![](https://capedge.com/proxy/8-K/0000049826-05-000008/img001.jpg)
ITW Conference Call
First Quarter
2005
Exhibit 99.2
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img002.jpg)
ITW
Agenda
1.
Introduction……………………..John Brooklier
2.
Financial Overview……………...Ron Kropp
3.
Manufacturing Segments……… John Brooklier
4.
Forecast 2005………………….…Jon Kinney
4.
Q & A………………......…………Group
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img003.jpg)
ITW
Forward - Looking Statements
This conference call contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, including,
without limitation, statements regarding end market conditions and
operating results for the second quarter and full-year 2005 and the
company’s earnings and acquired revenue forecasts. These statements are
subject to certain risks, uncertainties, and other factors, which could cause
actual results to differ materially from those anticipated. Important risks
that may influence future results include (1) a downturn in the
construction, automotive, general industrial, food service and retail, or
commercial real estate markets, (2) deterioration in global and domestic
business and economic conditions, particularly in North America, the
European Community and Australia, (3) the unfavorable impact of foreign
currency fluctuations and costs of raw materials, (4) an interruption in, or
reduction in, introducing new products into the Company’s product lines,
(5) an unfavorable environment for making acquisitions or dispositions,
domestic and international, including adverse accounting or regulatory
requirements and market values of candidates, and (6) unfavorable tax law
changes and tax authority rulings. The risks covered here are not all
inclusive and given these and other possible risks and uncertainties,
investors should not place undue reliance on forward-looking statements
as a prediction of actual results.
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img004.jpg)
Conference Call Playback
Replay number: 203-369-0858
No pass code necessary
Telephone replay available through midnight of May
3, 2005
Webcast / PowerPoint replay available at itw.com
website
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img005.jpg)
ITW
Quarterly Highlights
2004
2005
Q1
Q1
Amount
%
Operating Revenues
2,710.3
3,074.3
364.0
13.4%
Operating Income
447.6
477.9
30.3
6.8%
% of Revenues
16.5%
15.5%
-1.0%
Income From Continuing Operations
Income Amount
290.0
312.3
22.3
7.7%
Income Per Share-Diluted
0.93
1.06
0.13
14.0%
Average Invested Capital
7,126.4
8,142.4
(1,016.0)
-14.3%
Return on Average Invested Capital
16.6%
15.8%
-0.8%
Free Operating Cash Flow
278.0
254.3
(23.7)
-8.5%
F(U) Last Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img006.jpg)
ITW
Quarterly Operating Analysis
Revenue
Income
Margins
Base Manufacturing Business
Operating Leverage
6.1%
15.2%
1.4%
Nonvolume-related
-
-11.8%
-1.8%
Total
6.1%
3.4%
-0.4%
Acquisitions / Divestitures
6.2%
2.2%
-0.6%
Translation
2.3%
2.1%
-
Impairment
-
2.3%
0.3%
Restructuring
-
0.3%
0.1%
Leasing & Investments
-0.6%
-3.5%
-0.4%
Intercompany
-0.6%
-
-
Total
13.4%
6.8%
-1.0%
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img007.jpg)
ITW
Leasing & Investments
2004
2005
Q1
Q1
Amount
%
Operating Revenues
38.7
22.6
(16.1)
-41.6%
Operating Income
34.8
18.8
(16.0)
-46.0%
Operating Margins
89.9%
83.1%
-6.8%
F(U) Last Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img008.jpg)
ITW
Non Operating & Taxes
2004
2005
Q1
Q1
Amount
%
Operating Income
447.6
477.9
30.3
6.8%
Interest Expense
(15.9)
(18.7)
(2.8)
Other Income
7.7
3.4
(4.3)
Income From Continuing Operations-P/T
439.4
462.6
23.2
5.3%
Income Taxes
149.4
150.3
(0.9)
% to Pre Tax Income
34.0%
32.5%
1.5%
Income From Continuing Operations-A/T
290.0
312.3
22.3
7.7%
F(U) Last Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img009.jpg)
ITW
Invested Capital
3/31/04
12/31/04
3/31/05
Trade Receivables
1,909.6
2,054.6
2,132.5
Days Sales Outstanding
63.4
60.6
62.4
Inventories
1,070.5
1,281.2
1,361.4
Months on Hand
1.8
1.9
2.0
Other Current Assets
386.2
319.0
309.4
Accounts Payable & Accruals
(1,647.4)
(1,647.4)
(1,585.3)
Operating Working Capital
1,718.9
2,007.4
2,218.0
% to Revenue(Prior 4 Qtrs.)
16%
17%
18%
Net Plant & Equipment
1,783.2
1,876.9
1,875.2
Investments, net of L&I Debt
659.9
833.5
850.3
Goodwill
2,618.1
2,753.1
2,848.7
Other, net
505.4
534.9
486.7
Invested Capital
7,285.5
8,005.8
8,278.9
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img010.jpg)
ITW
Debt & Equity
3/31/04
12/31/04
3/31/05
Total Capital
Short Term Debt
51.4
203.5
786.0
Long Term Debt
920.8
921.1
967.9
Total Debt
972.2
1,124.6
1,753.9
Stockholders' Equity
8,234.1
7,627.6
7,708.7
Total Capital
9,206.3
8,752.2
9,462.6
Less:
Leasing & Investments Debt
(191.8)
(79.0)
(130.8)
Cash
(1,729.0)
(667.4)
(1,052.9)
Net Debt & Equity
7,285.5
8,005.8
8,278.9
Debt to Total Capital
11%
13%
19%
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img011.jpg)
ITW
Cash Flow
2004
2005
Q1
Q1
Net Income
290.2
312.3
Adjust for Non-Cash Items
60.4
186.0
Changes in Operating Assets & Liabilities
(30.9)
(195.4)
Net Cash From Operating Activities
319.7
302.9
Additions to Plant & Equipment
(60.5)
(64.0)
Proceeds from Investments
18.8
15.4
Free Operating Cash Flow
278.0
254.3
Stock Repurchase
-
(189.7)
Acquisitions
(183.7)
(188.4)
Purchase of Investments
(14.6)
(70.7)
Dividends
(73.9)
(81.7)
Debt
(16.7)
630.8
Other
55.5
31.0
Net Cash Increase/(Decrease)
44.6
385.6
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img012.jpg)
ITW
Return on Average Invested Capital
2004
2005
F(U)
Current Quarter
Q1
Q1
Prior Yr.
Operating Income after Taxes
295.4
322.6
27.2
Operating Margins
11.0%
10.5%
-0.5%
Average Invested Capital
7,126.4
8,142.4
(1,016.0)
Capital Turnover
1.52
1.51
(0.01)
Return on Average Invested Capital
16.6%
15.8%
-0.8%
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img013.jpg)
ITW
Acquisitions
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Annual Revenues Acquired
247
168
78
131
151
-
-
-
Purchase Price
Cash Paid
184
193
62
149
188
-
-
-
Stock Issued
2
-
-
-
-
-
-
-
Total
186
193
62
149
188
-
-
-
Number of Acquisitions
North America
Engineered Products
2
1
1
1
1
-
-
-
Specialty Systems
-
1
1
1
1
-
-
-
International
Engineered Products
5
2
-
1
-
-
-
-
Specialty Systems
3
4
1
-
1
-
-
-
Total
10
8
3
3
3
-
-
-
2004
2005
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img014.jpg)
Key Economic Data
March ’05 ISM: declined to 55.2% from 58.6% in
December ’04 ; new order index also decreased to 57.1%
from 67.4% in the same time period
US Industrial Production (ex. Tech.): +3.1% in March ’05
compared to +4.1% in December ’04
Euro-Zone Purchasing Managers’ Index: 50.4% in
March ’05 versus 51.4% in December ’04
Euro-Zone Industrial Production: +2.0% in most recent
reported month versus +0.4% in November ’04
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img015.jpg)
ITW
Engineered Products - North America
2004
2005
Q1
Q1
Amount
%
Operating Revenues
812.8
918.3
105.5
13.0%
Operating Income
138.2
144.4
6.2
4.5%
Operating Margins
17.0%
15.7%
-1.3%
F(U) Last Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img016.jpg)
Engineered Products - North America
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
3.2%
7.9%
0.8%
Nonvolume-related
-
-9.5%
-1.6%
Total
3.2%
-1.6%
-0.8%
Acquisitions / Divestitures
9.6%
4.6%
-0.7%
Translation
0.2%
0.2%
-
Impairment
-
1.4%
0.2%
Restructuring
-
-0.1%
-
Total
13.0%
4.5%
-1.3%
% F(U) Prior Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img017.jpg)
Engineered Products - North America
Key Points
Total construction: +3% for Q1 ’05
ITW construction (Paslode/Buildex/Ramset/ITW Brands)
base revenues: +7% for Q1 ’05;
- new housing / renovation both grew 8% to 10% in Q1 ’05
- commercial increases 3% to 5% in Q1 ’05
Wilsonart base revenues were flat
- basic laminate revenues modestly increased in Q1 ’05 while
flooring revenues were sluggish
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img018.jpg)
Engineered Products - North America
Key Points
Auto base revenues: -1% for Q1 ’05
Big 3 build rates: -9% for Q1 ’05
GM: -13%
Ford: -9%
Chrysler: -3%
Transplants: +7%
Big 3 inventories: 79 days at 3-31-05
GM: 78 days
Ford: 82 days
Chrysler: 77 days
Transplants: 54 days
ITW build estimates for 2005:
Q2: -5%
FY: -4% to -5%
Industrial: base revenues +7% for Q1 ’05
Top performers: Minigrip/ZipPak, Fibre Glass Evercoat,
Engineered Polymers, Fluid Products
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img019.jpg)
ITW
Engineered Products - International
2004
2005
Q1
Q1
Amount
%
Operating Revenues
523.6
645.7
122.1
23.3%
Operating Income
64.4
84.2
19.8
30.7%
Operating Margins
12.3%
13.0%
0.7%
F(U) Last Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img020.jpg)
Engineered Products - International
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
3.0%
9.8%
0.8%
Nonvolume-related
-
-8.2%
-1.0%
Total
3.0%
1.6%
-0.2%
Acquisitions / Divestitures
15.0%
7.3%
-1.0%
Translation
5.3%
6.7%
0.1%
Impairment
-
13.1%
1.6%
Restructuring
-
2.0%
0.2%
Total
23.3%
30.7%
0.7%
% F(U) Prior Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img021.jpg)
Engineered Products - International
Key Points
Construction base revenues: +8% in Q1 ’05
Europe: +11% growth (strength in UK, France)
Austral-Asia: Flat (retail weaker; commercial stronger)
Wilsonart Intl.: +17% (good activity in China, Germany,
and U.K.)
Automotive base revenues: -3% in Q1 ’05
Builds: +1% in Q1 ’05
Fiat: -16.1%; VW: -4.9%; Daimler/Chrysler: -1.5%;
BMW: +21.7%; Peugeot: +8.4%; GM: +8.0%
ITW forecasting FY ’05 builds: +2%
Industrial base revenues: +2% in Q1 ’05
Top performers: polymers and fluid products
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img022.jpg)
ITW
Specialty Systems - North America
2004
2005
Q1
Q1
Amount
%
Operating Revenues
909.3
1,005.9
96.6
10.6%
Operating Income
150.6
176.6
26.0
17.3%
Operating Margins
16.6%
17.6%
1.0%
F(U) Last Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img023.jpg)
Specialty Systems - North America
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
9.8%
24.5%
2.2%
Nonvolume-related
-
-10.7%
-1.6%
Total
9.8%
13.8%
0.6%
Acquisitions / Divestitures
0.4%
0.4%
-
Translation
0.4%
0.5%
-
Impairment
-
-0.1%
-
Restructuring
-
2.7%
0.4%
Total
10.6%
17.3%
1.0%
% F(U) Prior Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img024.jpg)
Specialty Systems - North America
Key Points
Welding base revenues: approximately 20% growth in
Q1 ’05 due primarily to stronger equipment sales to
construction and variety of other end markets;
consumables and components units also grew sales
Food Equipment base revenues: +9% in Q1 ’05;
growth due to restaurant/institutional customers and
parts/service
Marking and Decorating: approximately 20% growth
in Q1 ’05; strength in hot melt business units
Industrial Packaging: Signode base revenues grew 4%
in Q1 ’05 ; consumables / machinery both showed
improvement
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img025.jpg)
ITW
Specialty Systems - International
2004
2005
Q1
Q1
Amount
%
Operating Revenues
520.2
592.8
72.6
14.0%
Operating Income
59.6
53.9
(5.7)
-9.6%
Operating Margins
11.5%
9.1%
-2.4%
F(U) Last Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img026.jpg)
Specialty Systems - International
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
6.8%
23.5%
1.8%
Nonvolume-related
-
-30.9%
-3.3%
Total
6.8%
-7.4%
-1.5%
Acquisitions / Divestitures
1.8%
-2.7%
-0.5%
Translation
5.4%
6.5%
0.2%
Impairment
-
0.4%
0.1%
Restructuring
-
-6.4%
-0.7%
Total
14.0%
-9.6%
-2.4%
% F(U) Prior Year
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img027.jpg)
Specialty Systems - International
Key Points
Signode base revenues continued strong growth in Q1
’05:
-Europe: +15%
-Asia/Pacific: +16%
Food Equipment: base revenues +7% in Q1 ’05;
growth from Germany, U.K. and Asia
Welding: base revenue grew 15% in Q1 ’05; Europe
and Asia strong
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img028.jpg)
ITW
2005 Forecast
Mid
Low
High
Point
2nd Quarter
Base Revenues
4.7%
6.7%
5.7%
Income Per Share-Diluted
$1.30
$1.36
$1.33
%F(U) 2004
12%
17%
15%
Full Year
Base Revenues
4.6%
6.1%
5.3%
Income Per Share-Diluted
$5.06
$5.20
$5.13
%F(U) 2004
15%
18%
17%
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img029.jpg)
ITW 2005 Forecast
Key Assumptions
Exchange rates hold at current levels.
Acquired revenues in the $600 to $800
million range.
Restructuring cost of $30 to $50 million.
Leasing & Investments income of $65 to
$75 million, which is lower than 2004 by
$55 to $65 million.
Tax rate of 32.5% for the first quarter and
the year.
![](https://capedge.com/proxy/8-K/0000049826-05-000008/img030.jpg)
ITW Conference Call
Q & A
First Quarter
2005