- Revenue of $4.02 billion, an increase of 5%
- Operating margin of 25.4%, an increase of 60 bps, as Enterprise Initiatives contributed 120 bps
- GAAP EPS of $2.66, an increase of 12%
- Full Year 2026 GAAP EPS guidance raised by $0.10 to a range of $11.10 to $11.50
GLENVIEW, Ill., April 30, 2026 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its first quarter 2026 results and raised full year 2026 GAAP EPS guidance.
“ITW delivered a solid start to the year, marked by five percent revenue growth, margin expansion of 60 basis points to 25.4 percent, and a 12 percent increase in GAAP earnings per share to $2.66. Positive demand trends continued in our capex-related segments, led by Welding and Test & Measurement and Electronics, which delivered organic growth of six percent and five percent, respectively, this quarter,” said Christopher A. O’Herlihy, President and Chief Executive Officer.
“As we move forward, ITW’s unique and resilient business model and ‘Do What We Say’ execution ensure that we are primed to deliver robust financial performance in any environment. With a disciplined focus on our organic growth and enterprise initiatives, we expect to continue to outperform our end markets in 2026, while further increasing profitability and margins,” O’Herlihy concluded.
First Quarter 2026 Results
First quarter revenue of $4.02 billion increased by 4.6 percent. Organic revenue growth was 0.4 percent. Foreign currency translation increased revenue by 3.9 percent and an acquisition added 0.3 percent.
GAAP EPS grew 12 percent to $2.66, while operating income increased seven percent to $1.02 billion. Operating margin expanded by 60 basis points to 25.4 percent, driven by a 120-basis point contribution from enterprise initiatives. Operating cash flow was $623 million, and free cash flow was $528 million, a six percent increase representing a 69 percent conversion of net income, in line with seasonal expectations. During the quarter, the company returned capital to shareholders through the repurchase of $375 million of its own shares. The effective tax rate for the quarter was 20.6 percent.
2026 Guidance
ITW is raising its full year 2026 GAAP EPS guidance by $0.10 to a range of $11.10 to $11.50 per share, representing eight percent growth at the mid-point. Based on current demand levels and prevailing foreign exchange rates, the company continues to project revenue growth of two to four percent and organic growth of one to three percent.
For the full year, all seven segments are expected to deliver both positive organic growth and operating margin expansion. Operating margin is projected to reach a range of 26.5 to 27.5 percent, a year-over-year improvement of approximately 100 basis points, driven by an approximate 100-basis point contribution from enterprise initiatives.
Free cash flow is projected to exceed 100 percent of net income, and the company expects to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is in the range of 23 to 24 percent.
Non-GAAP Measures
This earnings release contains certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the attached supplemental reconciliation schedule. The estimated guidance of free cash flow to net income conversion rate is based on assumptions that are difficult to predict, and estimated guidance for the most directly comparable GAAP measure and a reconciliation of this forward-looking estimate to its most directly comparable GAAP estimate have been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of reliable forward-looking cash flow information. For the same reasons, the company is unable to address the potential significance of the unavailable information, which could be material to future results.
Forward-looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding global supply chain challenges, expected impact of inflation including raw material inflation and rising interest rates, the potential impact of tariffs, the company’s projected pricing actions, the impact of enterprise initiatives, future financial and operating performance, free cash flow and free cash flow to net income conversion rate, organic and total revenue, operating and incremental margin, price/cost impact, statements regarding diluted income per share, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates, expected timing and amount of share repurchases, end market economic and regulatory conditions, the impact of recent or potential acquisitions and/or divestitures, and the company’s 2026 guidance. These statements are subject to certain risks, uncertainties, assumptions, 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 2025 and subsequent reports filed with the SEC.
About Illinois Tool Works
ITW (NYSE: ITW) is a Fortune 300 global multi-industrial manufacturing leader with revenue of $16 billion in 2025. The company’s seven industry-leading segments leverage the unique ITW Business Model to drive solid growth with best-in-class margins and returns in markets where highly innovative, customer-focused solutions are required. ITW’s approximately 43,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com.
Investor Relations & Media Contact:
Erin Linnihan
Tel: 224.661.7431
[email protected] | [email protected]
STATEMENT OF INCOME (UNAUDITED)
Three Months Ended March 31,In millions except per share amounts 2026 2025 Operating Revenue$4,016 $3,839 Cost of revenue 2,256 2,161 Selling, administrative, and research and development expenses 722 706 Amortization and impairment of intangible assets 18 21 Operating Income 1,020 951 Interest expense (73) (68)Other income (expense) 20 12 Income Before Taxes 967 895 Income Taxes 199 195 Net Income$768 $700 Net Income Per Share: Basic$2.66 $2.39 Diluted$2.66 $2.38 Cash Dividends Per Share: Paid$1.61 $1.50 Declared$1.61 $1.50 Shares of Common Stock Outstanding During the Period: Average 288.3 293.6 Average assuming dilution 289.1 294.5
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In millionsMarch 31, 2026 December 31, 2025Assets Current Assets: Cash and equivalents$827 $851 Trade receivables 3,380 3,227 Inventories 1,726 1,659 Prepaid expenses and other current assets 402 463 Total current assets 6,335 6,200 Net plant and equipment 2,230 2,230 Goodwill 5,083 5,098 Intangible assets 574 591 Deferred income taxes 505 519 Other assets 1,537 1,510 $16,264 $16,148 Liabilities and Stockholders' Equity Current Liabilities: Short-term debt$2,545 $2,286 Accounts payable 609 522 Accrued expenses 1,534 1,636 Cash dividends payable 463 465 Income taxes payable 180 217 Total current liabilities 5,331 5,126 Noncurrent Liabilities: Long-term debt 6,603 6,683 Deferred income taxes 158 154 Other liabilities 942 959 Total noncurrent liabilities 7,703 7,796 Stockholders' Equity: Common stock 6 6 Additional paid-in-capital 1,817 1,771 Retained earnings 30,454 30,150 Common stock held in treasury (27,246) (26,875)Accumulated other comprehensive income (loss) (1,802) (1,827)Noncontrolling interest 1 1 Total stockholders' equity 3,230 3,226 $16,264 $16,148
SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2026Dollars in millionsTotal RevenueOperating IncomeOperating MarginAutomotive OEM$820 $173 21.0%Food Equipment 637 157 24.7%Test & Measurement and Electronics 715 164 22.9%Welding 507 163 32.1%Polymers & Fluids 452 126 28.0%Construction Products 458 135 29.4%Specialty Products 431 135 31.3%Intersegment (4) — —%Total Segments 4,016 1,053 26.2%Unallocated — (33)—%Total Company$4,016 $1,020 25.4%
SEGMENT DATA (UNAUDITED)
Q1 2026 vs. Q1 2025 Favorable/(Unfavorable)Operating RevenueAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITWOrganic(0.9)%(2.8)%4.6%6.0%1.7%(1.3)%(4.7)%0.4%Acquisitions/
Divestitures—%—%1.8%—%—%—%—%0.3%Translation5.3%4.5%3.2%1.3%3.7%4.7%3.7%3.9%Operating Revenue4.4%1.7%9.6%7.3%5.4%3.4%(1.0)%4.6%
Divestitures——(60) bps————(10) bpsRestructuring/Other80 bps10 bps30 bps(30) bps—10 bps50 bps30 bpsTotal Operating Margin Change170 bps(180) bps150 bps(40) bps150 bps20 bps40 bps60 bps Total Operating Margin % *21.0%24.7%22.9%32.1%28.0%29.4%31.3%25.4% * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets30 bps10 bps140 bps10 bps100 bps10 bps20 bps50 bps **** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.05) on GAAP earnings per share for the first quarter of 2026.
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) Three Months Ended March 31,Dollars in millions 2026 2025 Numerator: Net Income$768 $700 Discrete tax benefit related to the first quarter 2026 (34) — Discrete tax benefit related to the first quarter 2025 — (21)Interest expense, net of tax (1) 56 52 Other (income) expense, net of tax (1) (15) (9)Operating income after taxes$775 $722 Denominator: Invested capital: Cash and equivalents$827 $873 Trade receivables 3,380 3,153 Inventories 1,726 1,663 Net plant and equipment 2,230 2,085 Goodwill and intangible assets 5,657 5,475 Accounts payable and accrued expenses (2,143) (2,071)Debt (9,148) (8,263)Other, net 701 327 Total net assets (stockholders' equity) 3,230 3,242 Cash and equivalents (827) (873)Debt 9,148 8,263 Total invested capital$11,551 $10,632 Average invested capital (2)$11,447 $10,432 Net income to average invested capital (3) 26.8% 26.9%After-tax return on average invested capital (3) 27.1% 27.7%
(1) Effective tax rate used for interest expense and other (income) expense for the three months ended March 31, 2026 and 2025 was 24.1% and 24.0%, respectively.
(2) Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of the periods presented.
(3) Returns for the three months ended March 31, 2026 and 2025 were converted to an annual rate by multiplying the calculated return by 4.
A reconciliation of the tax rate for the three month period ended March 31, 2026, excluding the first quarter 2026 discrete tax benefit of $34 million primarily related to the resolution of a U.S. tax audit, is as follows:
Three Months Ended March 31, 2026Dollars in millionsIncome Taxes Tax RateAs reported$199 20.6%Discrete tax benefit related to the first quarter 2026 34 3.5%As adjusted$233 24.1%A reconciliation of the tax rate for the three month period ended March 31, 2025, excluding the first quarter 2025 discrete tax benefit of $21 million related to the reversal of a valuation allowance on net operating loss carryforwards, is as follows:
Three Months Ended March 31, 2025Dollars in millionsIncome Taxes Tax RateAs reported$195 21.7%Discrete tax benefit related to the first quarter 2025 21 2.3%As adjusted$216 24.0%Twelve Months EndedDollars in millionsDecember 31, 2025Numerator: Net income$3,066 Net discrete tax benefit related to the third quarter 2025 (27)Discrete tax benefit related to the first quarter 2025 (21)Interest expense, net of tax (1) 222 Other (income) expense, net of tax (1) (32)Operating income after taxes$3,208 Denominator: Invested capital: Cash and equivalents$851 Trade receivables 3,227 Inventories 1,659 Net plant and equipment 2,230 Goodwill and intangible assets 5,689 Accounts payable and accrued expenses (2,158)Debt (8,969)Other, net 697 Total net assets (stockholders' equity) 3,226 Cash and equivalents (851)Debt 8,969 Total invested capital$11,344 Average invested capital (2)$10,959 Net income to average invested capital 28.0%After-tax return on average invested capital 29.3%
(1) Effective tax rate used for interest expense and other (income) expense for the year ended December 31, 2025 was 23.9%.
(2) Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within the period presented.
A reconciliation of the 2025 effective tax rate, excluding the third quarter 2025 net discrete tax benefit of $27 million, which included a favorable discrete tax benefit of $43 million related to the estimated U.S. federal tax liability for 2024, partially offset by a $16 million discrete tax expense related primarily to the resolution of a foreign tax audit, and excluding the first quarter 2025 discrete tax benefit of $21 million related to the reversal of a valuation allowance on net operating loss carryforwards, is as follows:
Twelve Months Ended December 31, 2025Dollars in millionsIncome Taxes Tax RateAs reported$900 22.7%Net discrete tax benefit related to the third quarter 2025 27 0.7%Discrete tax benefit related to the first quarter 2025 21 0.5%As adjusted$948 23.9%FREE CASH FLOW (UNAUDITED)
Three Months Ended March 31,Dollars in millions 2026 2025 Net cash provided by operating activities$623 $592 Less: Additions to plant and equipment (95) (96)Free cash flow$528 $496 Net income$768 $700 Net cash provided by operating activities to net income conversion rate 81% 85%Free cash flow to net income conversion rate 69% 71%