Illinois Tool Works 8-K
PositiveEarningsGuidance raised
Capex demand accelerates in Test & Measurement and Electronics and Welding; FY2026 GAAP EPS guidance raised to $11.45–$11.55
Filed 2026-10-27 09:20 ET
- 2.02 Results of Operations
- 9.01 Financial Statements and Exhibits
Summary
Q3 2026 results with raised FY2026 guidance. Revenue growth came from accelerating demand in capex-related Test & Measurement and Electronics and Welding, along with continued strength in Polymers & Fluids. ITW raised its full-year EPS outlook and cited its goal of more than 3% Customer-Back Innovation yield as part of its plan for above-market organic growth and further margin expansion.
Key Figures
| Metric | Q3 2026 | 9M 2026 |
|---|---|---|
| Revenue | $4.24B, +4.4% Y/Y | $12.6B, +5.0% Y/Y |
| Operating income | $1.18B, +5.9% Y/Y | $3.34B, +6.8% Y/Y |
| Operating margin | 27.8%, vs 27.4% | 26.6%, vs 26.2% |
| Net income | $855M, +4.1% Y/Y | $2.44B, +7.1% Y/Y |
| Diluted GAAP EPS | $3.00, +6.8% Y/Y | $8.49, +9.3% Y/Y |
| Operating cash flow | $953M, -6.7% Y/Y | $2.30B, +6.3% Y/Y |
| Free cash flow | $851M, -5.9% Y/Y | $2.01B, +8.7% Y/Y |
| Organic revenue growth | 3.8% | 2.9% |
- Test & Measurement and Electronics organic revenue grew 15.8%, Welding 6.9% and Polymers & Fluids 8.2%; North America organic growth was 6.0%. Pricing and other actions more than offset rising raw-material costs, while enterprise initiatives contributed 130 basis points to operating margin expansion.
- Tornado damage to two Welding facilities reduced Q3 revenue by an estimated $40M. ITW estimates Welding organic growth would have been approximately 15% and company organic growth approximately 5% excluding the impact; lost operating income was largely offset by business-interruption insurance, and the future impact is expected to be immaterial.
- ITW repurchased $187M of shares; average diluted shares were 285.3M, down 2.2% Y/Y. It raised the dividend 7% to an annualized $6.88 per share, marking 63 consecutive years of increases. Q3 free-cash-flow conversion was 100% of net income.
Guidance
| Metric | Period | Guidance | Prior | Direction |
|---|---|---|---|---|
| GAAP EPS | FY2026 | $11.45-$11.55 per share | $11.45 midpoint | Raised by $0.05 at midpoint; narrowed |
| Revenue growth | FY2026 | 4.5%-5.5% | — | Raised |
| Organic growth | FY2026 | 3%-4% | — | Reaffirmed |
| Operating margin | FY2026 | 26.5%-27.5%; enterprise initiatives contribute more than 100 bps | — | — |
| Free cash flow to net income conversion | FY2026 | ≈100% | — | — |
| Share repurchases | FY2026 | ≈$1.5B | — | — |
| Effective tax rate | FY2026 | 23%-24% | — | — |
Guidance changes, derived from earlier filings
| Metric | Period | Earlier guidance | Guidance now | Change |
|---|---|---|---|---|
| GAAP EPS | FY2026 | $11.35-$11.55 | $11.45-$11.55 per share | narrowed (raised low end) |
| Revenue growth | FY2026 | 4%-5% | 4.5%-5.5% | raised |
| Organic growth | FY2026 | 3%-4%; midpoint raised 1.5 percentage points | 3%-4% | reaffirmed |
| Operating margin | FY2026 | 26.5%-27.5% | 26.5%-27.5%; enterprise initiatives contribute more than 100 bps | reaffirmed |
| Free cash flow to net income conversion | FY2026 | More than 100% | ≈100% | reaffirmed |
| Share repurchases | FY2026 | ≈$1.5B | ≈$1.5B | reaffirmed |
| Effective tax rate | FY2026 | 23%-24% | 23%-24% | reaffirmed |
Investor Takeaways
- Watch whether capex-related demand persists in Test & Measurement and Electronics and Welding, which grew organically 15.8% and 6.9% in Q3, respectively.
- FY2026 performance against the raised $11.45-$11.55 GAAP EPS range and 4.5%-5.5% revenue-growth outlook will test whether the Q3 momentum carries through year-end.
- Progress toward ITW’s more-than-3% Customer-Back Innovation yield goal is a measure to watch alongside the company’s plan for above-market organic growth and further margin expansion.
The summary is written by an AI model reading the filing.
Model 005 · prompt v111 · 2026-10-27 14:40:44Z