Illinois Tool Works (ITW) Q1 2026 earnings summary

Executive summary

• Revenue grew 5% year-over-year to $4.02 billion in Q1 2026, driven by strong demand in capex-related segments and outperformance versus end markets.

• GAAP EPS increased 12% to $2.66, with operating income up 7% to $1.02 billion and operating margin expanding by 60 bps to 25.4%, supported by enterprise initiatives.

• Free cash flow rose 6% to $528 million, with a 69% conversion rate and $375 million in share repurchases completed in Q1 2026.

• Capex-related segments such as Welding and Test & Measurement and Electronics led organic growth, while consumer-facing businesses faced challenging markets but outperformed peers.

• Enterprise initiatives contributed 120 basis points to margin improvement in Q1 2026.

Financial highlights

• Q1 2026 revenue reached $4.02 billion, up 4.6% year-over-year, with organic growth of 0.4% and FX/acquisitions contributing 4.2%.

• Operating cash flow was $623 million; free cash flow conversion was 69% for Q1 2026.

• Effective tax rate for the quarter was 20.6%, including a $34 million discrete tax benefit from a U.S. tax audit resolution.

• Cash dividends paid and declared per share were $1.61, up from $1.50 year-over-year.

• Incremental margins were approximately 40% in Q1, expected to rise through the year.

Outlook and guidance

• Full-year 2026 GAAP EPS guidance raised by $0.10 to $11.10–$11.50, representing 8% growth at midpoint.

• Revenue growth projected at 2–4% for 2026, with organic growth of 1–3%.

• Operating margin expected to expand to 26.5–27.5%, with all seven segments projected to deliver positive organic growth and margin expansion.

• Free cash flow conversion expected to exceed 100% of net income; $1.5 billion in share repurchases planned for 2026.

• Projected effective tax rate for 2026 is 23–24%.