Summary
Illinois Tool Works Inc. (ITW) filed an 8-K on October 24, 2018, to report its third-quarter 2018 results of operations. The filing itself is a brief announcement, referencing a press release (Exhibit 99.1) for detailed financial results and commentary. Notably, the company continues to emphasize non-GAAP financial measures, such as adjusted after-tax return on invested capital (ROIC) and free cash flow, for a clearer view of underlying operational performance and comparability with peers. Management utilizes these measures, excluding impacts like the Tax Cuts and Jobs Act and a prior legal settlement, to assess operational effectiveness and cash generation potential for strategic initiatives.
Key Highlights
- 1ITW reported its third-quarter 2018 financial results on October 24, 2018, via an 8-K filing.
- 2The primary details of the results are contained within the furnished press release (Exhibit 99.1).
- 3The company is providing and emphasizing non-GAAP financial measures for investor clarity.
- 4Key non-GAAP measures highlighted include adjusted after-tax return on invested capital (ROIC) and free cash flow.
- 5These non-GAAP measures are presented to exclude specific impacts, such as the 2017 Tax Cuts and Jobs Act and a 2017 legal settlement, to reflect core operational performance.
- 6Management believes these adjusted metrics enhance understanding of the company's underlying financial performance and facilitate peer comparisons.
- 7Free cash flow is defined as operating cash flow less capital expenditures, used to assess the company's ability to fund dividends, share repurchases, acquisitions, and debt repayment.
Frequently Asked Questions
The main purpose of this 8-K filing is to report Illinois Tool Works Inc.'s (ITW) third-quarter 2018 results of operations and financial condition. The detailed results are provided in an accompanying press release furnished with the filing.
ITW presents non-GAAP financial measures, such as adjusted ROIC and free cash flow, to provide investors with a clearer understanding of the company's underlying operational performance. They believe these measures, which exclude certain items like the impact of the Tax Cuts and Jobs Act and a legal settlement, enhance comparability with peers and management's internal assessment of performance.
ITW defines free cash flow as net cash provided by operating activities less additions to plant and equipment. This metric is used to measure cash generated by operations that is available for dividends, share repurchases, acquisitions, and debt repayment.
ITW's adjusted after-tax ROIC measures the effectiveness of its operations in using invested capital to generate profits. The company excludes certain items like a confidential legal settlement from the calculation to provide a more consistent view of operational effectiveness.