Illinois Tool Works Reports Mixed Q3 Results with Strong Net Income

Illinois Tool Works Inc. (ITW) reported its financial results for the third quarter and the nine months ended September 30, 2024, showcasing a mixed performance compared to the previous fiscal period.

For the three months ended September 30, 2024, ITW's operating revenue was $3,966 million, a slight decrease from $4,031 million in the same period of 2023. Year-to-date operating revenue for 2024 was $11,966 million, down from $12,124 million in 2023. Despite the decline in revenue, operating income for Q3 2024 was $1,052 million, slightly lower than $1,070 million in Q3 2023, while year-to-date operating income increased to $3,233 million from $3,052 million in the prior year. The operating margin remained stable at 26.5% for Q3 2024, with a year-to-date margin of 27.0%, up from 25.2% in 2023.

Net income for Q3 2024 was reported at $1,160 million, a significant increase from $772 million in Q3 2023. For the nine months ended September 30, 2024, net income rose to $2,738 million from $2,240 million in the previous year. The effective tax rate for Q3 2024 was notably lower at 14.9% compared to 23.8% in Q3 2023, contributing to the improved net income figures.

ITW's strategic developments included two acquisitions in the Test & Measurement and Electronics segment, totaling $116 million, which were not material to the company's overall financial results. Additionally, the company completed the sale of its noncontrolling equity interest in Wilsonart International Holdings LLC for $395 million, resulting in a pre-tax gain of $363 million.

The company also implemented a change in its inventory valuation method from LIFO to FIFO for certain U.S. businesses, which impacted approximately 23% of total inventories. This change resulted in a pre-tax cumulative effect of $117 million recorded as a reduction of cost of revenue in Q1 2024.

Cash and equivalents at the end of Q3 2024 stood at $947 million, down from $1,065 million at the beginning of the period. Net cash provided by operating activities for the nine months ended September 30, 2024, was $2,167 million, a decrease from $2,500 million in the same period of 2023. The company reported a net decrease in cash and equivalents of $118 million for the nine months ended September 30, 2024, compared to an increase of $282 million in the prior year.

Overall, ITW's performance reflects a combination of strategic acquisitions, a significant tax benefit, and a shift in inventory accounting, contributing to a robust net income despite a decline in operating revenue.