Illinois Tool Works Inc. (NYSE:ITW) announced its fourth-quarter and full-year 2025 results on Tuesday. The stock rose following the release. Full-year revenue reached $16 billion, up 0.9%, and GAAP EPS was $10.49, exceeding the prior guidance midpoint of $10.45.
In the fourth quarter, operating revenue was $4.093 billion, a 4.1% increase from the previous year. Organic revenue grew 1.3%, with foreign currency translation adding 2.5% and acquisitions contributing 0.3%. GAAP EPS was $2.72, up 7%, surpassing analyst expectations of $2.69 and $4.068 billion in revenue.
“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 CEO.
Operating margin was 26.5%, up 30 basis points, with enterprise initiatives contributing 140 basis points. Segment operating margin rose to 27.7%.
Operating cash flow was $1.0 billion, and free cash flow was $900 million, representing a 109% conversion to net income. ITW repurchased $375 million in shares during the quarter, and the effective tax rate was 22.8%.
The company disclosed that amortization expense from acquisition-related intangible assets had an unfavorable impact of $0.05 on the fourth-quarter GAAP EPS.
Segment Performance
Automotive OEM revenue reached $827 million, up 5.5% year-over-year, with a 21.8% operating margin. Food Equipment generated $698 million in revenue, a 3.8% increase, with a 28.0% margin.
Test & Measurement and Electronics saw $789 million in revenue, a 5.5% increase, with a 28.1% margin. Welding posted $462 million in revenue, a 3.3% increase, with a robust 33.3% margin. Polymers & Fluids generated $457 million in revenue, up 6.5%, with a 29.0% margin.
Construction Products generated $431 million, down 1.5%, with a 29.0% margin, while Specialty Products posted $433 million in revenue, a 4.0% increase, with a 28.7% margin. Overall, segment operating margin increased by 120 basis points to 27.7%, driven by strong results across most segments.
Outlook
Looking ahead to 2026, ITW provided guidance for 2% to 4% revenue growth and 1% to 3% organic growth. GAAP EPS is projected to range from $11.00 to $11.40, reflecting a 7% increase at the midpoint, compared to the analyst estimate of $11.29.
The company’s 2026 guidance suggests sales between $16.378 billion and $16.699 billion, compared to the analyst estimate of $16.555 billion.
The company expects operating margin to expand by approximately 100 basis points, with enterprise initiatives contributing 100 basis points. ITW plans to repurchase $1.5 billion in shares, and free cash flow is expected to exceed net income by more than 100%.
All seven segments are expected to deliver positive organic growth and operating margin expansion in 2026.
ITW Price Action: Illinois Tool Works shares were up 5.44% at $278.58 at the time of publication on Tuesday. The stock is trading at a new 52-week high, according to Benzinga Pro data.
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