Illinois Tool Works (ITW) Q3 2025 earnings summary

Executive summary

• Q3 2025 revenue reached $4.1B, up 2–3% year-over-year, with 1% organic growth and a 2% positive currency impact, partially offset by a 1% reduction from product line simplification.

• Achieved record operating income of $1.1B, GAAP EPS of $2.81 (up 6% YoY excluding divestiture gain), and operating margin of 27.4%, up 90 bps year-over-year.

• Enterprise initiatives and pricing actions contributed 140 bps to margin expansion, offsetting tariff impacts.

• Dividend was raised 7%, marking the 62nd consecutive annual increase, and share repurchases exceeded $1.1B YTD, with $375M in Q3.

• Progressing on strategic growth priorities, focusing on customer-backed innovation and above-market organic growth.

Financial highlights

• Q3 2025 operating income: $1.1B (+5.7–6% YoY); operating margin: 27.4% (+90 bps YoY); net income: $821M; diluted EPS: $2.81.

• Revenue grew 2–2.3% to $4.1B, with organic growth of 1%.

• Free cash flow rose 15% to $904M in Q3, with a 110% conversion rate; YTD free cash flow was $1.85B.

• Effective tax rate for Q3 was 21.8%; projected 23% for full year.

• After-tax ROIC for Q3 2025 was 29.1% annualized.

Outlook and guidance

• Full-year 2025 GAAP EPS guidance narrowed to $10.40–$10.50, reflecting a $0.10 increase from initial midpoint.

• Projected 2025 revenue growth of 1–3%, with organic growth expected to be flat to 2%.

• Operating margin for 2025 projected at 26–27%, with at least 125 bps from enterprise initiatives.

• Free cash flow expected to be approximately 100% of net income; $1.5B in share repurchases planned.

• Projected effective tax rate for 2025 is approximately 23%; Q4 expected to see a more typical tax rate of 24–25%.