ITW - Earnings call transcript Q3 2021 | Illinois Tool Works Inc.

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Operator

Good morning. My name is Tammy, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. [Operator Instructions]. Thank you. of you President conference. begin Vice Fletcher, Investor may Relations, your Karen

Karen Fletcher

CEO, Senior Tammy. to Larsen. joined Call. and welcome morning, by Santi; Third Chairman Thanks, and Conference ITW's Good CFO, President Vice and Quarter XXXX our Scott Michael and I'm

today's a measures results to ITW's quarter press release. XX-K reminder contained turn certain of We presentation to forward-looking and will that financial uses a turn that in year XXXX. refer to discuss for actual filed presentation with more Please reports could reconciliation for and it's important over statements. and call the subsequent Slide to materially Form our GAAP our differ this Scott and guidance those full we pleasure measures company's expectations. Chairman you most Slide now call, CEO, results is This During SEC measures, the third the cause my and our update the non-GAAP to X, X XXXX about from to is comparable contains the detail Santi. directly risks

Scott Santi

and Test Measurement by was per plus share & of products $X.XX at XX%; plus our results. Thank was segments operational at the and segment organic In Good morning, of quarter, delivered and third welding specialty saw and growth at strong led XX%; X%. equipment Revenue earnings financial up grew organic Karen. growth X% growth X% in execution plus of X XX%. level, plus At the and continued food excellent XX% momentum you, we at everyone. X Electronics with

than continued on cost improvement and quarter. increases progress long-term on to our XX% EPS challenges by the to executed production was result, cutbacks with term projected a down into auto In affecting to quarter. the as were up expecting larger segment QX, well-publicized executing June. the heading our operating leveraged The what auto we impacted be automotive segment challenging near production the job revenues people in close teams customer Win way, enterprise is and X% cost of the to on chain initiative robust as teams a a company minus in very associated and our the to XX/XX another of ended stay in significantly managed QX, our also deliver an In were our auto QX, staffed by environment, points appropriate systems also costs. supply in the benefit the dollar-for-dollar invested the result, a in rapidly basis sustain from and our resulting fully customers. strategy, X Recovery basis input timely capabilities decision price XXX continue from impact in They able positioning to and and price we as customers the In continue front-to-back And of to for And chain our flexible of to levels the our service manufacturing customers. raw versus being highly and pandemic adjustments through system. supply were OEM offset of ITW's company. our our QX do cutbacks fully auto world Our exceptional world-class end the And, initiatives. margin OE for the to and combination for material around rising drive response execute

to and fully sustaining of strategy. strength and we and our model growth the very the Moving execution make business our on the made leveraging of continue momentum the have forward, of support in focused we enterprise on remain investments competitive ITW

and to efforts for their serving themselves ITW continued colleagues path to colleagues excellence thank for ITW to progress to keeping potential. to full over around the to and turning you. all Michael, their over it with dedication all to on Before driving Michael, and safe our world want their our I ITW's our customers of

Michael Larsen

everyone. Scott, morning, you, and good Thank

in remained operating X%. which of versus X% Scott total flat Growth volume a our points. or XX.X% businesses X% as and raw increases Throughout the we've $X.X was percentage at these geographic quickly fully EPS leverage, QX given organic but points, margin basis X further by was XX% cost the year despite before, businesses, strong remind with significant logistics inflation to led $X.XX. to Thanks have X more was contributed and X% up positive a on segments, benefit and you price dollar-for-dollar China basis cost As a don't policy XX% North in decisively was increases demand and; up Operating up escalated alignment with X% this EPS-neutral headwinds. in XXX in dilutive GAAP this than was Enterprise with cost XXXX, ranging up in quarter of material at our revenue tax great we X% price income talked actions I'll increase to up quarter. our raw QX pricing onetime again Asia, responded material said, positive all were cost in still price XXX with growth offset effort of cost about X%. as with current America, hedge. of billion basis that $X.XX up X% prior sequentially. And X%; included third environment, and Europe, basis. increased from XXX of by to by margin an and but operating points and to Initiatives real was regions,

across to execution the financial supply businesses X flow moving world-class always inventory million. strong service invested in XX.X% Free was board. conversion on in So customers. cash our capital to current very cost growth the been both for flow was adding return businesses was XX% and support quarter, have cash free about segments Overall, sustained as and our operational for X growth and is $XXX real After-tax through chain levels our intentional mitigate excellent time. our risk inflation then and of and

Slide slide QX left points. the without illustrates go the we data wanted results. with I X strong and segment Let's to And of the highlight key on to automotive to X side our detail, get for before segment OEM. the results

the from consistency this in resilience we our diversified deliver ITW's top-tier of to power financial is performance. significant case, of performance. in headwinds portfolio the derive and first strength, is The us, overall segment benefit terms high-quality near-term largest and business which still through in our enabling

momentum the we're growth The strong second core accelerating is generating company. the earnings with leverage across

XX% rest margin in of given our organic company QX. of growth an XX% collectively segment, Excluding the growth delivered Operating income and the operating issues plus auto that OEM the now, of market of right affecting XX%.

third As can model price/cost which strong growth core focus incrementals if of impact, slide, were on see you the this you the very in the the strategy. a XX% our quality of business and to points leverage and quarter, core profitability that eliminate our define

all, most, in production were as look closer our the than revenue heading a and North in and forecasters QX, take side Europe, beginning China, And on let's America this chain-related up OEM we XX%, Now down page. at was larger performance XX%, quarter. with what Organic with automotive mentioned, cutbacks QX not right into down expecting auto industry down external were much X%. segment if Scott of supply the XX%;

of and is, whenever to market that term, conditions get that positioned accelerates really but be out current resolved. the ITW we will the incremental auto seize the now opportunities Between and our coming supply of improve our and While side gain are obviously chain time of situation. of customers inevitable and source is a recovery and as strongly extended the support invested market other share good once the issues ultimately over this very standpoint remain news eventual the fully major begin production in growth to auto an challenging near for will from in period

health operating in began as organic Electronics serve in businesses of board. and Turning QX was growth up grew and X% XX%. Measurement was our the the XX% Food and were up and XX%. very revenue organic X%. of over Pacific, more XX% equipment of growth margin XX%, CapEx strong is care about of & to evident internationally Food continued growth recovery Asia up strength our XX.X%. strength lodging XX%, recovery this driven was Test that Electronics demand service which service Slide X/X as up in our and North XX% up In with at strength. up that pre-COVID the around sales with and across Test strength Institutional XX% increased XX% revenue, Europe up is revenue, continues XX%. education, is with and X America well levels. with for and way and in Strong Equipment revenues Equipment that evidenced than XX%. almost segment are led revenue stages Restaurants was by spend gain below with up with growth view, to Equipment, of XX% up the in was strong still space. by customer semiconductor early Measurement the & XX%

organic So consumables moving XX%. Equipment and strong grew growth Welding continued with up be revenue to to was very X. XX% of Slide revenue demand XX%.

QX business, a was strength with XX.X% XX% XX%. Automotive continued higher businesses X% demand ago. to at growth than hygiene was small year an America the the with for levels margin decline Fluids up with of more Our of significantly Fluids X% steady were by operating margin up XX% Polymers began and MRO organic business, products in in And comp cost grew In the down in in elevated quarter. international channel. X% negative retail was basis increased oil individual continued in driven due had industry pandemic-related silicone. Margins plus of such, last growth of a gas, recovery year. and to X% heavy as users prior was was a and points and XX% Welding growth by impact mostly the sustained that had was from strength with up And Polymers price industrial North XX% X%. with aftermarket year. businesses XXX led the & X%, holding grew which in QX, tough commercial applications. resins sells and in costs which versus

up and New ago up by with Moving with residential up similar X comp XX% of were a construction, was in X%. XX% X%. organic top Specialty up driven top up North plus XX%. situation international XX%, almost year growth X%. Australia rate growth renovation consumables strong where was was growth continued All to X%, up with and and revenue which sales and up also on Slide up organic was X%, on Equipment X%, up Europe X. year-ago plus a of of a delivered commercial And with a America America, North up regions was also Zealand X% X% and was was down recovery X%.

Slide our to on X guidance. for move on an year Let's update XXXX full

in down levels anticipated XX% of to you automotive second we're XX% to on forecast about our press our $X.XX of our track As release, flat EPS our updating guidance. on in versus QX actual revenues OEM to be $X.XX GAAP which in was segments Automotive better lower previous the or revenue guidance half previous the customer other saw the OEM being in versus production We and the including the guidance auto of in segment guidance. range a second expect All remain and down previous half, that QX embedded roughly XX. now QX versus July impact incorporates

the price of revenue $XX.X Our in with growth year. earnings rate $X.XX volume which full Of to at growth, up XX%. of to XX% to including organic midpoint, $XX.X range the year full billion of XX% now X% to are is billion, the midpoint XX% X%. share the with We range for to in expect of to XX% be X% gains XX% growth of growth organic that equates

year. more than now coming million expect year. For approximately our considering points margin pretty up this expanding up than material costs expectation XX%, which year-over-year, expect that strong all we're year, is this performance, raw is basis X% the that last $XXX we more fact And the XXX operating environment margins at is full which of into versus Xx we or to in be

dilutive. offset on cost pricing margin track know, basis, material to a on is you raw with Our but actions EPS dollar-per-dollar which, businesses as are increases neutral

raw expected of full than and dilution the impact estimate our we cash we environment, points. invest have price be net our more up by XXX and As for than costs cost though, to margin headwinds challenging basis capital to will flow guidance, basis basis enterprise income mitigate to price of XXX to what for and about prioritize in about XXX basis predicted is be strong These points our at as and we previous another growth service gone support more offset volume chain points material expectation our initiatives sustaining percentage levels previous versus solid working leverage year now customers of in consequently, in from points. margin we contribution world-class as Free approximately from will continue this XX% risks. additional supply of continue such, our XXX

Our for acquisition to of full on of QX for updated business. the XX% XX% Simulation from expected approximately XX%. any guidance rate guidance based and tax a tax MTS Test And process, our usual the excludes announced previously XX% per year is as rate an of to impact

and transaction We and are receive approval QX. close awaiting to expect one final that regulatory the in

EPS flow a be of record for So organic this plus. ITW year and margin cash in double-digit summary, XX% with growth, strong expansion, growth will

next and deliver demand OEM in XXXX team's differentiated continue as point in high performance well at Karen, proven momentum competitive to chain very any improve. execute an strong we ability year With leverage business at ITW's to supply it turn a model business into our to to with from some that, level ITW this portfolio, expect as to environment. diversified likely back strength very in remains issues you. the QX there additional positioned I'll high-quality begin well our boost and We of proprietary to best-in-class the automotive continue

Karen Fletcher

please Thanks, questions? the Operator, for lines Michael. you can up open

Operator

Instructions]. [Operator

Research. line Your Sprague first the Jeffrey question from with comes of Vertical

Jeffrey Sprague

of to what, maybe any, effect relates so maybe to inventories. on to And if - Could going that's kind just it speak whipsaw as you on start.

out at of Just with try how sales fully point? any So kind when aware coupled really we about this you to recouple and of trying might point. Or feel like do get this think are of there as your kind to production? to they nuances be of fully

Scott Santi

than about sales bit I overall would of of giving say But we I don't production exact ship know terms our know not we may normal the X customers so times actually the number. nuances. their more certainly cushion auto talked But - our I - In by tomorrow. there obviously, you given turn than may build rates are forecast. an to whole relative see margin going to quarterly production be QX us that work volatile guides a we've immediate be just little many I thing Yes. look be building from But I late. to effect. of should that sales on we I before, bit as our sort lot percentage if pretty were able say at of sort think the this expect - our we space, a little don't points. higher And of declines in would in that a there incremental have to of cushioning around, environment. a been once there starts customers we're of those inventory today, know

Jeffrey Sprague

you working to of done. M&A Scott, close getting activity pipeline MTS point? an also speak this And at your Are looks It like pipeline. the you we're would just active to

Scott Santi

about before. talked many We've this times

us a run interesting get are time. We the opportunity We very things all require. to by

We have clear our of view and a well-defined what financial our strategy and very fits criteria.

certainly there the there that go presenting MTS, continuously case so to will things of expect But others as one. we the But forward, would being it's as and And speculate was at not just some are a opportunity I itself are right and evaluated. matter with I point. that that be

Jeffrey Sprague

should bit expect? what's of unallocated there? one quick for And just more? has higher and going The year a kind on we been Like bumped And running cleaning little house all one what cost up Michael.

Michael Larsen

a XX% going are a Yes, really about we that there I example would the costs XX% stay we're last wealth of And there. that $XX so. basis. somewhere is quarters, segments, And during range million are allocate the averaging there's are certain or I costs to four things laundry on to that think in year-over-year. assume up don't we'll and out health list go-forward

Operator

of Your next Melius Scott the question comes from line Research. with Davis

Scott Davis

much? you problems. on-time levels? think that where from XX ever minutes just slip that's to levels. bit. a your gears but had competitors I Did your comment of about and probably back ago pre-pandemic? mean Anyways, perhaps love your comments, your major can I'm When service of to little Are world-class today sure the of slide brevity the best-in-class kind switching your slides, deliveries prepared kind quarters of versus I I tell. information. appreciate of it's a little hard were real comparable X competitors few they deck. maintaining I - some versus bit they perhaps what they up measure, a

Scott Santi

Yes. environment order a throughout summation ship sustained levels certainly, to a are but to kinds ship thinking next that lot people number order of make and our of cases this work say, a ship into of compete also where It traditional more I'm year. of in in I given have markets their thinking we've brute tomorrow although bit certain In today they deliveries is we've harder a of of lot would with a other we the quoting I that from in that happen. had cases, force businesses some number have cases, are gone now But a certainly to got a different there tomorrow week. environment, service with about, I'm

our to customers is relative increased we that of service in in every to period. standpoint ability but one we terms think different that cases, relative is have excite - a exact them, pandemic from in advantage that the our that are we in I XX without think level advantage, - can't I I regard are So of necessarily our of actually again, deliver this bet my

Scott Davis

than delivery can such in there make that have doesn't value that be get lot promise predictability inventory to the extra you have it, for to that does and customer a price are you to they guys Scott, of some that your faith And given them. have easier because and hold going

Scott Santi

I would certainly it. imagine of part that's

the products value food around as best not of try put service think performance we in where dimension those businesses it's our supply to them, we positions delivery overall we delivered the the those, terms of relationship the terms like value of the service have both just in of we service, it's to add I the the IP prop overall service the and equipment. outserve give customers

in of our I their And so customers that, aware environment. think I well are material of all all of raw think

of So think standpoint to we're delivery, that recover back. environment value we're just the trying the on fact from to the I dollar, to we're overall to them, value dollar for a that trying get margin our not in the and

recover we said expanding as think, I dollar we've think and that for to dollar. in we're that fact customers, relationships I able our interested of to those all been with before, speaks the because

Operator

Next of question Jamie comes from the Cook Suisse. Credit line with

Jamie Cook

guess given challenging the my margins job question, I environment. the Good first on business. on the just construction just

the down a up, were margins little. were You

get question, opportunity can supplement second And are recovery. the to could of growth color you can of M&A then could trying help of my and just see when pipeline what us margin forward? opportunities and the So sort - the going some on an further update there we that just give sort sort

Michael Larsen

with I pipeline minutes it. you Jeff. a have Jamie, about We may think ago talked few the just missed M&A

So I'm that. skip going to

Jamie Cook

[indiscernible]... sorry I'm

Michael Larsen

on of on And it. mean the terms the really margins I in is year-over-year worry good don't as side. think initiative a basis, contributions, construction about look price/cost leverage. headwind good enterprise volume at the of we then okay, I kind It's

in this our talked headwind. in particular, are but with a with significant still in basis, at significantly like dilutive over here price offset dollar-for-dollar steel margin pretty Obviously, are the quarter. segment, XXX on a points policy basis costs third in here So we line

decisively the once - and high react price. a say. of with and is with to think to timing appropriately to is I and to also going increases our going and point can our to confidence whatever say What record, start that terms to difficult when that read at respond come in this degree cost is when our is be of we to ability impact track diminish way

forward. worst record I that track kind we're to counting continue behind hopeful itself, of as us, on for think that we're but and we that certainly speaks that. we'll is look do the And not

the QX And a of probably here relative couple construction we've QX. less go some to But - QX so typically, got days, to you'll has a get point margin going these some near-term construction pressure bit in seasonality, of structurally, issues the relative QX at high I'd of here see margins QX. little resolved. long shipping to down once in again in back terms we say in in be are XXs term,

Operator

the next line Kaplowitz Citigroup. Your comes from of with question Andy

Andrew Kaplowitz

early 'XX, big picture. it's I So maybe know to but talk about just

than Ex XX%, auto, let's Given continuing up the about we say, in our organic with level faster comes 'XX, expected. snapping what's maybe growth. growth And in said. ITW think growth momentum auto to businesses and X% 'XX? you your equipment any X% this may deliver, point, as of of to your that potentially back above your businesses. longer-term Food that that, dovetailing continue when lead At into going reflecting mind conviction levels can goal are actually trend to

Michael Larsen

businesses kind organically. more really said, are really situation CapEx-oriented in And Well, some QX if have you Andy, said, we momentum, those businesses. positive like the particularly there's and our like XX% certainly aside, good momentum we of in mean, you I up the some auto QX, think, in I businesses set

well and in we're measurement, get We like equipment, down once resolved, food for the set in think production road. I and well challenges then automotive up some XXXX, So really strong test the potentially we'll said, OEM. recovery think positive momentum we think automotive a see welding, as I

yet that, still momentum comment really in We'll with I terms February, But in like fully X enterprise you done on in. rolled of plans years until full the update go But embedded that leverage not the to guidance. demand for on the much. volume always a do certainly, that, we initiatives goes want yet. plans provide when the XXXX too and we up give don't - we've fully So we've

Our ability supply with cost to our come deal and way. issues chain whatever

really for up well set we're beyond. think I XXXX and

Andrew Kaplowitz

QX, Michael, there I that's is mean then mentioned And seasonality. normal some you helpful.

You there in the mentioned little of still negative maybe and down the lag going in anything maybe then a a be fluids? maybe of QX. you're that materials EPS auto else days. range how the less the on? in it forecasting in shipping Obviously, middle to Is Is resins that is and from P&L you polymers and hit costs say And stuff. margin impact peak would and QX kind

Michael Larsen

Well, I counting it. hope not so. We're on

I look, the - don't saw I increase QX, think cost if QX on they just our go I inflation. anymore. materials, in big of raw step-up say what material can up Yes, the rate we a think from to

unlikely said, are down Margins X beyond less said we down. it's same October. it's typical But QX, seasonality think, We've that, year-over-year. mean, got see we're QX. to through here OEM, I are I go XX% who for days. in shipping think I down. us. revenues down a thing the already I QX like from Automotive knows, we'll We

The positive in which to gave than QX the but for organic discrete of not then little tax QX little And you versus a have that currency other just we QX. the headwind more there headwind, performance X rounding, the of in currency QX. item, a have you in a on segments those little bit really bit will detail is more is growth. Margin a need we be then QX, similar if to bit adjust will rate, better. segments all And

we'll hopefully all for you put good that you to - go where pretty from and of outlook a risk-adjusted together, is see quarter, what the fourth here. get So we

So...

Operator

line with from Your Duignan Ann next comes question of JPMorgan. the

Ann Duignan

more. Perhaps lot a you about opening your businesses XX but doing because some little XXXX, had you've bit like said into automotive, momentum talked expected. comments, than know your that digging years actually nice than you other later. were the going better laughing other of it's just I'm a I brief in

there on just risk If then lot institutional that side, the federal you could mean, on COVID government hearing some bit. is demand, pull a equipment by about institutional, you demand little of food institutions any particularly that driving aid. of the there's a anything on forward service on that side. curtailed are And I with expand the

So Food and maybe bit more broadly, a Equipment. drivers the then on in demand of first little

Michael Larsen

Yes.

kind your to of, talk think, we orders I and relative test in QX. welding, last question call, think on food first equipment did expectations. had We the I I some about what certainly and here was mean onetime equipment improved measurement.

If you take out, test really business measurement the is back well in side. on those the momentum as demand on semiconductor and strong strong of the the

to point the I'd strongest. those X So as

so there. don't education significant Health of from up health we the terms institutional XX%, think institutional we the really that side, forward, was a up, In there's side mean like impact I XX%, pull health but in was overall, was was said care. care up XX%.

down a certainly or end really haven't side institutional kind we significant markets Food within seen on the So we the any impact. slowing anything there's other really think that of And of don't Equipment.

Ann Duignan

or or of demanded equipment in Okay. changes types following seeing notable Food Any types any any coming to COVID, restaurant serve on thinking up being of the to And just like the structural secular Equipment are the side. the you side, changes about then quick that are of out being changes ordered? in equipment

Michael Larsen

Ann. really, I No, Not mix, this normal think like. similar very to you of our if is product kind

no So from impact real that. there's

Operator

with Joe the Ritchie comes Sachs. Goldman Your of next question line from

Joseph Ritchie

cost kind start the difficult And so a to those what about for I'm auto price guys platforms, we it's to for price just is back pricing do margins that So you - OEM trying see from the to win your understand, from you point and a and and sometimes term? of I recovery historically, auto you equation price minute at try get and guess, longer when Can thinking turn spend get OEMs? talking is margins what my we to like understanding potential positive about perspective

Scott Santi

derived is circumstances to not of current in normal the cost customers. What that that. structurally one negotiated discussions the ones material relative would about our is our in inflation, with needing much where is space pricing And adjust businesses. to situation more about rest that under I contractually sort Yes, this raw to generally, - the we're the auto say the certainly regards of our only with customers our auto clearly delta we're having of respect in

- in somewhat sort the there's an them run, some So with our leverage it And start we're of dollar we but have then issue approach there. terms And going that company in I lot a more volume resolved, ability full is remains margin those is up of through as going I we're of have say us we'll the the start get get we of is of lag snacks improving, that the of biggest see say - - there the given business. sort it's value. issue we're I'd amount ultimately, that that in the volumes to certainly is short much recover cost nothing the grow to same expect there it segment on to terms recover, prior margins to that. as peak start is to but price and chain of rest from There's shipments would won't back working the of as of - we're recovery seeing. that the to there the go inflation our it's - supply get in auto

Michael Larsen

the we still XX%, QX, typical the in Overall, company, And I think I auto. mean, what's and maybe for Yes. here just you're did think to is if in industry not margins from I in little the margins worried about margins top-tier QX our just if guidance QX, expect probably in is this if I'll term implied - add, helps, in And will think that performance, XX%, it what operating near think which I best-in-class. a XX% step is in be for I range. we're but down we mid-teens. solidly QX the Joe.

so that margin you may in And anything worried the that here. of hopefully, about performance you helps quantify be terms

Joseph Ritchie

follow-up you can I I on company. the you acquired process you've really had elaborate of quarter. the in like had that And forgotten bit just a just got appreciate little first the No, or almost guys And I I of one I taking from color Yes. I the company - that's It's acquiring think on to or guess both funny, what's you. that guess helpful. so is think MTS. in then... my announced long?

Scott Santi

know, Yes, don't I lines. the don't at want that, to We're I Joe. do X-yard

they let's leave over just line the here goal where are, we'll it soon. things get and So

Joseph Ritchie

anything you about like the Is Okay. we high there gross accretion can margin. XXs of the tell sized million it have roughly with like us kind business $XXX business? from type Because

into year? thoughts any if So accretion closes potential on XXXX it this

Michael Larsen

contribute the play. still upfront EPS didn't of think kind or going And much a mean XXXX. be one, is bit little in it's more EPS case. purchase we've long-term that's think year not really we accounting I to buy for of to I what to of a going here. business This there's said neutral, this we in

we $XXX with disposed In terms think of your million is think size, EBIT little in space was you can a what margins, well, know are $XXX in that the over purchase look familiar go pre-COVID. you're Instron right, it mean, The quite a entry of back we and I business. 'XX. I price million X% and about numbers

due one about excited is work. team to getting to really family the this and over The over welcoming the everything we're lot well material we've to benefit get of has around had of a goal going So and organized line get ourselves time the the ITW MTS terms saw diligence next think plus. in the to we integration X,X raw confirmed is years planning we and business and in seen this we've how what perform

Operator

next of Barclays. Mitchell question the Your comes with Julian line from

Julian Mitchell

on growth Just wanted to near-term organic follow outlook. the up

it So in down is year-on-year ITW QX year-on-year. growth maybe I overall think, for implied like, volume looks

I you've right check roughly confident market If how is that's And about that think overall where share sort way wanted volumes? digits. are that sort it on to feel that the the pricing mid-single recapture volumes in And effort? to anything up you just of soft? OE-related got of auto else

Michael Larsen

But down to OEM XX%. answer your automotive question, in it's here all with QX revenues

high at said a X The combined. like really businesses other level X performing we or are

be just XX% similar to at projected - QX. plus, you almost did If organic in or what XX% they is these look segments, growth XX% other in to X QX, businesses the margins,

a auto different it's the than so in near-term that's look we do. normally really this numbers issue little making what OE And

Julian Mitchell

circling the Understood. on back And then divestment aspect. just

past, to the we've I very talked you've recent think couple because elevated. started year. a very, the you companies maybe divesting next divestments times. assets now And discussed see of are table some industrial certainly, In about acquisitions on other being valuations

to of your wanted the sort clearly if bit multiples wait of are growing. let Just aspects, latest you to planning keep a thoughts that wanted on operating profit divestment more high, just are just sort

Michael Larsen

other - sell going COVID we back businesses right coming to things And reminder businesses good these planned absolutely significantly these expect said case, be I had then not up. you're a and other just thought side, be a the in we when a is this right, That think these you better the we certainly these that's think divestitures And so this, pulled really and businesses. would terms few to - than and we the we I of time of gone on was not to more said performance going worth out before. we multiples It's hit. on have Well underlying

we that to year early kind be time so of will relaunch And these some good a next processes. of think

the If announced this divestitures program. a than this you little less of plan back this to got half XXXX, point. completed when we we've go at in

million at. we're that we've So another businesses revenues worth look $XXX $XXX of got close a million taking to here,

Operator

Coe Your Research. next question comes of from the with line Wolfe Nigel

Nigel Coe

have by do if et spirit know just try that with OEMs. assuming on maybe contracts to my want . Joe's to you going all are back cetera? the contracts bit good And any XXXX curious. pressure in So ask we of the just you can't just is sort on you little along maybe of be the on the see to we a to question on inflation, but not recovering Michael, recovery volume that still pass mechanism to do to I different surcharges, you extreme the slightly have call. the multi-year way. I a question the But given have XXXX inflation water And under

Michael Larsen

nature Scott that little say to going how it's prices the of us industry we out play those and talked adjusted bit it's about to to taking next hard sit here and so as longer the for a year. contractual get

on 'XX and happens the how go an - will faced pretty but set eventually react we cycle say. to just in being again differentiated the really have look is that a auto are and get back auto 'XX with up when which of multi-industry terms the be I'll levels from longer. take difficult businesses no this to - way can company being those and point and diversified that's will different every in unprecedented a go-forward a demonstrated that we're play ahead of think when quality and this positioned then can and high inflation, price read that out. with I Exactly benefit will some in got up that year We'll and I then inflationary be we and not of was we bring our happens all what little ultimately cost what of well a bit basis. segments, business happened think last how of in kind

it. maybe to So I way think that's think about the

Scott Santi

we are cooperative our with We've for They're - one Yes. Maybe elements of while relationships. These customers sort talk partners of also time. thing relationships. that these long contractual are is partnering about I'd just with add it. the these a been the

it's I the - parties are what's us that fair and environment, in of provisions obstacle, current working given together the environment. the ultimate about contractual the and So think whether I for each don't both it's think

- and overly do relationships. don't need to are serve them. wouldn't long-term is I us word contractualize know this best our who These I relationships if to these with want So we partners

- And all so it be there's will out. worked

Michael Larsen

at you with starts of down the settle the mean, ITW. growth, price/cost incremental leverage just at still element at And that the if the is here, margins organic have bit initiatives. one volume getting look a I'll cost little maybe price look just then And once add, enterprise a I we're equation of the we margin expansion little and here to bit.

on get as on together this. and you negative So. we'll give year. cost And give we too look I the you again, detail wouldn't a into next get February in side you more when lot price guidance,

Operator

Karen questions will further no I now the to back this time. Fletcher. there are call And turn over at Ms.

Karen Fletcher

Thanks, just I for our day. for Okay. and short efficient thank Tammy. to us a everybody have this want and call, great joining morning

Operator

Thank at this conference you today's call. lines in for may disconnect All time. participating

Illinois Tool Works (ITW) 28 Oct 212021 Q3 Earnings call transcript