ITW Conference Call
Third Quarter
2008
Exhibit 99.2
ITW
Agenda
1. Introduction…………………….. John Brooklier/David Speer
2. Financial Overview…………….. Ron Kropp
3. Reporting Segments………..…. John Brooklier
4. Forecast 2008……….…….….… Ron Kropp
5. Q & A………………......………… John Brooklier/Ron Kropp/David Speer
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,
income from continuing operations, diluted income per share
from continuing operations, use of free cash, potential
acquisitions, end market conditions, discontinued operations,
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 second quarter and
Form 10-K for 2007.
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ITW
Quarterly Highlights
2007
2008
Q3
Q3
Amount
%
Operating Revenues
3,744.4
4,147.8
403.4
10.8%
Operating Income
649.6
639.0
(10.6)
-1.6%
% of Revenues
17.3%
15.4%
-1.9%
Income from Continuing Operations
Income Amount
464.1
443.3
(20.8)
-4.5%
Income Per Share-Diluted
0.84
0.85
0.01
1.2%
Net Income
Income Amount
491.1
453.5
(37.6)
-7.7%
Income Per Share-Diluted
0.89
0.87
(0.02)
-2.2%
Free Operating Cash Flow
656.1
599.5
(56.6)
-8.6%
F(U) Last Year
ITW
Quarterly Operating Analysis
Operating
Operating
Operating
Revenues
Income
Margins
Base Manufacturing Business
Operating Leverage
-0.8%
-1.9%
-0.2%
Changes in VM & OH costs
-
-6.1%
-1.1%
Total
-0.8%
-8.0%
-1.3%
Acquisitions/Divestitures
6.9%
1.9%
-0.7%
Translation
4.7%
4.1%
-
Impairment
-
0.1%
-
Restructuring
-
0.3%
0.1%
Intercompany/Other
-
-
-
Total
10.8%
-1.6%
-1.9%
% F(U) Prior Year
ITW
Non Operating & Taxes
2007
2008
Q3
Q3
Amount
%
Operating Income
649.6
639.0
(10.6)
-1.6%
Interest Expense
(25.8)
(38.2)
(12.4)
Other Income
23.0
15.9
(7.1)
Income from Continuing Operations-Pretax
646.8
616.7
(30.1)
-4.7%
Income Taxes
182.7
173.4
9.3
% to Pretax Income
28.2%
28.1%
0.1%
Income from Continuing Operations
464.1
443.3
(20.8)
-4.5%
Income from Discontinued Operations
27.0
10.2
(16.8)
Net Income
491.1
453.5
(37.6)
-7.7%
F(U) Last Year
ITW
Invested Capital
9/30/07
6/30/08
9/30/08
Trade Receivables
2,842.4
3,302.3
2,981.7
Days Sales Outstanding
63.6
66.0
64.7
Inventories
1,607.8
1,845.6
1,835.5
Months on Hand
1.9
1.9
2.0
Prepaids and Other Current Assets
431.9
408.4
505.8
Accounts Payable & Accrued Expenses
(2,027.2)
(2,369.5)
(2,447.4)
Operating Working Capital
2,854.9
3,186.8
2,875.6
% to Revenue(Prior 4 Qtrs.)
19%
20%
18%
Net Plant & Equipment
2,120.6
2,285.0
2,120.8
Investments
546.3
506.4
498.3
Goodwill and Intangibles
5,594.4
6,279.9
6,472.5
Assets Held for Sale
-
144.7
619.8
Other, net
(657.3)
(615.5)
(763.4)
Invested Capital
10,458.9
11,787.3
11,823.6
Return on Average Invested Capital
17.9%
18.8%
15.6%
ITW
Debt & Equity
9/30/07
6/30/08
9/30/08
Total Capital
Short Term Debt
101.4
1,465.9
2,197.1
Long Term Debt
1,573.1
1,462.4
1,398.2
Total Debt
1,674.5
2,928.3
3,595.3
Stockholders' Equity
9,386.5
9,499.2
9,095.9
Total Capital
11,061.0
12,427.5
12,691.2
Less:
Cash
(602.1)
(640.2)
(867.6)
Net Debt & Equity
10,458.9
11,787.3
11,823.6
Debt to Total Capital
15%
24%
28%
Shares outstanding at end of period
544.0
519.4
511.2
ITW
Cash Flow
2007
2008
Q3
Q3
Net Income
491.1
453.5
Adjust for Non-Cash Items
152.5
225.7
Changes in Operating Assets & Liabilities
92.8
9.6
Net Cash From Operating Activities
736.4
688.8
Additions to Plant & Equipment
(80.3)
(89.3)
Free Operating Cash Flow
656.1
599.5
Stock Repurchases
(479.0)
(406.0)
Acquisitions
(195.1)
(646.0)
Purchase of Investments
(0.6)
(0.6)
Dividends
(115.9)
(145.4)
Debt
182.8
737.0
Proceeds from Investments
25.8
7.1
Other
46.5
81.8
Net Cash Increase
120.6
227.4
ITW
Acquisitions
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Annual Revenues Acquired
399
213
218
165
230
308
847
Purchase Price
Cash Paid
263
216
235
163
223
439
751
Stock Issued
-
-
-
-
-
-
-
Total
263
216
235
163
223
439
751
Number of Acquisitions
9
10
18
15
16
10
14
2007
2008
Industrial Packaging
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q3
599.6
78.5
13.1%
2008 Q3
687.5
76.2
11.1%
$ F(U)
87.9
(2.3)
-2.0%
% F(U)
14.7%
-2.9%
% F(U) Prior Year
Base Business
Operating Leverage
5.2%
15.8%
1.3%
Changes in VM & OH costs
-
-20.6%
-2.5%
Total
5.2%
-4.8%
-1.2%
Acquisitions/Divestitures
4.2%
3.5%
-
Translation
5.3%
3.1%
-0.2%
Impairment
-
0.5%
-
Restructuring
-
-5.2%
-0.6%
Other
-
-
-
Total
14.7%
-2.9%
-2.0%
Industrial Packaging
Key Points
Total segment base revenues: +5.2% for Q3 ’08
Q3 North America base revenues: +2.2% for Q3 ’08
Base revenue growth driven by significant price
recovery for raw materials in Q3
Q3 International base revenues: +7.5% for Q3 ’08
Worldwide insulation base revenues grew more than
40% in Q3 ’08
Underlying demand strong from energy related
customers
Power Systems and Electronics
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q3
567.5
110.8
19.5%
2008 Q3
620.7
118.2
19.0%
$ F(U)
53.2
7.4
-0.5%
% F(U)
9.4%
6.7%
% F(U) Prior Year
Base Business
Operating Leverage
3.1%
6.1%
0.6%
Changes in VM & OH costs
-
-1.1%
-0.2%
Total
3.1%
5.0%
0.4%
Acquisitions/Divestitures
3.7%
-1.0%
-0.9%
Translation
2.5%
1.9%
-0.1%
Impairment
-
-
-
Restructuring
-
0.9%
0.2%
Other
0.1%
-0.1%
-0.1%
Total
9.4%
6.7%
-0.5%
Power Systems and Electronics
Key Points
Total segment base revenues: +3.1% in Q3 ’08
In Q3, Welding’s worldwide base revenues: +5.7%
Welding’s Q3 International base revenues grew
26.4%
Double-digit growth in Asia due to high levels of
demand for specialty consumable products serving
energy/pipeline, ship building and container categories
Welding’s Q3 North America base revenues
declined 0.9% as underlying industrial production
and related end markets continue to slow in U.S.
Ground Support Equipment: +6.9% in Q3
Transportation
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q3
534.5
88.8
16.6%
2008 Q3
581.9
68.9
11.8%
$ F(U)
47.4
(19.9)
-4.8%
% F(U)
8.9%
-22.4%
% F(U) Prior Year
Base Business
Operating Leverage
-9.6%
-22.5%
-2.4%
Changes in VM & OH costs
-
-10.3%
-1.9%
Total
-9.6%
-32.8%
-4.3%
Acquisitions/Divestitures
12.3%
0.6%
-1.5%
Translation
6.1%
5.5%
0.2%
Impairment
-
-
-
Restructuring
-
4.3%
0.8%
Other
0.1%
-
-
Total
8.9%
-22.4%
-4.8%
Transportation
Key Points
Total segment base revenues: -9.6% in Q3 ’08
Auto OEM/Tiers:
Automotive Worldwide Q3 base revenues: -12.5%
North America Q3 base revenues: -18.1%
Q3 combined build: -16%
Q3 Detroit 3 builds decline 23%: GM: -12%; Ford: -33%;
Chrysler: -31%
Q3 New Domestics: -6%
Expect Q4 2008 combined builds to be down 18% - 20%
International Q3 base revenues: -7.3%
International builds: Flat in Q3: VW Group: +5%; Fiat: +2%;
Renault: Flat; Daimler: -2%; GM Group: -2%; PSA: -2%
Auto aftermarket Q3 worldwide base revenues: +2.8%; consumers
hold on longer to existing vehicles
Construction Products
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q3
516.4
77.0
14.9%
2008 Q3
525.0
73.4
14.0%
$ F(U)
8.6
(3.6)
-0.9%
% F(U)
1.7%
-4.7%
% F(U) Prior Year
Base Business
Operating Leverage
-4.4%
-12.5%
-1.3%
Changes in VM & OH costs
-
0.3%
0.1%
Total
-4.4%
-12.2%
-1.2%
Acquisitions/Divestitures
0.3%
-0.6%
-0.2%
Translation
5.8%
6.4%
0.2%
Impairment
-
-
-
Restructuring
-
1.7%
0.3%
Other
-
-
-
Total
1.7%
-4.7%
-0.9%
Construction Products
Key Points
Total segment base revenues: -4.4% in Q3 ’08
North America Q3 base revenues: -6.2%
Q3 Residential: -12% vs. -31% housing starts in Q3 ’08
Q3 Renovation: -2% due to uptick in orders at Big Box stores
Q3 Commercial Construction base revenues: -2% even as
Dodge Index data shows year-to-date activity (sq. footage)
down 19%
International Q3 base revenues: -3.2%
Q3 Europe: base revenues: -8.3% as overall Europe weakens
Q3 Asia-Pacific: base revenues: +3.9% but rate of growth
slowing
Food Equipment
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q3
500.4
88.9
17.8%
2008 Q3
542.7
87.5
16.1%
$ F(U)
42.3
(1.4)
-1.7%
% F(U)
8.4%
-1.6%
% F(U) Prior Year
Base Business
Operating Leverage
-1.7%
-4.1%
-0.5%
Changes in VM & OH costs
-
-2.9%
-0.5%
Total
-1.7%
-7.0%
-1.0%
Acquisitions/Divestitures
5.8%
2.4%
-0.5%
Translation
4.4%
3.8%
-
Impairment
-
-
-
Restructuring
-
-0.8%
-0.1%
Other
-0.1%
-
-0.1%
Total
8.4%
-1.6%
-1.7%
Food Equipment
Key Points
Total segment base revenues: -1.7% in Q3 ’08
North America Q3 base revenues: -1.2%
Q3 Institutional/restaurant base revenues: -3.8% as
institutional customers delay purchases
Q3 Service base revenues: +2.8%
International Q3 base revenues: -3.2%
Europe base revenues decline 4.0% while Asia-Pacific base
revenues grow 8.9%
Polymers and Fluids
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q3
252.5
43.8
17.3%
2008 Q3
371.0
53.4
14.4%
$ F(U)
118.5
9.6
-2.9%
% F(U)
46.9%
22.0%
% F(U) Prior Year
Base Business
Operating Leverage
3.5%
8.9%
0.9%
Changes in VM & OH costs
-
-4.4%
-0.7%
Total
3.5%
4.5%
0.2%
Acquisitions/Divestitures
36.2%
10.8%
-3.2%
Translation
7.2%
6.1%
-
Impairment
-
-
-
Restructuring
-
0.6%
0.1%
Other
-
-
-
Total
46.9%
22.0%
-2.9%
Polymers and Fluids
Key Points
Total segment base revenues: +3.5% in Q3 ’08
North America:
Polymers Q3 base revenues: +15.4% thanks to demand for
specialty adhesives and epoxy products
Fluids Q3 base revenues: -3.3% as manufacturing demand
slackens
International:
Polymers and Fluids Q3 base revenues flat for both
categories as industrial demand softens
All Other
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q3
786.9
161.7
20.5%
2008 Q3
833.1
161.3
19.4%
$ F(U)
46.2
(0.4)
-1.1%
% F(U)
5.9%
-0.3%
% F(U) Prior Year
Base Business
Operating Leverage
-0.7%
-1.6%
-0.2%
Changes in VM & OH costs
-
-5.3%
-1.1%
Total
-0.7%
-6.9%
-1.3%
Acquisitions/Divestitures
2.9%
2.5%
-
Translation
3.7%
4.1%
0.1%
Impairment
-
-
-
Restructuring
-
0.1%
-
Other
-
-0.1%
0.1%
Total
5.9%
-0.3%
-1.1%
All Other
Key Points
Total segment base revenues: -0.7% in Q3 ’08
Q3 worldwide test and measurement base
revenues: +11.2%
Q3 worldwide consumer packaging base
revenues: -2.4%
Q3 worldwide finishing base revenues: +0.8%
Q3 worldwide industrial/appliance base
revenues: -4.0%
ITW
2008 Forecast
Mid
Low
High
Point
4th Quarter
Total Revenues
6%
9%
8%
Diluted Income per Share - Continuing
$0.74
$0.82
$0.78
% F(U) 2007
-10%
0%
-5%
Full Year
Total Revenues
10%
11%
11%
Diluted Income per Share - Continuing
$3.24
$3.32
$3.28
% F(U) 2007
5%
8%
6%
ITW 2008 Forecast
Key Assumptions
Exchange rates hold at current levels.
Acquired revenues in the $1.5 billion to $1.6 billion
range.
Share repurchases of $1.0 billion to $1.2 billion for the
year.
No further impairment of goodwill/intangibles.
Net nonoperating expense, including interest expense
and other nonoperating income, of $110 to $120 million,
which is higher than 2007 by $65 to $75 million.
Tax rate range of 28.25% to 28.75% for the fourth quarter
and 28.4% to 28.6% for the year.
ITW Conference Call
Q & A
Third Quarter
2008
