10-KPeriod: FY2011

ILLINOIS TOOL WORKS INC Annual Report, Year Ended Dec 31, 2011

Filed February 17, 2012For Securities:ITW

Summary

Illinois Tool Works Inc. (ITW) reported strong performance in its 2011 10-K filing, showcasing robust revenue growth driven by its diverse industrial product portfolio. The company's "80/20 business process" continues to be a cornerstone of its strategy, focusing on efficiency and simplification to drive long-term operating and financial improvements. ITW demonstrated resilience, navigating a mixed global economic environment with growth across many segments, particularly in the Transportation and Power Systems & Electronics sectors. The company's commitment to strategic acquisitions and effective capital allocation is evident, with significant share repurchases and a solid free operating cash flow. ITW's decentralized operating structure appears to be a key competitive advantage, allowing for rapid response to market dynamics and fostering innovation. Investors can note the company's consistent dividend payments and its focus on reinvesting in its businesses to support organic growth and shareholder returns.

Financial Highlights

54 data points
Beta

Revenue

$14.52B

37.4% Gross Margin

Net Income

$2.07B

14.3% Net Margin

EPS (Diluted)

$4.19

Total Assets

$17.98B

Cash & Equivalents

$1.18B

Free Cash Flow

$1.60B

Financial Statements
Beta
Revenue$14.52B
Cost of Revenue$9.09B
Gross Profit$5.43B
R&D Expenses$221.00M
Operating Income$2.36B
Interest Expense$191.00M
Net Income$2.07B
EPS (Basic)$4.21
EPS (Diluted)$4.19
Shares Outstanding (Basic)491.40M
Shares Outstanding (Diluted)494.60M

Key Highlights

  • 1Revenue growth of 15.4% in 2011 compared to 2010, driven by strong performance in base businesses and strategic acquisitions.
  • 2Operating income increased by 21.2% in 2011 over 2010, with operating margins improving to 15.4%.
  • 3The '80/20 business process' continues to be a key driver for simplifying operations and improving financial performance.
  • 4Significant strategic acquisitions were made across various segments, contributing to revenue and income growth.
  • 5Free operating cash flow demonstrated strong growth, reaching $1.6 billion, supporting dividends and share repurchases.
  • 6The company repurchased approximately $950 million of its common stock in 2011 under a new $4 billion repurchase program.
  • 7International operations accounted for 59% of revenues in 2011, highlighting the company's global reach.

Frequently Asked Questions

ITW's core business strategy revolves around its '80/20 business process,' which focuses on identifying and prioritizing the most critical aspects of its businesses to drive efficiency, reduce complexity, and improve operating and financial performance. This process is applied to product lines, customer segmentation, and supplier relationships. The company also pursues growth through strategic acquisitions and effective capital allocation, including dividends and share repurchases.

In 2011, ITW reported a 15.4% increase in operating revenues compared to 2010, reaching $17.8 billion. Operating income grew by 21.2% to $2.7 billion, with operating margins improving to 15.4%. This growth was driven by strong performance in its core businesses, the integration of strategic acquisitions, and a favorable impact from currency translation. The company also generated robust free operating cash flow of $1.6 billion.

ITW operates through eight reportable segments. The largest contributors to revenue in 2011 were Transportation ($3.1 billion), Power Systems & Electronics ($2.9 billion), and All Other ($2.9 billion). Industrial Packaging ($2.6 billion), Food Equipment ($2.0 billion), and Construction Products ($2.0 billion) also represented significant revenue streams. The company's diversified business model across these segments helps mitigate risks associated with any single industry.

For 2012, ITW anticipated continued growth in North American and Asia Pacific markets. European markets were expected to remain relatively flat compared to 2011. Specific strengths were noted in end markets associated with welding, transportation, and test and measurement businesses.