How much of ITW's Q1 2026 revenue growth came from underlying business performance?

Very little. Organic revenue grew just 0.4%. The 4.6% headline increase was driven mainly by a 3.9 point favorable currency translation effect, with a 0.3 point contribution from an acquisition. Automotive OEM, Food Equipment, Construction Products and Specialty Products were flat to down organically, while Welding and Test & Measurement and Electronics were the main sources of organic growth.

Did the discrete tax benefit flatter Q1 2026 earnings?

Yes. The $34 million discrete tax benefit, mainly from resolving a U.S. tax audit, added roughly $0.12 per diluted share. Excluding it, the effective tax rate would have been 24.1% instead of 20.6%, and EPS growth would be closer to 7 to 10% by our estimate, rather than the reported 12%. Management's own adjusted metrics exclude this item for comparability.

Is the $0.10 guidance raise a meaningful upgrade to ITW's outlook?

Probably less than it appears. The $0.10 raise is roughly equal to the one-time Q1 tax benefit of about $0.12 per share. Guidance for organic growth (1 to 3%) and revenue growth (2 to 4%) was unchanged, so the improvement appears to come mainly from the tax item and from margin expansion, not from a stronger demand outlook. Investors should watch whether the 23 to 24% tax rate guidance and margin targets are met.

Is ITW's cash generation keeping pace with earnings?

Broadly, but conversion slipped. Free cash flow was $528 million, up 6%, but free cash flow conversion of net income was 69% versus 71% a year earlier. Management is still guiding to free cash flow above 100% of net income for the full year, which implies a strong recovery in the remaining quarters, as Q1 is seasonally weaker for cash generation.

How is ITW funding shareholder returns, and how is leverage trending?

ITW repurchased $375 million of stock in Q1 and plans about $1.5 billion of buybacks for 2026. Total debt rose to about $9.1 billion from $9.0 billion at year-end 2025, and short-term debt increased to $2.5 billion from $2.3 billion. Cash was $827 million, leaving net debt of roughly $8.3 billion. Shareholder returns are therefore partly supported by debt, though the balance sheet remains manageable given the company's cash generation.

ITW 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 30, 2026. Cited figures are marked; the original filing is the authoritative source.

ITW reported first quarter 2026 revenue of $4.02 billion^a, up 4.6%, but organic growth was only 0.4%.

Foreign currency translation contributed 3.9 points and a small acquisition added 0.3 points, so the headline top-line gain was mostly currency-driven. Profitability was the bright spot: operating margin expanded 60 basis points to 25.4%, with enterprise initiatives contributing 120 basis points, and operating income rose 7% to $1.02 billion^b. GAAP diluted EPS grew 12% to $2.66.

The quality of the EPS beat needs context. Q1 2026 included a $34 million^c discrete tax benefit, primarily from the resolution of a U.S. tax audit, which is worth roughly $0.12 per share. Excluding it, the effective tax rate would have been 24.1% rather than 20.6%, and EPS growth would be closer to 7 to 10% by our estimate.

Free cash flow rose 6% to $528 million^d, but its conversion of net income slipped to 69% from 71%. The company also returned $375 million through buybacks. Full-year 2026 GAAP EPS guidance was raised by $0.10 to $11.10 to $11.50, implying about 8% growth at the midpoint.

Guidance calls for organic growth of 1 to 3% and total revenue growth of 2 to 4%, with operating margin of 26.5 to 27.5%, about 100 basis points of expansion. Management expects free cash flow above 100% of net income and roughly $1.5 billion of share repurchases. Because the raise is smaller than the Q1 discrete tax benefit, much of the guidance improvement may reflect that one-time item rather than a broader upgrade to underlying operations.

02—Key points

Key Highlights

Revenue of $4.02 billion grew 4.6%, but organic growth was just 0.4%; foreign currency added 3.9 points and an acquisition added 0.3 points.
Operating margin expanded 60 basis points to 25.4%, with enterprise initiatives contributing 120 basis points; operating income rose 7% to $1.02 billion.
GAAP diluted EPS rose 12% to $2.66, but included a $34 million discrete tax benefit (about $0.12 per share) that lowered the reported effective tax rate to 20.6% from an adjusted 24.1%.
Welding (+6% organic) and Test & Measurement and Electronics (+5% organic) led growth, while Specialty Products (-4.7%), Food Equipment (-2.8%) and Automotive OEM (-0.9%) declined organically.
Free cash flow rose 6% to $528 million, but free cash flow conversion of net income fell to 69% from 71%; operating cash flow was $623 million.
Full-year 2026 GAAP EPS guidance was raised by $0.10 to $11.10 to $11.50, with organic growth guidance of 1 to 3% and operating margin guidance of 26.5 to 27.5%.
Total debt rose to about $9.1 billion from $9.0 billion at year-end 2025, while the company repurchased $375 million of shares in the quarter and plans about $1.5 billion for the full year.

03—Questions

Frequently Asked Questions

How much of ITW's Q1 2026 revenue growth came from underlying business performance?
Very little. Organic revenue grew just 0.4%. The 4.6% headline increase was driven mainly by a 3.9 point favorable currency translation effect, with a 0.3 point contribution from an acquisition. Automotive OEM, Food Equipment, Construction Products and Specialty Products were flat to down organically, while Welding and Test & Measurement and Electronics were the main sources of organic growth.
Did the discrete tax benefit flatter Q1 2026 earnings?
Yes. The $34 million discrete tax benefit, mainly from resolving a U.S. tax audit, added roughly $0.12 per diluted share. Excluding it, the effective tax rate would have been 24.1% instead of 20.6%, and EPS growth would be closer to 7 to 10% by our estimate, rather than the reported 12%. Management's own adjusted metrics exclude this item for comparability.
Is the $0.10 guidance raise a meaningful upgrade to ITW's outlook?
Probably less than it appears. The $0.10 raise is roughly equal to the one-time Q1 tax benefit of about $0.12 per share. Guidance for organic growth (1 to 3%) and revenue growth (2 to 4%) was unchanged, so the improvement appears to come mainly from the tax item and from margin expansion, not from a stronger demand outlook. Investors should watch whether the 23 to 24% tax rate guidance and margin targets are met.
Is ITW's cash generation keeping pace with earnings?
Broadly, but conversion slipped. Free cash flow was $528 million, up 6%, but free cash flow conversion of net income was 69% versus 71% a year earlier. Management is still guiding to free cash flow above 100% of net income for the full year, which implies a strong recovery in the remaining quarters, as Q1 is seasonally weaker for cash generation.
How is ITW funding shareholder returns, and how is leverage trending?
ITW repurchased $375 million of stock in Q1 and plans about $1.5 billion of buybacks for 2026. Total debt rose to about $9.1 billion from $9.0 billion at year-end 2025, and short-term debt increased to $2.5 billion from $2.3 billion. Cash was $827 million, leaving net debt of roughly $8.3 billion. Shareholder returns are therefore partly supported by debt, though the balance sheet remains manageable given the company's cash generation.

04—Continue

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