ILLINOIS TOOL WORKS INC : Results of Operations and Financial Condition, Financial Statements and Exhibits (form 8-K)
February 05, 2021 at 09:16 am EST
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Item 2.02 Results of Operations and Financial Condition
On February 5, 2021, Illinois Tool Works Inc. (the "Company") announced its 2020
fourth 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 ("After-tax ROIC")
to measure the effectiveness of its operations' use of invested capital to
generate profits. After-tax 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 After-tax ROIC. For comparability, the Company excluded
the third quarter 2019 discrete tax benefit of $21 million from the effective
tax rate for the year ended December 31, 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 After-tax ROIC is included in the press release furnished as
Exhibit 99.1.
The Company uses the ratio of total debt to EBITDA as a measure of its ability
to repay its outstanding debt obligations. EBITDA and the ratio of total debt to
EBITDA are non-GAAP financial measures. The Company believes that total debt to
EBITDA is a meaningful metric to investors in evaluating the Company's long term
financial liquidity and may be different than the method used by other companies
to calculate total debt to EBITDA. The ratio of total debt to EBITDA represents
total debt divided by net income before interest expense, other income
(expense), income taxes, depreciation, and amortization and impairment of
intangible assets on a trailing twelve month basis. A reconciliation of EBITDA
to net income and a calculation of the ratio of total debt to EBITDA are
included in the press release furnished as Exhibit 99.1.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit Number Exhibit Description
99.1 Press Release issued by Illinois Tool Works Inc. dated February 5,
2021 (furnished pursuant to Item 2.02).
104 Cover Page Interactive Data File
Illinois Tool Works Inc. is a diversified industrial group organized around 7 families of products:
- automotive equipment (20.1% of net sales). Besides, the group proposes products for maintenance and refurbishment (coatings, sealants, shutters, etc.);
- electronic equipment (17.5%): primarily equipment of microelectronic assembly. The group also provides test and measurement equipment and software;
- equipment for industrial kitchens (16.3%): cookers, dishwasher, ovens, refrigerators, cupboards, systems of aeration, etc.;
- construction systems and materials (12.6%): powder and gas nailing, perforators and consumables (fuses, chisels, pads, plugs, etc.) intended for applications on wood, steel and concrete;
- polymers, coatings, resins, adhesives and lubricants (11.2%);
- metallurgical equipment (10.5%): arc welding equipment, blowtorches, welding accessories, etc.
- specialty products (11.3%): industrial packaging systems and materials, products coding and marking equipment, etc.
Net sales are distributed geographically as follows: the United States (47.1%), North America (6.9%), Europe/Middle East/Africa (25.8%), Asia/Pacific (18.3%) and South America (1.9%).