Illinois Tool Works : Q4 2015 Illinois Tool Works Inc. Earnings Conference Call Presentation
January 27, 2016 at 08:19 am EST
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Fourth Quarter 2015 Conference Call
Scott Santi, Chairman & CEO
Michael M. Larsen, Senior Vice President & CFO
Aaron H. Hoffman, Vice President, Investor Relations
January 27, 2016
Forward Looking Statements
Safe Harbor Statement
This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the expected impact of product line simplification activities, future financial performance, operating performance, growth in free cash flow, organic and total revenue growth, operating margin growth, growth in diluted income per share from continuing operations, restructuring expenses and related benefits, tax rates, exchange rates, timing and amount of share repurchases, return on invested capital, end market economic conditions, and the company's related 2016 guidance. These statements are subject to certain risks, uncertainties, and other factors which could cause actual results to differ materially from those anticipated. Important risks that could cause actual results to differ materially from the company's expectations include those that are detailed in ITW's Form 10-K for 2014 and Form 10-Q for the third quarter of 2015.
Non-GAAP Measures
The company uses certain non-GAAP measures in discussing the company's performance. The reconciliation of those measures to the most comparable GAAP measures are detailed in ITW's press release for the fourth quarter of 2015, which is available at www.itw.com, together with this presentation.
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2015 Highlights
2015 financial results driven by solid execution of ITW's Enterprise Strategy
$5.13 EPS +10%, record 21.4% operating margin +150 bps, record 20.4% ROIC* +140 bps
Invested ~$560 million in growth and productivity
110 basis points of margin improvement from "self-help" Enterprise Initiatives
Solid progress in our "pivot to growth" … 60% of ITW's revenues achieved "ready to grow" status and 45% grew at 6% in 2015
Returned more than $2.7 billion to shareholders through dividends and share repurchases
Remain on-track to deliver on our end of 2017 Enterprise performance goals:
Operating margin 23%+
ROIC 20%+
Organic growth of 200 bps or more above global GDP
Continuing to make strong progress in positioning ITW for solid growth with best-in-class margins and returns
See ITW's fourth quarter 2015 press release for the reconciliation from GAAP to non-GAAP measurements. 3
Q4 2015 Financial Summary
Q4 2015 Actuals
Highlights
EPS
Total
Revenue
$1.18
$3.5B
$1.23
$3.3B
EPS +11%
ex. currency
$1.23 EPS +4%; +11% excluding $(0.08) of currency impact
Q4 record operating margin of 20.7% as Enterprise Initiatives contribute 110 basis points
Organic revenue (0.6)% includes expected (1) percentage point impact from PLS
Underlying demand trends in industrial capex businesses
(Welding, Test & Measurement) remained stable
Operating
Q4'14 Q4'15
Record Q4 adjusted after-tax ROIC of 20.1%*
Margin ROIC*
19.6%
18.6%
20.7%
20.1%
+110 bps
+150 bps
Strong free cash flow of $628 million … 140% conversion*
Stable demand and solid execution drives strong Q4 performance
* See ITW's fourth quarter 2015 press release for the reconciliation from GAAP to non-GAAP measurements. 4
Illinois Tool Works Inc. issued this content on 27 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 27 January 2016 13:18:52 UTC
Original Document: http://investor.itw.com/~/media/Files/I/ITW-IR/documents/events/q4-2015-conference-call-deck-final.pdf
Illinois Tool Works Inc. is a diversified industrial group organized around 7 families of products:
- automotive equipment (20.1% of net sales). Besides, the group proposes products for maintenance and refurbishment (coatings, sealants, shutters, etc.);
- electronic equipment (17.5%): primarily equipment of microelectronic assembly. The group also provides test and measurement equipment and software;
- equipment for industrial kitchens (16.3%): cookers, dishwasher, ovens, refrigerators, cupboards, systems of aeration, etc.;
- construction systems and materials (12.6%): powder and gas nailing, perforators and consumables (fuses, chisels, pads, plugs, etc.) intended for applications on wood, steel and concrete;
- polymers, coatings, resins, adhesives and lubricants (11.2%);
- metallurgical equipment (10.5%): arc welding equipment, blowtorches, welding accessories, etc.
- specialty products (11.3%): industrial packaging systems and materials, products coding and marking equipment, etc.
Net sales are distributed geographically as follows: the United States (47.1%), North America (6.9%), Europe/Middle East/Africa (25.8%), Asia/Pacific (18.3%) and South America (1.9%).
ILLINOIS TOOL WORKS INC. 
