Illinois Tool Works (ITW) Q3 2026 Earnings Report

The call had a strongly positive tone. ITW reported solid organic growth, record operating income, higher margins, strong cash flow, increased shareholder returns, and raised EPS and revenue guidance. Momentum was especially strong in Test and Measurement and Electronics, Welding, and Polymers and Fluids, with customer-back innovation above 3% and constructive commentary on 2027. These positives outweighed the tornado-related Welding disruption, declines in Automotive OEM, Construction Products, and Specialty Products, regional weakness in Europe and China, and near-term price/cost and employee-cost pressures.

For full year 2026, ITW’s organic growth projection remains 3% to 4%, despite the 5%+ in Q4; sequentially, revenues are expected to grow 1% to 2% from Q3, total revenue growth guidance is 4.5% to 5.5%, operating margin guidance is 26.5% to 27.5% with Q4 margins in the mid- to high 27s, enterprise initiatives are expected to contribute more than 100 basis points, price/cost is expected to be favorable on an income basis and about neutral to margins, GAAP EPS guidance is $11.45 to $11.55 with a new midpoint of $11.50 representing 10% year over year growth, the projected effective tax rate remains 23% to 24%, free cash flow conversion is projected to be approximately 100% of net income, and full year share repurchases are expected to be approximately $1.5 billion; CBI is expected to exceed 3% for the full year, food equipment organic growth is projected in the low single digits with operating margin expansion in Q4, welding margins are expected to return to the typical best in class 32%, 33%, 34% range, 2027 is expected to include a 10 to 20 basis points tailwind to margins from price cost and incremental margins in the 40% plus range, while the long term framework remains 4%+ organic growth and 30% operating margins by 2030.