Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the ITW First Quarter Earnings Conference Call. [Operator Instructions]. Thank you.

of President Vice Fletcher, Investor Relations. Karen

begin may your conference. You

Karen Fletcher

Senior morning, to I'm Larsen. ITW's Okay, Santi; by thank quarter welcome Good Rob. and Scott CEO, Call. you, first CFO, and XXXX Chairman and President Vice and our Michael joined Conference

today's XXXX. ITW's quarter and will financial outlook for discuss on an update our we the call, results During first provide full year

filed you XX-K that actual is presentation from contains that reports refer a and We Form XXXX reminder risks this expectations. the our more to X results for company's Slide statements. the important materially SEC detail with subsequent forward-looking to about differ cause could

release. and the This presentation GAAP contained comparable measures, of press those is a most non-GAAP directly measures to uses measures certain the reconciliation in

it's Please pleasure to X, my over call to to Santi. Chairman the Slide and Scott our and now CEO, turn turn

Scott Santi

morning good And Karen. you, everyone. Thank

in the heading start from results coming As a delivered you release largely solid with we saw this year, with the morning, quarter. line our our to earnings in into expectations

Starting Test up line, Fluids down XX%, growth, of organic flat, was segments growth equipment seven and top Measurement and X% X% organic X% & was Construction positive four by up and XX%, OEM Specialty with Welding delivering Automotive Food up X%. up Polymers X%. & Electronics led was the was with down

$X.XX, increased the to XXX contribution for from point XX% XX.X% was enterprise QX basis Operating earnings expanded with points GAAP per basis margin share to XXX a company. initiatives. record which new

QX in levels. rate of was income above XX% net normal was to Our flow line conversion free cash which modestly

Looking the ahead at year. of balance the

comes some the execute way. no that macro continue read world course my high whatever of ITW our and with uncertainty is the have around regard doubt a to react environment, will to level colleagues at I there to While

now in over year Michael? detail discuss turn performance guidance, the to updated more QX will our call to our Michael and full I

Michael Larsen

and operationally solid of organic everyone. financially, And growth ITW good quarter you delivered more morning Scott. than starting Thank another X%. with

respectively. divestitures currency translation and Foreign headwind X%, reduced by X%, and revenue

operating margins respectively. points On X% XX.X% points and Operating costs XXX line, and incremental basis grew XXX points, basis initiatives with margin price enterprise basis the our contributing with to bottom XXX XX%. income of improved

In addition funding were XXX of delivered the headcount our costs that wages investments still points organic and the and we benefit support higher improvement to year-over-year, initiatives. margin quarter. in growth our in growth strategies areas And basis including

Scott flow foreign of GAAP and Overall including included QX to currency operational the tax EPS and to said, record our excellent it free financial strong see cash to as execution headwind across encouraging $X.XX, grew XX% $X.XX, rate QX, our EPS. Board normal which a was XX.X%. for levels. And translation return performance was performance

Including about our Europe is X%. geographies. Please four, all positive organic North starting turn XX% to Slide of revenues, growth up total grew America, and major which of represents in with X%, and

Asia X%, to decline Pacific in QX. headwinds related China grew despite COVID X% in a due

X% of seeing And due was related results, segment in bounce North and Europe down XX%. China up back QX. Automotive at starting the and grew X% to to X%. growth QX. on organic solid Moving expected America here we're was OEM with COVID headwinds

margins the last to we automotive over cost years. points segment the impact beginning margins, basis In in XXX recover has that terms about OEM of margin price by diluted two are this

QX, QX leverage for starting cost lead sequentially volume in to with price margin which, to starting and positive the initiatives, As year-over-year impact a result, in higher and combined and from will enterprise contributions balance turn of year. the positive margins we expect

in of organic more education XX% as led were particular XX% XX%. delivered the with up Turning with to than quarter Slide with America X. way markets Institutional Food strong another of strength growth growth Equipment end and North lodging. organic

XX%. margin than China. revenue XX.X%, QX more Asia operating In Europe International progress with an basis due Pacific Strong X% X%, restaurants to margins XX% were with of than was on grew year-over-year. up and increase down up addition, more points XXX of

delivered double-digit represent about and growth slowdown of Electronics Test revenue. revenues, & which semiconductor-related a despite X% in segment organic XX% Measurement of

On hand, strong down electronics for was equipment XX% demand Instron, & as XX%. example, evidenced the by other capital organically which for and our up grew Test Overall, was remains Measurement X%.

grew growth were oil X. by of while XX% and XX%. driven international Slide organic commercial double-digit the Industrial last up XX% QX sales gas was as XX%, in top North grew Welding which and organic to in up delivered XX%, on XX%. with on of business, strong the and year strength America XX%, in XX% grew consumables side growth QX of down remained Moving was equipment X%.

XXX also X%. margin was segment Polymers expanded to was X% XX.X% of On a declined a grew the and points growth and new a aftermarket international basis, record geographic grew difficult basis company. X%, the Organic last was up year. in Operating about down and Automotive Fluids North XX% against comparison and for Fluids X%. America flat plus X% Polymers

X. plus up was X%. Residential Europe construction was down was was X% construction business down Zealand last tough and X% and commercial XX% than XX% down of X%, up Organic the was in a New North a revenue less which Australia, year. Turn to Slide little construction, against and X%. America comparison represents of

Specialty included down was was simplification. international was America revenue X% down North percentage which line X product points of headwind geographic X%. down a and X%, Finally, basis, organic On from

to move full year on Slide for our update XXXX an let's Okay, guidance. eight,

year range to XX%. projected to of rate As range $X.XX, raised to for you tax the guidance XX.X% of considers in we which a lower by full the the morning, saw this $X.XX $X.XX GAAP new EPS

essentially our lower Given macroeconomic uncertainty of guidance EPS and to going we're forward, adjusting holding level projected the operational the tax rate. reflect

and of rates divestitures projection current markets. adjustment to organic demand are in Combined, further translation of projected impact X% revenue risk current to Our X%. slowing with certain some X% currency reflects reduce levels for growth at end foreign by

start points Like I by of said, basis range, XXX expand positive points includes midpoint our impact. is margin from and to more at XXX we're the outperform Initiatives momentum QX, than balance well off XXXX. to and projected whatever approximately through continue a into we to of with Enterprise some price/cost economic remain which the the heading basis positive in conditions Operating positioned margin to year to solid emerge

With back turn to it that, Karen, I'll you.

Karen Fletcher

up Okay. you, open Rob, Thank let's Michael. please. questions, line the for

Operator

[Operator the question your Instructions] Kaplowitz of line from first And Citigroup. from Andy comes

open. Your line is

Andrew Kaplowitz

Michael, know everyone. XXX was you you in said, up year? about how points change morning, a basis us I didn't color on for you as little thinking give good QX. the Hey, company's but your margins you're more to can the forecast,

us know basis guided you for I think you points think thinking XXX year. basis was points, it I points. I QX, cost said in to XXX about you're said XXX the and price versus you

from return So your what back are that materially you margin year? held automotive increasing thinking forecast should comps you in now the for especially so your be given not higher

Michael Larsen

Well, and I think on QX, really with flow. also free Andy plan, the came income along in statement our cash across entire right

year. expanded low points. So margins QX the XXX the basis That's point typically for

margin in in we And our again actually, of similar year-over-year terms here And to historically, on expect current QX. segments, we're of trends expect margins so of here. planning, XXX improving about QX QX margins in each points you'd back you across remaining if the one from improvement based basis seeing and and in quarters. improve our from look go And

about within -- at kind bridge year. talk as this control are we're last We positive leverage of XXX we from growth certainly on enterprise and own look company. about that's and our organic you on that based if inside quarter, well seeing We're some activities the are projects points going contribution at the our operating well initiatives this seeing of from basis

That started to in QX. impact being cost positive. starting are really price We margin see

here year. And for remainder we forward said, expect remain that as in to you another the step the of QX, positive

basis the two points bit basis As points margins half years the price we'll of little and year, we've a this at you diluted than so level enterprise know, maybe from about more over last XXX XXX cost. recover maybe that about

support that we're talked organic in making to of and then growth is And in terms about our we the the what delta our investments people. including

we so seeing. of is that else And there certainly wages and are terms increases some in everybody seeing increases benefit

that the picture So your that's margin kind I question. answers for hope year-end. the of

Andrew Kaplowitz

thinking projected. ITW up slowing end XX% sort then Yes, And better quarter, said of XX% your breakdown than run terms you of still businesses XX%, Is that QX the or last seasonality. for And slowing. were that you those in predicted is year? of you than that Michael, of businesses worse then that's at you projected helpful. And the case? maybe rate Are the EPS higher terms in still you bit a a

Michael Larsen

Yes.

of talked revenues the at the we're think quarter you I down. look was XX% -- about we last -- about slowing what if company's

in residential about just the aftermarket the so digits. into and talking commercial welding everybody, low And down in remind talking we're maybe about here kind single We're QX and of to automotive construction. being

appliance digits. Specialty being business in down the components single high Our Products and

revenues And Measurement seeing that then XX% Test down. down the about segment. into in we semiconductor, coming primarily coming translate XX% talked We're that in orders to now range, &

expect was QX slowing these of just So And We I I that primarily some terms -- handful would in in say... in actually what this mentioned. further businesses line we what of expected. with do plan

Scott Santi

And our plan. that's new. in That's not

Michael Larsen

have a and the businesses as and our of we'd of would We're performance, are same strength of lot out solid our year. for remainder year. still always the demand. that's our in The rest parts in the seeing the the that nets tailwind there's saw guidance plan, Yes, the our in headwind all of and it was company, included pretty and of say going QX, majority kind in and to of vast for solid some obviously. expect I you some other to just plan

this, positioned pretty mean, this based change can But environment, obviously, really solid performance of just deliver quickly. and here uncertain balance what the QX I know point, remain we on the to say pretty today, at the this in for year. well is things I'll we

Andrew Kaplowitz

thinking you that split? are still Michael, XX-XX

Michael Larsen

I have still really standpoint, in line assumption planning with done historically. we a that's good think and a From Yes. what

Andrew Kaplowitz

you. Thank

Operator

line Your next question of JPMorgan. from Zakaria Tami comes from the

Your open. is line

Tami Zakaria

so morning. taking much for questions. good Thank my Hi, you

So from seasonality is Automotive year the first get from modeling? expect lowest margins here of be build that quarter better to the mentioned some about we be you should also there you sales the then sequentially, to expect Or here? we and How sales? Should on.

Michael Larsen

I mean the it's on little by driven growth are here there think is year-over-year comparisons. out. more there the rates from I I very mean, -- really improvement

number if year So builds look year. this lower you in decline there that's higher was QX or auto a be in going meaningful to -- at last was a

sequentially. growth on growth here we basis. a certainly see significant significant to going So not not in year-over-year some you're baked good see terms in of sequentially, will revenue in and assumption QX But an

Tami Zakaria

you on it. it much. Got so I’ll next Thank pass person. to

Operator

next comes the Jeff question from of from Research Vertical Sprague line Your Partners.

open. is line Your

Jeff Sprague

Thank you. Good morning, everyone. me. Maybe two for topics separate

could you starting the resilient to some Any if uncharacteristic about think or think your backlog into parts I visibility, burn have build wonder build. cycle, that them? of wouldn't forward on later, on so bit the you that last maybe I are you backlogs you a things longer visibility saw get the that just things there still in kind and year interesting? where color you're speak are backlog would of of If be the is one you the typically are the orders to of portfolio holding,

Michael Larsen

still down Yes. a necessarily pre-COVID a you And company. point out, higher Jeff, little we are think come kind they're backlogs not I while backlog-driven I today than bit, of levels. as have significantly mean

not but fair at bit of and we're Xx, least running XX% where higher at backlog. Welding seeing still businesses in Xx, Equipment like a maybe So Food

this come we're supply The other seeing across we Jeff, moderate you see the of challenges down, company. here and exactly continues to to what in know the thing backlogs as that's chain terms talked about, we're going

Jeff Sprague

to you term if margins. auto could And I wonder speak longer

two last basis said auto think in but the XXXX, XXX we in auto right this? had on ago we only higher you up I it the to than in basis so. there. from kind about other all game I point and just price side actually a were kind or year pointing over of of don't points, place Margins hit we get XXX of margins? to catch arithmetic do the us Are margins structural or higher the down cost, know year a you had are are

Scott Santi

margins, over And the exact business some to sure, but to of referring you're that think just the I two to sort we not years. in combination auto substance. it's spend great going weeks, auto Jeff, I'm and a path fact we're that the in to, margin next comp low it's detailing margin programs our in out a new safe prospects Yes. fact, The see of Day a that couple growth put for or say we there. three to mid-XXs add the Investor in all positive that time more are a of in plug

Operator

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

Your line is open.

Scott Davis

Hey, us a wondering and was Karen, on you what's into little a window bit could if of good I Michael morning. Scott, give China. guys in going

came the are from the a businesses had guessing by I'm a what April. in contraction to see month early makes kind they folks quarter. perspective the were sense? a reopening. perhaps at chance, the lighter if seeing of at macro January expecting and think now an I of down look into back but just What April probably you've PMI I least that each than think But level, should you there in toughest little be And was you had a

Michael Larsen

here to think double-digit -- equipment we're businesses a year-over-year back the I on customers, our I of answer the quarter, as April, automotive quarter. in the slower rate a Yes. our in to basis here did January, food out, seeing here your particularly in in which well in as second were question, supports We you as open a several restaurant first pointed OEMs mean growth we bounce China up. see

definitely were in So OEM. down we automotive

all were I second Fluids businesses back to Equipment. in think We was in that range. of XX% down strong the also kind pretty we in X%. Polymers here said & quarter. And are XX% those down Food coming

will basis. big build some year-over-year automotive business numbers up up see on OEM China. a significantly That could in in be be significantly You'll

Also, the comps are easier here.

So looking Equipment growth Fluids, XX% business. a rate automotive is back, Food Polymers at Welding we're XX% to in & the business. coming the China

So be than quarter. back which it up something slower bounce QX expected maybe all here obviously includes to a XX%, bit somewhere the January, year-over-year around in and they're adds up little opening first from the to

Scott Davis

point. go helpful. question, de-escalators and blow back contracts, price to That's I to don't Day, up over to is era feel and the But want right. but is or price And auto want that All the era to your of Investor I downs be price years, the free X you at we're of of of Or environment? down into back nothing at over day, and kind price to dynamic? usual really with has more going least next that X%, And the flattish end envision changed. the a we're X% Jeff's

Michael Larsen

Yes.

I think latter, of be the to it's honest here. more

of industry the of changed not terms upfront. contracts really where I you how these has structured think in are get price a lot

innovate customers so to else And to solve that problems ways is the key for in continue there nobody and can.

And you point. price structure that terms on at changed come not vehicles, content this in price. tons in at new as But programs get that higher a to win has new and every the so of year has

Scott Davis

Okay. Thank you integrity of for the answer.

Operator

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

open. line is Your

Joe Ritchie

a there? you real And I'm any Can about be your Do to do curious, market, OEM do in to seems we of need Just helpful. today? anything the like that's think guys. is help scale business? kind change how position around position be to thoughts you Good just morning, that Thanks. talk auto would the there Chinese your happening

Michael Larsen

to side. Well, local I shift that think and a are Chinese in very fastest-growing the business what's OEMs Day, at China. see, our particularly you'll Investor there's pretty automotive again, been on successful as local in The dramatic a been OEMs EV in

and the will to the enough terms detail of Chinese we're to win resources that to our business. automotive so have make Day, and innovation some that And efforts Investor we growth continue in also support sure in of that making investments the at capacity

years a there organic business still inside ago, different And the successful. prospects very terms the are best from growth frankly, X, the but XX organic it growth in above-market of So of really very is some company.

we'll spend So time certainly optimistic little that Investor Joe, but business. -- on again, Day, we're this that's a very more on at

Joe Ritchie

quarter curious, can guess an more in Investor we've about it. I I And quantify the margin is the of a autos get That's as about bit to margins great progresses. much to through for learning maybe forward price/cost little I'm you looking at hear. it this I sequential improvement how question, of forecasting just and year-over-year you're we'll quarters? expected and But to the year though, follow-on to be much a a now was on impact the Day. that talked improvement help and basis. know how more benefit as progress we I'm year-over-year recovery know the

Michael Larsen

Yes.

So a and I we’re the was to quarter. in here this said price begin automotive in it turn like slightly second cost to expecting negative think positive I margin QX

overall seeing acetyl basic coming are those deflation down. on including are those and commodities, more prices the nylon commodities, We of resins, more

And us we with, along so that's in margins. said, part of higher new what's content like at helping coming

to And lead this the will a to parts could price cost automotive beginning bit recovery years. OEM recovery, of But so margin combined as longer takes than other the of those cost three said, year. in this little This in take two company. Scott

Scott Santi

what up I'd in by out, the terrific our following peer factor a margin And are point right just the in and auto absolutely outperforms Michael's we returns capital generate still do on with business company. comments we of also line benchmarks X.Xx on that the

stress. deal are So The still issues these we'll really that long-term business terrible it's a short-term not with, well. standpoint, by performs from but any

Michael Larsen

That's true.

Joe Ritchie

guys. Thanks, Great.

Operator

of Your next Volkmann question comes Steve from Jefferies. from the line

Your line open. is

Steve Volkmann

you small side then company Is few price of seeing specifically? cost any you're plan you ask the risk you're that of goes of my down of Michael, Thanks. one. of any the the seeing side? risk? going Or everybody. think part I'll is deflation on I for to your that kind these what back forward a the where a follows that And curious areas commodities there that do but relative answered follow-on morning, automotive. as down broader Good across sort mentioned I'm you price? question, Are terms other maybe down? there any how cost the in

Michael Larsen

I we're There's like It's seeing so point. we to parts, again, basic that costs component. so just I going labor think, little On Steve, this machine there, labor not stickier going I the components, of up costs anymore. said, the significant we're wouldn't maybe think at kind seeing Well, -- are I little parts in the bit deflation, of content, deflation assembled commodities say are of be because a a that have mentioned.

planning, this, our lapping we all terms In we these planning how based price increases increases, we always our are as price are to of inflation-driven more implemented and kind normal decreases assumptions back cost price with either of as do consistent I that have on we're think or announced, known increases. of and the well kind

terms down. potentially of as will stick costs price those In material come increases

we only think roughly index. I X% to of have an tied revenues our is

really able be if So premium historical the to gains priorities, gain strategy, want of would of same vast certainly which the compete at strategic market. the the grow expect time, share want we majority one maintain our X the to is share, -- not to we to consistently big price number which to priority enterprise our growth we and market is organic and above

frame that's think would So -- I how that. we'd I

Steve Volkmann

Great.

quick to going goes follow-up that call margin quite for. that Anything Market construction Okay. just a sort Thank you. And goodness some a forward? was higher out and of kind I of there on were of think products. looking us were than bit then the how

Michael Larsen

mean something usually really Yes. price when you unusual, the answer I see is cost.

margin the hit segment more is what talked are about a happening recover we beginning segment automotive what you're another to really standpoint. years, start margin we the two last And been that's over about to a hard business. the impact, which from than little actually, is is bit here, automotive in that's the seeing So

initiatives cost enterprise So that a price positive combined combined significant actually the of to above with average contribution company. from the

of inside I XXX-odd initiatives. basis think the points of the highest at they were company enterprise contribution

two in the the drivers big business. So construction those were

is onetime as is the us where telling XX%. not on really the around is a pretty to look those -- QX XXs, you high team about this of remarkable encouraging think kind forward, pre-enterprise expect started what to we we which kind in what's sustain And we margins of impact, strategy is when based somewhere

in high-XX those term. So to we expect term certainly margins and near the sustain medium

Steve Volkmann

I appreciate. Thanks.

Operator

comes Credit Your from next Jamie the from Suisse. of Cook line question

Your open. line is

Chigusa Katoku

This is for Thanks for my Chigusa Jamie. Katoku taking on question.

the X% if outlook wondering at segment organic But just X% by was just on guide. all? around to So maintain growth, you the at I

Michael Larsen

close And mean, actually we we you course, to -- very I call year. so when last the gave looked at told we for this. guidance of full our on I think what we're

We construction, things, kind maybe automotive, of equipment, gave in had we than months level line scheme planned. that and that, was we a X last the little food enterprise lot the assumptions test are are ago, overall, a grand right of seeing But measurement, bit strength of better you yes, welding, at what when in with quarter. we

Chigusa Katoku

price/cost. on then And Great. Okay.

So XXX should was remember, thought you to puts would the that be for we how I basis with beginning auto some positive quarter. cadence recover takes it about the you it But and expect be And you probably just I there because to wondering mentioned was points onward? just year. think positive remainder this of

Michael Larsen

Yes.

basis contribution. points not from not XX that's your think normal cost and -- price is I

the today, similar just and the second quarter the another have down -- on as of in run we of come price. know So in second what then the into think half contribution based I around comparisons some we we'll will year it

that be to uncertainty XXX fair what would in basis points terms there's a price-cost for you bit But know expectation. expect like today, year margin, the on obviously, full fact, somewhere what of on I would in environment. net-net, we XXX around the But said, we know which the in based -- we today, of based

Operator

comes question America. Bank from the of of Obin Andrew line next from Your

Sabrina Abrams

taking Andrew for You Sabrina for my on Abrams have Obin. Thanks questions.

that to you've next about already talking activity? order areas particularly rest current drop further there to in the would you business guidance, based the the Are the of seeing businesses that as maybe slowing on is year were embedded maybe year slowing. guys you pointed other the of flag through think in of the I XX%

Michael Larsen

I sure the not I'm -- CA first you understood said slowing?

Sabrina Abrams

of like slowing parts the of wondering just said in other pointed those there's the be you've of if portfolio? slowdown see XX% -- the signs of you the that would think seeing I'm incremental where the to in softness Just any you particularly rest businesses further year. the you're and I

Scott Santi

that's a think simple I answer.

other XX% very continue to The demand rates strong. be

Michael Larsen

Yes.

line, you of I think is more automotive maybe is cycle. about been And and food that its semi then own the there's which Sabrina, to rate the interest is sensitive lot there's really a back measurement, of on the strength then think equipment the way And some equipment, welding, and more a lot of calling there in test more softness look. is capital on it kind if businesses, the and and business consumer-oriented, strength out top go in softness. where we've

it I mean, would. slowdown see we last in exactly thought we at since like QX, and to a out summer, least in started it's in construction, played

pretty QX so start. a off is to far, And good

Sabrina Abrams

Got business. then you about about you. headcount a of where And the talk been in you more Can has focus? talked reinvesting adding

Michael Larsen

I it's Well, really the across enterprise. think

inside to one not we're or they where of another. over significant make -- front organic and every in add of the growth their business, to headcount has support it's growth So decisions of segment organic company them, to in headcount and in allocate opportunities support strategies. Every operating terms favoring the unit

I growth after innovation, have of It's another front our organic in investing one. over So two to divisions there's support that customers. commercial by one those opportunities in like XX significant and every favored -- and them of capacity not they're are said, X going really those resources or segments

Scott Santi

And to go every are something those I'll continue cases, before, up. reiterate just all i.e., is you which margins will in self-funded, add in that investments I said segment can

Michael Larsen

I all at investments this incremental look after front advantage mean, margins XX% to growth organic range, take opportunities of -- that’s in our you are necessary full to the XX% Yes. all the of of part that in making us. that is our long-term

Operator

Fargo. line Wells Your Joe next from O'Dea comes question from of the

is line Your open.

Joe O'Dea

questions. for wanted seeing. Thanks trends my I taking just good and Hi, to start what morning. consumables on you're

and and are I some sort construction Those think at consumables higher if we have the businesses. where organic across exposure seen of of tend those we've polymers to look relatively products softer trends. the year-over-year specialty the some of products,

any visibility be of Or maybe And on if is sort any really inventory correction? these just what terms function inning in is of some to And of so of the consumer might of also, tied signs that some that a we exposure? destocking seeing case, consumables?

Michael Larsen

Yes. I mean certainly the the BXB quarter, consumer said. going that saw a some correction more customer again, And are bit end or businesses, little the quarter or to seeing end we're there's and market, inventory end this consumer. like all -- where the is directly we not These on it's selling we're softness, you but the a consumer. are those ones last as

can add So if I don't I to that. more know I have lot a whole

Joe O'Dea

on to the sure in imply XX-XX and sound make that it thought earlier than it's Maybe weighting you're year then I quarter? a normal-ish circle earnings we like doesn't lower and seems XXX it like of want what just but kind talking sort about seeing bps, not the the it about -- quarter. the bit wanted slowing nitpicking, wouldn't a talking just the you're normal cadence is to I in maybe second to over overly little you split, back year, it's see such also relative of And actually mean, answer second the Okay. would

Michael Larsen

No.

think XX. quarter, about call, I we talked last XX on we this --

XX%, And that's on we're just what again, planning still our I seeing think reiterate, I'll assumption, in kind based it's of today. XX%.

I so is said, fair far, that's base -- kind everybody I of think that bit a to that's a QX our planning our But uncertainty assumption. is there's start. of And good dealing with now. right like off

Operator

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

line open. is Your

Nigel Coe

but suggest Thanks, just to to Couple I dig quite food of to continues good morning. equipment really because nicely. want that ground, outperform into

where are we curious cycle refresh reopening and in-store share cetera? upgrade the on just there cycle? et the thoughts So post gains, Any sort base of on

Michael Larsen

our supply based in with we've when of others Well, lot struggled. customers ability maybe think a our gained this share business and service on times I lead to

nothing really on up going on say we're the of of recovered we'd to take terms still our maybe there's in everybody terms point. side, care momentum, an we're at service think equipment of the service side. side, have the the picking little on constrained we in I And ability then largely recovery, unusual area where a this

little are business. we which gives what backlog used see were is earlier levels, we're we're talking backlog overall, normally to. bit really to a is trends some this Xx But where strong demand about continuing than area in an us the we more This normal visibility

In of markets, know, care seeing our focused plus. as up terms more lodging whether XX% but of there, strength we're the the business restaurants health or you education and it's institutional side, end lot a or also is on

this we prepared think in I remarks. the said

So momentum really here. lot of overall, a solid

back year. of the China But remainder including in high to high about margin that's margins certainly as a we a QX little here in was and the side, performing in really on to at encouraging see the XXs in business the it's for down was come again. level, that's a very going think I back that talked business about, softer the XX%, QX and so

positioned well I the solid and remainder year. for the think really overall, of So a quarter

Scott Santi

just it was for going I to Just another plug -- take Nigel. to. sorry,

Nigel Coe

Go ahead.

Scott Santi

our just plug will equipment Investor at as for be segments event. of make the featuring in a weeks, of that another we That one Day food couple to

Nigel Coe

margins. follow-on to back then And my would That be just going is just great. order

that. America North growth, price is was X% XX%. talked I cost, understand Europe You've about

have into nice you of Just think that as cadence that so about maybe well the downside. order wondering talk QX, here? mix essentially back that margins to sequential we margin just year, you continues a in do issue in to Q-over-Q the a from half improvement the if And when there's

Michael Larsen

answer from here current assumption margins that continue The yes, out planning improve automotive. latter, is that's to the the on in

I more read much think DX we about were QX. you you as But up, into America, the concentrated North build But America can't auto OEMs. are in too you if overall at the builds I in think, look quarterly North know, numbers. XX% with

So I about X% the those think, up quarter. -- they were in

significant that has think don't margin I necessarily. So a impact

geography. by pretty as we've As our customers I comparable before, across are think about as talked well margins

a you if So huge mix not want. issue,

Operator

last Barclays. Julian from our question Mitchell And from line comes the of

open. Your line is

Julian Mitchell

just shrinks the midpoint, And year. in thanks the assuming price/cost and I sort squeezing at think circle did I'm I X that therefore year, sales tailwind through the guide at the you X% to the tailwind wanted year to QX, me the of for revenue for organic the guided as well. in. morning. Good back Because does price

you're QX perhaps. essentially of the sort talked acceleration you've seeing or growth steady business an QX of But of sort growth volume or about flat QX So to with even a slowdown. X/X volume assuming

the business slowing the of help maybe what's to offset volume-wise accelerating XX% of quarter from that's sort the that's the So more. QX understand us

Michael Larsen

Yes.

back expect the I no what think X%, and half. more in, half and X% else. terms things built There's here year-over-year accelerating to second to being on first closer in comp year guide last our that's anything was of growth the phenomenon assumption in a we really than to during of the organic talked in of the we about X% being closer that organic, X% of call half the

QX up QX. And again then Our seasonality then to we step and standpoint. low is similar QX, kind of typical from in QX is a the see of kind point revenue a is QX.

that's just with mean in QX kind think changed. able on along are to assumptions we're just here I I they our right we So what I came planning the sit based of would add to today. those again, add, expectations. as extrapolate -- haven't I'd

And year so kind in still plan. right line we're with full of that

Julian Mitchell

taper assume tapers? And firm the through margin of the does fair year as why it tailwind the price is to of just cost sort tailwind price that sort

Michael Larsen

exception of Yes. talked that recover we to the one and the pick do to starting then second business, which is half beginning lot one automotive today, the business in quarter in that's about up Maybe year. OEM here the expect a the the just we of second with again

Julian Mitchell

growing just XX% in the think That's or helpful. plus would where on peers Fortive many my I but year were follow-up the & business, QX. Tektronix, there's guiding something. flat. exit They're Measurement been Test at questions, say, of don't They to some And the be then like

core of sort the about test of that the and rate Just the piece year electronics, you're on slowdown? aside in the wondered how balance of measurement thinking terms of

Michael Larsen

industrial Well, really equipment strong. Test & for remains Measurement demand general and

progress our Day, a plug up QX. think Investor kind report mentioned will another of I XX%, up give Instron you XX% which I MTS, for was year-over-year in

some that even about are the quoting. which on of numbers only segment. here were semi more line only is really, So with side, in you those And challenges businesses the the are of the XX%

And said QX. that like in to XX% we XX% now those range semi revenues in are down

think really some this and of progress in organic of kind of softness the mean, lower-margin I some further business. here mid-XXs overall, digesting expect We good the part in segment. X% growth a in our I acquisition QX But that and margins after in

Julian Mitchell

great. That’s you. Thank

Karen Fletcher

we in to seeing So thank May to things our reminder, up. you Boston morning. Investor joining look forward this XX. Day I that for on And wraps just us a want at everybody

Operator

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

Illinois Tool Works (ITW) 2 May 232023 Q1 Earnings call transcript