ITW Reports Fourth Quarter and Full Year 2025 Results

Rhea-AI Summary

Illinois Tool Works (NYSE: ITW) reported fourth-quarter revenue of $4.1 billion (+4.1%) and GAAP EPS of $2.72 (+7%). Full-year 2025 revenue was $16.0 billion (+0.9%) with GAAP EPS of $10.49. Operating margin expanded to 26.3–26.5% helped by enterprise initiatives.

The company expects 2026 revenue growth of 2–4%, GAAP EPS of $11.00–$11.40 (≈7% growth at midpoint), operating margin expansion of ~100 bps, free cash flow conversion >100%, and plans to repurchase ~$1.5 billion of shares.

Positive

• Q4 revenue increased by 4.1% to $4.1 billion
• Full-year GAAP EPS of $10.49 exceeded prior guidance midpoint
• 2026 GAAP EPS guidance of $11.00–$11.40 (≈7% growth at midpoint)
• Planned share repurchases of approximately $1.5 billion in 2026
• Free cash flow projected to convert to >100% of net income

Negative

• Full-year organic revenue was flat, with total 2025 revenue up only 0.9%
• A meaningful portion of 2025 growth came from foreign currency translation and acquisitions
• Company omitted a forward-looking GAAP reconciliation for estimated free cash flow conversion, limiting transparency

Key Figures

Q4 2025 Revenue: $4.1 billion Q4 2025 GAAP EPS: $2.72 Q4 Operating Margin: 26.5% +5 more

8 metrics

Q4 2025 Revenue $4.1 billion Fourth quarter 2025 revenue, up 4.1% year over year

Q4 2025 GAAP EPS $2.72 Fourth quarter 2025 GAAP EPS, increased 7%

Q4 Operating Margin 26.5% Fourth quarter 2025 operating margin; enterprise initiatives added 140 bps

2025 Revenue $16 billion Full year 2025 revenue, increased 0.9%

2025 GAAP EPS $10.49 Full year GAAP EPS, above prior guidance midpoint of $10.45

2026 GAAP EPS Guidance $11.00–$11.40 2026 GAAP EPS outlook, 7% growth at midpoint

2026 Revenue Growth Guide 2–4% Projected 2026 total revenue growth; organic 1–3%

2025 Free Cash Flow $2.7 billion Full year 2025 free cash flow, 88% conversion to net income

Market Reality Check

Price: $264.21 Vol: Volume 2,133,460 vs 20-da...

high vol

$264.21 Last Close

Volume Volume 2,133,460 vs 20-day average 1,396,892 (relative volume 1.53), indicating elevated interest ahead of/around earnings. high

Technical Price 264.21 is trading above 200-day MA 252.19, keeping ITW in a longer-term uptrend into these results.

Peers on Argus

ITW is up 1.13% while key peers in momentum (AME, ETN) show declines of about 4–...

2 Down

ITW is up 1.13% while key peers in momentum (AME, ETN) show declines of about 4–6%. Broader sector names in the watchlist mostly show modest gains, so ITW’s reaction looks more company-specific than a unified sector move.

Common Catalyst Multiple peers (AME, ETN) also reported or discussed record results and 2026 outlooks, suggesting an earnings-heavy day for the industrial machinery group.

Previous Earnings Reports

5 past events · Latest: Jan 13 (Neutral)

Same Type Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jan 13	Earnings webcast schedule	Neutral	+0.8%	Scheduled Q4 and full-year 2025 earnings release and webcast details.
Oct 24	Q3 2025 earnings	Positive	-4.5%	Reported Q3 revenue $4.1B, GAAP EPS $2.81, record 27.4% operating margin and raised guidance.
Oct 10	Earnings webcast schedule	Neutral	-1.4%	Announced Q3 2025 earnings release timing and webcast access information.
Jul 30	Q2 2025 earnings	Positive	-2.3%	Reported Q2 2025 revenue $4.1B, record GAAP EPS $2.58, 26.3% operating margin and higher guidance.
Jul 11	Earnings webcast schedule	Neutral	-0.9%	Set Q2 2025 earnings release date and webcast logistics for investors.

Pattern Detected

Earnings webcasts and result releases have often been followed by relatively modest single-day moves, with several strong fundamental reports seeing negative price reactions.

Recent Company History

Over the past six months, ITW has maintained a steady cadence of earnings updates and webcasts. Q2 and Q3 2025 results highlighted revenue around $4.1B, record operating margins above 26%, and GAAP EPS in the mid‑$2 range, alongside consistent share repurchases and raised full‑year EPS guidance. Despite these fundamentally strong reports, the stock saw negative reactions on several result days. Today’s fourth quarter and full‑year 2025 release, with record margins and EPS above prior guidance, continues that pattern of operational strength.

Historical Comparison

earnings

+2.0 %

Average Historical Move

Historical Analysis

In the past year, ITW earnings-related headlines saw an average move of 1.98%. Today’s 1.13% move on Q4/FY 2025 results tracks close to that typical reaction.

Typical Pattern

Earnings communications progressed from Q2 to Q3 2025 and now to Q4/FY 2025, with recurring themes of ~$4.1B quarterly revenue, expanding operating margins above 26%, and steadily higher GAAP EPS and guidance.

Market Pulse Summary

This announcement underscores ITW’s ability to sustain high profitability, with Q4 operating margin ...

Analysis

This announcement underscores ITW’s ability to sustain high profitability, with Q4 operating margin at 26.5% and full‑year GAAP EPS of $10.49, slightly above prior guidance. Revenue grew to $16 billion, while free cash flow reached $2.7 billion. The 2026 outlook calls for 2–4% revenue growth and EPS of $11.00–$11.40. Investors following this story may watch execution on margin expansion, cash conversion, and the pace of planned share repurchases around $1.5 billion.

Key Terms

gaap eps, operating margin, organic revenue growth, operating cash flow, +4 more

8 terms

gaap eps financial

"GAAP EPS of $2.72, an increase of 7% 2025 Highlights GAAP EPS of $10.49"

GAAP EPS is the profit per share a company reports using U.S. Generally Accepted Accounting Principles, the standard rules for preparing financial statements. It shows how much net income is attributable to each share after recognized costs like operating expenses, taxes and long-term cost allocations, much like a household reporting its monthly savings after following a fixed budgeting checklist. Investors rely on GAAP EPS to compare profitability consistently across companies and reporting periods.

operating margin financial

"Operating margin of 26.5 percent increased 30 basis points"

Operating margin shows how much profit a company makes from its core business activities after paying for costs like wages and materials. It’s useful because it tells you how efficiently a company is running—higher margins mean it keeps more money from each dollar of sales, which can indicate better management or stronger products.

organic revenue growth financial

"Fourth quarter revenue of $4.1 billion increased by 4.1 percent and organic revenue growth was 1.3 percent."

Organic revenue growth is the increase in a company's sales that comes from its existing products and services, without including any gains from acquisitions or selling off parts of the business. It reflects the company’s ability to attract more customers or encourage existing customers to buy more over time. For investors, it indicates the company's underlying strength and efficiency in expanding its core operations.

operating cash flow financial

"Operating cash flow was $1 billion, and free cash flow was $0.9 billion"

Operating cash flow is the amount of money a company earns from its main business activities, like selling products or services. It shows how well the company can generate cash to pay bills, invest in growth, or return money to shareholders. This figure helps investors understand if the company’s core operations are healthy and sustainable.

free cash flow financial

"Operating cash flow was $1 billion, and free cash flow was $0.9 billion"

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

foreign currency translation financial

"Foreign currency translation increased revenue by 2.5 percent"

Foreign currency translation is the process of converting financial statements prepared in one currency into another currency so they can be combined or compared. Investors care because exchange rate swings can change reported revenue, profit and asset values even when a company’s underlying business hasn’t changed — like converting vacation spending back to your home money and seeing the total rise or fall depending on the day’s exchange rate.

segment operating margin financial

"Segment operating margin increased 120 basis points to 27.7 percent."

Segment operating margin measures how much profit a specific part of a company keeps from its sales after paying the costs to run that part, expressed as a percentage. Investors use it like a slice-size indicator to compare which divisions are more efficient at turning revenue into operating profit, helping spot strengths, weaknesses, and where management might focus resources or improvements.

effective tax rate financial

"the effective tax rate was 22.8 percent."

The effective tax rate is the percentage of a company's profits that it pays in taxes. It shows how much of its earnings go to taxes after all deductions and credits are considered. For investors, it indicates how much of the company's income is taken by taxes, impacting overall profitability and financial health.

AI-generated analysis. Not financial advice.

Fourth Quarter 2025 Highlights

• Revenue of $4.1 billion, an increase of 4.1%
• Operating margin of 26.5%, as enterprise initiatives contributed 140 bps
• GAAP EPS of $2.72, an increase of 7%

2025 Highlights

• Revenue of $16 billion, an increase of 0.9%
• Customer-Back Innovation contributed 2.4% to revenue growth, an increase of 40 bps
• Operating margin of 26.3%, as enterprise initiatives contributed 130 bps
• GAAP EPS of $10.49 exceeded the prior guidance mid-point of $10.45

2026 Guidance

• Revenue growth of 2 to 4%, organic growth of 1 to 3%
• Operating margin expansion of approximately 100 bps with enterprise initiatives contributing 100 bps
• GAAP EPS of $11.00 to $11.40, an increase of 7% at the mid-point

GLENVIEW, Ill., Feb. 03, 2026 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its fourth quarter and full year 2025 results.

“ITW delivered a solid finish to the year, marked by more than four percent revenue growth and a seven percent increase in GAAP earnings per share. As a result of our disciplined execution across all seven segments, we expanded both operating margin and income to record levels in the quarter,” said Christopher O’Herlihy, President and Chief Executive Officer.

“Our results over the past year demonstrate that ITW is well-positioned to deliver solid financial performance in any environment as we consistently exceeded market growth while improving profitability and margins. Notably, our Customer-Back Innovation initiatives were a primary catalyst, contributing 2.4 percent to revenue growth in 2025. Building on this momentum, we expect to continue outperforming our end markets in 2026 as we leverage ITW’s unique business model to drive consistent, above-market organic growth with best-in-class margins and returns. I extend my sincere gratitude to our global colleagues for their unwavering dedication to serving our customers and executing our strategy with excellence,” O’Herlihy concluded.

Fourth Quarter 2025 Results

Fourth quarter revenue of $4.1 billion increased by 4.1 percent and organic revenue growth was 1.3 percent. Foreign currency translation increased revenue by 2.5 percent and acquisitions added 0.3 percent.

GAAP EPS of $2.72 increased seven percent. Operating margin of 26.5 percent increased 30 basis points as enterprise initiatives contributed 140 basis points. Segment operating margin increased 120 basis points to 27.7 percent. Operating cash flow was $1 billion, and free cash flow was $0.9 billion with a conversion of 109 percent to net income. During the quarter, the company repurchased $375 million of its own shares and the effective tax rate was 22.8 percent.

Full Year 2025 Results

Full year revenue of $16 billion increased 0.9 percent as organic revenue was flat. Foreign currency translation increased revenue by 0.8 percent and acquisitions contributed 0.1 percent to revenues.

GAAP EPS of $10.49 exceeded the prior guidance mid-point of $10.45. Operating income was $4.2 billion and operating margin was 26.3 percent with enterprise initiatives contributing 130 basis points. Segment operating margin of 27.2 percent increased 70 basis points. Pricing and supply chain actions successfully offset the tariff impact for the year. Six of seven segments expanded operating margins with three segments achieving operating margins above 30 percent.

Operating cash flow was $3.1 billion and free cash flow was $2.7 billion, with a conversion of 88 percent to net income. The company invested approximately $0.8 billion to support the long-term growth of its highly profitable businesses and returned $3.3 billion to shareholders through dividends and share repurchases. The effective tax rate was 22.7 percent.

2026 Guidance

ITW is initiating 2026 guidance including GAAP EPS in the range of $11.00 to $11.40 per share, which represents seven percent earnings growth at the mid-point. The company projects revenue growth of two to four percent and organic growth of one to three percent based on current levels of demand and present foreign exchange rates.

Operating margin is projected to be in the range of 26.5 to 27.5 percent, an improvement of approximately 100 basis points with enterprise initiatives contributing 100 basis points.

All seven segments are expected to deliver positive organic growth and operating margin expansion in 2026. 

Free cash flow is projected to be greater than 100 percent of net income, and the company plans to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is 23.5 to 24.5 percent.

Non-GAAP Measures

This earnings release contains certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the attached supplemental reconciliation schedule. The estimated guidance of free cash flow to net income conversion rate is based on assumptions that are difficult to predict, and estimated guidance for the most directly comparable GAAP measure and a reconciliation of this forward-looking estimate to its most directly comparable GAAP estimate have been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of reliable forward-looking cash flow information. For the same reasons, the company is unable to address the potential significance of the unavailable information, which could be material to future results.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding the potential impact of tariffs, the Company’s projected pricing actions, the impact of enterprise initiatives, future financial and operating performance, free cash flow and free cash flow to net income conversion rate, organic and total revenue, operating and incremental margin, price/cost impact, statements regarding diluted earnings per share, after-tax return on invested capital, effective tax rates, exchange rates, expected timing and amount of share repurchases, end market economic and regulatory conditions, and the Company’s 2026 guidance. These statements are subject to certain risks, uncertainties, assumptions, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that could cause actual results to differ materially from the Company’s expectations include those that are detailed in ITW’s Form 10-K for 2024 and subsequent reports filed with the SEC.

About Illinois Tool Works

ITW (NYSE: ITW) is a Fortune 300 global multi-industrial manufacturing leader with revenue of $16 billion in 2025. The company’s seven industry-leading segments leverage the unique ITW Business Model to drive solid growth with best-in-class margins and returns in markets where highly innovative, customer-focused solutions are required. ITW’s approximately 43,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com.

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF INCOME (UNAUDITED)
	Three Months Ended December 31,								Twelve Months Ended December 31,
In millions except per share amounts		2025				2024				2025				2024
Operating Revenue	$	4,093			$	3,932			$	16,044			$	15,898
Cost of revenue		2,284				2,221				8,969				8,858
Selling, administrative, and research and development expenses		704				655				2,779				2,675
Amortization and impairment of intangible assets		20				25				80				101
Operating Income		1,085				1,031				4,216				4,264
Interest expense		(75	)			(68	)			(292	)			(283	)
Other income (expense)		14				20				42				441
Income Before Taxes		1,024				983				3,966				4,422
Income taxes		234				233				900				934
Net Income	$	790			$	750			$	3,066			$	3,488
Net Income Per Share:
Basic	$	2.73			$	2.55			$	10.52			$	11.75
Diluted	$	2.72			$	2.54			$	10.49			$	11.71
Cash Dividends Per Share:
Paid	$	1.61			$	1.50			$	6.11			$	5.70
Declared	$	1.61			$	1.50			$	6.22			$	5.80
Shares of Common Stock Outstanding During the Period:
Average		289.5				294.7				291.5				296.8
Average assuming dilution		290.2				295.8				292.3				297.8

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In millions	December 31, 2025				December 31, 2024
Assets
Current Assets:
Cash and equivalents	$	851			$	948
Trade receivables		3,227				2,991
Inventories		1,659				1,605
Prepaid expenses and other current assets		463				312
Total current assets		6,200				5,856
Net plant and equipment		2,230				2,036
Goodwill		5,098				4,839
Intangible assets		591				592
Deferred income taxes		519				369
Other assets		1,510				1,375
	$	16,148			$	15,067
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term debt	$	2,286			$	1,555
Accounts payable		522				519
Accrued expenses		1,636				1,576
Cash dividends payable		465				441
Income taxes payable		217				217
Total current liabilities		5,126				4,308
Noncurrent Liabilities:
Long-term debt		6,683				6,308
Deferred income taxes		154				119
Other liabilities		959				1,015
Total noncurrent liabilities		7,796				7,442
Stockholders' Equity:
Common stock		6				6
Additional paid-in-capital		1,771				1,669
Retained earnings		30,150				28,893
Common stock held in treasury		(26,875	)			(25,375	)
Accumulated other comprehensive income (loss)		(1,827	)			(1,877	)
Noncontrolling interest		1				1
Total stockholders' equity		3,226				3,317
	$	16,148			$	15,067

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED)
Three Months Ended December 31, 2025
Dollars in millions	Total Revenue			Operating Income			Operating Margin
Automotive OEM	$	827		$	180		21.8	%
Food Equipment		698			196		28.0	%
Test & Measurement and Electronics		789			221		28.1	%
Welding		462			153		33.3	%
Polymers & Fluids		457			132		29.0	%
Construction Products		431			126		29.0	%
Specialty Products		433			124		28.7	%
Intersegment		(4	)		—		—	%
Total Segments		4,093			1,132		27.7	%
Unallocated		—			(47	)	—	%
Total Company	$	4,093		$	1,085		26.5	%

Twelve Months Ended December 31, 2025
Dollars in millions	Total Revenue			Operating Income			Operating Margin
Automotive OEM	$	3,288		$	693		21.1	%
Food Equipment		2,699			753		27.9	%
Test & Measurement and Electronics		2,825			694		24.6	%
Welding		1,890			621		32.9	%
Polymers & Fluids		1,765			493		27.9	%
Construction Products		1,820			550		30.2	%
Specialty Products		1,775			553		31.2	%
Intersegment		(18	)		—		—	%
Total Segments		16,044			4,357		27.2	%
Unallocated		—			(141	)	—	%
Total Company	$	16,044		$	4,216		26.3	%

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED)
Q4 2025 vs. Q4 2024 Favorable/(Unfavorable)
Operating Revenue	Automotive OEM		Food Equipment		Test & Measurement and Electronics		Welding		Polymers & Fluids		Construction Products		Specialty Products		Total ITW
Organic	1.9	%	0.7	%	1.8	%	2.3	%	4.7	%	(3.5	)%	1.1	%	1.3	%
Acquisitions/  Divestitures	—	%	—	%	1.5	%	—	%	—	%	—	%	—	%	0.3	%
Translation	3.6	%	3.1	%	2.2	%	1.0	%	1.8	%	2.0	%	2.9	%	2.5	%
Operating Revenue	5.5	%	3.8	%	5.5	%	3.3	%	6.5	%	(1.5	)%	4.0	%	4.1	%

Q4 2025 vs. Q4 2024 Favorable/(Unfavorable)
Change in Operating  Margin	Automotive OEM	Food Equipment	Test & Measurement and Electronics	Welding	Polymers & Fluids	Construction Products	Specialty Products	Total ITW
Operating Leverage	40 bps	10 bps	40 bps	40 bps	80 bps	(80) bps	30 bps	30 bps
Changes in Variable  Margin & OH Costs	130 bps	70 bps	130 bps	200 bps	60 bps	190 bps	10 bps	10 bps
Total Organic	170 bps	80 bps	170 bps	240 bps	140 bps	110 bps	40 bps	40 bps
Acquisitions/  Divestitures	—	—	(60) bps	—	—	—	—	(10) bps
Restructuring/Other	30 bps	—	—	(30) bps	(30) bps	(10) bps	(10) bps	—
Total Operating  Margin Change	200 bps	80 bps	110 bps	210 bps	110 bps	100 bps	30 bps	30 bps
Total Operating  Margin % *	21.8%	28.0%	28.1%	33.3%	29.0%	29.0%	28.7%	26.5%
* Includes  unfavorable operating  margin impact of  amortization expense  from acquisition-related  intangible assets	20 bps	10 bps	120 bps	—	130 bps	10 bps	20 bps	50 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.05) on GAAP earnings per share for  the fourth quarter of 2025.

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED)
Full Year 2025 vs Full Year 2024 Favorable/(Unfavorable)
Operating Revenue	Automotive OEM		Food Equipment		Test & Measurement and Electronics		Welding		Polymers & Fluids		Construction Products		Specialty Products		Total ITW
Organic	2.0	%	0.8	%	(1.4	)%	2.0	%	(0.2	)%	(5.1	)%	1.0	%	—	%
Acquisitions/  Divestitures	—	%	—	%	0.4	%	—	%	—	%	—	%	—	%	0.1	%
Translation	1.2	%	1.1	%	1.2	%	0.1	%	0.3	%	0.5	%	0.8	%	0.8	%
Operating Revenue	3.2	%	1.9	%	0.2	%	2.1	%	0.1	%	(4.6	)%	1.8	%	0.9	%

Full Year 2025 vs Full Year 2024 Favorable/(Unfavorable)
Change in Operating  Margin	Automotive OEM	Food Equipment	Test & Measurement and Electronics	Welding	Polymers & Fluids	Construction Products	Specialty Products	Total ITW
Operating Leverage	40 bps	20 bps	(40) bps	30 bps	10 bps	(110) bps	20 bps	—
Changes in Variable  Margin & OH Costs	110 bps	40 bps	60 bps	30 bps	50 bps	170 bps	70 bps	(50) bps
Total Organic	150 bps	60 bps	20 bps	60 bps	60 bps	60 bps	90 bps	(50) bps
Acquisitions/  Divestitures	—	—	(20) bps	—	—	—	—	—
Restructuring/Other	—	10 bps	(30) bps	—	(10) bps	30 bps	—	—
Total Operating  Margin Change	150 bps	70 bps	(30) bps	60 bps	50 bps	90 bps	90 bps	(50) bps
Total Operating  Margin % *	21.1%	27.9%	24.6%	32.9%	27.9%	30.2%	31.2%	26.3%
* Includes  unfavorable operating  margin impact of  amortization expense  from acquisition-related  intangible assets	20 bps	10 bps	130 bps	10 bps	150 bps	10 bps	10 bps	50 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.21) on GAAP earnings per share for   2025.

	ILLINOIS TOOL WORKS INC. and SUBSIDIARIES GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
	AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
		Three Months Ended December 31,								Twelve Months Ended December 31,
Dollars in millions			2025				2024				2025				2024
Numerator:
Net income		$	790			$	750			$	3,066			$	3,488
Net discrete tax benefit related to the third quarter 2025			—				—				(27	)			—
Discrete tax benefit related to the first quarter 2025			—				—				(21	)			—
Net discrete tax benefit related to the third quarter 2024			—				—				—				(121	)
Interest expense, net of tax (1)			57				51				222				215
Other (income) expense, net of tax (1)			(10	)			(16	)			(32	)			(336	)
Operating income after taxes		$	837			$	785			$	3,208			$	3,246
Denominator:
Invested capital:
	Cash and equivalents	$	851			$	948			$	851			$	948
	Trade receivables		3,227				2,991				3,227				2,991
	Inventories		1,659				1,605				1,659				1,605
	Net plant and equipment		2,230				2,036				2,230				2,036
	Goodwill and intangible assets		5,689				5,431				5,689				5,431
	Accounts payable and accrued expenses		(2,158	)			(2,095	)			(2,158	)			(2,095	)
	Debt		(8,969	)			(7,863	)			(8,969	)			(7,863	)
	Other, net		697				264				697				264
Total net assets (stockholders' equity)			3,226				3,317				3,226				3,317
	Cash and equivalents		(851	)			(948	)			(851	)			(948	)
	Debt		8,969				7,863				8,969				7,863
Total invested capital		$	11,344			$	10,232			$	11,344			$	10,232
Average invested capital (2)		$	11,285			$	10,511			$	10,959			$	10,419
Net income to average invested capital (3)			28.0	%			28.6	%			28.0	%			33.5	%
After-tax return on average invested capital (3)			29.7	%			29.9	%			29.3	%			31.2	%
(1)	Effective tax rate used for interest expense and other (income) expense for the three months ended December 31, 2025 and 2024 was 22.8% and 23.7%, respectively, and 23.9%, and 23.8% for the twelve months ended December 31, 2025 and 2024, respectively.
(2)	Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within each of the periods presented.
(3)	Returns for the three months ended December 31, 2025 and 2024 were converted to an annual rate by multiplying the calculated return by 4.

A reconciliation of the 2025 effective tax rate, excluding the third quarter 2025 net discrete tax benefit of $27 million, which included a favorable discrete tax benefit of $43 million related to the estimated U.S. federal tax liability for 2024, partially offset by a $16 million discrete tax expense related primarily to the resolution of a foreign tax audit, and excluding the first quarter 2025 discrete tax benefit of $21 million related to the reversal of a valuation allowance on net operating loss carryforwards, is as follows:

	Twelve Months Ended December 31, 2025
Dollars in millions	Income Taxes			Tax Rate
As reported	$	900		22.7	%
Net discrete tax benefit related to the third quarter 2025		27		0.7	%
Discrete tax benefit related to the first quarter 2025		21		0.5	%
As adjusted	$	948		23.9	%

A reconciliation of the 2024 effective tax rate excluding the third quarter 2024 net discrete tax benefit of $121 million, which included favorable discrete tax benefits of $107 million related to the utilization of capital loss carryforwards upon the sale of Wilsonart and $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, is as follows:

	Twelve Months Ended December 31, 2024
Dollars in millions	Income Taxes			Tax Rate
As reported	$	934		21.1	%
Net discrete tax benefit related to the third quarter 2024		121		2.7	%
As adjusted	$	1,055		23.8	%

FREE CASH FLOW (UNAUDITED)
	Three Months Ended December 31,								Twelve Months Ended December 31,
Dollars in millions		2025				2024				2025				2024
Net cash provided by operating activities	$	963			$	1,114			$	3,126			$	3,281
Less: Additions to plant and equipment		(105	)			(118	)			(419	)			(437	)
Free cash flow	$	858			$	996			$	2,707			$	2,844
Net income	$	790			$	750			$	3,066			$	3,488
Net cash provided by operating activities to net income    conversion rate		122	%			149	%			102	%			94	%
Free cash flow to net income conversion rate		109	%			133	%			88	%			82	%

	ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED)
		Twelve Months Ended December 31, 2024
As reported		$	11.71
Impact of sale of noncontrolling interest in Wilsonart (1)			(1.26	)
Cumulative effect of change in inventory accounting method, net of tax (2)			(0.30	)
As adjusted		$	10.15
(1)	Includes the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes.
(2)	Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax).

Investor Relations & Media Contact:
Erin Linnihan
Tel: 224.661.7431
investorrelations@itw.com | mediarelations@itw.com

FAQ

What were ITW's reported fourth-quarter 2025 results (NYSE: ITW)?

ITW reported $4.1 billion in Q4 2025 revenue and GAAP EPS of $2.72. According to the company, operating margin was 26.5%, enterprise initiatives added 140 basis points, and organic revenue grew 1.3% in the quarter.

How did ITW perform for full-year 2025 and did it beat guidance?

Full-year 2025 revenue was $16.0 billion and GAAP EPS was $10.49, which exceeded the prior guidance midpoint. According to the company, operating margin reached 26.3% and six of seven segments expanded margins year-over-year.

What guidance did ITW provide for 2026 including revenue and EPS?

ITW guided 2026 revenue growth of 2–4%, organic growth of 1–3%, and GAAP EPS of $11.00–$11.40. According to the company, the midpoint implies roughly 7% EPS growth versus 2025.

How much share repurchase did ITW complete in Q4 and plan for 2026?

In Q4 ITW repurchased $375 million of shares and plans to repurchase about $1.5 billion in 2026. According to the company, buybacks are part of returning capital alongside dividends totaling $3.3 billion returned in 2025.

What did ITW report about free cash flow and conversion metrics for 2025 and 2026?

ITW reported 2025 free cash flow of $2.7 billion with conversion of 88% to net income and Q4 conversion of 109%. According to the company, 2026 free cash flow is projected to be >100% of net income.