GLENVIEW, Ill., April 22, 2014 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported first quarter 2014 diluted earnings per share (EPS) from continuing operations of $1.01, 15 percent higher than the prior year period. The stronger-than-expected EPS was driven by meaningful contributions from ongoing enterprise initiatives and accelerated share repurchase.
Key highlights for the 2014 first quarter financial results versus the year-ago period include:
-- Total revenues grew 4 percent to $3.6 billion and operating income increased 16 percent to $667 million. Organic revenues increased 3.3 percent, with international growing 6.3 percent and North America increasing 1.0 percent. Internationally, European and Asia Pacific organic revenues grew 4.8 percent and 7.2 percent, respectively. -- EPS of $1.01 was 15 percent higher than the prior-year period. -- Operating margins of 18.7 percent increased 180 basis points, with enterprise initiatives contributing 120 basis points.
First quarter segment highlights versus the year-ago period include:
-- Automotive OEM organic revenue growth of 13 percent significantly outpaced worldwide auto builds of 5 percent. Organic revenues grew 11 percent in North America, 14 percent in Europe and 28 percent in China. Operating margins of 23.3 percent increased 350 basis points. -- Food Equipment's organic revenues grew 5 percent due to solid growth in equipment and service in North America and strong equipment sales internationally. Operating margins of 18.6 percent increased 190 basis points. -- Construction Products' organic revenues grew 5 percent due to 14 percent growth in Asia Pacific and 1 percent growth in Europe. In the United States, organic revenues grew 7 percent in the residential category, while the renovation category was flat and the commercial construction category declined 8 percent. Operating margins of 14.8 percent increased 310 basis points.
"Underlying our strong first quarter financial results is our ongoing five-year enterprise strategy and related initiatives," said Scott Santi, president and chief executive officer. "Thanks to the worldwide ITW team, we produced operating margins of nearly 19 percent, grew our EPS 15 percent and expanded adjusted after-tax ROIC to more than 17 percent in the quarter. Finally, we continued to focus on capital allocation during the quarter by returning significant amounts of free cash to our investors in the form of accelerated share repurchase and consistent dividend payout."
Looking forward, the Company is raising its full-year EPS guidance to a range of $4.45 to $4.65, with the $4.55 mid-point representing a 25 percent increase versus 2013. The 15 cents guidance increase at the mid-point is driven by the accelerated share repurchase program as well as continued contributions from enterprise initiatives. Total revenue is expected to grow in the range of 3 percent to 4 percent. For the 2014 second quarter, the Company is forecasting EPS to be in a range of $1.16 to $1.24 and expects total revenue growth in a range of 3 percent to 5 percent.
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding total revenue growth 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 2013 Form 10-K.
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 businesses. These businesses serve local customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW's revenues totaled $14.1 billion in 2013.
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF INCOME (UNAUDITED) ------------------------------ Three Months Ended (In millions except per share amounts) March 31, --------- 2014 2013 ---- ---- Operating Revenues $3,569 $3,420 Cost of revenues 2,158 2,078 Selling, administrative, and research and development expenses 682 703 Amortization of intangible assets 62 61 --- --- Operating Income 667 578 Interest expense (64) (60) Other income (expense) 9 47 --- --- Income from Continuing Operations Before Income Taxes 612 565 Income Taxes 184 164 --- --- Income from Continuing Operations 428 401 Income (Loss) from Discontinued Operations 45 (47) --- --- Net Income $473 $354 ==== ==== Income Per Share from Continuing Operations: Basic $1.01 $0.89 Diluted $1.01 $0.88 Income (Loss) Per Share from Discontinued Operations: Basic $0.11 $(0.10) Diluted $0.11 $(0.10) Net Income Per Share: Basic $1.12 $0.78 Diluted $1.11 $0.78 Shares of Common Stock Outstanding During the Period: Average 421.9 451.7 Average assuming dilution 425.0 454.8
FREE OPERATING CASH FLOW (UNAUDITED) ----------------------------------- Three Months Ended (In millions) March 31, 2014 2013 ---- ---- Net cash provided by operating activities $314 $366 Less: Additions to plant and equipment (68) (89) Free operating cash flow $246 $277 ==== ====
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (UNAUDITED) ------------------------------------------ (In millions) March December 31, 31, 2013 2014 ---- ASSETS ------ Current Assets: Cash and equivalents $3,547 $3,618 Trade receivables 2,563 2,365 Inventories 1,298 1,247 Deferred income taxes 335 384 Prepaid expenses and other current assets 345 366 Assets held for sale 1,940 1,836 ----- ----- Total current assets 10,028 9,816 Net Plant and Equipment 1,699 1,709 Goodwill 4,893 4,886 Intangible Assets 1,936 1,999 Deferred Income Taxes 383 359 Other Assets 1,231 1,197 ----- ----- $20,170 $19,966 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY ----------------------------------- Current Liabilities: Short-term debt $2,833 $3,551 Accounts payable 689 634 Accrued expenses 1,204 1,272 Cash dividends payable 174 181 Income taxes payable 84 69 Deferred income taxes 15 10 Liabilities held for sale 361 317 --- --- Total current liabilities 5,360 6,034 Noncurrent Liabilities: Long-term debt 4,789 2,793 Deferred income taxes 522 507 Other liabilities 919 923 --- --- Total noncurrent liabilities 6,230 4,223 Stockholders' Equity: Common stock 6 6 Additional paid-in-capital 1,043 1,046 Income reinvested in the business 15,243 14,943 Common stock held in treasury (8,138) (6,676) Accumulated other comprehensive income 420 384 Noncontrolling interest 6 6 --- --- Total stockholders' equity 8,580 9,709 ----- ----- $20,170 $19,966 ======= =======
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES ADJUSTED RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) ------------------------------------------------------ Three Months Ended (Dollars in millions) March 31, --------- 2014 2013 Operating income $667 $578 Tax rate 30.0% 29.0% Income taxes (200) (168) ---- ---- Operating income after taxes $467 $410 ==== ==== Invested capital: Trade receivables $2,563 $2,789 Inventories 1,298 1,514 Net assets held for sale 1,579 232 Net plant and equipment 1,699 1,960 Goodwill and intangible assets 6,829 7,574 Accounts payable and accrued expenses (1,893) (1,984) Other, net 580 544 Total invested capital $12,655 $12,629 ===== ===== Average invested capital $12,545 $12,735 Adjustment for Wilsonart (formerly Decorative Surfaces) (161) (172) Adjustment for Industrial Packaging (1,521) (1,493) Adjusted average invested capital $10,863 $11,070 ===== ===== Annualized adjusted return on average invested capital 17.2% 14.8% ==== ====
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES ADJUSTED RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) --- For the Three Months Ended March 31, 2014 % F(U) vs. prior year --------------------- Automotive Test & Food Polymers Construction Specialty OEM Measurement Equipment & Fluids Products Products and Electronics Welding ----------- ------------ ---------- -------- ------- ------------ -------- Total Revenue: Total organic revenue 13.0% (0.4)% 5.3% (0.4)% (2.0)% 4.7% 1.5% Acquisitions & divestitures - % (0.1)% 3.3% - % 1.2% - % 6.0% Other 0.4% 0.4% 0.8% (2.3)% (1.0)% (3.0)% 0.6% Total Revenue 13.4% (0.1)% 9.4% (2.7)% (1.8)% 1.7% 8.1% ============= ==== ===== === ===== ===== === === For the Three Months Ended March 31, 2014 ----------------------------------------- % Point Increase (Decrease) -------------------------- Automotive Test & Food Polymers Construction Specialty OEM Measurement Equipment & Fluids Products Products and Electronics Welding ----------- ------------ ---------- -------- ------- ------------ -------- Operating Margin: Operating leverage 2.0% (0.1)% 1.4% (0.1)% (0.3)% 1.4% 0.4% Variable margin & overhead costs 0.9% (0.1)% 1.4% 1.5% 0.8% 1.7% 0.6% Total Organic Margin 2.9% (0.2)% 2.8% 1.4% 0.5% 3.1% 1.0% Acquisitions & divestitures - % 0.1% (0.4)% - % (0.2)% - % (1.0)% Other 0.6% (0.7)% (0.5)% 0.6% (0.6)% - % 1.2% Total Operating Margin 3.5% (0.8)% 1.9% 2.0% (0.3)% 3.1% 1.2% =============== === ===== === === ===== === ===
SOURCE Illinois Tool Works Inc.