Summary
Illinois Tool Works Inc. (ITW) reported a decrease in operating revenues for the third quarter and first nine months of 2013 compared to the prior year, primarily driven by divestitures, notably the Decorative Surfaces segment. Despite lower revenues, operating income showed a modest increase for the quarter, reflecting improved operating margins and cost management initiatives, though it declined year-to-date. The company is actively engaged in portfolio management, including the planned divestiture of the Industrial Packaging segment, and continues to repurchase shares. Management remains confident in its liquidity and ability to service debt through internally generated cash flows. Significant operational changes are underway, including a reorganization of business segments for better alignment with the enterprise-wide portfolio management initiative. The company is focusing on businesses with strong differentiation and growth potential. While navigating economic headwinds and currency fluctuations, ITW is demonstrating resilience through cost efficiencies and strategic asset management, aiming to enhance profitability and returns.
Financial Highlights
51 data points| Revenue | $3.57B |
| Cost of Revenue | $2.15B |
| Gross Profit | $1.42B |
| Operating Income | $678.00M |
| Interest Expense | $60.00M |
| Net Income | $452.00M |
| EPS (Basic) | $1.01 |
| EPS (Diluted) | $1.01 |
| Shares Outstanding (Basic) | 445.90M |
| Shares Outstanding (Diluted) | 448.90M |
Key Highlights
- 1Total operating revenues decreased by 4.4% to $3,568 million in Q3 2013 and by 6.4% to $10,581 million year-to-date compared to the prior year, largely due to divestitures, particularly the Decorative Surfaces segment.
- 2Operating income increased by 1.8% to $678 million in Q3 2013, but decreased by 3.3% to $1,886 million year-to-date, reflecting improved operating margins and cost management initiatives.
- 3The company announced plans to sell its Industrial Packaging segment, classifying it as held for sale and initiating a sale process expected to conclude by mid-2014.
- 4ITW repurchased approximately 5.2 million shares of common stock in Q3 2013 under its existing share repurchase program, with a new authorization of $6.0 billion approved in August 2013.
- 5Adjusted Return on Average Invested Capital (ROIC) improved year-over-year, with the annualized adjusted ROIC reaching 17.6% in Q3 2013, up from 15.8% in Q3 2012, driven by higher operating margins and reduced invested capital.
- 6Net income for the nine months ended September 30, 2013, was $1,271 million, a significant decrease from $1,891 million in the same period of 2012, primarily impacted by the divestiture of Decorative Surfaces and related gains in the prior year.
- 7The company is undergoing a business structure simplification initiative, reorganizing its operations into seven external reportable segments to enhance global competitiveness and drive operational efficiencies.