Executive Summary
Illinois Tool Works (0J8W.L) reported Q4 2024 revenue of $3.932 billion, with gross profit of $1.686 billion and a gross margin of 42.9%. Operating income was $1.031 billion (operating margin 26.2%), and net income reached $750 million (net margin 19.1%), translating to diluted EPS of $2.54. YoY revenue declined 1.28% and QoQ revenue declined 0.86%, while net income rose about 4.6% year-over-year amid margin discipline and favorable product mix. Free cash flow totaled $996 million for the quarter, supported by $1.114 billion of operating cash flow and a disciplined capital allocation program that included $443 million in dividends and $375 million in share repurchases, offset by $118 million of capital expenditure. The company carried total debt of approximately $8.08 billion and net debt around $7.13 billion, with a debt-to-capitalization of roughly 70.9% and interest coverage of 15.2x, indicating solid balance sheet resilience even as leverage remains a focus for investors.
Management continued to emphasize cash generation and returns to shareholders, underpinned by ITW’s diversified industrial portfolio and high-margin franchises. While 2024 saw modest revenue headwinds, the margin profile and cash flow performance position ITW to weather cyclical volatility and fund ongoing capital returns. No explicit full-year revenue guidance is provided in the QQ4 release, necessitating close monitoring of end-market demand, pricing dynamics, and input costs as macro conditions evolve. Overall, ITW remains a high-quality, cash-generative franchise in the industrials space, though investors should weigh the premium valuation against its durability, balance sheet strength, and ongoing capital allocation strategy.
Key Performance Indicators
Key Insights
Revenue: $3,932,000,000; YoY change: -1.28%; QoQ change: -0.86%
Gross Profit: $1,686,000,000; Gross Margin: 42.88%; YoY change: +0.90%; QoQ change: -1.40%
Operating Income: $1,031,000,000; Operating Margin: 26.22%; YoY change: +4.35%; QoQ change: -2.00%
Net Income: $750,000,000; Net Margin: 19.07%; YoY change: +4.60%; QoQ change: -35.34%
EPS (Diluted): $2.54; EPS (Basic): $2.55; YoY EPS change: +6.69%; QoQ EPS change: -34.95%
EBITDA: $1,153,000,000; EBITDA Margin: 29.32%
Free Cash Flow: $996,0...
Financial Highlights
Revenue: $3,932,000,000; YoY change: -1.28%; QoQ change: -0.86%
Gross Profit: $1,686,000,000; Gross Margin: 42.88%; YoY change: +0.90%; QoQ change: -1.40%
Operating Income: $1,031,000,000; Operating Margin: 26.22%; YoY change: +4.35%; QoQ change: -2.00%
Net Income: $750,000,000; Net Margin: 19.07%; YoY change: +4.60%; QoQ change: -35.34%
EPS (Diluted): $2.54; EPS (Basic): $2.55; YoY EPS change: +6.69%; QoQ EPS change: -34.95%
EBITDA: $1,153,000,000; EBITDA Margin: 29.32%
Free Cash Flow: $996,000,000; Operating Cash Flow: $1,114,000,000; Capex: $(118,000,000)
Balance Sheet Highlights:
Total Assets: $15.067 billion; Total Liabilities: $11.750 billion; Total Stockholders’ Equity: $3.316 billion
Cash and Cash Equivalents: $948 million; Net Debt: $7.13 billion; Total Debt: $8.078 billion; Debt/Capitalization: ~70.9%
Current Ratio: 1.359x; Quick Ratio: 0.973x; Cash Ratio: 0.220x
Shareholder Returns: Dividends paid: $443 million; Share repurchases: $375 million; Dividend Payout Ratio: 59.1%
Key Multiples (as reported/updated): P/E ~ 24.96x; P/B ~ 22.58x; P/S ~ 19.04x; Dividend Yield ~ 0.59% (0.00592).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.93B |
-1.28% |
-0.86% |
| Gross Profit |
1.69B |
0.90% |
-1.40% |
| Operating Income |
1.03B |
4.35% |
-2.00% |
| Net Income |
750.00M |
4.60% |
-35.34% |
| EPS |
2.55 |
6.69% |
-34.95% |
Key Financial Ratios
operatingProfitMargin
26.2%
operatingCashFlowPerShare
$3.78
freeCashFlowPerShare
$3.38
dividendPayoutRatio
59.1%
Management Commentary
Note: The earnings transcript data were not provided in the input. As a result, the highlights below synthesize management commentary that is typically associated with ITW’s QQ4 calls and align with the reported metrics. Theme-based context rather than verbatim quotes:
- Strategy and portfolio mix: ITW’s diversified end-markets (Automotive OEM, Food Equipment, Test & Measurement, and Specialty Products) continue to support margin resilience despite modest top-line pressure. The company has historically leveraged pricing discipline and mix to protect margins in downturns.
- Operational execution: Margin stability in a challenging revenue environment suggests effective cost controls and productivity initiatives. Cash generation remains a core strength, with an emphasis on returning capital to shareholders through dividends and buybacks.
- Market conditions: Modest demand headwinds in select industrials end-markets appear to persist into QQ4 2024, with relief from broad-based pricing actions and mix improvements helping offset revenue softness.
- Capital allocation: The cash flow profile supports continued dividends and buybacks, while maintaining investment in high-return capex and selective acquisitions aligned with strategic priorities.
Forward Guidance
The QQ4 2024 results release does not include explicit full-year revenue or earnings guidance. Investors should monitor: (1) end-market demand trends across ITW’s seven segments, (2) pricing momentum and input cost trajectory (notably materials and freight), (3) working capital dynamics and inventory levels (DIO around 66.7 days), and (4) capital allocation efficiency (free cash flow generation vs. dividends and share repurchases) as potential drivers of mid-cycle earnings stability. Historically, ITW has demonstrated a disciplined approach to capital allocation and a focus on sustaining margins and cash flow; the magnitude of any near-term margin expansion will depend on price realization and cost containment opportunities amid ongoing macro volatility.