Illinois Tool Works Inc. · NYSE:ITW
Illinois Tool Works — Q2 2012 Earnings Presentation
19 slides from Illinois Tool Works's earnings presentation, Jul 24, 2012
Slide 1: ITW Conference Call Second Quarter 2012
ITW Conference Call Second Quarter 2012 July 24, 2012 100 YEARS STRONG
Slide 2: Forward-Looking Statements
Forward-Looking Statements Safe Harbor Statement This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding strategic initiatives and related benefits, operating performance,
Slide 3: Conference Call Playback
Conference Call Playback • Replay number: 888-566-0396; No pass code necessary • Telephone replay available through midnight of August 7, 2012 • Webcast / PowerPoint replay available at www.itw.com • Supplemental financial and investor information will be available on the ITW website under the “Inve
Slide 4: Key Long-Term Initiatives
Key Long-Term Initiatives • ITW is committed to shareholder value-adding initiatives: business structure simplification, strategic sourcing and portfolio management • These initiatives will enable our decentralized management to better leverage ITW’s core competitive advantages globally and will enh
Slide 5: Q2 2012 Highlights
Q2 2012 Highlights $ in Millions, except per share amounts Q2 2012 Q2 2011 F/(U) • Total revenue growth of 0.9%, with organic and Operating Revenues $ 4,655 $ 4,615 0.9% acquired revenues offset by currency impact, primarily weaker Euro Operating Income 770 711 8.3% • Strong North America % of Reven
Slide 6: Q2 2012 vs. Q2 2011 Operating Results
Q2 2012 vs. Q2 2011 Operating Results F(U) to Prior Year • Organic revenue growth: 2.3%, led by US Total Operating Operating Revenue Income Margin • Price / cost margin Organic (Base) Business impact: +60 bps Operating Leverage 2.3% 6.0% 0.6% • Acquisition operating Changes in Variable margins exclu
Slide 7: Working Capital & Cash Flow
Working Capital & Cash Flow Net Trade Receivables & DSO Inventory & MOH Avg. Invested Capital & ROIC * $1,920 $3,146 $3,164 $13,456 $1,796 $12,954 62.0 61.2 16.3% 15.6% 1.9 1.8 Q2 2011 Q2 2012 Q2 2011 Q2 2012 Q2 2011 Q2 2012 Trade Receivables DSO Inventory MOH Avg. Invested Capital ROIC * $ In Milli
Slide 8: Capital Structure
Capital Structure Capital Allocation Priorities • Organic investments continue to focus on key growth platforms and emerging 1. Organic Investments market opportunities 2. Dividends $346M YTD • $526M of share repurchases in Q2; $1B YTD 3. External Investments • $105M annualized revenues acquired in
Slide 9: Revenue Growth by Geography Q2 2012 vs. Q2 2011
Revenue Growth by Geography Q2 2012 vs. Q2 2011 ITW Worldwide • North America (US) International drives organic growth 12% • European performance 8% modestly negative 5% 5% • Asia Pacific performance 4% reflects flat performance 3% in China and better than 2% 2% 2% expected growth in India •South Am
Slide 10: Q2 2012 Segment Results
Q2 2012 Segment Results Q2 2012 % F(U) vs. prior year $ in Millions Total Operating Operating Total Organic Operating Operating Organic Revenue Income Margin Revenue (Base) Income Margin (Base) Revenue * Op Margin * Transportation $ 896 $ 143 16.0% 0.1% 3.4% 4.4% 0.7% 1.0% Power Systems & 810 172 21
Slide 11: Q2 2012 Segment Commentary
Q2 2012 Segment Commentary Organic Revenue Y/O/Y % Changes / Key Business Trends ~ Auto OEM: WW 6% ∙ NA: 8%, International: 4%, Europe: 1%, Asia: 24% Transportation ∙ Auto builds grow in NA and China but decline in Europe ~ Auto Aftermarket: -2% as consumer spending softens ~ CCI: 4% due to strong e
Slide 12: 2012 Guidance
2012 Guidance Full Year Prior Current Q3 Forecast Forecast Forecast Total Revenue (1%) - 1% 5% - 7% 1% - 3% Diluted EPS from Continuing Ops $1.03 - $1.11 $4.14 - $4.38 $4.03 - $4.19 % F/(U) to 2011 Diluted EPS from Continuing 3% - 11% 10% - 16% 7% - 12% Operations(1) Tax Rate 28.5% - 29.5% 28.5% - 2
Slide 13: Q&A
Q&A 100 YEARS STRONG PROFITABLE GROWTH, STRONG RETURNS 13
Slide 14: Appendix: GAAP to Non-GAAP Reconciliations & Segment Tables
Appendix: GAAP to Non-GAAP Reconciliations & Segment Tables 100 YEARS STRONG PROFITABLE GROWTH, STRONG RETURNS 14
Slide 15: Appendix: Return on Average Invested Capital
Appendix Return on Average Invested Capital The Company uses return on average invested capital (“ROIC”) to measure the effectiveness of its operations' use of invested capital to generate profits. Invested capital represents the net assets of the Company, excluding cash and cash equivalents and out
Slide 16: Appendix: Free Operating Cash Flow
Appendix Free Operating Cash Flow The Company uses free operating cash flow to measure cash flow generated by operations that is available for dividends, acquisitions, share repurchases and debt repayment. Free operating cash flow represents net cash provided by operating activities less additions t
Slide 17: Appendix: Total Debt to EBITDA
Appendix Total Debt to EBITDA The Company uses the ratio of total debt to EBITDA to measure its ability to repay its outstanding debt obligations. The ratio of total debt to EBITDA represents total debt divided by income from continuing operations before interest expense, other income (expense), inc
Slide 18: Appendix: Results by Segment Q2 2012 vs. Q2 2011
Appendix Results by Segment Q2 2012 vs. Q2 2011 Power Total Revenue Systems & Industrial Food Polymers & Decorative Transportation Electronics Packaging Equipment Construction Fluids Surfaces All Other Total Organic (Base) 3.4% 5.2% 0.2% 1.3% -0.5% -0.4% 4.8% 2.6% Acquisitions & Divestitures 1.1% 4.
Slide 19: Appendix: 2011 Segment Restatement
Appendix 2011 Segment Restatement The Company periodically makes changes to its management reporting structure to better align its businesses with Company objectives and operating strategies. In the first quarter of 2012, the Company made certain changes in its management reporting structure that re