Illinois Tool Works Inc. reported financial results for the third quarter of 2026, announcing a quarterly record for operating income and raising its full-year earnings guidance.
For the three months ended September 30, 2026, the company reported total revenue of $4.236 billion, an increase of 4.4 percent compared to the prior year. Organic revenue growth was 3.8 percent, driven by a 6.0 percent increase in North America. Operating income rose to $1.177 billion, up 5.9 percent year-over-year, resulting in an operating margin of 27.8 percent, which expanded by 40 basis points.
GAAP earnings per share (EPS) increased 6.8 percent to $3.00. The company generated $953 million in operating cash flow and $851 million in free cash flow, representing a 100 percent conversion of net income. During the quarter, the company repurchased $187 million of its common stock and raised its dividend by 7 percent, marking the 63rd consecutive year of dividend increases.
Management noted that a tornado in late July caused estimated revenue losses of $40 million in the Welding segment; excluding this impact, organic growth would have been approximately 5 percent. The associated loss in operating income was largely offset by business interruption insurance.
Regarding 2026 guidance, Illinois Tool Works raised its full-year GAAP EPS outlook by $0.05 at the midpoint to a range of $11.45 to $11.55 per share, representing 10 percent growth at the midpoint. The company also raised its revenue growth guidance to 4.5 to 5.5 percent and reaffirmed its organic growth guidance of 3 to 4 percent. Operating margin is projected to be in the range of 26.5 to 27.5 percent, with enterprise initiatives contributing more than 100 basis points. The company expects to repurchase approximately $1.5 billion of its own shares and projects free cash flow to be approximately 100 percent of net income.
