Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
In millions except per share amounts | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Operating Revenue | $ | 3,983 | $ | 3,971 | $ | 16,107 | $ | 15,932 | |||||||||||||||
Cost of revenue | 2,312 | 2,309 | 9,316 | 9,429 | |||||||||||||||||||
Selling, administrative, and research and development expenses | 658 | 644 | 2,638 | 2,579 | |||||||||||||||||||
Amortization and impairment of intangible assets | 25 | 32 | 113 | 134 | |||||||||||||||||||
Operating Income | 988 | 986 | 4,040 | 3,790 | |||||||||||||||||||
Interest expense | (70) | (56) | (266) | (203) | |||||||||||||||||||
Other income (expense) | 9 | 191 | 49 | 255 | |||||||||||||||||||
Income Before Taxes | 927 | 1,121 | 3,823 | 3,842 | |||||||||||||||||||
Income taxes | 210 | 214 | 866 | 808 | |||||||||||||||||||
Net Income | $ | 717 | $ | 907 | $ | 2,957 | $ | 3,034 | |||||||||||||||
Net Income Per Share: | |||||||||||||||||||||||
Basic | $ | 2.39 | $ | 2.96 | $ | 9.77 | $ | 9.80 | |||||||||||||||
Diluted | $ | 2.38 | $ | 2.95 | $ | 9.74 | $ | 9.77 | |||||||||||||||
Cash Dividends Per Share: | |||||||||||||||||||||||
Paid | $ | 1.40 | $ | 1.31 | $ | 5.33 | $ | 4.97 | |||||||||||||||
Declared | $ | 1.40 | $ | 1.31 | $ | 5.42 | $ | 5.06 | |||||||||||||||
Shares of Common Stock Outstanding During the Period: | |||||||||||||||||||||||
Average | 300.1 | 306.8 | 302.6 | 309.6 | |||||||||||||||||||
Average assuming dilution | 301.1 | 307.9 | 303.6 | 310.7 |
In millions | December 31, 2023 | December 31, 2022 | |||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and equivalents | $ | 1,065 | $ | 708 | |||||||
Trade receivables | 3,123 | 3,171 | |||||||||
Inventories | 1,707 | 2,054 | |||||||||
Prepaid expenses and other current assets | 340 | 329 | |||||||||
Assets held for sale | — | 8 | |||||||||
Total current assets | 6,235 | 6,270 | |||||||||
Net plant and equipment | 1,976 | 1,848 | |||||||||
Goodwill | 4,909 | 4,864 | |||||||||
Intangible assets | 657 | 768 | |||||||||
Deferred income taxes | 479 | 494 | |||||||||
Other assets | 1,262 | 1,178 | |||||||||
$ | 15,518 | $ | 15,422 | ||||||||
Liabilities and Stockholders' Equity | |||||||||||
Current Liabilities: | |||||||||||
Short-term debt | $ | 1,825 | $ | 1,590 | |||||||
Accounts payable | 581 | 594 | |||||||||
Accrued expenses | 1,663 | 1,728 | |||||||||
Cash dividends payable | 419 | 400 | |||||||||
Income taxes payable | 187 | 147 | |||||||||
Liabilities held for sale | — | 1 | |||||||||
Total current liabilities | 4,675 | 4,460 | |||||||||
Noncurrent Liabilities: | |||||||||||
Long-term debt | 6,339 | 6,173 | |||||||||
Deferred income taxes | 326 | 484 | |||||||||
Noncurrent income taxes payable | 151 | 273 | |||||||||
Other liabilities | 1,014 | 943 | |||||||||
Total noncurrent liabilities | 7,830 | 7,873 | |||||||||
Stockholders' Equity: | |||||||||||
Common stock | 6 | 6 | |||||||||
Additional paid-in-capital | 1,588 | 1,501 | |||||||||
Retained earnings | 27,122 | 25,799 | |||||||||
Common stock held in treasury | (23,870) | (22,377) | |||||||||
Accumulated other comprehensive income (loss) | (1,834) | (1,841) | |||||||||
Noncontrolling interest | 1 | 1 | |||||||||
Total stockholders' equity | 3,013 | 3,089 | |||||||||
$ | 15,518 | $ | 15,422 |
Three Months Ended December 31, 2023 | |||||||||||
Dollars in millions | Total Revenue | Operating Income | Operating Margin | ||||||||
Automotive OEM | $ | 814 | $ | 143 | 17.6 | % | |||||
Food Equipment | 655 | 177 | 27.0 | % | |||||||
Test & Measurement and Electronics | 731 | 185 | 25.3 | % | |||||||
Welding | 451 | 134 | 29.6 | % | |||||||
Polymers & Fluids | 440 | 125 | 28.5 | % | |||||||
Construction Products | 459 | 124 | 26.9 | % | |||||||
Specialty Products | 437 | 116 | 26.6 | % | |||||||
Intersegment | (4) | — | — | % | |||||||
Total Segments | 3,983 | 1,004 | 25.2 | % | |||||||
Unallocated | — | (16) | — | % | |||||||
Total Company | $ | 3,983 | $ | 988 | 24.8 | % |
Twelve Months Ended December 31, 2023 | |||||||||||
Dollars in millions | Total Revenue | Operating Income | Operating Margin | ||||||||
Automotive OEM | $ | 3,235 | $ | 561 | 17.3 | % | |||||
Food Equipment | 2,622 | 713 | 27.2 | % | |||||||
Test & Measurement and Electronics | 2,832 | 686 | 24.2 | % | |||||||
Welding | 1,902 | 605 | 31.8 | % | |||||||
Polymers & Fluids | 1,804 | 482 | 26.7 | % | |||||||
Construction Products | 2,033 | 578 | 28.4 | % | |||||||
Specialty Products | 1,697 | 449 | 26.5 | % | |||||||
Intersegment | (18) | — | — | % | |||||||
Total Segments | 16,107 | 4,074 | 25.3 | % | |||||||
Unallocated | — | (34) | — | % | |||||||
Total Company | $ | 16,107 | $ | 4,040 | 25.1 | % |
Q4 2023 vs. Q4 2022 Favorable/(Unfavorable) | ||||||||||||||||||||||||||
Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||||||||||||
Organic | 7.7 | % | 2.7 | % | (1.4) | % | (6.8) | % | (1.6) | % | (3.5) | % | (5.4) | % | (0.5) | % | ||||||||||
Acquisitions/ Divestitures | — | % | (0.9) | % | — | % | — | % | — | % | — | % | (1.8) | % | (0.4) | % | ||||||||||
Translation | 1.7 | % | 2.1 | % | 1.1 | % | 0.5 | % | (1.6) | % | 1.2 | % | 1.8 | % | 1.2 | % | ||||||||||
Operating Revenue | 9.4 | % | 3.9 | % | (0.3) | % | (6.3) | % | (3.2) | % | (2.3) | % | (5.4) | % | 0.3 | % |
Q4 2023 vs. Q4 2022 Favorable/(Unfavorable) | ||||||||||||||||||||||||||
Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||||||||||||
Operating Leverage | 130 bps | 50 bps | (30) bps | (100) bps | (30) bps | (60) bps | (110) bps | (10) bps | ||||||||||||||||||
Changes in Variable Margin & OH Costs | 80 bps | (90) bps | (110) bps | (110) bps | 370 bps | 190 bps | 90 bps | 40 bps | ||||||||||||||||||
Total Organic | 210 bps | (40) bps | (140) bps | (210) bps | 340 bps | 130 bps | (20) bps | 30 bps | ||||||||||||||||||
Acquisitions/ Divestitures | — | 10 bps | — | — | — | — | 50 bps | 10 bps | ||||||||||||||||||
Restructuring/Other | (160) bps | (30) bps | (20) bps | 10 bps | (70) bps | 10 bps | 60 bps | (40) bps | ||||||||||||||||||
Total Operating Margin Change | 50 bps | (60) bps | (160) bps | (200) bps | 270 bps | 140 bps | 90 bps | — | ||||||||||||||||||
Total Operating Margin % * | 17.6% | 27.0% | 25.3% | 29.6% | 28.5% | 26.9% | 26.6% | 24.8% | ||||||||||||||||||
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 20 bps | 50 bps | 140 bps | 10 bps | 160 bps | 20 bps | 20 bps | 60 bps ** | ||||||||||||||||||
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.06) on GAAP earnings per share for the fourth quarter of 2023. |
Full Year 2023 vs Full Year 2022 Favorable/(Unfavorable) | ||||||||||||||||||||||||||
Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||||||||||||
Organic | 8.8 | % | 7.8 | % | 0.3 | % | 0.3 | % | 0.3 | % | (3.2) | % | (4.9) | % | 2.0 | % | ||||||||||
Acquisitions/ Divestitures | — | % | (1.2) | % | — | % | — | % | (4.0) | % | — | % | (1.6) | % | (0.8) | % | ||||||||||
Translation | 0.2 | % | 0.7 | % | (0.2) | % | 0.1 | % | (1.6) | % | (0.6) | % | 0.8 | % | (0.1) | % | ||||||||||
Operating Revenue | 9.0 | % | 7.3 | % | 0.1 | % | 0.4 | % | (5.3) | % | (3.8) | % | (5.7) | % | 1.1 | % |
Full Year 2023 vs Full Year 2022 Favorable/(Unfavorable) | ||||||||||||||||||||||||||
Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW | ||||||||||||||||||
Operating Leverage | 160 bps | 150 bps | 10 bps | 10 bps | — | (60) bps | (90) bps | 40 bps | ||||||||||||||||||
Changes in Variable Margin & OH Costs | (120) bps | 30 bps | 10 bps | 90 bps | 180 bps | 330 bps | 30 bps | 90 bps | ||||||||||||||||||
Total Organic | 40 bps | 180 bps | 20 bps | 100 bps | 180 bps | 270 bps | (60) bps | 130 bps | ||||||||||||||||||
Acquisitions/ Divestitures | — | 20 bps | — | — | 30 bps | — | 40 bps | 10 bps | ||||||||||||||||||
Restructuring/Other | 10 bps | (10) bps | (20) bps | — | (60) bps | (20) bps | — | (10) bps | ||||||||||||||||||
Total Operating Margin Change | 50 bps | 190 bps | — | 100 bps | 150 bps | 250 bps | (20) bps | 130 bps | ||||||||||||||||||
Total Operating Margin % * | 17.3% | 27.2% | 24.2% | 31.8% | 26.7% | 28.4% | 26.5% | 25.1% | ||||||||||||||||||
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 30 bps | 50 bps | 160 bps | 10 bps | 180 bps | 20 bps | 40 bps | 70 bps ** | ||||||||||||||||||
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.28) on GAAP earnings per share for 2023. | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income | $ | 717 | $ | 907 | $ | 2,957 | $ | 3,034 | |||||||||||||||
Discrete tax benefit related to the second quarter 2023 | — | — | (20) | — | |||||||||||||||||||
Discrete tax benefit related to the fourth quarter 2022 | — | (32) | — | (32) | |||||||||||||||||||
Discrete tax benefit related to the second quarter 2022 | — | — | — | (51) | |||||||||||||||||||
Interest expense, net of tax (1) | 54 | 44 | 204 | 156 | |||||||||||||||||||
Other (income) expense, net of tax (1) | (7) | (147) | (38) | (196) | |||||||||||||||||||
Operating income after taxes | $ | 764 | $ | 772 | $ | 3,103 | $ | 2,911 | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Invested capital: | |||||||||||||||||||||||
Cash and equivalents | $ | 1,065 | $ | 708 | $ | 1,065 | $ | 708 | |||||||||||||||
Trade receivables | 3,123 | 3,171 | 3,123 | 3,171 | |||||||||||||||||||
Inventories | 1,707 | 2,054 | 1,707 | 2,054 | |||||||||||||||||||
Net assets held for sale | — | 7 | — | 7 | |||||||||||||||||||
Net plant and equipment | 1,976 | 1,848 | 1,976 | 1,848 | |||||||||||||||||||
Goodwill and intangible assets | 5,566 | 5,632 | 5,566 | 5,632 | |||||||||||||||||||
Accounts payable and accrued expenses | (2,244) | (2,322) | (2,244) | (2,322) | |||||||||||||||||||
Debt | (8,164) | (7,763) | (8,164) | (7,763) | |||||||||||||||||||
Other, net | (16) | (246) | (16) | (246) | |||||||||||||||||||
Total net assets (stockholders' equity) | 3,013 | 3,089 | 3,013 | 3,089 | |||||||||||||||||||
Cash and equivalents | (1,065) | (708) | (1,065) | (708) | |||||||||||||||||||
Debt | 8,164 | 7,763 | 8,164 | 7,763 | |||||||||||||||||||
Total invested capital | $ | 10,112 | $ | 10,144 | $ | 10,112 | $ | 10,144 | |||||||||||||||
Average invested capital (2) | $ | 10,096 | $ | 10,006 | $ | 10,214 | $ | 10,017 | |||||||||||||||
Net income to average invested capital (3) | 28.4 | % | 36.3 | % | 29.0 | % | 30.3 | % | |||||||||||||||
After-tax return on average invested capital (3) | 30.3 | % | 30.8 | % | 30.4 | % | 29.1 | % |
Twelve Months Ended | |||||||||||
December 31, 2023 | |||||||||||
Dollars in millions | Income Taxes | Tax Rate | |||||||||
As reported | $ | 866 | 22.6 | % | |||||||
Discrete tax benefit related to the second quarter 2023 | 20 | 0.6 | % | ||||||||
As adjusted | $ | 886 | 23.2 | % |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
December 31, 2022 | December 31, 2022 | ||||||||||||||||||||||
Dollars in millions | Income Taxes | Tax Rate | Income Taxes | Tax Rate | |||||||||||||||||||
As reported | $ | 214 | 19.1 | % | $ | 808 | 21.0 | % | |||||||||||||||
Discrete tax benefit related to the fourth quarter 2022 | 32 | 2.9 | % | 32 | 0.8 | % | |||||||||||||||||
Discrete tax benefit related to the second quarter 2022 | — | — | % | 51 | 1.4 | % | |||||||||||||||||
As adjusted | $ | 246 | 22.0 | % | $ | 891 | 23.2 | % |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
Dollars in millions | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Net cash provided by operating activities | $ | 1,039 | $ | 811 | $ | 3,539 | $ | 2,348 | |||||||||||||||
Less: Additions to plant and equipment | (131) | (156) | (455) | (412) | |||||||||||||||||||
Free cash flow | $ | 908 | $ | 655 | $ | 3,084 | $ | 1,936 | |||||||||||||||
Net income | $ | 717 | $ | 907 | $ | 2,957 | $ | 3,034 | |||||||||||||||
Net cash provided by operating activities to net income conversion rate | 145 | % | 89 | % | 120 | % | 77 | % | |||||||||||||||
Free cash flow to net income conversion rate | 127 | % | 72 | % | 104 | % | 64 | % |
Three Months Ended | |||||||||||||||||
March 31, | June 30, | September 30, | |||||||||||||||
Dollars in millions | 2023 | 2023 | 2023 | ||||||||||||||
Net cash provided by operating activities | $ | 728 | $ | 790 | $ | 982 | |||||||||||
Less: Additions to plant and equipment | (113) | (85) | (126) | ||||||||||||||
Free cash flow | $ | 615 | $ | 705 | $ | 856 | |||||||||||
Net income | $ | 714 | $ | 754 | $ | 772 | |||||||||||
Net cash provided by operating activities to net income conversion rate | 102 | % | 105 | % | 127 | % | |||||||||||
Free cash flow to net income conversion rate | 86 | % | 94 | % | 111 | % |
Three Months Ended | |||||
December 31, 2023 | |||||
As reported | $ | 2.38 | |||
Argentina currency devaluation impact in the fourth quarter 2023 | 0.04 | ||||
As adjusted | $ | 2.42 |
Three Months Ended | Twelve Months Ended | ||||||||||
December 31, 2022 | December 31, 2022 | ||||||||||
As reported | $ | 2.95 | $ | 9.77 | |||||||
Net impact of gains from two divestitures in the fourth quarter 2022 | (0.61) | (0.60) | |||||||||
As adjusted | $ | 2.34 | $ | 9.17 |