We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Illinois Tool Works (ITW) Q1 Earnings and Revenues Top Estimates
Read MoreHide Full Article
Illinois Tool Works Inc. (ITW - Free Report) ) reported better-than-expected first-quarter 2022 results. Its earnings surpassed estimates by 1.9% while sales beat the same by 4.6%.
The industrial tool maker’s adjusted earnings (excluding a 5-cent impact of unfavorable foreign currency translation) in the quarter were $2.11, surpassing the Zacks Consensus Estimate of $2.07. Earnings were flat with the year-ago figure.
Revenue Details
Illinois Tool generated revenues of $3,939 million in the reported quarter, reflecting growth of 11.2% from the year-ago figure. The top-line results benefited from a 10.6% increase in organic sales and a 2.8% contribution from the MTS acquisition. Foreign currency movements had an adverse impact of 2.2%.
Except for the Automotive OEM segment, sales increase in other segments supported the quarterly sales rise of 11.2%. Supply-chain restrictions had adverse impacts on auto production and hence, affected Automotive OEM in the quarter.
The top line surpassed the Zacks Consensus Estimate of $3,767 million.
Illinois Tool reports revenues under the segments discussed below:
Test & Measurement and Electronics’ revenues in the first quarter increased 8% year over year to $685 million. Revenues from Automotive OEM (Original Equipment Manufacturer) declined 1% to $760 million. Food Equipment generated revenues of $ 566 million, increasing 28% year over year.
Welding revenues were $450 million, growing 13% year over year. Construction Products’ revenues were up 21% to $551 million. Revenues of $452 million from Specialty Products reflected an increase of 1%. Polymers & Fluids’ revenues of $481 million grew 13% year over year.
Illinois Tool Works Inc. Price, Consensus and EPS Surprise
In the reported quarter, Illinois Tool’s cost of sales increased 15.6% year over year to $2,357 million. It represented 59.8% of the quarter’s revenues compared with 57.5% in the year-ago quarter. Selling, administrative, and research and development expenses expanded 15.2% to $652 million. The same represented 16.6% of first-quarter revenues compared with 16% in the year-ago quarter.
The operating margin was 22.7% in the quarter, down 280 basis points (bps) year over year. Enterprise initiatives contributed 90 bps to the operating margin, while price/cost had an adverse impact of 250 bps. Interest expenses in the quarter decreased 7.7% year over year to $48 million. The effective tax rate in the quarter was 23.1%.
Balance Sheet and Cash Flow
Exiting the first quarter, Illinois Tool had cash and cash equivalents of $1,296 million, down 15.1% from $1,527 million recorded at the end of the last reported quarter. Long-term debt decreased 1.3% sequentially to $6,817 million.
In the first three months of 2022, Illinois Tool generated net cash of $323 million from operating activities, reflecting a decline of 47% from the previous-year quarter’s figure. Capital spending on the purchase of plant and equipment was $74 million, up 8.8% year over year. Free cash flow was $249 million, reflecting a year-over-year decline of 54%.
Outlook
For 2022, Illinois Tool expects organic revenue growth of 7-10% and an 8.5-11.5% rise in total revenues from the respective year-ago actuals.
Foreign currency translation is expected to adversely impact sales by 1.5%, while the MTS acquisition is likely to boost the top line by 3%.
Earnings (GAAP) are expected to be $9.00-$9.40 per share, suggesting an increase of 11-16% (excluding the impact of one-time favorable tax items in 2021) from the previous year’s reported number.
The operating margin is expected to be 24-25%. Enterprise initiatives are likely to contribute 100 bps to the operating margin. However, dilution from price/costs and MTS buyouts are predicted to lower the margin 100 bps and 50 bps, respectively.
In the year, Illinois Tool intends to repurchase $1.5 billion worth of shares. The tax rate (effective) is expected to be 23-24%.
Zacks Rank & Stocks to Consider
With a market capitalization of $23.6 billion, ITW currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies from the industrial products sector are discussed below.
AIT’s earnings estimates have increased 5.4% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have increased 3.7% in the past three months.
Roper Technologies, Inc. (ROP - Free Report) ) presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 2%, on average.
In the past 60 days, ROP’s earnings estimates have increased 1.1% for 2022. The stock has decreased 0.4% in the past three months.
Ferguson plc (FERG - Free Report) ) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, the stock’s earnings estimates have increased 6.5% for fiscal 2022 (ending July 2022). The same has declined 21% in the past three months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Illinois Tool Works (ITW) Q1 Earnings and Revenues Top Estimates
Illinois Tool Works Inc. (ITW - Free Report) ) reported better-than-expected first-quarter 2022 results. Its earnings surpassed estimates by 1.9% while sales beat the same by 4.6%.
The industrial tool maker’s adjusted earnings (excluding a 5-cent impact of unfavorable foreign currency translation) in the quarter were $2.11, surpassing the Zacks Consensus Estimate of $2.07. Earnings were flat with the year-ago figure.
Revenue Details
Illinois Tool generated revenues of $3,939 million in the reported quarter, reflecting growth of 11.2% from the year-ago figure. The top-line results benefited from a 10.6% increase in organic sales and a 2.8% contribution from the MTS acquisition. Foreign currency movements had an adverse impact of 2.2%.
Except for the Automotive OEM segment, sales increase in other segments supported the quarterly sales rise of 11.2%. Supply-chain restrictions had adverse impacts on auto production and hence, affected Automotive OEM in the quarter.
The top line surpassed the Zacks Consensus Estimate of $3,767 million.
Illinois Tool reports revenues under the segments discussed below:
Test & Measurement and Electronics’ revenues in the first quarter increased 8% year over year to $685 million. Revenues from Automotive OEM (Original Equipment Manufacturer) declined 1% to $760 million. Food Equipment generated revenues of $ 566 million, increasing 28% year over year.
Welding revenues were $450 million, growing 13% year over year. Construction Products’ revenues were up 21% to $551 million. Revenues of $452 million from Specialty Products reflected an increase of 1%. Polymers & Fluids’ revenues of $481 million grew 13% year over year.
Illinois Tool Works Inc. Price, Consensus and EPS Surprise
Illinois Tool Works Inc. price-consensus-eps-surprise-chart | Illinois Tool Works Inc. Quote
Margin Profile
In the reported quarter, Illinois Tool’s cost of sales increased 15.6% year over year to $2,357 million. It represented 59.8% of the quarter’s revenues compared with 57.5% in the year-ago quarter. Selling, administrative, and research and development expenses expanded 15.2% to $652 million. The same represented 16.6% of first-quarter revenues compared with 16% in the year-ago quarter.
The operating margin was 22.7% in the quarter, down 280 basis points (bps) year over year. Enterprise initiatives contributed 90 bps to the operating margin, while price/cost had an adverse impact of 250 bps. Interest expenses in the quarter decreased 7.7% year over year to $48 million. The effective tax rate in the quarter was 23.1%.
Balance Sheet and Cash Flow
Exiting the first quarter, Illinois Tool had cash and cash equivalents of $1,296 million, down 15.1% from $1,527 million recorded at the end of the last reported quarter. Long-term debt decreased 1.3% sequentially to $6,817 million.
In the first three months of 2022, Illinois Tool generated net cash of $323 million from operating activities, reflecting a decline of 47% from the previous-year quarter’s figure. Capital spending on the purchase of plant and equipment was $74 million, up 8.8% year over year. Free cash flow was $249 million, reflecting a year-over-year decline of 54%.
Outlook
For 2022, Illinois Tool expects organic revenue growth of 7-10% and an 8.5-11.5% rise in total revenues from the respective year-ago actuals.
Foreign currency translation is expected to adversely impact sales by 1.5%, while the MTS acquisition is likely to boost the top line by 3%.
Earnings (GAAP) are expected to be $9.00-$9.40 per share, suggesting an increase of 11-16% (excluding the impact of one-time favorable tax items in 2021) from the previous year’s reported number.
The operating margin is expected to be 24-25%. Enterprise initiatives are likely to contribute 100 bps to the operating margin. However, dilution from price/costs and MTS buyouts are predicted to lower the margin 100 bps and 50 bps, respectively.
In the year, Illinois Tool intends to repurchase $1.5 billion worth of shares. The tax rate (effective) is expected to be 23-24%.
Zacks Rank & Stocks to Consider
With a market capitalization of $23.6 billion, ITW currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies from the industrial products sector are discussed below.
Applied Industrial Technologies, Inc. (AIT - Free Report) ) presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AIT’s earnings estimates have increased 5.4% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have increased 3.7% in the past three months.
Roper Technologies, Inc. (ROP - Free Report) ) presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 2%, on average.
In the past 60 days, ROP’s earnings estimates have increased 1.1% for 2022. The stock has decreased 0.4% in the past three months.
Ferguson plc (FERG - Free Report) ) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, the stock’s earnings estimates have increased 6.5% for fiscal 2022 (ending July 2022). The same has declined 21% in the past three months.