Please wait

ITW Reports Fourth Quarter and Full Year 2025 Results

Fourth Quarter 2025 Highlights
•Revenue of $4.1 billion, an increase of 4.1%
•Operating margin of 26.5%, as enterprise initiatives contributed 140 bps
•GAAP EPS of $2.72, an increase of 7%

2025 Highlights
•Revenue of $16 billion, an increase of 0.9%
•Customer-Back Innovation contributed 2.4% to revenue growth, an increase of 40 bps
•Operating margin of 26.3%, as enterprise initiatives contributed 130 bps
•GAAP EPS of $10.49 exceeded the prior guidance mid-point of $10.45

2026 Guidance
•Revenue growth of 2 to 4%, organic growth of 1 to 3%
•Operating margin expansion of approximately 100 bps with enterprise initiatives contributing 100 bps
•GAAP EPS of $11.00 to $11.40, an increase of 7% at the mid-point

GLENVIEW, IL., February 3, 2026 - Illinois Tool Works Inc. (NYSE: ITW) today reported its fourth quarter and full year 2025 results.

“ITW delivered a solid finish to the year, marked by more than four percent revenue growth and a seven percent increase in GAAP earnings per share. As a result of our disciplined execution across all seven segments, we expanded both operating margin and income to record levels in the quarter,” said Christopher O’Herlihy, President and Chief Executive Officer.

“Our results over the past year demonstrate that ITW is well-positioned to deliver solid financial performance in any environment as we consistently exceeded market growth while improving profitability and margins. Notably, our Customer-Back Innovation initiatives were a primary catalyst, contributing 2.4 percent to revenue growth in 2025. Building on this momentum, we expect to continue outperforming our end markets in 2026 as we leverage ITW’s unique business model to drive consistent, above-market organic growth with best-in-class margins and returns. I extend my sincere gratitude to our global colleagues for their unwavering dedication to serving our customers and executing our strategy with excellence,” O’Herlihy concluded.

Fourth Quarter 2025 Results
Fourth quarter revenue of $4.1 billion increased by 4.1 percent and organic revenue growth was 1.3 percent. Foreign currency translation increased revenue by 2.5 percent and acquisitions added 0.3 percent.

GAAP EPS of $2.72 increased seven percent. Operating margin of 26.5 percent increased 30 basis points as enterprise initiatives contributed 140 basis points. Segment operating margin increased 120 basis points to 27.7 percent. Operating cash flow was $1 billion, and free cash flow was $0.9 billion with a conversion of 109 percent to net income. During the quarter, the company repurchased $375 million of its own shares and the effective tax rate was 22.8 percent.

Full Year 2025 Results
Full year revenue of $16 billion increased 0.9 percent as organic revenue was flat. Foreign currency translation increased revenue by 0.8 percent and acquisitions contributed 0.1 percent to revenues.

GAAP EPS of $10.49 exceeded the prior guidance mid-point of $10.45. Operating income was $4.2 billion and operating margin was 26.3 percent with enterprise initiatives contributing 130 basis points. Segment operating margin of 27.2 percent increased 70 basis points. Pricing and supply chain actions successfully offset the tariff impact for the year. Six of seven segments expanded operating margins with three segments achieving operating margins above 30 percent.

Operating cash flow was $3.1 billion and free cash flow was $2.7 billion, with a conversion of 88 percent to net income. The company invested approximately $0.8 billion to support the long-term growth of its highly profitable businesses and returned $3.3 billion to shareholders through dividends and share repurchases. The effective tax rate was 22.7 percent.




2026 Guidance
ITW is initiating 2026 guidance including GAAP EPS in the range of $11.00 to $11.40 per share, which represents seven percent earnings growth at the mid-point. The company projects revenue growth of two to four percent and organic growth of one to three percent based on current levels of demand and present foreign exchange rates.

Operating margin is projected to be in the range of 26.5 to 27.5 percent, an improvement of approximately 100 basis points with enterprise initiatives contributing 100 basis points.

All seven segments are expected to deliver positive organic growth and operating margin expansion in 2026.

Free cash flow is projected to be greater than 100 percent of net income, and the company plans to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is 23.5 to 24.5 percent.

Non-GAAP Measures
This earnings release contains certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the attached supplemental reconciliation schedule. The estimated guidance of free cash flow to net income conversion rate is based on assumptions that are difficult to predict, and estimated guidance for the most directly comparable GAAP measure and a reconciliation of this forward-looking estimate to its most directly comparable GAAP estimate have been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of reliable forward-looking cash flow information. For the same reasons, the company is unable to address the potential significance of the unavailable information, which could be material to future results.

Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding the potential impact of tariffs, the Company’s projected pricing actions, the impact of enterprise initiatives, future financial and operating performance, free cash flow and free cash flow to net income conversion rate, organic and total revenue, operating and incremental margin, price/cost impact, statements regarding diluted earnings per share, after-tax return on invested capital, effective tax rates, exchange rates, expected timing and amount of share repurchases, end market economic and regulatory conditions, and the Company’s 2026 guidance. These statements are subject to certain risks, uncertainties, assumptions, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that could cause actual results to differ materially from the Company’s expectations include those that are detailed in ITW’s Form 10-K for 2024 and subsequent reports filed with the SEC.

About Illinois Tool Works
ITW (NYSE: ITW) is a Fortune 300 global multi-industrial manufacturing leader with revenue of $16 billion in 2025. The company’s seven industry-leading segments leverage the unique ITW Business Model to drive solid growth with best-in-class margins and returns in markets where highly innovative, customer-focused solutions are required. ITW’s approximately 43,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com.


ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)

Three Months EndedTwelve Months Ended
December 31,December 31,
In millions except per share amounts2025202420252024
Operating Revenue$4,093 $3,932 $16,044 $15,898 
Cost of revenue2,284 2,221 8,969 8,858 
Selling, administrative, and research and development expenses704 655 2,779 2,675 
Amortization and impairment of intangible assets20 25 80 101 
Operating Income1,085 1,031 4,216 4,264 
Interest expense(75)(68)(292)(283)
Other income (expense)14 20 42 441 
Income Before Taxes1,024 983 3,966 4,422 
Income taxes234 233 900 934 
Net Income$790 $750 $3,066 $3,488 
Net Income Per Share:
Basic
$2.73 $2.55 $10.52 $11.75 
Diluted
$2.72 $2.54 $10.49 $11.71 
Cash Dividends Per Share:
Paid
$1.61 $1.50 $6.11 $5.70 
Declared
$1.61 $1.50 $6.22 $5.80 
Shares of Common Stock Outstanding During the Period:
Average
289.5294.7291.5296.8
Average assuming dilution
290.2295.8292.3297.8



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (UNAUDITED)

In millionsDecember 31, 2025December 31, 2024
Assets  
Current Assets:  
Cash and equivalents$851 $948 
Trade receivables3,227 2,991 
Inventories1,659 1,605 
Prepaid expenses and other current assets463 312 
Total current assets6,200 5,856 
Net plant and equipment2,230 2,036 
Goodwill5,098 4,839 
Intangible assets591 592 
Deferred income taxes519 369 
Other assets1,510 1,375 
 $16,148 $15,067 
Liabilities and Stockholders' Equity  
Current Liabilities:  
Short-term debt$2,286 $1,555 
Accounts payable522 519 
Accrued expenses1,636 1,576 
Cash dividends payable465 441 
Income taxes payable217 217 
Total current liabilities5,126 4,308 
Noncurrent Liabilities:  
Long-term debt6,683 6,308 
Deferred income taxes154 119 
Other liabilities959 1,015 
Total noncurrent liabilities7,796 7,442 
Stockholders' Equity:  
Common stock6 6 
Additional paid-in-capital1,771 1,669 
Retained earnings30,150 28,893 
Common stock held in treasury(26,875)(25,375)
Accumulated other comprehensive income (loss)(1,827)(1,877)
Noncontrolling interest1 1 
Total stockholders' equity3,226 3,317 
$16,148 $15,067 



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)

Three Months Ended December 31, 2025
Dollars in millionsTotal RevenueOperating IncomeOperating Margin
Automotive OEM$827 $180 21.8 %
Food Equipment698 196 28.0 %
Test & Measurement and Electronics789 221 28.1 %
Welding462 153 33.3 %
Polymers & Fluids457 132 29.0 %
Construction Products431 126 29.0 %
Specialty Products433 124 28.7 %
Intersegment(4)— — %
Total Segments4,093 1,132 27.7 %
Unallocated— (47)— %
Total Company$4,093 $1,085 26.5 %
Twelve Months Ended December 31, 2025
Dollars in millionsTotal RevenueOperating IncomeOperating Margin
Automotive OEM$3,288 $693 21.1 %
Food Equipment2,699 753 27.9 %
Test & Measurement and Electronics2,825 694 24.6 %
Welding1,890 621 32.9 %
Polymers & Fluids1,765 493 27.9 %
Construction Products1,820 550 30.2 %
Specialty Products1,775 553 31.2 %
Intersegment(18)— — %
Total Segments16,044 4,357 27.2 %
Unallocated— (141)— %
Total Company$16,044 $4,216 26.3 %


ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)

Q4 2025 vs. Q4 2024 Favorable/(Unfavorable)
Operating RevenueAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
Organic1.9 %0.7 %1.8 %2.3 %4.7 %(3.5)%1.1 %1.3 %
Acquisitions/
Divestitures		— %— %1.5 %— %— %— %— %0.3 %
Translation3.6 %3.1 %2.2 %1.0 %1.8 %2.0 %2.9 %2.5 %
Operating Revenue5.5 %3.8 %5.5 %3.3 %6.5 %(1.5)%4.0 %4.1 %
Q4 2025 vs. Q4 2024 Favorable/(Unfavorable)
Change in Operating MarginAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
Operating Leverage40 bps10 bps40 bps40 bps80 bps(80) bps30 bps30 bps
Changes in Variable Margin & OH Costs130 bps70 bps130 bps200 bps60 bps190 bps10 bps10 bps
Total Organic170 bps80 bps170 bps240 bps140 bps110 bps40 bps40 bps
Acquisitions/
Divestitures		——(60) bps————(10) bps
Restructuring/Other 30 bps —— (30) bps  (30) bps  (10) bps  (10) bps —
Total Operating Margin Change200 bps80 bps110 bps210 bps110 bps100 bps30 bps30 bps
Total Operating Margin % *21.8%28.0%28.1%33.3%29.0%29.0%28.7%26.5%
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 20 bps  10 bps  120 bps — 130 bps  10 bps  20 bps  50 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.05) on GAAP earnings per share for the fourth quarter of 2025.


ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)

Full Year 2025 vs Full Year 2024 Favorable/(Unfavorable)
Operating RevenueAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
Organic2.0 %0.8 %(1.4)%2.0 %(0.2)%(5.1)%1.0 %— %
Acquisitions/
Divestitures		— %— %0.4 %— %— %— %— %0.1 %
Translation1.2 %1.1 %1.2 %0.1 %0.3 %0.5 %0.8 %0.8 %
Operating Revenue3.2 %1.9 %0.2 %2.1 %0.1 %(4.6)%1.8 %0.9 %
Full Year 2025 vs Full Year 2024 Favorable/(Unfavorable)
Change in Operating MarginAutomotive OEMFood EquipmentTest & Measurement and ElectronicsWeldingPolymers & FluidsConstruction ProductsSpecialty ProductsTotal ITW
Operating Leverage40 bps20 bps(40) bps30 bps10 bps(110) bps20 bps—
Changes in Variable Margin & OH Costs110 bps40 bps60 bps30 bps50 bps170 bps70 bps(50) bps
Total Organic150 bps60 bps20 bps60 bps60 bps60 bps90 bps(50) bps
Acquisitions/
Divestitures		——(20) bps—————
Restructuring/Other— 10 bps  (30) bps — (10) bps  30 bps ——
Total Operating Margin Change150 bps70 bps(30) bps60 bps50 bps90 bps90 bps(50) bps
Total Operating Margin % *21.1%27.9%24.6%32.9%27.9%30.2%31.2%26.3%
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 20 bps  10 bps  130 bps  10 bps  150 bps  10 bps  10 bps  50 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.21) on GAAP earnings per share for 2025.



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)

AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)

Three Months EndedTwelve Months Ended
December 31,December 31,
Dollars in millions2025202420252024
Numerator:
Net income$790 $750 $3,066 $3,488 
Net discrete tax benefit related to the third quarter 2025— — (27)— 
Discrete tax benefit related to the first quarter 2025— — (21)— 
Net discrete tax benefit related to the third quarter 2024— — — (121)
Interest expense, net of tax (1)
57 51 222 215 
Other (income) expense, net of tax (1)
(10)(16)(32)(336)
Operating income after taxes$837 $785 $3,208 $3,246 
Denominator:
Invested capital:
Cash and equivalents$851 $948 $851 $948 
Trade receivables3,227 2,991 3,227 2,991 
Inventories1,659 1,605 1,659 1,605 
Net plant and equipment2,230 2,036 2,230 2,036 
Goodwill and intangible assets5,689 5,431 5,689 5,431 
Accounts payable and accrued expenses(2,158)(2,095)(2,158)(2,095)
Debt(8,969)(7,863)(8,969)(7,863)
Other, net697 264 697 264 
Total net assets (stockholders' equity)3,226 3,317 3,226 3,317 
Cash and equivalents(851)(948)(851)(948)
Debt8,969 7,863 8,969 7,863 
Total invested capital$11,344 $10,232 $11,344 $10,232 
Average invested capital (2)
$11,285 $10,511 $10,959 $10,419 
Net income to average invested capital (3)
28.0 %28.6 %28.0 %33.5 %
After-tax return on average invested capital (3)
29.7 %29.9 %29.3 %31.2 %

(1)    Effective tax rate used for interest expense and other (income) expense for the three months ended December 31, 2025 and 2024 was 22.8% and 23.7%, respectively, and 23.9%, and 23.8% for the twelve months ended December 31, 2025 and 2024, respectively.

(2)    Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within each of the periods presented.

(3)    Returns for the three months ended December 31, 2025 and 2024 were converted to an annual rate by multiplying the calculated return by 4.




A reconciliation of the 2025 effective tax rate, excluding the third quarter 2025 net discrete tax benefit of $27 million, which included a favorable discrete tax benefit of $43 million related to the estimated U.S. federal tax liability for 2024, partially offset by a $16 million discrete tax expense related primarily to the resolution of a foreign tax audit, and excluding the first quarter 2025 discrete tax benefit of $21 million related to the reversal of a valuation allowance on net operating loss carryforwards, is as follows:

Twelve Months Ended
December 31, 2025
Dollars in millionsIncome TaxesTax Rate
As reported$900 22.7 %
Net discrete tax benefit related to the third quarter 202527 0.7 %
Discrete tax benefit related to the first quarter 202521 0.5 %
As adjusted$948 23.9 %

A reconciliation of the 2024 effective tax rate excluding the third quarter 2024 net discrete tax benefit of $121 million, which included favorable discrete tax benefits of $107 million related to the utilization of capital loss carryforwards upon the sale of Wilsonart and $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, is as follows:

Twelve Months Ended
December 31, 2024
Dollars in millionsIncome TaxesTax Rate
As reported$934 21.1 %
Net discrete tax benefit related to the third quarter 2024121 2.7 %
As adjusted$1,055 23.8 %




FREE CASH FLOW (UNAUDITED)

Three Months EndedTwelve Months Ended
December 31,December 31,
Dollars in millions2025202420252024
Net cash provided by operating activities$963 $1,114 $3,126 $3,281 
Less: Additions to plant and equipment(105)(118)(419)(437)
Free cash flow$858 $996 $2,707 $2,844 
Net income$790 $750 $3,066 $3,488 
Net cash provided by operating activities to net income conversion rate122 %149 %102 %94 %
Free cash flow to net income conversion rate109 %133 %88 %82 %


ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED)

Twelve Months Ended
December 31, 2024
As reported$11.71 
Impact of sale of noncontrolling interest in Wilsonart (1)
(1.26)
Cumulative effect of change in inventory accounting method, net of tax (2)
(0.30)
As adjusted$10.15 

(1)    Includes the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes.

(2)    Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax).