Illinois Tool Works Inc
Q3 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: −0.33%.
Did ITW Beat Earnings? Q3 2025 Results
Illinois Tool Works posted a stronger-than-expected bottom line in Q3 2025, with earnings per share of $2.81 beating the consensus estimate of $2.70 by 3.91%, even as revenue of $4.06 billion came in fractionally light, missing expectations by 0.70% despite growing 2.3% year-over-year. The standout driver behind the earnings beat was a record operating margin of 27.4%, which expanded 90 basis points year-over-year as enterprise initiatives alone contributed 140 basis points of improvement, with six of the company's seven segments widening margins during the quarter. Free cash flow reached $904 million, a 15% increase year-over-year, underscoring the operational discipline that has defined ITW's model. On the capital return front, the company repurchased $375 million in shares and raised its dividend 7% to an annualized $6.44 per share, marking 62 consecutive years of dividend increases, though some observers note the guidance adjustment signals a cautious demand backdrop. Looking ahead, ITW narrowed its full-year 2025 EPS guidance to $10.40 to $10.50, projecting overall revenue growth of 1% to 3% while incorporating pricing actions designed to offset tariff-related cost pressures.
- Enterprise initiatives contributed 140 basis points to operating margin expansion
- Record operating margin of 27.4%, with six of seven segments expanding margins
- Organic revenue growth of 1% with favorable foreign currency translation of 2%
- Automotive OEM led organic growth at 5.0%
- Free cash flow conversion rate of 110% to net income
“The ITW team concluded the third quarter with solid operational and financial execution, delivering EPS of $2.81, which grew six percent year-over-year excluding the divestiture gain, alongside record operating margin of 27.4 percent, and a 15 percent increase in free cash flow. This outcome underscores the fundamental strength of the ITW Business Model, the inherent resilience of our diversified portfolio, and the high-quality execution demonstrated by our colleagues worldwide.”
Illinois Tool Works CEO, on the earnings call
Forward Guidance & Outlook
ITW narrowed its full year 2025 GAAP EPS guidance range to $10.40 to $10.50 per share. The company projects overall revenue growth of 1% to 3%, incorporating organic growth of flat to 2%. This outlook accounts for the current demand environment, adjusted for ongoing pricing and supply chain actions intended to effectively offset tariff cost impacts and for current foreign exchange rates. Operating margin is projected to be in the range of 26% to 27% with a projected contribution of 125 basis points or more from enterprise initiatives. Free cash flow is expected to be approximately 100% of net income, and the company plans to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is approximately 23%.
ITW YoY Financials
ITW Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.