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Jun 30, 2023
ITW Q2 2023 Earnings Report
ITW's Q2 2023 results reflected strong operational execution and financial performance.
Key Takeaways
ITW reported a 2% increase in revenue to $4.1 billion with 3% organic growth. Operating income grew by 9% to a record $1.01 billion, and operating margin improved by 170 bps to 24.8%. GAAP EPS increased by 5% to a record $2.48, and the company raised its full-year GAAP EPS guidance by $0.10 to a range of $9.55 to $9.95 per share.
Revenue increased by 2% to $4.1 billion, with organic growth of 3%.
Operating income reached a record $1.01 billion, a 9% increase.
Operating margin expanded by 170 bps to 24.8%.
GAAP EPS increased by 5% to a record $2.48, excluding one-time tax items, EPS increased 9%.
ITW
ITW
ITW Revenue by Segment
Revenue by Segment
Automotive OEM Revenue
CapyFin.comFood Equipment Revenue
CapyFin.comTest & Measurement and Electronics Revenue
CapyFin.comWelding Revenue
CapyFin.comPolymers & Fluids Revenue
CapyFin.comConstruction Products Revenue
CapyFin.comSpecialty Products Revenue
CapyFin.com Forward Guidance
ITW is raising its full-year GAAP EPS guidance by $0.10 to $9.55 to $9.95 per share. The company is projecting organic growth of three to five percent. Divestitures are expected to reduce revenue by one percent resulting in total revenue growth of two to four percent. Operating margin is projected to be in the range of 24.5 to 25.5 percent, with enterprise initiatives contributing more than 100 basis points. Free cash flow is projected to be greater than 100 percent of net income and the company plans to repurchase approximately $1.5 billion of its own shares. The expected tax rate is in the range of 22.5 to 23.5 percent.
Positive Outlook
- Full-year GAAP EPS guidance raised by $0.10 to $9.55-$9.95 per share.
- Organic growth projected at 3-5%.
- Operating margin projected in the range of 24.5-25.5%.
- Enterprise initiatives expected to contribute more than 100 basis points to operating margin.
- Free cash flow projected to be greater than 100% of net income.
Challenges Ahead
- Divestitures are expected to reduce revenue by 1%.
- Customer and channel inventory normalization will continue to be a factor for the next several quarters.
- Stabilizing supply chain performance impacted organic growth by 1 to 1.5 percent in the quarter.
- Expected tax rate is in the range of 22.5 to 23.5 percent.
- Raw material inflation and rising interest rates
Revenue & Expenses
Visualization of income flow from segment revenue to net income