Illinois Tool Works — Apr 30, 2025 release

Exhibit 99.1 ITW Reports First Quarter 2025 Results • Revenue of $3.8 billion, down 3.4%; organic growth down 1.6%, flat on an equal days’ basis • Operating margin of 24.8%; Enterprise Initiatives contribute 120 bps • GAAP EPS of $2.38, ahead of plan expectations • Maintaining full year 2025 guidance; ongoing pricing actions offset tariff cost impacts GLENVIEW, IL., April 30, 2025 - Illinois Tool Works Inc. (NYSE: ITW) today reported its first quarter 2025 results and maintained guidance for full year 2025. “ITW commenced 2025 with solid execution, achieving financial results ahead of plan expectations as we continued to outperform underlying end markets,” said Christopher A. O’Herlihy, President and Chief Executive Officer. “Acknowledging the uncertain external environment, we are maintaining our full year 2025 guidance as we expect our ongoing pricing actions to offset tariff cost impacts. ITW is built to outperform in today's volatile environment. Our largely “produce where we sell” manufacturing strategy, decentralized operating culture which enables rapid “read and react” response, and diversified high-quality business portfolio all provide resilience during times of volatility and uncertainty. Our strong financial profile allows us to maintain our strategic investments and focus on driving continued progress on our long-term strategy to make above-market organic growth, fueled by Customer-back Innovation, into a core ITW strength,” O’Herlihy concluded. First Quarter 2025 Results First quarter revenue of $3.8 billion declined by 3.4 percent as organic revenue declined by 1.6 percent. On an equal days’ basis, organic revenue was essentially flat. Foreign currency translation impact reduced revenue by 1.8 percent. First quarter 2024 GAAP EPS of $2.73 and operating margin of 28.4 percent included a one-time inventory accounting change which benefited EPS by $0.29 and operating margin by 300 basis points. For comparison purposes, the following year-over-year references exclude this one-time item. GAAP EPS for the first quarter of 2025 of $2.38 declined two percent and included approximately $0.10 of headwind from higher restructuring expenses and unfavorable foreign currency translation impact. Operating margin of 24.8 percent declined 60 basis points as enterprise initiatives contributed 120 basis points, offset by higher restructuring expenses related to 80/20 Front-to-Back projects and other one-time items. Operating cash flow was $592 million, and free cash flow was $496 million with a conversion of 71 percent to net income. During the quarter, the company repurchased $375 million of its own shares. The effective tax rate was 21.7 percent which included a discrete tax benefit of $21 million related to the reversal of valuation allowances on net operating loss carryforwards. 2025 Guidance ITW is maintaining its full year 2025 GAAP EPS guidance range of $10.15 to $10.55 per share which includes on-going pricing actions that are projected to offset tariff cost impacts. The Company is projecting revenue and organic growth of zero to two percent based on current levels of demand adjusted for incremental pricing associated with tariffs and current foreign exchange rates. Operating margin is projected to be in the range of 26.5 to 27.5 percent, with enterprise initiatives contributing 100 basis points or more. Free cash flow is expected to exceed 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 approximately 24 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 global supply chain challenges, expected impact of inflation including raw material inflation and rising interest rates, 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 income per share, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates, expected timing and amount of share repurchases, end market economic and regulatory conditions, the impact of recent or potential acquisitions and/or divestitures, and the Company’s 2025 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 $15.9 billion in 2024. 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 44,000 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 March 31, In millions except per share amounts 2025 2024 Operating Revenue $ 3,839  $ 3,973  Cost of revenue 2,161  2,145  Selling, administrative, and research and development expenses 706  676  Amortization and impairment of intangible assets 21  25  Operating Income 951  1,127  Interest expense (68) (71) Other income (expense) 12  16  Income Before Taxes 895  1,072  Income Taxes 195  253  Net Income $ 700  $ 819  Net Income Per Share: Basic $ 2.39  $ 2.74  Diluted $ 2.38  $ 2.73  Cash Dividends Per Share: Paid $ 1.50  $ 1.40  Declared $ 1.50  $ 1.40  Shares of Common Stock Outstanding During the Period: Average 293.6  298.9  Average assuming dilution 294.5  300.0  ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (UNAUDITED) In millions March 31, 2025 December 31, 2024 Assets     Current Assets:     Cash and equivalents $ 873  $ 948  Trade receivables 3,153  2,991  Inventories 1,663  1,605  Prepaid expenses and other current assets 348  312  Total current assets 6,037  5,856  Net plant and equipment 2,085  2,036  Goodwill 4,903  4,839  Intangible assets 572  592  Deferred income taxes 440  369  Other assets 1,431  1,375    $ 15,468  $ 15,067  Liabilities and Stockholders' Equity     Current Liabilities:     Short-term debt $ 981  $ 1,555  Accounts payable 594  519  Accrued expenses 1,477  1,576  Cash dividends payable 439  441  Income taxes payable 289  217  Total current liabilities 3,780  4,308  Noncurrent Liabilities:     Long-term debt 7,282  6,308  Deferred income taxes 127  119  Other liabilities 1,037  1,015  Total noncurrent liabilities 8,446  7,442  Stockholders' Equity:     Common stock 6  6  Additional paid-in-capital 1,705  1,669  Retained earnings 29,154  28,893  Common stock held in treasury (25,746) (25,375) Accumulated other comprehensive income (loss) (1,878) (1,877) Noncontrolling interest 1  1  Total stockholders' equity 3,242  3,317  $ 15,468  $ 15,067  ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) Three Months Ended March 31, 2025 Dollars in millions Total Revenue Operating Income Operating Margin Automotive OEM $ 786  $ 151  19.3  % Food Equipment 627  166  26.5  % Test & Measurement and Electronics 652  139  21.4  % Welding 472  153  32.5  % Polymers & Fluids 429  114  26.5  % Construction Products 443  130  29.2  % Specialty Products 435  135  30.9  % Intersegment (5) —  —  % Total Segments 3,839   988   25.7   % Unallocated —  (37) —  % Total Company $ 3,839   $ 951   24.8   % ILLINOIS TOOL WORKS INC. and SUBSIDIARIES SEGMENT DATA (UNAUDITED) Q1 2025 vs. Q1 2024 Favorable/(Unfavorable) Operating Revenue Automotive OEM Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW Organic (1.2) % 1.2  % (5.4) % 0.1  % 1.7  % (7.4) % 0.9  % (1.6) % Acquisitions/ Divestitures —  % —  % 0.1  % —  % —  % —  % —  % —  % Translation (2.5) % (1.9) % (1.0) % (1.0) % (2.5) % (1.8) % (1.9) % (1.8) % Operating Revenue (3.7) % (0.7) % (6.3) % (0.9) % (0.8) % (9.2) % (1.0) % (3.4) % Q1 2025 vs. Q1 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 (30) bps 20 bps (150) bps — 30 bps (140) bps 20 bps (30) bps Changes in Variable Margin & OH Costs 60 bps 20 bps 40 bps (50) bps 50 bps 120 bps 140 bps (290) bps Total Organic 30 bps 40 bps (110) bps (50) bps 80 bps (20) bps 160 bps (320) bps Acquisitions/ Divestitures — — (30) bps — — — — (10) bps Restructuring/Other  (80) bps  10 bps  (60) bps  30 bps  (10) bps —  (40) bps  (30) bps Total Operating Margin Change (50) bps 50 bps (200) bps (20) bps 70 bps (20) bps 120 bps (360) bps Total Operating Margin % * 19.3% 26.5% 21.4% 32.5% 26.5% 29.2% 30.9% 24.8% * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets  20 bps  30 bps  150 bps  10 bps  150 bps  10 bps  20 bps  60 bps ** ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.05) on GAAP earnings per share for the first quarter of 2025. ILLINOIS TOOL WORKS INC. and SUBSIDIARIES GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED) AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) Three Months Ended March 31, Dollars in millions 2025 2024 Numerator: Net Income $ 700  $ 819  Discrete tax benefit related to the first quarter 2025 (21) —  Cumulative effect of change in inventory accounting method, net of tax (1) —  (88) Interest expense, net of tax (2) 52  54  Other (income) expense, net of tax (2) (9) (12) Operating income after taxes $ 722  $ 773  Denominator: Invested capital: Cash and equivalents $ 873  $ 959  Trade receivables 3,153  3,238  Inventories 1,663  1,825  Net plant and equipment 2,085  1,973  Goodwill and intangible assets 5,475  5,557  Accounts payable and accrued expenses (2,071) (2,109) Debt (8,263) (8,325) Other, net 327  (97) Total net assets (stockholders' equity) 3,242  3,021  Cash and equivalents (873) (959) Debt 8,263  8,325  Total invested capital $ 10,632  $ 10,387  Average invested capital (3) $ 10,432  $ 10,249  Net income to average invested capital (4) 26.9  % 32.0  % After-tax return on average invested capital (4) 27.7  % 30.1  % (1)     Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses in the first quarter of 2024 ($117 million pre-tax, or $88 million after-tax). (2)     Effective tax rate used for interest expense and other (income) expense for the three months ended March 31, 2025 and 2024 was 24.0% and 23.6%, respectively. (3)     Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of the periods presented. (4)     Returns for the three months ended March 31, 2025 and 2024 were converted to an annual rate by multiplying the calculated return by 4. A reconciliation of the tax rate for the three month period ended March 31, 2025, 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: Three Months Ended March 31, 2025 Dollars in millions Income Taxes Tax Rate As reported $ 195  21.7  % Discrete tax benefit related to the first quarter 2025 21  2.3  % As adjusted $ 216  24.0  % AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED) Twelve Months Ended Dollars in millions December 31, 2024 Numerator: Net income $ 3,488  Net discrete tax benefit related to the third quarter 2024 (121) Interest expense, net of tax (1) 215  Other (income) expense, net of tax (1) (336) Operating income after taxes $ 3,246  Denominator: Invested capital: Cash and equivalents $ 948  Trade receivables 2,991  Inventories 1,605  Net plant and equipment 2,036  Goodwill and intangible assets 5,431  Accounts payable and accrued expenses (2,095) Debt (7,863) Other, net 264  Total net assets (stockholders' equity) 3,317  Cash and equivalents (948) Debt 7,863  Total invested capital $ 10,232  Average invested capital (2) $ 10,419  Net income to average invested capital 33.5  % After-tax return on average invested capital 31.2  % (1)     Effective tax rate used for interest expense and other (income) expense for the year ended December 31, 2024 was 23.8%. (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 the period presented. 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 March 31, Dollars in millions 2025 2024 Net cash provided by operating activities $ 592  $ 589  Less: Additions to plant and equipment (96) (95) Free cash flow $ 496  $ 494  Net income $ 700  $ 819  Net cash provided by operating activities to net income conversion rate 85  % 72  % Free cash flow to net income conversion rate (1) 71  % 60  % (1)     Excluding the impact of the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses in the first quarter of 2024 ($117 million pre-tax, or $88 million after-tax), the free cash flow to net income conversion rate for the three months ended March 31, 2024 would have been 68%. ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED) Three Months Ended Twelve Months Ended March 31, 2024 December 31, 2024 As reported $ 2.73  $ 11.71  Cumulative effect of change in inventory accounting method, net of tax (1) (0.29) (0.30) Impact of sale of noncontrolling interest in Wilsonart (2) —  (1.26) As adjusted $ 2.44  $ 10.15  (1)     Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses in the first quarter of 2024 ($117 million pre-tax, or $88 million after-tax). (2)     Includes the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes in the third quarter of 2024.