ILLINOIS TOOL WORKS INC
For the period ended Sep 30, 2024. Filed Oct 30, 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.
Sep 30, 2024 · Filed Oct 30, 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 2024-06-30; filed 2024-08-02.
0000049826-24-000038
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0000049826-24-000048
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 204 previous paragraphs and 207 current paragraphs.
114 unchanged; 81 reworded; 10 added; 6 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 25 previous and 26 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 (10)
Current report
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"). 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. 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. 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 quarters. Refer to Note 4. Sale of Noncontrolling Interest in Wilsonart International Holdings LLC and Note 6. Income Taxes in Item 1. Financial Statements for additional information regarding this transaction.
Current report
•Diluted earnings per share (EPS) of $3.91 for the third quarter of 2024 increased 53.3%, or 3.9% excluding the favorable impact of $1.26 from the sale of the Company's noncontrolling interest in Wilsonart. In the year-to-date period of 2024, EPS of $9.17 increased 24.6%, or 3.5% excluding the favorable impact from the first quarter 2024 LIFO accounting method change of $0.30 and the favorable impact of $1.25 from the Wilsonart transaction.
Current report
•Operating revenue decreased in the third quarter and year-to-date periods due to lower organic revenue and the unfavorable effect of foreign currency translation.
Current report
•Organic revenue decreased 1.0% in the third quarter as equipment and consumables declined 0.9% and 1.1%, respectively. In the year-to-date period, organic revenue declined 3.1% as equipment and consumables decreased 2.7% and 3.7%, respectively.
Current report
•In the year-to-date period, operating margin of 32.6% increased 10 basis points primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 70 basis points, partially offset by higher employee-related expenses and unfavorable operating leverage of 50 basis points.
Current report
•Operating margin was 27.9% in the third quarter. The decrease of 20 basis points was primarily driven by higher employee-related expenses and unfavorable price/cost of 20 basis points, partially offset by benefits from the Company's enterprise initiatives and lower intangible asset amortization expense.
Current report
•In the year-to-date period, operating margin of 29.6% increased 70 basis points primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 20 basis points, partially offset by unfavorable operating leverage of 130 basis points, higher restructuring expenses and higher employee-related expenses.
Current report
•Other income (expense) was income of $379 million in the third quarter of 2024 and $421 million in the year-to-date period. 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. Proceeds from the transaction, net of transaction costs, were $395 million, resulting in a pre-tax gain of $363 million. 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 quarters. Refer to Note 4. Sale of Noncontrolling Interest in Wilsonart International Holdings LLC in Item 1. Financial Statements for additional information regarding this transaction. Excluding the Wilsonart pre-tax gain, other income (expense) in the third quarter of 2024 increased $6 million compared to the third quarter of 2023 primarily due to investment losses in 2023. Excluding the Wilsonart pre-tax gain, the increase in the year-to-date period of $18 million was primarily driven by lower foreign currency transaction losses compared to 2023.
Current report
A reconciliation of the tax rate for the three and nine month periods ended September 30, 2024, 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:
Current report
Refer to Note 6. Income Taxes in Item 1. Financial Statement for additional information regarding the third quarter 2024 and second quarter 2023 discrete tax items.
Removed paragraphs (6)
Previous report
•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 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.
Previous 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.
Previous 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.
Previous report
•In the year-to-date period, operating margin of 29.4% increased 100 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 90 basis points and higher employee-related expenses.
Previous report
•Other income (expense) was income of $26 million in the second quarter of 2024 and $42 million in the year-to-date period, an increase of $6 million compared to the second quarter of 2023 and an increase of $12 million in the year-to-date period primarily due to foreign currency translation gains in 2024 versus foreign currency translation losses in 2023, partially offset by lower investment income in 2024.
Reworded paragraphs (81)
Previous wording
Illinois Tool Works Inc. (the "Company" or "ITW") is a global manufacturer of a diversified range of industrial products and equipment with 84 divisions in 51 countries. As of December 31, 2023, the Company employed approximately 45,000 people.
Current wording
Illinois Tool Works Inc. (the "Company" or "ITW") is a global manufacturer of a diversified range of industrial products and equipment. As of December 31, 2023, the Company had 84 divisions with approximately 45,000 people in 51 countries.
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 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.
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 nine months ended September 30, 2023. There was no operating revenue related to this business included in the Company's results of operations for the three months ended September 30, 2023. Refer to Note 3. Divestitures in Item 1. Financial Statements for further information regarding this divestiture.
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 $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.
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 September 30, 2024. The revenue for these subsidiaries for the three and nine months ended September 30, 2024 was approximately $6 million and $17 million, respectively. These subsidiaries are not material to the Company’s results of operations or financial position.
Previous 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.
Current wording
In a challenging and dynamic environment, the Company delivered solid financial results in the third 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 second quarter and year-to-date periods 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 third quarter and year-to-date periods of 2024 compared to 2023.
Previous 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.
Current wording
Cost of revenue was $2.2 billion and $2.3 billion in the third quarter of 2024 and 2023, respectively. Cost of revenue was 3.8% lower in the third quarter of 2024 compared to 2023 primarily due to lower revenue. Cost of revenue as a percent of operating revenue improved in the third 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 $6.6 billion and $7.0 billion in 2024 and 2023, respectively. Cost of revenue was 5.2% 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 3.1% and 1.7%, respectively. Cost of revenue as a percent of operating revenue improved in the year-to-date period 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.
Previous 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.
Current wording
Selling, administrative, and research and development expenses were $658 million and $615 million in the third quarter of 2024 and 2023, respectively, and $2.02 billion and $1.98 billion in the year-to-date period of 2024 and 2023, respectively. Selling, administrative, and research and development expenses as a percent of operating revenue were higher in the third quarter and year-to-date periods of 2024 compared to the respective 2023 periods, as higher employee-related expenses and the unfavorable impact of acquisitions in the first and second quarters of 2024 were partially offset by benefits from the Company's enterprise initiatives.
Previous 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.
Current wording
Amortization and impairment of intangible assets was lower in the third 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 second quarter and year-to-date periods 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 third quarter and year-to-date periods of 2024 compared to 2023.
Previous wording
The Company's consolidated results of operations for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Current wording
The Company's consolidated results of operations for the third quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous 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.
Current wording
•Operating revenue decreased in the third quarter and year-to-date periods primarily due to lower organic revenue and the unfavorable effect of foreign currency translation.
Previous wording
•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 wording
•Organic revenue decreased 1.4% in the third quarter as a decline in five segments was partially offset by growth in the Specialty Products and Polymers & Fluids segments. In the year-to-date period, organic revenue declined 0.7% as a decrease in the Construction Products, Welding and Test & Measurement and Electronics segments was partially offset by growth in the Specialty Products, Polymers & Fluids, Automotive OEM and Food Equipment segments. Product line simplification activities reduced organic revenue by 50 basis points in the third quarter and year-to-date periods.
Previous 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.
Current wording
◦North American organic revenue decreased 2.6% in the third quarter and 2.7% in the year-to-date period as a decrease in six segments was partially offset by an increase in the Specialty Products segment.
Previous 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.
Current wording
◦Europe, Middle East and Africa organic revenue decreased 0.5% as a decline in three segments was partially offset by growth in the Food Equipment, Polymers & Fluids, Welding and Specialty Products segments. In the year-to-date period, organic revenue grew 0.5% as growth in the Specialty Products, Food Equipment, Polymers & Fluids and Welding segments was partially offset by a decline in the Construction Products, Automotive OEM and Test & Measurements and Electronics segments.
Previous wording
◦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 wording
◦Asia Pacific organic revenue decreased 1.0% in the third quarter. Organic revenue in China decreased 0.2% as a decline in four segments was essentially offset by an increase in the Welding, Specialty Products and Polymers & Fluids segments. In the year-to-date period, Asia Pacific organic revenue grew 2.4% primarily due to growth in the Automotive OEM segment, partially offset by a decline in the Construction Products segment. China organic revenue grew 5.9% in the year-to-date period driven by an increase in four segments, primarily due to growth in the Automotive OEM segment, partially offset by a decline in the Test & Measurement and Electronics, Construction Products and Food Equipment segments.
Previous 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.
Current wording
•Operating income of $1.1 billion decreased 1.7% in the third quarter compared to the prior year. In the year-to-date period, operating income of $3.2 billion grew 5.9%, or 2.1% excluding the $117 million favorable impact of the LIFO accounting method change discussed previously.
Previous wording
•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 wording
•Operating margin of 26.5% in the third quarter was flat compared to the prior year as benefits from the Company's enterprise initiatives of 130 basis points and favorable price/cost of 30 basis points were offset by higher employee-related expenses and mix.
Previous 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.
Current wording
•In the year-to-date period, operating margin of 27.0% increased 180 basis points. Excluding the 100 basis points of favorable impact from the LIFO accounting method change in the first quarter of 2024, operating margin increased 80 basis points primarily driven by benefits from the Company's enterprise initiatives of 130 basis points and favorable price/cost of 50 basis points, partially offset by higher employee-related expenses and mix.
Previous 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.
Current wording
•The Company's effective tax rate for the third quarter of 2024 and 2023 was 14.9% and 23.8%, respectively, and 20.4% and 22.7% for the year-to-date periods of 2024 and 2023, respectively. The effective tax rates for the third quarter and year-to-date periods of 2024 benefited from discrete income tax benefits in 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. Refer to Note 4. Sale of Noncontrolling Interest in Wilsonart International Holdings LLC for more information regarding the Wilsonart transaction. The effective tax rate for the year-to-date period of 2023 included a discrete income tax benefit of $20 million in the second quarter of 2023 related to amended 2021 U.S. taxes. The effective tax rates for 2024 and 2023 also included discrete income tax benefits related to excess tax benefits from stock-based compensation of $1 million and $2 million for the third quarter of 2024 and 2023, respectively, and $11 million and $19 million for the year-to-date period of 2024 and 2023, respectively.
Previous 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.
Current wording
•The Company repurchased approximately 1.5 million and 4.5 million shares of its common stock in the third quarter and year-to-date periods of 2024, respectively, for approximately $375 million and $1.1 billion, respectively.
Previous wording
Total operating revenue and operating income for the second quarter and year-to-date periods of 2024 and 2023 were as follows:
Current wording
Total operating revenue and operating income for the third 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 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.
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 third quarter of 2023 included the impact of lower corporate expenses primarily related to an immaterial insurance recovery and favorable health and welfare and other employee-related expenses. Unallocated in the nine months ended September 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 8. 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 second quarter and year-to-date periods of 2024 and 2023 were as follows:
Current wording
The results of operations for the Automotive OEM segment for the third quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous wording
•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 wording
•Operating revenue decreased in the third quarter due to lower organic revenue and the unfavorable effect of foreign currency translation. In the year-to-date period, operating revenue declined due to the unfavorable effect of foreign currency translation, partially offset by higher organic revenue.
Previous 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.
Current wording
•Organic revenue decreased 3.0% in the third quarter and grew 0.3% in the year-to-date period compared to worldwide auto builds which declined 5% and 2% in the third quarter and year-to-date periods, respectively. Product line simplification activities reduced organic revenue by 80 basis points in the third quarter and 60 basis points in the year-to-date period.
Previous 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.
Current wording
◦North American organic revenue decreased 5.7% and 5.1% in the third quarter and year-to-date periods, respectively, compared to North American auto builds which declined 5% in the third quarter and decreased 1% in the year-to-date period primarily due to customer mix and product line simplification activities. Auto builds for the Detroit 3, where the Company has higher content, declined 9% in the third quarter and decreased 5% in the year-to-date period.
Previous 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.
Current wording
◦European organic revenue decreased 5.3% and 1.5% in the third quarter and year-to-date periods, respectively, compared to European auto builds which declined 6% in the third quarter and 4% in the year-to-date period primarily due to market penetration gains.
Previous 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.
Current wording
◦Asia Pacific organic revenue increased 3.0% in the third quarter primarily due to growth in South Korea and India. China organic revenue decreased 1.9% versus China auto builds which declined 3%. In the year-to-date period, Asia Pacific organic revenue increased 10.7%. China organic revenue grew 7.9% in the year-to-date period, including growth in the electric vehicles market and higher content in the Chinese original equipment manufacturers, versus China auto builds which increased 2%. Auto builds of foreign automotive manufacturers in China, where the Company has higher content, declined 26% and 16% in the third quarter and year-to-date periods, respectively.
Previous wording
•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 wording
•Operating margin was 19.4% in the third quarter. The increase of 50 basis points was primarily driven by benefits from the Company's enterprise initiatives and lower restructuring expenses, partially offset by unfavorable operating leverage of 60 basis points, higher employee-related expenses and continued investment in the business.
Previous 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.
Current wording
•In the year-to-date period, operating margin of 19.5% increased 220 basis points primarily driven by benefits from the Company's enterprise initiatives, favorable price/cost of 40 basis points and lower restructuring expenses, 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 second quarter and year-to-date periods of 2024 and 2023 were as follows:
Current wording
The results of operations for the Food Equipment segment for the third quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous 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.
Current wording
•Operating revenue decreased in the third quarter due to lower organic revenue, partially offset by the favorable effect of foreign currency translation. In the year-to-date period, operating revenue grew due to higher organic revenue and the favorable effect of foreign currency translation.
Previous wording
•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 wording
•Organic revenue decreased 0.3% in the third quarter as equipment organic revenue declined 3.6% and service organic revenue increased 6.9%. In the year-to-date period, organic revenue grew 0.3% as equipment organic revenue declined 2.0% and service organic revenue grew 4.9%.
Previous wording
◦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 wording
◦North American organic revenue decreased 2.2% in the third quarter. Equipment organic revenue declined 6.6% primarily due to lower demand in the food retail, independent restaurant and the institutional end markets. Service organic revenue increased 6.4%. In the year-to-date period, North American organic revenue declined 0.9%. Equipment organic revenue declined 3.6% primarily due to lower demand in the independent restaurant and food retail end markets, partially offset by growth in the institutional end market. Service organic revenue grew 4.0%.
Previous wording
◦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 wording
◦International organic revenue increased 2.8% and 2.2% in the third quarter and year-to-date periods, respectively. Equipment organic revenue increased 0.9% in the third quarter primarily due to higher demand in the European warewash, cooking and refrigeration end markets, partially offset by a decline in Asia Pacific. In the year-to-date period, equipment organic revenue grew 0.3% primarily due to higher demand in the European warewash and cooking end markets and growth in Asia Pacific, partially offset by lower demand in the European refrigeration end market. Service organic revenue increased 7.7% and 6.5% in the third quarter and year-to-date periods, respectively.
Previous wording
•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 wording
•Operating margin was 28.4% in the third quarter. The increase of 110 basis points was primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 30 basis points, partially offset by higher employee-related expenses and additional investment in the business.
Previous wording
•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 wording
•In the year-to-date period, operating margin of 27.2% was flat to the prior year, as benefits from the Company's enterprise initiatives and favorable price/cost of 40 basis points were offset by higher employee-related expenses and additional investment in the business.
Previous 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:
Current wording
The results of operations for the Test & Measurement and Electronics segment for the third quarter and year-to-date periods of 2024 and 2023 were as follows:
Previous 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.
Current wording
•Operating revenue decreased in the third quarter due to lower organic revenue, partially offset by revenue from acquisitions and the favorable effect of foreign currency translation. In the year-to-date period, operating revenue declined due to lower organic revenue and the unfavorable effect of foreign currency translation, partially offset by revenue from acquisitions.
Previous 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.
Current wording
•Organic revenue decreased 1.5% in the third quarter primarily due to a decline in the MTS Test & Simulation business and lower demand in the semiconductor and consumer electronics end markets. In the year-to-date period, organic revenue declined 2.0% primarily due to a decline in the semiconductor and electronics end markets, partially offset by growth in the MTS Test & Simulation business.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
•Operating revenue decreased in the third quarter and year-to-date periods due to the unfavorable effect of foreign currency translation, partially offset by higher organic revenue.
Current report — wording carried from elsewhere
On May 5, 2023, the Company entered into a €1.3 billion Euro Credit Agreement with an initial termination date of May 3, 2024; provided, however, that the Company may extend the termination date by six months on up to two occasions. On May
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
•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.
Previous report — wording carried elsewhere
•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.
Previous report — wording carried 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