ITW Conference Call
Second 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
operating performance, revenue growth, operating income,
diluted income per share from continuing operations, use of
free cash, potential acquisitions, end market conditions,
charges, 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 could
cause actual results to differ materially from the Company’s
expectations are set forth in ITW’s Form 10-Q for the 2008 first
quarter and Form 10-K for 2007.
3
Conference Call Playback
Replay number: 203-369-1553
No pass code necessary
Telephone replay available through midnight of
July 31, 2008
Webcast / PowerPoint replay available at
itw.com website
4
ITW
Quarterly Highlights
5
2007
2008
Q2
Q2
Amount
%
Operating Revenues
4,136.8
4,570.5
433.7
10.5%
Operating Income
695.6
756.7
61.1
8.8%
% of Revenues
16.8%
16.6%
-0.2%
Income from Continuing Operations
Income Amount
480.4
528.5
48.1
10.0%
Income Per Share-Diluted
0.86
1.01
0.15
17.4%
Net Income
Income Amount
505.6
528.1
22.5
4.4%
Income Per Share-Diluted
0.90
1.01
0.11
12.2%
Free Operating Cash Flow
442.6
354.1
(88.5)
-20.0%
F(U) Last Year
ITW
Quarterly Operating Analysis
6
Operating
Operating
Operating
Revenues
Income
Margins
Base Manufacturing Business
Operating Leverage
-
0.1%
-
Nonvolume-related
-
1.4%
0.3%
Total
0.0%
1.5%
0.3%
Acquisitions/Divestitures
4.2%
2.5%
-0.3%
Translation
6.4%
6.1%
-
Impairment
-
-
-
Restructuring
-
-1.3%
-0.2%
Intercompany/Other
-0.1%
-
-
Total
10.5%
8.8%
-0.2%
% F(U) Prior Year
7
ITW
Non Operating & Taxes
2007
2008
Q2
Q2
Amount
%
Operating Income
695.6
756.7
61.1
8.8%
Interest Expense
(25.6)
(36.5)
(10.9)
Other Income
22.0
24.2
2.2
Income from Continuing Operations-Pretax
692.0
744.4
52.4
7.6%
Income Taxes
211.6
215.9
(4.3)
% to Pretax Income
30.6%
29.0%
1.6%
Income from Continuing Operations
480.4
528.5
48.1
10.0%
Income (Loss) from Discontinued Operations
25.2
(0.4)
(25.6)
Net Income
505.6
528.1
22.5
4.4%
F(U) Last Year
8
ITW
Invested Capital
6/30/07
3/31/08
6/30/08
Trade Receivables
2,882.7
3,014.4
3,302.3
Days Sales Outstanding
62.7
65.5
65.0
Inventories
1,612.4
1,766.0
1,845.6
Months on Hand
1.8
2.0
1.9
Prepaids and Other Current Assets
463.8
529.9
553.1
Accounts Payable & Accrued Expenses
(1,998.5)
(2,224.7)
(2,369.5)
Operating Working Capital
2,960.4
3,085.6
3,331.5
% to Revenue(Prior 4 Qtrs.)
20%
19%
20%
Net Plant & Equipment
2,116.8
2,247.6
2,285.0
Investments
560.7
507.0
506.4
Goodwill and Intangibles
5,409.1
5,839.5
6,279.9
Other, net
(655.4)
(583.7)
(615.5)
Invested Capital
10,391.6
11,096.0
11,787.3
Return on Average Invested Capital
19.1%
12.4%
18.8%
9
ITW
Debt & Equity
6/30/07
3/31/08
6/30/08
Total Capital
Short Term Debt
528.1
1,340.0
1,465.9
Long Term Debt
956.6
1,435.4
1,462.4
Total Debt
1,484.7
2,775.4
2,928.3
Stockholders' Equity
9,388.4
9,248.0
9,499.2
Total Capital
10,873.1
12,023.4
12,427.5
Less:
Cash
(481.5)
(927.4)
(640.2)
Net Debt & Equity
10,391.6
11,096.0
11,787.3
Debt to Total Capital
14%
23%
24%
Shares outstanding at end of period
551.8
522.8
519.4
10
ITW
Cash Flow
2007
2008
Q2
Q2
Net Income
505.6
528.1
Adjust for Non-Cash Items
98.8
123.3
Changes in Operating Assets & Liabilities
(72.8)
(201.3)
Net Cash From Operating Activities
531.6
450.1
Additions to Plant & Equipment
(89.0)
(96.0)
Free Operating Cash Flow
442.6
354.1
Stock Repurchases
(300.0)
(200.0)
Acquisitions
(155.3)
(442.2)
Dividends
(116.9)
(146.4)
Proceeds from Divestitures
58.0
4.7
Debt Proceeds (Repayments)
(86.3)
110.4
Proceeds from Investments
11.8
10.0
Other
53.0
22.1
Net Cash Decrease
(93.1)
(287.3)
11
ITW
Acquisitions
Q1
Q2
Q3
Q4
Q1
Q2
Annual Revenues Acquired
399
213
218
165
230
308
Purchase Price
Cash Paid
263
216
235
163
223
424
Stock Issued
-
-
-
-
-
-
Total
263
216
235
163
223
424
Number of Acquisitions
9
10
18
15
16
10
2007
2008
12
Industrial Packaging
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q1
620.7
79.9
12.9%
2008 Q1
711.4
93.7
13.2%
$ F(U)
90.7
13.8
0.3%
% F(U)
14.6%
17.3%
% F(U) Prior Year
Base Business
Operating Leverage
0.7%
2.0%
0.2%
Nonvolume-related
-
5.1%
0.7%
Total
0.7%
7.1%
0.9%
Acquisitions/Divestitures
5.5%
0.5%
-0.7%
Translation
8.4%
9.0%
-
Impairment
-
-
-
Restructuring
-
0.7%
0.1%
Other
-
-
-
Total
14.6%
17.3%
0.3%
Industrial Packaging
Key Points
Total segment base revenues: +1% for Q2 ’08
Q2 North America base revenues: +1%
Strapping and equipment businesses: slightly negative in
Q2; mirrors weakening industrial production environment
in North America
Q2 International base revenues: +1%
Strapping and equipment businesses also slightly negative
in Q2 largely due to slower European activity
Worldwide insulation base revenues grow more than 30% in
Q2
13
14
Power Systems and Electronics
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q2
565.3
116.1
20.5%
2008 Q2
648.8
142.1
21.9%
$ F(U)
83.5
26.0
1.4%
% F(U)
14.8%
22.4%
% F(U) Prior Year
Base Business
Operating Leverage
7.7%
14.4%
1.3%
Nonvolume-related
-
3.9%
0.8%
Total
7.7%
18.3%
2.1%
Acquisitions/Divestitures
3.7%
1.0%
-0.6%
Translation
3.4%
2.8%
-0.1%
Impairment
-
-
-
Restructuring
-
0.3%
0.1%
Other
-
-
-0.1%
Total
14.8%
22.4%
1.4%
Power Systems and Electronics
Key Points
Total segment base revenues: +8% in Q2 ’08
In Q2, Welding’s worldwide base revenues: +9%
Welding’s Q2 International base revenues: +25%
Double digit growth in Asia due to high levels of
demand for specialty consumable products serving
energy/pipeline and shipping end markets in China
Welding’s Q2 North America base revenues: +3%
PC board fabrication: base revenues +7% in Q2
15
16
Transportation
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q2
583.7
107.2
18.4%
2008 Q2
630.7
99.7
15.8%
$ F(U)
47.0
(7.5)
-2.6%
% F(U)
8.0%
-6.9%
% F(U) Prior Year
Base Business
Operating Leverage
-4.7%
-10.1%
-1.0%
Nonvolume-related
-
-2.9%
-0.6%
Total
-4.7%
-13.0%
-1.6%
Acquisitions/Divestitures
5.6%
3.6%
-0.2%
Translation
7.2%
8.0%
0.3%
Impairment
-
-
-
Restructuring
-
-5.5%
-1.1%
Other
-0.1%
-
-
Total
8.0%
-6.9%
-2.6%
Transportation
Key Points
Total segment base revenues: -5% in Q2 ’08
North America base revenues: -8%
International base revenues: Flat
Auto OEM/Tiers:
North America Q2 base revenues: -13%
Q2 Detroit 3 builds decline 21%: GM: -28%; Ford: -15%;
Chrysler: -19%
Q2 New Domestics: -1%
Q2 combined build: -14%
Expect full-year 2008 combined builds to be down 10% - 12%
International Q2 base revenues: Flat
International builds: +3% in Q2: Daimler: +8%; VW Group:
+3%; Ford Group: Flat; Renault Group: -2.3%; BMW: -3.5%
Expect full-year 2008 builds: +4% to +5%
Auto aftermarket Q2 worldwide base revenues: +6%; good trends
anticipated as consumers hold on longer to existing vehicles
17
18
Construction Products
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q2
541.2
81.2
15.0%
2008 Q2
566.2
78.3
13.8%
$ F(U)
25.0
(2.9)
-1.2%
% F(U)
4.6%
-3.5%
% F(U) Prior Year
Base Business
Operating Leverage
-4.3%
-12.0%
-1.2%
Nonvolume-related
-
-1.7%
-0.3%
Total
-4.3%
-13.7%
-1.5%
Acquisitions/Divestitures
0.6%
-0.8%
-0.2%
Translation
8.2%
9.4%
0.3%
Impairment
-
-
-
Restructuring
-
1.5%
0.2%
Other
0.1%
0.1%
-
Total
4.6%
-3.5%
-1.2%
Construction Products
Key Points
Total segment base revenues: -4% in Q2 ’08
North America Q2 base revenues: -12%
Q2 Residential: -16% vs. -32% housing start decrease in Q2 ’08
Q2 Renovation: -10% due to weakness at Big Box stores
Q2 Commercial Construction base revenues: -6% largely due to
double digit declines in stores/food service; warehouses;
manufacturing categories
International Q2 base revenues: +2%
Q2 Asia-Pacific: base revenues: +8%
Q2 Europe: base revenues: -2%; U.K., Spain and Ireland all
exhibited weakness
19
20
Food Equipment
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q2
473.6
65.7
13.9%
2008 Q2
538.5
73.0
13.6%
$ F(U)
64.9
7.3
-0.3%
% F(U)
13.7%
11.1%
% F(U) Prior Year
Base Business
Operating Leverage
2.3%
6.9%
0.6%
Nonvolume-related
-
-7.5%
-1.0%
Total
2.3%
-0.6%
-0.4%
Acquisitions/Divestitures
5.1%
13.7%
1.2%
Translation
6.3%
5.2%
-0.1%
Impairment
-
-
-
Restructuring
-
-7.2%
-1.0%
Other
-
-
-
Total
13.7%
11.1%
-0.3%
Food Equipment
Key Points
Total segment base revenues: +2% in Q2 ’08
North America Q2 base revenues: +2%
Q2 Institutional/restaurant base revenues: +2%
Q2 Service base revenues: +3%
International Q2 base revenues: +4%
Asia-Pacific and Europe combine to produce reasonably
healthy base revenue growth
21
22
Decorative Surfaces
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q2
322.8
47.6
14.8%
2008 Q2
336.0
47.4
14.1%
$ F(U)
13.2
(0.2)
-0.7%
% F(U)
4.1%
-0.5%
% F(U) Prior Year
Base Business
Operating Leverage
-1.3%
-3.7%
-0.4%
Nonvolume-related
-
0.3%
-
Total
-1.3%
-3.4%
-0.4%
Acquisitions/Divestitures
-
-
-
Translation
5.4%
2.5%
-0.4%
Impairment
-
-
-
Restructuring
-
0.4%
0.1%
Other
-
-
-
Total
4.1%
-0.5%
-0.7%
Decorative Surfaces
Key Points
Total segment base revenues: -1% in Q2 ’08
North America Q2 base revenues: -2% in Q2
Q2 laminate base revenues: +1% due to larger commercial
construction exposure and success of premium priced high
definition laminate product line
Q2 flooring base revenues: double digit negative in Q2
International Q2 base revenues: Flat
Q2 European base revenues: -2%
Q2 Asia-Pacific base revenues: +16%
23
24
Polymers and Fluids
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q2
229.7
40.7
17.7%
2008 Q2
300.8
55.2
18.3%
$ F(U)
71.1
14.5
0.6%
% F(U)
31.0%
35.5%
% F(U) Prior Year
Base Business
Operating Leverage
2.3%
5.8%
0.6%
Nonvolume-related
-
13.5%
2.3%
Total
2.3%
19.3%
2.9%
Acquisitions/Divestitures
20.7%
9.7%
-2.1%
Translation
8.0%
7.4%
-0.1%
Impairment
-
-
-
Restructuring
-
-0.9%
-0.2%
Other
-
-
0.1%
Total
31.0%
35.5%
0.6%
Polymers and Fluids
Key Points
Total segment base revenues: +2% in Q2 ’08
North America Q2 base revenues: +6%
International revenues: Flat
North America:
Polymers Q2 base revenues: +9% thanks to specialty
adhesives and epoxy products
Fluids Q2 base revenues: -1%
International:
Fluids Q2 base revenues: -6%
Polymers Q2 base revenues: +3%
25
26
All Other
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q2
811.5
157.2
19.4%
2008 Q2
853.1
167.3
19.6%
$ F(U)
41.6
10.1
0.2%
% F(U)
5.1%
6.4%
% F(U) Prior Year
Base Business
Operating Leverage
-0.9%
-2.2%
-0.3%
Nonvolume-related
-
3.8%
0.7%
Total
-0.9%
1.6%
0.4%
Acquisitions/Divestitures
1.1%
-0.2%
-0.3%
Translation
4.8%
5.3%
0.1%
Impairment
-
-
-
Restructuring
-
-0.2%
-
Other
0.1%
-0.1%
-
Total
5.1%
6.4%
0.2%
All Other
Key Points
Total segment base revenues: -1% in Q2 ’08
Q2 worldwide test and measurement Q2 base
revenues: +9%
Q2 worldwide consumer packaging Q2 base
revenues: -2%
Q2 worldwide finishing Q2 base revenues: -2%
Q2 worldwide appliance/industrial Q2 base
revenues: -5%
27
28
ITW
2008 Forecast
Mid
Low
High
Point
3rd Quarter
Total Revenues
10%
14%
12%
Diluted Income per Share - Continuing
$0.93
$0.99
$0.96
% F(U) 2007
5%
11%
8%
Full Year
Total Revenues
9%
12%
11%
Diluted Income per Share - Continuing
$3.40
$3.52
$3.46
% F(U) 2007
4%
7%
5%
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 $125 to $135 million,
which is higher than 2007 by $82 to $92 million.
Tax rate range of 28.75% to 29.25% for the third quarter
and 29.75% to 30.25% for the year.
29
ITW Conference Call
Q & A
Second Quarter
2008
30
