Illinois Tool Works Inc.
) reported its financial results for the third quarter 2012 on
October 23. The company's earnings per share from continuing
operations, adjusted for divestment impact, were $1.09. Results
came to 3 cents above the Zacks Consensus Estimate of $1.06 and
within management's guidance range of $1.03-$1.11.
EPS including the divestment impact of 3 cents was $1.12,
representing a 12% year-over-year increase.
Operating revenue in the third quarter decreased 1.7% year over
year to $4,501 million and also failed to surpass the Zacks
Consensus Estimate of $4,571 million. The year-over-year decline
was greater than a 1% decline to 1% growth expectation of
Of the total revenue, base revenue in the quarter grew 0.9% year
over year, registering a 3.9% increase in North American and 2.7%
decline in international revenues. Acquisitions added 1.4% while
currency translation negatively impacted revenue growth by 4.1%.
On a segmental basis, Transportation revenue (19.1% of total
revenue) declined 2.2% year over year; Power Systems &
Electronics (18.1%) grew 4.6%; Industrial Packaging (13.3%)
plummeted 4.6%; Food Equipment (10.9%) went down by 4.0% while
Construction (10.6%) decreased 7.2%; Polymers & Fluids (6.8%)
dived south by 7.3%; Decorative Surfaces (5.9%) decreased by 5.7%
and All Other (15.6%) jumped 4.1%.
Cost of goods sold plummeted 3.6% year over year in the quarter
and represented 63.4% of total revenue; down from 64.7% in the
year-ago quarter. Selling, administrative and R&D expenses,
as a percentage of total revenue, stood at 18.0%. Operating
margin in the quarter was 17.0%, up 140 basis points year over
Exiting the third quarter, Illinois Tool Works' cash and cash
equivalents increased 21.4% sequentially to approximately
$2,054.0 million. Long-term debt, net of current portion also
registered a sequential increase from $3,468.0 million in the
previous quarter to $4,572 million in the third quarter 2012.
Net cash flow from operating activities in the quarter was $635.0
million, down from $787.0 million in the year-ago quarter while
capital expenditure increased 8.4% to $90.0 million. Free cash
flow was approximately $545.0 million in the third quarter versus
$704.0 million in the comparable quarter last year.
In the third quarter, the company distributed $169 million as
dividends and repurchased shares worth $416 million.
For the fourth quarter 2012, management anticipates a weak
international market with currency translation still playing a
negative role. Hence, total revenue growth range for the full
year was revised to a 0%-1% growth as against 1%-3% expected
earlier. Earnings per share for the full year is expected to
range within the band of $4.06 to $4.14 versus $4.03-$4.19
Revenue growth in the fourth quarter is expected to be within
(1%)-(4%) and earnings per share to be roughly in the range of
86-94 cents .
Illinois Tool Works is one of the leading manufacturers of
industrial products and equipment. The company's chief
Cooper Industries plc
General Electric Co.
Manitowoc Co. Inc.
We currently maintain a Neutral recommendation on the stock.
COOPER INDS PLC (CBE): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis
ILL TOOL WORKS (ITW): Free Stock Analysis
MANITOWOC INC (MTW): Free Stock Analysis
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