ILLINOIS TOOL WORKS INC Quarterly Report for Q3 Ended Sep 30, 2025

Summary

Illinois Tool Works Inc. (ITW) reported its third quarter and year-to-date results for the period ending September 30, 2025. For the third quarter, operating revenue increased by 2.3% year-over-year to $4.06 billion, while operating income saw a more robust increase of 5.7% to $1.11 billion. The company's operating margin improved by 90 basis points to 27.4%, driven by benefits from enterprise initiatives. For the first nine months of the year, operating revenue slightly decreased by 0.1% to $11.95 billion, and operating income decreased by 3.2% to $3.13 billion, with operating margin contracting by 80 basis points to 26.2%. This contraction, excluding a favorable LIFO accounting change in the prior year, showed a slight 20 basis point improvement due to enterprise initiatives, offset by higher employee-related costs. Financially, ITW continues to manage its balance sheet effectively. Cash and equivalents stood at $924 million. The company repurchased $375 million of its stock in the third quarter and $1.125 billion year-to-date, demonstrating a commitment to returning capital to shareholders. Despite a slight increase in total debt to $8.94 billion, the company maintained a manageable Debt to EBITDA ratio of 2.0 for the trailing twelve months. Free cash flow remained strong, with $904 million generated in the third quarter and $1.85 billion year-to-date, supporting dividends and repurchases.

Key Highlights

• 1Third quarter operating revenue grew 2.3% to $4.06 billion, with operating income up 5.7% to $1.11 billion and operating margin expanding 90 basis points to 27.4%, driven by enterprise initiatives.
• 2Year-to-date operating revenue was flat at $11.95 billion, while operating income declined 3.2% to $3.13 billion, and operating margin compressed 80 basis points to 26.2%.
• 3Automotive OEM segment showed strong Q3 performance with revenue up 7.3% and operating income up 21.0%, benefiting from organic growth and favorable FX.
• 4Test & Measurement and Electronics segment experienced a slight revenue increase of 0.3% in Q3 but saw a decrease in operating income and margin, reflecting challenges in certain sub-segments and higher restructuring costs.
• 5The company repurchased approximately $1.125 billion of common stock year-to-date, reflecting a continued focus on capital return to shareholders.
• 6Free cash flow remained strong, generating $1.85 billion year-to-date, supporting dividend payments and share repurchases.
• 7Total debt increased to $8.94 billion, but the Debt to EBITDA ratio remained at a manageable 2.0 for the trailing twelve months.

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