Why Manufacturing Company Illinois Tool Works Shares Are Down Today

Illinois Tool Works Inc ITW shares are trading lower after the company reported mixed fourth-quarter financial results.

Revenue remained flat Y/Y at $3.98 billion, missing the consensus of $4.007 billion. Adjusted EPS totaled $2.42, beating the consensus of $2.41.

The operating income increased to $988 million from $986 million a year ago, and the operating margin came in at 24.8%, as enterprise initiatives contributed 150 bps.

ITW’s operating cash flow was $1 billion, and free cash flow was $908 million, an increase of 39%, with a conversion rate to net income of 127%. During the quarter, the company repurchased $375 million worth of shares.

FY24 Guidance: Illinois Tool Works expects GAAP EPS of $10.00-$10.40 (consensus: $10.18).

The company is projecting total revenue growth of 2%-4% with organic growth of 1%-3% and operating margin of 25.5% to 26.5%, with enterprise initiatives contributing about 100 basis points.

Christopher A. O’Herlihy, President and Chief Executive Officer, said, “2023 marked another year of strong operational execution and financial performance, as ITW delivered organic growth of two percent, expanded operating margin by 130 basis points to 25.1 percent, grew operating income seven percent to $4 billion, and increased cash flow by more than 50 percent.”

Price Action: ITW shares were down 2.52% at $254.32 on the last check Thursday.