Organic revenues and operating margins higher than expected
Illinois Tool Works Inc. (NYSE: ITW)) yesterday reported 2010 third quarter diluted income per share from continuing operations of $0.83, a 38 percent increase versus the year-ago period. The growth in earnings was largely driven by strong organic revenue performance and ongoing contributions from restructuring activities.
The Company’s third quarter revenues of $4.018 billion were 12.2 percent higher than the year-earlier period. Organic or base revenues grew 11.2 percent in the quarter, with North American base revenues increasing 11.5 percent and international base revenues growing 10.8 percent. While all of the reporting segments produced positive organic revenue growth in the third quarter, the strongest organic revenue increases were produced by the Power Systems and Electronics, Industrial Packaging and Transportation segments. Acquisitions added 3.6 percent to third quarter revenues. Currency translation negatively impacted revenues by 2.4 percent.
“ITW’s third quarter financial results represented strong operating performance amid end markets that largely performed to our expectations,” said David B. Speer, chairman and chief executive officer. “We were pleased, however, that both our organic revenues and operating margins came in at higher than expected levels. While acquired revenues in the third quarter were relatively modest, we remain optimistic that acquisition activity will continue to improve as the year progresses and we move into 2011. Given our existing cash position, we repurchased 8.1 million shares for $350 million in the quarter. We consider our share repurchase program an ongoing part of our capital allocation process and we remain committed to being opportunistic as to its use.'
Total worldwide revenues for the Power Systems and Electronics segment increased 23.7percent in the third quarter versus the year-ago period.
Organic revenues grew 23.8 percent in the quarter due to strong end market demand associated with the welding and electronics businesses. Worldwide welding organic revenues increased 14.8 percent in the third quarter, with North American welding organic revenues growing 19.4 percent. The North American businesses continued to be helped by strong demand for welding products from heavy equipment OEM’s as well as other manufacturing customers. International welding organic revenues increased 5.3 percent in the quarter.