What changed in Illinois Tool Works's 2024 10-K compared to 2023?

Across the narrative sections we track, Illinois Tool Works (ITW) added 223 paragraphs, removed 210, and edited 175 between the 2023 and 2024 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+152/−143), Item 1. Business (+35/−33), Item 1A. Risk Factors (+16/−16).

Did Illinois Tool Works add new Risk Factors in the 2024 10-K?

Yes — Item 1A Risk Factors shows 16 new/edited paragraphs and 16 removed paragraphs versus the 2023 10-K.

What changed in Illinois Tool Works's MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 152 new/edited paragraphs and 143 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did Illinois Tool Works update its Cybersecurity disclosure (Item 1C) in 2024?

Item 1C Cybersecurity has 7 paragraph-level changes between the 2023 and 2024 filings.

Where does this ITW 10-K diff come from?

The source filings are Illinois Tool Works's official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Illinois Tool Works's 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of Illinois Tool Works's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+223 added−210 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-09)

Top changes in Illinois Tool Works's 2024 10-K

223 paragraphs added · 210 removed · 175 edited across 8 sections

Item 7. Management's Discussion & Analysis+152 / −143 · 116 edited
Item 1. Business+35 / −33 · 26 edited
Item 1A. Risk Factors+16 / −16 · 15 edited
Item 1C. Cybersecurity+7 / −6 · 6 edited
Item 5. Market for Registrant's Common Equity+6 / −6 · 6 edited

Item 1. Business

Business — how the company describes what it does

26 edited+9 added−7 removed53 unchanged

2023 filing

2024 filing

Biggest changeGuilherme Silva 48 Executive Vice President 2024 Vice President/General Manager, polymers & fluids businesses, 2016-2020; Group President, polymers & fluids businesses, 2020-2021; Group President, test & measurement and electronics businesses, 2021-2023. Sharon Szafranski 57 Executive Vice President 2020 Vice President/General Manager, test & measurement and electronics businesses, 2016-2019; Group President, test & measurement and electronics businesses, 2019. Michael R.

Biggest changeSchott 51 Senior Vice President, General Counsel & Secretary 2021 Deputy General Counsel & Assistant Secretary, Caterpillar, Inc., 2019-2021. Guilherme Silva 49 Executive Vice President 2024 Group President, polymers & fluids businesses, 2020-2021; Group President, test & measurement and electronics businesses, 2021-2023. Sharon A. Szafranski 58 Executive Vice President 2020 Mark A.

Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, energy, automotive original equipment manufacturers and tiers, industrial capital goods and consumer durables markets.

Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, automotive original equipment manufacturers and tiers, energy, industrial capital goods and consumer durables markets.

Specialty Products — This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. This segment primarily serves the food and beverage, consumer durables, general industrial, industrial capital goods, airlines and printing and publishing markets.

Specialty Products — This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. This segment primarily serves the food and beverage, consumer durables, general industrial, airlines, industrial capital goods and printing and publishing markets.

Available Information Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 9 are available free of charge through the Company's website ( www.itw.com ), as soon as reasonably practicable after electronically filing with or otherwise furnishing such information to the Securities and Exchange Commission ("the SEC").

Available Information Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the Company's website ( www.itw.com ), as soon as reasonably practicable after electronically filing with or otherwise furnishing such information to the Securities and Exchange Commission (the "SEC").

Any additional 7 measures to maintain compliance are not expected to materially affect the Company's capital expenditures (including expenditures for environmental control facilities), competitive position, financial position or results of operations. Various legislative and administrative regulations applicable to the Company in the matters noted above have become effective or are under consideration in many parts of the world.

Any additional measures to maintain compliance are not expected to materially affect the Company's capital expenditures (including expenditures for environmental control facilities), competitive position, financial position or results of operations. Various legislative and administrative regulations applicable to the Company in the matters noted above have become effective or are under consideration in many parts of the world.

Outside the U.S., employees in certain countries are represented by an employee representative organization, such as a union, works council or employee association. The Company considers its employee relations to be excellent. 8 Information About Our Executive Officers The executive officers of the Company serve at the discretion of the Board of Directors.

Outside the U.S., employees in certain countries are represented by an employee representative organization, such as a union, works council or employee association. The Company considers its employee relations to be excellent. Information About Our Executive Officers The executive officers of the Company serve at the discretion of the Board of Directors.

ITW now has 84 scaled-up divisions with significantly enhanced focus on growth investments, core customers and products, and customer-back innovation. • The Strategic Sourcing initiative established sourcing as a core strategic and operational capability at ITW, delivering an average of one percent reduction in spend each year since 2013 and continues to be a key contributor to the Company's ongoing enterprise strategy. • With the initial portfolio realignment and scale-up work largely completed, the Company shifted its focus to preparing for and accelerating organic growth, reapplying the 80/20 Front-to-Back process to optimize its scaled-up divisions for growth, first, to build a foundation of operational excellence, and second, to identify the best opportunities to drive organic growth.

ITW now has 86 scaled-up divisions with significantly enhanced focus on growth investments, core customers and products, and customer-back innovation. • The Strategic Sourcing initiative established sourcing as a core strategic and operational capability at ITW, delivering an average of one percent reduction in spend each year since 2013 and continues to be a key contributor to the Company's ongoing enterprise strategy. • With the initial portfolio realignment and scale-up work largely completed, the Company shifted its focus to preparing for and accelerating organic growth, reapplying the 80/20 Front-to-Back process to optimize its scaled-up divisions for growth, first, to build a foundation of operational excellence, and second, to identify the best opportunities to drive organic growth.

In the U.S., the Company focuses on providing a comprehensive, competitive benefits package that supports the health and wellness, educational endeavors, community involvement and financial stability of its colleagues. Labor Relations . Less than three percent of the Company's U.S. employees are represented by a labor union.

In the U.S., the Company focuses on providing a comprehensive, competitive benefits package that supports the health and wellness, educational endeavors, community involvement and financial stability of its colleagues. 8 Labor Relations . Less than three percent of the Company's U.S. employees are represented by a labor union.

The Company's Code of Ethics for the CEO and key financial and accounting personnel is also posted on the Company's website.

The Company's Code of Ethics for the CEO and key financial and accounting personnel is also posted on the Company's website. 9

At the same time, these 80/20 initiatives can also result in restructuring initiatives that reduce costs and improve profitability and returns.

At the same time, these 80/20 initiatives may also result in restructuring initiatives that reduce costs and improve profitability and returns.

The Company strives to be a great employer through its demonstrated commitment to employee safety, its workplace culture, talent development, diversity and inclusion, compensation and benefits. Employee Safety . The safety and well-being of ITW's colleagues around the world is its top priority, in addition to being an essential component of our commitment to be a great employer.

The Company strives to be a great employer through its demonstrated commitment to employee safety, its workplace culture, talent development, the ITW employee experience, compensation and benefits. Employee Safety . The safety and well-being of ITW's colleagues around the world is its top priority, in addition to being an essential component of our commitment to be a great employer.

Diversity and Inclusion . ITW believes it is at its best when it brings together unique perspectives, experiences, and ideas. Rooted in ITW's core values of Respect and Integrity, the Company is committed to equal employment opportunity, fair treatment and creating diverse and inclusive workplaces where all ITW colleagues can perform to their full potential.

The ITW Employee Experience . ITW believes it is at its best when it brings together unique perspectives, experiences, and ideas. Rooted in ITW's core values of Respect and Integrity, the Company is committed to equal employment opportunity, fair treatment and creating inclusive workplaces where all ITW colleagues can perform to their full potential.

Set forth below is information regarding the principal occupations and employment and business experience over the past five years for each executive officer. Unless otherwise stated, employment is by the Company. Executive Officers of the Company as of February 9, 2024 were as follows: Name Age Present Position First Year in Present Position Other Positions Held During 2019-2023 Christopher A.

Set forth below is information regarding the principal occupations and employment and business experience over the past five years for each executive officer. Unless otherwise stated, employment is by the Company. Executive Officers of the Company as of February 14, 2025 were as follows: Name Age Present Position First Year in Present Position Other Positions Held During 2020-2024 Christopher A.

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately 19,600 granted and pending patents; 4 • ITW's Decentralized, Entrepreneurial Culture enables ITW businesses to be fast, focused, and responsive.

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately 20,900 granted and pending patents; 4 • ITW's Decentralized, Entrepreneurial Culture enables ITW businesses to be fast, focused, and responsive.

ITEM 1. Business General Illinois Tool Works Inc. (the "Company" or "ITW") was founded in 1912 and incorporated in 1915. The Company's ticker symbol is ITW. The Company is a global manufacturer of a diversified range of industrial products and equipment with 84 divisions in 51 countries. As of December 31, 2023, the Company employed approximately 45,000 people.

ITEM 1. Business General Illinois Tool Works Inc. (the "Company" or "ITW") was founded in 1912 and incorporated in 1915. The Company's ticker symbol is ITW. The Company is a global manufacturer of a diversified range of industrial products and equipment with 86 divisions in 51 countries. As of December 31, 2024, the Company employed approximately 44,000 people.

Financial Statements and Supplementary Data for further information regarding this acquisition. 80/20 Front-to-Back Practice Excellence ITW will continue to drive 80/20 Front-to-Back practice excellence in every division in the Company, every day.

Financial Statements and Supplementary Data for additional information regarding this transaction. 80/20 Front-to-Back Practice Excellence ITW will continue to drive 80/20 Front-to-Back practice excellence in every division in the Company, every day.

Refer to Item 1A. Risk Factors for further information. Human Capital Management As of December 31, 2023, the Company employed approximately 45,000 people, with approximately 17,000 people located in the United States and the remainder in multiple other countries where the Company's businesses operate.

Refer to Item 1A. Risk Factors for further information. Human Capital Management As of December 31, 2024, the Company employed approximately 44,000 people, with approximately 16,000 people located in the United States and the remainder in multiple other countries where the Company's businesses operate.

Intellectual Property The Company owns approximately 4,000 unexpired U.S. patents and 9,900 foreign patents covering articles, methods and machines. In addition, the Company has approximately 1,400 applications for patents pending in the U.S. Patent Office and 4,300 applications pending in foreign patent offices. There is no assurance that any of these patents will be issued.

Intellectual Property The Company owns approximately 4,100 unexpired U.S. patents and 10,500 unexpired foreign patents covering articles, methods and machines. In addition, the Company has approximately 1,500 applications for patents pending in the U.S. Patent Office and 4,800 applications pending in foreign patent offices. There is no assurance that any of these patents will be issued.

Operating revenue related to these divested businesses that was included in the Company's results of operations for the twelve months ended December 31, 2022 and 2021 was $106 million and $115 million, respectively. In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment.

Operating revenue related to these divested businesses that was included in the Company's results of operations for the twelve months ended December 31, 2022 was $106 million. In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment. This business was presented as held for sale beginning in the fourth quarter of 2022.

ITW is committed to attracting the best talent and enhancing the diversity of its global leadership teams. ITW drives progress through a comprehensive enterprise Diversity and Inclusion Framework, which focuses on; (i) leadership commitment and accountability; (ii) attracting and retaining global, diverse talent; (iii) creating inclusive workplaces; and (iv) striving to be a great employer. Compensation and Benefits .

ITW drives progress through a comprehensive enterprise talent management strategy, which focuses on: (i) leadership commitment and accountability; (ii) attracting and retaining great ITW talent; (iii) creating inclusive workplaces; and (iv) striving to be a great employer. Compensation and Benefits .

The Company routinely evaluates its portfolio to ensure it delivers sustainable differentiation and drives consistent long-term performance. This includes both implementing portfolio refinements and assessing selective high-quality acquisitions to supplement ITW's long-term growth potential. The Company previously communicated its intent to explore options, including potential divestitures, for certain businesses with annual revenues totaling up to $1.0 billion.

Operating revenue related to this business that was included in the Company's results of operations was $9 million, $37 million and $35 million for the twelve months ended December 31, 2023, 2022 and 2021, respectively. Refer to Note 4. Divestitures in Item 8. Financial Statements and Supplementary Data for further information regarding the Company's divestitures.

This business was sold on April 3, 2023, with no significant gain or loss upon sale. Operating revenue related to this business that was included in the Company's results of operations was $9 million and $37 million for the twelve months ended December 31, 2023 and 2022, respectively. Refer to Note 3. Divestitures in Item 8.

Some of the Company's more significant trademarks include ITW, which is also used in conjunction with the trademarks of many of the Company's businesses; Deltar and Shakeproof in the Automotive OEM segment; Hobart in the Food Equipment segment; Instron and MTS in the Test & Measurement and Electronics segment; Miller in the Welding segment; Rain-X and Permatex in the Polymers & Fluids segment; Paslode in the Construction Products segment; and Hi-Cone in the Specialty Products segment. 7 Government Regulations The Company believes that its businesses and operations, including its manufacturing plants and equipment, are in substantial compliance with all applicable government laws and regulations, including those related to environmental, consumer protection, international trade, labor and employment, human rights, tax, anti-bribery and competition matters.

The Great ITW Leader Framework defines leadership capabilities and attributes to help colleagues to reach their full potential as leaders. Great ITW Leaders are expected to be experts in the practice of the ITW Business Model, make great strategic choices, deliver great results, be great talent managers and provide strong leadership.

The Great ITW Leader Framework defines leadership capabilities and attributes to help colleagues to reach their full potential as leaders.

Javier Gracia Carbonell 51 Executive Vice President 2022 Vice President/General Manager, construction businesses, 2017-2020; Group President, construction businesses, 2020-2021. Patricia A. Hartzell 47 Executive Vice President 2022 Vice President/General Manager, test & measurement and electronics businesses, 2017-2020; Group President, test & measurement and electronics businesses, 2020-2021. Michael M. Larsen 55 Senior Vice President & Chief Financial Officer 2013 Mary K.

Hartzell 48 Executive Vice President 2022 Group President, test & measurement and electronics businesses, 2020-2021. Michael M. Larsen 56 Senior Vice President & Chief Financial Officer 2013 Mary K. Lawler 59 Senior Vice President & Chief Human Resources Officer 2014 Randall J. Scheuneman 57 Vice President & Chief Accounting Officer 2009 Jennifer K.

O'Herlihy 60 President & Chief Executive Officer 2024 Vice Chairman 2015-2023. E. Scott Santi (1) 62 Chairman 2024 Chairman & Chief Executive Officer 2015-2023. Axel Beck 58 Executive Vice President 2020 Group President, food equipment businesses, 2016-2020. Kenneth Escoe 48 Executive Vice President 2020 Vice President/General Manager, specialty products businesses, 2016-2019; Group President, specialty products businesses, 2019.

O'Herlihy 61 President & Chief Executive Officer 2024 Vice Chairman 2015-2023. Axel R.J. Beck 59 Executive Vice President 2020 Group President, food equipment businesses, 2016-2020. T. Kenneth Escoe 49 Executive Vice President 2020 Javier Gracia Carbonell 52 Executive Vice President 2022 Group President, construction businesses, 2020-2021. Patricia A.

Removed

In the fourth quarter of 2019, the Company completed the divestitures of three businesses. Due to the COVID-19 pandemic, the Company chose to defer any significant divestiture activity in 2020 and 2021. The Company reinitiated the divestiture process in 2022 for certain businesses with combined annual revenues of approximately $0.5 billion, subject to approval by the Company's Board of Directors.

Added

Financial Statements and Supplementary Data for further information regarding the Company's divestitures. On January 2, 2024, the Company completed the acquisition of one business in the Test & Measurement and Electronics segment for $57 million, net of cash acquired.

Removed

This business was presented as held for sale in the Statement of Financial Position as of December 31, 2022 and had assets and liabilities held for sale of $8 million and $1 million, respectively. This business was sold on April 3, 2023, with no significant gain or loss upon sale.

Added

On April 1, 2024, the Company completed the acquisition of one business in the Test & Measurement and Electronics segment for $59 million, net of cash acquired. The purchase price for both acquisitions was subject to certain closing adjustments. These acquisitions were not material, individually or in the aggregate, to the Company’s results of operations, financial position or cash flows.

Removed

As the Company continues to make progress toward its full potential, the Company will explore opportunities to reinforce or further expand the long-term organic growth potential of ITW through the addition of selective high-quality acquisitions, such as the acquisition of the Test & Simulation business of MTS Systems Corporation ("MTS") from Amphenol Corporation on December 1, 2021.

Added

Refer to Note 2. Acquisitions in Item 8. Financial Statements and Supplementary Data for further information regarding the Company's acquisitions. On August 5, 2024, the Company entered into a purchase agreement with affiliates of Clayton, Dubilier & Rice, LLC ("CD&R") for the sale of the Company’s noncontrolling equity interest in Wilsonart International Holdings LLC ("Wilsonart") for $398 million.

Removed

The operating results of the MTS Test & Simulation business were reported within the Company's Test & Measurement and Electronics segment. Refer to Note 3. Acquisitions in Item 8.

Added

The transaction closed immediately after the execution of the purchase agreement. Proceeds from the transaction, net of transaction costs, were $395 million, resulting in a pre-tax gain of $363 million which was included in Other income (expense) in the Statement of Income.

Removed

Government Regulations The Company believes that its businesses and operations, including its manufacturing plants and equipment, are in substantial compliance with all applicable government laws and regulations, including those related to environmental, consumer protection, international trade, labor and employment, human rights, tax, anti-bribery and competition matters.

Added

Income taxes on the gain were more than offset by a discrete tax benefit of $107 million in the third quarter of 2024 related to the utilization of capital loss carryforwards upon the sale of Wilsonart.

Removed

Lawler 58 Senior Vice President & Chief Human Resources Officer 2014 Randall J. Scheuneman 56 Vice President & Chief Accounting Officer 2009 Jennifer K. Schott 50 Senior Vice President, General Counsel & Secretary 2021 Vice President, Assistant General Counsel & Assistant Secretary, Discover Financial Services, 2016-2019; Deputy General Counsel & Assistant Secretary, Caterpillar, Inc., 2019-2021.

Added

The sale of the Company’s equity interest in Wilsonart is not expected to have a material impact on the Company’s financial results in subsequent periods. Refer to Note 5. Other Income (Expense) and Note 6. Income Taxes in Item 8.

Removed

Zimmerman 63 Executive Vice President 2015 (1) Mr. Santi will remain Chairman through March 1, 2024, after which he will become Non-Executive Chairman and will no longer be an employee of the Company.

Added

Great ITW Leaders are expected to make great strategic choices to drive above-market organic growth, be an expert in the practice of customer-back innovation and the ITW Business Model, deliver great results, be great talent managers and lead through ITW's culture and values.

Added

Consistent with these values, ITW is also committed to attracting the best talent for its global leadership teams, valuing the perspectives of every ITW colleague, and reflecting the communities where we live and work.

Added

Thibeault 41 Executive Vice President 2025 Vice President/General Manager, test & measurement and electronics businesses, 2019-2022; Group President, test & measurement and electronics businesses, 2022-2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

15 edited+1 added−1 removed51 unchanged

2023 filing

2024 filing

Biggest changeA number of factors may result in impairments to goodwill and other intangible assets, including significant negative industry or economic trends, disruptions to our business, increased competition and significant changes in the use of the assets. Impairment charges could adversely affect the Company's financial condition or results of operations in the periods recognized.

Biggest changeThe Company has recorded significant goodwill and other identifiable intangible assets on its balance sheet as a result of acquisitions. A number of factors may result in impairments to goodwill and other intangible assets, including significant negative industry or economic trends, disruptions to our business, increased competition and significant changes in the use of the assets.

Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "intend," "may," "strategy," "prospects," "estimate," "will," "should," "could," "project," "target," "anticipate," "guidance," "forecast," and other similar words, and may include, without limitation, statements regarding the duration and potential effects of global supply chain challenges, related government actions and the Company's strategy in response thereto on the Company's business, future financial and operating performance, free cash flow, economic and regulatory conditions in various geographic regions, the impact of foreign currency fluctuations, the timing and amount of benefits from the Company's enterprise strategy initiatives, the timing and amount of dividends and share repurchases, the protection of the Company's intellectual property, the likelihood of future goodwill or intangible asset impairment charges, the impact of adopting new accounting pronouncements, the adequacy of internally generated funds and credit facilities to service debt and finance the Company's capital allocation priorities, the sufficiency of U.S. generated cash to fund cash requirements in the U.S., the cost and availability of additional financing, the availability of raw materials and energy and the impact of raw material cost inflation, enterprise initiatives, the Company's portion of future benefit payments related to pension and postretirement benefits, the Company's information technology infrastructure, potential acquisitions and divestitures and the expected performance of acquired businesses and impact of divested businesses, the impact of U.S. and global tax legislation and the estimated timing and amount related to the resolution of tax matters, the cost of compliance with environmental regulations, the impact of failure of the Company's employees to comply with applicable laws and regulations, and the outcome of outstanding legal proceedings.

Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "intend," "may," "strategy," "prospects," "estimate," "will," "should," "could," "project," "target," "anticipate," "guidance," "forecast," and other similar words, and may include, without limitation, statements regarding the duration and potential effects of global supply chain challenges, related government actions and the Company's strategy in response thereto on the Company's business, future financial and operating performance, free cash flow, economic and regulatory conditions in various geographic regions, the impact of foreign currency fluctuations, the timing and amount of benefits from the Company's enterprise strategy initiatives, the timing and amount of dividends and share repurchases, the protection of the Company's intellectual property, the likelihood of future goodwill or intangible asset impairment charges, the impact of adopting new accounting pronouncements, the adequacy of internally generated funds and credit facilities to service debt and finance the Company's capital allocation priorities, the sufficiency of U.S. generated cash to fund cash requirements in the U.S., the cost and availability of additional financing, the availability of raw materials and energy and the impact of raw material cost inflation, enterprise initiatives, the Company's portion of future benefit payments related to pension and postretirement benefits, the Company's information technology infrastructure, potential acquisitions and divestitures and the expected performance of acquired businesses and impact of divested businesses, the impact of U.S. and global tax legislation and the estimated timing and amount related to the resolution of tax matters, the cost of compliance with environmental regulations, the impact of interest rate changes, the impact of failure of the Company's employees to comply with applicable laws and regulations, and the outcome of outstanding legal proceedings.

If the Company is unable to successfully manage the risks associated with managing and expanding its international businesses, the Company's business, results of operations or financial condition may be adversely impacted. A significant fluctuation between the U.S. Dollar and other currencies could adversely impact the Company's operating income. Although the Company's financial results are reported in U.S.

If the Company is unable to successfully manage the risks associated with managing and expanding its international businesses, the Company's business, results of operations or financial condition may be adversely impacted. 10 A significant fluctuation between the U.S. Dollar and other currencies could adversely impact the Company's operating income. Although the Company's financial results are reported in U.S.

ITW is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise, except as required by law. 14 ITW practices fair disclosure for all interested parties.

ITW is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise, except as required by law. ITW practices fair disclosure for all interested parties.

These risks are not all inclusive and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Any forward-looking statements made by ITW speak only as of the date on which they are made.

These risks are not all inclusive and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 14 Any forward-looking statements made by ITW speak only as of the date on which they are made.

The Company may incur fines or penalties, damage to its reputation or other adverse consequences if its employees, agents or business partners violate anti-bribery, competition, export and import, trade sanctions, data privacy, environmental, human rights or other laws.

Slower economic growth, financial market instability, supply chain disruptions, natural disasters, public health crises (such as the COVID-19 pandemic), labor market challenges, rapid inflation, armed conflicts (such as Russia's ongoing invasion of Ukraine), government deficit reduction, sequestration and other austerity measures impacting the markets the Company serves can adversely affect the Company's businesses by reducing demand for the Company's products and services, limiting financing available to the Company's customers, causing production delays, increasing order cancellations and the difficulty in collecting accounts receivable, increasing price competition, or increasing the risk that counterparties to the Company's contractual arrangements will become insolvent or otherwise unable to fulfill their obligations.

Slower economic growth, financial market instability, supply chain disruptions, natural disasters, public health crises (such as the COVID-19 pandemic), labor market challenges, rapid inflation, armed conflicts (such as the Russia and Ukraine conflict), government deficit reduction, sequestration and other austerity measures impacting the markets the Company serves can adversely affect the Company's businesses by reducing demand for the Company's products and services, limiting financing available to the Company's customers, causing production delays, increasing order cancellations and the difficulty in collecting accounts receivable, increasing price competition, or increasing the risk that counterparties to the Company's contractual arrangements will become insolvent or otherwise unable to fulfill their obligations.

The risks inherent in the Company's global operations include: • fluctuation in currency exchange rates; • limitations on ownership or participation in local enterprises; • price controls, exchange controls and limitations on repatriation of earnings; • supply chain disruptions, including transportation delays and disruptions; • political, social and economic instability and disruptions, including political unrest and armed conflicts; • acts of terrorism; • the impact of widespread public health crises and pandemics; • government embargoes, sanctions or foreign trade restrictions; • the imposition of duties and tariffs and other trade barriers and retaliatory countermeasures; • government actions impacting international trade agreements, including the EU-UK Trade and Cooperation Agreement; • import and export controls; • social and labor unrest and current and changing regulatory environments; • the potential for expropriation or nationalization of enterprises; • difficulties in staffing and managing multi-national operations; • multiple and potentially conflicting laws, regulations and policies that are subject to change; • limitations on its ability to enforce legal rights and remedies; and • potentially adverse tax consequences. 10 The global geopolitical and trade environment has resulted in raw material inflation and potential for increased escalation of domestic and international tariffs and retaliatory trade policies.

In particular, inflation, changes in trade policies, the imposition of duties and tariffs, potential retaliatory countermeasures, public health crises and pandemics (such as the COVID-19 pandemic, which adversely impacted the price and availability of raw materials), threatened or actual military conflicts (such as Russia's ongoing invasion of Ukraine) and severe weather events could adversely impact the price or availability of raw materials.

In particular, inflation, changes in trade policies, the imposition of duties and tariffs, potential retaliatory countermeasures, public health crises and pandemics (such as the COVID-19 pandemic, which adversely impacted the price and availability of raw materials), threatened or actual military conflicts (such as the Russia and Ukraine conflict) and severe weather events could adversely impact the price or availability of raw materials.

The Company is subject to complex U.S., foreign and other local laws and regulations that are applicable to its operations, such as anti-bribery and anti-corruption, competition, export and import, trade sanctions, data privacy, environmental and human rights laws.

Difficulties or delays in research, development, production or commercialization of new products and services may reduce future revenues and adversely affect the Company's competitive position. If the Company is unable to create sustainable product differentiation, its organic growth may be adversely affected.

Difficulties or delays in research, development, production or commercialization of new products and services or in the adoption of technological change, such as the use of artificial intelligence and machine learning, may reduce future revenues and adversely affect the Company's competitive position. If the Company is unable to create sustainable product differentiation, its organic growth may be adversely affected.

Prices for raw materials necessary for production have fluctuated significantly in the past and the Company has experienced upward pricing pressure on raw materials such as steel, resins and chemicals. Significant price increases could adversely affect the Company's results of operations and operating margins.

Prices for raw materials have fluctuated significantly in the past and the Company has experienced upward pricing pressure on specialty materials such as high labor-content fabrications. Significant price increases could adversely affect the Company's results of operations and operating margins.

Raw material price increases and supply shortages could adversely affect results. The supply of raw materials to the Company and to its component parts suppliers could be interrupted for a variety of reasons, including availability and pricing.

Impairment charges could adversely affect the Company's financial condition or results of operations in the periods recognized. Raw material price increases and supply shortages could adversely affect results. The supply of raw materials to the Company and to its component parts suppliers could be interrupted for a variety of reasons, including availability and pricing.

The Company has engaged in various acquisitions in the past, such as the acquisition of the MTS Test & Simulation business in December 2021, and could choose to acquire additional businesses in the future.

The Company has engaged in various acquisitions in the past and could choose to acquire additional businesses in the future.

Minor security breaches have occurred from time to time and are expected to occur in the future.

The risk and severity of cybersecurity attacks could increase as artificial intelligence is used by threat actors to identify vulnerabilities and conduct increasingly sophisticated attacks. Minor security breaches have occurred from time to time and are expected to occur in the future.

Removed

The Company has recorded significant goodwill and other identifiable intangible assets on its balance sheet as a result of acquisitions, including the acquisition of the MTS Test & Simulation business in December 2021.

Added

The global geopolitical and trade environment has resulted in raw material inflation and potential for increased escalation of domestic and international tariffs and retaliatory trade policies.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−0 removed6 unchanged

2023 filing

2024 filing

Biggest changeEach of the Company's divisions has a Division Cyber Incident Response Team and protocols in place to communicate cybersecurity incidents to a central Cyber Incident Response Team. The Cyber Incident Response Team is led by the Chief Information Security Officer and is responsible for the initial assessment of cybersecurity incidents and oversight of any incident response.

Biggest changeEach of the Company's divisions has a Division Cyber Incident Response Team and protocols in place to communicate cybersecurity incidents to a central Cyber Incident Response Team.

Cybersecurity risk management is part of the Company's global enterprise risk management program. In order to manage the risks associated with cybersecurity threats, the Company has implemented a robust risk-based cybersecurity program consisting of processes, technologies, and controls to assess, identify and manage material risks from cybersecurity threats.

Cybersecurity risk management is part of the Company's global enterprise risk management program. In order to manage the risks associated with cybersecurity threats, the Company has implemented a risk-based cybersecurity program consisting of processes, technologies, and controls to assess, identify and manage material risks from cybersecurity threats.

Additionally, the Audit Committee of the Board of Directors 15 receives quarterly cybersecurity reports from senior management which cover any identified cybersecurity incidents, results of third party vulnerability testing, and key developments in policies and practices during the quarter.

Additionally, the Audit Committee of the Board of Directors receives quarterly cybersecurity reports from senior management which cover any identified cybersecurity incidents, results of third party vulnerability testing, and key developments in policies and practices during the quarter.

These activities include the following, among others: • Annual cybersecurity training; • Quarterly phish simulation testing; • Ongoing response planning and tabletop exercises; • Network and endpoint monitoring; • Vulnerability management and testing; and • Backup and recovery testing.

These activities include the following, among others: • Annual cybersecurity training; • Quarterly phish simulation testing; • Ongoing response planning and tabletop exercises; • Network/endpoint protection, monitoring and response; • Vulnerability management and • Backup and recovery testing.

While the Company's information systems are exposed to cybersecurity threats and risks, the Company has not experienced any material cybersecurity incidents during 2023, 2022 or 2021, and any costs or operational impacts related to cybersecurity incidents were immaterial during this period.

While the Company's information systems are exposed to cybersecurity threats and risks, the Company has not experienced any material cybersecurity incidents during 2024, 2023 or 2022, and any costs or operational impacts related to cybersecurity incidents were immaterial during this period.

On a quarterly basis, or sooner if appropriate, cybersecurity incidents are summarized and reported to the Cybersecurity Governance Committee comprised of senior executives.

The CISO reports directly to the Chief Information Officer ("CIO") and is responsible for leading the execution of the Company's cybersecurity strategy. On a quarterly basis, or sooner if appropriate, cybersecurity incidents are summarized and reported to the Cybersecurity Governance Committee comprised of senior executives.

Added

The Cyber Incident Response Team is led by the Chief Information Security Officer ("CISO") and is responsible for the initial assessment of cybersecurity incidents and oversight of any incident response. 15 The Company’s cybersecurity program is overseen by a dedicated global team of cybersecurity professionals, led by the CISO who brings over 20 years of information technology and cybersecurity leadership experience and holds the Certified Information Security Manager ("CISM") designation.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties Due to the Company's decentralized operating structure and global operations, the Company operates out of a large number of facilities worldwide, none of which are individually significant to the Company or its segments. As of December 31, 2023, the Company operated approximately 410 plants and office facilities, excluding regional sales offices and warehouse facilities.

Biggest changeITEM 2. Properties Due to the Company's decentralized operating structure and global operations, the Company operates out of a large number of facilities worldwide, none of which are individually significant to the Company or its segments. As of December 31, 2024, the Company operated approximately 410 plants and office facilities, excluding regional sales offices and warehouse facilities.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 16 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 17 Item 6 . [Reserved] 18 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShare repurchase activity under the Company's share repurchase programs for the fourth quarter of 2023 was as follows: In millions except per share amounts Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Value of Shares That May Yet Be Purchased Under Programs October 2023 0.6 $ 229.18 0.6 $ 5,227 November 2023 0.6 $ 235.76 0.6 $ 5,096 December 2023 0.4 $ 253.48 0.4 $ 4,990 Total 1.6 1.6

Biggest changeShare repurchase activity under the Company's share repurchase programs for the fourth quarter of 2024 was as follows: In millions except per share amounts Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Value of Shares That May Yet Be Purchased Under Programs October 2024 0.5 $ 258.91 0.5 $ 3,721 November 2024 0.5 $ 271.32 0.5 $ 3,597 December 2024 0.4 $ 269.58 0.4 $ 3,490 Total 1.4 1.4

The 2023 peer group consists of the following 17 public companies, consistent with the peer group included in the Company's Proxy Statement: 3M Company Ecolab Inc. Parker-Hannifin Corporation Caterpillar Inc. Emerson Electric Co. PPG Industries, Inc. Cummins Inc. Fortive Corporation Rockwell Automation, Inc. Deere & Company General Dynamics Corporation Stanley Black & Decker, Inc. Dover Corporation Honeywell International Inc.

The 2024 peer group consists of the following 17 public companies, consistent with the peer group included in the Company's Proxy Statement: 3M Company Ecolab Inc. Parker-Hannifin Corporation Caterpillar Inc. Emerson Electric Co. PPG Industries, Inc. Cummins Inc. Fortive Corporation Rockwell Automation, Inc. Deere & Company General Dynamics Corporation Stanley Black & Decker, Inc. Dover Corporation Honeywell International Inc.

There were no changes in the Company's peer group in 2023. 17 Repurchases of Common Stock On August 3, 2018, the Company announced a stock repurchase program which provided for the repurchase of up to $3.0 billion of the Company's common stock over an open-ended period of time (the "2018 Program").

There were no changes in the Company's peer group in 2024. 17 Repurchases of Common Stock On August 3, 2018, the Company announced a stock repurchase program which provided for the repurchase of up to $3.0 billion of the Company's common stock over an open-ended period of time (the "2018 Program").

On August 4, 2023, the Company announced a new stock repurchase program which provides for the repurchase of up to an additional $5.0 billion of the Company's common stock over an open-ended period of time (the "2023 Program"). As of December 31, 2023, there were approximately $5.0 billion of authorized repurchases remaining under the 2023 Program.

On August 4, 2023, the Company announced a stock repurchase program which provides for the repurchase of up to an additional $5.0 billion of the Company's common stock over an open-ended period of time (the "2023 Program"). As of December 31, 2024, there were approximately $3.5 billion of authorized repurchases remaining under the 2023 Program.

ITEM 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Data — The Company's common stock is listed on the New York Stock Exchange under the trading symbol "ITW." There were approximately 4,484 holders of record of common stock as of January 31, 2024.

ITEM 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Data — The Company's common stock is listed on the New York Stock Exchange under the trading symbol "ITW." There were approximately 4,199 holders of record of common stock as of January 31, 2025.

This number does not include beneficial owners of the Company's securities held in the name of nominees. *Assumes $100 invested on December 31, 2018, including reinvestment of dividends. Fiscal years ended December 31. Copyright© 2024 Standard & Poor's, a division of S&P Global. All rights reserved.

This number does not include beneficial owners of the Company's securities held in the name of nominees. *Assumes $100 invested on December 31, 2019, including reinvestment of dividends. Fiscal years ended December 31. Copyright© 2025 Standard & Poor's, a division of S&P Global. All rights reserved.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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2024 filing

Biggest changeConsumables grew 1.3% and equipment decreased 0.4%. ◦ North American organic revenue decreased 0.2% primarily due to a decline in the commercial end markets, partially offset by growth in the industrial and aerospace end markets. 29 ◦ International organic revenue grew 2.7% primarily due to higher equipment demand in the general industrial and oil and gas end markets in Asia Pacific. • Operating margin of 31.8% increased 100 basis points primarily driven by favorable price/cost of 300 basis points and benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses and product mix. 2022 compared to 2021 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2022 2021 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,894 $ 1,650 14.7 % 16.0 % — % — % (1.3) % 14.7 % Operating income $ 583 $ 490 19.0 % 19.1 % — % 0.6 % (0.7) % 19.0 % Operating margin % 30.8 % 29.7 % 110 bps 80 bps — 10 bps 20 bps 110 bps • Operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation. • Organic revenue grew 16.0% as equipment increased 16.2% and consumables increased 15.8% primarily due to higher demand in the industrial end markets related to heavy equipment for agriculture, infrastructure and mining, and in the commercial end markets related to construction, light fabrication and farm and ranch customers. ◦ North American organic revenue grew 16.6% due to growth in the industrial and commercial end markets of 25.6% and 3.9%, respectively. ◦ International organic revenue grew 13.3% primarily due to higher equipment demand in the oil and gas end markets in Europe and Asia. • Operating margin of 30.8% increased 110 basis points primarily driven by positive operating leverage of 220 basis points and benefits from the Company's enterprise initiatives, partially offset by higher operating expenses, including employee-related expenses and freight costs, and unfavorable price/cost of 80 basis points.

Biggest changeProducts in this segment include: • arc welding equipment; and • metal arc welding consumables and related accessories. 29 The results of operations for the Welding segment for 2024, 2023 and 2022 were as follows: 2024 compared to 2023 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2024 2023 Inc (Dec) Organic Acquisition/ Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,851 $ 1,902 (2.7) % (2.4) % — % — % (0.3) % (2.7) % Operating income $ 597 $ 605 (1.3) % (1.3) % — % 0.2 % (0.2) % (1.3) % Operating margin % 32.3 % 31.8 % 50 bps 40 bps — 10 bps — 50 bps • Operating revenue decreased due to lower organic revenue and the unfavorable effect of foreign currency translation. • Organic revenue declined 2.4% as equipment and consumables decreased 2.1% and 3.0%, respectively. ◦ North American organic revenue decreased 3.3% as the industrial and commercial end markets declined 2.3% and 6.0%, respectively. ◦ International organic revenue grew 2.2% primarily due to higher equipment demand in the general industrial and oil and gas end markets in Europe and Asia Pacific. • Operating margin of 32.3% increased 50 basis points primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 50 basis points, partially offset by higher employee-related expenses and unfavorable operating leverage of 40 basis points. 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,902 $ 1,894 0.4 % 0.3 % — % — % 0.1 % 0.4 % Operating income $ 605 $ 583 3.7 % 3.4 % — % (0.1) % 0.4 % 3.7 % Operating margin % 31.8 % 30.8 % 100 bps 100 bps — — — 100 bps • Operating revenue grew due to higher organic revenue and the favorable effect of foreign currency translation. • Organic revenue increased 0.3%, which had a challenging comparable in the prior year of 16.0% growth.

Through the application of data driven insights generated by 80/20 practice, ITW focuses on its largest and best opportunities (the "80") and eliminates cost, complexity and distractions associated with the less 18 profitable opportunities (the "20"). 80/20 enables ITW businesses to consistently achieve world-class operational excellence in product availability, quality, and innovation, while generating superior financial performance; • Customer-back Innovation has fueled decades of profitable growth at ITW.

Through the application of data driven insights generated by 80/20 practice, ITW focuses on its 18 largest and best opportunities (the "80") and eliminates cost, complexity and distractions associated with the less profitable opportunities (the "20"). 80/20 enables ITW businesses to consistently achieve world-class operational excellence in product availability, quality, and innovation, while generating superior financial performance; • Customer-back Innovation has fueled decades of profitable growth at ITW.

Excluding the favorable impact of $0.60 per diluted share in 2022 related to the pre-tax divestiture gains of $197 million in the fourth quarter of 2022, or $188 million after-tax including the impact of the $32 million discrete tax benefit noted above, EPS increased 6.2%. • The Company repurchased approximately 6.4 million shares of its common stock in 2023 for approximately $1.5 billion. • The Company increased the quarterly dividend on common stock from $1.31 to $1.40 per share in 2023, or from $5.24 to $5.60 per share on an annualized basis.

Excluding the favorable impact of $0.60 per diluted share in 2022 related to the pre-tax divestiture gains of $197 million in the fourth quarter of 2022, or $188 million after-tax including the impact of the $32 million discrete tax benefit noted above, EPS increased 6.2%. 24 • The Company repurchased approximately 6.4 million shares of its common stock in 2023 for approximately $1.5 billion. • The Company increased the quarterly dividend on common stock from $1.31 to $1.40 per share in 2023, or from $5.24 to $5.60 per share on an annualized basis.

Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, automotive original equipment manufacturers and tiers, energy, industrial capital goods and consumer durables markets.

The 2023 effective tax rate benefited from a discrete income tax benefit of $20 million in the second quarter of 2023 related to amended 2021 U.S. taxes.

The 2022 effective tax rate benefited from discrete income tax benefits of $32 million in the fourth quarter of 2022 related to the utilization of capital loss carryforwards and $51 million in the second quarter of 2022 related to a decrease in unrecognized tax benefits resulting from the resolution of a U.S. tax audit.

During the fourth quarter of 2022, the Company entered into a $3.0 billion, five-year revolving credit facility with a termination date of October 21, 2027, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. No amounts were outstanding under the revolving credit facility as of December 31, 2023 or 2022.

Products in this segment include: • adhesives for industrial, construction and consumer purposes; • chemical fluids which clean or add lubrication to machines; • epoxy and resin-based coating products for industrial applications; • hand wipes and cleaners for industrial applications; • fluids, polymers and other supplies for auto aftermarket maintenance and appearance; • fillers and putties for auto body repair; and • polyester coatings and patch and repair products for the marine industry.

Products in this segment include: • adhesives for industrial, construction and consumer purposes; • chemical fluids which clean or add lubrication to machines; • epoxy and resin-based coating products for industrial applications; • hand wipes and cleaners for industrial applications; 30 • fluids, polymers and other supplies for auto aftermarket maintenance and appearance; • fillers and putties for auto body repair; and • polyester coatings and patch and repair products for the marine industry.

Organic revenue declined primarily due to a decrease in Europe and Asia Pacific. Product line simplification activities reduced organic revenue by 50 basis points. ◦ North American organic revenue decreased 0.2% primarily due to lower demand in the United States residential and commercial end markets of 0.2% and 0.1%, respectively.

Organic revenue declined primarily due to a decrease in Europe and Asia Pacific. Product line simplification activities reduced organic revenue by 50 basis points. 32 ◦ North American organic revenue decreased 0.2% primarily due to lower demand in the United States residential and commercial end markets of 0.2% and 0.1%, respectively.

On April 3, 2023, the Company completed the sale of a business. Operating revenue for this business that was included in the Company's results of operations for the years ended December 31, 2023 and 2022 was $9 million and $37 million, respectively. Refer to Note 4. Divestitures in Item 8.

Under the 2018 Program, the Company repurchased approximately 6.7 million shares of its common stock at an average price of $158.11 per share 35 during 2019, approximately 4.2 million shares of its common stock at an average price of $167.69 per share during 2020, approximately 4.4 million shares of its common stock at an average price of $227.29 per share during 2021 and approximately 1.2 million shares of its common stock at an average price of $216.62 per share during 2022.

Under the 2018 Program, the Company repurchased approximately 6.7 million shares of its common stock at an average price of $158.11 per share during 2019, approximately 4.2 million shares of its common stock at an average price of $167.69 per share during 2020, approximately 4.4 million shares of its common stock at an average price of $227.29 per share during 2021 and approximately 1.2 million shares of its common stock at an average price of $216.62 per share during 2022.

On October 3, 2022, the Company completed the sale of a business. Operating revenue for this business that was included in the Company's results of operations for the year ended December 31, 2022 was $76 million. Refer to Note 4. Divestitures in Item 8.

Additionally, for comparability, the Company also excluded the discrete tax benefits of $32 million in the fourth quarter of 2022 and $51 million in the second quarter of 2022 from net income and the effective tax rate for the year ended December 31, 2022.

Also, for comparability, the Company excluded the discrete tax benefits of $32 million in the fourth quarter of 2022 and $51 million in the second quarter of 2022 from net income and the effective tax rate for the year ended December 31, 2022.

Auto builds for the Detroit 3, where the Company has higher content, grew 1%. ◦ European organic revenue grew 12.5% compared to European auto builds which increased 13%. ◦ Asia Pacific organic revenue increased 21.4%.

Auto builds for the Detroit 3, where the Company has higher content, grew 1%. 26 ◦ European organic revenue grew 12.5% compared to European auto builds which increased 13%. ◦ Asia Pacific organic revenue increased 21.4%.

For comparability, the Company also excluded the discrete tax benefit of $20 million in the second quarter of 2023 from net income and the effective tax rate for the year ended December 31, 2023.

Additionally, for comparability, the Company also excluded the discrete tax benefit of $20 million in the second quarter of 2023 from net income and the effective tax rate for the year ended December 31, 2023.

Important assumptions in determining pension and postretirement expense and obligations are the discount rate, the expected long-term return on plan assets, life expectancy, and health care cost trend rates. Future changes in any of these assumptions could materially affect the amounts recorded related to the Company's pension and other postretirement benefit plans. See Note 12.

See Note 12. Pension and Other Postretirement Benefits in Item 8. Financial Statements and Supplementary Data for information on the Company's pension and other postretirement benefit plans and related assumptions. The expected long-term return on plan assets is based on historical and expected long-term returns for similar investment allocations among asset classes.

See Note 11. Pension and Other Postretirement Benefits in Item 8. Financial Statements and Supplementary Data for information on the Company's pension and other postretirement benefit plans and related assumptions. The expected long-term return on plan assets is based on historical and expected long-term returns for similar investment allocations among asset classes.

On December 1, 2022, the Company completed the sale of a business. Operating revenue for this business that was included in the Company's results of operations for the year ended December 31, 2022 was $30 million. Refer to Note 4. Divestitures in Item 8.

As of December 31, 2023, there were approximately $5.0 billion of authorized repurchases remaining under the 2023 program. 36 After-tax Return on Average Invested Capital The Company uses after-tax return on average invested capital ("After-tax ROIC") to measure the effectiveness of its operations' use of invested capital to generate profits.

As of December 31, 2024, there were approximately $3.5 billion of authorized repurchases remaining under the 2023 Program. 36 After-tax Return on Average Invested Capital The Company uses after-tax return on average invested capital ("After-tax ROIC") to measure the effectiveness of its operations' use of invested capital to generate profits.

Operating Revenue Refer to the "Results of Operations for Total Company" and the "Results of Operations by Segment" sections for discussion of changes in operating revenue for 2023 compared to 2022 and 2022 compared to 2021.

Operating revenue related to this business that was included in the Company's results of operations for the twelve months ended December 31, 2023 and 2022 was $9 million and $37 million, respectively. Refer to Note 3. Divestitures in Item 8. Financial Statements and Supplementary Data for further information regarding the Company's divestitures.

Refer to the "Results of Operations for Total Company" and the "Results of Operation by Segment" sections for additional discussion of operating results for 2023 compared to 2022 and 2022 compared to 2021.

Refer to the "Results of Operations for Total Company" and the "Results of Operation by Segment" sections for additional discussion of operating results for 2024 compared to 2023 and 2023 compared to 2022.

At the same time, these 80/20 initiatives can also result in restructuring initiatives that reduce costs and improve profitability and returns.

At the same time, these 80/20 initiatives may also result in restructuring initiatives that reduce costs and improve profitability and returns.

Income taxes on the gains were mostly offset by the utilization of capital loss carryforwards of $32 million. Operating revenue related to these divested businesses that was included in the Company's results of operations for the twelve months ended December 31, 2022 and 2021 was $106 million and $115 million, respectively.

In response, the United States and several other countries imposed economic and other sanctions on Russia. The Company has four immaterial Russian subsidiaries with total assets of approximately $22 million as of December 31, 2023. The revenue for these four subsidiaries for the twelve months ended December 31, 2023 was approximately $26 million.

In response, the United States and several other countries imposed economic and other sanctions on Russia. The Company has four immaterial Russian subsidiaries with total assets of approximately $22 million as of December 31, 2024. The revenue for these four subsidiaries for the twelve months ended December 31, 2024 was approximately $24 million.

There are inherent uncertainties related to these factors and management's judgment in applying them in the impairment tests of goodwill and other intangible assets. As of December 31, 2023, the Company had total goodwill and intangible assets of approximately $5.6 billion allocated to its reporting units.

There are inherent uncertainties related to these factors and management's judgment in applying them in the impairment tests of goodwill and other intangible assets. As of December 31, 2024, the Company had total goodwill and intangible assets of approximately $5.4 billion allocated to its reporting units.

Instead, the Company's corporate management collects data on several key measurements: operating revenue, operating income, operating margin, overhead costs, number of months on hand in inventory, days sales outstanding in accounts receivable, past due receivables and return on invested capital.

Instead, the Company's corporate management collects data on several key measurements: operating revenue, operating income, operating margin, variable cost of revenue, overhead expenses, number of months on hand in inventory, days sales outstanding in accounts receivable, past due receivables and return on invested capital.

The amount of goodwill and other intangible assets allocated to individual reporting units ranges from approximately $215 million to $1.4 billion , with the average amount equal to $556 million . In all cases, the fair value of the individual reporting unit significantly exceeds its carrying value.

The amount of goodwill and other intangible assets allocated to individual reporting units ranges from approximately $232 million to $1.4 billion , with the average amount equal to $542 million . In all cases, the fair value of the individual reporting unit significantly exceeds its carrying value.

For the U.S. primary pension plan, a 25 basis point decrease in the expected return on plan assets would increase the annual pension expense by approximately $4 million .

For the U.S. primary pension plan, a 25 basis point decrease in the expected return on plan assets would increase the annual pension expense by approximately $3 million . 42

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately 19,600 granted and pending patents; • ITW's Decentralized, Entrepreneurial Culture enables ITW businesses to be fast, focused, and responsive.

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately 20,900 granted and pending patents; • ITW's Decentralized, Entrepreneurial Culture enables ITW businesses to be fast, focused, and responsive.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION Illinois Tool Works Inc. (the "Company" or "ITW") is a global manufacturer of a diversified range of industrial products and equipment with 84 divisions in 51 countries. As of December 31, 2023, the Company employed approximately 45,000 people.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION Illinois Tool Works Inc. (the "Company" or "ITW") is a global manufacturer of a diversified range of industrial products and equipment with 86 divisions in 51 countries. As of December 31, 2024, the Company employed approximately 44,000 people.

In a challenging and dynamic environment, the Company delivered strong financial results in 2023 primarily due to the continued successful execution of enterprise initiatives and continued focus on the highly differentiated ITW Business Model.

In a challenging and dynamic environment, the Company delivered solid financial results in 2024 primarily due to the continued successful execution of enterprise initiatives and continued focus on the highly differentiated ITW Business Model.

In the ordinary course of business, the Company also had approximately $231 million outstanding in guarantees, letters of credit and other similar arrangements with financial institutions as of December 31, 2023. Refer to Note 11. Debt in Item 8. Financial Statements and Supplementary Data for additional details regarding the Company's outstanding debt obligations.

In the ordinary course of business, the Company also had approximately $250 million outstanding in guarantees, letters of credit and other similar arrangements with financial institutions as of December 31, 2024. Refer to Note 10. Debt in Item 8. Financial Statements and Supplementary Data for additional details regarding the Company's outstanding debt obligations.

Financial Statements and Supplementary Data for further information regarding this acquisition. 20 80/20 Front-to-Back Practice Excellence ITW will continue to drive 80/20 Front-to-Back practice excellence in every division in the Company, every day.

Financial Statements and Supplementary Data for additional information regarding this transaction. 20 80/20 Front-to-Back Practice Excellence ITW will continue to drive 80/20 Front-to-Back practice excellence in every division in the Company, every day.

RESULTS OF OPERATIONS FOR TOTAL COMPANY The Company's consolidated results of operations for 2023, 2022 and 2021 were as follows: 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/ Divestiture Restructuring Foreign Currency Total Operating revenue $ 16,107 $ 15,932 1.1 % 2.0 % (0.8) % — % (0.1) % 1.1 % Operating income $ 4,040 $ 3,790 6.6 % 7.6 % (0.5) % (0.2) % (0.3) % 6.6 % Operating margin % 25.1 % 23.8 % 130 bps 130 bps 10 bps (10) bps — 130 bps • Operating revenue increased due to higher organic revenue, partially offset by the impact of divestiture activity in the second quarter of 2023 and the fourth quarter of 2022, and the unfavorable effect of foreign currency translation. • Organic revenue increased 2.0% as growth in five segments was partially offset by a decline in the Specialty Products and Construction Products segments.

Total cash dividends of approximately $1.7 billion were paid in 2024. 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/ Divestiture Restructuring Foreign Currency Total Operating revenue $ 16,107 $ 15,932 1.1 % 2.0 % (0.8) % — % (0.1) % 1.1 % Operating income $ 4,040 $ 3,790 6.6 % 7.6 % (0.5) % (0.2) % (0.3) % 6.6 % Operating margin % 25.1 % 23.8 % 130 bps 130 bps 10 bps (10) bps — 130 bps • Operating revenue increased due to higher organic revenue, partially offset by the impact of divestiture activity in the second quarter of 2023 and the fourth quarter of 2022, and the unfavorable effect of foreign currency translation. • Organic revenue increased 2.0% as growth in five segments was partially offset by a decline in the Specialty Products and Construction Products segments.

This business was sold on April 3, 2023, with no significant gain or loss upon sale. Operating revenue related to this business that was included in the Company's results of operations was $9 million, $37 million and $35 million for the twelve months ended December 31, 2023, 2022 and 2021, respectively.

These two businesses were classified as held for sale beginning in the second quarter of 2022. In the fourth quarter of 2022, both of these businesses were divested. On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million.

In the fourth quarter of 2022, both of these businesses were divested. On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million.

The maximum outstanding commercial paper balance during 2023 was $1.9 billion, while the average daily balance was $1.0 billion. As of December 31, 2023, the Company had unused capacity of approximately $158 million under international debt facilities.

The maximum outstanding commercial paper balance during 2024 was $1.9 billion, while the average daily balance was $906 million. As of December 31, 2024, the Company had unused capacity of approximately $170 million under international debt facilities.

These subsidiaries were not material to the Company's results of operations or financial position. 21 In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment.

These subsidiaries were not material to the Company's results of operations or financial position. In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment. These two businesses were classified as held for sale beginning in the second quarter of 2022.

Free cash flow represents net cash provided by operating activities less additions to plant and equipment. Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies.

Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies.

Cost of revenue as a percent of operating revenue increased in 2022 compared to 2021 primarily due to higher raw material costs and increased employee-related expenses, partially offset by positive operating leverage and benefits from the Company's enterprise initiatives. 22 Selling, administrative, and research and development expenses were $2.6 billion in 2023, $2.6 billion in 2022 and $2.4 billion in 2021.

Cost of revenue as a percent of operating revenue improved in 2023 compared to 2022 primarily due to benefits from the Company's enterprise initiatives and positive operating leverage, partially offset by higher employee-related expenses. 22 Selling, administrative, and research and development expenses were $2.7 billion in 2024, $2.6 billion in 2023 and $2.6 billion in 2022.

Management believes that these sources are sufficient to service debt and to finance the Company's capital allocation priorities, which include: • internal investments to support organic growth and sustain core businesses; • payment of an attractive dividend to shareholders; and • external investments in selective strategic acquisitions that support the Company's organic growth focus, such as the acquisition of the MTS Test & Simulation business on December 1, 2021, and an active share repurchase program.

Total debt to EBITDA for the years ended December 31, 2023, 2022 and 2021 was as follows: Dollars in millions 2023 2022 2021 Total debt $ 8,164 $ 7,763 $ 7,687 Net income $ 2,957 $ 3,034 $ 2,694 Add: Interest expense 266 203 202 Other (income) expense (49) (255) (51) Income taxes 866 808 632 Depreciation 282 276 277 Amortization and impairment of intangible assets 113 134 133 EBITDA $ 4,435 $ 4,200 $ 3,887 Total debt to EBITDA ratio 1.8 1.8 2.0 40 Stockholders' Equity The changes to stockholders' equity during 2023 and 2022 were as follows: In millions 2023 2022 Beginning balance $ 3,089 $ 3,626 Net income 2,957 3,034 Cash dividends declared (1,634) (1,560) Repurchases of common stock (1,500) (1,750) Other comprehensive income (loss) 7 (339) Other 94 78 Ending balance $ 3,013 $ 3,089 CRITICAL ACCOUNTING ESTIMATES The Company has three accounting estimates that it believes are most important to the Company's financial condition and results of operations, and which require the Company to make judgments about matters that are inherently uncertain.

Total debt to EBITDA for the years ended December 31, 2024, 2023 and 2022 was as follows: Dollars in millions 2024 2023 2022 Total debt $ 7,863 $ 8,164 $ 7,763 Net income $ 3,488 $ 2,957 $ 3,034 Add: Interest expense 283 266 203 Other (income) expense (441) (49) (255) Income taxes 934 866 808 Depreciation 301 282 276 Amortization and impairment of intangible assets 101 113 134 EBITDA $ 4,666 $ 4,435 $ 4,200 Total debt to EBITDA ratio 1.7 1.8 1.8 40 Stockholders' Equity The changes to stockholders' equity during 2024 and 2023 were as follows: In millions 2024 2023 Beginning balance $ 3,013 $ 3,089 Net income 3,488 2,957 Cash dividends declared (1,717) (1,634) Repurchases of common stock (1,500) (1,500) Other comprehensive income (loss) (43) 7 Other 76 94 Ending balance $ 3,317 $ 3,013 CRITICAL ACCOUNTING ESTIMATES The Company has three accounting estimates that it believes are most important to the Company's financial condition and results of operations, and which require the Company to make judgments about matters that are inherently uncertain.

Cost of revenue as a percent of operating revenue improved in 2024 compared to 2023 primarily due to the LIFO accounting method change and benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses.

Product line simplification activities reduced organic revenue by 150 basis points. ◦ North American organic revenue decreased 6.4% primarily driven by a decline in the consumer packaging, specialty films, strength films and decorating equipment businesses, partially offset by growth in the ground support equipment, appliance and filter medical businesses. ◦ International organic revenue declined 1.6% primarily due to a decrease in Asia Pacific in the strength films, graphics and decorating equipment businesses, partially offset by growth in the ground support equipment and consumer packaging businesses in Europe. • Operating margin of 26.5% decreased 20 basis points primarily driven by unfavorable operating leverage of 90 basis points, higher employee-related expenses and product mix, partially offset by favorable price/cost of 130 basis points, benefits from the Company's enterprise initiatives and the favorable impact of a divestiture in the second quarter of 2023. 33 2022 compared to 2021 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2022 2021 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,799 $ 1,854 (2.9) % 0.4 % — % — % (3.3) % (2.9) % Operating income $ 481 $ 504 (4.5) % (1.8) % — % 0.1 % (2.8) % (4.5) % Operating margin % 26.7 % 27.2 % (50) bps (60) bps — — 10 bps (50) bps • Operating revenue declined due to the unfavorable effect of foreign currency translation, partially offset by higher organic revenue. • Organic revenue increased 0.4% as consumable sales increased 3.0% and equipment sales declined 9.5%.

Product line simplification activities reduced organic revenue by 270 basis points. ◦ North American organic revenue increased 1.8% primarily driven by growth in the ground support equipment, appliance, consumer packaging and strength films businesses, partially offset by a decline in the decorative and thermal foils businesses. ◦ International organic revenue grew 6.9% primarily due to an increase in Europe, primarily in the ground support equipment business, and growth in the appliance business in Asia Pacific, partially offset by a decline in the consumer packaging businesses. • Operating margin of 30.3% increased 380 basis points primarily driven by benefits from the Company's enterprise initiatives, positive operating leverage of 70 basis points, favorable price/cost of 70 basis points and lower restructuring expenses, partially offset by higher employee-related expenses and product mix. 33 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,697 $ 1,799 (5.7) % (4.9) % (1.6) % — % 0.8 % (5.7) % Operating income $ 449 $ 481 (6.5) % (7.2) % (0.1) % (0.3) % 1.1 % (6.5) % Operating margin % 26.5 % 26.7 % (20) bps (60) bps 40 bps (10) bps 10 bps (20) bps • Operating revenue declined due to lower organic revenue and the impact of a divestiture in the second quarter of 2023, partially offset by the favorable effect of foreign currency translation.

Summarized cash flow information for the years ended December 31, 2023, 2022 and 2021 was as follows: In millions 2023 2022 2021 Net cash provided by operating activities $ 3,539 $ 2,348 $ 2,557 Additions to plant and equipment (455) (412) (296) Free cash flow $ 3,084 $ 1,936 $ 2,261 Cash dividends paid $ (1,615) $ (1,542) $ (1,463) Repurchases of common stock (1,500) (1,750) (1,000) Acquisition of businesses (excluding cash and equivalents) — (2) (731) Proceeds from sale of operations and affiliates 7 278 — Net proceeds from (repayments of) debt 294 276 (141) Other 84 42 83 Effect of exchange rate changes on cash and equivalents 3 (57) (46) Net increase (decrease) in cash and equivalents $ 357 $ (819) $ (1,037) Operating cash flow improved in 2023 compared to 2022 as supply chains began to normalize in 2023 and the Company reduced its investment in working capital.

Summarized cash flow information for the years ended December 31, 2024, 2023 and 2022 was as follows: In millions 2024 2023 2022 Net cash provided by operating activities $ 3,281 $ 3,539 $ 2,348 Additions to plant and equipment (437) (455) (412) Free cash flow $ 2,844 $ 3,084 $ 1,936 Cash dividends paid $ (1,695) $ (1,615) $ (1,542) Repurchases of common stock (1,500) (1,500) (1,750) Acquisition of businesses (excluding cash and equivalents) (115) — (2) Proceeds from sale of operations and affiliates — 7 278 Proceeds from sale of noncontrolling interest in Wilsonart International Holdings LLC 395 — — Net proceeds from (repayments of) debt (8) 294 276 Other 27 84 42 Effect of exchange rate changes on cash and equivalents (65) 3 (57) Net increase (decrease) in cash and equivalents $ (117) $ 357 $ (819) 35 Net cash provided by operating activities improved in 2023 compared to 2022 as supply chains began to normalize in 2023 and the Company reduced its investment in working capital.

Also, for comparability, the Company excluded the discrete tax benefits of $21 million in the third quarter of 2021 and $112 million in the second quarter of 2021 from net income and the effective tax rate for the year ended December 31, 2021.

For comparability, the Company also excluded the net discrete tax benefit of $121 million in the third quarter of 2024 from net income and the effective tax rate for the year ended December 31, 2024.

This segment primarily serves the general industrial market, which includes fabrication, shipbuilding and other general industrial markets, and construction, energy, MRO, industrial capital goods and automotive original equipment manufacturers and tiers markets. Products in this segment include: • arc welding equipment; and • metal arc welding consumables and related accessories.

Operating Expenses Dollars in millions 2023 2022 2021 Operating Revenue $ 16,107 $ 15,932 $ 14,455 Cost of revenue $ 9,316 $ 9,429 $ 8,489 Percent of operating revenue 57.8 % 59.2 % 58.7 % Selling, administrative, and research and development expenses $ 2,638 $ 2,579 $ 2,356 Percent of operating revenue 16.4 % 16.2 % 16.3 % Amortization and impairment of intangible assets $ 113 $ 134 $ 133 Percent of operating revenue 0.7 % 0.8 % 0.9 % Cost of revenue was $9.3 billion in 2023, $9.4 billion in 2022 and $8.5 billion in 2021.

Operating Expenses Dollars in millions 2024 2023 2022 Operating Revenue $ 15,898 $ 16,107 $ 15,932 Cost of revenue $ 8,858 $ 9,316 $ 9,429 Percent of operating revenue 55.7 % 57.8 % 59.2 % Selling, administrative, and research and development expenses $ 2,675 $ 2,638 $ 2,579 Percent of operating revenue 16.8 % 16.4 % 16.2 % Amortization and impairment of intangible assets $ 101 $ 113 $ 134 Percent of operating revenue 0.6 % 0.7 % 0.8 % Cost of revenue was $8.9 billion in 2024, $9.3 billion in 2023 and $9.4 billion in 2022.

Asia Pacific organic revenue declined 2.3% primarily due to lower demand in the Australia and New Zealand residential end markets. • Operating margin of 28.4% increased 250 basis points primarily driven by favorable price/cost of 350 basis points and benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses and unfavorable operating leverage of 60 basis points. 2022 compared to 2021 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2022 2021 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,113 $ 1,945 8.6 % 14.4 % — % — % (5.8) % 8.6 % Operating income $ 548 $ 530 3.5 % 8.8 % — % (0.2) % (5.1) % 3.5 % Operating margin % 25.9 % 27.2 % (130) bps (130) bps — — — (130) bps • Operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation. • Organic revenue grew 14.4% with growth across all major regions.

Asia Pacific organic revenue declined 9.2% primarily due to lower demand in the Australia and New Zealand residential end markets. • Operating margin of 29.3% increased 90 basis points primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 10 basis points, partially offset by unfavorable operating leverage of 110 basis points, higher employee-related expenses and higher restructuring expenses. 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,033 $ 2,113 (3.8) % (3.2) % — % — % (0.6) % (3.8) % Operating income $ 578 $ 548 5.5 % 6.6 % — % (0.5) % (0.6) % 5.5 % Operating margin % 28.4 % 25.9 % 250 bps 270 bps — (20) bps — 250 bps • Operating revenue declined due to lower organic revenue and the unfavorable effect of foreign currency translation. • Organic revenue declined 3.2%, which had a challenging comparable in the prior year period of 14.4% growth.

Under the 2023 program, the Company repurchased approximately 38,000 shares of its common stock at an average price of $263.44 per share during 2023.

Under the 2023 Program, the Company repurchased approximately 38,000 shares of its common stock at an average price of $263.44 per share during the fourth quarter of 2023 and approximately 5.9 million shares of its common stock at an average price of $254.04 per share during 2024.

Demand in Europe was negatively impacted by declines in the wind and industrial end markets. ◦ Organic revenue for the fluids businesses declined 2.7% driven by lower demand in the European life sciences end market, the North American industrial maintenance, repair and operations end market, and the transportation and health and hygiene end markets. • Operating margin of 26.7% increased 150 basis points primarily driven by favorable price/cost of 210 basis points, benefits from the Company's enterprise initiatives and lower intangible asset amortization expense, partially offset by higher employee-related expenses and product mix. 2022 compared to 2021 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2022 2021 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,905 $ 1,804 5.6 % 10.5 % (1.2) % — % (3.7) % 5.6 % Operating income $ 479 $ 457 4.8 % 9.6 % (0.7) % — % (4.1) % 4.8 % Operating margin % 25.2 % 25.4 % (20) bps (30) bps 20 bps — (10) bps (20) bps • Operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation and the impact of a divestiture in the fourth quarter of 2022.

Product line simplification activities reduced organic revenue by 30 basis points. ◦ Organic revenue for the polymers businesses grew 6.3% due to increases in South America, Europe and Asia Pacific, partially offset by a decrease in North America. ◦ Organic revenue for the fluids businesses increased 1.9% primarily driven by higher demand in Europe, primarily due to growth in the life sciences end market, partially offset by lower demand in the North American and European industrial maintenance, repair and operations and hygiene end markets. ◦ Organic revenue for the automotive aftermarket businesses declined 2.2% primarily due to lower demand in the North American car care, body repair and tire repair businesses, partially offset by growth in the North American engine repair business and the European additives and tire repair businesses. • Operating margin of 27.4% increased 70 basis points primarily driven by benefits from the Company's enterprise initiatives, favorable price/cost of 30 basis points, positive operating leverage of 20 basis points, lower restructuring expenses and lower intangible asset amortization expense, partially offset by higher employee-related expenses. 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,804 $ 1,905 (5.3) % 0.3 % (4.0) % — % (1.6) % (5.3) % Operating income $ 482 $ 479 0.6 % 7.6 % (3.3) % (0.8) % (2.9) % 0.6 % Operating margin % 26.7 % 25.2 % 150 bps 180 bps 30 bps (20) bps (40) bps 150 bps • Operating revenue declined due to the impact of a divestiture in the fourth quarter of 2022 and the unfavorable effect of foreign currency translation, partially offset by higher organic revenue.

The results of operations for the Specialty Products segment for 2023, 2022 and 2021 were as follows: 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,697 $ 1,799 (5.7) % (4.9) % (1.6) % — % 0.8 % (5.7) % Operating income $ 449 $ 481 (6.5) % (7.2) % (0.1) % (0.3) % 1.1 % (6.5) % Operating margin % 26.5 % 26.7 % (20) bps (60) bps 40 bps (10) bps 10 bps (20) bps • Operating revenue declined due to lower organic revenue and the impact of a divestiture in the second quarter of 2023, partially offset by the favorable effect of foreign currency translation.

The results of operations for the Specialty Products segment for 2024, 2023 and 2022 were as follows: 2024 compared to 2023 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2024 2023 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,743 $ 1,697 2.7 % 3.5 % (0.6) % — % (0.2) % 2.7 % Operating income $ 528 $ 449 17.6 % 17.3 % (0.1) % 0.7 % (0.3) % 17.6 % Operating margin % 30.3 % 26.5 % 380 bps 350 bps 10 bps 20 bps — 380 bps • Operating revenue increased due to higher organic revenue, partially offset by the impact of a divestiture in the second quarter of 2023 and the unfavorable effect of foreign currency translation. • The Company divested a business on April 3, 2023.

Net income to average invested capital and After-tax ROIC for the years ended December 31, 2023, 2022, and 2021 were as follows: Dollars in millions 2023 2022 2021 Numerator: Net income $ 2,957 $ 3,034 $ 2,694 Discrete tax benefit related to the second quarter 2023 (20) — — Discrete tax benefit related to the fourth quarter 2022 — (32) — Discrete tax benefit related to the second quarter 2022 — (51) — Discrete tax benefit related to the third quarter 2021 — — (21) Discrete tax benefit related to the second quarter 2021 — — (112) Interest expense, net of tax (1) 204 156 157 Other (income) expense, net of tax (1) (38) (196) (40) Operating income after taxes $ 3,103 $ 2,911 $ 2,678 Denominator: Invested capital: Cash and equivalents $ 1,065 $ 708 $ 1,527 Trade receivables 3,123 3,171 2,840 Inventories 1,707 2,054 1,694 Net assets held for sale — 7 — Net plant and equipment 1,976 1,848 1,809 Goodwill and intangible assets 5,566 5,632 5,937 Accounts payable and accrued expenses (2,244) (2,322) (2,233) Debt (8,164) (7,763) (7,687) Other, net (16) (246) (261) Total net assets (stockholders' equity) 3,013 3,089 3,626 Cash and equivalents (1,065) (708) (1,527) Debt 8,164 7,763 7,687 Total invested capital $ 10,112 $ 10,144 $ 9,786 Average invested capital (2) $ 10,214 $ 10,017 $ 9,087 Net income to average invested capital 29.0 % 30.3 % 29.6 % After-tax return on average invested capital 30.4 % 29.1 % 29.5 % 37 (1) Effective tax rate used for interest expense and other (income) expense for the years ended December 31, 2023, 2022, and 2021 was 23.2%, 23.2% and 23.0%, respectively.

Net income to average invested capital and After-tax ROIC for the years ended December 31, 2024, 2023, and 2022 were as follows: Dollars in millions 2024 2023 2022 Numerator: Net income $ 3,488 $ 2,957 $ 3,034 Net discrete tax benefit related to the third quarter 2024 (121) — — Discrete tax benefit related to the second quarter 2023 — (20) — Discrete tax benefit related to the fourth quarter 2022 — — (32) Discrete tax benefit related to the second quarter 2022 — — (51) Interest expense, net of tax (1) 215 204 156 Other (income) expense, net of tax (1) (336) (38) (196) Operating income after taxes $ 3,246 $ 3,103 $ 2,911 Denominator: Invested capital: Cash and equivalents $ 948 $ 1,065 $ 708 Trade receivables 2,991 3,123 3,171 Inventories 1,605 1,707 2,054 Net assets held for sale — — 7 Net plant and equipment 2,036 1,976 1,848 Goodwill and intangible assets 5,431 5,566 5,632 Accounts payable and accrued expenses (2,095) (2,244) (2,322) Debt (7,863) (8,164) (7,763) Other, net 264 (16) (246) Total net assets (stockholders' equity) 3,317 3,013 3,089 Cash and equivalents (948) (1,065) (708) Debt 7,863 8,164 7,763 Total invested capital $ 10,232 $ 10,112 $ 10,144 Average invested capital (2) $ 10,419 $ 10,214 $ 10,017 Net income to average invested capital 33.5 % 29.0 % 30.3 % After-tax return on average invested capital 31.2 % 30.4 % 29.1 % (1) Effective tax rate used for interest expense and other (income) expense for the years ended December 31, 2024, 2023, and 2022 was 23.8 %, 23.2% and 23.2%, respectively. 37 (2) Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within each of the periods presented.

OTHER FINANCIAL HIGHLIGHTS • Interest expense was $266 million in 2023, $203 million in 2022 and $202 million in 2021. Interest expense in 2023 was higher than 2022 primarily due to higher interest rates, partially offset by the repayment of notes due May 22, 2023.

OTHER FINANCIAL HIGHLIGHTS • Interest expense was $283 million in 2024, $266 million in 2023 and $203 million in 2022. Interest expense in 2024 was higher than 2023 primarily due to the issuance of the Euro notes in May of 2024, partially offset by the repayment of the $700 million notes due March 1, 2024.

Unless otherwise stated, the changes in financial results in the consolidated results of operations and the results of operations by segment represent the current year period versus the comparable period in the prior year. CONSOLIDATED RESULTS OF OPERATIONS During the first quarter of 2022, Russian military forces invaded Ukraine.

After-tax ROIC decreased 40 basis points for the twelve month period ended December 31, 2022 compared to the prior year period as a result of a 10.2% increase in average invested capital versus an 8.7% increase in after-tax operating income.

After-tax ROIC increased 80 basis points for the twelve month period ended December 31, 2024 compared to the prior year period as a result of a 4.6% increase in after-tax operating income versus a 2.0% increase in average invested capital.

Service organic revenue increased 13.4%. • Operating margin of 27.2% increased 190 basis points primarily driven by favorable price/cost of 220 basis points, positive operating leverage of 150 basis points and benefits from the Company's enterprise initiatives, partially offset by higher operating expenses, including employee-related expenses. 2022 compared to 2021 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2022 2021 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,444 $ 2,078 17.6 % 22.9 % (0.1) % — % (5.2) % 17.6 % Operating income $ 618 $ 469 31.7 % 38.1 % (0.1) % (0.4) % (5.9) % 31.7 % Operating margin % 25.3 % 22.6 % 270 bps 280 bps — (10) bps — 270 bps • Operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation and the impact of a divestiture in the fourth quarter of 2022.

Service organic revenue grew 6.4%. • Operating margin of 27.2% was flat as benefits from the Company's enterprise initiatives, favorable price/cost of 30 basis points and positive operating leverage of 20 basis points were offset by higher operating expenses, including employee-related expenses and additional investment in the business. 27 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,622 $ 2,444 7.3 % 7.8 % (1.2) % — % 0.7 % 7.3 % Operating income $ 713 $ 618 15.2 % 15.4 % (0.7) % (0.3) % 0.8 % 15.2 % Operating margin % 27.2 % 25.3 % 190 bps 180 bps 20 bps (10) bps — 190 bps • Operating revenue grew due to higher organic revenue and the favorable effect of foreign currency translation, partially offset by the impact of a divestiture in the fourth quarter of 2022.

Financial Statements and Supplementary Data for further information. • The impact of the Euro and other foreign currencies against the U.S. Dollar in 2023 versus 2022 decreased operating revenue and income before taxes by approximately $7 million and $15 million, respectively. The impact of the Euro and other foreign currencies against the U.S.

Dollar in 2024 versus 2023 decreased operating revenue and income before taxes by approximately $115 million and $40 million, respectively. The impact of foreign currencies against the U.S. Dollar in 2023 versus 2022 decreased operating revenue and income before taxes by approximately $7 million and $15 million, respectively.

The results of operations for the Polymers & Fluids segment for 2023, 2022 and 2021 were as follows: 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,804 $ 1,905 (5.3) % 0.3 % (4.0) % — % (1.6) % (5.3) % Operating income $ 482 $ 479 0.6 % 7.6 % (3.3) % (0.8) % (2.9) % 0.6 % Operating margin % 26.7 % 25.2 % 150 bps 180 bps 30 bps (20) bps (40) bps 150 bps 30 • Operating revenue declined due to the impact of a divestiture in the fourth quarter of 2022 and the unfavorable effect of foreign currency translation, partially offset by higher organic revenue.

The results of operations for the Polymers & Fluids segment for 2024, 2023 and 2022 were as follows: 2024 compared to 2023 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2024 2023 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,764 $ 1,804 (2.2) % 0.9 % — % — % (3.1) % (2.2) % Operating income $ 484 $ 482 0.4 % 3.7 % — % 0.9 % (4.2) % 0.4 % Operating margin % 27.4 % 26.7 % 70 bps 80 bps — 20 bps (30) bps 70 bps • Operating revenue decreased due to the unfavorable effect of foreign currency translation, partially offset by higher organic revenue. • Organic revenue grew 0.9% due to increases in South America, Europe and Asia Pacific, partially offset by a decrease in North America.

The other electronics businesses, which include the contamination control, static control and pressure sensitive adhesives businesses, decreased 6.4% primarily due to lower demand in the semiconductor end market, partially offset by higher demand in the automotive end market. • Operating margin of 24.2% was flat compared to the prior year as favorable price/cost of 160 basis points, benefits from the Company's enterprise initiatives and lower intangible asset amortization expense were offset by higher employee-related expenses and product mix. 28 2022 compared to 2021 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2022 2021 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,828 $ 2,346 20.6 % 9.0 % 15.9 % — % (4.3) % 20.6 % Operating income $ 684 $ 643 6.3 % 10.1 % — % 0.1 % (3.9) % 6.3 % Operating margin % 24.2 % 27.4 % (320) bps 30 bps (350) bps — — (320) bps • Operating revenue grew due to the MTS Test & Simulation acquisition, which was completed on December 1, 2021, and higher organic revenue, partially offset by the unfavorable effect of foreign currency translation. • Organic revenue increased 9.0%. ◦ Organic revenue for the test and measurement businesses increased 12.7% primarily driven by higher semiconductor demand in North America and Asia Pacific and the impact of a stronger capital spending environment.

The other electronics businesses, which include the contamination control, static control and pressure sensitive adhesives businesses, grew 3.1% primarily due to higher demand across all major regions. • Operating margin of 24.9% increased 70 basis points primarily driven by benefits from the Company's enterprise initiatives, favorable price/cost of 60 basis points and lower intangible asset amortization expense, partially offset by product mix, the dilutive impact of 50 basis points from acquisitions in 2024, higher employee-related expenses and unfavorable operating leverage of 20 basis points. 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,832 $ 2,828 0.1 % 0.3 % — % — % (0.2) % 0.1 % Operating income $ 686 $ 684 0.3 % 1.3 % — % (0.5) % (0.5) % 0.3 % Operating margin % 24.2 % 24.2 % — 20 bps — (10) bps (10) bps — • Operating revenue was essentially flat as higher organic revenue was offset by the unfavorable effect of foreign currency translation. • Organic revenue increased 0.3% primarily due to growth in the general industrial end market, partially offset by a decline in the semiconductor end market. ◦ Organic revenue for the test and measurement businesses increased 7.0% primarily driven by growth in the MTS Test & Simulation and Instron businesses and higher demand in the automotive, defense, and oil and gas end markets, partially offset by lower semiconductor demand in North America. ◦ Electronics organic revenue decreased 10.8% primarily due to a decline in the consumer electronics and semiconductor end markets.

China organic revenue grew 21.9%, including growth in the electric vehicles market and higher content in the Chinese original equipment manufacturers, versus China auto builds which increased 9%. • Operating margin of 17.3% increased 50 basis points primarily driven by positive operating leverage of 160 basis points, favorable price/cost of 140 basis points and benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses and continued investments in the business, including the electric vehicles market, and product mix. 2022 compared to 2021 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2022 2021 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,969 $ 2,800 6.0 % 11.7 % — % — % (5.7) % 6.0 % Operating income $ 499 $ 545 (8.6) % 1.5 % — % (4.8) % (5.3) % (8.6) % Operating margin % 16.8 % 19.5 % (270) bps (180) bps — (90) bps — (270) bps • Operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation. • Organic revenue increased 11.7% compared to worldwide auto builds which grew 6%.

Auto builds of foreign automotive manufacturers in China, where the Company has higher content per vehicle, decreased 17%. • Operating margin of 19.6% increased 230 basis points primarily driven by benefits from the Company's enterprise initiatives, lower restructuring expenses and favorable price/cost of 20 basis points, partially offset by higher employee-related expenses and continued investment in the business. 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 3,235 $ 2,969 9.0 % 8.8 % — % — % 0.2 % 9.0 % Operating income $ 561 $ 499 12.4 % 11.7 % — % 1.1 % (0.4) % 12.4 % Operating margin % 17.3 % 16.8 % 50 bps 40 bps — 20 bps (10) bps 50 bps • Operating revenue grew due to higher organic revenue and the favorable effect of foreign currency translation. • Organic revenue increased 8.8% compared to worldwide auto builds which grew 9%.

Refer to Note 3. Acquisitions in Item 8. Financial Statements and Supplementary Data for further information regarding this acquisition. The Company believes that, based on its operating revenue, operating margin, free cash flow, and credit ratings, it could readily obtain additional financing, if necessary. The Company has certain contractual obligations, primarily noncurrent income taxes payable, operating leases and long-term debt.

The Company believes that, based on its operating revenue, operating margin, free cash flow, and credit ratings, it could readily obtain additional financing, if necessary. The Company has certain contractual obligations, primarily the current portion of noncurrent income taxes payable, operating leases and long-term debt. Refer to Note 6. Income Taxes, Note 9. Leases and Note 10.

Total cash dividends of approximately $1.5 billion were paid in 2022. 24 RESULTS OF OPERATIONS BY SEGMENT The reconciliation of segment operating revenue and operating income to total operating revenue and operating income is as follows: Operating Revenue In millions 2023 2022 2021 Automotive OEM $ 3,235 $ 2,969 $ 2,800 Food Equipment 2,622 2,444 2,078 Test & Measurement and Electronics 2,832 2,828 2,346 Welding 1,902 1,894 1,650 Polymers & Fluids 1,804 1,905 1,804 Construction Products 2,033 2,113 1,945 Specialty Products 1,697 1,799 1,854 Intersegment revenue (18) (20) (22) Total $ 16,107 $ 15,932 $ 14,455 Operating Income In millions 2023 2022 2021 Automotive OEM $ 561 $ 499 $ 545 Food Equipment 713 618 469 Test & Measurement and Electronics 686 684 643 Welding 605 583 490 Polymers & Fluids 482 479 457 Construction Products 578 548 530 Specialty Products 449 481 504 Total Segments 4,074 3,892 3,638 Unallocated (34) (102) (161) Total $ 4,040 $ 3,790 $ 3,477 Segments are allocated a fixed overhead charge based on the segment's revenue.

RESULTS OF OPERATIONS BY SEGMENT The reconciliation of segment operating revenue and operating income to total operating revenue and operating income is as follows: Operating Revenue In millions 2024 2023 2022 Automotive OEM $ 3,188 $ 3,235 $ 2,969 Food Equipment 2,647 2,622 2,444 Test & Measurement and Electronics 2,818 2,832 2,828 Welding 1,851 1,902 1,894 Polymers & Fluids 1,764 1,804 1,905 Construction Products 1,909 2,033 2,113 Specialty Products 1,743 1,697 1,799 Total segments 15,920 16,125 15,952 Intersegment revenue (22) (18) (20) Total $ 15,898 $ 16,107 $ 15,932 Operating Income In millions 2024 2023 2022 Automotive OEM $ 625 $ 561 $ 499 Food Equipment 719 713 618 Test & Measurement and Electronics 703 686 684 Welding 597 605 583 Polymers & Fluids 484 482 479 Construction Products 559 578 548 Specialty Products 528 449 481 Total segments 4,215 4,074 3,892 Unallocated 49 (34) (102) Total $ 4,264 $ 4,040 $ 3,790 Segments are allocated a fixed overhead charge based on the segment's revenue.

The results of operations for the Food Equipment segment for 2023, 2022 and 2021 were as follows: 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,622 $ 2,444 7.3 % 7.8 % (1.2) % — % 0.7 % 7.3 % Operating income $ 713 $ 618 15.2 % 15.4 % (0.7) % (0.3) % 0.8 % 15.2 % Operating margin % 27.2 % 25.3 % 190 bps 180 bps 20 bps (10) bps — 190 bps • Operating revenue grew due to higher organic revenue and the favorable effect of foreign currency translation, partially offset by the impact of a divestiture in the fourth quarter of 2022.

The results of operations for the Food Equipment segment for 2024, 2023 and 2022 were as follows: 2024 compared to 2023 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2024 2023 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,647 $ 2,622 1.0 % 1.1 % — % — % (0.1) % 1.0 % Operating income $ 719 $ 713 1.0 % 1.4 % — % (0.3) % (0.1) % 1.0 % Operating margin % 27.2 % 27.2 % — 10 bps — (10) bps — — • Operating revenue increased primarily due to higher organic revenue. • Organic revenue grew 1.1% as equipment declined 0.8% and service organic revenue increased 4.8%. ◦ North American organic revenue decreased 0.2%.

Service organic revenue increased 20.8%. • Operating margin of 25.3% increased 270 basis points primarily due to positive operating leverage of 430 basis points, benefits from the Company's enterprise initiatives and favorable price/cost of 90 basis points, partially offset by higher operating expenses, including employee-related expenses.

A reconciliation of the 2023 effective tax rate excluding the second quarter 2023 discrete tax benefit of $20 million related to amended 2021 U.S. taxes is as follows: Twelve Months Ended December 31, 2023 Dollars in millions Income Taxes Tax Rate As reported $ 866 22.6 % Discrete tax benefit related to the second quarter 2023 20 0.6 % As adjusted $ 886 23.2 % A reconciliation of the 2022 effective tax rate excluding the fourth quarter 2022 discrete tax benefit of $32 million related to the utilization of capital loss carryforwards and the second quarter 2022 discrete tax benefit of $51 million related to the resolution of a U.S. tax audit is as follows: Twelve Months Ended December 31, 2022 Dollars in millions Income Taxes Tax Rate As reported $ 808 21.0 % Discrete tax benefit related to the fourth quarter 2022 32 0.8 % Discrete tax benefit related to the second quarter 2022 51 1.4 % As adjusted $ 891 23.2 % A reconciliation of the 2021 effective tax rate excluding the third quarter 2021 discrete tax benefit of $21 million related to the utilization of capital loss carryforwards and the second quarter 2021 discrete tax benefit of $112 million related to a change in the U.K. income tax rate is as follows: Twelve Months Ended December 31, 2021 Dollars in millions Income Taxes Tax Rate As reported $ 632 19.0 % Discrete tax benefit related to the third quarter 2021 21 0.6 % Discrete tax benefit related to the second quarter 2021 112 3.4 % As adjusted $ 765 23.0 % Refer to Note 7.

A reconciliation of the 2024 effective tax rate excluding the third quarter 2024 net discrete tax benefit of $121 million, which included favorable discrete tax benefits of $107 million related to the utilization of capital loss carryforwards upon the sale of Wilsonart and $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, is as follows: Twelve Months Ended December 31, 2024 Dollars in millions Income Taxes Tax Rate As reported $ 934 21.1 % Net discrete tax benefit related to the third quarter 2024 121 2.7 % As adjusted $ 1,055 23.8 % A reconciliation of the 2023 effective tax rate excluding the second quarter 2023 discrete tax benefit of $20 million related to amended 2021 U.S. taxes is as follows: Twelve Months Ended December 31, 2023 Dollars in millions Income Taxes Tax Rate As reported $ 866 22.6 % Discrete tax benefit related to the second quarter 2023 20 0.6 % As adjusted $ 886 23.2 % A reconciliation of the 2022 effective tax rate excluding the fourth quarter 2022 discrete tax benefit of $32 million related to the utilization of capital loss carryforwards and the second quarter 2022 discrete tax benefit of $51 million related to the resolution of a U.S. tax audit is as follows: Twelve Months Ended December 31, 2022 Dollars in millions Income Taxes Tax Rate As reported $ 808 21.0 % Discrete tax benefit related to the fourth quarter 2022 32 0.8 % Discrete tax benefit related to the second quarter 2022 51 1.4 % As adjusted $ 891 23.2 % Refer to Note 6.

Selling, administrative, and research and development expenses as a percent of operating revenue improved in 2022 compared to 2021 primarily due to positive operating leverage and benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses and research and development expenses.

Selling, administrative, and research and development expenses as a percent of operating revenue were higher in 2024 compared to 2023, as higher employee-related expenses and the unfavorable impact of acquisitions in the first and second quarters of 2024 were partially offset by benefits from the Company's enterprise initiatives.

As of December 31, 2023, the Company had €1.3 billion outstanding under the Euro Credit Agreement with an interest rate of 4.59%, which was included in Long-term debt as the Company intends to exercise its options to extend the termination date. The Company may issue commercial paper to fund general corporate needs, share repurchases, and small and medium-sized acquisitions.

As of December 31, 2023, the Company had €1.3 billion outstanding under the Euro Credit Agreement with an interest rate of 4.59%, which was included in Long-term debt as the Company intended to exercise its options to extend the termination date. The first and second options to extend the termination date were both exercised in 2024.

OUR NEXT PHASE: 2024 - 2030 In the Next Phase of the Company’s evolution, the ITW Business Model and the Enterprise Strategy framework will be as formidable of a competitive advantage and performance differentiator as it has been over the last decade, if not more so. 19 Volatility, risk and the pace of change in the global operating environment will continue to increase, and a decentralized entrepreneurial culture allows the Company to be a fast adaptor – to read, react, respond and evolve.

Interest expense in 2022 was $1 million higher than 2021 primarily due to higher average outstanding commercial paper and higher interest rates, partially offset by the repayment of notes due September 15, 2021 and May 20, 2022. Refer to Note 11. Debt in Item 8.

Interest expense in 2023 was higher than 2022 primarily due to higher interest rates, partially offset by the repayment of notes due May 22, 2023. Refer to Note 10. Debt in Item 8.

Other income was higher in 2022 as compared to 2023 and 2021 primarily due to net pre-tax gains of $191 million related to the sale of businesses in 2022. • The Company's effective tax rate for 2023, 2022, and 2021 was 22.6%, 21.0% and 19.0%, respectively.

Other income was higher in 2022 as compared to 2023 primarily due to net pre-tax gains of $191 million related to the sale of businesses in 2022. Refer to Note 3. Divestitures and Note 5.

Products in this segment include: • plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses. 25 The results of operations for the Automotive OEM segment for 2023, 2022 and 2021 were as follows: 2023 compared to 2022 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2023 2022 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 3,235 $ 2,969 9.0 % 8.8 % — % — % 0.2 % 9.0 % Operating income $ 561 $ 499 12.4 % 11.7 % — % 1.1 % (0.4) % 12.4 % Operating margin % 17.3 % 16.8 % 50 bps 40 bps — 20 bps (10) bps 50 bps • Operating revenue grew due to higher organic revenue and the favorable effect of foreign currency translation. • Organic revenue increased 8.8% compared to worldwide auto builds which grew 9%.

The results of operations for the Automotive OEM segment for 2024, 2023 and 2022 were as follows: 2024 compared to 2023 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2024 2023 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 3,188 $ 3,235 (1.5) % (0.4) % — % — % (1.1) % (1.5) % Operating income $ 625 $ 561 11.4 % 9.6 % — % 3.0 % (1.2) % 11.4 % Operating margin % 19.6 % 17.3 % 230 bps 180 bps — 50 bps — 230 bps • Operating revenue decreased due to the unfavorable effect of foreign currency translation and lower organic revenue. • Organic revenue declined 0.4% compared to worldwide auto builds which decreased 1%.

Product line simplification activities reduced organic revenue by 40 basis points. ◦ North American organic revenue increased 14.3% with growth in all seven segments primarily driven by the Food Equipment, Welding and Construction Products segments. ◦ Europe, Middle East and Africa organic revenue increased 9.7% with growth in all seven segments primarily driven by the Food Equipment and Automotive OEM segments. ◦ Asia Pacific organic revenue increased 8.3% due to growth in six segments, partially offset by a decline in the Specialty Products segment.

Product line simplification activities reduced organic revenue by 60 basis points. ◦ North American organic revenue decreased 2.4% as a decline in six segments was partially offset by growth in the Specialty Products segment. ◦ Europe, Middle East and Africa organic revenue declined 0.3% as a decrease in the Automotive OEM, Construction Products and Test & Measurement and Electronics segments was partially offset by growth in the Specialty Products, Food Equipment, Polymers & Fluids and Welding segments. ◦ Asia Pacific organic revenue grew 3.0% as growth in six segments was partially offset by a decline in the Construction Products segment.

Net working capital as of December 31, 2023 and 2022 is summarized as follows: In millions 2023 2022 Increase (Decrease) Current Assets: Cash and equivalents $ 1,065 $ 708 $ 357 Trade receivables 3,123 3,171 (48) Inventories 1,707 2,054 (347) Prepaid expenses and other current assets 340 329 11 Assets held for sale — 8 (8) 6,235 6,270 (35) Current Liabilities: Short-term debt 1,825 1,590 235 Accounts payable and accrued expenses 2,244 2,322 (78) Liabilities held for sale — 1 (1) Other 606 547 59 4,675 4,460 215 Net Working Capital $ 1,560 $ 1,810 $ (250) As of December 31, 2023, a significant portion of the Company's cash and equivalents was held by international subsidiaries.

Net working capital as of December 31, 2024 and 2023 is summarized as follows: In millions 2024 2023 Increase (Decrease) Current Assets: Cash and equivalents $ 948 $ 1,065 $ (117) Trade receivables 2,991 3,123 (132) Inventories 1,605 1,707 (102) Prepaid expenses and other current assets 312 340 (28) Total current assets 5,856 6,235 (379) Current Liabilities: Short-term debt 1,555 1,825 (270) Accounts payable and accrued expenses 2,095 2,244 (149) Other 658 606 52 Total current liabilities 4,308 4,675 (367) Net Working Capital $ 1,548 $ 1,560 $ (12) As of December 31, 2024, a significant portion of the Company's cash and equivalents was held by international subsidiaries.

Product line simplification activities reduced organic revenue by 40 basis points. ◦ North American organic revenue increased 26.0% driven by higher demand in the United States residential and commercial end markets of 30.4% and 11.5%, respectively. ◦ International organic revenue increased 5.1%.

Product line simplification activities reduced organic revenue by 50 basis points. ◦ North American organic revenue decreased 4.6% primarily due to lower demand in the residential and commercial end markets. Organic revenue in the United States residential and commercial end markets declined 4.5% and 9.5%, respectively. Organic revenue in Canada increased 3.9%. ◦ International organic revenue declined 7.7%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−0 removed5 unchanged

2023 filing

2024 filing

Biggest changeOn February 22, 2022, €500 million of the Euro notes issued in May 2014 were redeemed in full and on May 22, 2023, €500 million of the Euro notes issued in May 2015 were repaid on the due date. Refer to Note 11. Debt in Item 8.

Biggest changeOn February 22, 2022, €500 million of the Euro notes issued in May 2014 were redeemed in full, on May 22, 2023, €500 million of the Euro notes issued in May 2015 were repaid on the due date and on December 5, 2024, €600 million of the Euro notes issued in May 2019 were repaid on the due date.

The Company designated the €1.0 billion of Euro notes issued in May 2014, the €1.0 billion of Euro notes issued in May 2015, the €1.6 billion of Euro notes issued in June 2019 and the €1.3 billion of Euro term loans borrowed under the Euro Credit Agreement in May 2023 as hedges of a portion of its net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations.

The Company designated the €1.0 billion of Euro notes issued in May 2014, the €1.0 billion of Euro notes issued in May 2015, the €1.6 billion of Euro notes issued in June 2019, the €1.3 billion of Euro term loans borrowed under the Euro Credit Agreement in May 2023 and the €1.5 billion of Euro notes issued in May 2024 as hedges of a portion of its net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations.

The Company does not engage in speculative or leveraged transactions and does not hold or issue financial instruments for trading purposes. Interest Rate Risk The Company's exposure to market risk for changes in interest rates relates primarily to the fair value of the Company's fixed rate debt. Refer to Note 11. Debt in Item 8.

Financial Statements and Supplemental Data for additional information regarding the redemption of these notes. The amount of pre-tax gain (loss) related to these notes that was recorded in Other comprehensive income (loss) for the twelve months ended December 31, 2023, 2022 and 2021 was $(109) million, $205 million and $303 million, respectively. 42

The amount of pre-tax gain (loss) related to these notes that was recorded in Other comprehensive income (loss) for the twelve months ended December 31, 2024, 2023 and 2022 was $301 million, $(109) million and $205 million, respectively. 43

Added

On May 22, 2024, the Company also repaid €550 million of the term loans under the Euro Credit Agreement. Refer to Note 10. Debt in Item 8. Financial Statements and Supplemental Data for additional information regarding the redemption of these notes.

Top changes in Illinois Tool Works's 2024 10-K

Item 1. Business

Item 1A. Risk Factors

Item 1C. Cybersecurity

Item 2. Properties

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Other ITW 10-K year-over-year comparisons