ITW's 4Q Outperforms Estimate - Analyst Blog
31 Gennaio 2012 - 4:10PM
Zacks
Illinois Tool Works Inc. (ITW) reported its
financial results for the fourth quarter and fiscal year 2011 on
January 31. Earnings per share from continuing operations were 90
cents, an increase of 36.4% year over year and two cents above the
Zacks Consensus Estimate of 88 cents and in line with the mid-point
of management’s guidance range of 86-94 cents.
The reported quarter’s earnings excluded one cent of income from
discontinued operations, including which earnings came in for
roughly $1.00 per share.
For the fiscal year 2011, earnings per share came in at $4.08,
excluding 11 cents of income from the continuing operations.
Results surpassed the Zacks Consensus Estimate of $3.73.
Revenue
Operating revenue in the fourth quarter increased 10.4% year
over year to $4,319.3 million, but failed to surpass the Zacks
Consensus Estimate of $4,357 million.The year-over-year increase in
operating revenue symbolized continued improvement in end-market
demand. The year-over-year improvement was in line with
management’s projected growth range of 9.5%-12.5%.
Of the total revenue, base revenue in the quarter grew 5.9% year
over year, registering an 8.7% increase in North American and a
3.0% hike in international revenues. Acquisitions added 4.7% while
currency translation negatively impacted revenue growth by
0.4%.
Revenue in the Power Systems and Electronics segment rose
increased 16.0% year over year to $714.3 million in the quarter
with base revenue increase of 10.2%, due to strong performance in
the wielding and consumable business. Revenue in the Transportation
segment soared 20.9% year over year to $757.4 million, with a
base revenue increase of 8.7%.
Industrial Packaging soared 7.2% to $618.9 million while Food
Equipment rose 3.8% to $507.0 million. Construction Products
revenue increased 3.3% to $461.5 million; Polymers & Fluids
revenue was $316.7 million, up 11.7% year over year; Decorative
Surfaces revenue increased 2.9% to $248.1 million; and revenue from
All Other sources increased 8.3% to $711.6 million. Intercompany
revenue in the quarter was ($16.2) million.
For the fiscal year 2011, operating revenues were $17,786.6
million, an increase of 15.4% year over year. Results, however,
lagged behind the Zacks Consensus of $17,877 million.
Margins
Cost of goods sold in the quarter increased 7.4% year over year
and represented 64.8% of total revenue; slightly down from 66.6% in
the year-ago quarter. Selling, administrative and R&D expenses,
as a percentage of total revenue, stood at 18.6%. Operating margin
in the quarter was 15.0%, up 270 basis points year over year.
Balance Sheet
Exiting the fourth quarter, Illinois Tool Works’ cash and cash
equivalents decreased 10.7% sequentially to approximately $1,177.9
million. Long-term debt, net of current portion decreased to
$3,488.2 million from $3,522.1 million in the third quarter of
2011.
Cash Flow
Net cash flow from operating activities in the quarter was
$711.7 million, up from $356.2 million in the year-ago quarter.
Capital expenditure increased to $94.5 million versus $88.1 million
in the year-ago quarter. Free cash flow was approximately $617.2
million versus $268.0 million in the third quarter of 2010.
Outlook
For full-year 2012, management expects earnings in the range of
$4.02-$4.26 based on total revenue growth assumption of 5.0%-8.0%.
Earnings for the first quarter of 2012 are expected to be
within the 89-97 cents range based on total revenue growth
assumption of 6.0%-9.0%.
Illinois Tool Works is one of the leading manufacturers of
industrial products and equipment. The company’s chief competitors
include Cooper Industries plc (CBE),
General Electric Co. (GE) and Manitowoc
Co. Inc. (MTW).
We currently maintain a Neutral recommendation on the stock.
COOPER INDS PLC (CBE): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
ILL TOOL WORKS (ITW): Free Stock Analysis Report
MANITOWOC INC (MTW): Free Stock Analysis Report
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