Illinois Tool Works Inc. (NYSE:ITW) shares traded higher Tuesday after the company reported second-quarter 2026 results that beat analyst expectations and raised its full-year outlook.
GAAP diluted EPS of $2.84 topped the $2.79 estimate and rose 10.1% from $2.58 a year earlier. Revenue increased 6.1% year over year to $4.301 billion, above the $4.189 billion estimate.
• Illinois Tool Works stock is surging to new heights today. What’s behind ITW gains?
Earnings and Margins
Organic revenue grew 4.5%, led by 6.4% growth in North America. Currency translation added 1.4 percentage points, while an acquisition contributed 0.2 point.
Net income rose to $815 million from $755 million. Operating income increased 7.4% to a record $1.15 billion.
Operating margin expanded 40 basis points to 26.7%, aided by a 120-basis-point contribution from enterprise initiatives.
Pricing exceeded higher raw-material costs in dollar terms, though timing lags modestly pressured margins. Acquisition-related intangible amortization reduced GAAP EPS by four cents.
Segment Performance
Test & Measurement and Electronics revenue rose 12.1% to $769 million, with 10% organic growth. Margin expanded 240 basis points to 25.2%.
Welding revenue increased 14.7% to $549 million, including 13.9% organic growth, while margin fell 70 basis points to 32.4%.
Polymers & Fluids revenue rose 8.8% to $476 million, with margin expanding 160 basis points to 29.3%.
Food Equipment revenue increased 1.6% to $692 million, while Automotive OEM revenue rose 1.3% to $857 million.
Construction Products revenue grew 4.3% to $494 million. Specialty Products revenue rose 3% to $468 million, while margin declined 110 basis points to 31.5%.
Cash Flow and Capital Returns
Operating cash flow totaled $723 million. Free cash flow rose 41% to $631 million and represented 77% of net income.
Cash and equivalents were $839 million, while total debt stood at $9.69 billion.
ITW returned more than $1.2 billion to shareholders, including $750 million through share repurchases.
2026 Guidance Raised
ITW raised full-year GAAP EPS guidance to $11.35-$11.55 from $11.10-$11.50, versus the $11.34 estimate.
Sales guidance increased to $16.686 billion-$16.846 billion, above the $16.599 billion estimate.
The company expects 3%-4% organic growth, a 26.5%-27.5% operating margin, free cash flow conversion above 100% and about $1.5 billion in share repurchases.
Management Commentary
CEO Christopher A. O'Herlihy said the quarter reflected stronger organic growth, record profitability and improved performance in capital-expenditure-related businesses.
"Our results reflect a meaningful acceleration in our capex-related segments, led by double-digit organic growth in Welding and Test & Measurement and Electronics, alongside strong performance in Polymers & Fluids."
He added that stronger operating momentum supported the company's decision to raise both revenue and earnings guidance for 2026.
ITW Price Action: Illinois Tool Works shares were up 5.03% at $299.06 at the time of publication on Tuesday, according to Benzinga Pro data.
Photo by T. Schneider via Shutterstock
