- 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 income and margin impact
- GAAP EPS of $3.00 grew +7%
- Operating cash flow of $953 million and free cash flow conversion of 100% of net income
- Full Year 2026 GAAP EPS guidance raised $0.05 at the midpoint to a narrowed range of $11.45 to $11.55 per share, representing +10% growth year-over-year at the midpoint
GLENVIEW, Ill., Oct. 27, 2026 (GLOBE NEWSWIRE) — Illinois Tool Works Inc. (NYSE: ITW) today reported its third quarter 2026 results and raised full year 2026 guidance.
“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,” said 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. We entered the fourth quarter with strong operational momentum and are raising our EPS guidance for the year. As we continue to advance our enterprise strategy priorities, including our goal of 3 percent-plus Customer-Back Innovation yield, we are positioning ITW to deliver consistent, above-market organic growth while further expanding profitability and margins,” O’Herlihy concluded.
Third Quarter 2026 Results
Third quarter revenue of $4.24 billion increased by 4.4 percent. Organic revenue growth was 3.8 percent, led by 6.0 percent growth in North America. Foreign currency translation increased revenue by 0.3 percent, and an acquisition added 0.3 percent.
GAAP EPS grew 6.8 percent to $3.00, while operating income increased 5.9 percent to $1.18 billion, a quarterly record for the company. Operating margin expanded by 40 basis points to 27.8 percent as enterprise initiatives contributed 130 basis points. In the quarter, price increases and other actions more than offset rising raw material costs, resulting in a favorable impact on both operating income and margin. Operating cash flow was $953 million, and free cash flow was $851 million, representing a 100 percent conversion of net income. During the quarter, the company repurchased $187 million of its own shares and raised its dividend 7 percent, bringing the annualized payout to $6.88 per share. This increase marks the 63rd consecutive year of dividend increases. The effective tax rate for the quarter was 24.4 percent.
Tornado damage to two Welding facilities in late July reduced third-quarter revenue by an estimated $40 million. Excluding this impact, the company estimates that the Welding organic revenue growth rate would have been approximately 15 percent, resulting in total company organic growth of approximately 5 percent. The associated loss of operating income was largely offset by business interruption insurance. The impact going forward is expected to be immaterial.
2026 Guidance
ITW is raising its full year 2026 GAAP EPS guidance by $0.05 at the midpoint to a narrowed range of $11.45 to $11.55 per share, representing 10 percent growth at the midpoint. Based on current demand levels and prevailing foreign exchange rates, the company is raising revenue growth guidance to 4.5 to 5.5 percent and reaffirming its organic growth guidance of 3 to 4 percent.
Operating margin is projected to be in the range of 26.5 to 27.5 percent, with enterprise initiatives contributing more than 100 basis points. Free cash flow is projected to be approximately 100 percent of net income, and the company expects to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is 23 to 24 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 U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding supply chain challenges, expected impact of inflation including raw material inflation and rising interest rates, 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, contribution from Customer-Back Innovation to revenue growth, operating and incremental margin, price/cost impact, statements regarding diluted earnings per share, after-tax return on average 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and subsequent reports filed with the U.S. Securities and Exchange Commission. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statement to reflect new information, future events, changed circumstances, or otherwise.
About ITW:
Founded in 1912, Illinois Tool Works Inc. (NYSE: ITW) is a Fortune 300 global multi-industry 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. To learn more, please visit www.itw.com.
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ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF INCOME (UNAUDITED) |
|||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| In millions except per share amounts | 2026 | 2025 | 2026 | 2025 | |||||||||||
| Operating Revenue | $ | 4,236 | $ | 4,059 | $ | 12,553 | $ | 11,951 | |||||||
| Cost of revenue | 2,326 | 2,253 | 6,985 | 6,685 | |||||||||||
| Selling, administrative, and research and development expenses | 717 | 676 | 2,174 | 2,075 | |||||||||||
| Amortization and impairment of intangible assets | 16 | 18 | 50 | 60 | |||||||||||
| Operating Income | 1,177 | 1,112 | 3,344 | 3,131 | |||||||||||
| Interest expense | (83 | ) | (75 | ) | (235 | ) | (217 | ) | |||||||
| Other income (expense) | 37 | 12 | 69 | 28 | |||||||||||
| Income Before Taxes | 1,131 | 1,049 | 3,178 | 2,942 | |||||||||||
| Income Taxes | 276 | 228 | 740 | 666 | |||||||||||
| Net Income | $ | 855 | $ | 821 | $ | 2,438 | $ | 2,276 | |||||||
| Net Income Per Share: | |||||||||||||||
| Basic | $ | 3.00 | $ | 2.82 | $ | 8.51 | $ | 7.79 | |||||||
| Diluted | $ | 3.00 | $ | 2.81 | $ | 8.49 | $ | 7.77 | |||||||
| Cash Dividends Per Share: | |||||||||||||||
| Paid | $ | 1.61 | $ | 1.50 | $ | 4.83 | $ | 4.50 | |||||||
| Declared | $ | 1.72 | $ | 1.61 | $ | 4.94 | $ | 4.61 | |||||||
| Shares of Common Stock Outstanding During the Period: | |||||||||||||||
| Average | 284.6 | 290.8 | 286.4 | 292.2 | |||||||||||
| Average assuming dilution | 285.3 | 291.7 | 287.1 | 293.0 | |||||||||||
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ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (UNAUDITED) |
|||||||
| In millions | September 30, 2026 | December 31, 2025 | |||||
| Assets | |||||||
| Current Assets: | |||||||
| Cash and equivalents | $ | 809 | $ | 851 | |||
| Trade receivables | 3,516 | 3,227 | |||||
| Inventories | 1,823 | 1,659 | |||||
| Prepaid expenses and other current assets | 450 | 463 | |||||
| Total current assets | 6,598 | 6,200 | |||||
| Net plant and equipment | 2,254 | 2,230 | |||||
| Goodwill | 5,073 | 5,098 | |||||
| Intangible assets | 543 | 591 | |||||
| Deferred income taxes | 492 | 519 | |||||
| Other assets | 1,537 | 1,510 | |||||
| $ | 16,497 | $ | 16,148 | ||||
| Liabilities and Stockholders’ Equity | |||||||
| Current Liabilities: | |||||||
| Short-term debt | $ | 2,219 | $ | 2,286 | |||
| Accounts payable | 623 | 522 | |||||
| Accrued expenses | 1,635 | 1,636 | |||||
| Cash dividends payable | 490 | 465 | |||||
| Income taxes payable | 133 | 217 | |||||
| Total current liabilities | 5,100 | 5,126 | |||||
| Noncurrent Liabilities: | |||||||
| Long-term debt | 7,153 | 6,683 | |||||
| Deferred income taxes | 168 | 154 | |||||
| Other liabilities | 934 | 959 | |||||
| Total noncurrent liabilities | 8,255 | 7,796 | |||||
| Stockholders’ Equity: | |||||||
| Common stock | 6 | 6 | |||||
| Additional paid-in-capital | 1,866 | 1,771 | |||||
| Retained earnings | 31,177 | 30,150 | |||||
| Common stock held in treasury | (28,190 | ) | (26,875 | ) | |||
| Accumulated other comprehensive income (loss) | (1,718 | ) | (1,827 | ) | |||
| Noncontrolling interest | 1 | 1 | |||||
| Total stockholders’ equity | 3,142 | 3,226 | |||||
| $ | 16,497 | $ | 16,148 | ||||
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ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) |
||||||||
| Three Months Ended September 30, 2026 | ||||||||
| Dollars in millions |
Total Revenue |
Operating Income |
Operating Margin |
|||||
| Automotive OEM | $ | 814 | $ | 163 | 20.1 | % | ||
| Food Equipment | 698 | 208 | 29.8 | % | ||||
| Test & Measurement and Electronics | 819 | 235 | 28.7 | % | ||||
| Welding | 513 | 186 | 36.3 | % | ||||
| Polymers & Fluids | 477 | 149 | 31.3 | % | ||||
| Construction Products | 472 | 141 | 29.9 | % | ||||
| Specialty Products | 447 | 140 | 31.4 | % | ||||
| Intersegment | (4 | ) | — | — | % | |||
| Total Segments | 4,236 | 1,222 | 28.9 | % | ||||
| Unallocated | — | (45 | ) | — | % | |||
| Total Company | $ | 4,236 | $ | 1,177 | 27.8 | % | ||
| Nine Months Ended September 30, 2026 | ||||||||
| Dollars in millions |
Total Revenue |
Operating Income |
Operating Margin |
|||||
| Automotive OEM | $ | 2,491 | $ | 521 | 20.9 | % | ||
| Food Equipment | 2,027 | 553 | 27.3 | % | ||||
| Test & Measurement and Electronics | 2,303 | 592 | 25.7 | % | ||||
| Welding | 1,569 | 527 | 33.6 | % | ||||
| Polymers & Fluids | 1,405 | 415 | 29.6 | % | ||||
| Construction Products | 1,424 | 427 | 30.0 | % | ||||
| Specialty Products | 1,346 | 423 | 31.4 | % | ||||
| Intersegment | (12 | ) | — | — | % | |||
| Total Segments | 12,553 | 3,458 | 27.5 | % | ||||
| Unallocated | — | (114 | ) | — | % | |||
| Total Company | $ | 12,553 | $ | 3,344 | 26.6 | % | ||
|
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) |
||||||||||||||||
| Q3 2026 vs. Q3 2025 Favorable/(Unfavorable) | ||||||||||||||||
|
Operating Revenue |
Automotive OEM |
Food Equipment |
Test & Measurement and Electronics |
Welding |
Polymers & Fluids |
Construction Products |
Specialty Products |
Total ITW | ||||||||
| Organic | (2.1 | )% | 0.5 | % | 15.8 | % | 6.9 | % | 8.2 | % | (0.8 | )% | (1.2 | )% | 3.8 | % |
| Acquisitions/ Divestitures |
— | % | — | % | 1.8 | % | — | % | — | % | — | % | — | % | 0.3 | % |
| Translation | 0.3 | % | 0.2 | % | (0.3 | )% | 0.4 | % | (0.1 | )% | 0.8 | % | 0.1 | % | 0.3 | % |
|
Operating Revenue |
(1.8 | )% | 0.7 | % | 17.3 | % | 7.3 | % | 8.1 | % | — | % | (1.1 | )% | 4.4 | % |
| Q3 2026 vs. Q3 2025 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 | (40) bps | 10 bps | 370 bps | 130 bps | 140 bps | (10) bps | (20) bps | 80 bps |
| Changes in Variable Margin & OH Costs |
(150) bps | 40 bps | (50) bps | 220 bps | 100 bps | (200) bps | (90) bps | (60) bps |
| Total Organic | (190) bps | 50 bps | 320 bps | 350 bps | 240 bps | (210) bps | (110) bps | 20 bps |
| Acquisitions/ Divestitures |
— | — | (60) bps | — | — | — | — | (10) bps |
| Restructuring/Other | 20 bps | 10 bps | 70 bps | 20 bps | 40 bps | 40 bps | 20 bps | 30 bps |
|
Total Operating Margin Change |
(170) bps | 60 bps | 330 bps | 370 bps | 280 bps | (170) bps | (90) bps | 40 bps |
|
Total Operating Margin % * |
20.1% | 29.8% | 28.7% | 36.3% | 31.3% | 29.9% | 31.4% | 27.8% |
|
* Includes unfavorable operating margin impact of amortization expense from acquisition- related intangible assets |
20 bps | — | 110 bps | 10 bps | 70 bps | 10 bps | 10 bps | 40 bps** |
| ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.04) on GAAP earnings per share for the third quarter of 2026. | ||||||||
|
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) |
||||||||||||||||
| YTD 2026 vs. YTD 2025 Favorable/(Unfavorable) | ||||||||||||||||
|
Operating Revenue |
Automotive OEM |
Food Equipment |
Test & Measurement and Electronics |
Welding |
Polymers & Fluids |
Construction Products |
Specialty Products |
Total ITW | ||||||||
| Organic | (1.1 | )% | (0.7 | )% | 10.3 | % | 9.0 | % | 5.8 | % | — | % | (1.4 | )% | 2.9 | % |
| Acquisitions/ Divestitures |
— | % | — | % | 1.6 | % | — | % | — | % | — | % | — | % | 0.3 | % |
| Translation | 2.3 | % | 2.0 | % | 1.2 | % | 0.8 | % | 1.6 | % | 2.6 | % | 1.7 | % | 1.8 | % |
|
Operating Revenue |
1.2 | % | 1.3 | % | 13.1 | % | 9.8 | % | 7.4 | % | 2.6 | % | 0.3 | % | 5.0 | % |
| YTD 2026 vs. YTD 2025 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 | (20) bps | (10) bps | 260 bps | 140 bps | 110 bps | — | (30) bps | 60 bps | ||||||||
| Changes in Variable Margin & OH Costs |
(10) bps | (50) bps | 10 bps | (40) bps | 80 bps | (70) bps | (60) bps | (30) bps | ||||||||
| Total Organic | (30) bps | (60) bps | 270 bps | 100 bps | 190 bps | (70) bps | (90) bps | 30 bps | ||||||||
| Acquisitions/ Divestitures |
— | — | (50) bps | — | — | — | — | (10) bps | ||||||||
| Restructuring/Other | 40 bps | 10 bps | 30 bps | (20) bps | 10 bps | 10 bps | 30 bps | 20 bps | ||||||||
|
Total Operating Margin Change |
10 bps | (50) bps | 250 bps | 80 bps | 200 bps | (60) bps | (60) bps | 40 bps | ||||||||
|
Total Operating Margin % * |
20.9 % |
27.3 % |
25.7 % |
33.6 % |
29.6 % |
30.0 % |
31.4 % |
26.6 % |
||||||||
|
* Includes unfavorable operating margin impact of amortization expense from acquisition- related intangible assets |
20 bps |
— |
120 bps |
— |
80 bps | 10 bps | 20 bps | 50 bps ** | ||||||||
| ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.13) on GAAP earnings per share for the first nine months of 2026. | ||||||||||||||||
|
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED) |
|||||||||||||||
|
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) |
|||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| Dollars in millions | 2026 | 2025 | 2026 | 2025 | |||||||||||
| Numerator: | |||||||||||||||
| Net Income | $ | 855 | $ | 821 | $ | 2,438 | $ | 2,276 | |||||||
| Discrete tax benefit related to the first quarter 2026 | — | — | (34 | ) | — | ||||||||||
| Net discrete tax benefit related to the third quarter 2025 | — | (27 | ) | — | (27 | ) | |||||||||
| Discrete tax benefit related to the first quarter 2025 | — | — | — | (21 | ) | ||||||||||
| Interest expense, net of tax(1) | 63 | 57 | 178 | 165 | |||||||||||
| Other (income) expense, net of tax(1) | (28 | ) | (10 | ) | (52 | ) | (22 | ) | |||||||
| Operating income after taxes | $ | 890 | $ | 841 | $ | 2,530 | $ | 2,371 | |||||||
| Denominator: | |||||||||||||||
| Invested capital: | |||||||||||||||
| Cash and equivalents | $ | 809 | $ | 924 | $ | 809 | $ | 924 | |||||||
| Trade receivables | 3,516 | 3,255 | 3,516 | 3,255 | |||||||||||
| Inventories | 1,823 | 1,725 | 1,823 | 1,725 | |||||||||||
| Net plant and equipment | 2,254 | 2,203 | 2,254 | 2,203 | |||||||||||
| Goodwill and intangible assets | 5,616 | 5,568 | 5,616 | 5,568 | |||||||||||
| Accounts payable and accrued expenses | (2,258 | ) | (2,175 | ) | (2,258 | ) | (2,175 | ) | |||||||
| Debt | (9,372 | ) | (8,942 | ) | (9,372 | ) | (8,942 | ) | |||||||
| Other, net | 754 | 651 | 754 | 651 | |||||||||||
| Total net assets (stockholders’ equity) | 3,142 | 3,209 | 3,142 | 3,209 | |||||||||||
| Cash and equivalents | (809 | ) | (924 | ) | (809 | ) | (924 | ) | |||||||
| Debt | 9,372 | 8,942 | 9,372 | 8,942 | |||||||||||
| Total invested capital | $ | 11,705 | $ | 11,227 | $ | 11,705 | $ | 11,227 | |||||||
| Average invested capital(2) | $ | 11,728 | $ | 11,293 | $ | 11,587 | $ | 10,863 | |||||||
| Net income to average invested capital(3) | 29.1 | % | 29.1 | % | 28.1 | % | 27.9 | % | |||||||
| After-tax return on average invested capital(3) | 30.3 | % | 29.8 | % | 29.1 | % | 29.1 | % | |||||||
(1) Effective tax rate used for interest expense and other (income) expense for the three months ended September 30, 2026 and 2025 was 24.4% and 24.3%, respectively. Effective tax rate used for interest expense and other (income) expense for the nine months ended September 30, 2026 and 2025 was 24.3% in both periods.
(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 September 30, 2026 and 2025 were converted to an annual rate by multiplying the calculated return by 4. Returns for the nine months ended September 30, 2026 and 2025 were converted to an annual rate by dividing the calculated return by 3 and multiplying it by 4.
A reconciliation of the tax rate for the nine month period ended September 30, 2026, excluding the first quarter 2026 discrete tax benefit of $34 million primarily related to the resolution of a U.S. tax audit, is as follows:
| Nine Months Ended | |||||
| September 30, 2026 | |||||
| Dollars in millions | Income Taxes | Tax Rate | |||
| As reported | $ | 740 | 23.3 | % | |
| Discrete tax benefit related to the first quarter 2026 | 34 | 1.0 | % | ||
| As adjusted | $ | 774 | 24.3 | % | |
A reconciliation of the tax rate for the three and nine month periods ended September 30, 2025, 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:
| Three Months Ended | Nine Months Ended | ||||||||||
| September 30, 2025 | September 30, 2025 | ||||||||||
| Dollars in millions | Income Taxes | Tax Rate | Income Taxes | Tax Rate | |||||||
| As reported | $ | 228 | 21.8 | % | $ | 666 | 22.7 | % | |||
| Net discrete tax benefit related to the third quarter 2025 | 27 | 2.5 | % | 27 | 0.9 | % | |||||
| Discrete tax benefit related to the first quarter 2025 | — | — | % | 21 | 0.7 | % | |||||
| As adjusted | $ | 255 | 24.3 | % | $ | 714 | 24.3 | % | |||
|
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) |
|||
| Twelve Months Ended | |||
| Dollars in millions | December 31, 2025 | ||
| Numerator: | |||
| Net income | $ | 3,066 | |
| Net discrete tax benefit related to the third quarter 2025 | (27 | ) | |
| Discrete tax benefit related to the first quarter 2025 | (21 | ) | |
| Interest expense, net of tax(1) | 222 | ||
| Other (income) expense, net of tax(1) | (32 | ) | |
| Operating income after taxes | $ | 3,208 | |
| Denominator: | |||
| Invested capital: | |||
| Cash and equivalents | $ | 851 | |
| Trade receivables | 3,227 | ||
| Inventories | 1,659 | ||
| Net plant and equipment | 2,230 | ||
| Goodwill and intangible assets | 5,689 | ||
| Accounts payable and accrued expenses | (2,158 | ) | |
| Debt | (8,969 | ) | |
| Other, net | 697 | ||
| Total net assets (stockholders’ equity) | 3,226 | ||
| Cash and equivalents | (851 | ) | |
| Debt | 8,969 | ||
| Total invested capital | $ | 11,344 | |
| Average invested capital(2) | $ | 10,959 | |
| Net income to average invested capital | 28.0 | % | |
| After-tax return on average invested capital | 29.3 | % | |
(1) Effective tax rate used for interest expense and other (income) expense for the year ended December 31, 2025 was 23.9%.
(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 the period presented.
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 millions | Income Taxes | Tax Rate | |||
| As reported | $ | 900 | 22.7 | % | |
| Net discrete tax benefit related to the third quarter 2025 | 27 | 0.7 | % | ||
| Discrete tax benefit related to the first quarter 2025 | 21 | 0.5 | % | ||
| As adjusted | $ | 948 | 23.9 | % | |
|
FREE CASH FLOW (UNAUDITED) |
|||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| Dollars in millions | 2026 | 2025 | 2026 | 2025 | |||||||||||
| Net cash provided by operating activities | $ | 953 | $ | 1,021 | $ | 2,299 | $ | 2,163 | |||||||
| Less: Additions to plant and equipment | (102 | ) | (117 | ) | (289 | ) | (314 | ) | |||||||
| Free cash flow | $ | 851 | $ | 904 | $ | 2,010 | $ | 1,849 | |||||||
| Net income | $ | 855 | $ | 821 | $ | 2,438 | $ | 2,276 | |||||||
| Net cash provided by operating activities to net income conversion rate | 111 | % | 124 | % | 94 | % | 95 | % | |||||||
| Free cash flow to net income conversion rate | 100 | % | 110 | % | 82 | % | 81 | % | |||||||
Investor Relations & Media Contact:
Erin Linnihan
Tel: 224.661.7431
[email protected]
|
[email protected]
