 |
Discrete tax benefit related to the second quarter 2023 | - | (20) | - | (20) | ||||
Interest expense, net of tax (1)
|
57 | 53 | 111 | 99 | ||||
Other (income) expense, net of tax (1)
|
(20) | (15) | (32) | (23) | ||||
Operating income after taxes | $ | 796 | $ | 772 | $ | 1,657 | $ | 1,524 |
Denominator: | ||||||||
Invested capital: | ||||||||
Cash and equivalents | $ | 862 | $ | 922 | $ | 862 | $ | 922 |
Trade receivables | 3,250 | 3,216 | 3,250 | 3,216 | ||||
Inventories | 1,819 | 1,921 | 1,819 | 1,921 | ||||
Net plant and equipment | 2,011 | 1,901 | 2,011 | 1,901 | ||||
Goodwill and intangible assets | 5,551 | 5,595 | 5,551 | 5,595 | ||||
Accounts payable and accrued expenses | (2,191) | (2,215) | (2,191) | (2,215) | ||||
Debt | (8,473) | (8,222) | (8,473) | (8,222) | ||||
Other, net | 133 | (24) | 133 | (24) | ||||
Total net assets (stockholders' equity) | 2,962 | 3,094 | 2,962 | 3,094 | ||||
Cash and equivalents | (862) | (922) | (862) | (922) | ||||
Debt | 8,473 | 8,222 | 8,473 | 8,222 | ||||
Total invested capital | $ | 10,573 | $ | 10,394 | $ | 10,573 | $ | 10,394 |
Average invested capital (2)
|
$ | 10,480 | $ | 10,366 | $ | 10,357 | $ | 10,292 |
Net income to average invested capital (3)
|
29.0 | % | 29.1 | % | 30.5 | % | 28.5 | % |
After-tax return on average invested capital (3)
|
30.4 | % | 29.8 | % | 32.0 | % | 29.6 | % |
Three Months Ended | Six Months Ended | |||||||
June 30, 2023 | June 30, 2023 | |||||||
Dollars in millions | Income Taxes | Tax Rate | Income Taxes | Tax Rate | ||||
As reported | $ | 207 | 21.4 | % | $ | 415 | 22.0 | % |
Discrete tax benefit related to the second quarter 2023 | 20 | 2.2 | % | 20 | 1.1 | % | ||
As adjusted | $ | 227 | 23.6 | % | $ | 435 | 23.1 | % |
Twelve Months Ended | ||
Dollars in millions | December 31, 2023 | |
Numerator: | ||
Net income | $ | 2,957 |
Discrete tax benefit related to the second quarter 2023 | (20) | |
Interest expense, net of tax (1)
|
204 | |
Other (income) expense, net of tax (1)
|
(38) | |
Operating income after taxes | $ | 3,103 |
Denominator: | ||
Invested capital: | ||
Cash and equivalents | $ | 1,065 |
Trade receivables | 3,123 | |
Inventories | 1,707 | |
Net plant and equipment | 1,976 | |
Goodwill and intangible assets | 5,566 | |
Accounts payable and accrued expenses | (2,244) | |
Debt | (8,164) | |
Other, net | (16) | |
Total net assets (stockholders' equity) | 3,013 | |
Cash and equivalents | (1,065) | |
Debt | 8,164 | |
Total invested capital | $ | 10,112 |
Average invested capital (2)
|
$ | 10,214 |
Net income to average invested capital | 29.0 | % |
After-tax return on average invested capital | 30.4 | % |
Twelve Months Ended | ||||
December 31, 2023 | ||||
Dollars in millions | Income Taxes | Tax Rate | ||
As reported | $ | 866 | 22.6 | % |
Discrete tax benefit related to the second quarter 2023 | 20 | 0.6 | % | |
As adjusted | $ | 886 | 23.2 | % |
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
Dollars in millions | 2024 | 2023 | 2024 | 2023 | ||||
Net cash provided by operating activities | $ | 687 | $ | 790 | $ | 1,276 | $ | 1,518 |
Less: Additions to plant and equipment | (116) | (85) | (211) | (198) | ||||
Free cash flow | $ | 571 | $ | 705 | $ | 1,065 | $ | 1,320 |
Net income | $ | 759 | $ | 754 | $ | 1,578 | $ | 1,468 |
Net cash provided by operating activities to net income conversion rate | 91 | % | 105 | % | 81 | % | 103 | % |
Free cash flow to net income conversion rate | 75 | % | 94 | % | 67 | % | 90 | % |
Three Months Ended | ||
June 30, 2023 | ||
As reported | $ | 2.48 |
Discrete tax benefit related to the second quarter 2023 | (0.07) | |
As adjusted | $ | 2.41 |