Summary
Illinois Tool Works Inc. (ITW) filed an 8-K on July 26, 2019, to report its second quarter 2019 financial results, primarily through a furnished press release. The report highlights the company's operational performance and financial condition, emphasizing key non-GAAP financial measures that ITW uses to provide investors with a clearer view of its financial health and operational effectiveness. Investors should note that ITW utilizes "free cash flow" and "adjusted after-tax return on average invested capital (ROIC)" as important metrics. Free cash flow is presented as a measure of cash available for dividends, share repurchases, acquisitions, and debt repayment, calculated as net cash from operations less capital expenditures. Adjusted ROIC is used to assess the efficiency of capital deployment in generating profits, with specific exclusions for certain tax benefits to enhance comparability.
Key Highlights
- 1ITW reported its second quarter 2019 financial results via an 8-K filing on July 26, 2019.
- 2The company furnished its Q2 2019 earnings press release as Exhibit 99.1.
- 3ITW emphasizes the use of non-GAAP financial measures, including free cash flow and adjusted ROIC.
- 4Free cash flow is defined as net cash from operating activities minus additions to plant and equipment.
- 5The company believes free cash flow is a useful measure for investors to evaluate its ability to fund strategic initiatives.
- 6Adjusted after-tax ROIC is used to gauge the effectiveness of ITW's capital utilization.
- 7Specific tax benefits were excluded from the ROIC calculation for improved period-over-period comparability.