Form 8-K
8-K — ILLINOIS TOOL WORKS INC
Accession: 0000049826-26-000057
Filed: 2026-10-27
Period: 2026-10-27
CIK: 0000049826
SIC: 3560 (GENERAL INDUSTRIAL MACHINERY & EQUIPMENT)
Item: Results of Operations and Financial Condition
Item: Financial Statements and Exhibits
Documents
8-K — itw-20261027.htm (Primary)
EX-99.1 (a20260930-3q26ex991pressre.htm)
XML — IDEA: XBRL DOCUMENT (R1.htm)
8-K
8-K (Primary)
Filename: itw-20261027.htm · Sequence: 1
itw-20261027
0000049826false00000498262026-10-272026-10-270000049826us-gaap:CommonStockMemberexch:XNYS2026-10-272026-10-270000049826itw:A0.625EuroNotesdue2027Memberexch:XNYS2026-10-272026-10-270000049826itw:A3.250EuroNotesDue2028Memberexch:XNYS2026-10-272026-10-270000049826itw:A2.125EuroNotesdue2030Memberexch:XNYS2026-10-272026-10-270000049826itw:A1.00EuroNotesdue2031Memberexch:XNYS2026-10-272026-10-270000049826itw:A3.375EuroNotesDue2032Memberexch:XNYS2026-10-272026-10-270000049826itw:A3.00EuroNotesdue2034Memberexch:XNYS2026-10-272026-10-27
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 27, 2026
_________________________
ILLINOIS TOOL WORKS INC.
(Exact name of registrant as specified in its charter)
Delaware 1-4797 36-1258310
(State or other jurisdiction of incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
155 Harlem Avenue Glenview IL 60025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 847-724-7500
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock ITW New York Stock Exchange
0.625% Euro Notes due 2027 ITW27 New York Stock Exchange
3.250% Euro Notes due 2028 ITW28 New York Stock Exchange
2.125% Euro Notes due 2030 ITW30 New York Stock Exchange
1.00% Euro Notes due 2031 ITW31 New York Stock Exchange
3.375% Euro Notes due 2032 ITW32 New York Stock Exchange
3.00% Euro Notes due 2034 ITW34 New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On October 27, 2026, Illinois Tool Works Inc. (the "Company") announced its 2026 third quarter results of operations in the press release furnished as Exhibit 99.1.
Non-GAAP Financial Measures
The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. The Company believes this non-GAAP financial measure, along with free cash flow to net income conversion rate, are useful to investors in evaluating the Company’s financial performance and measures the Company's ability to generate cash internally to fund Company initiatives. Free cash flow represents net cash provided by operating activities less additions to plant and equipment. Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies. A reconciliation of free cash flow to net cash provided by operating activities is included in the press release furnished as Exhibit 99.1.
The Company uses after-tax return on average invested capital ("After-tax ROIC") to measure the effectiveness of its operations' use of invested capital to generate profits. After-tax ROIC is not defined under U.S. generally accepted accounting principles ("GAAP"). After-tax ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company's ability to generate returns from cash invested in its operations and may be different than the method used by other companies to calculate After-tax ROIC. The Company defines After-tax ROIC as operating income after taxes divided by average invested capital, which is annualized when presented in interim periods. Operating income after taxes is a non-GAAP measure consisting of net income before interest expense and other income (expense), on an after-tax basis, which are excluded as they do not represent returns generated by the Company's operations. For comparability, the Company also excluded the discrete tax benefit of $34 million in the first quarter of 2026 from net income and the effective tax rate for the nine months ended September 30, 2026. Additionally, for comparability, the Company also excluded the net discrete tax benefit of $27 million in the third quarter of 2025 from net income and the effective tax rate for the three and nine months ended September 30, 2025, and for the year ended December 31, 2025. Also, for comparability, the Company excluded the discrete tax benefit of $21 million in the first quarter of 2025 from net income and the effective tax rate for the nine months ended September 30, 2025, and the year ended December 31, 2025. Total invested capital represents the net assets of the Company, other than cash and equivalents and outstanding debt which do not represent capital investment in the Company's operations. The most comparable GAAP measure to operating income after taxes is net income. Calculations of net income to average invested capital and After-tax ROIC are included in the press release furnished as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit Number Exhibit Description
99.1
Press Release issued by Illinois Tool Works Inc. dated October 27, 2026 (furnished pursuant to Item 2.02).
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
ILLINOIS TOOL WORKS INC.
Dated: October 27, 2026
By: /s/ Michael M. Larsen
Michael M. Larsen
Senior Vice President & Chief Financial Officer
EX-99.1
EX-99.1
Filename: a20260930-3q26ex991pressre.htm · Sequence: 2
Document
Exhibit 99.1
ITW Reports Third Quarter 2026 Results
•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., October 27, 2026 - 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.
Investor Relations & Media Contact:
Erin Linnihan
Tel: 224.661.7431
investorrelations@itw.com | mediarelations@itw.com
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
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
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 %
XML — IDEA: XBRL DOCUMENT
XML
Filename: R1.htm · Sequence: 8
v3.26.3
Document and Entity Information Document
Oct. 27, 2026
Entity Information [Line Items]
Document Type
8-K
Document Period End Date
Oct. 27, 2026
Entity Registrant Name
ILLINOIS TOOL WORKS INC.
Entity Incorporation, State or Country Code
DE
Entity File Number
1-4797
Entity Tax Identification Number
36-1258310
Entity Address, Address Line One
155 Harlem Avenue
Entity Address, City or Town
Glenview
Entity Address, State or Province
IL
Entity Address, Postal Zip Code
60025
City Area Code
847
Local Phone Number
724-7500
Written Communications
false
Soliciting Material
false
Pre-commencement Tender Offer
false
Pre-commencement Issuer Tender Offer
false
Entity Emerging Growth Company
false
Entity Central Index Key
0000049826
Amendment Flag
false
NEW YORK STOCK EXCHANGE, INC. | Common Stock
Entity Information [Line Items]
Title of 12(b) Security
Common Stock
Trading Symbol
ITW
Security Exchange Name
NYSE
NEW YORK STOCK EXCHANGE, INC. | 0.625% Euro Notes due 2027
Entity Information [Line Items]
Title of 12(b) Security
0.625% Euro Notes due 2027
Trading Symbol
ITW27
Security Exchange Name
NYSE
NEW YORK STOCK EXCHANGE, INC. | 3.250% Euro Notes due 2028
Entity Information [Line Items]
Title of 12(b) Security
3.250% Euro Notes due 2028
Trading Symbol
ITW28
Security Exchange Name
NYSE
NEW YORK STOCK EXCHANGE, INC. | 2.125% Euro Notes due 2030
Entity Information [Line Items]
Title of 12(b) Security
2.125% Euro Notes due 2030
Trading Symbol
ITW30
Security Exchange Name
NYSE
NEW YORK STOCK EXCHANGE, INC. | 1.00% Euro Notes due 2031
Entity Information [Line Items]
Title of 12(b) Security
1.00% Euro Notes due 2031
Trading Symbol
ITW31
Security Exchange Name
NYSE
NEW YORK STOCK EXCHANGE, INC. | 3.375% Euro Notes due 2032
Entity Information [Line Items]
Title of 12(b) Security
3.375% Euro Notes due 2032
Trading Symbol
ITW32
Security Exchange Name
NYSE
NEW YORK STOCK EXCHANGE, INC. | 3.00% Euro Notes due 2034
Entity Information [Line Items]
Title of 12(b) Security
3.00% Euro Notes due 2034
Trading Symbol
ITW34
Security Exchange Name
NYSE
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