01—Abstract
Summary
Summary of the 10-Q filed October 24, 2025. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 millionb.
The company repurchased $375 millionc 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.
02—Key points
Key Highlights
- Third 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.
- Year-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%.
- Automotive OEM segment showed strong Q3 performance with revenue up 7.3% and operating income up 21.0%, benefiting from organic growth and favorable FX.
- Test & 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.
- The company repurchased approximately $1.125 billion of common stock year-to-date, reflecting a continued focus on capital return to shareholders.
- Free cash flow remained strong, generating $1.85 billion year-to-date, supporting dividend payments and share repurchases.
- Total debt increased to $8.94 billion, but the Debt to EBITDA ratio remained at a manageable 2.0 for the trailing twelve months.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Illinois Tool Works Inc kept $0.20.
- Revenue$4.06B100.0%
- Cost of revenue−$2.25B55.5%
- Gross profit$1.81B44.5%
- Operating costs−$694.0M17.1%
- Operating income$1.11B27.4%
- Interest, other & tax−$291.0M7.2%
- Net income$821.0M20.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed October 24, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $4.06B$3.97B | +2.3% |
| Cost of Revenue | $2.25B$2.23B | +1.0% |
| Gross Profit | $1.81B$1.74B | +4.0% |
| Operating Income | $1.11B$1.05B | +5.7% |
| Net Income | $821.00M$1.16B | −29.2% |
| EPS (Basic) | $2.82$3.92 | −28.1% |
| EPS (Diluted) | $2.81$3.91 | −28.1% |
| Shares Outstanding (Basic) | 290.80M296.10M | −1.8% |
| Shares Outstanding (Diluted) | 291.70M297.00M | −1.8% |
05—Questions
Frequently Asked Questions
What was the overall financial performance of ITW in the third quarter of 2025 compared to the same period last year?
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.
How did the company's different business segments perform during the reported period?
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.
What is the company's current financial position in terms of debt and liquidity?
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.
What is ITW's outlook or strategy moving forward based on this report?
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.
06—Continue