Stephen Volkmann's questions to Illinois Tool Works Inc (ITW) leadership • Q2 2025
Question
Stephen Volkmann from Jefferies asked about the implied volume within the organic growth guide and the impact of enterprise initiatives on incrementals. He also sought details on the margin improvement in the Construction segment.
Answer
Senior VP & CFO Michael Larsen clarified that core incremental margins are currently running significantly higher than the historical 35-40%, as demonstrated by the Automotive segment's performance. Regarding the Construction segment's remarkable 140 bps margin improvement despite a revenue decline, Larsen attributed it primarily to enterprise initiatives, which contributed 160 basis points. President & CEO Chris O'Herlihy added that strong brands and technology also underpin this resilience.