Illinois Tool Works Inc. (0J8W.L) reported Q3 2024 results that underscore the company’s resilience in a modestly decelerating industrial environment. Revenue totaled $3.97 billion, down 1.6% year over year and 1.5% quarter over quarter, while gross margin remained robust at approximately 43.1% and operating margin at 26.5%. The standout item in the quarter was a meaningful contribution from total other income, which helped lift net income to $1.16 billion and diluted EPS to $3.91-$3.92, marking substantial YoY and QoQ earnings per share growth of about 53% and 54%, respectively. Free cash flow was strong at $783 million, supporting a prudent capital allocation stance including buybacks, modest capital expenditure, and a sizable net debt position.
From a capital structure and cash-flow perspective, ITW generated $891 million in operating cash flow and deployed approximately $108 million in capex during the quarter, resulting in free cash flow of $783 million. The balance sheet shows a solid asset base, with total assets of $15.82 billion and total liabilities of $12.43 billion, leaving equity of roughly $3.39 billion. The company carries a notable level of leverage (total debt of $8.35 billion; net debt of $7.40 billion) and a total debt-to-capitalization of about 71%, which highlights leverage risk even as coverage metrics remain supportive (interest coverage around 15x).
Overall, ITW remains a high-quality, diversified industrials player with a durable profitability profile, strong cash-generation capability, and a track record of generating returns on equity well above typical cyclical peers. The challenge remains a modest revenue backdrop against a backdrop of leverage, goodwill/intangible assets on balance sheet, and ongoing macro uncertainty. Investors should monitor industry demand, price realization, and the effectiveness of the company’s cost-mitigation and capital allocation strategies as macro conditions evolve.