ITW Reports Third Quarter 2026 Results
ILLINOIS TOOL WORKS INC (ITW) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 ITW Reports Third Quarter 2026 Results • Revenue of $4.24 billion increased +4% with organic growth of +4%; +5% ex-Welding tornado impact • Record operating income of $1.18 billion increased +6% • Operating margin of 27.8% expanded 40 bps with favorable price/cost in
How this was made
The 30-second read
Why it matters
The raised EPS guidance and $1.5 bn buyback indicate stronger cash generation, likely prompting a price uptick.
Market read
First‑report earnings with raised guidance for a large‑cap industrial firm; high relevance for traders.
What to watch
Raw‑material cost inflation and higher interest rates could pressure margins later.
ITW Reports Third Quarter 2026 Results
Third-quarter operating revenue increased 4.4%, operating income reached a quarterly record of $1.18 billion, operating margin expanded 40 basis points to 27.8%, GAAP diluted EPS increased 6.8% to $3.00, and the company raised full-year GAAP EPS guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 operating revenueGAAP | $4.24B | – | 4.4 percent |
| Q3 2026 organic revenue growthother | 3.8 percent | – | 3.8 percent |
| Q3 2026 foreign currency translation impact on revenueother | 0.3 percent | – | 0.3 percent |
| Q3 2026 acquisition impact on revenueother | 0.3 percent | – | 0.3 percent |
| Q3 2026 cost of revenueGAAP | 2,326 | – | – |
| Q3 2026 selling, administrative, and research and development expensesGAAP | 717 | – | – |
| Q3 2026 amortization and impairment of intangible assetsGAAP | 16 | – | – |
| Q3 2026 operating incomeGAAP | $1.18B | – | 5.9 percent |
| Q3 2026 operating marginGAAP | 27.8 % | – | 40 bps |
| Q3 2026 interest expenseGAAP | (83) | – | – |
| Q3 2026 other income (expense)GAAP | 37 | – | – |
| Q3 2026 income before taxesGAAP | 1,131 | – | – |
| Q3 2026 income taxesGAAP | 276 | – | – |
| Q3 2026 effective tax rateGAAP | 24.4 percent | – | – |
| Q3 2026 net incomeGAAP | $855M | – | – |
| Q3 2026 basic net income per shareGAAP | $ 3.00 | – | – |
| Q3 2026 diluted net income per shareGAAP | $ 3.00 | – | 6.8 percent |
| Q3 2026 cash dividends per share paidGAAP | $ 1.61 | – | – |
| Q3 2026 cash dividends per share declaredGAAP | $ 1.72 | – | – |
| Q3 2026 average shares of common stock outstandingGAAP | 284.6 | – | – |
| Q3 2026 average shares of common stock outstanding assuming dilutionGAAP | 285.3 | – | – |
| Q3 2026 net cash provided by operating activitiesGAAP | $953M | – | – |
| Q3 2026 additions to plant and equipmentGAAP | (102) | – | – |
| Q3 2026 free cash flownon-GAAP | $851M | – | – |
| Q3 2026 net cash provided by operating activities to net income conversion ratenon-GAAP | 111 % | – | – |
| Q3 2026 free cash flow to net income conversion ratenon-GAAP | 100 % | – | – |
| Q3 2026 after-tax return on average invested capitalnon-GAAP | 30.3 % | – | – |
| Nine months 2026 operating revenueGAAP | $12.55B | – | 5.0 % |
| Nine months 2026 organic revenue growthother | 2.9 % | – | 2.9 % |
| Nine months 2026 operating incomeGAAP | 3,344 | – | – |
| Nine months 2026 operating marginGAAP | 26.6% | – | 40 bps |
| Nine months 2026 net incomeGAAP | $2.44B | – | – |
| Nine months 2026 diluted net income per shareGAAP | $ 8.49 | – | – |
| Nine months 2026 free cash flownon-GAAP | $2.01B | – | – |
| Nine months 2026 free cash flow to net income conversion ratenon-GAAP | 82 % | – | – |
| Nine months 2026 after-tax return on average invested capitalnon-GAAP | 29.1 % | – | – |
| Q3 2026 Automotive OEM operating incomeGAAP | $163M | – | – |
| Q3 2026 Automotive OEM operating marginGAAP | 20.1 % | – | (170) bps |
| Q3 2026 Food Equipment operating incomeGAAP | 208 | – | – |
| Q3 2026 Food Equipment operating marginGAAP | 29.8 % | – | 60 bps |
| Q3 2026 Test & Measurement and Electronics operating incomeGAAP | 235 | – | – |
| Q3 2026 Test & Measurement and Electronics operating marginGAAP | 28.7 % | – | 330 bps |
| Q3 2026 Welding operating incomeGAAP | 186 | – | – |
| Q3 2026 Welding operating marginGAAP | 36.3 % | – | 370 bps |
| Q3 2026 Polymers & Fluids operating incomeGAAP | 149 | – | – |
| Q3 2026 Polymers & Fluids operating marginGAAP | 31.3 % | – | 280 bps |
| Q3 2026 Construction Products operating incomeGAAP | 141 | – | – |
| Q3 2026 Construction Products operating marginGAAP | 29.9 % | – | (170) bps |
| Q3 2026 Specialty Products operating incomeGAAP | 140 | – | – |
| Q3 2026 Specialty Products operating marginGAAP | 31.4 % | – | (90) bps |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Automotive OEMOrganic revenue change was (2.1) % and translation was 0.3 %. | $814M | – | (1.8) % |
| Food EquipmentOrganic revenue growth was 0.5 % and translation was 0.2 %. | 698M | – | 0.7 % |
| Test & Measurement and ElectronicsOrganic revenue growth was 15.8 %, acquisitions/divestitures contributed 1.8 %, and translation was (0.3) %. | 819M | – | 17.3 % |
| WeldingOrganic revenue growth was 6.9 %. Tornado damage to two Welding facilities reduced third-quarter revenue by an estimated $40 million. | 513M | – | 7.3 % |
| Polymers & FluidsOrganic revenue growth was 8.2 % and translation was (0.1) %. | 477M | – | 8.1 % |
| Construction ProductsOrganic revenue change was (0.8) % and translation was 0.8 %. | 472M | – | — % |
| Specialty ProductsOrganic revenue change was (1.2) % and translation was 0.1 %. | 447M | – | (1.1) % |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Full Year 2026 outlook
- Revenue4.5 to 5.5 percent
- Tax rate23 to 24 percent
- NoteGAAP EPS of $11.45 to $11.55 per share
- NoteOrganic growth of 3 to 4 percent
- NoteOperating margin of 26.5 to 27.5 percent
- NoteEnterprise initiatives contributing more than 100 basis points
- NoteFree cash flow projected to be approximately 100 percent of net income
- NoteApproximately $1.5 billion of share repurchases
Capital returns
- Repurchased $187 million of its own shares during the quarter.
- Raised its dividend 7 percent, bringing the annualized payout to $6.88 per share.
- The dividend increase marks the 63rd consecutive year of dividend increases.
- Expects to repurchase approximately $1.5 billion of its own shares in 2026.
What drove it
- Third-quarter organic revenue growth was 3.8 percent, led by 6.0 percent growth in North America.
- Foreign currency translation increased third-quarter revenue by 0.3 percent and an acquisition added 0.3 percent.
- Enterprise initiatives contributed 130 basis points to third-quarter operating margin.
- Price increases and other actions more than offset rising raw material costs, resulting in a favorable impact on operating income and margin.
- Management cited accelerating demand in Welding and Test & Measurement and Electronics, continued strength in Polymers & Fluids, and a meaningful increase in Customer-Back Innovation contribution to revenue growth.
Concerns
- Tornado damage to two Welding facilities in late July reduced third-quarter revenue by an estimated $40 million.
- Automotive OEM, Construction Products, and Specialty Products posted organic revenue changes of (2.1) %, (0.8) %, and (1.2) %, respectively.
- Q3 operating-margin changes were negative in Automotive OEM at (170) bps, Construction Products at (170) bps, and Specialty Products at (90) bps.
- Interest expense was (83) in Q3 2026 compared with (75) in Q3 2025.
What to watch
- Whether demand remains strong in capex-related Welding and Test & Measurement and Electronics markets.
- Delivery against full-year revenue growth guidance of 4.5 to 5.5 percent and organic growth guidance of 3 to 4 percent.
- Progress toward the projected operating-margin range of 26.5 to 27.5 percent and enterprise-initiative contribution of more than 100 basis points.
- Whether the expected ongoing impact from the Welding tornado remains immaterial.
- Execution of approximately $1.5 billion in expected 2026 share repurchases.
Balance sheet and cash flow
- Cash and equivalents were $ 809 at September 30, 2026, compared with $ 851 at December 31, 2025.
- Short-term debt was $ 2,219 at September 30, 2026, compared with $ 2,286 at December 31, 2025.
- Long-term debt was 7,153 at September 30, 2026, compared with 6,683 at December 31, 2025.
- Q3 2026 net cash provided by operating activities was $ 953 and free cash flow was $ 851.
- Nine months 2026 net cash provided by operating activities was $ 2,299 and free cash flow was $ 2,010.
Analysis
ITW reported third-quarter operating revenue of $ 4,236, up 4.4 percent, with organic revenue growth of 3.8 percent. North America grew 6.0 percent, while foreign currency translation and an acquisition each added 0.3 percent to revenue growth. Test & Measurement and Electronics, Welding, and Polymers & Fluids were the principal growth contributors, with operating revenue changes of 17.3 %, 7.3 %, and 8.1 %, respectively. Automotive OEM, Construction Products, and Specialty Products remained softer on an organic basis.
Profitability strengthened despite mixed segment growth. Operating income increased 5.9 percent to a quarterly-record $ 1,177 and operating margin expanded 40 bps to 27.8 %. Enterprise initiatives contributed 130 basis points, and price increases and other actions more than offset rising raw-material costs. Segment margin performance was led by Test & Measurement and Electronics, Welding, and Polymers & Fluids, whose total operating-margin changes were 330 bps, 370 bps, and 280 bps, respectively. Automotive OEM and Construction Products each recorded a (170) bps operating-margin change.
GAAP net income was $ 855 and GAAP diluted EPS was $ 3.00, up 6.8 percent. Operating cash flow was $ 953 and free cash flow was $ 851, producing a 100 % free-cash-flow-to-net-income conversion rate. ITW repurchased $187 million of shares during the quarter and raised its dividend 7 percent to an annualized payout of $6.88 per share. Cash and equivalents were $ 809 at September 30, 2026, while short-term debt was $ 2,219 and long-term debt was 7,153.
The late-July tornado affecting two Welding facilities reduced third-quarter revenue by an estimated $40 million. Excluding this impact, Welding organic revenue growth would have been approximately 15 percent and total-company organic growth would have been approximately 5 percent. The associated loss of operating income was largely offset by business interruption insurance, and management expects the forward impact to be immaterial.
Management raised full-year GAAP EPS guidance by $0.05 at the midpoint to $11.45 to $11.55 per share. It also raised revenue growth guidance to 4.5 to 5.5 percent while reaffirming organic growth of 3 to 4 percent. The company maintained its operating-margin outlook of 26.5 to 27.5 percent, expects free cash flow of approximately 100 percent of net income, and expects to repurchase approximately $1.5 billion of shares.
Management, verbatim
The ITW team delivered strong operational execution and financial performance in the third quarter, including organic growth of 4 percent (5 percent excluding the impact of a tornado affecting our Welding segment), 40 basis points of operating margin expansion to 27.8 percent, and a 7 percent increase in GAAP earnings per share to $3.00.
Christopher A. O’Herlihy, President and Chief Executive Officer
Our top-line results reflect accelerating demand in our capex-related segments, Welding and Test & Measurement and Electronics, continued strength in Polymers & Fluids segment, and a meaningful increase in the contribution to revenue growth from our Customer-Back Innovation efforts.
Christopher A. O’Herlihy, President and Chief Executive Officer
We entered the fourth quarter with strong operational momentum and are raising our EPS guidance for the year.
Christopher A. O’Herlihy, President and Chief Executive Officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Gross margin was not reported.
- Prior-quarter comparisons were not reported for the presented operating and financial metrics.
- Prior-year segment revenue, segment operating income, and segment operating margin values were not printed in the segment data tables.
- Full-year 2026 gross-margin guidance and operating-expense guidance were not reported.
- A reconciliation for forward free-cash-flow-to-net-income conversion guidance was omitted because of unreasonable efforts and lack of reliable forward-looking cash flow information.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is an SEC Form 8‑K Item 2.02 earnings release, the first public disclosure of Q3 results and FY guidance.
Ticker impact
Illinois Tool Works reported Q3 2026 results with revenue up 4% and raised full‑year GAAP EPS guidance to $11.45‑$11.55.
likely upward pressure as investors price in higher EPS and buyback support
Guidance raise and sizable buyback are fresh, material information for a large‑cap industrial stock.
Market effects
Improved outlook may lift other industrial and manufacturing peers.
Positive for U.S. industrial sector indices.
Limited to markets tracking U.S. industrials.
Counterpoint
If the tornado impact recurs, the guidance may be overly optimistic.
Key entities
- companyIllinois Tool Works Inc.
Industrial manufacturing conglomerate reporting Q3 2026 results.
