Illinois Tool Works (ITW) Tops Q4 EPS by 23c, Revenues Beat; Offers FY21 EPS Mid-Point Guidance Above Consensus

February 5, 2021 8:04 AM EST
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Price: $221.60 -0.01%

EPS Growth %: +6.8%

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Total: 535M

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Illinois Tool Works (NYSE: ITW) reported Q4 EPS of $2.02, $0.23 better than the analyst estimate of $1.79. Revenue for the quarter came in at $3.48 billion versus the consensus estimate of $3.33 billion.

Fourth-Quarter 2020 Highlights

  • Total revenue of $3.5 billion, an increase of 5% versus Q3 2020
  • Record Q4 operating income of $883 million, an increase of 7% year-over-year
  • Record Q4 operating margin of 25.4% as enterprise initiatives contributed 130 basis points
  • GAAP EPS of $2.02, an increase of 2%, or 7% excluding $0.11 of divestiture gains in Q4 2019
  • Record Q4 after-tax ROIC of 32.0%, an increase of 310 basis points
  • Strong free cash flow of $705 million, 110% of net income

“The ITW team closed out 2020 with another quarter of strong execution and financial performance, generating revenue of $3.5 billion and delivering all-time record Q4 operating income, operating margin, and ROIC performance,” said E. Scott Santi, chairman and chief executive officer.

“Looking back at 2020 in its entirety, our people around the world provided another meaningful demonstration of the power of the ITW Business Model and the differentiating value of our decentralized entrepreneurial culture in how the company responded to the unprecedented events and challenges of the past year. While it was the unique circumstances that we faced and our response to them that defined the year, it was the sum total of all that the ITW team has built over the last eight years through the execution of our enterprise strategy that gave us the capabilities and options to respond as we did. In the face of a global pandemic, our ability to deliver strong operational and financial performance while remaining fully invested in the execution of our long-term enterprise strategy provides further evidence that ITW is a company that has the enduring competitive advantages, resilience, and agility necessary to deliver consistent top tier performance in any environment and over the long term. I offer my heartfelt thanks to all my ITW colleagues for their dedication and commitment to keeping their co-workers safe, serving our customers with excellence, and continuing to make progress on our path to ITW’s full-potential performance,” Santi concluded.

GUIDANCE:

Illinois Tool Works sees FY2021 EPS of $7.60-$8.00, versus the consensus of $7.68.

The company initiated full-year GAAP EPS guidance in a range of $7.60 to $8.00 per share, an increase of 15 to 21 percent. Organic growth is expected to be in the range of seven to ten percent. Revenue is expected to grow in the range of nine to twelve percent as foreign currency translation at current exchange rates is projected to increase revenues by approximately two percent. PLS impact is forecasted to be approximately 50 basis points. Operating margin is expected to be in a range of 24 to 25 percent, with enterprise initiatives contributing approximately 100 basis points. Free cash flow is expected to be greater than 100 percent of net income. The company plans to repurchase approximately $1 billion of its shares in 2021 and expects an effective tax rate in the range of 23 to 24 percent.

For earnings history and earnings-related data on Illinois Tool Works (ITW) click here.



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