10-QPeriod: Q1 FY2026

ILLINOIS TOOL WORKS INC Quarterly Report for Q1 Ended Mar 31, 2026

Filed May 7, 2026For Securities:ITW

Summary

Illinois Tool Works Inc. (ITW) reported a solid first quarter for 2026, demonstrating resilience and continued execution of its business model in a dynamic global environment. The company achieved a 4.6% increase in operating revenue, reaching $4.02 billion, driven by a combination of organic growth, favorable foreign currency translation, and a recent acquisition in the Test & Measurement and Electronics segment. Profitability saw a notable improvement, with operating income rising by 7.2% to $1.02 billion. This was supported by a 60 basis point expansion in operating margin to 25.4%, attributed to the company's ongoing enterprise initiatives and efficiencies, partially offset by increased employee-related expenses. Diluted Earnings Per Share (EPS) also saw a healthy increase of 11.8% to $2.66. The company continued its commitment to shareholder returns, repurchasing approximately $375 million in stock during the quarter, alongside consistent dividend payments.

Financial Highlights

49 data points
Beta

Revenue

$4.02B

43.8% Gross Margin

Net Income

$768.00M

19.1% Net Margin

EPS (Diluted)

$2.66

Total Assets

$16.26B

Cash & Equivalents

$827.00M

Free Cash Flow

$528.00M

Financial Statements
Beta
Revenue$4.02B
Cost of Revenue$2.26B
Gross Profit$1.76B
Operating Income$1.02B
Net Income$768.00M
EPS (Basic)$2.66
EPS (Diluted)$2.66
Shares Outstanding (Basic)288.30M
Shares Outstanding (Diluted)289.10M

Key Highlights

  • 1Operating revenue increased by 4.6% to $4.02 billion, driven by organic growth, foreign currency tailwinds, and a strategic acquisition.
  • 2Operating income grew by 7.2% to $1.02 billion, with operating margin expanding by 60 basis points to 25.4% due to enterprise initiatives and efficiencies.
  • 3Diluted Earnings Per Share (EPS) rose by 11.8% to $2.66, reflecting improved profitability.
  • 4The Test & Measurement and Electronics segment showed strong performance with a 9.6% revenue increase and a 150 bps margin expansion.
  • 5Automotive OEM segment revenue grew 4.4% and saw a significant 170 bps margin improvement, outperforming industry auto build declines.
  • 6The company generated strong free cash flow of $528 million, supporting its capital allocation priorities.
  • 7ITW repurchased approximately $375 million of its common stock during the quarter, underscoring its commitment to shareholder returns.

Frequently Asked Questions

Revenue growth was primarily driven by a combination of factors including favorable foreign currency translation, a modest increase in organic revenue across several segments, and the impact of a recent acquisition in the Test & Measurement and Electronics segment. While overall organic revenue growth was modest, the company highlighted specific segment strengths that contributed positively.

ITW improved its operating margin through continued execution of its enterprise initiatives, which yielded efficiency benefits. These were partially offset by higher employee-related expenses. The company also benefited from lower restructuring expenses and, in some segments, positive operating leverage, contributing to the overall margin expansion.

ITW's capital allocation priorities include internal investments for growth, dividend payments, strategic acquisitions, and share repurchases. In the first quarter, the company paid dividends and repurchased approximately $375 million of its common stock. The company also generated strong free cash flow of $528 million, which provides financial flexibility for these priorities.

The report notes continued uncertainty in the external environment, including potential impacts from global supply chain challenges and U.S. trade policies, though the company believes it is well-positioned to mitigate tariff impacts. Certain segments experienced modest organic revenue declines, and increased employee-related expenses were a recurring factor impacting profitability across segments.