Item 2.02 Results of Operations and Financial Condition

On October 23, 2020, Illinois Tool Works Inc. (the "Company") announced its 2020 third quarter results of operations in the press release furnished as Exhibit 99.1.

Non-GAAP Financial Measures

The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. The Company believes this non-GAAP financial measure is useful to investors in evaluating the Company's financial performance and measures the Company's ability to generate cash internally to fund Company initiatives. Free cash flow represents net cash provided by operating activities less additions to plant and equipment. Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies. A reconciliation of free cash flow to net cash provided by operating activities is included in the press release furnished as Exhibit 99.1.

The Company uses after-tax return on average invested capital ("ROIC") to measure the effectiveness of its operations' use of invested capital to generate profits. ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company's financial performance and may be different than the method used by other companies to calculate ROIC. For comparability, the Company excluded the third quarter 2019 discrete tax benefit of $21 million from the effective tax rate for the three and nine months ended September 30, 2019. Average invested capital represents the net assets of the Company, excluding cash and equivalents and outstanding debt, which are excluded as they do not represent capital investment in the Company's operations. Average invested capital is calculated using balances at the start of the period and at the end of each quarter. A calculation of ROIC is included in the press release furnished as Exhibit 99.1.




Item 9.01  Financial Statements and Exhibits
(d)   Exhibits

      Exhibit Number               Exhibit Description

        99.1                         Press Release issued by Illinois Tool Works Inc. dated October
                                       23    , 2020 (furnished pursuant to Item 2.02).
      104                          Cover Page Interactive Data File (embedded within the Inline XBRL
                                   document).

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses