1
ITW Conference Call
Fourth Quarter
2008
Exhibit 99.2
2
ITW
Agenda
1. Introduction…………………….. John Brooklier/David Speer
2. Financial Overview…………….. Ron Kropp
3. Reporting Segments………..…. John Brooklier
4. Forecast 2009……….…….….… Ron Kropp
5. Q & A………………......………… John Brooklier/Ron Kropp/David Speer
3
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 third quarter and Form
10-K for 2007.
4
Conference Call Playback
Replay number: 203-369-0593
No pass code necessary
Telephone replay available through midnight of
February 12, 2009
Webcast / PowerPoint replay available at
itw.com website
5
ITW
Quarterly Highlights
2007
2008
Q4
Q4
Amount
%
Operating Revenues
3,908.4
3,678.4
(230.0)
-5.9%
Operating Income
618.7
414.1
(204.6)
-33.1%
% of Revenues
15.8%
11.3%
-4.5%
Income from Continuing Operations
Income Amount
443.5
273.3
(170.2)
-38.4%
Income Per Share-Diluted
0.82
0.54
(0.28)
-34.1%
Net Income
Income Amount
470.7
233.8
(236.9)
-50.3%
Income Per Share-Diluted
0.87
0.46
(0.41)
-47.1%
Free Operating Cash Flow
694.7
508.9
(185.8)
-26.7%
% to Net Income
147.6%
217.7%
70.1%
47.5%
F(U) Last Year
6
ITW
Quarterly Operating Analysis
Operating
Operating
Operating
Revenues
Income
Margins
Base Manufacturing Business
Operating Leverage
-9.2%
-24.4%
-2.6%
Changes in VM & OH costs
-
-
-
Total
-9.2%
-24.4%
-2.6%
Acquisitions/Divestitures
7.8%
0.3%
-0.9%
Translation
-4.5%
-4.7%
-0.2%
Impairment
-
-
-
Restructuring
-
-4.3%
-0.8%
Intercompany/Other
-
-
-
Total
-5.9%
-33.1%
-4.5%
% F(U) Prior Year
7
ITW
Non Operating & Taxes
2007
2008
Q4
Q4
Amount
%
Operating Income
618.7
414.1
(204.6)
-33.1%
Interest Expense
(26.2)
(40.3)
(14.1)
Other Income (expense)
4.2
(14.5)
(18.7)
Income from Continuing Operations-Pretax
596.7
359.3
(237.4)
-39.8%
Income Taxes
153.2
86.0
67.2
% to Pretax Income
25.7%
23.9%
1.8%
Income from Continuing Operations
443.5
273.3
(170.2)
-38.4%
Income (Loss) from Discontinued Operations
27.2
(39.5)
(66.7)
Net Income
470.7
233.8
(236.9)
-50.3%
F(U) Last Year
8
ITW
Full Year Highlights
2007
2008
Amount
%
Operating Revenues
14,871.1
15,869.4
998.3
6.7%
Operating Income
2,448.9
2,338.2
(110.7)
-4.5%
% of Revenues
16.5%
14.7%
-1.8%
Income from Continuing Operations
Income Amount
1,711.9
1,583.3
(128.6)
-7.5%
Income Per Share-Diluted
3.08
3.04
(0.04)
-1.3%
Net Income
Income Amount
1,869.9
1,519.0
(350.9)
-18.8%
Income Per Share-Diluted
3.36
2.91
(0.45)
-13.4%
Free Operating Cash Flow
2,130.9
1,867.4
(263.5)
-12.4%
% to Net Income
114.0%
122.9%
8.9%
7.8%
F(U) Last Year
9
ITW
Full Year Operating Analysis
Operating
Operating
Operating
Revenues
Income
Margins
Base Manufacturing Business
Operating Leverage
-2.5%
-6.5%
-0.7%
Changes in VM & OH costs
-
-1.0%
-0.2%
Total
-2.5%
-7.5%
-0.9%
Acquisitions/Divestitures
6.5%
1.5%
-0.7%
Translation
2.8%
2.6%
-
Impairment
-
-
-
Restructuring
-
-1.1%
-0.2%
Intercompany/Other
-0.1%
-
-
Total
6.7%
-4.5%
-1.8%
% F(U) Prior Year
10
ITW
Invested Capital
12/31/07
9/30/08
12/31/08
Trade Receivables
2,915.5
2,981.7
2,426.1
Days Sales Outstanding
62.7
64.7
59.4
Inventories
1,625.8
1,835.5
1,673.2
Months on Hand
1.8
2.0
2.1
Prepaids and Other Current Assets
464.1
505.9
367.7
Accounts Payable & Accrued Expenses
(2,190.1)
(2,240.9)
(1,893.0)
Operating Working Capital
2,815.3
3,082.2
2,574.0
% to Revenue(Prior 4 Qtrs.)
19%
19%
16%
Net Plant & Equipment
2,194.0
2,120.8
1,968.6
Investments
507.6
498.3
465.9
Goodwill and Intangibles
5,683.3
6,472.5
6,278.3
Net Assets Held for Sale
137.7
413.2
318.0
Other, net
(514.7)
(763.4)
(1,007.1)
Invested Capital
10,823.2
11,823.6
10,597.7
Return on Average Invested Capital
17.3%
15.6%
11.2%
11
ITW
Debt & Equity
12/31/07
9/30/08
12/31/08
Total Capital
Short Term Debt
410.5
2,197.1
2,433.5
Long Term Debt
1,888.8
1,398.2
1,243.7
Total Debt
2,299.3
3,595.3
3,677.2
Stockholders' Equity
9,351.3
9,095.9
7,663.5
Total Capital
11,650.6
12,691.2
11,340.7
Less:
Cash
(827.5)
(867.6)
(743.0)
Net Debt & Equity
10,823.1
11,823.6
10,597.7
Debt to Total Capital
20%
28%
32%
Shares outstanding at end of period
530.1
511.2
499.1
12
ITW
Cash Flow
2007
2008
Q4
Q4
Net Income
470.7
233.8
Adjust for Non-Cash Items
142.1
107.4
Changes in Operating Assets & Liabilities
180.6
248.9
Net Cash From Operating Activities
793.4
590.1
Additions to Plant & Equipment
(98.7)
(81.2)
Free Operating Cash Flow
694.7
508.9
Stock Repurchases
(798.9)
(399.0)
Acquisitions
(193.2)
(222.7)
Purchase of Investments
(20.6)
(16.5)
Dividends
(152.3)
(158.5)
Debt
591.6
194.6
Proceeds from Investments
40.5
5.4
Other
63.6
(36.9)
Net Cash Increase
225.4
(124.7)
13
ITW
Acquisitions
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Annual Revenues Acquired
399
213
218
165
230
308
847
154
Purchase Price
Cash Paid
263
216
235
163
223
439
745
190
Stock Issued
-
-
-
-
-
-
-
-
Total
263
216
235
163
223
439
745
190
Number of Acquisitions
9
10
18
15
16
10
14
10
2007
2008
14
Macro Data and End Markets Continued to
Deteriorate in Q4
Since December 2008 Investor Meeting in New York City, macro and
end market trends have continued to deteriorate
U.S. Data
Industrial production: -6.1% in October 2008 vs. -10.2% in
December 2008
ISM Index: 36.2% in November 2008 vs. 32.4% in December 2008
Capacity utilization (manufacturing ex.tech): 79.2% in December
2007 vs. 70.5% in December 2008
NA auto: Q4 combined builds forecasted to be -18% to -20% per
December meeting vs. -26 % Q4 Actual
Q4 Housing starts forecasted to be -30% to -35% per December
meeting vs. -41% Q4 actual (680k starts in Q4)
International Data
Euro-Zone industrial production: -2.2% in October 2008 vs. -6.9% in
December 2008
Euro-Zone Purchasing Manager’s Index: 41.1% in October 2008 vs.
33.9% in December 2008
Euro-Zone capacity utilization: 83.0% for full year 2007 vs. 81.6% for
Q4 2008
European auto: Q4 builds forecasted to be -8% to -10% per
December meeting vs. -16% Q4 actual
15
Industrial Packaging
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q4
626.3
76.8
12.3%
2008 Q4
568.8
38.4
6.8%
$ F(U)
(57.5)
(38.4)
-5.5%
% F(U)
-9.2%
-50.0%
% F(U) Prior Year
Base Business
Operating Leverage
-5.7%
-18.2%
-1.6%
Changes in VM & OH costs
-
-16.2%
-2.1%
Total
-5.7%
-34.4%
-3.7%
Acquisitions/Divestitures
2.4%
0.7%
-0.1%
Translation
-5.9%
-5.6%
-0.3%
Impairment
-
-
-
Restructuring
-
-10.6%
-1.4%
Other
-
-0.1%
-
Total
-9.2%
-50.0%
-5.5%
16
Industrial Packaging
Key Points
Total segment base revenues: -5.7% for Q4 ’08 vs. +5.2 % in Q3 ’08
Q4 North America base revenues: -12.3% for Q4 ’08
Base revenue decline largely due to notable fall-off in demand
for consumable plastic and steel strapping products
Q4 International base revenues: -1.2% for Q4 ’08 as demand for
strapping products was essentially flat in the quarter
Worldwide insulation base revenues grew 24.5% in Q4 ’08
Underlying demand strong from energy-related customers
17
Power Systems and Electronics
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q4
558.4
107.5
19.2%
2008 Q4
504.9
77.7
15.4%
$ F(U)
(53.4)
(29.8)
-3.8%
% F(U)
-9.6%
-27.7%
% F(U) Prior Year
Base Business
Operating Leverage
-10.8%
-21.9%
-2.4%
Changes in VM & OH costs
-
0.7%
0.2%
Total
-10.8%
-21.2%
-2.2%
Acquisitions/Divestitures
3.2%
-3.4%
-1.3%
Translation
-1.9%
-1.3%
0.1%
Impairment
-
-
-
Restructuring
-
-1.9%
-0.4%
Other
-0.1%
0.1%
-
Total
-9.6%
-27.7%
-3.8%
18
Power Systems and Electronics
Key Points
Total segment base revenues: -10.8% in Q4 ’08 vs. +3.1% in Q3 ’08
In Q4, Welding’s worldwide base revenues: -9.0%
Welding’s Q4 North America base revenues declined 15.7% as
underlying industrial production and related end markets
continue to slow in U.S.
Welding’s Q4 International base revenues: +9.4%
18.7% base revenue increase in Asia due to high levels of demand
for specialty consumable products serving energy/pipeline, ship
building and container categories
3.9% base revenue decline in Europe in Q4
Ground Support Equipment: +17.9% in Q4
19
Transportation
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q4
567.8
94.4
16.6%
2008 Q4
541.0
16.9
3.1%
$ F(U)
(26.8)
(77.5)
-13.5%
% F(U)
-4.7%
-82.1%
% F(U) Prior Year
Base Business
Operating Leverage
-20.3%
-46.9%
-5.6%
Changes in VM & OH costs
-
-16.9%
-3.5%
Total
-20.3%
-63.8%
-9.1%
Acquisitions/Divestitures
19.8%
-4.8%
-2.0%
Translation
-4.2%
-5.4%
-0.8%
Impairment
-
-
-
Restructuring
-
-8.1%
-1.7%
Other
-
-
0.1%
Total
-4.7%
-82.1%
-13.5%
20
Transportation
Key Points
Total segment base revenues: -20.3% in Q4 ’08 vs. -9.6% in Q3 ’08
Auto OEM/Tiers:
North America Q4 base revenues: -26.5%
Q4 combined build: -26%
Q4 Detroit 3 builds decline 28%: GM: -23%; Ford: -29%; Chrysler: -37%
Q4 New Domestics: -22%
FY 2008 combined build: -16%; D3: -21%; New Domestics: -8%
International Q4 base revenues: -21.7%
International builds: -16% in Q4: GM Group: -39%; Renault: -24%; Fiat:
-21%; BMW: -18%; PSA: -15%; Ford: -14%
FY 2008 builds: -3%
2009 Forecast vs. 2008:
NA: 10 million vehicles … 21% decline
INTL: 17 million vehicles … 20% decline
Auto aftermarket Q4 worldwide base revenues: -3.6% as consumer spending
dips
21
Construction Products
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q4
532.3
73.7
13.9%
2008 Q4
415.5
35.7
8.6%
$ F(U)
(116.8)
(38.0)
-5.3%
% F(U)
-21.9%
-51.6%
% F(U) Prior Year
Base Business
Operating Leverage
-14.6%
-44.8%
-4.9%
Changes in VM & OH costs
-
7.5%
1.2%
Total
-14.6%
-37.3%
-3.7%
Acquisitions/Divestitures
0.4%
-1.4%
-0.3%
Translation
-7.7%
-9.7%
-0.8%
Impairment
-
-
-
Restructuring
-
-3.3%
-0.5%
Other
-
0.1%
-
Total
-21.9%
-51.6%
-5.3%
22
Construction Products
Key Points
Total segment base revenues: -14.6% in Q4 ’08 vs. -4.4% in Q3 ’08
North America Q4 base revenues: -23.4% vs. -6.2% in Q3 ’08
Q4 Residential: -29% base revenues vs. -41% Q4 housing starts
Q4 Commercial Construction base revenues: -16% as Dodge
Index data shows year-to-date activity (sq. footage) down 19%
Q4 Renovation: -19% due to weak demand at Big Box stores
International Q4 base revenues: -10.5% vs. -3.2% in Q3 ’08
Q4 Europe: base revenues: -16.9% as overall Europe continues
to weaken
Q4 Asia-Pacific: base revenues: -1.6% due to slowing Asia;
Australia/New Zealand flat in Q4
23
Food Equipment
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q4
565.7
80.2
14.2%
2008 Q4
542.3
87.8
16.2%
$ F(U)
(23.4)
7.7
2.0%
% F(U)
-4.1%
9.6%
% F(U) Prior Year
Base Business
Operating Leverage
1.7%
4.8%
0.4%
Changes in VM & OH costs
-
13.4%
1.9%
Total
1.7%
18.2%
2.3%
Acquisitions/Divestitures
-1.9%
-2.0%
-
Translation
-3.9%
-3.8%
0.1%
Impairment
-
-
-
Restructuring
-
-2.9%
-0.4%
Other
-
0.1%
-
Total
-4.1%
9.6%
2.0%
24
Food Equipment
Key Points
Total segment base revenues: +1.7% in Q4 ’08 vs. -1.7% in Q3 ’08
International Q4 base revenues: +3.2%
Europe base revenues increased 3.0% while Asia-Pacific base
revenues grew 6.4%
North America Q4 base revenues: -0.7%
Q4 Institutional/restaurant base revenues: -4.0% as
institutional customers delay purchases of equipment
Q4 Service base revenues: +3.5%
Q4 Retail base revenues: +6.7%
25
Polymers and Fluids
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q4
261.1
40.8
15.6%
2008 Q4
327.2
��
36.3
11.1%
$ F(U)
66.1
(4.5)
-4.5%
% F(U)
25.3%
-11.0%
% F(U) Prior Year
Base Business
Operating Leverage
-7.9%
-22.5%
-2.5%
Changes in VM & OH costs
-
2.2%
0.4%
Total
-7.9%
-20.3%
-2.1%
Acquisitions/Divestitures
38.2%
15.3%
-2.1%
Translation
-5.3%
-6.4%
-0.3%
Impairment
-
-
-
Restructuring
-
0.3%
0.1%
Other
0.3%
-
-0.1%
Total
25.3%
-11.1%
-4.5%
26
Polymers and Fluids
Key Points
Total segment base revenues: -7.9% in Q4 ’08 vs. +3.5% in Q3 ’08 as
industrial markets notably slow
Product breakdown:
Worldwide Polymers base revenues: -7.8%
Worldwide Fluids base revenues: -8.0%
North America:
Polymers Q4 base revenues: -5.4%
Fluids Q4 base revenues: -14.7% as manufacturing demand slackens
International:
Polymers Q4 base revenues: -9.1%
Fluids Q4 base revenues: -4.6%
27
All Other
Quarterly Analysis
Operating
Operating
Operating
Revenues
Income
Margins
2007 Q4
807.9
145.3
18.0%
2008 Q4
789.6
121.4
15.4%
$ F(U)
(18.3)
(24.0)
-2.6%
% F(U)
-2.3%
-16.5%
% F(U) Prior Year
Base Business
Operating Leverage
-7.5%
-19.5%
-2.3%
Changes in VM & OH costs
-
5.7%
1.1%
Total
-7.5%
-13.8%
-1.2%
Acquisitions/Divestitures
8.5%
4.2%
-0.6%
Translation
-3.3%
-3.7%
-0.2%
Impairment
-
-
-
Restructuring
-
-3.1%
-0.6%
Other
-
-0.1%
-
Total
-2.3%
-16.5%
-2.6%
28
All Other
Key Points
Total segment base revenues: -7.5% in Q4 ’08 vs. -0.7% in Q3 ’08
Q4 worldwide test and measurement base revenues: +3.0%
due to Asian operations
Q4 worldwide consumer packaging base revenues: -7.6% as
demand for graphics, foils and marking weakened; Hi-Cone
& Zip-Pak units grew base revenues in the quarter
Q4 worldwide finishing base revenues: -8.3%
Q4 worldwide industrial/appliance base revenues: -14.5%
29
ITW
2009 Forecast
Mid
Low
High
Point
1st Quarter
Total Revenues
-17%
-11%
-14%
Diluted Income per Share - Continuing
$0.26
$0.42
$0.34
% F(U) 2008
-63%
-40%
-51%
Full Year
Total Revenues
-12%
-6%
-9%
Diluted Income per Share - Continuing
$1.84
$2.48
$2.16
% F(U) 2008
-39%
-18%
-29%
30
ITW 2009 Forecast
Key Assumptions
Exchange rates hold at current levels.
Acquired revenues in the $400 to $600 million range.
No share repurchases planned for the year.
Restructuring costs of $60 to $100 million
Net nonoperating expense, including interest expense
and other nonoperating income, of $90 to $100 million,
which is lower than 2008 by $47 to $57 million.
Tax rate range of 27.75% to 28.25% for the first quarter
and for the year.
31
ITW Conference Call
Q & A
Fourth Quarter
2008
