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October 25, 2025 • 3 min read
Illinois Tool Works Inc. (ITW), a global manufacturer of industrial products and equipment, recently filed its third-quarter 2025 financial results. For those looking to understand the health of the industrial sector, ITW's performance offers a valuable window. Let's break down the key figures from their latest 10-Q filing to see what's driving the company.
At first glance, ITW's quarter might seem mixed. Operating Revenue for the three months ending September 30, 2025, edged up a modest 2.3% to $4.1 billion compared to the same period last year. Net Income, however, tells a different story, falling to $821 million from $1.16 billion in Q3 2024.
So, what's behind this sharp drop in net income? The answer lies in a one-time event from last year. In Q3 2024, ITW recorded a significant gain of $363 million from the sale of its interest in Wilsonart International. This skewed the comparison.
A better measure of core performance is Operating Income, which excludes such one-off items and interest expenses. Here, ITW showed its strength, with operating income growing a healthy 5.7% to $1.11 billion. This pushed the company's operating margin up to 27.4% from 26.5% a year ago, highlighting impressive efficiency and profitability in its core business.
To visualize how ITW translates its revenue into profit, the following flow diagram breaks down the company's quarterly income statement.
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The diagram illustrates how revenue from ITW's seven distinct business segments flows through various costs to arrive at the final net income for the quarter.
ITW operates across seven segments, and a look at their individual performance reveals where the company is excelling.
Automotive OEM: This was the star performer of the quarter. The segment, which supplies components and fasteners to automakers, saw revenue jump 7.3% to $830 million. More impressively, its operating income surged by 21%, with operating margins expanding by 240 basis points to 21.8%. This suggests strong demand and excellent cost management in the automotive sector.
Food Equipment: A consistently strong segment for ITW, it continued its steady performance. Revenue grew 2.5% to $694 million, while operating income rose 5.1%. Its operating margin reached an impressive 29.2%.
Construction Products: This segment provides a fascinating case study in profitability. While revenue dipped slightly by 1.4% to $473 million, reflecting some softness in the construction market, operating income increased by 3.1%. The segment managed to expand its operating margin by 140 basis points to 31.6%, demonstrating a powerful ability to manage costs and pricing effectively even when sales are flat.
ITW maintained its focus on returning capital to its shareholders. During the third quarter, the company:
This combined return of over $800 million in a single quarter underscores the company's strong cash flow generation and confidence in its financial position.
While a headline drop in net income might cause initial concern, a deeper dive into ITW's Q3 2025 results reveals a company performing well. The underlying operational strength is evident in the growth of operating income and expanding margins. Standout performance in the large Automotive OEM segment and remarkable resilience in Construction Products paint a picture of a well-managed, diversified industrial leader. ITW's ability to drive profitability even in challenging markets speaks to the effectiveness of its long-term business strategy.
Last updated: October 25, 2025