ILLINOIS TOOL WORKS INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 21, 2015

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EX-99.1 - EXHIBIT 99.1 - ILLINOIS TOOL WORKS INCex991pressrel1q15.pdf
EX-99.2 - EXHIBIT 99.2 - ILLINOIS TOOL WORKS INCex992confercall1q15.pdf


Exhibit 99.1
                               
ITW Reports First Quarter 2015 Financial Results
•
Diluted EPS of $1.21, up 20 percent
•
Operating margin of 20.9 percent up 220 basis points; Enterprise Initiatives contributed 100 basis points
•
Share repurchases of $1.6 billion in the first quarter
•
Company updates full-year guidance

GLENVIEW, Ill., April 21, 2015 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE:ITW) today reported first quarter 2015 diluted earnings per share (EPS) from continuing operations of $1.21, which is 20 percent higher than the year-ago period. Reported EPS was $0.04 above the midpoint of company guidance despite $0.03 of incremental negative currency translation impact vs. the exchange rates in effect at the time the Company issued guidance for the first quarter 2015 on January 27, 2015. Organic revenue growth was up 1 percent in the quarter, reflecting lower demand in some of the company’s equipment-related businesses and ongoing product line simplification (PLS) activities.

"Despite currency translation headwinds and a challenging capital spending environment, ITW delivered record first quarter operating margin and 20 percent EPS growth," said E. Scott Santi, president and chief executive officer. "This performance reflects the continued progress that our business teams around the world are making in executing our strategy and leveraging ITW’s highly differentiated business model to its full potential. ITW is well positioned for another year of strong progress in 2015 and we remain solidly on track to deliver on our 2017 performance goals.”

First quarter 2015 enterprise highlights*
•
Organic revenue was up 1 percent, with both North America and International growing 1 percent. In North America, organic revenue growth was driven by continued strength in Automotive OEM and Food Equipment. Internationally, European and Asia Pacific organic revenues both increased 1 percent. As expected, the ongoing product line and customer base simplification activities associated with the portfolio management component of ITW's Enterprise Strategy reduced organic revenue growth by approximately 1 percentage point. Total revenues of $3.3 billion were down 6 percent due to the impact of foreign currency translation.
•
Operating margin of 20.9 percent increased 220 basis points, with Enterprise Initiatives contributing 100 basis points.








First quarter 2015 segment highlights*
•
Automotive OEM organic revenue growth of 7 percent outpaced first quarter worldwide auto builds of 1 percent. Organic revenues increased 13 percent in Europe, 3 percent in North America and 14 percent in China. Operating margin of 25.0 percent increased 170 basis points.
•
Food Equipment's organic revenues increased 4 percent due to solid demand for equipment and service. Operating margin of 22.6 percent increased 400 basis points.
•
Every one of the Company’s segments delivered strong operating margin improvement. Polymers & Fluids improved margin by 340 basis points, Test & Measurement and Electronics was up 250 basis points, and Welding, Construction Products and Specialty Products improved margin by more than 120 basis points.

Guidance
The company is reducing its 2015 full-year EPS guidance by $0.15 to reflect current exchange rates. The updated EPS range is $5.00 to $5.20, an increase of 9 percent at the $5.10 midpoint. Organic revenue growth for the year is projected to be 1 to 2 percent, down slightly from the previous forecast due to a more challenging capital spending environment. Operating margin is projected to exceed 21 percent, and the Company expects stronger margin performance to offset modestly lower revenue expectations. For the second quarter 2015, the Company is expecting EPS to be in a range of $1.22 to $1.30. Organic revenue growth for the second quarter is forecast to be 1 to 2 percent.


*All comparisons are to the prior year period.

Forward-looking statement
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding organic and total revenue growth, impact of foreign currency translation, operating margins and diluted income per share from continuing operations. These statements are subject to certain risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated. Such factors include those contained in ITW's Form 10-K for 2014. The attached tables include a calculation of ROIC, a non-GAAP measure.











About ITW
ITW is a Fortune 200 global diversified industrial manufacturer of value added consumables and specialty equipment with related service businesses. The Company focuses on solid growth, improving profitability and strong returns across its worldwide platforms and divisions. These divisions serve customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW's revenues totaled $14.5 billion in 2014.
 







ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
 
Three Months Ended
In millions except per share amounts
March 31,
 
2015
 
2014
Operating Revenues
$
3,342

 
$
3,569

Cost of revenues
1,970

 
2,158

Selling, administrative, and research and development expenses
616

 
682

Amortization of intangible assets
59

 
62

Operating Income
697

 
667

Interest expense
(54
)
 
(64
)
Other income (expense)
21

 
9

Income from Continuing Operations Before Income Taxes
664

 
612

Income Taxes
206

 
184

Income from Continuing Operations
458

 
428

Income from Discontinued Operations
—

 
45

Net Income
$
458

 
$
473

 
 
 
 
Income Per Share from Continuing Operations:
 
 
 
Basic
$
1.22

 
$
1.01

Diluted
$
1.21

 
$
1.01

Income Per Share from Discontinued Operations:
 
 
 
Basic
$
—

 
$
0.11

Diluted
$
—

 
$
0.11

Net Income Per Share:
 
 
 
Basic
$
1.22

 
$
1.12

Diluted
$
1.21

 
$
1.11

 
 
 
 
Shares of Common Stock Outstanding During the Period:
 
 
 
Average
376.6

 
421.9

Average assuming dilution
379.2

 
425.0


FREE OPERATING CASH FLOW (UNAUDITED)
 
Three Months Ended
In millions
March 31,
 
2015
 
2014
Net cash provided by operating activities
$
442

 
$
314

Less: Additions to plant and equipment
(83
)
 
(68
)
Free operating cash flow
$
359

 
$
246









ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In millions
 
March 31, 2015
 
December 31, 2014
Assets
 
 
 
Current Assets:
 
 
 
Cash and equivalents
$
2,672

 
$
3,990

Trade receivables
2,367

 
2,293

Inventories
1,187

 
1,180

Deferred income taxes
188

 
212

Prepaid expenses and other current assets
253

 
401

Total current assets
6,667

 
8,076

 
 
 
 
Net plant and equipment
1,624

 
1,686

Goodwill
4,498

 
4,667

Intangible assets
1,733

 
1,799

Deferred income taxes
278

 
301

Other assets
1,137

 
1,149

 
$
15,937

 
$
17,678

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
1,708

 
$
1,476

Accounts payable
670

 
512

Accrued expenses
1,083

 
1,287

Cash dividends payable
179

 
186

Income taxes payable
96

 
64

Deferred income taxes
8

 
8

Total current liabilities
3,744

 
3,533

 
 
 
 
Noncurrent Liabilities:
 
 
 
Long-term debt
5,845

 
5,981

Deferred income taxes
380

 
338

Other liabilities
986

 
1,002

Total noncurrent liabilities
7,211

 
7,321

 
 
 
 
Stockholders’ Equity:
 
 
 
Common stock
6

 
6

Additional paid-in-capital
1,102

 
1,096

Income reinvested in the business
17,453

 
17,173

Common stock held in treasury
(12,357
)
 
(10,798
)
Accumulated other comprehensive income
(1,226
)
 
(658
)
Noncontrolling interest
4

 
5

Total stockholders’ equity
4,982

 
6,824

 
$
15,937

 
$
17,678





ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
ADJUSTED RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
 
Three Months Ended
Dollars in millions
March 31,
 
2015
 
2014
Operating income
$
697

 
$
667

Tax rate
31.0
%
 
30.0
%
Income taxes
(216
)
 
(200
)
Operating income after taxes
$
481

 
$
467

 
 
 
 
Invested capital:
 
 
 

Trade receivables
$
2,367

 
$
2,563

Inventories
1,187

 
1,298

Net assets held for sale
—

 
1,579

Net plant and equipment
1,624

 
1,699

Goodwill and intangible assets
6,231

 
6,829

Accounts payable and accrued expenses
(1,753
)
 
(1,893
)
Other, net
207

 
580

Total invested capital
$
9,863

 
$
12,655

 
 
 
 
Average invested capital
$
10,077

 
$
12,545

Adjustment for Wilsonart (formerly the Decorative Surfaces segment)
(130
)
 
(161
)
Adjustment for Industrial Packaging
—

 
(1,521
)
Adjusted average invested capital
$
9,947

 
$
10,863

Annualized adjusted return on average invested capital
19.3
%
 
17.2
%







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