ITW Posts Solid Q3 Results, Raises Confidence in 2025 Guidance

Illinois Tool Works Inc. (NYSE: ITW) reported strong third-quarter 2025 results, exceeding expectations and demonstrating continued operational efficiency. The company also updated its full-year guidance, reflecting confidence in its strategic initiatives and steady demand across core markets.

Earnings and Revenue Beat Reflect Operational Efficiency

Illinois Tool Works Inc. (NYSE: ITW) reported a robust performance in the third quarter of 2025, with revenue reaching $4.1 billion, surpassing the anticipated $4.08 billion. This represents a 2% increase, driven by a 1% organic growth and a favorable foreign currency translation impact. The company achieved a record operating margin of 27.4%, an improvement of 90 basis points, attributed to strategic enterprise initiatives contributing 140 basis points.

ITW’s earnings per share (EPS) stood at $2.81, exceeding the projected $2.69, marking a 6% increase compared to the previous year, excluding the impact of a divestiture gain. The company’s operating income rose by 6% to $1.1 billion, reflecting strong financial execution. Free cash flow also saw a significant boost of 15%, amounting to $904 million, with a free cash flow conversion rate of 110% to net income.

The company’s strategic focus on customer-driven innovation has enabled it to maintain above-market organic growth, as noted by President and CEO Christopher A. O’Herlihy. The performance reflects the company’s ability to navigate economic challenges while maintaining high-quality execution across its diversified portfolio. The effective tax rate for the quarter was reported at 21.8%.

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ITW Targets 1–3% Revenue Growth, Solid Margins Ahead

Looking ahead, ITW has narrowed its full-year 2025 GAAP EPS guidance to a range of $10.40 to $10.50 per share. This revision reflects the company’s confidence in sustaining its strategic initiatives and delivering differentiated performance despite varying economic conditions. The company anticipates overall revenue growth of 1% to 3%, with organic growth expected to be flat to 2%.

The guidance takes into account the current demand environment and incorporates adjustments for ongoing pricing and supply chain actions aimed at mitigating tariff cost impacts. ITW projects an operating margin between 26% and 27%, with enterprise initiatives expected to contribute at least 125 basis points. The company plans to maintain a free cash flow conversion rate of approximately 100% of net income.

ITW also intends to repurchase around $1.5 billion of its own shares and expects an effective tax rate of approximately 23%. These projections underscore ITW’s commitment to delivering shareholder value through strategic financial management and operational excellence. The company’s focus on innovation and market leadership positions it well to navigate future challenges and capitalize on growth opportunities.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.