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    ILLINOIS TOOL WORKS (ITW)

    Q3 2023 Earnings Summary

    Reported on Jan 4, 2025 (Before Market Open)
    Pre-Earnings Price$222.45Last close (Oct 23, 2023)
    Post-Earnings Price$225.51Open (Oct 24, 2023)
    Price Change
    $3.06(+1.38%)
    • Strong Margin Performance Driven by Enterprise Initiatives: Despite low volume growth, ITW achieved record quarterly margin performance, with significant contributions from their enterprise initiatives and favorable price/cost impact. This positions the company for even greater margin improvement when volume leverage returns, with expected incrementals of 35% to 40%.
    • Continued Market Share Gains and Competitive Advantage: ITW continues to gain market share across its businesses due to its strong customer-facing metrics, value-added products, and competitive advantages derived from its business model. Their margins are typically 2 to 3 times higher than competitors, highlighting their strong performance relative to peers.
    • Successful Acquisition and Integration of MTS Systems: The acquisition of MTS has been highly successful, with the business delivering double-digit top-line growth in Q3 and margins improving from approximately 7% to mid-teens for the full year. This demonstrates ITW's effective integration and implementation of its business model.
    • Weak demand in the Electronics and Semiconductor segments persists, with recovery now deferred until sometime next year.
    • Inventory levels remain above normal, with normalization expected to take until early to mid next year, potentially dragging on organic growth by 1% to 1.5% over the next few quarters.
    • The ongoing auto strike is expected to reduce Q4 earnings by $0.12 per share, assuming the strike continues through year-end, adding uncertainty to the company's outlook.

    Research analysts covering ILLINOIS TOOL WORKS.