Illinois Tool Works (ITW) investor relations material

Executive summary

• Achieved record quarterly profitability with operating income of $1.15 billion, up 7.4% year-over-year, and operating margin of 26.7%, up 40 bps, driven by strong performance in CapEx-related businesses and Customer-Back Innovation initiatives.

• Revenue grew 6.1% to $4.30 billion, with organic growth accelerating to 4.5% and North America leading at 6.4%.

• GAAP EPS increased 10.1% to $2.84, reflecting strong operational execution and margin expansion.

• Raised full-year 2026 guidance for both revenue and EPS, reflecting robust demand, operational momentum, and increased new product contributions.

• Free cash flow increased 41%, with over $1.2 billion returned to shareholders via dividends and share repurchases.

Financial highlights

• Q2 2026 GAAP EPS rose 10.1% to $2.84; operating margin expanded by 40 bps to 26.7%.

• Revenue grew 6.1% to $4.30 billion, with organic revenue up 4.5%.

• Free cash flow conversion was 77% in Q2, with a 41% increase in free cash flow.

• Share repurchases totaled $750 million in Q2, with over $1.2 billion returned to shareholders.

• After-tax ROIC was 29.7% in Q2 and 27.4% for H1 2026.

Outlook and guidance

• Full-year 2026 organic growth guidance raised to 3–4% (midpoint 3.5%), with total revenue growth guidance at 4–5%.

• GAAP EPS guidance increased to $11.35–$11.55, representing up to 11% growth.

• Operating margin guidance remains at 26.5–27.5%, with enterprise initiatives expected to contribute over 100 bps.

• Free cash flow conversion projected to exceed 100% of net income; share repurchases for the year expected to reach $1.5 billion.

• After-tax ROIC projected above 30%.