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What changed in Illinois Tool Works's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Illinois Tool Works's 2024 and 2025 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 2025 report.

+180 added−197 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-14)

Top changes in Illinois Tool Works's 2025 10-K

180 paragraphs added · 197 removed · 158 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDriving strong operational excellence in the quality of 80/20 Front-to-Back practice across the Company, division by division, will produce further customer-facing performance improvement in a number of divisions and additional structural margin expansion at the enterprise level. Current Year Developments Refer to Item 7.
Biggest changeCBI successes, coupled with underlying market growth and share gains, are how the Company intends to achieve its high-quality organic growth . 5 During the Next Phase, ITW will continue to drive 80/20 Front-to-Back practice excellence in every division in the Company, every day, further improving customer-facing performance and supporting additional structural margin expansion at the enterprise level.
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.
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, airlines, general industrial, 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 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"). 9
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.
ITW now has 88 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.
Competition With operations in 51 countries, the Company offers a wide range of products in a myriad of markets, many of which are fragmented, and the Company encounters a variety of competitors that vary by product line, end market and geographic area.
Competition With operations in 49 countries, the Company offers a wide range of products in a myriad of markets, many of which are fragmented, and the Company encounters a variety of competitors that vary by product line, end market and geographic area.
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.
Refer to Item 1A. Risk Factors for further information. Human Capital Management As of December 31, 2025, the Company employed approximately 43,000 people, with approximately 16,000 people located in the United States and the remainder in multiple other countries where the Company's businesses operate.
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.
Thibeault 42 Executive Vice President 2025 Vice President/General Manager, test & measurement and electronics businesses, 2019-2022; Group President, test & measurement and electronics businesses, 2022-2024.
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.
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 13, 2026 were as follows: Name Age Present Position First Year in Present Position Other Positions Held During 2021-2025 Christopher A.
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.
These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately 21,800 granted and pending patents; and 4 • ITW's Decentralized, Entrepreneurial Culture enables ITW businesses to be fast, focused, and responsive.
Management's Discussion and Analysis of Financial Condition and Results of Operations. 6 Distribution Methods The Company's businesses primarily distribute their products directly to industrial manufacturers and through independent distributors. Backlog Backlog generally is not considered a significant factor in the Company's businesses as relatively short delivery periods and rapid inventory turnover are characteristic of most of their products.
Distribution Methods The Company's businesses primarily distribute their products directly to industrial manufacturers and through independent distributors. 6 Backlog Backlog generally is not considered a significant factor in the Company's businesses as relatively short delivery periods and rapid inventory turnover are characteristic of most of their products.
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.
Intellectual Property The Company owns approximately 4,200 unexpired U.S. patents and 10,400 unexpired foreign patents covering articles, methods and machines. In addition, the Company has approximately 1,600 applications for patents pending in the U.S. Patent Office and 5,600 applications pending in foreign patent offices. There is no assurance that any of these patents will be issued.
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.
Refer to Note 3. Divestitures in Item 8. 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.
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.
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 88 divisions in 49 countries. As of December 31, 2025, the Company employed approximately 43,000 people.
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.
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.
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.
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. Refer to Note 5. Other Income (Expense) and Note 6. Income Taxes in Item 8.
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.
This business was presented as held for sale beginning in the fourth quarter of 2022. 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 for the twelve months ended December 31, 2023.
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 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. In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment.
ITW businesses have the right "raw material" in terms of market and business attributes that best fit the ITW Business Model and have significant potential to drive above-market organic growth over the long-term.
Portfolio Discipline The Company only operates in industries where it can generate significant, long-term competitive advantage from the ITW Business Model. ITW businesses have the right "raw material" in terms of market and business attributes that best fit the ITW Business Model and have significant potential to drive above-market organic growth over the long-term.
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.
O'Herlihy 62 President & Chief Executive Officer 2024 Vice Chairman 2015-2023. Axel R.J. Beck 60 Executive Vice President 2020 T. Kenneth Escoe 50 Executive Vice President 2020 Javier Gracia Carbonell 53 Executive Vice President 2022 Group President, construction businesses, 2020-2021. Patricia A. Hartzell 49 Executive Vice President 2022 Group President, test & measurement and electronics businesses, 2020-2021. Michael M.
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.
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. The transaction closed immediately after the execution of the purchase agreement.
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.
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 Company has completed the allocation of purchase price for both of these acquisitions.
Schott 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.
Scheuneman 58 Vice President & Chief Accounting Officer 2009 Guilherme Silva 50 Executive Vice President 2024 Group President, polymers & fluids businesses, 2020-2021; Group President, test & measurement and electronics businesses, 2021-2023. Sharon A. Szafranski 59 Executive Vice President 2020 Mark A.
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.
Larsen 57 Senior Vice President & Chief Financial Officer 2013 Mary K. Lawler 60 Senior Vice President & Chief Human Resources Officer 2014 Christopher P. Rauch 56 Senior Vice President, General Counsel & Secretary 2025 Chief IP Counsel & Assistant Secretary, 2019 -2025. Randall J.
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CBI successes, coupled with underlying market growth and share gains, are how the Company intends to achieve its high-quality organic growth . 5 Portfolio Discipline The Company only operates in industries where it can generate significant, long-term competitive advantage from the ITW Business Model.
Added
On October 1, 2025, the Company completed the acquisition of one business in the Test & Measurement and Electronics segment for $120 million, net of cash acquired, and subject to certain closing adjustments. The allocation of purchase price for this acquisition will be completed as soon as practicable, but no later than one year from the acquisition date.
Removed
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. In the fourth quarter of 2022, both of these businesses were divested.
Added
These acquisitions were not material, individually or in the aggregate, to the Company's results of operations, financial position or cash flows. Refer to Note 2. Acquisitions in Item 8. Financial Statements and Supplementary Data for further information regarding the Company's acquisitions.
Removed
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 business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million.
Added
Financial Statements and Supplementary Data for additional information regarding this transaction. Current Year Developments Refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Removed
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.
Removed
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
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.
Removed
The Company's Code of Ethics for the CEO and key financial and accounting personnel is also posted on the Company's website. 9

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Company has retained certain liabilities directly or through indemnifications made to the buyers against known and unknown contingent liabilities such as lawsuits, tax liabilities, product liability claims and environmental matters, which could adversely affect the Company's financial results. Tax, Legal and Regulatory Risks Unfavorable tax law changes and tax authority rulings may adversely affect results.
Biggest changeIt divested one business in the first quarter of 2023 as it continues portfolio refinements to maintain portfolio discipline. The Company has retained certain liabilities directly or through indemnifications made to the buyers against known and unknown contingent liabilities such as lawsuits, tax liabilities, product liability claims and environmental matters, which could adversely affect the Company's financial results.
Although the Company has implemented compliance programs which include internal controls, policies and procedures and employee training to deter prohibited practices, these measures may not be effective in preventing employees, agents or business partners from violating or circumventing such internal policies and violating applicable laws and regulations.
Although the Company has implemented compliance programs which include internal controls, internal audits, policies and procedures and employee training to deter prohibited practices, these measures may not be effective in preventing employees, agents or business partners from violating or circumventing such internal policies and violating applicable laws and regulations.
The global nature of the Company's operations subjects it to political, economic and social risks that could adversely affect its business, results of operations or financial condition. Over 50% of the Company's net sales are derived from customers outside the United States, and the Company currently operates in 51 countries.
The global nature of the Company's operations subjects it to political, economic and social risks that could adversely affect its business, results of operations or financial condition. Over 50% of the Company's net sales are derived from customers outside the United States, and the Company currently operates in 49 countries.
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.
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, the current and expected impact of U.S. trade policy, including tariffs and related retaliatory countermeasures, the expected impact of the One Big Beautiful Bill Act, 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, the Company's 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 not able to realize the value of these assets, it may recognize charges relating to the impairment of these assets. Divestitures pose the risk of retained liabilities that could adversely affect the Company's financial results.
If the Company is not able to realize the value of these assets, it may recognize charges relating to the impairment of these assets. Divestitures pose the risk of retained liabilities that could adversely affect the Company's financial results. The Company has had significant divestiture activity in the past in accordance with its portfolio management initiative.
The Company is subject to income taxes in the U.S. and in various foreign jurisdictions. Domestic and international tax liabilities are based on the income and expenses in various tax jurisdictions.
Tax, Legal and Regulatory Risks Unfavorable tax law changes and tax authority rulings may adversely affect results. The Company is subject to income taxes in the U.S. and in various foreign jurisdictions. Domestic and international tax liabilities are based on the income and expenses in various tax jurisdictions.
Removed
The Company has had significant divestiture activity in the past in accordance with its portfolio management initiative, and it divested one business in the first quarter of 2023 as it continues portfolio refinements to maintain portfolio discipline.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, 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.
Biggest changeAdditionally, the Audit Committee of the Board of Directors receives quarterly cybersecurity reports from senior management which cover any identified cybersecurity incidents, significant cybersecurity risks, and key developments in policies and practices during the quarter.
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.
While the Company's information systems are exposed to cybersecurity threats and risks, the Company has not experienced any material cybersecurity incidents during 2025, 2024 or 2023, and any costs or operational impacts related to cybersecurity incidents were immaterial during this period.

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, 2024, 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, 2025, the Company operated approximately 410 plants and office facilities, excluding regional sales offices and warehouse facilities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn 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.
Biggest changeAs of December 31, 2025, there were approximately $2.0 billion of authorized repurchases remaining under the 2023 Program.
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.
The 2025 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.
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.
This number does not include beneficial owners of the Company's securities held in the name of nominees. *Assumes $100 invested on December 31, 2020, including reinvestment of dividends. Fiscal years ended December 31. Copyright© 2026 Standard & Poor's, a division of S&P Global. All rights reserved.
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.
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 3,957 holders of record of common stock as of January 31, 2026.
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").
There were no changes in the Company's peer group in 2025. 17 Repurchases of Common Stock On May 7, 2021, 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 "2021 Program").
The 2018 Program was completed in the first quarter of 2022. On May 7, 2021, the Company announced a stock repurchase program which provided for the repurchase of up to an additional $3.0 billion of the Company's common stock over an open-ended period of time (the "2021 Program"). The 2021 Program was completed in the fourth quarter of 2023.
The 2021 Program was completed in the fourth quarter of 2023. 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").
Share 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
Share repurchase activity under the Company's share repurchase programs for the fourth quarter of 2025 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 2025 0.7 $ 245.80 0.7 $ 2,191 November 2025 0.3 $ 242.94 0.3 $ 2,110 December 2025 0.5 $ 251.20 0.5 $ 1,990 Total 1.5 1.5

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeEquipment grew 3.6%, partially offset by a decline in consumables of 0.6%. ◦ North American organic revenue grew 1.2% primarily due to an increase of 1.9% in the industrial end market and growth in the second half of the year in the aerospace end market, partially offset by a decline of 2.1% in the commercial end market. ◦ International organic revenue increased 6.0% primarily due to higher equipment demand in the general industrial and oil and gas end markets in Europe and Asia Pacific. • Operating margin of 32.9% increased 60 basis points primarily driven by benefits from the Company's enterprise initiatives, favorable price/cost of 30 basis points and positive operating leverage of 30 basis points, partially offset by higher employee-related expenses. 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.
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.
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 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; 18 • Customer-back Innovation has fueled decades of profitable growth at ITW.
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.
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; 30 • 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.
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.
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, airlines, general industrial, industrial capital goods and printing and publishing markets.
The 2024 effective tax rate benefited from discrete income tax benefits during the third quarter of 2024 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.
The 2024 effective tax rate benefited from discrete income tax benefits during the third quarter of 2024 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.
Cash and equivalents held internationally may be subject to foreign withholding taxes if repatriated to the U.S. Cash and equivalents held internationally are typically used for international operating needs or reinvested to fund expansion of existing international businesses. International funds may also be used to fund international acquisitions or, if not considered permanently invested, may be repatriated to the U.S.
Cash and equivalents held internationally are typically used for international operating needs or reinvested to fund expansion of existing international businesses. International funds may also be used to fund international acquisitions or, if not considered permanently invested, may be repatriated to the U.S. and subject to foreign withholding taxes.
Additionally, the effective tax rates for 2024 and 2023 included discrete income tax benefits of $14 million and $20 million, respectively, related to excess tax benefits from stock-based compensation. • Diluted earnings per share ("EPS") of $11.71 in 2024 increased 20.2%, or 4.2% excluding the favorable impact from the first quarter 2024 LIFO accounting method change of $0.30 and the favorable impact of $1.26 from the third quarter 2024 Wilsonart transaction. • The Company repurchased approximately 5.9 million shares of its common stock in 2024 for approximately $1.5 billion. • The Company increased the quarterly dividend on common stock from $1.40 to $1.50 per share in 2024, or from $5.60 to $6.00 per share on an annualized basis.
Additionally, the effective tax rates for 2024 and 2023 included discrete income tax benefits of $14 million and $20 million, respectively, related to excess tax benefits from stock-based compensation. 24 • Diluted earnings per share ("EPS") of $11.71 in 2024 increased 20.2%, or 4.2% excluding the favorable impact from the first quarter 2024 LIFO accounting method change of $0.30 and the favorable impact of $1.26 from the third quarter 2024 Wilsonart transaction. • The Company repurchased approximately 5.9 million shares of its common stock in 2024 for approximately $1.5 billion. • The Company increased the quarterly dividend on common stock from $1.40 to $1.50 per share in 2024, or from $5.60 to $6.00 per share on an annualized basis.
Financial Statements and Supplementary Data for additional information regarding this change in accounting method and the Company’s inventory balances. On August 5, 2024, the Company entered into a purchase agreement with affiliates of CD&R for the sale of the Company’s noncontrolling equity interest in Wilsonart. The transaction closed immediately after the execution of the purchase agreement.
Financial Statements and Supplementary Data for additional information regarding this change in accounting method and the Company's inventory balances. 21 On August 5, 2024, the Company entered into a purchase agreement with affiliates of CD&R for the sale of the Company's noncontrolling equity interest in Wilsonart. The transaction closed immediately after the execution of the purchase agreement.
Refer to Note 5. Other Income 23 (Expense) and Note 6. Income Taxes in Item 8. Financial Statements and Supplementary Data for additional information regarding these transactions. 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.
Refer to Note 5. Other Income (Expense) and Note 6. Income Taxes in Item 8. Financial Statements and Supplementary Data for additional information regarding these transactions. 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.
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.
ITW now has 88 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.
The Company’s ability to consistently execute and invest through the ups and downs of the business cycle is now a defining competitive advantage. Throughout the Next Phase, the Company's focus is to build organic growth into a core ITW strength on par with the Company’s world-class financial performance and operational capabilities.
The Company's ability to consistently execute and invest through the ups and downs of the business cycle is now a defining competitive advantage. 19 Throughout the Next Phase, the Company's focus is to build organic growth into a core ITW strength on par with the Company's world-class financial performance and operational capabilities.
Income Taxes in Item 8. Financial Statements and Supplementary Data for further information regarding the discrete tax items noted above. 38 Working Capital Management uses working capital as a measurement of the short-term liquidity of the Company.
Income Taxes in Item 8. Financial Statements and Supplementary Data for further information regarding the discrete tax items noted above. Working Capital Management uses working capital as a measurement of the short-term liquidity of the Company.
Auto builds for the Detroit 3, where the Company has higher content, decreased 4%. ◦ European organic revenue declined 3.4% compared to European auto builds which decreased 5% primarily due to market penetration gains. ◦ Asia Pacific organic revenue grew 9.7%.
Auto builds for the Detroit 3, where the Company has higher content, decreased 4%. 26 ◦ European organic revenue declined 3.4% compared to European auto builds which decreased 5% primarily due to market penetration gains. ◦ Asia Pacific organic revenue grew 9.7%.
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.
Additionally, 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.
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.
Also, for comparability, the Company 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.
A 25 basis point decrease in the discount rate would increase the present value of the U.S. primary pension plan obligation by approximately $24 million . The Company estimates the service and interest cost components of net periodic benefit cost by applying specific spot rates along the yield curve to the projected cash flows rather than a single weighted-average rate.
A 25 basis point decrease in the discount rate would increase the present value of the U.S. primary pension plan obligation by approximately $21 million. The Company estimates the service and interest cost components of net periodic benefit cost by applying specific spot rates along the yield curve to the projected cash flows rather than a single weighted-average rate.
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, 2024 or 2023.
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, 2025 or 2024.
Organic revenue in Canada declined 2.7%. ◦ International organic revenue decreased 6.4%. European organic revenue declined 9.9% primarily due to lower demand in the commercial and residential end markets.
Organic revenue in Canada decreased 3.2%. ◦ International organic revenue declined 4.7%. European organic revenue decreased 3.9% primarily due to lower demand in the commercial and residential end markets.
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 2024 compared to 2023 and 2023 compared to 2022.
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 2025 compared to 2024 and 2024 compared to 2023.
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.
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 for the twelve months ended December 31, 2023. Refer to Note 3. Divestitures in Item 8.
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.
In the ordinary course of business, the Company also had approximately $265 million outstanding in guarantees, letters of credit and other similar arrangements with financial institutions as of December 31, 2025. Refer to Note 10. Debt in Item 8. Financial Statements and Supplementary Data for additional details regarding the Company's outstanding debt obligations.
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.
Refer to the "Results of Operations for Total Company" and the "Results of Operation by Segment" sections for additional discussion of operating results for 2025 compared to 2024 and 2024 compared to 2023.
TERMS USED BY ITW Management uses the following terms to describe the financial results of operations of the Company: • Organic business - acquired businesses that have been included in the Company's results of operations for more than 12 months on a constant currency basis. • Operating leverage - the estimated effect of the organic revenue volume changes on organic operating income, assuming variable margins remain the same as the prior period. • Price/cost - represents the estimated net impact of increases or decreases in the cost of materials used in the Company's products versus changes in the selling price to the Company's customers. • Product line simplification ("PLS") - focuses businesses on eliminating the complexity and overhead costs associated with smaller product lines and customers, and focuses businesses on supporting and growing their largest customers and product lines.
Financial Statements and Supplementary Data for additional information regarding this transaction. 20 TERMS USED BY ITW Management uses the following terms to describe the financial results of operations of the Company: • Organic business - acquired businesses that have been included in the Company's results of operations for more than 12 months on a constant currency basis. • Operating leverage - the estimated effect of the organic revenue volume changes on organic operating income, assuming variable margins remain the same as the prior period. • Price/cost - represents the estimated net impact of increases or decreases in the cost of materials used in the Company's products versus changes in the selling price to the Company's customers. • Product line simplification ("PLS") - focuses businesses on eliminating the complexity and overhead costs associated with smaller product lines and customers, and focuses businesses on supporting and growing their largest customers and product lines.
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.
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, 2025, the Company had total goodwill and intangible assets of approximately $5.7 billion allocated to its reporting units.
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.
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 % 38 Refer to Note 6.
Debt in Item 8. Financial Statements and Supplementary Data for details related to the Company's contractual obligations. The Company did not have any significant off-balance sheet commitments as of December 31, 2024. Cash Flow The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment.
Financial Statements and Supplementary Data for details related to the Company's contractual obligations. The Company did not have any significant off-balance sheet commitments as of December 31, 2025. 35 Cash Flow The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment.
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.
These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately 21,800 granted and pending patents; and • ITW's Decentralized, Entrepreneurial Culture enables ITW businesses to be fast, focused, and responsive.
Businesses in this segment produce components and fasteners for automotive-related applications. This segment primarily serves the automotive original equipment manufacturers and tiers market. Products in this segment include: • plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses.
This segment primarily serves the automotive original equipment manufacturers and tiers market. Products in this segment include: • plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses.
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.
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, approximately 5.9 million shares of its common stock at an average price of $254.04 per share during 2024 and approximately 6.0 million shares of its common stock at an average price of $251.20 per share during 2025.
RESULTS OF OPERATIONS FOR TOTAL COMPANY The Company's consolidated results of operations 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 $ 15,898 $ 16,107 (1.3) % (0.7) % 0.1 % — % (0.7) % (1.3) % Operating income $ 4,264 $ 4,040 5.5 % 6.2 % (0.2) % 0.5 % (1.0) % 5.5 % Operating margin % 26.8 % 25.1 % 170 bps 170 bps (10) bps 10 bps — 170 bps • Operating revenue decreased primarily due to lower organic revenue and the unfavorable effect of foreign currency translation. • Organic revenue declined 0.7% as a decrease in the Construction Products, Welding, Test & Measurement and Electronics and Automotive OEM segments was partially offset by growth in the Specialty Products, Food Equipment and Polymers & Fluids segments.
Total cash dividends of approximately $1.8 billion were paid in 2025. 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 $ 15,898 $ 16,107 (1.3) % (0.7) % 0.1 % — % (0.7) % (1.3) % Operating income $ 4,264 $ 4,040 5.5 % 6.2 % (0.2) % 0.5 % (1.0) % 5.5 % Operating margin % 26.8 % 25.1 % 170 bps 170 bps (10) bps 10 bps — 170 bps • Operating revenue decreased primarily due to lower organic revenue and the unfavorable effect of foreign currency translation. • Organic revenue declined 0.7% as a decrease in the Construction Products, Welding, Test & Measurement and Electronics and Automotive OEM segments was partially offset by growth in the Specialty Products, Food Equipment and Polymers & Fluids segments.
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.
In response, the United States and several other countries imposed economic and other sanctions on Russia. The Company has four immaterial Russian subsidiaries with net assets of approximately $38 million as of December 31, 2025. The revenue for these four subsidiaries for the twelve months ended December 31, 2025 was approximately $24 million.
Amortization and impairment of intangible assets was $101 million in 2024, $113 million in 2023 and $134 million in 2022. The decreased expense in each respective period was primarily due to fully amortized intangible assets.
Amortization and impairment of intangible assets was $80 million in 2025, $101 million in 2024 and $113 million in 2023. The decreased expense in each respective period was primarily due to fully amortized intangible assets.
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.
As of December 31, 2025, there were approximately $2.0 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.
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.
Cost of revenue, excluding the first quarter 2024 LIFO accounting method change, as a percent of operating revenue improved in 2025 compared to 2024 primarily due to benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses.
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.
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 88 divisions in 49 countries. As of December 31, 2025, the Company employed approximately 43,000 people.
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%.
Auto builds of foreign automotive manufacturers in China, where the Company has higher content per vehicle, declined 5%. • Operating margin of 21.1% increased 150 basis points primarily driven by benefits from the Company's enterprise initiatives, positive operating leverage of 40 basis points and favorable price/cost of 10 basis points, partially offset by higher employee-related expenses and continued investment in the business. 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 50 basis points. ◦ North American organic revenue decreased 0.3% as a decline in the Test & Measurement and Electronics, Specialty Products, Automotive OEM, Welding and Construction Products segments was partially offset by growth in the Food Equipment and Polymers & Fluids segments. ◦ Europe, Middle East and Africa organic revenue increased 3.9% as growth in three segments was partially offset by a decline in the Construction Products, Polymers & Fluids, Specialty Products and Welding segments. ◦ Asia Pacific organic revenue increased 6.9% as growth in five segments was partially offset by a decline in the Specialty Products and Construction Products segments.
Product line simplification activities reduced organic revenue by 60 basis points. ◦ North American organic revenue declined 0.7% as a decrease in the Construction Products, Test & Measurement and Electronics, Automotive OEM and Polymers & Fluids segments was partially offset by growth in the Food Equipment, Welding and Specialty Products segments. ◦ Europe, Middle East and Africa organic revenue decreased 2.2% as a decline in the Test & Measurement and Electronics, Construction Products, Automotive OEM, Polymers & Fluids and Food Equipment segments was partially offset by growth in the Specialty Products and Welding segments. ◦ Asia Pacific organic revenue grew 6.3% as growth in the Automotive OEM, Test & Measurement and Electronics, Welding, Polymers & Fluids and Specialty Products segments was partially offset by a decline in the Construction Products and Food Equipment segments.
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.
Total debt to EBITDA for the years ended December 31, 2025, 2024 and 2023 was as follows: Dollars in millions 2025 2024 2023 Total debt $ 8,969 $ 7,863 $ 8,164 Net income $ 3,066 $ 3,488 $ 2,957 Add: Interest expense 292 283 266 Other (income) expense (42) (441) (49) Income taxes 900 934 866 Depreciation 317 301 282 Amortization and impairment of intangible assets 80 101 113 EBITDA $ 4,613 $ 4,666 $ 4,435 Total debt to EBITDA ratio 1.9 1.7 1.8 40 Stockholders' Equity The changes to stockholders' equity during 2025 and 2024 were as follows: In millions 2025 2024 Beginning balance $ 3,317 $ 3,013 Net income 3,066 3,488 Cash dividends declared (1,809) (1,717) Repurchases of common stock (1,500) (1,500) Other comprehensive income (loss) 50 (43) Other 102 76 Ending balance $ 3,226 $ 3,317 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.
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.
Product line simplification activities reduced organic revenue by 60 basis points. ◦ Organic revenue for the automotive aftermarket businesses declined 0.5% primarily due to lower demand in the North American body repair and tire repair businesses, partially offset by growth in the North American car care business. ◦ Organic revenue for the polymers businesses declined 0.3% due to a decrease in Europe and North America, partially offset by an increase in Asia Pacific and South America. ◦ Organic revenue for the fluids businesses increased 0.7% 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. • Operating margin of 27.9% increased 50 basis points primarily driven by benefits from the Company's enterprise initiatives and lower intangible asset amortization expense, partially offset by higher employee-related expenses. 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.
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.
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.
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.
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.
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%.
The results of operations for the Food Equipment segment for 2025, 2024 and 2023 were as follows: 2025 compared to 2024 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2025 2024 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,699 $ 2,647 1.9 % 0.8 % — % — % 1.1 % 1.9 % Operating income $ 753 $ 719 4.6 % 3.0 % — % 0.4 % 1.2 % 4.6 % Operating margin % 27.9 % 27.2 % 70 bps 60 bps — 10 bps — 70 bps • Operating revenue increased due to the favorable effect of foreign currency translation and higher organic revenue. • Organic revenue grew 0.8% as equipment declined 0.3% and service organic revenue increased 2.8%. ◦ North American organic revenue grew 1.8%.
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.
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 operating leases and long-term debt. Refer to Note 9. Leases and Note 10. Debt in Item 8.
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.
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. Refer to Note 5. Other Income (Expense) and Note 6. Income Taxes in Item 8.
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.
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. Refer to Note 5. Other Income (Expense) and Note 6. Income Taxes in Item 8.
The results of operations for the Construction 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 $ 1,909 $ 2,033 (6.1) % (6.1) % — % — % — % (6.1) % Operating income $ 559 $ 578 (3.4) % (2.5) % — % (0.8) % (0.1) % (3.4) % Operating margin % 29.3 % 28.4 % 90 bps 110 bps — (20) bps — 90 bps • Operating revenue decreased due to lower organic revenue. • Organic revenue declined 6.1% due to lower demand across all major regions.
The results of operations for the Construction Products segment for 2025, 2024 and 2023 were as follows: 2025 compared to 2024 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2025 2024 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,820 $ 1,909 (4.6) % (5.1) % — % — % 0.5 % (4.6) % Operating income $ 550 $ 559 (1.6) % (3.1) % — % 1.1 % 0.4 % (1.6) % Operating margin % 30.2 % 29.3 % 90 bps 60 bps — 30 bps — 90 bps • Operating revenue decreased due to lower organic revenue, partially offset by the favorable effect of foreign currency translation. • Organic revenue declined 5.1% due to lower demand across all major regions.
The results of operations for the Test & Measurement and Electronics 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 $ 2,818 $ 2,832 (0.5) % (1.0) % 0.9 % — % (0.4) % (0.5) % Operating income $ 703 $ 686 2.5 % 4.0 % (1.0) % — % (0.5) % 2.5 % Operating margin % 24.9 % 24.2 % 70 bps 130 bps (50) bps — (10) bps 70 bps • Operating revenue decreased due to lower organic revenue and the unfavorable effect of foreign currency translation, partially offset by revenue from acquisitions. 28 • The Company completed the acquisition of one business for $57 million, net of cash acquired, on January 2, 2024, and completed the acquisition of a second business for $59 million, net of cash acquired, on April 1, 2024.
The results of operations for the Test & Measurement and Electronics segment for 2025, 2024 and 2023 were as follows: 2025 compared to 2024 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2025 2024 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 2,825 $ 2,818 0.2 % (1.4) % 0.4 % — % 1.2 % 0.2 % Operating income $ 694 $ 703 (1.2) % (0.8) % (0.5) % (0.8) % 0.9 % (1.2) % Operating margin % 24.6 % 24.9 % (30) bps 20 bps (20) bps (20) bps (10) bps (30) bps • Operating revenue increased due to the favorable effect of foreign currency translation and revenue from acquisitions, partially offset by lower organic revenue. • 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 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.
The amount of goodwill and other intangible assets allocated to individual reporting units as of December 31, 2025 ranged from approximately $267 million to $1.4 billion , with the average amount equal to $711 million . In all cases, the fair value of the individual reporting unit significantly exceeds its carrying value.
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.
Net income to average invested capital and After-tax ROIC for the years ended December 31, 2025, 2024, and 2023 were as follows: Dollars in millions 2025 2024 2023 Numerator: Net income $ 3,066 $ 3,488 $ 2,957 Net discrete tax benefit related to the third quarter 2025 (27) — — Discrete tax benefit related to the first quarter 2025 (21) — — Net discrete tax benefit related to the third quarter 2024 — (121) — Discrete tax benefit related to the second quarter 2023 — — (20) Interest expense, net of tax (1) 222 215 204 Other (income) expense, net of tax (1) (32) (336) (38) Operating income after taxes $ 3,208 $ 3,246 $ 3,103 Denominator: Invested capital: Cash and equivalents $ 851 $ 948 $ 1,065 Trade receivables 3,227 2,991 3,123 Inventories 1,659 1,605 1,707 Net plant and equipment 2,230 2,036 1,976 Goodwill and intangible assets 5,689 5,431 5,566 Accounts payable and accrued expenses (2,158) (2,095) (2,244) Debt (8,969) (7,863) (8,164) Other, net 697 264 (16) Total net assets (stockholders' equity) 3,226 3,317 3,013 Cash and equivalents (851) (948) (1,065) Debt 8,969 7,863 8,164 Total invested capital $ 11,344 $ 10,232 $ 10,112 Average invested capital (2) $ 10,959 $ 10,419 $ 10,214 Net income to average invested capital 28.0 % 33.5 % 29.0 % After-tax return on average invested capital 29.3 % 31.2 % 30.4 % (1) Effective tax rate used for interest expense and other (income) expense for the years ended December 31, 2025, 2024, and 2023 was 23.9%, 23.8% 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.
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.
Product line simplification activities reduced organic revenue by 90 basis points. 33 ◦ North American organic revenue grew 0.6% primarily driven by growth in the filter medical, specialty films and ground support equipment businesses, partially offset by a decline in the consumer packaging strength films businesses. ◦ International organic revenue increased 1.7% primarily due to an increase in European ground support equipment and consumer packaging equipment businesses, partially offset by a decline in the appliance business. • Operating margin of 31.2% increased 90 basis points primarily driven by benefits from the Company's enterprise initiatives, positive operating leverage of 20 basis points and favorable price/cost of 20 basis points, partially offset by higher employee-related expenses and product mix. 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.
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.
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. 22 Selling, administrative, and research and development expenses were $2.78 billion in 2025, $2.68 billion in 2024 and $2.64 billion in 2023.
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 2025, the Company delivered solid financial results in a challenging and dynamic environment primarily due to the strong execution on enterprise initiatives as an outcome of the highly differentiated ITW Business Model.
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.
Operating Expenses Dollars in millions 2025 2024 2023 Operating Revenue $ 16,044 $ 15,898 $ 16,107 Cost of revenue $ 8,969 $ 8,858 $ 9,316 Percent of operating revenue 55.9 % 55.7 % 57.8 % Selling, administrative, and research and development expenses $ 2,779 $ 2,675 $ 2,638 Percent of operating revenue 17.3 % 16.8 % 16.4 % Amortization and impairment of intangible assets $ 80 $ 101 $ 113 Percent of operating revenue 0.5 % 0.6 % 0.7 % Cost of revenue was $8.97 billion in 2025, $8.86 billion in 2024 and $9.32 billion in 2023.
Total cash dividends of approximately $1.6 billion were paid in 2023.
Total cash dividends of approximately $1.7 billion were paid in 2024.
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 results of operations for the Polymers & Fluids segment for 2025, 2024 and 2023 were as follows: 2025 compared to 2024 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2025 2024 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,765 $ 1,764 0.1 % (0.2) % — % — % 0.3 % 0.1 % Operating income $ 493 $ 484 1.9 % 1.9 % — % — % — % 1.9 % Operating margin % 27.9 % 27.4 % 50 bps 60 bps — — (10) bps 50 bps • Operating revenue increased due to the favorable effect of foreign currency translation, partially offset by lower organic revenue. • Organic revenue declined 0.2%, primarily due to a decrease in Europe and North America, partially offset by an increase in Asia Pacific and South America.
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%.
The results of operations for the Automotive OEM segment for 2025, 2024 and 2023 were as follows: 2025 compared to 2024 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2025 2024 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 3,288 $ 3,188 3.2 % 2.0 % — % — % 1.2 % 3.2 % Operating income $ 693 $ 625 10.9 % 9.8 % — % (0.2) % 1.3 % 10.9 % Operating margin % 21.1 % 19.6 % 150 bps 150 bps — — — 150 bps • Operating revenue increased due to higher organic revenue and the favorable effect of foreign currency translation. • Organic revenue grew 2.0% compared to worldwide auto builds which increased 4%.
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. 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.
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 Company has completed the allocation of purchase price for both of these acquisitions.
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.
Asia Pacific organic revenue declined 5.7% primarily due to lower demand in the Australia and New Zealand residential end markets. • Operating margin of 30.2% increased 90 basis points primarily driven by benefits from the Company's enterprise initiatives and lower restructuring expenses, partially offset by unfavorable operating leverage of 110 basis points, unfavorable price/cost of 50 basis points and higher employee-related expenses. 32 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 $ 1,909 $ 2,033 (6.1) % (6.1) % — % — % — % (6.1) % Operating income $ 559 $ 578 (3.4) % (2.5) % — % (0.8) % (0.1) % (3.4) % Operating margin % 29.3 % 28.4 % 90 bps 110 bps — (20) bps — 90 bps • Operating revenue decreased due to lower organic revenue. • Organic revenue declined 6.1% due to lower demand across all major regions.
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 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. In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment.
After-tax ROIC increased 130 basis points for the twelve month period ended December 31, 2023 compared to the prior year period as a result of a 6.6% increase in after-tax operating income versus a 2.0% increase in average invested capital.
After-tax ROIC decreased 190 basis points for the twelve month period ended December 31, 2025 compared to the prior year period as a result of a 5.2% increase in average invested capital and a 1.2% decrease in after-tax operating income.
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.
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 2025 2024 2023 Automotive OEM $ 3,288 $ 3,188 $ 3,235 Food Equipment 2,699 2,647 2,622 Test & Measurement and Electronics 2,825 2,818 2,832 Welding 1,890 1,851 1,902 Polymers & Fluids 1,765 1,764 1,804 Construction Products 1,820 1,909 2,033 Specialty Products 1,775 1,743 1,697 Total segments 16,062 15,920 16,125 Intersegment revenue (18) (22) (18) Total $ 16,044 $ 15,898 $ 16,107 Operating Income In millions 2025 2024 2023 Automotive OEM $ 693 $ 625 $ 561 Food Equipment 753 719 713 Test & Measurement and Electronics 694 703 686 Welding 621 597 605 Polymers & Fluids 493 484 482 Construction Products 550 559 578 Specialty Products 553 528 449 Total segments 4,357 4,215 4,074 Unallocated (141) 49 (34) Total $ 4,216 $ 4,264 $ 4,040 Segments are allocated a fixed overhead charge based on the segment's revenue.
ITW businesses have the right "raw material" in terms of market and business attributes that best fit the ITW Business Model and have significant potential to drive above-market organic growth over the long-term.
Portfolio Discipline The Company only operates in industries where it can generate significant, long-term competitive advantage from the ITW Business Model. ITW businesses have the right "raw material" in terms of market and business attributes that best fit the ITW Business Model and have significant potential to drive above-market organic growth over the long-term.
As of December 31, 2024, the Company had $948 million of cash and equivalents on hand and no outstanding borrowings under its $3.0 billion revolving credit facility. The Company also has maintained strong access to public debt markets.
LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of liquidity are free cash flow and short-term credit facilities. As of December 31, 2025, the Company had $851 million of cash and equivalents on hand and no outstanding borrowings under its $3.0 billion revolving credit facility. The Company also has maintained strong access to public debt markets.
Proceeds from the issuance were used for general corporate purposes, including the repayment of a portion of the indebtedness under the commercial paper program and the Euro Credit Agreement. The Company may issue commercial paper to fund general corporate needs, share repurchases, and small and medium-sized acquisitions.
Proceeds from the issuance were used for general corporate purposes, including the repayment of a portion of the indebtedness under the commercial paper program and the Euro Credit Agreement.
Therefore, the Company recorded the pre-tax cumulative effect of this change in accounting method of $117 million as a reduction of Cost of revenue in the first quarter of 2024. Refer to Note 1. Description of Business and Summary of Significant Accounting Policies in Item 8.
Unallocated expenses in 2024 included the favorable pre-tax cumulative effect of the LIFO accounting method change of $117 million in the first quarter of 2024. Refer to Note 1. Description of Business and Summary of Significant Accounting Policies in Item 8.
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.
Service organic revenue increased 0.4%. • Operating margin of 27.9% increased 70 basis points primarily driven by benefits from the Company's enterprise initiatives and positive operating leverage of 20 basis points, partially offset by higher operating expenses, including employee-related expenses and additional investment in the business. 27 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%.
Additionally, Short-term debt included $778 million and $464 million of commercial paper as of December 31, 2024 and 2023, respectively.
Short-term debt also included commercial paper of $1.3 billion and $778 million as of December 31, 2025 and December 31, 2024, respectively.
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.
For comparability, the Company also excluded the net discrete tax benefit of $27 million in the third quarter of 2025 and the discrete tax benefit of $21 million in the first quarter of 2025 from net income and the effective tax rate for the year ended December 31, 2025.
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.
These subsidiaries were not material to the Company's results of operations or financial position. 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.
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.
Summarized cash flow information for the years ended December 31, 2025, 2024 and 2023 was as follows: In millions 2025 2024 2023 Net cash provided by operating activities $ 3,126 $ 3,281 $ 3,539 Additions to plant and equipment (419) (437) (455) Free cash flow $ 2,707 $ 2,844 $ 3,084 Cash dividends paid $ (1,785) $ (1,695) $ (1,615) Repurchases of common stock (1,500) (1,500) (1,500) Acquisition of businesses (excluding cash and equivalents) (119) (115) — Proceeds from sale of operations and affiliates 1 — 7 Proceeds from sale of noncontrolling interest in Wilsonart International Holdings LLC — 395 — Net proceeds from (repayments of) debt 508 (8) 294 Other 49 27 84 Effect of exchange rate changes on cash and equivalents 42 (65) 3 Net increase (decrease) in cash and equivalents $ (97) $ (117) $ 357 Stock Repurchase Programs On May 7, 2021, 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 "2021 Program").
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.
The results of operations for the Specialty Products segment for 2025, 2024 and 2023 were as follows: 2025 compared to 2024 For the Years Ended Dollars in millions December 31, Components of Increase (Decrease) 2025 2024 Inc (Dec) Organic Acquisition/Divestiture Restructuring Foreign Currency Total Operating revenue $ 1,775 $ 1,743 1.8 % 1.0 % — % — % 0.8 % 1.8 % Operating income $ 553 $ 528 4.7 % 4.0 % — % (0.1) % 0.8 % 4.7 % Operating margin % 31.2 % 30.3 % 90 bps 90 bps — — — 90 bps • Operating revenue increased due to higher organic revenue and the favorable effect of foreign currency translation. • Organic revenue grew 1.0% as equipment sales increased 7.4%, partially offset by a decline in consumables of 0.9%.
The electronics assembly businesses decreased 19.3% primarily due to lower demand in North America and Asia Pacific.
The electronics assembly businesses decreased 0.1% primarily due to lower demand in Asia Pacific, partially offset by growth in North America.
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.
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.
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.
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. The transaction closed immediately after the execution of the purchase agreement.
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 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. Additionally, the effective tax rates for 2025, 2024 and 2023 included discrete income tax benefits of $8 million, $14 million and $20 million, respectively, related to excess tax 34 benefits from stock-based compensation.
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.
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.
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.
Product line simplification activities reduced organic revenue by 100 basis points. ◦ North American organic revenue declined 5.5% primarily due to lower demand in the residential and commercial end markets. Organic revenue in the United States residential end market decreased 6.4%. Organic revenue in the commercial end market was flat.
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.
The other electronics businesses, which include the contamination control, static control and pressure sensitive adhesives businesses, increased 1.6% with higher demand in North America and Asia Pacific, partially offset by a decline in Europe. • Operating margin of 24.6% decreased 30 basis points primarily driven by unfavorable operating leverage of 40 basis points, higher employee-related expenses and the dilutive impact of 20 basis points from acquisitions, partially offset by benefits from the Company's enterprise initiatives and lower intangible asset amortization expense. 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 $ 2,818 $ 2,832 (0.5) % (1.0) % 0.9 % — % (0.4) % (0.5) % Operating income $ 703 $ 686 2.5 % 4.0 % (1.0) % — % (0.5) % 2.5 % Operating margin % 24.9 % 24.2 % 70 bps 130 bps (50) bps — (10) bps 70 bps • Operating revenue decreased due to lower organic revenue and the unfavorable effect of foreign currency translation, partially offset by revenue from acquisitions. • The Company completed the acquisition of one business for $57 million, net of cash acquired, on January 2, 2024, and completed the acquisition of a second business for $59 million, net of cash acquired, on April 1, 2024.
In May 2024, the Company issued €650 million of 3.25% Euro notes due May 17, 2028 at 99.525% of face value and €850 million of 3.375% Euro notes due May 17, 2032 at 99.072% of face value.
The weighted-average interest rate on commercial paper outstanding was 3.84% and 4.56% as of December 31, 2025 and 2024, respectively. 39 In May 2024, the Company issued €650 million of 3.25% Euro notes due May 17, 2028 at 99.525% of face value and €850 million of 3.375% Euro notes due May 17, 2032 at 99.072% of face value.
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.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed5 unchanged
Biggest changeThe 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.
Biggest changeThe outstanding balances of the Euro notes issued in May 2014, May 2015, June 2019 and May 2024, and the term loan under the Euro Credit Agreement are designated as hedges of a portion of the Company's net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations.
Foreign Currency Risk The Company operates in the U.S. and 50 foreign countries. The funding for the foreign manufacturing operations is provided primarily through the permanent investment of equity capital. The Company's products are typically manufactured and sold within the same country or economic union.
Foreign Currency Risk The Company operates in the U.S. and 48 foreign countries. The funding for the foreign manufacturing operations is provided primarily through the permanent investment of equity capital. The Company's products are typically manufactured and sold within the same country or economic union.
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
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, 2025, 2024 and 2023 was $(589) million, $301 million and $(109) million, respectively.
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.
The carrying value of the outstanding balance of Euro-denominated debt that was designated as a net investment hedge as of December 31, 2025 and December 31, 2024 was $5.0 billion and $4.4 billion, respectively. Refer to Note 10. Debt in Item 8. Financial Statements and Supplemental Data for additional information regarding the Company's outstanding Euro debt. 43
Removed
On 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.

Other ITW 10-K year-over-year comparisons