ITW Conference Call
First Quarter
2008
Exhibit 99.2
1
ITW
Agenda
1.
Introduction…………………….. John Brooklier/David Speer
2.
Financial Overview…………….. Ron Kropp
3.
Operating Segments………..…. John Brooklier
4.
Forecast 2008……….…….….… Ron Kropp
4.
Q & A………………......………… John Brooklier/Ron Kropp/David Speer
2
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, revenue growth,
earnings growth, operating income, tax rates, use of free cash, share
repurchases and potential acquisitions for the 2008 full year and the
Company’s related 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 or further downturn in the construction,
general industrial, automotive or food institutional/restaurant and service
markets, (2) deterioration in international and domestic business and
economic conditions, particularly in North America, Europe, Asia or 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, 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.
3
Conference Call Playback
Replay number: 203-369-1304
No pass code necessary
Telephone replay available through midnight of
April 30, 2008
Webcast / PowerPoint replay available at
itw.com website
4
ITW
Quarterly Highlights
5
2007
2008
Q1
Q1
Amount
%
Operating Revenues
3,716.6
4,139.4
422.8
11.4%
Operating Income
568.5
520.0
(48.5)
-8.5%
% of Revenues
15.3%
12.6%
-2.7%
Income from Continuing Operations
Income Amount
385.0
301.4
(83.6)
-21.7%
Income Per Share-Diluted
0.68
0.57
(0.11)
-16.2%
Net Income
Income Amount
402.4
303.6
(98.8)
-24.6%
Income Per Share-Diluted
0.71
0.57
(0.14)
-19.7%
Free Operating Cash Flow
337.5
404.9
67.4
20.0%
F(U) Last Year
ITW
Quarterly Operating Analysis
6
Operating
Operating
Operating
Revenues
Income
Margins
Base Manufacturing Business
Operating Leverage
0.4%
1.1%
0.1%
Nonvolume-related
-
0.5%
0.1%
Total
0.4%
1.6%
0.2%
Acquisitions/Divestitures
6.2%
0.6%
-0.7%
Translation
4.8%
4.8%
0.1%
Impairment
-
-17.0%
-2.6%
Restructuring
-
1.5%
0.2%
Intercompany/Other
-
-
0.1%
Total
11.4%
-8.5%
-2.7%
% F(U) Prior Year
7
ITW
Non Operating & Taxes
2007
2008
Q1
Q1
Amount
%
Operating Income
568.5
520.0
(48.5)
-8.5%
Interest Expense
(24.4)
(37.5)
(13.1)
Other Income (Expense)
15.0
(21.4)
(36.4)
Income from Continuing Operations-Pretax
559.1
461.1
(98.0)
-17.5%
Income Taxes
174.1
159.7
14.4
% to Pretax Income
31.1%
34.6%
-3.5%
Income from Continuing Operations
385.0
301.4
(83.6)
-21.7%
Income from Discontinued Operations
17.4
2.2
(15.2)
Net Income
402.4
303.6
(98.8)
-24.6%
F(U) Last Year
8
ITW
Invested Capital
3/31/07
12/31/07
3/31/08
Trade Receivables
2,681.5
2,915.5
3,014.4
Days Sales Outstanding
64.2
61.8
65.5
Inventories
1,601.7
1,625.8
1,766.0
Months on Hand
2.0
1.8
2.0
Prepaids and Other Current Assets
444.2
607.7
529.9
Accounts Payable & Accrued Expenses
(1,924.1)
(2,196.0)
(2,224.7)
Operating Working Capital
2,803.3
2,953.0
3,085.6
% to Revenue(Prior 4 Qtrs.)
19%
18%
19%
Net Plant & Equipment
2,070.5
2,194.0
2,247.6
Investments
552.2
507.6
507.0
Goodwill and Intangibles
5,283.6
5,683.3
5,839.5
Other, net
(594.0)
(514.8)
(583.7)
Invested Capital
10,115.6
10,823.1
11,096.0
Return on Average Invested Capital
15.7%
18.3%
12.4%
9
ITW
Debt & Equity
3/31/07
12/31/07
3/31/08
Total Capital
Short Term Debt
577.1
410.5
1,340.0
Long Term Debt
956.3
1,888.8
1,435.4
Total Debt
1,533.4
2,299.3
2,775.4
Stockholders' Equity
9,156.8
9,351.3
9,248.0
Total Capital
10,690.2
11,650.6
12,023.4
Less:
Cash
(574.6)
(827.5)
(927.4)
Net Debt & Equity
10,115.6
10,823.1
11,096.0
Debt to Total Capital
14%
20%
23%
Shares outstanding at end of period
556.7
530.1
522.8
10
ITW
Cash Flow
2007
2008
Q1
Q1
Net Income
402.4
303.6
Adjust for Non-Cash Items
77.2
230.8
Changes in Operating Assets & Liabilities
(56.8)
(40.5)
Net Cash From Operating Activities
422.8
493.9
Additions to Plant & Equipment
(85.3)
(89.0)
Free Operating Cash Flow
337.5
404.9
Stock Repurchase
(179.9)
(385.6)
Acquisitions
(269.1)
(236.0)
Proceeds from Divestitures
91.7
(3.7)
Dividends
(117.3)
(148.4)
Debt
89.2
425.2
Proceeds from Investments
13.1
4.4
Other
19.2
39.1
Net Cash Increase (Decrease)
(15.6)
99.9
11
ITW
Acquisitions
Q1
Q2
Q3
Q4
Q1
Annual Revenues Acquired
399
213
218
165
230
Purchase Price
Cash Paid
263
216
235
163
219
Stock Issued
-
-
-
-
-
Total
263
216
235
163
219
Number of Acquisitions
9
10
18
15
16
2007
2008
12
Industrial Packaging
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
554.6
65.1
11.7%
2008 Q1
623.3
69.0
11.1%
$ F(U)
68.7
3.9
-0.6%
% F(U)
12.4%
6.1%
% F(U) Prior Year
Base Business
Operating Leverage
0.7%
2.6%
0.2%
Nonvolume-related
-
-7.1%
-0.8%
Total
0.7%
-4.5%
-0.6%
Acquisitions/Divestitures
4.9%
1.7%
-0.3%
Translation
6.7%
7.4%
0.1%
Impairment
-
-
-
Restructuring
-
1.4%
0.2%
Other
0.1%
0.1%
-
Total
12.4%
6.1%
-0.6%
Industrial Packaging
Key Points
Total segment base revenues: +1% for Q1 ’08
Strapping consumables/equipment base revenues: -1%
All other industrial packaging base revenues: +6%
Q1 International base revenues: +3%
Strapping consumables base revenues: -3%
Equipment base revenues: -2%
Q1 North America base revenues: -2%
Strapping consumables base revenues: -3%; largely driven by
weakness in residential construction and primary metals
Strapping equipment base revenues: +11%
13
14
Power Systems and Electronics
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
554.4
116.1
20.9%
2008 Q1
582.4
124.8
21.4%
$ F(U)
28.0
8.7
0.5%
% F(U)
5.0%
7.5%
% F(U) Prior Year
Base Business
Operating Leverage
0.9%
1.5%
0.1%
Nonvolume-related
-
3.9%
0.9%
Total
0.9%
5.4%
1.0%
Acquisitions/Divestitures
2.0%
1.1%
-0.2%
Translation
2.2%
1.9%
-0.1%
Impairment
-
-0.7%
-0.2%
Restructuring
-
-0.2%
-
Other
-0.1%
-
-
Total
5.0%
7.5%
0.5%
Power Systems and Electronics
Key Points
Total segment base revenues: +1% in Q1 ’08
Welding accounts for nearly 75% of total segment revenues
In Q1, Welding’s worldwide base revenues: +3%
Welding’s Q1 International base revenues: +18%
Double digit growth in Asia due to high levels of
demand for specialty consumable products serving
energy/pipeline and shipping end markets
Double digit base revenue growth in Europe
Welding’s Q1 North America base revenues: -2%
Weakening demand from customers in
construction/assorted manufacturing sectors
15
16
Transportation
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
529.3
84.3
15.9%
2008 Q1
594.3
91.7
15.4%
$ F(U)
65.0
7.4
-0.5%
% F(U)
12.3%
8.7%
% F(U) Prior Year
Base Business
Operating Leverage
1.1%
2.6%
0.2%
Nonvolume-related
-
-3.1%
-0.5%
Total
1.1%
-0.5%
-0.3%
Acquisitions/Divestitures
5.9%
1.1%
-0.7%
Translation
5.3%
5.1%
-
Impairment
-
-
-
Restructuring
-
2.9%
0.5%
Other
-
0.1%
-
Total
12.3%
8.7%
-0.5%
Transportation
Key Points
Total segment base revenues: +1% in Q1 ’08
International base revenues: +6%
North America base revenues: -3%
Auto OEM/Tiers worldwide base revenues: slightly positive in Q1
International Q1 base revenues: +6%
Growth driven by 7% increase in international builds: Renault
Group: +19%; Daimler: +17%; BMW: +10%; VW Group: +7%;
GM group: +5%; and Fiat: +3%
Expect full-year 2008 builds: +4% to +5%
North America Q1 base revenues: -5%
Q1 Detroit 3 builds decline 13%: GM: -17%; Ford: -6%;
Chrysler: -16%
Q1 New Domestics: -1%
Q1 combined build: -9%
Expect full-year 2008 combined builds to decline 6% to 8%
Auto aftermarket Q1 worldwide base revenues: +4%
17
18
Construction Products
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
474.5
52.6
11.1%
2008 Q1
484.0
50.4
10.4%
$ F(U)
9.5
(2.2)
-0.7%
% F(U)
2.0%
-4.1%
% F(U) Prior Year
Base Business
Operating Leverage
-5.7%
-21.0%
-1.8%
Nonvolume-related
-
-3.9%
-0.5%
Total
-5.7%
-24.9%
-2.3%
Acquisitions/Divestitures
0.6%
-1.1%
-0.2%
Translation
7.1%
9.4%
0.3%
Impairment
-
0.7%
0.1%
Restructuring
-
11.7%
1.4%
Other
-
0.1%
-
Total
2.0%
-4.1%
-0.7%
Construction Products
Key Points
Total segment base revenues: -6% in Q1 ’08
North America Q1 base revenues: -18%
Q1 Residential: -20% vs. -29% housing start decrease in Q1 ’08
Q1 Renovation: -16% due to weakness at Big Box stores
Q1 Commercial Construction base revenues: -8% largely due to
fall off in stores/food service; warehouses; manufacturing
categories
International Q1 base revenues: +4%
Q1 Asia-Pacific: base revenues: +9%
Q1 Europe: base revenues: flat: Ireland, U.K., Spain all weak
19
20
Food Equipment
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
390.6
69.4
17.8%
2008 Q1
509.7
71.0
13.9%
$ F(U)
119.1
1.6
-3.9%
% F(U)
30.5%
2.4%
% F(U) Prior Year
Base Business
Operating Leverage
6.1%
15.0%
1.5%
Nonvolume-related
-
-8.7%
-1.5%
Total
6.1%
6.3%
0.0%
Acquisitions/Divestitures
20.1%
-5.4%
-3.5%
Translation
4.3%
4.0%
0.1%
Impairment
-
-
-
Restructuring
-
-2.5%
-0.4%
Other
-
-
-0.1%
Total
30.5%
2.4%
-3.9%
Food Equipment
Key Points
Total segment base revenues: +6% in Q1 ’08
North America Q1 base revenues: +2%
Q1 Institutional base revenues: +1%
Q1 Service base revenues: +5%
Q1 Retail base revenues: +3%
International Q1 base revenues: +13%
Q1 Asia-Pacific: base revenues: +16%
Growth driven by demand from institutional customers
Q1 Europe: base revenues: +12%
21
22
Decorative Surfaces
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
283.7
28.3
10.0%
2008 Q1
302.5
33.3
11.0%
$ F(U)
18.8
5.0
1.0%
% F(U)
6.6%
17.5%
% F(U) Prior Year
Base Business
Operating Leverage
2.2%
9.0%
0.7%
Nonvolume-related
-
5.2%
0.5%
Total
2.2%
14.2%
1.2%
Acquisitions/Divestitures
-
-
-
Translation
4.5%
2.9%
-0.2%
Impairment
-
-
-
Restructuring
-
0.4%
-
Other
-0.1%
-
-
Total
6.6%
17.5%
1.0%
Decorative Surfaces
Key Points
Total segment base revenues: +2% in Q1 ’08
North America Q1 base revenues: +1% in Q1
Q1 laminate base revenues: flat due to larger commercial
construction exposure and success of premium priced high
definition laminate product line
Q1 flooring base revenues: +10% due to new products/easier
comparisons from year ago period
International Q1 base revenues: +4%
Q1 European base revenues: +4%
Q1 Asia-Pacific base revenues: +6%
23
24
Polymers and Fluids
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
201.7
30.4
15.1%
2008 Q1
256.8
37.3
14.5%
$ F(U)
55.1
6.9
-0.6%
% F(U)
27.3%
22.8%
% F(U) Prior Year
Base Business
Operating Leverage
4.5%
13.1%
1.3%
Nonvolume-related
-
-0.6%
-0.1%
Total
4.5%
12.5%
1.2%
Acquisitions/Divestitures
17.1%
2.0%
-2.1%
Translation
5.7%
5.9%
0.1%
Impairment
-
2.8%
0.4%
Restructuring
-
-0.2%
-
Other
-
-0.2%
-0.2%
Total
27.3%
22.8%
-0.6%
Polymers and Fluids
Key Points
Total segment base revenues: +4% in Q1 ’08
International Q1 base revenues: +7%
North America Q1 base revenues: +1%
Q1 worldwide polymers base revenues: +5%
International Q1 base revenues: +8%
North America Q1 base revenues: +2%
Industrial adhesives base revenues grew 3% with strength
in MRO/OEM and power industries
Q1 worldwide fluids base revenues: +3%
International Q1 base revenues: +5%
North America Q1 base revenues: +1%
Strength in MRO/OEM partially offset by weakness in
janitorial/sanitation categories
25
26
All Other
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
739.2
122.4
16.6%
2008 Q1
800.5
42.4
5.3%
$ F(U)
61.3
(80.0)
-11.3%
% F(U)
8.3%
-65.3%
% F(U) Prior Year
Base Business
Operating Leverage
-1.6%
-4.4%
-0.5%
Nonvolume-related
-
10.2%
1.7%
Total
-1.6%
5.8%
1.2%
Acquisitions/Divestitures
6.2%
2.8%
0.2%
Translation
3.7%
4.5%
0.5%
Impairment
-
-79.2%
-13.3%
Restructuring
-
0.7%
0.1%
Other
-
0.1%
-
Total
8.3%
-65.3%
-11.3%
All Other
Key Points
Total segment base revenues: -2% in Q1 ’08
North America Q1 base revenues: -2%
International Q1 base revenues: -3%
Q1 worldwide consumer packaging Q1 base revenues: -1%
Weakness in marking, labeling and coating offset strength in Hi-
Cone and Zip-Pak
Q1 worldwide test and measurement Q1 base revenues: +10%
Q1 worldwide finishing Q1 base revenues: -2%
Q1 worldwide appliance/industrial Q1 base revenues: -8%
Worldwide appliance base revenues decline 6% in Q1
27
28
ITW
2008 Forecast
Mid
Low
High
Point
2nd Quarter
Total Revenues
9%
12%
11%
Diluted Income per Share - Continuing
$0.94
$1.00
$0.97
% F(U) 2007
8%
15%
11%
Full Year
Total Revenues
8%
12%
10%
Diluted Income per Share - Continuing
$3.35
$3.49
$3.42
% F(U) 2007
2%
6%
4%
ITW 2008 Forecast
Key Assumptions
Exchange rates hold at current levels.
Acquired revenues in the $0.8 billion to $1.2 billion
range.
Share repurchases of $0.8 billion to $1.0 billion for the
year.
No further impairment of goodwill/intangibles.
Net nonoperating expense, including interest expense
and other nonoperating income, of $135 to $145
million, which is higher than 2007 by $92 to $102
million.
Tax rate range of 28.75% to 29.25% for the second
quarter and 29.75% to 30.25% for the year.
29
ITW Conference Call
Q & A
First Quarter
2008
30
