Illinois Tool Works Inc. ITW reported second-quarter 2024 adjusted earnings of $2.54 per share, which surpassed the Zacks Consensus Estimate of $2.45. Earnings increased 2% year over year.
Illinois Tool’s revenues of $4.0 billion missed the consensus estimate of $4.1 billion. The top line inched down 1.2% year over year due to an unfavorable foreign currency translation of 1.2%. Also, organic sales decreased 0.1% while acquisition increased revenues by 0.1%.
Segmental Performance
Test & Measurement and Electronics’ revenues were down 3% year over year to $678 million. Our estimate for segmental revenues was $711.0 million. Revenues from Automotive Original Equipment Manufacturer decreased 1% year over year to $815 million. Our estimate for segmental revenues was $855.9 million.
Food Equipment generated revenues of $667 million, up 2% year over year. Our estimate for segmental revenues was $665.0 million. Welding revenues were $466 million, down 5% year over year. Our estimate for segmental revenues was $493.9 million.
Construction Products’ revenues were down 4% year over year to $504 million. Our estimate for segmental revenues was $510.7 million. Revenues of $449 million from Specialty Products reflected an increase of 6% year over year. Our estimate for segmental revenues was $412.5 million. Polymers & Fluids’ revenues of $454 million declined 1% year over year. Our estimate for segmental revenues was $460.1 million.
Illinois Tool Works Inc. Price, Consensus and EPS Surprise
Illinois Tool Works Inc. price-consensus-eps-surprise-chart | Illinois Tool Works Inc. Quote
Margin Profile
Illinois Tool’s cost of sales decreased 3.5% year over year to $2.26 billion. Selling, administrative, and research and development expenses decreased 0.6% year over year to $686 million. The operating margin was 26.2%, up 140 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 140 bps to the operating margin.
Balance Sheet and Cash Flow
At the end of the second quarter, Illinois Tool had cash and equivalents of $862 million compared with $1.1 billion at the end of December 2023. Long-term debt was $6.4 billion compared with $6.3 billion at the end of December 2023.
In the first six months of 2024, Illinois Tool generated net cash of $1.3 billion from operating activities, reflecting a decline of 15.9% from the year-ago reported number. Capital spending on the purchase of plant and equipment was $211 million, up 6.6% year over year. Free cash flow of $1.1 billion decreased 19.3% year over year.
2024 Guidance
Illinois Tool expects earnings to be in the range of $10.30-$10.40 per share. Total revenues and organic revenues are expected to be flat. Operating margin is expected to be 26.5-27%. Enterprise initiatives are expected to contribute more than 100 bps to the operating margin.
Illinois Tool projects free cash flow to be more than 100% of net income. The company expects to repurchase about $1.5 billion worth of shares. The tax rate is expected to be 24-24.5%.
Zacks Rank
The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Industrial Companies
Pentair plc PNR reported second-quarter adjusted earnings per share of $1.22, which beat the Zacks Consensus Estimate of $1.15. The reported figure also improved 18% from the year-ago quarter.
Net sales rose 1.6% year over year to $1.1 billion. PNR’s top line outpaced the Zacks Consensus Estimate of $1.09 billion.
Crown Holdings, Inc. CCK reported second-quarter adjusted earnings per share of $1.81, which beat the Zacks Consensus Estimate of $1.59. The bottom line improved 8% year over year.
Net sales totaled $3.04 billion, down 2.2% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $3.06 billion.
A. O. Smith Corporation’s AOS second-quarter adjusted earnings of $1.06 per share missed the Zacks Consensus Estimate of $1.07. However, the bottom line increased 5% on a year-over-year basis.
Net sales of $1.02 billion surpassed the consensus estimate of $992 million. The top line increased 7% year over year, driven by strong demand for residential and commercial water heaters in North America.
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