Illinois Tool Works (ITW) Q2 2026 earnings summary

Executive summary

• Achieved record quarterly profitability in Q2 2026 with operating income of $1.15 billion, up 7.4% year-over-year, and operating margin of 26.7%, up 40 basis points.

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

• GAAP EPS increased 10.1% to $2.84, driven by 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.

• Strong performance in CapEx-related businesses, Customer-Back Innovation, and key segments such as Welding, Test & Measurement and Electronics, and Polymers & Fluids.

Financial highlights

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

• Free cash flow increased 41% year-over-year, with a 77% conversion rate; operating cash flow was $723 million and free cash flow $631 million in Q2.

• Returned over $1.2 billion to shareholders via dividends and $750 million in share repurchases in Q2.

• After-tax ROIC for Q2 annualized at 29.4%, with a full-year target above 30%.

• Total debt to EBITDA ratio was 2.0 at quarter-end.

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; midpoint $11.45.

• Operating margin projected at 26.5–27.5%, with enterprise initiatives expected to contribute over 100 basis points.

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

• After-tax ROIC projected above 30%.