ILLINOIS TOOL WORKS INC
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
ITW$280.95-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000049826-24-000020
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000049826-24-000038
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 193 previous paragraphs and 204 current paragraphs.
110 unchanged; 65 reworded; 28 added; 18 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
•Organic revenue was essentially flat in the second quarter and year-to-date periods as growth in the Specialty Products, Polymers & Fluids, Food Equipment and Automotive OEM segments was offset by a decline in the Construction Products, Welding and Test & Measurement and Electronics segments. Product line simplification activities reduced organic revenue by 50 basis points and 40 basis points in the second quarter and year-to-date periods, respectively.
Current report
◦Asia Pacific organic revenue increased 2.9% in the second quarter and 4.2% in the year-to-date period primarily due to growth in the Automotive OEM segment of 10.3% and 15.1% in each respective period. Organic revenue in China increased 4.6% and 9.5% in the second quarter and year-to-date periods, respectively, driven by an increase in five segments, primarily due to growth in the Automotive OEM segment, partially offset by a decline in the Test & Measurement and Electronics and Construction Products segments.
Current report
•Operating margin was 26.2% in the second quarter. The increase of 140 basis points was primarily due to benefits from the Company's enterprise initiatives of 140 basis points and favorable price/cost of 40 basis points, partially offset by higher employee-related expenses and mix.
Current report
•Operating margin was 19.4% in the second quarter. The increase of 260 basis points was primarily driven by benefits from the Company's enterprise initiatives, lower restructuring expenses and favorable price/cost of 30 basis points, partially offset by higher employee-related expenses and continued investment in the business.
Current report
•Operating revenue increased in the second quarter due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation. In the year-to-date period, operating revenue grew primarily due to higher organic revenue.
Current report
•Organic revenue increased 2.5% in the second quarter as equipment and service organic revenue grew 1.4% and 4.6%, respectively. In the year-to-date period, organic revenue grew 0.6% as equipment organic revenue declined 1.1% and service organic revenue grew 3.9%.
Current report
◦North American organic revenue increased 1.8% in the second quarter. Equipment organic revenue increased 1.2% primarily due to higher demand in the institutional and food retail end markets, partially offset by a decline in the independent restaurant end market. Service organic revenue increased 2.9%. In the year-to-date period, North American organic revenue declined 0.2%. Equipment organic revenue declined 1.9% primarily due to lower demand in the independent restaurant end market, partially offset by growth in the food retail and institutional end markets. Service organic revenue grew 2.8%.
Current report
◦International organic revenue increased 3.5% and 1.9% in the second quarter and year-to-date periods, respectively. Equipment organic revenue increased 1.6% in the second quarter and was flat in the year-to-date period primarily due to higher demand in the European warewash and cooking end markets and growth in Asia Pacific, offset by lower demand in the European refrigeration end market. Service organic revenue increased 7.7% and 5.9% in the second quarter and year-to-date periods, respectively.
Current report
•Operating margin was 27.1% in the second quarter. The decrease of 70 basis points was primarily driven by higher employee-related expenses and additional investment in the business, partially offset by benefits from the Company's enterprise initiatives, favorable operating leverage of 50 basis points and favorable price/cost of 20 basis points.
Current report
•In the year-to-date period, operating margin of 26.5% decreased 70 basis points primarily driven by higher employee-related expenses and additional investment in the business, partially offset by benefits from the Company's enterprise initiatives, favorable price/cost of 40 basis points and favorable operating leverage of 20 basis points.
Current report
•Operating revenue decreased in the second quarter and year-to-date periods due to lower organic revenue and the unfavorable effect of foreign currency translation.
Current report
•Organic revenue decreased 4.7% in the second quarter as equipment and consumables declined 5.4% and 3.4%, respectively. In the year-to-date period, organic revenue declined 4.1% as equipment and consumables declined 3.5% and 4.9%, respectively.
Current report
◦North American organic revenue declined 6.2% in the second quarter and 4.4% in the year-to-date period. In the second quarter, the industrial and commercial end markets decreased 7.5% and 5.7%, respectively. In the year-to-date period, the industrial and commercial end markets declined 4.3% and 5.9%, respectively.
Current report
•Operating margin was 32.9% in the second quarter. The decrease of 100 basis points was primarily driven by higher employee-related expenses and unfavorable operating leverage of 70 basis points, partially offset by benefits from the Company's enterprise initiatives and favorable price/cost of 60 basis points.
Current report
•In the year-to-date period, operating margin of 32.8% decreased 10 basis points primarily driven by higher employee-related expenses and unfavorable operating leverage of 60 basis points, partially offset by benefits from the Company's enterprise initiatives and favorable price/cost of 70 basis points.
Current report
•Operating revenue decreased in the second quarter and year-to-date periods due to the unfavorable effect of foreign currency translation, partially offset by higher organic revenue.
Current report
•Organic revenue increased 2.6% and 0.9% in the second quarter and year-to-date periods, respectively. Product line simplification activities reduced organic revenue by 20 basis points in the second quarter and 30 basis points in the year-to-date period.
Current report
◦Organic revenue for the polymers businesses grew 10.0% and 5.2% in the second quarter and year-to-date periods, respectively, primarily due to increases in South America, Europe and Asia Pacific, partially offset by a decrease in North America.
Current report
◦Organic revenue for the fluids businesses grew 4.0% in the second quarter and 1.9% in the year-to-date period driven by higher demand in Europe primarily due to growth in the hygiene end market.
Current report
•In the year-to-date period, operating margin of 27.0% increased 180 basis points primarily driven by benefits from the Company's enterprise initiatives, favorable price/cost of 90 basis points, lower restructuring expenses, lower intangible asset amortization expense and favorable operating leverage of 20 basis points, partially offset by higher employee-related expenses.
Current report
◦North American organic revenue declined 1.9% in the second quarter and 2.2% in the year-to-date period due to lower demand in the residential and commercial end markets. Organic revenue in the United States residential end market decreased 1.6% and 1.1% in the second quarter and year-to-date periods, respectively, and the commercial end market declined 8.9% in the second quarter and 10.8% in the year-to-date period. Organic revenue in Canada grew 11.9% and 2.9% in the second quarter and year-to-date periods, respectively.
Current report
•Operating margin was 29.4% in the second quarter. The increase of 10 basis points was 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 80 basis points, higher restructuring expenses and higher employee-related expenses.
Current report
•Organic revenue increased 6.7% in the second quarter as consumables and equipment sales grew 5.1% and 12.8%, respectively. In the year-to-date period, organic revenue grew 6.1% as equipment sales grew 26.2% and consumables increased 1.4%. In both respective periods, organic revenue grew in all major regions. Product line simplification activities reduced organic revenue by 230 basis points in the second quarter and 190 basis points in the year-to-date period.
Current report
◦North American organic revenue grew 4.7% in the second quarter primarily driven by growth in the ground support equipment, consumer packaging, strength films and appliance businesses, partially offset by a decline in the decorative and thermal foils businesses. In the year-to-date period, organic revenue increased 2.0% primarily driven by growth in the ground support equipment, appliance and strength films businesses, partially offset by a decline in the decorative and thermal foils and consumer packaging businesses.
Current report
◦International organic revenue increased 10.4% in the second quarter primarily due to growth in Europe in the ground support equipment and appliance businesses, partially offset by a decline in the consumer packaging businesses. In the year-to-date period, organic revenue grew 14.3% primarily due to an increase in Europe in the ground support equipment, consumer packaging and appliance businesses.
Current report
•Operating margin was 31.9% in the second quarter. The increase of 590 basis points was primarily driven by benefits from the Company's enterprise initiatives, favorable operating leverage of 130 basis points, favorable price/cost of 100 basis points, lower restructuring expenses, and lower intangible asset amortization expense, partially offset by higher employee-related expenses and product mix.
Current report
A reconciliation of the tax rate for the three and six months ended June 30, 2023, excluding the second quarter 2023 discrete tax benefit of $20 million related to amended 2021 U.S. taxes, is as follows:
Current report
On May 17, 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. 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.
Removed paragraphs (18)
Previous report
•Organic revenue declined 0.6% as a decrease in the Construction Products, Welding, Test & Measurement and Electronics, Food Equipment and Polymers & Fluids segments was partially offset by growth in the Automotive OEM and Specialty Products segments. Product line simplification activities reduced organic revenue by 40 basis points.
Previous report
◦North American organic revenue decreased 3.5% as all seven segments declined primarily driven by the Test & Measurement and Electronics and Automotive OEM segments.
Previous report
•Diluted earnings per share (EPS) of $2.73 for the first quarter of 2024 increased 17.2%, or 4.7% excluding the favorable impact of $0.29 from the LIFO accounting method change.
Previous report
•Organic revenue decreased 1.4%, which had a challenging comparable in the prior year first quarter of 16.0% growth. Equipment organic revenue declined 3.7% and service organic revenue grew 3.2%.
Previous report
◦North American organic revenue declined 2.3%. Equipment organic revenue decreased 5.0% with lower demand in the food service and restaurant end markets, partially offset by growth in the food retail end markets. Service organic revenue increased 2.7%.
Previous report
◦International organic revenue was flat. Equipment organic revenue decreased 1.8% primarily due to lower demand in the European warewash and refrigeration end markets, partially offset by higher demand in the Asian warewash and the European cooking end markets. Service organic revenue increased 4.1%.
Previous report
•Operating revenue declined primarily due to lower organic revenue.
Previous report
•Organic revenue decreased 3.5%, which had a challenging comparable in the prior year first quarter of 10.2% growth. Consumables and equipment declined 6.4% and 1.7%, respectively.
Previous report
◦North American organic revenue decreased 2.6% primarily due to a decline in the commercial and industrial end markets of 6.1% and 1.1%, respectively.
Previous report
•Operating margin of 32.7% increased 80 basis points primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 90 basis points, partially offset by higher employee-related expenses and unfavorable operating leverage of 50 basis points.
Previous report
•Organic revenue decreased 0.9% as a decline in North America and Europe was partially offset by growth in South America and Asia Pacific. Product line simplification activities reduced organic revenue by 30 basis points.
Previous report
◦Organic revenue for the fluids businesses was essentially flat as lower demand in Europe was offset by higher demand in the North American hygiene end market.
Previous report
◦Organic revenue for the polymers businesses was essentially flat as growth in South America and Asia was offset by a decline in North America and Europe. Demand in North America and Europe was negatively impacted by decreases in the wind and industrial end markets.
Previous report
•Operating revenue declined due to lower organic revenue and the unfavorable effect of foreign currency translation.
Previous report
◦North American organic revenue decreased 2.5% primarily due to lower demand in the United States commercial and residential end markets of 13.0% and 0.6%, respectively. Organic revenue in Canada declined 4.7%.
Previous report
•Organic revenue increased 5.5%. Equipment sales increased 42.6% primarily driven by higher demand in Europe and North America. Consumable sales declined 2.2% primarily due to lower demand in North America. Product line simplification activities reduced organic revenue by 140 basis points.
Previous report
◦North American organic revenue decreased 0.5% primarily driven by a decline in the consumer packaging, specialty films, and decorating equipment businesses, partially offset by growth in the ground support equipment and appliance businesses.
Previous report
◦International organic revenue increased 18.6% primarily due to growth in Europe in the ground support equipment and consumer packaging businesses and growth in Asia due to higher demand in the appliance business.
Reworded paragraphs (65)
Previous wording
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. 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 three months ended March 31, 2023. Refer to Note 3. Divestitures in Item 1. Financial Statements for further information regarding this divestiture.
Current wording
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. 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 six months ended June 30, 2023. There was no operating revenue related to this business included in the Company's results of operations for the three months ended June 30, 2023. Refer to Note 3. Divestitures in Item 1. Financial Statements for further information regarding this divestiture.
Previous wording
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. This acquisition was not material to the Company’s results of operations, financial position or cash flows.
Current wording
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. The purchase price for both acquisitions is 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. Refer to Note 2. Acquisitions in Item 1. Financial Statements for further information regarding these acquisitions.
Previous wording
During the first quarter of 2022, Russian military forces invaded Ukraine. 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 March 31, 2024. The revenue for these subsidiaries for the three months ended March 31, 2024 was approximately $5 million. These subsidiaries are not material to the Company’s results of operations or financial position.
Current wording
During the first quarter of 2022, Russian military forces invaded Ukraine. 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 $26 million as of June 30, 2024. The revenue for these subsidiaries for the three and six months ended June 30, 2024 was approximately $6 million and $11 million, respectively. These subsidiaries are not material to the Company’s results of operations or financial position.
Previous wording
During the first quarter of 2024, the Company changed the method used to determine the cost of inventory at certain U.S. businesses from the last-in, first-out ("LIFO") method to the first-in, first-out ("FIFO") method, as the Company believes the FIFO method is preferable because it provides a more consistent method for valuing inventory across the Company’s operations, improves comparability with peers, and better reflects the current value of inventories at the balance sheet date. The LIFO provision for the years ended December 31, 2023 and 2022 was $6 million of expense and $7 million of income, respectively, and was not material to the Company’s results of operations, financial position or cash flows. Therefore, the Company has 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. Significant Accounting Policies and Note 7. Inventories in Item 1. Financial Statements for additional information regarding this change in accounting method and the Company’s inventory balances.
Current wording
During the first quarter of 2024, the Company changed the method used to determine the cost of inventory at certain U.S. businesses from the last-in, first-out ("LIFO") method to the first-in, first-out ("FIFO") method, as the Company believes the FIFO method is preferable because it provides a more consistent method for valuing inventory across the Company’s operations, improves comparability with peers, and better reflects the current value of inventories at the balance sheet date. The LIFO provision for the years ended December 31, 2023 and 2022 was $6 million of expense and $7 million of income, respectively, and was not material to the Company’s results of operations, financial position or cash flows. 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. Significant Accounting Policies and Note 7. Inventories in Item 1. Financial Statements for additional information regarding this change in accounting method and the Company’s inventory balances.
Previous wording
In a challenging and dynamic environment, the Company delivered strong financial results in the first quarter of 2024 primarily due to the continued successful execution of enterprise initiatives and continued focus on the highly differentiated ITW Business Model.
Current wording
In a challenging and dynamic environment, the Company delivered solid financial results in the second quarter and year-to-date periods of 2024 primarily due to the continued successful execution of enterprise initiatives and continued focus on the highly differentiated ITW Business Model.
Previous wording
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 the first quarter of 2024 compared to 2023.
Current wording
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 the second quarter and year-to-date periods of 2024 compared to 2023.
Previous wording
Cost of revenue was $2.1 billion and $2.3 billion in the first quarter of 2024 and 2023, respectively. Cost of revenue was 8.4% lower in the first quarter of 2024 compared to 2023 primarily due to the LIFO accounting method change, which reduced cost of revenue by 5.0%. Cost of revenue as a percent of operating revenue improved in the first quarter of 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 and unfavorable operating leverage.
Current wording
Cost of revenue was $2.26 billion and $2.34 billion in the second quarter of 2024 and 2023, respectively. Cost of revenue was 3.5% lower in the second quarter of 2024 compared to 2023 primarily due to lower revenue and the effect of foreign currency translation, which reduced cost of revenue by 2.5% and 1.2%, respectively. Cost of revenue as a percent of operating revenue improved in the second quarter of 2024 compared to 2023 primarily due to benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses. In the year-to-date period, cost of revenue was $4.41 billion and $4.69 billion in 2024 and 2023, respectively. Cost of revenue was 5.9% lower in 2024 compared to 2023 primarily due to lower revenue and the first quarter 2024 LIFO accounting method change, which reduced cost of revenue by 2.8% and 2.5%, respectively. 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.
Previous wording
Selling, administrative, and research and development expenses were $676 million and $675 million in the first quarter of 2024 and 2023, respectively. Selling, administrative, and research and development expenses as a percent of operating revenue were slightly higher in 2024 compared to 2023 primarily due to higher employee-related expenses, partially offset by benefits from the Company's enterprise initiatives.
Current wording
Selling, administrative, and research and development expenses were essentially flat in the second quarter and year-to-date periods of 2024 compared to the respective 2023 periods. Selling, administrative, and research and development expenses as a percent of operating revenue were also flat in the second quarter and year-to-date periods of 2024 compared to the respective 2023 periods, as benefits from the Company's enterprise initiatives were offset by higher employee-related expenses and the unfavorable impact of acquisitions in the first and second quarters of 2024.
Previous wording
Amortization and impairment of intangible assets was lower in the first quarter of 2024 compared to 2023 primarily due to fully amortized intangible assets.
Current wording
Amortization and impairment of intangible assets was lower in the second quarter and year-to-date periods of 2024 compared to 2023 primarily due to fully amortized intangible assets.
Previous wording
Refer to the "Results of Operations for Total Company" and the "Results of Operation by Segment" sections for additional discussion of operating results for the first quarter of 2024 compared to 2023.
Current wording
Refer to the "Results of Operations for Total Company" and the "Results of Operation by Segment" sections for additional discussion of operating results for the second quarter and year-to-date periods of 2024 compared to 2023.
Previous wording
The Company's consolidated results of operations for the first quarter of 2024 and 2023 were as follows:
Current wording
The Company's consolidated results of operations for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous wording
•Operating revenue declined due to the unfavorable effect of foreign currency translation and lower organic revenue.
Current wording
•Operating revenue decreased in the second quarter and year-to-date periods primarily due to the unfavorable effect of foreign currency translation and lower organic revenue.
Previous wording
◦Asia Pacific increased 5.6% as growth in five segments, primarily driven by Automotive OEM, was partially offset by a decline in the Construction Products and Welding segments. Organic revenue in China increased 15.3% due to an increase in the Automotive OEM, Polymers & Fluids, Specialty Products, Test & Measurement and Electronics and Food Equipment segments, partially offset by a decline in the Construction Products and Welding segments.
Current wording
◦North American organic revenue decreased 2.0% in the second quarter as a decline in five segments was partially offset by growth in the Specialty Products and Food Equipment segments. In the year-to-date period, organic revenue declined 2.7% driven by a decrease in six segments, partially offset by an increase in the Specialty Products segment.
Previous wording
◦Europe, Middle East and Africa organic revenue increased 1.3% as growth in the Specialty Products, Test & Measurement and Electronics and Automotive OEM segments was partially offset by a decline in the Construction Products, Polymers & Fluids, Welding and Food Equipment segments.
Current wording
◦Europe, Middle East and Africa organic revenue increased 0.6% in the second quarter as growth in four segments was partially offset by a decline in the Test & Measurement and Electronics, Construction Products and Automotive OEM segments. In the year-to-date period, organic revenue grew 1.0% driven by growth in six segments, partially offset by a decline in the Construction Products segment.
Previous wording
•Operating income of $1.1 billion grew 15.9%, or 3.8% excluding the $117 million favorable impact of the LIFO accounting method change discussed previously.
Current wording
•Operating income of $1.1 billion increased 4.5% in the second quarter compared to the prior year. In the year-to-date period, operating income of $2.2 billion grew 10.1%, or 4.2% excluding the $117 million favorable impact of the LIFO accounting method change discussed previously.
Previous wording
•Operating margin of 28.4% increased 420 basis points. Excluding the 300 basis points of favorable impact from the LIFO accounting method change, operating margin increased 120 basis points primarily driven by benefits from the Company's enterprise initiatives of 140 basis points and favorable price/cost of 90 basis points, partially offset by higher employee-related expenses, mix and unfavorable operating leverage of 20 basis points.
Current wording
•In the year-to-date period, operating margin of 27.3% increased 280 basis points. Excluding the 150 basis points of favorable impact from the LIFO accounting method change, operating margin increased 130 basis points primarily driven by benefits from the Company's enterprise initiatives of 140 basis points and favorable price/cost of 70 basis points, partially offset by higher employee-related expenses and mix.
Previous wording
•The Company's effective tax rate for the first quarter of 2024 and 2023 was 23.6% and 22.6%, respectively. The effective tax rates included discrete income tax benefits related to excess tax benefits from stock-based compensation of $9 million and $13 million for the first quarter of 2024 and 2023, respectively.
Current wording
•The Company's effective tax rate for the second quarter of 2024 and 2023 was 24.4% and 21.4%, respectively, and 24.0% and 22.0% for the year-to-date periods of 2024 and 2023, respectively. The effective tax rates for 2024 and 2023 included discrete income tax benefits related to excess tax benefits from stock-based compensation of $1 million and $4 million for the second quarter of 2024 and 2023, respectively, and $10 million and $17 million for the year-to-date period of 2024 and 2023, respectively. Additionally, the effective tax rate for the second quarter and year-to-date periods of 2023 included a discrete income tax benefit of $20 million related to amended 2021 U.S. taxes.
Previous wording
•Operating revenue declined due to lower organic revenue, partially offset by the favorable effect of foreign currency translation.
Current wording
•Diluted earnings per share (EPS) of $2.54 for the second quarter and $5.27 for the year-to-date period of 2024 increased 2.4% and 9.6%, respectively. In the year-to-date period, EPS increased 3.5% excluding the favorable effect of the first quarter 2024 LIFO accounting method change of $0.29.
Previous wording
•The Company repurchased approximately 1.4 million shares of its common stock in the first quarter of 2024 for approximately $375 million.
Current wording
•The Company repurchased approximately 1.6 million and 3.0 million shares of its common stock in the second quarter and year-to-date periods of 2024, respectively, for approximately $375 million and $750 million, respectively.
Previous wording
Total operating revenue and operating income for the first quarter of 2024 and 2023 were as follows:
Current wording
Total operating revenue and operating income for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous wording
Segments are allocated a fixed overhead charge based on the segment's revenue. Expenses not charged to the segments are reported separately as Unallocated. Because the Unallocated category includes a variety of items, it is subject to fluctuations on a quarterly and annual basis. Unallocated in 2024 includes the favorable pre-tax cumulative effect of the LIFO accounting method change of $117 million. Refer to Note 1. Significant Accounting Policies and Note 7. Inventories in Item 1. Financial Statements for additional information regarding this change in accounting method and the Company’s inventory balances.
Current wording
Segments are allocated a fixed overhead charge based on the segment's revenue. Expenses not charged to the segments are reported separately as Unallocated. Because the Unallocated category includes a variety of items, it is subject to fluctuations on a quarterly and annual basis. Unallocated in the six months ended June 30, 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. Significant Accounting Policies and Note 7. Inventories in Item 1. Financial Statements for additional information regarding this change in accounting method and the Company’s inventory balances.
Previous wording
The results of operations for the Automotive OEM segment for the first quarter of 2024 and 2023 were as follows:
Current wording
The results of operations for the Automotive OEM segment for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous wording
•Operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation.
Current wording
•Operating revenue decreased in the second quarter due to the unfavorable effect of foreign currency translation, partially offset by higher organic revenue. In the year-to-date period, operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation.
Previous wording
•Organic revenue increased 3.4% compared to worldwide auto builds which decreased 1%. Product line simplification activities reduced organic revenue by 50 basis points.
Current wording
•Organic revenue increased 0.4% in the second quarter and 1.9% in the year-to-date period compared to worldwide auto builds which were flat in both respective periods. Product line simplification activities reduced organic revenue by 50 basis points in the second quarter and year-to-date periods.
Previous wording
◦North American organic revenue decreased 5.7% compared to North American auto builds which increased 1% primarily due to customer mix and product line simplification activities. Auto builds for the Detroit 3, where the Company has higher content, declined 4%.
Current wording
◦North American organic revenue decreased 4.1% and 4.9% in the second quarter and year-to-date periods, respectively, compared to North American auto builds which grew 2% in the second quarter and year-to-date periods primarily due to customer mix and product line simplification activities. Auto builds for the Detroit 3, where the Company has higher content, declined 4% in the second quarter and 3% in the year-to-date period.
Previous wording
◦European organic revenue grew 2.2% compared to European auto builds which decreased 2% primarily due to market penetration gains and customer mix.
Current wording
◦European organic revenue decreased 1.7% in the second quarter and grew 0.3% in the year-to-date period compared to European auto builds which decreased 6% in the second quarter and 3% in the year-to-date period primarily due to market penetration gains.
Previous wording
◦Asia Pacific organic revenue increased 20.6%. China organic revenue grew 23.2%, including growth in the electric vehicles market and higher content in the Chinese original equipment manufacturers, versus China auto builds which increased 4%.
Current wording
◦Asia Pacific organic revenue increased 10.3% and 15.1% in the second quarter and year-to-date periods, respectively. China organic revenue increased 6.5% and 14.0% in the second quarter and year-to-date periods, respectively, including growth in the electric vehicles market and higher content in the Chinese original equipment manufacturers, versus China auto builds which increased 4% in the second quarter and 5% in the year-to-date period. Auto builds of foreign automotive manufacturers in China, where the Company has higher content, decreased 17% and 12% in the second quarter and year-to-date periods, respectively.
Previous wording
•Operating margin of 19.8% increased 370 basis points primarily driven by benefits from the Company's enterprise initiatives, favorable price/cost of 100 basis points and positive operating leverage of 60 basis points, partially offset by higher employee-related expenses and continued investment in the business.
Current wording
•In the year-to-date period, operating margin of 19.6% increased 320 basis points primarily driven by benefits from the Company's enterprise initiatives, favorable price/cost of 60 basis points and positive operating leverage of 40 basis points, partially offset by higher employee-related expenses and continued investment in the business.
Previous wording
The results of operations for the Food Equipment segment for the first quarter of 2024 and 2023 were as follows:
Current wording
The results of operations for the Food Equipment segment for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous wording
The results of operations for the Test & Measurement and Electronics segment for the first quarter of 2024 and 2023 were as follows:
Current wording
The results of operations for the Test & Measurement and Electronics segment for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous wording
•Operating revenue declined due to lower organic revenue and the unfavorable effect of foreign currency translation, partially offset by revenue from an acquisition in the first quarter of 2024.
Current wording
•Operating revenue decreased in the second quarter and year-to-date periods due to lower organic revenue and the unfavorable effect of foreign currency translation, partially offset by revenue from acquisitions in the first and second quarters of 2024.
Previous wording
•On January 2, 2024, the Company completed the acquisition ofone business for $57 million, net of cash acquired. Refer to Note 2. Acquisitions in Item 1. Financial Statements for additional information regarding the acquisition.
Current wording
•The Company completed the acquisition ofone 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. Refer to Note 2. Acquisitions in Item 1. Financial Statements for additional information regarding these acquisitions.
Previous wording
•Organic revenue decreased 1.3% primarily due to a decline in the semiconductor and electronics end markets, partially offset by growth in the MTS Test & Simulation business.
Current wording
•Organic revenue decreased 3.1% and 2.2% in the second quarter and year-to-date periods, respectively, primarily due to a decline in the semiconductor and electronics end markets, partially offset by growth in the MTS Test & Simulation business.
Previous wording
◦Organic revenue for the test and measurement businesses increased 2.1% primarily driven by growth in the MTS Test & Simulation business, partially offset by lower demand in the semiconductor and capital expenditure end markets in North America.
Current wording
◦Organic revenue for the test and measurement businesses decreased 3.2% and 0.6% in the second quarter and year-to-date periods, respectively, primarily driven by lower demand in the semiconductor and general industrial end markets in North America, partially offset by growth in the MTS Test & Simulation business.
Previous wording
◦Electronics organic revenue decreased 7.9% primarily due to a decline in the consumer electronics and semiconductor end markets. The electronics assembly businesses decreased 23.8% primarily due to lower demand in North America and Asia Pacific. The other electronics businesses, which include the contamination control, static control and pressure sensitive adhesives businesses, were essentially flat as growth in Asia Pacific was offset by a decline in North America and Europe.
Current wording
◦Electronics organic revenue decreased 3.0% in the second quarter and 5.6% in the year-to-date period primarily due to a decline in the consumer electronics and semiconductor end markets. The electronics assembly businesses decreased 15.0% and 19.7% in the second quarter and year-to-date periods, respectively, primarily due to lower demand in North America. The other electronics businesses, which include the contamination control, static control and pressure sensitive adhesives businesses, increased 2.2% in the second quarter and 1.1% in the year-to-date period due to higher demand across all major regions.
Previous wording
•Operating margin of 26.0% decreased 70 basis points primarily driven by higher employee-related expenses and unfavorable operating leverage of 30 basis points, partially offset by benefits from the Company's enterprise initiatives and favorable price/cost of 50 basis points.
Current wording
•Operating margin was 23.5% in the second quarter. The increase of 30 basis points was primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 50 basis points, partially offset by product mix, unfavorable operating leverage of 90 basis points, the dilutive impact of 50 basis points from acquisitions in 2024 and higher employee-related expenses.
Previous wording
•Operating margin of 23.4% decreased 110 basis points primarily driven by product mix, higher employee-related expenses, the dilutive impact of 50 basis points from an acquisition in the first quarter of 2024 and unfavorable operating leverage of 40 basis points, partially offset by favorable price/cost of 90 basis points and benefits from the Company's enterprise initiatives.
Current wording
•In the year-to-date period, operating margin of 23.4% decreased 40 basis points primarily driven by product mix, unfavorable operating leverage of 60 basis points, the dilutive impact of 50 basis points from acquisitions in 2024 and higher employee-related expenses, partially offset by favorable price/cost of 70 basis points and benefits from the Company's enterprise initiatives.
Previous wording
The results of operations for the Welding segment for the first quarter of 2024 and 2023 were as follows:
Current wording
The results of operations for the Welding segment for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous wording
◦International organic revenue declined 8.0% primarily due to lower equipment demand in the general industrial and oil and gas end markets in Asia Pacific and lower demand in Europe.
Current wording
◦International organic revenue increased 3.4% in the second quarter primarily due to higher demand in Europe, partially offset by lower demand in the general industrial and oil and gas end markets in Asia Pacific. In the year-to-date period, organic revenue declined 2.4% primarily due to lower demand in the general industrial and oil and gas end markets in Asia Pacific, partially offset by growth in Europe.
Previous wording
The results of operations for the Polymers & Fluids segment for the first quarter of 2024 and 2023 were as follows:
Current wording
The results of operations for the Polymers & Fluids segment for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
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Current report — wording carried from elsewhere
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 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 including inflation, 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 portion of future benefit payments related to pension and other postretirement benefits, the Company's information technology infrastructure, potential acquisitions and divestitures and the expected performance of acquired businesses and impact of divested businesses, the impact of U.S. and global tax legislation and the estimated timing and amount related to the resolution of tax matters, the cost of compliance with environmental regulations, the impact of failure of the