Illinois Tool Works reported first quarter 2015 diluted earnings per share (EPS) from continuing operations of $1.21, which is 20 percent higher than the year-ago period.
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Reported EPS was $0.04 above the midpoint of company guidance despite $0.03 of incremental negative currency translation impact vs. the exchange rates in effect at the time the company issued guidance for the first quarter 2015 on January 27, 2015.
Organic revenue growth was up 1 percent in the quarter, reflecting lower demand in some of the company's equipment-related businesses and ongoing product line simplification (PLS) activities.
Automotive OEM organic revenue growth of 7 percent outpaced first quarter worldwide auto builds of 1 percent. Organic revenues increased 13 percent in Europe, 3 percent in North America and 14 percent in China. Operating margin of 25.0 percent increased 170 basis points.
Food Equipment's organic revenues increased 4 percent due to solid demand for equipment and service. Operating margin of 22.6 percent increased 400 basis points.
Every one of the Company's segments delivered strong operating margin improvement. Polymers & Fluids improved margin by 340 basis points, Test & Measurement and Electronics was up 250 basis points, and Welding, Construction Products and Specialty Products improved margin by more than 120 basis points.
The company is reducing its 2015 full-year EPS guidance by $0.15 to reflect current exchange rates. The updated EPS range is $5.00 to $5.20, an increase of 9 percent at the $5.10 midpoint. Organic revenue growth for the year is projected to be 1 to 2 percent, down slightly from the previous forecast due to a more challenging capital spending environment.
Operating margin is projected to exceed 21 percent, and the Company expects stronger margin performance to offset modestly lower revenue expectations. For the second quarter 2015, the Company is expecting EPS to be in a range of $1.22 to $1.30. Organic revenue growth for the second quarter is forecast to be 1 to 2 percent. ■