Q4 2011 Conference Call
ITW Conference Call
Fourth Quarter
2011
January 31, 2012
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Exhibit 99.2
Q4 2011 Conference Call
ITW
Agenda
Agenda
1. Introduction…………………...….. John Brooklier
2. Fourth Quarter Highlights……... David Speer
3. Financial Overview…………..….. Ron Kropp
4. Reporting Segments………....…. John Brooklier
5. 2012 Forecasts…..……….….…… Ron Kropp
6. Q & A………………......……...…... John Brooklier/Ron Kropp/David Speer
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Q4 2011 Conference Call
ITW
Forward - Looking Statements
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, diluted
income per share from continuing operations, diluted net
income per share, restructuring expenses and related
benefits, tax rates, end market conditions, and the
Company’s related 2012 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 include those that are detailed in ITW’s Form
10-K for 2010.
within the meaning of the Private Securities Litigation
Reform Act of 1995 including, without limitation, statements
regarding operating performance, revenue growth, diluted
income per share from continuing operations, diluted net
income per share, restructuring expenses and related
benefits, tax rates, end market conditions, and the
Company’s related 2012 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 include those that are detailed in ITW’s Form
10-K for 2010.
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Q4 2011 Conference Call
Conference Call Playback
Replay number: 800-704-0516; No pass code necessary
Telephone replay available through midnight of Feb. 14,
2012
2012
Webcast / PowerPoint replay available at www.itw.com
Supplemental financial and investor information will be
available on the ITW website under the “Investor
Relations” tab
available on the ITW website under the “Investor
Relations” tab
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Q4 2011 Conference Call
Q4 and Full Year 2011 Highlights
Q4
• Generated total revenue and organic growth of 10.4% and 5.9%, respectively
• Delivered strong diluted EPS growth of 36%
• Produced total company operating margins of 15.0%: +270 basis points
• Generated $617 million in free operating cash flow
– 140% of net income
Full Year
• Generated record total revenues of $17.8 billion
– Organic revenues grew 7.5%
• Delivered record $2.0 billion of income from continuing operations
– 41% diluted EPS growth
• Produced total company operating margins of 15.4%: +80 basis points
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Q4 2011 Conference Call
ITW
Quarterly Highlights
Quarterly Highlights
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Q4 2011 Conference Call
ITW
Quarterly Operating Analysis
Quarterly Operating Analysis
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Q4 2011 Conference Call
ITW
Non Operating & Taxes
Non Operating & Taxes
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Q4 2011 Conference Call
ITW
Cash Flow
Cash Flow
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Q4 2011 Conference Call
ITW
Full Year Highlights
Full Year Highlights
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Q4 2011 Conference Call
ITW
Full Year Operating Analysis
Full Year Operating Analysis
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Q4 2011 Conference Call
ITW
Full Year Cash Flow
Full Year Cash Flow
Returned to shareholders $ 1,630
(Dividends & Share Repurchase)
Total Acquisitions 1,308
Full Year Capital Allocation 2,938
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Q4 2011 Conference Call
ITW
Invested Capital
Invested Capital
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Q4 2011 Conference Call
ITW
Debt & Equity
Debt & Equity
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Q4 2011 Conference Call
ITW Acquisition Activity
2010 | 2011 | |||||||||
$ in Millions | Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL |
Annualized Revenues Acquired | 26 | 253 | 120 | 131 | 530 | 329 | 156 | 296 | 86 | 867 |
Amount Paid | 27 | 199 | 145 | 160 | 531 | 556 | 190 | 480 | 110 | 1,336 |
Number of Acquisitions | 4 | 7 | 5 | 8 | 24 | 6 | 7 | 8 | 7 | 28 |
Ø 81% of acquired revenues in 2011 directly tied to emerging market and platform growth initiatives Ø ITW Global Brands (SOPUS) and Despatch: key platform acquisitions Ø Completed nine emerging market-related acquisitions Ø Higher revenue multiple in 2011 related to higher growth, higher margin businesses Ø Margins for newly acquired businesses were 16.2% (excluding amortization) Ø Consistent long-term ROIC expectations | ||||||||||
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Q4 2011 Conference Call
• Closed January 2012
• 2011 revenues: $210 million
– nearly half of revenues coming from Asia,
Europe and the Middle East
Europe and the Middle East
• Highly-branded provider of specialty devices
used to measure and control the flow of gases
and fluids through an electronic interface
used to measure and control the flow of gases
and fluids through an electronic interface
• Products used in applications where gas or
liquid must be regulated with ultra-precise
accuracy as part of highly complex
manufacturing processes
liquid must be regulated with ultra-precise
accuracy as part of highly complex
manufacturing processes
• High-growth end market applications include
mobile computing, microelectronics,
mobile computing, microelectronics,
LED, energy and life sciences
Recent Acquisition: Brooks Instrument
Complements Growing Test & Measurement Platform
Complements Growing Test & Measurement Platform
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Q4 2011 Conference Call
Transportation
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues: 8.7%
• Auto OEM/Tiers: Worldwide base
revenue growth of 7.9% vs. worldwide
car build increase of 1%
revenue growth of 7.9% vs. worldwide
car build increase of 1%
– North American base revenues: 8.0% as
D3 and new domestics ramped up Q4
build
D3 and new domestics ramped up Q4
build
– International base revenues: 7.7% even
as European and ROW builds modestly
declined in Q4
as European and ROW builds modestly
declined in Q4
– 2012 full year auto build forecast:
• North America: 13.5 - 14.5 million units
• Europe: 18.0 -19.0 million units
• Auto aftermarket worldwide base
revenues: 5.6%
revenues: 5.6%
• Truck remanufacturing: 19.5% base
revenue growth due to oil & gas field
exploration activity
revenue growth due to oil & gas field
exploration activity
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Q4 2011 Conference Call
Power Systems and Electronics
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues: 10.2%
due to strong contributions from
worldwide welding
due to strong contributions from
worldwide welding
• Worldwide welding base revenues:
22.8%
22.8%
– North America welding base
revenues: 25.2% due to strength in
oil & gas and heavy equipment end
markets
revenues: 25.2% due to strength in
oil & gas and heavy equipment end
markets
– International welding base revenues:
16.4% as Europe and Asia Pacific
helped drive organic growth
16.4% as Europe and Asia Pacific
helped drive organic growth
• Total electronics base revenues
weakened in Q4: -7.7%
weakened in Q4: -7.7%
– PC board fabrication: -14.5%
– Other electronics: -3.9%
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Q4 2011 Conference Call
Industrial Packaging
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues: 3.8%
reflected slowing industrial
production demand in Europe
reflected slowing industrial
production demand in Europe
– Total North American industrial
packaging base revenues: 7.3%
packaging base revenues: 7.3%
– Total international industrial
packaging base revenues: 1.0%
packaging base revenues: 1.0%
• Worldwide strapping and related
equipment base revenues: 5.0%
equipment base revenues: 5.0%
– North America: 10.7%
– International: 1.5%
• Worldwide protective packaging
base revenues: 5.8%
base revenues: 5.8%
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Q4 2011 Conference Call
Food Equipment
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues: 3.9%
as equipment sales strengthened in
North America; service revenues
improved globally
as equipment sales strengthened in
North America; service revenues
improved globally
• Total North America base revenues:
6.1%
6.1%
– Equipment base revenues: 7.5% due
to improved sales to restaurants,
supermarkets, and colleges &
universities
to improved sales to restaurants,
supermarkets, and colleges &
universities
– Service base revenues: 4.1%
• Total international base revenues:
1.7%
1.7%
– Equipment base revenues: 0.6%, as
cap ex spend lagged in Europe
cap ex spend lagged in Europe
– Service base revenues: 4.4%
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Q4 2011 Conference Call
Construction Products
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues: 2.6%
as North America and Europe
posted positive organic revenue
growth
as North America and Europe
posted positive organic revenue
growth
• North America construction base
revenues: 9.1%
revenues: 9.1%
– Residential base revenues: 12.3%
– Commercial base revenues: 7.5%
– Renovation base revenues: 7.7%
• International construction base
revenues: 0.3%
revenues: 0.3%
– Europe base revenues: 2.7%
– Asia Pacific (Aust/NZ) base
revenues: -2.3%
revenues: -2.3%
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Q4 2011 Conference Call
Polymers and Fluids
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues: 3.2%
reflected modestly slowing
industrial demand for both
polymer and fluid products
reflected modestly slowing
industrial demand for both
polymer and fluid products
• Worldwide polymers base
revenues: 3.2% as international
and North American business
contributions were roughly the
same
revenues: 3.2% as international
and North American business
contributions were roughly the
same
• Loss on an international
polymers contract accounted for
the segment’s base margin
decline
polymers contract accounted for
the segment’s base margin
decline
• Worldwide fluids base revenues:
3.2% due to better demand in
international (Asian) markets
3.2% due to better demand in
international (Asian) markets
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Q4 2011 Conference Call
Decorative Surfaces
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues: 3.5%
• North America laminate base
revenues: 5.4% due to premium
laminate product positioning and
growth in office furniture category
revenues: 5.4% due to premium
laminate product positioning and
growth in office furniture category
• International base revenues: 1.2%
as growth slows in Europe
(France and U.K.)
as growth slows in Europe
(France and U.K.)
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Q4 2011 Conference Call
All Other
Quarterly Analysis
Q4 2011
Quarterly Analysis
Q4 2011
Key Points (Q4’11 vs. Q4’10)
• Segment organic revenues:
6.5%
6.5%
• Worldwide test and
measurement base revenues:
15.6% as equipment orders
remained strong in North
America and Europe
measurement base revenues:
15.6% as equipment orders
remained strong in North
America and Europe
• Worldwide consumer
packaging base revenues: 3.9%
as decorating, foils and
beverage packaging improved
packaging base revenues: 3.9%
as decorating, foils and
beverage packaging improved
• Worldwide industrial/appliance
base revenues: -2.4% due to
ongoing weakness in
worldwide appliance sector
base revenues: -2.4% due to
ongoing weakness in
worldwide appliance sector
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Q4 2011 Conference Call
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Assumptions:
• Exchange rates hold at current levels
• Restructuring costs of $70 to $80 million for the full year
• Tax rate range of 28.5% to 29.5% for Q1 and full year 2012
Notes:
•* 2011 EPS excludes the impact of the Q1 Australian tax case
• Beginning 2012, ITW will discontinue the monthly release of rolling 3 month revenue data
Q4 2011 Conference Call
ITW Conference Call
Q & A
Q & A
Fourth Quarter
2011
January 31, 2012
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