ITW - Earnings call 3 2023 | Illinois Tool Works Inc.

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Operator

Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the ITW Third Quarter Earnings Conference Call. [Operator Instructions] Thank you. Karen Fletcher, Vice President of Investor Relations.

begin. may You

Karen Fletcher

Senior Krista. Quarter you, Chairman and to O'Herlihy; welcome CEO Larsen. CFO, Okay. Conference Good Call. Third and Chris Chairman, XXXX Santi; our President I'm ITW's and Scott Michael Thank Vice morning, Vice joined and by

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

actual This is a measures results non-GAAP the most to reconciliation the differ uses and subsequent a GAAP contains materially about comparable that contained forward-looking refer with to from in presentation the our reports detail reminder measures, to and statements. XX-K directly this company's presentation expectations. for that is the Form of press important X could measures those Slide XXXX more cause SEC filed Please risks certain release.

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

E. Santi

Karen, and morning, you, everyone. Thank good

are wherein full model, we As and role colleague, you September year-end. business the CEO Chris expertise the exceptional with strategy in O'Herlihy differentiated one-of-a-kind will leverage Chris to to deep turning I unique succession highly ITW's CEO my leader at focused X, to over our culture. announced an be is our all it aware, on company's plan potential

He has been XX an invaluable partner and collaborator past years. with me over the

prepare transition. an is He this for more and together We as job exceptional do have ITW's he ready to will closely next worked than CEO.

in by strategic bit that belief the we the XX and I say years, a fundamental everything power to ITW of In If long refer last potential set able of you we that be over driven will full to past positioned the to was getting allow the as of operational reflection we phase, practices company them performance brief and their leverage business properly model. to the focused the on term. on differentiated this me did simply capabilities our

With at enters these a level great read in our our only increase here foundation, they of forward. in the be him the advantage all our that especially honed. if doubt and ITW the bigger believe will competitive even have to resilience ITW position phase Chris behind tools lead utilize the skills will phase of source team with our capabilities unique believe unpredictability I of sharply than differentiated to next talented absolutely in next as company and company's disposal of and volatility were performance whatever there and react the wholeheartedly greater even you and will world an ITW's of phase. that this incredibly comes as to last heights and do in one, no strength I and that leadership differentiated the from I the next way

to me years. Let working and a can deepest company offer past both that of been close XX for be I for day their to has And support ITW commitment gratitude every their for last and all of privilege great my present we by and colleagues unwavering to lead my best the to all ITW an the be. it this saying that honor

and Chris, over With to O'Herlihy. in my you. it the the Chris to to pleasure turn company that, now call few is over a months,

Christopher O'Herlihy

Thank you, Scott, and good morning, everyone.

confidence leadership next and exceptionally Board opportunity ITW's great to talented me our of and in trust as CEO. colleagues for by Scott our thank to want and lead company, I'm team, the incredibly humbled electing XX,XXX world. Directors dedicated around our this their I the First,

to our performed model last our to XX full work the the been the in years has said, best-in-class of as strategy as focus capabilities never enterprise potential, with its company Scott central elevate our The better done enterprise future. ITW par and business customer-backed high-quality key As and of of leverage next innovation the on executing is a ITW the our result better operational organic over differentiators phase for to financial growth strategy positioned or performance.

and that XXXX in just are team I on goals. committed deeply to performance leadership enterprise Our doing ITW's delivering

basis Now turn QX financial Starting execution resilience The Measurement slowed drove performance. and strength for business down was on proprietary Welding. Organic let's and & with as our X% this model growth again strong line. diversified portfolio CapEx operational Electronics equal quarter. top of and high-quality an the Test to in and ITW's once days' demand performance and

flow With QX. margin us, XX%. was XXX $X.XX grew continues behind $X.XX now X% are in be our points. to auto we XX.X% range grew robust. to EPS to incorporates narrowing operating billion. to to cash X free guidance as year-over-year to points which the Quarterly contributed Our very Enterprise a $X.X EPS Initiatives basis the and income $X.XX impact up quarters improved X% performance of margin strike basis GAAP of and to $X.XX, Operating a adjustment income XXX

another to the performance. Looking balance well year company year, the ahead at of differentiated deliver of remains the positioned

I'll full year our to in performance turn detail. QX the call guidance and more now over Michael discuss Michael? to

Michael Larsen

X% shipping year. Thank you, basis last Organic had to as year on day this flat an less was compared quarter X QX Chris, growth essentially and and the good in everyone. QX equal morning, third plus days

reduced currency by X.X% and Foreign The growth revenue favorable X.X%. was was divestitures impact by net revenue translation of X.X%. result

by an and increase corporate partially starting enterprise other unallocated recovery. quarter to health year-over-year including income. and items points insurance basis employee-related up $X.XX operating on XXX basis welfare income, GAAP a was million and was basis initiatives as EPS was lower $X.XX margin improved impact lower positive million due XX.X%, onetime X% favorable of XXX included by with due expenses, and of $XX investment favorable primarily expense, basis which to This item year-over-year $XX a of lower points. offset points price/cost was net margin XXX of contributed Third

was of said, share. the net favorable items I net As these X per effect $X.XX

levels. a of XX% grew with progress our $XXX solid historical raised and XXth We to per repurchased income shares of QX million, an flow X% our conversion the this continue our XXX% make cash quarter operational of to our of net $XXX year million and inventory dividend financial In payout to we returning as to was normal on to raising quarter another execution $X.XX share, strong summary, which marks dividend. annualized of performance. by Free

growth Turning and to revenue geography. Slide organic X, by

flat, North can driven and down you was by see, X%, Pacific the segment. As X%, China Asia up America with Europe up was Automotive OEM about was X%,

down was Excluding auto, China X%.

North down X%, and segments in the Europe Chris was was But Automotive on our essentially and OEM, up not was the up segment X% strike the QX. impact to that was noted, with OEM starting Moving revenues X%. be case QX. auto There China Automotive from as will was organic XX%. in growth America no

Automotive XX% automotive And reminder, of revenues. total OEM approximately our that American customers. sales business segment a annual North represents X/X XX%, to within our tied DX of approximately As are

Included on remainder levels is in our auto of QX our that of the earnings based updated share, domestic estimate continuing $X.XX is DX the impact the strike essentially earnings through production per which October today the guidance our by quarter. will reduce

and the up Equipment single product the the grew Food X%. was X. Europe, however, with Asia to retail restaurants X% North growth up digits up Equipment and on America high X% Turning mid-teens, was up X%. solid XX%, up delivered rollouts. flat was institutional teens of Service of high back as in in Slide grew organic sales and new Pacific

which revenues. semiconductor-related declined down of In demand, & percentage slowed X%, ITW Test Measurement down represents as about for & for and Test X% Electronics segments XX%. Overall, in weighed Measurement and points grew X context, Electronics, and organic and demand by revenue X% XX% of quarter was CapEx the only

industrial of last and plus flat. easier Commercial, was X% was Welding's year. to North X% X% was however, America XX% for back a were revenue was against X. Slide down year-over-year organic Consumables comparison of down as softer declined Moving X% revenue down Overall, declined sales down an international CapEx. revenue versus up of on X% X% though XX%. the demand as on comparison essentially Equipment tough

products. Polymers margin to Margins were XXX as improved organic operating was XX.X%. aftermarket down due Fluids revenue launch grew and the automotive & was points X% of XX% as solid X%. Polymers Fluids, grew basis new X% to down

solid from Construction enterprise Turning International and Europe as with XXX X. down the in strength some which with initiatives markets renovation down X%. Zealand to North X% operating Organic and up down residential to was soft, were as was and Margins improved revenue margin basis New X% price on XX.X% Commercial side, contributions was with construction America Slide were X%. cost. strong X% grew residential X%, points up X%. down Australia with

and X% Products, organic and segment XX% America which X%. Equipment of Consumables was international down X%. about down down revenue X% were revenue, up was Finally, grew was X%. represents North the Specialty

our year full and XXXX X Slide updated to guidance. Moving

saw narrowing As GAAP adjustment for full you morning, to the this of strike we $X.XX to to as impact EPS for we're Based of of of exiting estimated new auto a on a projecting estimated I range $X.XX which, range QX, earlier, X% in guidance growth the QX. demand of the $X.XX are year. the includes impact mentioned levels the X% organic current strike, including our auto

year we of enterprise performance margin to raising to margins to margin contribution a We stronger points operating full the initiatives. more basis quarter, XXX third XXX including full are that XX% at points will than improve expect basis the by and XX.X% for guidance our year our reflect the exiting midpoint, from

free net flow than are more the We for of cash XXX% year. conversion projecting of income

some the overall team remains long-term mention ability The increasing unique and has few. the strengths environment strike uncertainties elevated on a to to our just CapEx demand optimize term, while So differentiated to to interest performance. and deliver caution capabilities in near ITW normalization, continue at clearly focused rates, entire the ITW's auto leveraging inventory

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

Karen Fletcher

lines questions. Michael. up you, Krista, the please for Thank open

Operator

Davis Instructions] comes from Scott the Research. first question line of from [Operator Your Melius

Scott Davis

I was -- the basis XXX price/cost XXX -- better. was positive

simple more were Or price there it lower both? the math be to or a thinking kind little Or What get like you little was XXX helpful. -- of quarter? bit a XXX. just I some would were cost to think able color of more in we just

Michael Larsen

Yes.

little me here. give context let of a bit you So

to here have track progress. we've are on in us side, of So the margin in QX, recover around Price/cost basis third was and year. XXX somewhere at XXX positive the was XXX XXX points quarter. around looking QX, basis full and the basis then put now the which for in from energy. points side, as stabilized. impact And would still which we're peak on There's That now some XXX good inflation, as points on that to in said, QX, appears the X cost more components the than made definitely some years labor now well pressure unprecedented definitely we recovery

a -- Price on and bit commodity is deflation we're little side. holding, seeing of the the on more

on So would which be stronger here third the these the particular, metals, price/cost quarter. the in drove in performance

Scott Davis

I it's Chris, early. That's helpful. know

You've they're got driving guess color I Or the spending X months, shifting, is another of of given a planning emphasis and sell on maybe but just on X kind there's see more of you I little on -- for little that couple end can markets rates, focusing? into, a of the months -- growth plan higher a on know where you first first bit Or much there you do you front. to you XX the just mentioned days? diversity the focus But kind of is do there portfolio? where so but your -- just kind

Christopher O'Herlihy

Yes.

strengthen say, Scott, financial with that core on which very what organic in is capabilities over foundation, is of par time. and our I our operational obviously in and line growth Day we a Investor as then really general, strength our our terms much we ensuring in with would our to plan at business outlined model continue performance So building

of is make think capabilities say. phase, first leaning the the we're go learning it's that our foundation our for our ] being already, I'm XX and of strategy the that's [ financial be it but days XX in performance. par would course, businesses with of job, good just out to But down our well with the the is I plan our which, really operational this first sure obviously, build businesses, really is, just very strong organic next to businesses pretty business our potted understanding committed to have to with -- really and sustain around the on our for we the days, I continuing in capabilities context which model, to growth the our working strategy and

Scott Davis

exceptional. a run, Scott, Congrats, really fantastic

Operator

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

Tami Zakaria

price/cost So operating points, enterprise the XXX, my basis wanted XXX. XXX I first a question to initiative better, expansion is, understand margin bit

So you to you that XXX were I And especially that and still taper basis into to the labor investing the what do expansion. there? drag points Is expect in look you XXXX? this off, get was year. to compensation remember when as

Michael Larsen

So you're right.

If really you another improvement contribution Enterprise strong margin year-over-year, at the look Industries. from

performance the we then we're points best in the initiatives, and those want talked you of as obviously, on organic is get years, where because That long-term investments remarkable necessarily to including headwind basis the and are we all growth Price/cost, to we're points think -- adds as year-over-year in which it then, I XXX I don't given XX.X%, basis investments hires getting is which continue at record call strategy. XXX XXX quarter. points. up with to make, how And the to that even our basis of, for margin wage basis well benefit enterprise XXX, new really a I else about all of that was third X.X making regular improvement that's to you're in believe a that about inflation new seeing. these everybody

Tami Zakaria

how in that headwind? fourth next that the Does and quarters, quarter in about maybe the headwind points we basis continue think several XXX should

Michael Larsen

you of too myself. run Yes, to normal than is been XXX historically, of the don't at -- running see if up for XXX ahead But that the and higher this normal year. The rate next year. points that's headwind. to I look we'll roll plans run think I we've basis about how rate, get want far somewhere

Tami Zakaria

of does Got it. does out what through mean strike one The assume calling one? headwind Can the that $X.XX of And continues quick I quarter? ask for headwind strike quarter? quarter, the terms end growth that the the the auto more you're in from fourth for fourth organic the

Michael Larsen

Yes.

me a just the bit lens broaden Tami, So here. maybe let little

quarter-to-date that's now they for bit from I fact based we basically on of take adjustment now maybe things further that's embedded in the that week you our that the we're think little a deteriorating get that impact we is strike given if today. the sixth approach, our prudent you auto year-end, extrapolate room EPS And right and decided is more a the are with $X.XX how uncertainty and here, where around through businesses what guidance. the in take in seeing now, which

year-end. great to better worse, assuming If ground. that. the question, conditions reacting your do our before businesses the year-end, answer on in we'll and So continues strike the through -- obviously, it ends a terms of than do job reading gets If it to will

next want to might -- of for deferred number, optimist some we lot I that $X.XX laid the year. get a of say a But just uncertainty, down production pin those given really adjustment you and you. don't that here The of into out to will going that just that obviously, we're revenue give

Operator

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

Andrew Obin

you structure talking Or couple electronics? the XX% quarters. slowing XX%? Have those over about sort before Just look new any bottom think markets started I have any to past of like it do the same question, of portfolio And of at how you world? is the So of the markets slow? were

Michael Larsen

takes. Andrew, so puts and there's some definitely

be would I were quarter, automotive for question have last XX%. automotive had me would up said example, in aftermarket OEM -- asked They think, category. I if you that that

things moving and in So just an example of out.

you the were of combined it's XX%. what look third to year-over-year, X% those So would quarter. I'm we On at. really slowing at to a not But basis, down say in kind relevant now businesses sure is look that if just

I think percentage and specifically, point, . Talking which electronics the sequentially, from they semi remains stable. fairly second did say electronics fairly about I quarter consumer by However, would a improve weak.

this I'll On recall been now half semiconductor of we've as that year. deferred until next an it's of would second experts, a the call that our side, expectation about well that probably the customers them you here And demand talked will there sometime in from looks as industry like year. be reacceleration

to as those basis, let's Now obviously, on ongoing say, businesses. a, we we committed remain, do now

the positioned really that full that part us in and to year of we right the of advantage opportunities in invest to which ourselves XXXX hopefully position next recovery making believe continue that front growth take and long-term the down We in sure comes for so. well inevitable road, our businesses, are of we're

Andrew Obin

a the how And specific Got you. talked And then was Construction runway changes margin more you're overall, cost you about to material and but has maybe is you've doing benefit been answered year-to-date. & this there? variable Anything question in Fluids, the these margin as Polymers businesses? much year-over-year that and business in Products in

Michael Larsen

of lot enterprise to Obviously, businesses with those deliver the say the these a there's contribution the first going the ongoing and one from Well, familiar in on I'd initiatives. you're that's is work results. categories

that And initiatives as significant favorable so enterprise a mentioned both price/cost segments had you the contribution from impact. as well

So those in X are drivers those the businesses. really big

And it quarterly pretty I not volume putting given, record of of volume a margin lot frankly, is that up performance they're remarkable growth, a lot not leverage. think

So get as even range, again, was that ] runway talking about going XX% we for kind incrementals you once of more XX% at margin [ the improvement. can leverage there's to volume imagine Chris in

Operator

question next UBS. Steven from line from comes of Fisher the Your

Steven Fisher

Congratulations, Scott.

Welding difference And you're Is that it and year-over-year to the on term? was X side is could you a maybe the mix that margin better weaker a the between be in seemed extent there quarter segment, what little at least of? the relative industrial something like on a Within projecting to the little subsegments aware that those last commercial. near

Michael Larsen

that these -- just the are environment dynamic operating a what I this there's out are kind tried of some this a margin basis lay to we're terms great the in difference really, And was of that what's driving lot the in I a the of commentary So points in. data of is on think illustrate not nature But performance. comparison. year-over-year

the to So comparisons. draw it's from conclusions hard really year-over-year any

those think bit whether levels company. that a a X backlog have at say down broadly equipment slowing term, to that X What at Backlogs the upfront, Welding, be normalized. We're of to the appears weeks we can little really in on I back now say We're at this we backlog-driven as a to go-forward remain basis level. to difficult overall near demand the is is enterprise said in not will point. for

point I'll impact last the inventory. then levels channel seeing And is and reducing their of partners our meaningful customers still from make we're

So level, at X points think about if of you to the X.X was drag. enterprise that organic point growth

to normalize the little QX just So line. a bit results maybe the on top

in X% basis, and put you're adjustments, So of question slowed activity that quarter. no the inventory context little the days' things in X.X back on equal little X, just you the side But at bit. [ here in ] then kind the welding down on bit third there's an factor to a a

Steven Fisher

And getting with to kind Would price Okay. That's to you favor? tilted then in is helpful. tight. sense that? the in to cost is for And your XX-XX I'm your of when idea can pretty that broadly shape you you get be of how versus agree an industrial would something up going XXXX? sort it going is of

Michael Larsen

That we next what end really we'll handle plans the even this Well, with and a look yet segments our rolled get equation our much some and at might so better discussions happens good year. month, like. have of price/cost on the we'll haven't then up for

at margin just the recovery that on. we're you if trajectory look think do I

We impact. haven't margin fully recovered the

we've next next full those ourselves. to But lot -- top to the when And We're half it's maybe point, raw stabilized. year. last seen which detail year, and there pricing. anything this not a guidance so We'll carryover not equation, some unreasonable certainly, But I deflation inflation be over that price get too ahead you -- but at that more that we the And maybe you cost I cost -- direct will seeing levels don't far of into normal year. you for give on then of will material of give also add current the the is we're want again, years. not has first our think close you're to at if X be seeing significant early material holding the assume

news good the of kind here. that's So

Operator

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

Julian Mitchell

Any was Electronics. now? Maybe interested it's the one also various portfolio just the been of & please? that's area of very QX And us on color the market. and on within Also, of peers expectations & business, was for of say, on mixed in reads give Test could versus, Measurement in sort Measurement quarters in several some Electronics base Test as kind that, on how of acquisition, in the you gone I that progress light integration

Michael Larsen

Yes.

at Test quarterly typically QX. you'll and QX Julian, ramp-up & guidance. to think you So historical Measurement look don't give there's see But if relative we I information, Electronics in in that a

And do of expect so that. some we

end on like soft. I side, think remains market overall, I said, the the electronics electronics consumer

isolation a semi year-over-year year, segment. about Just in on was is basis. a down that last XX%, -- that's $XXX And XX% million

So seeing what's results. that's we're these -- definitely driving

in comments? in Chris, impact If to X% You on we the Test up semi pressure there. quarter. not basis. out run & some the want a here MTS Measurement and were on But make this year-over-year seasonality. overall, expect to on and typical I'd up do counting maybe, We're continue. just rate based on you a Electronics we're you recovery say It's fourth actually take

So you to... want maybe

Christopher O'Herlihy

Yes.

rationale So I of been our financial the has performed well. say, the assumptions we years owning business the fit acquired by very when made The much certainly have would strategic that terms and in we validated Julian, of business. business very X MTS

feel strongly is of We very We're the a our in very, starting acquisition. to process real this model. nice business successful ITW see be already that. But to implementing accruing currently some results from going are we

week MTS for said, business the technology, so great ITW of are progress brands, implementing But is model. like we've to great on the of going great made I I to our Board fact, them firsthand our later the And opportunity business we In the good. business like witness say, to this model. of be in, a years far in improve taking that Great term. up people, integration level Directors terms in long great to so X this

Michael Larsen

I the would somewhere grew were business add third And what mid-teens. the is you'll we in the maybe talking maybe term, full for quarter. of this margins in the is to double-digit coming around And the And line business at X%. -- in top point, this Yes. short Chris through just the are quantify about implementation in year recall outlook the model,

terms the business. right track when we potential So the on in of that we thought acquired we had

So good progress.

Julian Mitchell

a businesses. organic savings reinvestment the on sort a enterprise the various line That's helpful. And broader in I in Chris. share of on may Maybe realize whether into MTS. and bit that perhaps destocking to amidst not ITW a base initiatives CEO good congratulations wanted just so. of some was top helpful. a after on some like Scott to the But transition just of and the date of just the there's looks eased larger sort channels the share context noise months or sort or across But had about perhaps XX market share greater that or at maybe to price/cost in enjoyed perspectives hear so question, maybe there's COVID thinking the in to redeploy share And of maybe gains that of eased and have last the both ITW that it looking sort announced market and business? need be little

Michael Larsen

then, Maybe can jump Chris, in. and you I'll start

looking gain a not we gains may our disagree an saying we that with start if their what of terms share by annual outside in think But customer-facing focused And getting that we're one clear our our growing from all Recognizing growth they metrics, to that premise the market to add of model you in it the of what the and completely customers given continuing their in all our market advantages -- that XX that picture, I growth share. say those we're business gaining what divisions, of share derive our in from will them terms have our terms decipher on. markets from for value every basis. we at. I'll be go in rate of on and products, difficult to is cases, are the buying you would in we market that are competitive very is are competitors the

competitors, to gaining peers, that, share market work you is share, a in bit. competitors you that Julian you are public cases, you're case. not performance our And the and that maybe, side, And And you see to X, but margin example, company can back But I'll that the a if on. can the -- we onion are just just the little you'll our at and comment are I see little that we do Chris, were some you'll you our Welding Equipment able to do relative of focused market businesses at that if and Xx gaining areas we running note the at peel in bit? if work, look typically for want look we which only Food and are Lincoln add, to might

Christopher O'Herlihy

everything nicely our in performance of seen in echo investments portfolio, relation our customer-back amount fact to businesses like the we to grow room quality we've just the of terms terms that we the said in areas made and would focused each in Michael have in and in of of I so markets Yes, segment a key with credence of share getting on yield this on sales our improving that and we've hearing gives innovation, our that are what from most we're that competition. all coupled to the customer-facing innovation,

Operator

line from question Mig of from Dobre next comes [Operator Instructions] Baird. the Your

Mircea Dobre

Congrats to Scott, Chris.

that function mentioned Maybe a done your Construction. So In Is color question channel comments, you -- little a of quick well. doing has a on more that quite there. resi renovation be anything that little to on new productivity and channel? all a bit or the where interest going that be? just rates of and found surprising given products in to I seems

Michael Larsen

Yes.

again, So things. is residential renovation remodel on side of This right. the you're Mig,

at share, you look market familiar that I So example you with at look the asked And all business and X% this volume gains retailers, earlier box in through market rate -- the current big said, you, I little is about through I these And really box sales great Because you'd environment. share are market. the gain interest just the names is a I a you might up share data, be if like of end this retailers. that, in be strong agree that this is with. somebody year-over-year typically think particular underlying think essentially if big part surprised of

Mircea Dobre

beyond And this staying quarter? presumably, that some power has

Michael Larsen

overall say North that been -- weak. lot in the typically, international a which America on we maybe mind fourth bit softer side. construction demand stable. has a I'd think keep the seasonality by -- side, that reasons, But obvious better. typically this usually America gains The market in I segment, in North I & little in in concern the third Measurement said the lower power. the share bit been actually than particular on talked about quarter, fairly has strength Well, more remains absolutely for fourth of and of quarter is quarter. has staying business, part the a is does the where, little our Test Construction the But one that international terms

Mircea Dobre

your I'm curious chain seeing perhaps impacted destocking? you've maybe backlog verticals in segment where follow-up, got Or And my of on from Are has this you are? for any you than number here Then would there of helpful. the perspective? supply how but segment, Equipment. and some times within be know of as sort the Great. less sort is are also, around Food the a evolved to lead you where context channel a others? noise I

Christopher O'Herlihy

model lead pre-pandemic much of in a lead perspective, our So are outcome to I were we our performance. where is to customers. supply we from a best-in-class that and business And Mig, of ability times would back say customer-facing natural just our time terms very

here, has quarters segments channel It's one down that couple the over In sure. We're terms channel, think of It's down. there. of probably where the bit there it's the next by little to of it's inventory an in is inventory seeing impacted, I out coming still been of but a that yes, area channel. now fair come likely the I for think,

Michael Larsen

then customer to back just on the X weeks. our delivery performance backlog, which, And given normal to Yes. X case, in our is we're levels

kind So of levels here. we're back to normal

Operator

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

Joseph O'Dea

Scott normalization, last you inventory wanted Congrats guess terms the talked to of and I stay on that about both I to in Chris. something channel quarter. topic

size last similarly think is quarter. I pretty

so of it as seen all the the July changes just rationalization, it's months June, any are pace couple end ago? kind some of markets, whether is question of that expectations trends you've a terms of And in now from into where of with that in kind trending or of inventory of regions, we line if on

Michael Larsen

get had growth slightly X% with normalize I of obviously say above we ITW segment QX at Every the are to through. this that free channel currently that's cash expectations And add through is to that to as year to are X.X% organic we case, supply trending in where low continue working as strong estimate broad-based. more we might QX, pretty customers us capital levels exact work here as on early with things levels to right of and be we're will last just some Xs. just that out line flow and this we having of I'd we stabilized. the normal our continues months And Like on performance partners will back next look inventory own running drag take think call. a quarters. it if say, hand, probably the rate you that really running X inventory typically I kind result similar for said, our levels, mid very same us few inventory some going at on I'd just drive in laid until impact, was for kind as of chain working our the to and And a probably

Mircea Dobre

you're right how that to then some seeing of customers does of from kind relate compare your And what now.

trends hearing your out prepared more more a related talked Test if a pause this from of is seeing uncertainty-related? that's what you're of and customers, slower little it's customers degree what inventory maybe something think I bit to Welding macro of Measurement the or the you're or is in of little that's & kind you sort CapEx remarks, demand bit maybe in about of a

Michael Larsen

the demand the a as of it's as think overall, hard there's more term, the mean, maybe segments, I then on in being that, bit to here in inventory the rate particularly environment, clearly we part the auto tell. I near think environment, really cautious I strike. said, interest And uncertainties everybody some little of side. CapEx one our

quickly. a a of change can lot dynamic things It there's So pretty is here. pretty on environment. It going

think continue you sure to team and record, our at we to continue react deliver the the I thing only conditions ITW look read ground. we'll know The is long-term that will performance. if differentiated are on track just And whatever to for

on that. And to that's just focus continuing really is our do so

Operator

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

Illinois Tool Works (ITW) 24 Oct 232023 Q3 Earnings call transcript