Illinois Tool Works Up After Earnings, Revenue Beat Estimates

Industrial conglomerate Illinois Tool Works reported third-quarter net income and revenue that dropped but beat Wall Street expectations.
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Illinois Tool Works  (ITW) - Get Report rose Friday after the industrial conglomerate's third-quarter earnings and revenue beat expectations.

Shares of the Glenview, Ill., industrial group at last check were up 0.4% to $202.52. The stock on Friday touched a 52-week high above $208. 

As of Thursday's close it was 74% above the 52-week low just below $116, set in mid-March.

Net income dropped 12% to $1.83 a share from $2.04 a share in the year-earlier period. Revenue slipped 4.9% to $3.3 billion from $3.47 billion. 

A survey of analysts by FactSet produced consensus estimates of net income of $1.47 a share on revenue of $2.98 billion.

Operating margin in the third quarter narrowed to 23.8% from 25% in the year-ago period as lower volume and higher restructuring expenses were offset partly with benefits from enterprise initiatives, the company said. 

"We saw solid recovery progress in many of the end markets we serve in the third quarter as evidenced by our revenue being up sequentially 29% versus the second quarter," Chairman and Chief Executive E. Scott Santi said in a statement.

The company reported free cash flow of $631 million, more than double its net income. After-tax return on invested capital improved to 29.6% compared with 29.2% in the year-ago period.

On May 5 ITW suspended annual guidance for 2020 due to uncertainties regarding the duration and severity of the covid-19 pandemic. 

On Aug. 7 ITW's board approved a 6.5% increase in the quarterly dividend to $1.14 a share. 

ITW "[remains] focused on delivering strong results across a range of economic scenarios while continuing to execute on our long-term strategy,” Santi said.