Illinois Tool Works Inc. (ITW - Free Report) reported first-quarter 2024 adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate of $2.35. Earnings increased 5% year over year.
Illinois Tool’s revenues of $3.97 billion missed the consensus estimate of $4.02 billion. The top line inched down 1.1% year over year due to an unfavorable foreign currency translation of 0.4%. Also, organic sales decreased 0.5% and divestitures reduced revenues by 0.6%.
Segmental Performance
Test & Measurement and Electronics’ revenues were down 0.9% year over year to $696 million. Our estimate for segmental revenues was $705.8 million. Revenues from Automotive Original Equipment Manufacturer increased 2.5% year over year to $816 million. Our estimate for segmental revenues was $813.3 million.
Food Equipment generated revenues of $631 million, decreasing 0.7% year over year. Our estimate for segmental revenues was $650.7 million. Welding revenues were $476 million, down 3.4% year over year. Our estimate for segmental revenues was $497.7 million.
Construction Products’ revenues were down 7.3% year over year to $488 million. Our estimate for segmental revenues was $505.4 million. Revenues of $440 million from Specialty Products reflected an increase of 3.4% year over year. Our estimate for segmental revenues was $401.7 million. Polymers & Fluids’ revenues of $432 million declined 3.3% year over year. Our estimate for segmental revenues was $447.3 million.
Margin Profile
Illinois Tool’s cost of sales decreased 8.4% year over year to $2.1 billion. Selling, administrative, and research and development expenses decreased 0.2% year over yer to $676 million. The operating margin was 28.4%, up 420 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 140 bps to the operating margin.
Balance Sheet and Cash Flow
At the end of the first quarter, Illinois Tool had cash and equivalents of $959 million compared with $1.1 billion at the end of December 2023. Long-term debt was $6.25 billion compared with $6.33 billion at the end of December 2023.
In the first three months of 2024, Illinois Tool, carrying a current Zacks Rank #3 (Hold), generated net cash of $589 million from operating activities, reflecting a decline of 19.1% from the year-ago reported number. Capital spending on the purchase of plant and equipment was $95 million, down 15.9% year over year. Free cash flow of $494 million decreased 19.7% year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2024 Guidance
Illinois Tool expects earnings of $10.30-$10.70 per share for 2024. Organic revenues are expected to increase 1-3%. The company anticipates total revenues to increase 1-3% from the year-ago reported figure. Operating margin is expected to be 26-27%. Enterprise initiatives are expected to contribute more than 100 bps to the operating margin.
Illinois Tool projects free cash flow to be more than 100% of net income in 2024. The company expects to repurchase about $1.5 billion worth of shares. The tax rate is expected to be 24-24.5%.
Performance of Other Industrial Companies
IDEX Corporation’s (IEX - Free Report) first-quarter 2024 adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.
In the quarter under review, IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million. The top line also decreased 5.3% year over year.
A. O. Smith Corporation’s (AOS - Free Report) first-quarter 2024 adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
W.W. Grainger, Inc. (GWW - Free Report) has reported earnings per share of $9.62 in first-quarter 2024, beating the Zacks Consensus Estimate of $9.58. The bottom line improved 0.1% year over year.
Grainger’s quarterly revenues rose 3.5% year over year to $4.24 billion. The top line missed the consensus estimate of $4.27 billion.
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Illinois Tool Works Inc. (ITW - Free Report) reported first-quarter 2024 adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate of $2.35. Earnings increased 5% year over year.
Illinois Tool’s revenues of $3.97 billion missed the consensus estimate of $4.02 billion. The top line inched down 1.1% year over year due to an unfavorable foreign currency translation of 0.4%. Also, organic sales decreased 0.5% and divestitures reduced revenues by 0.6%.
Segmental Performance
Test & Measurement and Electronics’ revenues were down 0.9% year over year to $696 million. Our estimate for segmental revenues was $705.8 million. Revenues from Automotive Original Equipment Manufacturer increased 2.5% year over year to $816 million. Our estimate for segmental revenues was $813.3 million.
Food Equipment generated revenues of $631 million, decreasing 0.7% year over year. Our estimate for segmental revenues was $650.7 million. Welding revenues were $476 million, down 3.4% year over year. Our estimate for segmental revenues was $497.7 million.
Construction Products’ revenues were down 7.3% year over year to $488 million. Our estimate for segmental revenues was $505.4 million. Revenues of $440 million from Specialty Products reflected an increase of 3.4% year over year. Our estimate for segmental revenues was $401.7 million. Polymers & Fluids’ revenues of $432 million declined 3.3% year over year. Our estimate for segmental revenues was $447.3 million.
Margin Profile
Illinois Tool’s cost of sales decreased 8.4% year over year to $2.1 billion. Selling, administrative, and research and development expenses decreased 0.2% year over yer to $676 million. The operating margin was 28.4%, up 420 basis points (bps) from the year-ago quarter. Enterprise initiatives contributed 140 bps to the operating margin.
Balance Sheet and Cash Flow
At the end of the first quarter, Illinois Tool had cash and equivalents of $959 million compared with $1.1 billion at the end of December 2023. Long-term debt was $6.25 billion compared with $6.33 billion at the end of December 2023.
In the first three months of 2024, Illinois Tool, carrying a current Zacks Rank #3 (Hold), generated net cash of $589 million from operating activities, reflecting a decline of 19.1% from the year-ago reported number. Capital spending on the purchase of plant and equipment was $95 million, down 15.9% year over year. Free cash flow of $494 million decreased 19.7% year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2024 Guidance
Illinois Tool expects earnings of $10.30-$10.70 per share for 2024. Organic revenues are expected to increase 1-3%. The company anticipates total revenues to increase 1-3% from the year-ago reported figure. Operating margin is expected to be 26-27%. Enterprise initiatives are expected to contribute more than 100 bps to the operating margin.
Illinois Tool projects free cash flow to be more than 100% of net income in 2024. The company expects to repurchase about $1.5 billion worth of shares. The tax rate is expected to be 24-24.5%.
Performance of Other Industrial Companies
IDEX Corporation’s (IEX - Free Report) first-quarter 2024 adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.
In the quarter under review, IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million. The top line also decreased 5.3% year over year.
A. O. Smith Corporation’s (AOS - Free Report) first-quarter 2024 adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
W.W. Grainger, Inc. (GWW - Free Report) has reported earnings per share of $9.62 in first-quarter 2024, beating the Zacks Consensus Estimate of $9.58. The bottom line improved 0.1% year over year.
Grainger’s quarterly revenues rose 3.5% year over year to $4.24 billion. The top line missed the consensus estimate of $4.27 billion.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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