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 capex-related segments and favorable foreign currency.

• 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%.

• Free cash flow rose 6% to $528 million, supporting $375 million in share repurchases and higher dividends.

• Capex-related segments, especially Welding and Test & Measurement and Electronics, led organic growth, while consumer-facing businesses outperformed their sectors despite challenging markets.

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

Financial highlights

• Q1 revenue grew 4.6% to $4.02 billion, with organic growth of 0.4% and 3.9% from FX; operating income grew 7.2% to $1.02 billion.

• Free cash flow conversion was 69% in Q1, expected to exceed 100% for the year; $375 million in share repurchases completed.

• Effective tax rate for Q1 was 20.6%, including a $34 million discrete tax benefit from a U.S. tax audit resolution.

• After-tax ROIC was 27.1%–29.3% in Q1, expected to exceed 30% for the full year.

• Cash and equivalents at quarter-end were $827 million.

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 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%.