ITW Reports Second Quarter 2026 Results and Raises Full Year 2026 Guidance

  • Revenue of $4.30 billion, increased +6.1% as organic growth accelerated to +4.5%
  • Operating income of $1.15 billion grew +7.4% marking the most profitable quarter in company history
  • Operating margin of 26.7% expanded 40 bps, as enterprise initiatives contributed 120 bps
  • GAAP EPS of $2.84 increased +10.1%
  • Operating cash flow of $723 million and free cash flow of $631 million; an increase of +41%
  • Full Year 2026 guidance raised; organic revenue raised +1.5%-pts to new midpoint of 3.5% and GAAP EPS raised +$0.15 to new midpoint of $11.45

GLENVIEW, Ill., July 28, 2026 (GLOBE NEWSWIRE) — Illinois Tool Works Inc. (NYSE: ITW) today reported its second quarter 2026 results and raised full year 2026 guidance.

“The ITW team delivered a strong operational and financial performance in the second quarter highlighted by organic growth of 4.5 percent, operating margin of 26.7 percent, and a 10 percent increase in GAAP earnings per share to $2.84,” said Christopher A. O’Herlihy, President and Chief Executive Officer.

“Our results reflect a meaningful acceleration in our capex-related segments, led by double-digit organic growth in Welding and Test & Measurement and Electronics, alongside strong performance in Polymers & Fluids. As we advance our enterprise strategy priorities, we remain well-positioned to drive consistent, above-market organic growth powered by increased contribution to revenue growth from Customer-Back Innovation while further expanding profitability and margins. As a result of our strong operational momentum, we are raising both top- and bottom-line guidance for the full year,” O’Herlihy concluded.

Second Quarter 2026 Results

Second quarter revenue of $4.30 billion increased by 6.1 percent. Organic revenue growth was 4.5 percent, led by 6.4 percent growth in North America. Foreign currency translation increased revenue by 1.4 percent and an acquisition added 0.2 percent.

GAAP EPS grew 10.1 percent to $2.84, while operating income increased 7.4 percent to $1.15 billion, marking the most profitable quarter in the history of the company. Operating margin expanded by 40 basis points to 26.7 percent as enterprise initiatives contributed 120 basis points. In the quarter, price increases more than offset higher raw material costs in dollar terms, though timing lags between inflation and price adjustments modestly diluted margins. Operating cash flow was $723 million, and free cash flow was $631 million, a 41 percent increase representing a 77 percent conversion of net income. During the quarter, the company returned over $1.2 billion to shareholders through dividends and share repurchases of $750 million. The effective tax rate for the quarter was 24.4 percent.

2026 Guidance

ITW is raising its full year 2026 GAAP EPS guidance by $0.15 to a narrowed range of $11.35 to $11.55 per share, representing 9 percent growth at the midpoint. Based on current demand levels and prevailing foreign exchange rates, the company is raising revenue growth guidance to a new range of 4 to 5 percent and raising organic growth guidance to 3 to 4 percent, a 1.5 percentage point increase at the midpoint.

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 exceed 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 the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding global 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, operating and incremental margin, price/cost impact, statements regarding diluted income per share, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates, expected timing and amount of share repurchases, end market economic and regulatory conditions, the impact of recent or potential acquisitions and/or divestitures, 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 2025 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 Ended   Six Months Ended
  June 30,   June 30,
In millions except per share amounts 2026   2025   2026   2025
Operating Revenue $ 4,301     $ 4,053     $ 8,317     $ 7,892  
Cost of revenue   2,403       2,271       4,659       4,432  
Selling, administrative, and research and development expenses   735       693       1,457       1,399  
Amortization and impairment of intangible assets   16       21       34       42  
Operating Income   1,147       1,068       2,167       2,019  
Interest expense   (79 )     (74 )     (152 )     (142 )
Other income (expense)   12       4       32       16  
Income Before Taxes   1,080       998       2,047       1,893  
Income Taxes   265       243       464       438  
Net Income $ 815     $ 755     $ 1,583     $ 1,455  
               
Net Income Per Share:              
Basic $ 2.85     $ 2.58     $ 5.51     $ 4.97  
Diluted $ 2.84     $ 2.58     $ 5.50     $ 4.95  
               
Cash Dividends Per Share:              
Paid $ 1.61     $ 1.50     $ 3.22     $ 3.00  
Declared $ 1.61     $ 1.50     $ 3.22     $ 3.00  
               
Shares of Common Stock Outstanding During the Period:              
Average   286.4       292.3       287.3       292.9  
Average assuming dilution   287.0       292.9       288.1       293.7  
                               

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

STATEMENT OF FINANCIAL POSITION (UNAUDITED)
       
In millions June 30, 2026   December 31, 2025
Assets      
Current Assets:      
Cash and equivalents $ 839     $ 851  
Trade receivables   3,564       3,227  
Inventories   1,756       1,659  
Prepaid expenses and other current assets   441       463  
Total current assets   6,600       6,200  
       
Net plant and equipment   2,235       2,230  
Goodwill   5,074       5,098  
Intangible assets   558       591  
Deferred income taxes   489       519  
Other assets   1,538       1,510  
  $ 16,494     $ 16,148  
       
Liabilities and Stockholders’ Equity      
Current Liabilities:      
Short-term debt $ 3,145     $ 2,286  
Accounts payable   636       522  
Accrued expenses   1,592       1,636  
Cash dividends payable   457       465  
Income taxes payable   123       217  
Total current liabilities   5,953       5,126  
       
Noncurrent Liabilities:      
Long-term debt   6,549       6,683  
Deferred income taxes   162       154  
Other liabilities   935       959  
Total noncurrent liabilities   7,646       7,796  
       
Stockholders’ Equity:      
Common stock   6       6  
Additional paid-in-capital   1,838       1,771  
Retained earnings   30,812       30,150  
Common stock held in treasury   (28,004 )     (26,875 )
Accumulated other comprehensive income (loss)   (1,758 )     (1,827 )
Noncontrolling interest   1       1  
Total stockholders’ equity   2,895       3,226  
  $ 16,494     $ 16,148  
               

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
 
Three Months Ended June 30, 2026
Dollars in millions Total Revenue Operating Income Operating Margin
Automotive OEM $ 857   $ 185   21.6   %
Food Equipment   692     188   27.1   %
Test & Measurement and Electronics   769     193   25.2   %
Welding   549     178   32.4   %
Polymers & Fluids   476     140   29.3   %
Construction Products   494     151   30.6   %
Specialty Products   468     148   31.5   %
Intersegment   (4 )       %
Total Segments   4,301     1,183   27.5   %
Unallocated       (36 )   %
Total Company $ 4,301   $ 1,147   26.7   %
                   

Six Months Ended June 30, 2026
Dollars in millions Total Revenue Operating Income Operating Margin
Automotive OEM $ 1,677   $ 358   21.3   %
Food Equipment   1,329     345   26.0   %
Test & Measurement and Electronics   1,484     357   24.1   %
Welding   1,056     341   32.3   %
Polymers & Fluids   928     266   28.7   %
Construction Products   952     286   30.0   %
Specialty Products   899     283   31.4   %
Intersegment   (8 )       %
Total Segments   8,317     2,236   26.9   %
Unallocated       (69 )   %
Total Company $ 8,317   $ 2,167   26.1   %
                   

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
 
Q2 2026 vs. Q2 2025 Favorable/(Unfavorable)
Operating

Revenue
Automotive OEM Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW
Organic (0.4 ) %   % 10.0   % 13.9   % 7.3   % 2.0   % 1.6   % 4.5   %
Acquisitions/
Divestitures
  %   % 1.3   %   %   %   %   % 0.2   %
Translation 1.7   % 1.6   % 0.8   % 0.8   % 1.5   % 2.3   % 1.4   % 1.4   %
Operating

Revenue
1.3   % 1.6   % 12.1   % 14.7   % 8.8   % 4.3   % 3.0   % 6.1   %
                                                 

Q2 2026 vs. Q2 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 (10) bps 250 bps 220 bps 140 bps 40 bps 20 bps 90 bps
Changes in Variable
Margin & OH Costs
20 bps (60) bps (250) bps 40 bps (40) bps (150) bps (50) bps
Total Organic 10 bps (60) bps 250 bps (30) bps 180 bps (130) bps 40 bps
Acquisitions/
Divestitures
(20) bps
Restructuring/Other 20 bps 10 bps (40) bps (20) bps (20) bps 20 bps
Total Operating

Margin Change
30 bps (60) bps 240 bps (70) bps 160 bps (20) bps (110) bps 40 bps
                 
Total Operating

Margin % *
21.6 % 27.1 % 25.2 % 32.4 % 29.3 % 30.6 % 31.5 % 26.7 %
                 
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 20 bps 10 bps 120 bps 80 bps 10 bps 20 bps 40 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.04) on GAAP earnings per share for the second quarter of 2026.
 

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

SEGMENT DATA (UNAUDITED)
 
H1 2026 vs. H1 2025 Favorable/(Unfavorable)
Operating

Revenue
Automotive OEM Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW
Organic (0.6 ) % (1.3 ) % 7.4   % 10.0   % 4.6   % 0.4   % (1.5 ) % 2.5   %
Acquisitions/
Divestitures
  %   % 1.5   %   %   %   %   % 0.3   %
Translation 3.4   % 2.9   % 2.0   % 1.0   % 2.5   % 3.5   % 2.6   % 2.6   %
Operating

Revenue
2.8   % 1.6   % 10.9   % 11.0   % 7.1   % 3.9   % 1.1   % 5.4   %
                                                 

H1 2026 vs. H1 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 (10) bps (20) bps 200 bps 160 bps 90 bps 20 bps (30) bps 50 bps
Changes in Variable
Margin & OH Costs
70 bps (100) bps 20 bps (180) bps 80 bps (10) bps (40) bps (10) bps
Total Organic 60 bps (120) bps 220 bps (20) bps 170 bps 10 bps (70) bps 40 bps
Acquisitions/
Divestitures
(40) bps
Restructuring/Other 40 bps 10 bps 20 bps (30) bps (10) bps (10) bps 30 bps 10 bps
Total Operating

Margin Change
100 bps (110) bps 200 bps (50) bps 160 bps (40) bps 50 bps
                 
Total Operating

Margin % *
21.3 % 26.0 % 24.1 % 32.3 % 28.7 % 30.0 % 31.4 % 26.1 %
                 
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets 20 bps 130 bps 90 bps 10 bps 20 bps 40 bps  **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.09) on GAAP earnings per share for the first half 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   Six Months Ended
  June 30,   June 30,
Dollars in millions 2026   2025   2026   2025
Numerator:              
Net Income $ 815     $ 755     $ 1,583     $ 1,455  
Discrete tax benefit related to the first quarter 2026               (34 )      
Discrete tax benefit related to the first quarter 2025                     (21 )
Interest expense, net of tax (1)   59       56       115       108  
Other (income) expense, net of tax (1)   (9 )     (3 )     (24 )     (12 )
Operating income after taxes $ 865     $ 808     $ 1,640     $ 1,530  
               
Denominator:              
Invested capital:              
Cash and equivalents $ 839     $ 788     $ 839     $ 788  
Trade receivables   3,564       3,320       3,564       3,320  
Inventories   1,756       1,710       1,756       1,710  
Net plant and equipment   2,235       2,177       2,235       2,177  
Goodwill and intangible assets   5,632       5,596       5,632       5,596  
Accounts payable and accrued expenses   (2,228 )     (2,157 )     (2,228 )     (2,157 )
Debt   (9,694 )     (8,937 )     (9,694 )     (8,937 )
Other, net   791       714       791       714  
Total net assets (stockholders’ equity)   2,895       3,211       2,895       3,211  
Cash and equivalents   (839 )     (788 )     (839 )     (788 )
Debt   9,694       8,937       9,694       8,937  
Total invested capital $ 11,750     $ 11,360     $ 11,750     $ 11,360  
               
Average invested capital (2) $ 11,650     $ 10,996     $ 11,548     $ 10,741  
               
Net income to average invested capital (3)   28.0  %     27.4  %     27.4  %     27.1  %
After-tax return on average invested capital (3)   29.7  %     29.4  %     28.4  %     28.5  %
                               

(1) Effective tax rate used for interest expense and other (income) expense for the three months ended June 30, 2026 and 2025 was 24.4% in both periods. Effective tax rate used for interest expense and other (income) expense for the six months ended June 30, 2026 and 2025 was 24.3% and 24.2%, 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 June 30, 2026 and 2025 were converted to an annual rate by multiplying the calculated return by 4. Returns for the six months ended June 30, 2026 and 2025 were converted to an annual rate by multiplying the calculated return by 2.

A reconciliation of the tax rate for the six month period ended June 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:

  Six Months Ended
  June 30, 2026
Dollars in millions Income Taxes


  Tax Rate
As reported $ 464     22.6  %
Discrete tax benefit related to the first quarter 2026   34     1.7  %
As adjusted $ 498     24.3  %
             

A reconciliation of the tax rate for the six month period ended June 30, 2025, 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:

  Six Months Ended
  June 30, 2025
Dollars in millions Income Taxes   Tax Rate
As reported $ 438     23.1  %
Discrete tax benefit related to the first quarter 2025   21     1.1  %
As adjusted $ 459     24.2  %
             

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   Six Months Ended
  June 30,   June 30,
Dollars in millions 2026   2025   2026   2025
Net cash provided by operating activities $ 723     $ 550     $ 1,346     $ 1,142  
Less: Additions to plant and equipment   (92 )     (101 )     (187 )     (197 )
Free cash flow $ 631     $ 449     $ 1,159     $ 945  
               
Net income $ 815     $ 755     $ 1,583     $ 1,455  
               
Net cash provided by operating activities to net income conversion rate   89  %     73  %     85  %     78  %
Free cash flow to net income conversion rate   77  %     59  %     73  %     65  %
                               

Investor Relations & Media Contact:                                               
Erin Linnihan
Tel: 224.661.7431 
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