Illinois Tool Works Q4 Profit Falls, Backs FY14 View

(RTTNews) - Industrial equipment maker Illinois Tool Works Inc. (ITW) Tuesday reported a sharp fall in the fourth-quarter profit, reflecting a gain on sale of interest in Decorative Surfaces in the prior year. Quarterly revenues, however, increased and topped analysts' estimates. The company also reiterated its earnings per share guidance for full-year 2014.

For the fourth quarter, the company's net income declined to $408 million or $0.93 per share from $979 million or $2.11 per share in the previous year. The prior-year quarter recorded a gain on sale of interest in Decorative Surfaces totaling $933 million.

Earnings per share from continuing operations were $0.92, down from $1.99 per share last year. Adjusted earnings for the recent quarter were $0.92, while the company posted $0.65 per share in the preceding year.

On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.91 per share for the quarter. Analysts' estimates typically exclude special items.

Operating revenues for the quarter grew to $3.55 billion from $3.48 billion in the prior-year quarter. Sixteen analysts had consensus revenue estimate of $3.52 billion for the quarter. Excluding impact of Decorative Surfaces in 2012, operating revenues increased 4.8 percent.

Organic revenue was up 2.8 percent, with international growth of 3.3 percent and North America showing an increase of 2.6 percent.

Operating margins improved 260 basis points to 17.7 percent, with enterprise initiatives contributing 110 basis points.

Scott Santi, president and chief executive officer of the company said, "In the quarter, we continued to deliver meaningful improvement in our earnings per share, operating margin, and return on invested capital metrics. In addition, we saw modest improvement in the demand environment in a number of our key end markets..."

Looking ahead to the first quarter, the company forecast earnings per share to be in a range of $0.93 to $1.01 and expects total revenue growth in a range of 3 percent to 6 percent. Analysts expect the company to report earnings of $0.98 per share, on revenues of $3.57 billion for the first-quarter.

For full-year 2014, the company continues to expect earnings per share to be in the range of $4.30 to $4.50. This earnings per share range assumes a full-year total revenue growth range of 2 to 4 percent and full-year organic growth of 2 to 3 percent.

Street currently is looking for fiscal year 2014 earnings of $4.45 per share, on annual revenues of $14.83 billion. ITW closed Monday's regular trading at $78.29 on the NYSE.