- Total revenue of
$3.7 billion , an increase of 43% with organic growth of 37% - Operating margin of 24.3%, an increase of 680 basis points
- GAAP EPS of
$2.45 , an increase of 143% - Raising full year organic growth guidance to a range of 11 to 13 percent and GAAP EPS guidance to a range of
$8.55 to$8.95 per share
“In the second quarter, we saw continued improvement in both the breadth and pace of the recovery, with organic revenue growth at the segment level ranging from 17 to 84 percent,” said
Second Quarter 2021 Results
Second quarter revenue of
GAAP EPS of
All seven segments delivered double-digit organic growth in the quarter, led by Automotive OEM up 84 percent and Food Equipment up 46 percent. Welding, Test & Measurement and Electronics, Construction Products, and Polymers & Fluids delivered organic growth in the range of 28 to 33 percent, and Specialty Products grew 17 percent. On a geographic basis, organic growth was 36 percent in
2021 Guidance
The company is raising its full-year GAAP EPS guidance to
Non-GAAP Measures
This earnings release contains certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the attached supplemental reconciliation schedule. The estimated guidance of free cash flow conversion rate is based on assumptions that are difficult to predict, and a reconciliation of estimated free cash flow to the most directly comparable GAAP measure has been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of availability of reliable forward-looking cash flow and operating information.
Forward-looking Statement
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding the duration and potential effects of the COVID-19 pandemic, related government actions and the company’s strategy in response thereto on the company’s business, expected impact of tariffs and raw material inflation, product line simplification activities and enterprise initiatives, future financial and operating performance, free cash flow, organic and total revenue, operating margin, price/cost impact, diluted income per share, restructuring expenses and related benefits, expected dividend payments, expected repatriation, after-tax return on invested capital, effective tax rates, exchange rates, expected access to liquidity sources, expected capital allocation, expected timing and amount of share repurchases, end market economic and regulatory conditions, potential acquisitions and dispositions and related impact on financial results, including statements with respect to the anticipated acquisition of the MTS Test & Simulation business, and the company’s 2021 guidance. These statements are subject to certain risks, uncertainties, assumptions 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 2020.
About
ITW (NYSE: ITW) is a Fortune 200 global multi-industrial manufacturing leader with revenues totaling
Media Contact Tel: 224.661.7451 mediarelations@itw.com | Investor Relations Tel: 224.661.7433 investorrelations@itw.com |
STATEMENT OF INCOME (UNAUDITED)
Three Months Ended | Six Months Ended | ||||||||||||||||||
In millions except per share amounts | 2021 | 2020 | 2021 | 2020 | |||||||||||||||
Operating Revenue | $ | 3,676 | $ | 2,564 | $ | 7,220 | $ | 5,792 | |||||||||||
Cost of revenue | 2,163 | 1,594 | 4,202 | 3,465 | |||||||||||||||
Selling, administrative, and research and development expenses | 588 | 486 | 1,154 | 1,046 | |||||||||||||||
Amortization and impairment of intangible assets | 32 | 35 | 66 | 71 | |||||||||||||||
Operating Income | 893 | 449 | 1,798 | 1,210 | |||||||||||||||
Interest expense | (52 | ) | (51 | ) | (104 | ) | (102 | ) | |||||||||||
Other income (expense) | 22 | 8 | 34 | 33 | |||||||||||||||
Income Before Taxes | 863 | 406 | 1,728 | 1,141 | |||||||||||||||
Income Taxes | 88 | 87 | 282 | 256 | |||||||||||||||
Net Income | $ | 775 | $ | 319 | $ | 1,446 | $ | 885 | |||||||||||
Net Income Per Share: | |||||||||||||||||||
Basic | $ | 2.46 | $ | 1.01 | $ | 4.58 | $ | 2.79 | |||||||||||
Diluted | $ | 2.45 | $ | 1.01 | $ | 4.56 | $ | 2.78 | |||||||||||
Cash Dividends Per Share: | |||||||||||||||||||
Paid | $ | 1.14 | $ | 1.07 | $ | 2.28 | $ | 2.14 | |||||||||||
Declared | $ | 1.14 | $ | 1.07 | $ | 2.28 | $ | 2.14 | |||||||||||
Shares of Common Stock Outstanding During the Period: | |||||||||||||||||||
Average | 315.6 | 316.1 | 316.1 | 317.2 | |||||||||||||||
Average assuming dilution | 316.9 | 317.4 | 317.4 | 318.6 |
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In millions | |||||||||
Assets | |||||||||
Current Assets: | |||||||||
Cash and equivalents | $ | 2,058 | $ | 2,564 | |||||
Trade receivables | 2,786 | 2,506 | |||||||
Inventories | 1,400 | 1,189 | |||||||
Prepaid expenses and other current assets | 265 | 264 | |||||||
Total current assets | 6,509 | 6,523 | |||||||
Net plant and equipment | 1,767 | 1,777 | |||||||
4,658 | 4,690 | ||||||||
Intangible assets | 716 | 781 | |||||||
Deferred income taxes | 613 | 533 | |||||||
Other assets | 1,317 | 1,308 | |||||||
$ | 15,580 | $ | 15,612 | ||||||
Liabilities and Stockholders' Equity | |||||||||
Current Liabilities: | |||||||||
Short-term debt | $ | 592 | $ | 350 | |||||
Accounts payable | 607 | 534 | |||||||
Accrued expenses | 1,326 | 1,284 | |||||||
Cash dividends payable | 358 | 361 | |||||||
Income taxes payable | 77 | 60 | |||||||
Total current liabilities | 2,960 | 2,589 | |||||||
Noncurrent Liabilities: | |||||||||
Long-term debt | 7,056 | 7,772 | |||||||
Deferred income taxes | 617 | 588 | |||||||
Noncurrent income taxes payable | 365 | 413 | |||||||
Other liabilities | 1,061 | 1,068 | |||||||
Total noncurrent liabilities | 9,099 | 9,841 | |||||||
Stockholders’ Equity: | |||||||||
Common stock | 6 | 6 | |||||||
Additional paid-in-capital | 1,402 | 1,362 | |||||||
Retained earnings | 23,842 | 23,114 | |||||||
Common stock held in treasury | (20,140 | ) | (19,659 | ) | |||||
Accumulated other comprehensive income (loss) | (1,590 | ) | (1,642 | ) | |||||
Noncontrolling interest | 1 | 1 | |||||||
Total stockholders’ equity | 3,521 | 3,182 | |||||||
$ | 15,580 | $ | 15,612 |
SEGMENT DATA (UNAUDITED)
Three Months Ended | ||||||||||
Dollars in millions | Total Revenue | Operating Income | Operating Margin | |||||||
Automotive OEM | $ | 707 | $ | 133 | 18.8 | % | ||||
Food Equipment | 514 | 113 | 22.0 | % | ||||||
Test & Measurement and Electronics | 606 | 170 | 28.1 | % | ||||||
Welding | 402 | 115 | 28.5 | % | ||||||
Polymers & Fluids | 466 | 127 | 27.3 | % | ||||||
Construction Products | 518 | 143 | 27.6 | % | ||||||
Specialty Products | 471 | 128 | 27.2 | % | ||||||
Intersegment | (8 | ) | — | — | % | |||||
Total Segments | 3,676 | 929 | 25.3 | % | ||||||
Unallocated | — | (36 | ) | — | % | |||||
$ | 3,676 | $ | 893 | 24.3 | % |
Six Months Ended | ||||||||||
Dollars in millions | Total Revenue | Operating Income | Operating Margin | |||||||
Automotive OEM | $ | 1,490 | $ | 322 | 21.6 | % | ||||
Food Equipment | 965 | 209 | 21.6 | % | ||||||
Test & Measurement and Electronics | 1,158 | 327 | 28.2 | % | ||||||
Welding | 803 | 236 | 29.4 | % | ||||||
Polymers & Fluids | 901 | 239 | 26.6 | % | ||||||
Construction Products | 987 | 273 | 27.6 | % | ||||||
Specialty Products | 928 | 254 | 27.4 | % | ||||||
Intersegment | (12 | ) | — | — | % | |||||
Total Segments | 7,220 | 1,860 | 25.8 | % | ||||||
Unallocated | — | (62 | ) | — | % | |||||
$ | 7,220 | $ | 1,798 | 24.9 | % |
SEGMENT DATA (UNAUDITED)
Q2 2021 vs. Q2 2020 Favorable/(Unfavorable) | |||||||||||||||||
Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | |||||||||
Organic | 83.5 | % | 46.0 | % | 28.7 | % | 32.6 | % | 27.6 | % | 28.2 | % | 17.2 | % | 37.2 | % | |
Acquisitions/ Divestitures | — | % | — | % | — | % | — | % | — | % | (0.1 | ) | % | — | % | — | % |
Translation | 11.8 | % | 6.9 | % | 4.3 | % | 2.6 | % | 4.1 | % | 9.6 | % | 4.4 | % | 6.2 | % | |
Operating Revenue | 95.3 | % | 52.9 | % | 33.0 | % | 35.2 | % | 31.7 | % | 37.7 | % | 21.6 | % | 43.4 | % |
Q2 2021 vs. Q2 2020 Favorable/(Unfavorable) | ||||||||
Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW |
Operating Leverage | 1700 bps | 1010 bps | 560 bps | 480 bps | 520 bps | 440 bps | 330 bps | 700 bps |
Changes in Variable Margin & OH Costs | 970 bps | 280 bps | (330) bps | 220 bps | (70) bps | (30) bps | (140) bps | (20) bps |
Total Organic | 2670 bps | 1290 bps | 230 bps | 700 bps | 450 bps | 410 bps | 190 bps | 680 bps |
Acquisitions/ Divestitures | — | — | — | — | — | — | — | — |
Restructuring/ Other | (10) bps | (10) bps | 10 bps | (10) bps | (30) bps | (20) bps | (10) bps | — |
Total Operating Margin Change | 2660 bps | 1280 bps | 240 bps | 690 bps | 420 bps | 390 bps | 180 bps | 680 bps |
Total Operating Margin % * | 18.8% | 22.0% | 28.1% | 28.5% | 27.3% | 27.6% | 27.2% | 24.3% |
*Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 40 bps | 70 bps | 160 bps | 10 bps | 240 bps | 20 bps | 80 bps | 90 bps ** |
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ( |
SEGMENT DATA (UNAUDITED)
1H 2021 vs. 1H 2020 Favorable/(Unfavorable) | |||||||||||||||||
Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | |||||||||
Organic | 33.6 | % | 13.2 | % | 19.4 | % | 17.9 | % | 17.7 | % | 20.3 | % | 12.1 | % | 19.9 | % | |
Acquisitions/ Divestitures | — | % | — | % | — | % | — | % | — | % | (0.1 | ) | % | — | % | — | % |
Translation | 7.3 | % | 4.7 | % | 3.8 | % | 1.9 | % | 2.9 | % | 8.6 | % | 3.7 | % | 4.8 | % | |
Operating Revenue | 40.9 | % | 17.9 | % | 23.2 | % | 19.8 | % | 20.6 | % | 28.8 | % | 15.8 | % | 24.7 | % |
1H 2021 vs. 1H 2020 Favorable/(Unfavorable) | ||||||||
Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW |
Operating Leverage | 630 bps | 320 bps | 420 bps | 280 bps | 360 bps | 350 bps | 230 bps | 390 bps |
Changes in Variable Margin & OH Costs | 420 bps | 40 bps | (140) bps | 90 bps | (40) bps | 70 bps | (50) bps | 10 bps |
Total Organic | 1050 bps | 360 bps | 280 bps | 370 bps | 320 bps | 420 bps | 180 bps | 400 bps |
Acquisitions/ Divestitures | — | — | — | — | — | — | — | — |
Restructuring/ Other | — | (10) bps | — | (10) bps | — | (20) bps | (30) bps | — |
Total Operating Margin Change | 1050 bps | 350 bps | 280 bps | 360 bps | 320 bps | 400 bps | 150 bps | 400 bps |
Total Operating Margin % * | 21.6% | 21.6% | 28.2% | 29.4% | 26.6% | 27.6% | 27.4% | 24.9% |
*Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 40 bps | 70 bps | 170 bps | 10 bps | 260 bps | 20 bps | 80 bps | 100 bps ** |
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ( |
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
Three Months Ended | Six Months Ended | ||||||||||||||||||
Dollars in millions | 2021 | 2020 | 2021 | 2020 | |||||||||||||||
Operating income | $ | 893 | $ | 449 | $ | 1,798 | $ | 1,210 | |||||||||||
Tax rate | 23.0 | % | 21.3 | % | 22.7 | % | 22.4 | % | |||||||||||
Income taxes | (206 | ) | (96 | ) | (409 | ) | (271 | ) | |||||||||||
Operating income after taxes | $ | 687 | $ | 353 | $ | 1,389 | $ | 939 | |||||||||||
Invested capital: | |||||||||||||||||||
Trade receivables | $ | 2,786 | $ | 2,156 | $ | 2,786 | $ | 2,156 | |||||||||||
Inventories | 1,400 | 1,167 | 1,400 | 1,167 | |||||||||||||||
Net assets held for sale | — | 181 | — | 181 | |||||||||||||||
Net plant and equipment | 1,767 | 1,711 | 1,767 | 1,711 | |||||||||||||||
5,374 | 5,244 | 5,374 | 5,244 | ||||||||||||||||
Accounts payable and accrued expenses | (1,933 | ) | (1,508 | ) | (1,933 | ) | (1,508 | ) | |||||||||||
Other, net | (283 | ) | (636 | ) | (283 | ) | (636 | ) | |||||||||||
Total invested capital | $ | 9,111 | $ | 8,315 | $ | 9,111 | $ | 8,315 | |||||||||||
Average invested capital | $ | 8,926 | $ | 8,431 | $ | 8,864 | $ | 8,557 | |||||||||||
After-tax return on average invested capital | 30.8 | % | 16.8 | % | 31.3 | % | 22.0 | % |
A reconciliation of the tax rate for the three and six month periods ended
Three Months Ended | Six Months Ended | ||||||||||||
Dollars in millions | Income Taxes | Tax Rate | Income Taxes | Tax Rate | |||||||||
As reported | $ | 88 | 10.1 | % | $ | 282 | 16.3 | % | |||||
Discrete tax benefit | 112 | 12.9 | % | 112 | 6.4 | % | |||||||
As adjusted | $ | 200 | 23.0 | % | $ | 394 | 22.7 | % |
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
FREE CASH FLOW (UNAUDITED)
Three Months Ended | Six Months Ended | Twelve Months Ended | ||||||||||||||||||||||
Dollars in millions | 2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||||
Net cash provided by operating activities | $ | 555 | $ | 737 | $ | 1,164 | $ | 1,351 | $ | 2,807 | ||||||||||||||
Less: Additions to plant and equipment | (78 | ) | (56 | ) | (146 | ) | (116 | ) | (236 | ) | ||||||||||||||
Free cash flow | $ | 477 | $ | 681 | $ | 1,018 | $ | 1,235 | $ | 2,571 | ||||||||||||||
Net income | $ | 775 | $ | 319 | $ | 1,446 | $ | 885 | $ | 2,109 | ||||||||||||||
Less: Second quarter 2021 discrete tax benefit related to a change in the | (112 | ) | — | (112 | ) | — | — | |||||||||||||||||
Adjusted net income | $ | 663 | $ | 319 | $ | 1,334 | $ | 885 | $ | 2,109 | ||||||||||||||
Free cash flow to adjusted net income conversion rate | 72 | % | 213 | % | 76 | % | 140 | % | 122 | % |
Source:
2021 GlobeNewswire, Inc., source