Illinois Tool Works Inc. (ITW) has reported its third quarter 2025 results, indicating a revenue increase of 2% to $4.1 billion, with organic growth at 1%. The operating margin also reached a record high of 27.4%, marking an expansion of 90 basis points (bps). The GAAP EPS stands at $2.81, showing a 6% increase excluding the prior year divestiture gain.
Operating cash flow for the quarter was $1 billion, and free cash flow increased by 15% to $0.9 billion, with a conversion rate of 110% to net income. During the quarter, ITW repurchased $375 million of its own shares and raised its dividend by 7%, bringing the annualized payout to $6.44 per share, representing the 62nd consecutive year of dividend increases.
Looking ahead, ITW is narrowing its full year 2025 GAAP EPS guidance range to $10.40 to $10.50. The company is projecting overall revenue growth of 1 to 3%, which includes organic growth of flat to 2%. The operating margin is projected to be in the range of 26 to 27%, with a projected contribution of 125 bps or more from enterprise initiatives. Free cash flow is expected to be approximately 100% of net income, and the company plans to repurchase approximately $1.5 billion of its own shares.
The effective tax rate for the quarter was 21.8%, and the projected effective tax rate for the full year is approximately 23%.
It's important to note that the press release contains certain non-GAAP financial measures, and a reconciliation of these measures to the most directly comparable GAAP measures is included in the attached supplemental reconciliation schedule. The market has reacted to these announcements by moving the company's shares 1.77% to a price of $257.44. Check out the company's full 8-K submission here.
