10-QPeriod: Q3 FY2025

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

Filed October 24, 2025For Securities:ITW

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.

Financial Highlights

49 data points
Beta

Revenue

$4.06B

44.5% Gross Margin

Net Income

$821.00M

20.2% Net Margin

EPS (Diluted)

$2.81

Total Assets

$16.14B

Cash & Equivalents

$924.00M

Free Cash Flow

$904.00M

Financial Statements
Beta
Revenue$4.06B
Cost of Revenue$2.25B
Gross Profit$1.81B
Operating Income$1.11B
Net Income$821.00M
EPS (Basic)$2.82
EPS (Diluted)$2.81
Shares Outstanding (Basic)290.80M
Shares Outstanding (Diluted)291.70M

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.

Frequently Asked Questions

In the third quarter of 2025, Illinois Tool Works Inc. (ITW) reported a 2.3% increase in operating revenue to $4.06 billion and a 5.7% increase in operating income to $1.11 billion, compared to the third quarter of 2024. The company's operating margin improved by 90 basis points to 27.4%, largely due to the successful execution of its enterprise initiatives.

The Automotive OEM segment demonstrated robust growth in the third quarter, with revenue up 7.3% and operating income up 21.0%. The Food Equipment segment also saw positive growth in revenue and operating income. However, the Test & Measurement and Electronics segment experienced a slight revenue increase but a decline in operating income and margin, impacted by specific business unit performance and increased restructuring expenses. Other segments like Welding and Specialty Products showed modest growth, while Construction Products and Polymers & Fluids saw revenue declines but managed to improve or maintain operating margins.

As of September 30, 2025, ITW held $924 million in cash and equivalents and had no outstanding borrowings under its $3.0 billion revolving credit facility. Total debt increased to $8.94 billion, primarily due to an increase in long-term debt. However, the company's Debt to EBITDA ratio remained at a healthy 2.0 for the trailing twelve months. Free cash flow was strong at $1.85 billion year-to-date, providing ample resources for capital allocation priorities such as dividends and share repurchases.

The report emphasizes ITW's continued focus on its 'Next Phase: 2024-2030' strategy, which centers on building organic growth as a core strength. Key drivers include Customer-back Innovation (CBI) to solve customer pain points and continued excellence in the 80/20 Front-to-Back process for operational efficiency. The company maintains portfolio discipline, focusing on businesses that fit the ITW model and offer long-term growth potential. Management believes its decentralized, entrepreneurial culture allows for adaptability in a volatile environment.