Illinois Tool Works Inc. (ITW) announced its third‑quarter 2025 results on October 24, 2025, reporting revenue of $4.1 billion, up 2 % year‑over‑year, and GAAP earnings per share of $2.81, a 6 % increase excluding a $1.26 million divestiture gain. Operating income rose to $1.1 billion, giving the company a record operating margin of 27.4 %, up 90 basis points from the prior quarter, while free cash flow reached $904 million, a 15 % increase and a 110 % conversion to net income. The company also repurchased $375 million of shares and raised its dividend by 7 % to $6.44 per share, marking the 62nd consecutive year of dividend increases.
The earnings release highlighted that enterprise initiatives contributed 140 basis points to the operating margin, and six of the seven business segments expanded margins. Segment‑level details were not disclosed in the press release, but the overall margin improvement underscores the effectiveness of ITW’s 80/20 Front‑to‑Back process and its focus on customer‑back innovation. The effective tax rate for the quarter was 21.8 %, slightly lower than the 24.3 % rate reported for the same period in 2024.
ITW updated its full‑year 2025 guidance, narrowing the GAAP EPS range to $10.40–$10.50 and projecting revenue growth of 1–3 %, driven by flat to 2 % organic growth and favorable foreign‑currency translation. The company expects operating margins of 26–27 %, with enterprise initiatives contributing at least 125 basis points. Free cash flow is projected to be approximately 100 % of net income, and ITW plans to repurchase about $1.5 billion of shares during 2025.
The Q3 results reinforce ITW’s resilient business model and disciplined capital allocation. Record operating margin and free‑cash‑flow conversion demonstrate operational excellence, while the dividend increase and share‑repurchase program signal confidence in long‑term cash‑flow generation. These developments provide investors with a clear view of ITW’s continued ability to generate high‑quality returns amid a challenging demand environment.
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