ITW Reports Fourth Quarter 2013 Financial Results

GLENVIEW, Ill., Jan. 28, 2014

Key highlights for the 2013 fourth quarter financial results versus the prior-year period include:

• Total Company revenues were $3.55 billion while operating income totaled $628 million. Excluding the impact of Decorative Surfaces 2012 results, Company operating revenues increased 4.8 percent and operating income grew 22.7 percent. Organic revenues increased 2.8 percent, with international growing 3.3 percent and North America growing 2.6 percent. Internationally, Europe showed further stabilization as organic revenues grew 1.8 percent and Asia Pacific grew 4.1 percent.
• Fourth quarter 2013 EPS of $0.92 was 43 percent higher than the prior-year period.
• Fourth quarter operating margins of 17.7 percent were 260 basis points higher, with enterprise initiatives contributing 110 basis points.
• Fourth quarter free operating cash flow was at 147 percent of net income.
• Fourth quarter segment highlights include:
• Automotive OEM grew organic revenues 11.2 percent as increasing product penetration with key global customers resulted in revenue growth outperforming worldwide auto builds by 5 percentage points. Operating margins improved 160 basis points to 20.4 percent.
• Food Equipment's organic revenues grew 4.2 percent largely due to solid equipment and service growth in North America. Operating margins improved 250 basis points to 19.5 percent.

"We were pleased with the Company's performance in the quarter and for the year," said Scott Santi, president and chief executive officer.  "In the quarter, we continued to deliver meaningful improvement in our earnings per share, operating margin, and return on invested capital metrics.  In addition, we saw modest improvement in the demand environment in a number of our key end markets which drove a noticeable sequential improvement in the Company's organic growth rate in the quarter."

"For full-year 2013, we grew earnings per share 13 percent, expanded operating margins by 100 basis points to 17.8 percent, improved after-tax return on invested capital by 180 basis points to 16.3 percent, and returned $2.9 billion to shareholders in the form of dividends and share repurchases.  As a result of the ongoing execution of our enterprise strategy initiatives, the Company is well positioned to deliver another year of strong progress towards our enterprise strategy performance goals across a range of macro-economic conditions in 2014."

Comparisons to the Company's 2012 financial results exclude the impacts of the divested Decorative Surfaces segment.  Reconciliations of GAAP to non-GAAP results are included in the attached exhibits.

The Company is reiterating its full-year 2014 earnings forecast that it presented in December at its annual investor and analyst day in New York City. The Company continues to expect full-year 2014 EPS to be in a range of $4.30 to $4.50. This EPS range assumes a full-year total revenue growth range of 2 percent to 4 percent and full-year organic growth of 2 percent to 3 percent. For the 2014 first quarter, the Company is forecasting EPS to be in a range of $0.93 to $1.01 and expects total revenue growth in a range of 3 percent to 6 percent.

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding total revenue growth, organic revenue growth, operating margin improvement and diluted income per share from continuing operations. These statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially from those anticipated. Such factors include those contained in ITW's 2012 Form 10-K and Form 10-Q for the quarter ended September 30, 2013.