Illinois Tool Works Inc.
) reported earnings per share from continuing operations,
adjusted for one-time items, of $1.08 in the second quarter 2013.
The result was up 5.9% compared with the year-ago quarter but a
cent below the Zacks Consensus Estimate of $1.09.
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Including charges related to pension settlement amounting to 5
cents, Illinois Tool Works reported earnings per share of $1.03
in the quarter, down 5.5% year over year.
Illinois Tool reported operating revenues of $4,219 million, down
5.5% year over year and below the Zacks Consensus Estimate of
$4,305 million. The poor results were due to the Decorative
Surfaces divestiture, excluding which revenue grew 1% year over
Organic revenue in the quarter was flat year over year,
registering roughly a 1.0% decline in North American and 1.1%
growth in international revenues.
Illinois Tool reports its revenues under the following
heads/segments; a brief discussion has been provided below:
Test & Measurement and Electronics revenues declined 8.5%
year over year; Automotive OEM revenues increased 12.3%; Polymers
& Fluids dived south by 4.2%; Food Equipment went up by 3.0%;
Wielding revenues grew by 2.4%; Construction Products segment was
flat; Specialty Products increased 5.2% while Industrial
Packaging went down 0.6%.
Cost of revenue in the second quarter went down 6.9% year over
year and represented 62.1% of total revenue; down from 63.1% in
the year-ago quarter. Selling, administrative and R&D
expenses, as a percentage of total revenue, stood at 19.7%.
Adjusted operating margin in the quarter was 17.4%, up 40 basis
points year over year.
Exiting the second quarter 2013, Illinois Tool Works' cash and
cash equivalents stood at $2,768 million, up from $2,662 million
in the previous quarter. Long-term debt, net of current portion
also registered a sequential decline from $4,556.0 million in the
previous quarter to $3,771.0 million in this quarter.
Illinois Tool Works' net cash flow from operating activities in
the quarter was $643.0 million, up from $509.0 million in the
year-ago quarter while capital expenditure was at $89 million,
down from $100 million in the year-ago quarter. Free cash flow
was approximately $554.0 million as compared with $409 million in
the second quarter of 2012.
For 2013, management of Illinois Tool Works now anticipates total
revenue to grow 0.5%-2.5% as against the 2%-4% range expected
earlier. Earnings per share are expected to range within
$4.10-$4.30 down from the $4.15-$4.35 per share range. This
revision includes the impact of 5 cents per share dilution caused
due to pension settlement charges incurred in the second quarter.
For the third quarter 2013, earnings per share from continuing
operations are expected to be within the $1.06-$1.16 range and
total revenue growth to vary within 3.0%-5.0%.
Illinois Tool Works is one of the leading manufacturers of
industrial products and equipment. The stock currently has a
Zacks Rank #3 (Hold). Other stocks to watch out for are
Chart Industries Inc.
Gardner Denver Inc.
), each with a Zacks Rank #2 (Buy).