Cover Page
Cover Page | 3 Months Ended |
Mar. 31, 2022shares | |
Entity Information [Line Items] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2022 |
Document Transition Report | false |
Entity File Number | 1-4797 |
Entity Registrant Name | ILLINOIS TOOL WORKS INC |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 36-1258310 |
Entity Address, Address Line One | 155 Harlem Avenue |
Entity Address, City or Town | Glenview |
Entity Address, State or Province | IL |
Entity Address, Postal Zip Code | 60025 |
City Area Code | 847 |
Local Phone Number | 724-7500 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding (in shares) | 311,442,968 |
Entity Central Index Key | 0000049826 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Common Stock | |
Entity Information [Line Items] | |
Title of 12(b) Security | Common Stock |
Trading Symbol | ITW |
Security Exchange Name | NYSE |
1.25% Euro Notes due 2023 | |
Entity Information [Line Items] | |
Title of 12(b) Security | 1.25% Euro Notes due 2023 |
Trading Symbol | ITW23 |
Security Exchange Name | NYSE |
0.250% Euro Notes due 2024 | |
Entity Information [Line Items] | |
Title of 12(b) Security | 0.250% Euro Notes due 2024 |
Trading Symbol | ITW24A |
Security Exchange Name | NYSE |
0.625% Euro Notes due 2027 | |
Entity Information [Line Items] | |
Title of 12(b) Security | 0.625% Euro Notes due 2027 |
Trading Symbol | ITW27 |
Security Exchange Name | NYSE |
2.125% Euro Notes due 2030 | |
Entity Information [Line Items] | |
Title of 12(b) Security | 2.125% Euro Notes due 2030 |
Trading Symbol | ITW30 |
Security Exchange Name | NYSE |
1.00% Euro Notes due 2031 | |
Entity Information [Line Items] | |
Title of 12(b) Security | 1.00% Euro Notes due 2031 |
Trading Symbol | ITW31 |
Security Exchange Name | NYSE |
3.00% Euro Notes due 2034 | |
Entity Information [Line Items] | |
Title of 12(b) Security | 3.00% Euro Notes due 2034 |
Trading Symbol | ITW34 |
Security Exchange Name | NYSE |
Statement of Income (Unaudited)
Statement of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Operating Revenue | $ 3,939 | $ 3,544 |
Cost of revenue | 2,357 | 2,039 |
Selling, administrative, and research and development expenses | 652 | 566 |
Amortization and impairment of intangible assets | 35 | 34 |
Operating Income | 895 | 905 |
Interest expense | (48) | (52) |
Other income (expense) | 14 | 12 |
Income Before Taxes | 861 | 865 |
Income Taxes | 199 | 194 |
Net Income | $ 662 | $ 671 |
Net Income Per Share: | ||
Basic (in dollars per share) | $ 2.12 | $ 2.12 |
Diluted (in dollars per share) | $ 2.11 | $ 2.11 |
Shares of Common Stock Outstanding During the Period: | ||
Average (in shares) | 312.5 | 316.6 |
Average assuming dilution (in shares) | 313.7 | 317.9 |
Statement of Comprehensive Inco
Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net Income | $ 662 | $ 671 |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Foreign currency translation adjustments, net of tax | 26 | (7) |
Pension and other postretirement benefit adjustments, net of tax | 5 | 11 |
Other comprehensive income (loss) | 31 | 4 |
Comprehensive Income | $ 693 | $ 675 |
Statement of Financial Position
Statement of Financial Position (Unaudited) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and equivalents | $ 1,296 | $ 1,527 |
Trade receivables | 3,126 | 2,840 |
Inventories | 1,883 | 1,694 |
Prepaid expenses and other current assets | 377 | 313 |
Total current assets | 6,682 | 6,374 |
Net plant and equipment | 1,795 | 1,809 |
Goodwill | 5,008 | 4,965 |
Intangible assets | 875 | 972 |
Deferred income taxes | 546 | 552 |
Other assets | 1,380 | 1,405 |
Total assets | 16,286 | 16,077 |
Current Liabilities: | ||
Short-term debt | 1,041 | 778 |
Accounts payable | 696 | 585 |
Accrued expenses | 1,541 | 1,648 |
Cash dividends payable | 380 | 382 |
Income taxes payable | 200 | 77 |
Total current liabilities | 3,858 | 3,470 |
Long-term debt | 6,817 | 6,909 |
Noncurrent Liabilities: | ||
Long-term debt | 6,817 | 6,909 |
Deferred income taxes | 627 | 654 |
Noncurrent income taxes payable | 365 | 365 |
Other liabilities | 1,037 | 1,053 |
Total noncurrent liabilities | 8,846 | 8,981 |
Stockholders' Equity: | ||
Common stock (par value of $0.01 per share): issued- 550.0 shares in 2022 and 2021 outstanding- 311.4 shares in 2022 and 312.9 shares in 2021 | 6 | 6 |
Additional paid-in-capital | 1,447 | 1,432 |
Retained earnings | 24,607 | 24,325 |
Common stock held in treasury | (21,008) | (20,636) |
Accumulated other comprehensive income (loss) | (1,471) | (1,502) |
Noncontrolling interest | 1 | 1 |
Total stockholders' equity | 3,582 | 3,626 |
Total liabilities and stockholders' equity | $ 16,286 | $ 16,077 |
Statement of Financial Positi_2
Statement of Financial Position (Unaudited) - Parenthetical - $ / shares shares in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 550 | 550 |
Common stock, outstanding (in shares) | 311.4 | 312.9 |
Statement of Changes in Stockho
Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Common Stock Held in Treasury | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest |
Beginning balance at Dec. 31, 2020 | $ 3,182 | $ 6 | $ 1,362 | $ 23,114 | $ (19,659) | $ (1,642) | $ 1 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 671 | 671 | |||||
Common stock issued for stock-based compensation | 17 | 5 | 12 | ||||
Stock-based compensation expense | 11 | 11 | |||||
Repurchases of common stock | (250) | (250) | |||||
Dividends declared | (360) | (360) | |||||
Other comprehensive income (loss) | 4 | 4 | |||||
Noncontrolling interest | 1 | 0 | 1 | ||||
Ending balance at Mar. 31, 2021 | 3,276 | 6 | 1,378 | 23,425 | (19,897) | (1,638) | 2 |
Beginning balance at Dec. 31, 2021 | 3,626 | 6 | 1,432 | 24,325 | (20,636) | (1,502) | 1 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 662 | 662 | |||||
Common stock issued for stock-based compensation | 2 | (1) | 3 | ||||
Stock-based compensation expense | 16 | 16 | |||||
Repurchases of common stock | (375) | (375) | |||||
Dividends declared | (380) | (380) | |||||
Other comprehensive income (loss) | 31 | 31 | |||||
Ending balance at Mar. 31, 2022 | $ 3,582 | $ 6 | $ 1,447 | $ 24,607 | $ (21,008) | $ (1,471) | $ 1 |
Statement of Changes in Stock_2
Statement of Changes in Stockholders' Equity (Unaudited) - Parenthetical - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 1.22 | $ 1.14 |
Statement of Cash Flows (Unaudi
Statement of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Provided by (Used for) Operating Activities: | ||
Net Income | $ 662 | $ 671 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation | 71 | 66 |
Amortization and impairment of intangible assets | 35 | 34 |
Change in deferred income taxes | (37) | 21 |
Provision for uncollectible accounts | 1 | 0 |
(Income) loss from investments | (1) | (1) |
Stock-based compensation expense | 16 | 11 |
Other non-cash items, net | 0 | 3 |
(Increase) decrease in- | ||
Trade receivables | (301) | (192) |
Inventories | (207) | (122) |
Prepaid expenses and other assets | (47) | (21) |
Increase (decrease) in- | ||
Accounts payable | 116 | 65 |
Accrued expenses and other liabilities | (119) | (13) |
Income taxes | 134 | 88 |
Other, net | 0 | (1) |
Net cash provided by operating activities | 323 | 609 |
Cash Provided by (Used for) Investing Activities: | ||
Acquisition of businesses (excluding cash and equivalents) | (2) | 0 |
Additions to plant and equipment | (74) | (68) |
Proceeds from investments | 2 | 1 |
Proceeds from sale of plant and equipment | 2 | 2 |
Other, net | (1) | 0 |
Net cash provided by (used for) investing activities | (73) | (65) |
Cash Provided by (Used for) Financing Activities: | ||
Cash dividends paid | (382) | (361) |
Issuance of common stock | 16 | 26 |
Repurchases of common stock | (375) | (250) |
Net proceeds from (repayments of) debt with original maturities of three months or less | 564 | 0 |
Proceeds from debt with original maturities of more than three months | 357 | 0 |
Repayments of debt with original maturities of more than three months | (656) | 0 |
Other, net | (13) | (9) |
Net cash provided by (used for) financing activities | (489) | (594) |
Effect of Exchange Rate Changes on Cash and Equivalents | 8 | (30) |
Cash and Equivalents: | ||
Increase (decrease) during the period | (231) | (80) |
Beginning of period | 1,527 | 2,564 |
End of period | 1,296 | 2,484 |
Supplementary Cash Flow Information: | ||
Cash Paid During the Period for Interest | 58 | 56 |
Cash Paid During the Period for Income Taxes, Net of Refunds | $ 102 | $ 86 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Financial Statements — The unaudited financial statements included herein have been prepared by Illinois Tool Works Inc. and Subsidiaries (the "Company"). In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. Interim results are not necessarily indicative of results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and notes to financial statements included in the Company's 2021 Annual Report on Form 10-K. Certain reclassifications of prior year data have been made to conform with current year reporting. |
Novel Coronavirus (COVID-19)
Novel Coronavirus (COVID-19) | 3 Months Ended |
Mar. 31, 2022 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Novel Coronavirus (COVID-19) | Novel Coronavirus (COVID-19)In early 2020, an outbreak of a novel strain of coronavirus ("COVID-19") occurred in China and other jurisdictions. The COVID-19 outbreak was subsequently declared a global pandemic by the World Health Organization on March 11, 2020. In response to the outbreak, governments around the globe have taken various actions to reduce its spread, including travel restrictions, shutdowns of businesses deemed nonessential, and stay-at-home or similar orders. The COVID-19 pandemic and the measures taken globally to reduce its spread have negatively impacted the global economy, causing significant disruptions in the Company's global operations starting primarily in the latter part of the first quarter of 2020 as COVID-19 spread and impacted the countries in which the Company operates and the markets the Company serves. During 2021, the Company experienced solid recovery progress in many of its end markets; however, the disruptions caused by the COVID-19 pandemic continued to have an adverse impact on the Company's global operations. The full extent of the COVID-19 outbreak and its impact on the markets served by the Company and on the Company's operations continues to be highly uncertain as conditions continue to fluctuate around the world, with vaccine administration rising in certain regions and spikes in infections (including the spread of variants) also being experienced. The pandemic and resurgence of outbreaks could continue to adversely impact the operations of the Company and its customers and suppliers. |
MTS Test & Simulation Acquisiti
MTS Test & Simulation Acquisition | 3 Months Ended |
Mar. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
MTS Test & Simulation Acquisition | MTS Test & Simulation AcquisitionOn December 1, 2021, the Company completed the acquisition of the Test & Simulation business of MTS Systems Corporation ("MTS") from Amphenol Corporation for a purchase price of $750 million, subject to certain closing adjustments. The MTS Test & Simulation business is a leading global supplier of high-performance testing and simulation systems and is highly complementary to the Company's existing Test & Measurement and Electronics segment. The operating results of the MTS Test & Simulation business were reported within the Test & Measurement and Electronics segment from the date of acquisition, with operating revenue of $100 million for the three months ended March 31, 2022. The Company is in process of allocating the purchase price to the acquired assets and liabilities as of the acquisition date, including intangible assets and goodwill. Based on its updated allocation, the Company recorded goodwill of $429 million and intangible assets of $258 million. The intangible assets included $93 million related to indefinite-lived trademarks and brands and $165 million related to amortizable intangible assets that are expected to be amortized on a straight-line basis over estimated useful lives ranging from 1 to 14 years, with a weighted-average life of 11 years. The Company does not expect any of the goodwill related to the transaction to be tax deductible. The fair values of the intangible assets were estimated based on discounted cash flow and market-based valuation models using Level 2 and Level 3 inputs and assumptions. Adjustments resulting from updates to the purchase price allocation during the first quarter of 2022 were not material. Subsequent acquisition accounting adjustments may change the amounts recorded, including goodwill and intangible assets, primarily due to the completion of valuations. The allocation of purchase price will be completed as soon as practicable, but no later than one year from the acquisition date. |
Operating Revenue
Operating Revenue | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Operating Revenue | Operating Revenue The Company's 83 diversified operating divisions are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. Operating revenue by product category, which is consistent with the Company's segment presentation, for the three months ended March 31, 2022 and 2021 was as follows: Three Months Ended March 31, In millions 2022 2021 Automotive OEM $ 760 $ 783 Food Equipment 566 451 Test & Measurement and Electronics 685 552 Welding 450 401 Polymers & Fluids 481 435 Construction Products 551 469 Specialty Products 452 457 Intersegment revenue (6) (4) Total operating revenue $ 3,939 $ 3,544 The following is a description of the product offerings, end markets and typical revenue transactions for each of the Company's seven segments: Automotive OEM — This segment is a global, niche supplier to top tier OEMs, providing unique innovation to address pain points for sophisticated customers with complex problems. Businesses in this segment produce components and fasteners for automotive-related applications. This segment primarily serves the automotive original equipment manufacturers and tiers market. Products in this segment include: • plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses. Products sold in this segment are primarily manufactured to the customer's specifications and are sold under long-term supply agreements with OEM auto manufacturers and other top tier auto parts suppliers. The Company typically recognizes revenue for products in this segment at the time of shipment. Certain products may be produced utilizing tooling that is owned by the customer that the Company developed and is reimbursed by the customer for the associated cost. In these arrangements, the Company typically retains a contractual right to use the customer-owned tooling for the purpose of fulfilling its obligations under the supply agreement. The Company records reimbursements for the cost of customer-owned tooling as a cost offset rather than operating revenue as tooling is not considered a product offering central to the Company's operations. Food Equipment — This segment is a highly focused and branded industry leader in commercial food equipment differentiated by innovation and integrated service offerings. This segment primarily serves the food service, food retail and food institutional/restaurant markets. Products in this segment include: • warewashing equipment; • cooking equipment, including ovens, ranges and broilers; • refrigeration equipment, including refrigerators, freezers and prep tables; • food processing equipment, including slicers, mixers and scales; • kitchen exhaust, ventilation and pollution control systems; and • food equipment service, maintenance and repair. Revenue for equipment sold in this segment is typically recognized at the time of product shipment. In limited circumstances involving installation of equipment and customer acceptance, the Company may recognize revenue upon completion of installation and acceptance by the customer. Annual service contracts are typically sold separate from equipment and the related revenue is recognized on a straight-line basis over the annual service period. Operating revenue for on-demand service repairs and parts is recorded upon completion and customer acceptance of the work performed. Test & Measurement and Electronics — This segment is a branded and innovative producer of test and measurement and electronic manufacturing and maintenance, repair, and operations, or "MRO" solutions that improve efficiency and quality for customers in diverse end markets. Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, automotive original equipment manufacturers and tiers, industrial capital goods, energy and consumer durables markets. Products in this segment include: • equipment, consumables, and related software for testing and measuring of materials, structures, gases and fluids; • electronic assembly equipment; • electronic components and component packaging; • static control equipment and consumables used for contamination control in clean room environments; and • pressure sensitive adhesives and components for electronics, medical, transportation and telecommunications applications. Revenue for products sold in this segment is typically recognized at the time of shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue recognition is deferred until such obligations have been completed. In other limited arrangements involving the sale of highly specialized systems that include a high degree of customization and installation at the customer site, revenue is recognized over time if the product does not have an alternative use, and the Company has an enforceable right to payment for work performed to date. Revenue for transactions meeting these criteria is recognized over time as work is performed based on the costs incurred to date relative to the total estimated costs at completion. Welding — This segment is a branded value-added equipment and specialty consumable manufacturer with innovative and leading technology. Businesses in this segment produce arc welding equipment, consumables and accessories for a wide array of industrial and commercial applications. This segment primarily serves the general industrial market, which includes fabrication, shipbuilding and other general industrial markets, and energy, construction, MRO, automotive original equipment manufacturers and tiers, and industrial capital goods markets. Products in this segment include: • arc welding equipment; and • metal arc welding consumables and related accessories. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Polymers & Fluids — This segment is a branded supplier to niche markets that require value-added, differentiated products. Businesses in this segment produce engineered adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. This segment primarily serves the automotive aftermarket, general industrial, MRO and construction markets. Products in this segment include: • adhesives for industrial, construction and consumer purposes; • chemical fluids which clean or add lubrication to machines; • epoxy and resin-based coating products for industrial applications; • hand wipes and cleaners for industrial applications; • fluids, polymers and other supplies for auto aftermarket maintenance and appearance; • fillers and putties for auto body repair; and • polyester coatings and patch and repair products for the marine industry. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Construction Products — This segment is a branded supplier of innovative engineered fastening systems and solutions. This segment primarily serves the residential construction, renovation/remodel and commercial construction markets. Products in this segment include: • fasteners and related fastening tools for wood and metal applications; • anchors, fasteners and related tools for concrete applications; • metal plate truss components and related equipment and software; and • packaged hardware, fasteners, anchors and other products for retail. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Specialty Products — This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. This segment primarily serves the food and beverage, consumer durables, general industrial, industrial capital goods and printing and publishing markets. Products in this segment include: • line integration, conveyor systems and line automation for the food and beverage industries; • plastic consumables that multi-pack cans and bottles and related equipment; • foil, film and related equipment used to decorate consumer products; • product coding and marking equipment and related consumables; • plastic and metal closures and components for appliances; • airport ground support equipment; and • components for medical devices. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue is recognized when such obligations have been completed. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective tax rate for the three months ended March 31, 2022 and 2021 was 23.1% and 22.4%, respectively. The effective tax rate included discrete income tax benefits related to excess tax benefits from stock-based compensation of $8 million and $9 million for the three months ended March 31, 2022 and 2021, respectively. The Company and its subsidiaries file tax returns in the U.S. and various state, local and foreign jurisdictions. These tax returns are routinely audited by the tax authorities in these jurisdictions, including the Internal Revenue Service ("IRS"), Her Majesty's Revenue and Customs, German Fiscal Authority, French Fiscal Authority, and Australian Tax Office, and a number of these audits are currently ongoing, which may increase the amount of the unrecognized tax benefits in future periods. The Company believes it is reasonably possible that within the next twelve months the amount of the Company's unrecognized tax benefits may be decreased by approximately $51 million related predominantly to the potential resolution of federal, state and foreign examinations. The Company has recorded its best estimate of the potential exposure for these issues. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories as of March 31, 2022 and December 31, 2021 were as follows: In millions March 31, 2022 December 31, 2021 Raw material $ 775 $ 716 Work-in-process 248 208 Finished goods 981 888 LIFO reserve (121) (118) Total inventories $ 1,883 $ 1,694 |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 3 Months Ended |
Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits Pension and other postretirement benefit costs for the three months ended March 31, 2022 and 2021 were as follows: Three Months Ended March 31, Pension Other Postretirement Benefits In millions 2022 2021 2022 2021 Components of net periodic benefit cost: Service cost $ 12 $ 13 $ 2 $ 2 Interest cost 13 10 3 3 Expected return on plan assets (27) (25) (6) (7) Amortization of actuarial loss (gain) 7 13 (1) — Total net periodic benefit cost $ 5 $ 11 $ (2) $ (2) The service cost component of net periodic benefit cost is presented within Cost of revenue and Selling, administrative, and research and development expenses in the Statement of Income while the other components of net periodic benefit cost are presented within Other income (expense). The Company expects to contribute approximately $14 million to its pension plans and $4 million to its other postretirement benefit plans in 2022. As of March 31, 2022, contributions of $3 million to pension plans and $1 million to other postretirement benefit plans have been made. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Total debt as of March 31, 2022 and December 31, 2021 was as follows: In millions March 31, 2022 December 31, 2021 Short-term debt $ 1,041 $ 778 Long-term debt 6,817 6,909 Total debt $ 7,858 $ 7,687 Short-term debt included commercial paper of $1.0 billion and $210 million as of March 31, 2022 and December 31, 2021, respectively. The weighted-average interest rate on commercial paper as of March 31, 2022 and December 31, 2021 was 0.51% and 0.14%, respectively. As of December 31, 2021, Short-term debt also included $568 million related to the 1.75% Euro notes due May 20, 2022, which were redeemed in full at face value on February 22, 2022. Additionally, $350 million of 3.375% notes due September 15, 2021 were redeemed in full at face value on June 15, 2021. The Company has a $2.5 billion revolving credit facility with a termination date of September 27, 2024, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. No amounts were outstanding under the $2.5 billion revolving credit facility as of March 31, 2022 or December 31, 2021. The approximate fair value and related carrying value of the Company's total long-term debt, including current maturities of long-term debt presented as short-term debt, as of March 31, 2022 and December 31, 2021 were as follows: In millions March 31, 2022 December 31, 2021 Fair value $ 7,082 $ 8,296 Carrying value 6,817 7,477 The approximate fair values of the Company's long-term debt, including current maturities, were based on a valuation model using Level 2 observable inputs which included market rates for comparable instruments for the respective periods. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table summarizes changes in Accumulated other comprehensive income (loss) for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, In millions 2022 2021 Beginning balance $ (1,502) $ (1,642) Foreign currency translation adjustments during the period 49 33 Foreign currency translation adjustments reclassified to income — 2 Income taxes (23) (42) Total foreign currency translation adjustments, net of tax 26 (7) Pension and other postretirement benefit adjustments reclassified to income 6 13 Income taxes (1) (2) Total pension and other postretirement benefit adjustments, net of tax 5 11 Ending balance $ (1,471) $ (1,638) Foreign currency translation adjustments reclassified to income related to the exit of an immaterial foreign operation. Pension and other postretirement benefit adjustments reclassified to income represented the amortization of actuarial gains and losses. Refer to Note 7. Pension and Other Postretirement Benefits for additional information. The Company designated the €1.0 billion of Euro notes issued in May 2014, the €1.0 billion of Euro notes issued in May 2015 and the €1.6 billion of Euro notes issued in June 2019 as hedges of a portion of its net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations. Changes in the value of this debt resulting from fluctuations in the Euro to U.S. Dollar exchange rate have been recorded as foreign currency translation adjustments within Accumulated other comprehensive income (loss). On February 22, 2022, €500 million of the Euro notes issued in May 2014 were redeemed in full. Refer to Note 8. Debt for additional information regarding the redemption of these notes. The carrying values of the 2019, 2015 and 2014 Euro notes were $1.8 billion, $1.1 billion and $543 million, respectively, as of March 31, 2022. The cumulative unrealized pre-tax gain (loss) recorded in Accumulated other comprehensive income (loss) related to the net investment hedge was a gain of $277 million and $183 million as of March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022 and 2021, the ending balance of Accumulated other comprehensive income (loss) consisted of after-tax cumulative translation adjustment losses of $1.3 billion and $1.3 billion, respectively, and after-tax unrecognized pension and other postretirement benefits costs of $191 million and $320 million, respectively. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Segment InformationThe Company's operations are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. Refer to Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for information regarding operating revenue and operating income for the Company's segments. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue | Automotive OEM — This segment is a global, niche supplier to top tier OEMs, providing unique innovation to address pain points for sophisticated customers with complex problems. Businesses in this segment produce components and fasteners for automotive-related applications. This segment primarily serves the automotive original equipment manufacturers and tiers market. Products in this segment include: • plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses. Products sold in this segment are primarily manufactured to the customer's specifications and are sold under long-term supply agreements with OEM auto manufacturers and other top tier auto parts suppliers. The Company typically recognizes revenue for products in this segment at the time of shipment. Certain products may be produced utilizing tooling that is owned by the customer that the Company developed and is reimbursed by the customer for the associated cost. In these arrangements, the Company typically retains a contractual right to use the customer-owned tooling for the purpose of fulfilling its obligations under the supply agreement. The Company records reimbursements for the cost of customer-owned tooling as a cost offset rather than operating revenue as tooling is not considered a product offering central to the Company's operations. Food Equipment — This segment is a highly focused and branded industry leader in commercial food equipment differentiated by innovation and integrated service offerings. This segment primarily serves the food service, food retail and food institutional/restaurant markets. Products in this segment include: • warewashing equipment; • cooking equipment, including ovens, ranges and broilers; • refrigeration equipment, including refrigerators, freezers and prep tables; • food processing equipment, including slicers, mixers and scales; • kitchen exhaust, ventilation and pollution control systems; and • food equipment service, maintenance and repair. Revenue for equipment sold in this segment is typically recognized at the time of product shipment. In limited circumstances involving installation of equipment and customer acceptance, the Company may recognize revenue upon completion of installation and acceptance by the customer. Annual service contracts are typically sold separate from equipment and the related revenue is recognized on a straight-line basis over the annual service period. Operating revenue for on-demand service repairs and parts is recorded upon completion and customer acceptance of the work performed. Test & Measurement and Electronics — This segment is a branded and innovative producer of test and measurement and electronic manufacturing and maintenance, repair, and operations, or "MRO" solutions that improve efficiency and quality for customers in diverse end markets. Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, automotive original equipment manufacturers and tiers, industrial capital goods, energy and consumer durables markets. Products in this segment include: • equipment, consumables, and related software for testing and measuring of materials, structures, gases and fluids; • electronic assembly equipment; • electronic components and component packaging; • static control equipment and consumables used for contamination control in clean room environments; and • pressure sensitive adhesives and components for electronics, medical, transportation and telecommunications applications. Revenue for products sold in this segment is typically recognized at the time of shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue recognition is deferred until such obligations have been completed. In other limited arrangements involving the sale of highly specialized systems that include a high degree of customization and installation at the customer site, revenue is recognized over time if the product does not have an alternative use, and the Company has an enforceable right to payment for work performed to date. Revenue for transactions meeting these criteria is recognized over time as work is performed based on the costs incurred to date relative to the total estimated costs at completion. Welding — This segment is a branded value-added equipment and specialty consumable manufacturer with innovative and leading technology. Businesses in this segment produce arc welding equipment, consumables and accessories for a wide array of industrial and commercial applications. This segment primarily serves the general industrial market, which includes fabrication, shipbuilding and other general industrial markets, and energy, construction, MRO, automotive original equipment manufacturers and tiers, and industrial capital goods markets. Products in this segment include: • arc welding equipment; and • metal arc welding consumables and related accessories. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Polymers & Fluids — This segment is a branded supplier to niche markets that require value-added, differentiated products. Businesses in this segment produce engineered adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. This segment primarily serves the automotive aftermarket, general industrial, MRO and construction markets. Products in this segment include: • adhesives for industrial, construction and consumer purposes; • chemical fluids which clean or add lubrication to machines; • epoxy and resin-based coating products for industrial applications; • hand wipes and cleaners for industrial applications; • fluids, polymers and other supplies for auto aftermarket maintenance and appearance; • fillers and putties for auto body repair; and • polyester coatings and patch and repair products for the marine industry. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Construction Products — This segment is a branded supplier of innovative engineered fastening systems and solutions. This segment primarily serves the residential construction, renovation/remodel and commercial construction markets. Products in this segment include: • fasteners and related fastening tools for wood and metal applications; • anchors, fasteners and related tools for concrete applications; • metal plate truss components and related equipment and software; and • packaged hardware, fasteners, anchors and other products for retail. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. Specialty Products — This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. This segment primarily serves the food and beverage, consumer durables, general industrial, industrial capital goods and printing and publishing markets. Products in this segment include: • line integration, conveyor systems and line automation for the food and beverage industries; • plastic consumables that multi-pack cans and bottles and related equipment; • foil, film and related equipment used to decorate consumer products; • product coding and marking equipment and related consumables; • plastic and metal closures and components for appliances; • airport ground support equipment; and • components for medical devices. Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue is recognized when such obligations have been completed. |
Operating Revenue (Tables)
Operating Revenue (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Operating revenue by product category, which is consistent with the Company's segment presentation, for the three months ended March 31, 2022 and 2021 was as follows: Three Months Ended March 31, In millions 2022 2021 Automotive OEM $ 760 $ 783 Food Equipment 566 451 Test & Measurement and Electronics 685 552 Welding 450 401 Polymers & Fluids 481 435 Construction Products 551 469 Specialty Products 452 457 Intersegment revenue (6) (4) Total operating revenue $ 3,939 $ 3,544 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories as of March 31, 2022 and December 31, 2021 were as follows: In millions March 31, 2022 December 31, 2021 Raw material $ 775 $ 716 Work-in-process 248 208 Finished goods 981 888 LIFO reserve (121) (118) Total inventories $ 1,883 $ 1,694 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Benefit Costs | Pension and other postretirement benefit costs for the three months ended March 31, 2022 and 2021 were as follows: Three Months Ended March 31, Pension Other Postretirement Benefits In millions 2022 2021 2022 2021 Components of net periodic benefit cost: Service cost $ 12 $ 13 $ 2 $ 2 Interest cost 13 10 3 3 Expected return on plan assets (27) (25) (6) (7) Amortization of actuarial loss (gain) 7 13 (1) — Total net periodic benefit cost $ 5 $ 11 $ (2) $ (2) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Total debt as of March 31, 2022 and December 31, 2021 was as follows: In millions March 31, 2022 December 31, 2021 Short-term debt $ 1,041 $ 778 Long-term debt 6,817 6,909 Total debt $ 7,858 $ 7,687 The approximate fair value and related carrying value of the Company's total long-term debt, including current maturities of long-term debt presented as short-term debt, as of March 31, 2022 and December 31, 2021 were as follows: In millions March 31, 2022 December 31, 2021 Fair value $ 7,082 $ 8,296 Carrying value 6,817 7,477 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes changes in Accumulated other comprehensive income (loss) for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, In millions 2022 2021 Beginning balance $ (1,502) $ (1,642) Foreign currency translation adjustments during the period 49 33 Foreign currency translation adjustments reclassified to income — 2 Income taxes (23) (42) Total foreign currency translation adjustments, net of tax 26 (7) Pension and other postretirement benefit adjustments reclassified to income 6 13 Income taxes (1) (2) Total pension and other postretirement benefit adjustments, net of tax 5 11 Ending balance $ (1,471) $ (1,638) |
MTS Test & Simulation Acquisi_2
MTS Test & Simulation Acquisition (Details) - USD ($) $ in Millions | Dec. 01, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | |||
Goodwill | $ 5,008 | $ 4,965 | |
Weighted average amortization period | 11 years | ||
Minimum | |||
Business Acquisition [Line Items] | |||
Amortizable intangible asset, useful life | 1 year | ||
Maximum | |||
Business Acquisition [Line Items] | |||
Amortizable intangible asset, useful life | 14 years | ||
MTS | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 750 | ||
Operating revenue | $ 100 | ||
Goodwill | 429 | ||
Intangible assets | 258 | ||
Expected amortizable intangible assets | 165 | ||
MTS | Trademarks and Trade Names | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 93 |
Operating Revenue (Details)
Operating Revenue (Details) | 3 Months Ended |
Mar. 31, 2022segmentdivision | |
Revenue from Contract with Customer [Abstract] | |
Number of company divisions | division | 83 |
Number of reportable segments | segment | 7 |
Operating Revenue - Segment Rev
Operating Revenue - Segment Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 3,939 | $ 3,544 |
Operating segments | Automotive OEM | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 760 | 783 |
Operating segments | Food Equipment | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 566 | 451 |
Operating segments | Test & Measurement and Electronics | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 685 | 552 |
Operating segments | Welding | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 450 | 401 |
Operating segments | Polymers & Fluids | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 481 | 435 |
Operating segments | Construction Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 551 | 469 |
Operating segments | Specialty Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 452 | 457 |
Intersegment revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ (6) | $ (4) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation, percent | 23.10% | 22.40% |
Discrete tax expense (benefit) | $ 8 | $ 9 |
Potential decrease in unrecognized tax benefits | $ 51 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 775 | $ 716 |
Work-in-process | 248 | 208 |
Finished goods | 981 | 888 |
LIFO reserve | (121) | (118) |
Total inventories | $ 1,883 | $ 1,694 |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits - Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Pension | ||
Components of net periodic benefit cost: | ||
Service cost | $ 12 | $ 13 |
Interest cost | 13 | 10 |
Expected return on plan assets | (27) | (25) |
Amortization of actuarial loss (gain) | 7 | 13 |
Total net periodic benefit cost | 5 | 11 |
Other Postretirement Benefits | ||
Components of net periodic benefit cost: | ||
Service cost | 2 | 2 |
Interest cost | 3 | 3 |
Expected return on plan assets | (6) | (7) |
Amortization of actuarial loss (gain) | (1) | 0 |
Total net periodic benefit cost | $ (2) | $ (2) |
Pension and Other Postretirem_4
Pension and Other Postretirement Benefits - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Pension | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected current year company contributions | $ 14 |
Contributions | 3 |
Other Postretirement Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected current year company contributions | 4 |
Contributions | $ 1 |
Debt (Details)
Debt (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Short-term debt | $ 1,041 | $ 778 |
Long-term debt | 6,817 | 6,909 |
Total debt | $ 7,858 | $ 7,687 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | Jun. 15, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | |||
Commercial paper | $ 1,000,000,000 | $ 210,000,000 | |
Short-term debt | 1,041,000,000 | 778,000,000 | |
Long-term line of credit | $ 0 | $ 0 | |
Commercial Paper | |||
Debt Instrument [Line Items] | |||
Weighted average interest rate | 0.51% | 0.14% | |
Line of Credit | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 2,500,000,000 | $ 2,500,000,000 | |
1.75% Notes | |||
Debt Instrument [Line Items] | |||
Short-term debt | $ 568,000,000 | ||
Stated interest rate | 1.75% | ||
3.375% Notes Due September 15, 2021 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 3.375% | ||
Repayment of debt | $ 350,000,000 |
Debt - Fair Value and Related C
Debt - Fair Value and Related Carrying Values (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Fair value | $ 7,082 | $ 8,296 |
Carrying value | $ 6,817 | $ 7,477 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of AOCI(L) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||
Beginning balance | $ 3,626 | $ 3,182 |
Other comprehensive income (loss) | 31 | 4 |
Ending balance | 3,582 | 3,276 |
Accumulated Other Comprehensive Income Attributable to Parent | ||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||
Beginning balance | (1,502) | (1,642) |
Ending balance | (1,471) | (1,638) |
Accumulated Foreign Currency Adjustment Attributable to Parent | ||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||
Other comprehensive income (loss), adjustments during the period | 49 | 33 |
Other comprehensive income (loss), adjustments reclassified to income | 0 | 2 |
Income taxes | (23) | (42) |
Other comprehensive income (loss) | 26 | (7) |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | ||
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||
Other comprehensive income (loss), adjustments reclassified to income | 6 | 13 |
Income taxes | (1) | (2) |
Other comprehensive income (loss) | $ 5 | $ 11 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Narrative (Details) $ in Millions | Feb. 22, 2022EUR (€) | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | Mar. 31, 2021USD ($) | Jun. 30, 2019EUR (€) | May 31, 2015EUR (€) | May 31, 2014EUR (€) |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Cumulative translation adjustment losses, net of tax | $ 1,300 | $ 1,300 | |||||
Unrecognized pension and other postretirement benefits costs, net of tax | 191 | $ 320 | |||||
Net Investment Hedging | Euro Notes | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Accumulated other comprehensive income related to net investment hedge unrealized gain (loss), before tax | 277 | $ 183 | |||||
Euro Notes Issued May 2014 | Net Investment Hedging | Euro Notes | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Face value of notes | € | € 1,000,000,000 | ||||||
Debt repayment | € | € 500,000,000 | ||||||
Long-term debt | 543 | ||||||
Euro Notes Issued May 2015 | Net Investment Hedging | Euro Notes | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Face value of notes | € | € 1,000,000,000 | ||||||
Long-term debt | 1,100 | ||||||
Euro Notes Issued June 2019 | Net Investment Hedging | Euro Notes | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Face value of notes | € | € 1,600,000,000 | ||||||
Long-term debt | $ 1,800 |
Segment Information (Details)
Segment Information (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 7 |