Illinois Tool Works Inc. (NYSE:ITW) stock was trading lower on Wednesday after the company reported better-than-expected first-quarter 2025 results.

The company reported revenue of $3.84 billion, a 3.4% decline year over year, which aligns with the consensus estimate. EPS for the quarter stood at $2.38, down from $2.73 YoY and above the consensus of $2.36.

Organic revenue declined by 1.6%, while organic revenue remained nearly flat on an equal-day basis. Foreign currency translation had a negative impact of 1.8% on revenue.

Revenue By Segments: Automotive OEM $786 million (-3.7% YoY), Food Equipment $627 million (-0.7% YoY), Test & Measurement and Electronics $652 million (-6.3% YoY), Welding $472 million (-0.9% YoY), Polymers & Fluids $429 million (-0.8% YoY), Construction Products $443 million (-9.2% YoY) and Specialty Products $435 million (-1% YoY).

Operating income decreased 15.6% year over year to $951 million, and the operating margin contracted 360 bps to 24.8%. Enterprise initiatives contributed 120 basis points, offset by higher restructuring expenses from 80/20 projects and one-time items.

ITW’s operating cash flow was $592 million for the quarter, with free cash flow of $496 million, reflecting a 71% conversion to net income. The company repurchased $375 million of its shares during the quarter.

“Acknowledging the uncertain external environment, we are maintaining our full year 2025 guidance as we expect our ongoing pricing actions to offset tariff cost impacts. ITW is built to outperform in today’s volatile environment,” commented Christopher A. O’Herlihy, president and CEO.

“Our largely ‘produce where we sell’ manufacturing strategy, decentralized operating culture which enables rapid ‘read and react’ response, and diversified high-quality business portfolio all provide resilience during times of volatility and uncertainty. Our strong financial profile allows us to maintain our strategic investments and focus on driving continued progress on our long-term strategy to make above-market organic growth, fueled by Customer-back Innovation, into a core ITW strength,” O’Herlihy concluded.

2025 Guidance reaffirmed: ITW maintains its GAAP EPS guidance of $10.15 – $10.55 versus the consensus of $10.27.

Revenue and organic growth are projected to be 0-2%, with an operating margin expected between 26.5% and 27.5%.

The free cash flow is expected to exceed 100% of net income, and the company plans to repurchase $1.5 billion in shares. The projected effective tax rate is 24%.

Price Action: ITW shares traded lower by 3.58% at $233.10 at the last check Wednesday.

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