Illinois Tool Works (ITW) Q4 2024 earnings summary

Executive summary

• Achieved record GAAP EPS of $11.71 for 2024, up 20% year-over-year, with adjusted EPS of $10.15 excluding one-time items; Q4 GAAP EPS was $2.54, up 7%.

• Operating margin reached a record 26.8% for 2024, up 170 bps, with Q4 margin at 26.2%, up 140 bps; enterprise initiatives contributed 120–130 bps.

• Free cash flow reached a record $1B in Q4, up 10%, with 133% conversion to net income; full-year free cash flow was $2.84B.

• Returned $3.2B to shareholders in 2024, including $1.5B in share repurchases and a 7% dividend increase for the 61st consecutive year.

• Strong progress on innovation, with patent filings up 18% and $0.8B invested in core businesses.

Financial highlights

• 2024 revenue was $16.1B, down 1.3% year-over-year; organic revenue declined 0.7%, but Q4 organic growth was positive 0.4% excluding PLS.

• Q4 operating income was $1.03B; full-year operating income grew 6% to $4.26B.

• Q4 net income was $750M; full-year net income was $3.49B.

• Q4 effective tax rate was 23.7%; full-year effective tax rate was 21.1%, or 23.8% excluding discrete tax benefits.

• One-time items in 2024 included $1.26 EPS from the Wilsonart sale and $0.30 EPS from a LIFO accounting change.

Outlook and guidance

• 2025 GAAP EPS guidance is $10.15–$10.55, including a $0.30 FX headwind and $0.15–$0.20 from restructuring and higher taxes.

• Organic growth projected at 0–2% (1–3% ex-PLS); total revenue expected at $15.4–$15.7B, down 1–3% due to FX.

• Operating margin guidance is 26.5–27.5%, with all segments projecting margin improvement.

• Free cash flow conversion expected above 100% for 2025; $1.5B planned for share repurchases.

• Effective tax rate projected at 24–24.5%.