Illinois Tool Works 2025 Q1 Earnings Misses Targets as Net Income Falls 14.5%

Illinois Tool Works (ITW), ranking 192nd by market capitalization, reported its fiscal 2025 Q1 earnings on Apr 30th, 2025. The company's results met Wall Street's revenue expectations but recorded a drop in net income. Revenue fell 3.4% year over year to $3.84 billion, aligning with analyst estimates. Despite the downturn, ITW maintained its full-year guidance, projecting GAAP EPS between $10.15 and $10.55, in line with expectations. ITW expects organic growth of 0% to 2%, focusing on pricing strategies to offset tariff impacts.

Revenue

Illinois Tool Works reported a 3.4% decrease in total revenue for 2025 Q1, reaching $3.84 billion compared to $3.97 billion in 2024 Q1. Automotive OEM led with $786 million, followed by Food Equipment at $627 million. The Test & Measurement and Electronics division contributed $652 million, while Welding generated $472 million. Polymers & Fluids reported $429 million, Construction Products $443 million, and Specialty Products $435 million. Intersegment activities accounted for a $5 million reduction, summing up the Total Company revenue at $3.84 billion.

Earnings/Net Income

Illinois Tool Works experienced a decline in its earnings per share (EPS), which dropped by 12.8% to $2.39 from $2.74 the previous year. Net income also fell to $700 million, down 14.5% compared to $819 million in 2024 Q1. The decline in EPS indicates a challenging quarter for ITW.

Price Action

The stock price of Illinois Tool Works edged up 0.01% during the latest trading day, increased by 1.36% during the most recent full trading week, and decreased by 2.66% month-to-date.

Post-Earnings Price Action Review

The backtest results for Illinois Tool Works (ITW) reveal that earnings report metrics such as revenue, net income, and EPS have mixed effects on its stock price. Although revenue specifics weren't provided, generally, an increase in revenue is expected to positively impact stock price due to potential business growth. Net income impacts show a moderate positive market response, with a 3-Day and 10-Day win rate of 57.14%, and a 30-Day win rate of 52.38%. Similarly, EPS has a moderate positive effect, with identical short-term win rates. Despite this, the strongest market reactions often occur shortly after earnings releases, but overall response magnitude is modest. The stock's maximum return post-earnings was 4.29%, observed on day 73. In summary, while net income and EPS tend to positively influence ITW's stock price, the overall effect is moderate, with stabilization over time. Revenue's impact, while not specified, is likely positive due to its indication of potential growth.

CEO Commentary

Christopher A. O’Herlihy, President and Chief Executive Officer, emphasized that ITW delivered a solid start to the year with flat organic growth amid steady demand. He stated, "We continue to execute well in controlling the controllables," highlighting the contribution of enterprise initiatives to operating margins. O'Herlihy noted the company's unique advantages, including a diversified portfolio and a decentralized structure, which position ITW to outperform in volatile environments. He expressed confidence in their ability to mitigate tariff impacts through strategic adjustments and pricing actions. O'Herlihy concluded with gratitude for the dedication of ITW colleagues in serving customers and executing the strategy effectively.

Guidance

ITW maintains its full-year 2025 guidance with projected GAAP EPS in the range of $10.15 to $10.55. The company anticipates organic growth of 0% to 2%, incorporating recent tariff-related pricing and updated automotive build projections. The enterprise initiatives are expected to contribute at least 100 basis points of margin expansion independent of volume. Despite uncertainties in global demand, ITW plans to leverage its financial strength for continued investment in strategic initiatives, aiming for EPS to be neutral or better against tariff costs by year-end.

Additional News

Illinois Tool Works Inc. has actively repurchased $375 million worth of shares during the first quarter of 2025, reflecting a strong commitment to returning value to shareholders. The company plans to continue its buyback strategy, aiming to repurchase approximately $1.5 billion in shares over the year. Furthermore, Illinois Tool Works has maintained its dividend payments, with cash dividends declared at $1.50 per share for the quarter, consistent with previous quarters. These actions underscore ITW's robust financial position and its strategic focus on sustaining shareholder returns amidst an uncertain economic environment.