Illinois Tool Works (ITW) Q2 2025 earnings summary

Executive summary

• Achieved record Q2 2025 financial performance with GAAP EPS of $2.58, up 2% year-over-year, and operating margin of 26.3%, driven by enterprise initiatives and strategic execution amid a volatile macro environment.

• Q2 revenue reached $4.1 billion, up 1% year-over-year, with flat organic growth and a 1% positive FX impact; sequential revenue grew 6%.

• Free cash flow was $449 million in Q2, with a 59% conversion rate; share repurchases totaled $375 million in Q2 and $750 million YTD.

• Diluted EPS for Q2 was $2.58 (up 1.6% YoY); YTD EPS was $4.95 (down 6.1% YoY, or down 0.6% excluding the LIFO change).

• Strategic initiatives and disciplined execution contributed to margin expansion and market share gains, especially in China and the automotive segment.

Financial highlights

• Q2 2025 operating revenue: $4.1B (up 1% YoY); operating income was $1.1 billion; operating margin at 26.3%.

• Free cash flow was $449 million, with a 59% conversion rate; operating cash flow was $550 million.

• Q2 2025 net income: $755 million; dividends per share increased to $1.50.

• Sequentially from Q1 to Q2, revenue grew 6%, operating income improved 12%, and margin expanded by 150 bps.

• After-tax ROIC for Q2 2025 was 27.4%; YTD: 28.5%.

Outlook and guidance

• Full-year 2025 GAAP EPS guidance raised by $0.10 to $10.35–$10.55; organic growth projected at 0–2%, total revenue up 1–3%.

• Operating margin expected between 26–27% for 2025; after-tax ROIC expected at 31%+.

• Free cash flow conversion expected to exceed 100% of net income; $1.5 billion in share repurchases planned.

• All segments expected to grow revenue and improve margins in H2; full-year EPS cadence: 47% in H1, 53% in H2.

• Effective tax rate projected at approximately 24%.