ITW Q2 2025 10-Q: Auto Segment Shines Amidst Mixed Results

Illinois Tool Works (ITW), a global manufacturer of industrial products and equipment, recently released its financial results for the second quarter of 2025. The report offers a detailed look into the performance of a company whose diverse products range from automotive components to commercial kitchen equipment. In this post, we'll dive into the numbers from their latest 10-Q filing to understand the key trends shaping the company's performance.

For the three months ending June 30, 2025, ITW posted a modest increase in operating revenue, reaching $4.05 billion, up slightly from $4.03 billion in the same quarter last year. Net income remained stable at $755 million.

To better understand how the company's revenue translates into profit, the following flow diagram illustrates the journey from sales to the bottom line for the quarter.

A Mixed Bag Across Segments

As a diversified industrial giant, the true story of ITW's performance often lies within its seven distinct business segments. The second quarter revealed a clear divergence in demand across its end markets.

The stars of the quarter were the Automotive OEM and Food Equipment segments.

• Automotive OEM, which supplies components and fasteners to car manufacturers, saw revenue climb 3.8% to $845 million. More impressively, its operating income jumped 14.1% to $180 million, pushing its operating margin up to a strong 21.3%.
• Food Equipment, a division that makes everything from commercial ovens to refrigerators, also performed well, with revenue growing 2.1% to $680 million and operating income rising 4.6%.

On the other end of the spectrum, the Construction Products segment faced headwinds.

• Revenue fell 6.1% to $473 million, reflecting softer demand in its markets for fastening systems and solutions for wood, metal, and concrete applications.
• However, in a sign of strong operational management, the segment's operating margin actually increased from 29.4% to 30.8%, as cost controls and restructuring benefits helped offset the lower sales volume.

Other segments like Polymers & Fluids also saw revenue declines, while Welding and Specialty Products posted modest growth. This mixed performance underscores the varied economic conditions across the industrial landscape.

Capital Allocation and Financial Position

ITW continued its long-standing practice of returning capital to shareholders. During the quarter, the company:

• Repurchased $375 million of its own stock, bringing the year-to-date total to $750 million.
• Paid $439 million in dividends, reflecting a declared dividend of $1.50 per share, an increase from the $1.40 per share paid in the same quarter of 2024.

A look at the balance sheet shows a rise in total debt to $8.9 billion, up from $7.9 billion at the end of 2024. This pushed the company's total debt-to-EBITDA ratio (a key measure of leverage) from 1.7 to 2.0. While the increase is notable, the level remains manageable for a company of ITW's scale. Free cash flow for the first six months of the year was $945 million, a decrease from the $1.07 billion generated in the first half of 2024.

The Takeaway

Illinois Tool Works delivered a steady, if not spectacular, second quarter. The results paint a picture of a well-managed industrial conglomerate navigating a complex and uneven global market. Strength in the automotive sector provided a significant boost, helping to counterbalance the pronounced weakness in construction.

The company's ability to protect and even enhance profitability in segments with falling revenue highlights its commitment to its enterprise strategy and operational discipline. While the rise in debt and dip in free cash flow warrant attention, ITW's consistent return of capital to shareholders signals confidence in its long-term financial health. Moving forward, investors will be watching to see if the lagging segments can find their footing and if the high-flying automotive division can maintain its momentum.