Key financial results

  • Revenue: Total revenue grew 4.4% driven by 3.8% organic growth, a 0.3% contribution from foreign currency translation, and 0.3% from an acquisition.Total revenue grew 4.4%, driven by 3.8% organic growth, a 0.3% contribution from foreign currency translation and 0.3% from an acquisition.
  • Organic growth: Organic growth was 4% or 5% excluding the impact of the tornado event at one of our welding locations.organic growth of 4% and or 5% excluding the impact of the tornado event at 1 of our welding locations.
  • Operating margin: Operating margin expanded 40 basis points to 27.8% and operating income increased 6%, marking a new quarterly record for ITW.Operating margin expanded 40 basis points to 27.8% and operating income increased 6%, marking a new quarterly record for ITW.
  • EPS: GAAP EPS exceeded estimates and increased 7% to $3 despite a headwind of about $0.10 from a higher tax rate of 24.4% compared to 21.8% last year.GAAP EPS exceeded our estimates and increased 7% to $3.
  • Free cash flow: Free cash flow was $851 million or 100% of net income, and on a year-to-date basis, free cash flow grew 9% to more than $2 billion or 82% of net income.Free cash flow was $851 million or 100% of net income

Business segment results

  • Automotive OEM: Automotive OEM organic revenue was down 2% against a tough comparison last year of plus 5%, with North America down 1%, Europe down 7%, and China down 1%.Organic revenue was down 2% against a tough comparison last year of plus 5%.
  • Automotive OEM: Automotive OEM operating margin was down 170 basis points primarily due to resin inflation and the resulting price cost timing lag.Operating margin was down 170 basis points, primarily due to resin inflation
  • Food Equipment: Food Equipment organic revenue grew 1% overall as service strength of plus 5% helped offset a 2% decline in equipment.Food Equipment organic revenue grew 1% overall as service strength of plus 5%, helped offset a 2% decline in equipment
  • Food Equipment: Food Equipment operating margin improved 60 basis points to 29.8%.Operating margin improved 60 basis points to 29.8%.
  • Test & Measurement and Electronics: Test & Measurement and Electronics had 16% organic growth, led by a 31% surge in electronics and an 8% increase in Test & Measurement driven primarily by semiconductor demand.Test & Measurement and Electronics had another outstanding quarter with 16% organic growth, led by a 31% surge in electronics
  • Test & Measurement and Electronics: Test & Measurement and Electronics operating margin expanded by 330 basis points to 28.7% as a result of strong operating leverage.Operating margin expanded by 330 basis points to 28.7%, primarily as a result of strong operating leverage.
  • Welding: Welding delivered 7% organic growth, or 15% excluding the tornado event, with equipment revenue up 5% and consumables growing double digit.7% organic growth, which would have been 15%, excluding the tornado event.
  • Polymers & Fluids: Polymers & Fluids organic growth reached 8%, with 6% in automotive aftermarket, 12% in polymers, and 9% in fluids.In Polymers & Fluids, organic growth reached 8% and driven by strength across most end markets
  • Polymers & Fluids: Polymers & Fluids operating margin expanded 280 basis points to 31.3%.Operating margin expanded 280 basis points to 31.3%.
  • Construction Products: Construction Products organic growth was down 1% with North America flat, Europe down 2%, and Australia and New Zealand up 1%.Construction Products organic growth was down 1% compared to end markets
  • Construction Products: Construction Products operating margin was down 170 basis points to 29.9% due primarily to near-term price cost headwinds.Operating margin was down 170 basis points to 29.9% due primarily to near-term price cost headwinds.
  • Specialty Products: Specialty Products organic growth was down 1%, which includes the impact of 130 basis points of product line simplification.Specialty Products organic growth was down 1%, which includes the impact of 130 basis points of product line simplification
  • Specialty Products: Specialty Products operating margin was down 90 basis points to 31.4%.Operating margin was down 90 basis points to 31.4%.

Capital allocation

  • Dividend: In the quarter, the company raised its dividend 7% to mark its 63rd consecutive year of dividend increases.In the quarter, we raised our dividend 7% marking our 63rd consecutive year of dividend increases.
  • Shareholder returns: In the first three quarters of the year, the company returned $2.7 billion to shareholders through share repurchases and dividends.In the first 3 quarters of the year, we have returned $2.7 billion to shareholders through share repurchases and dividends.
  • Share repurchases: Full year share repurchases are projected to be approximately $1.5 billion.full year share repurchases of approximately $1.5 billion.
  • Price/cost: Price and cost were favorable in the third quarter overall, though some segments like automotive OEM and construction products experienced timing lags.
  • Inflation: Raw material costs such as resin, chemicals, steel, and electronic components saw inflation in the 4% to 5% range.continue to see a lot of inflation in raw material costs, such as resin, chemicals, steel, electronic components kind of in that 4% to 5% range.
  • Demand: Demand momentum continued to accelerate in the two CapEx-related segments.Demand momentum this quarter continued to accelerate in our 2 CapEx-related segments

Competitive landscape

  • Automotive OEM: Automotive OEM significantly outperformed build rates in both North America and China.we meaningfully outperformed build rates in both North America and China
  • Polymers & Fluids: Polymers & Fluids achieved growth supported by robust contributions from both market share gains and new products.

Macroeconomic environment

  • Regions: From a regional perspective, organic growth was up 6% in North America, up 3% in Asia Pacific with China down 2%, and flat in Europe.
  • China: China was down primarily due to a tough comparison of plus 10%.China down 2%, primarily due to a tough comparison of plus 10%

Growth opportunities and strategies

  • CBI: Customer-backed innovation contributed more than 3% to revenue growth compared to 2.4% in 2025, prompting management to raise its full year CBI projection to 3% plus.customer-back innovation progress which so far this year has contributed more than 3% to revenue growth compared to 2.4% in 2025.
  • Enterprise initiatives: Enterprise initiatives contributed 130 basis points to operating margin in the quarter.Enterprise Initiatives contributing 130 basis points to our operating margin.

Financial guidance and outlook

  • EPS guidance: Management raised full year GAAP EPS guidance by $0.05 to a narrowed range of $11.45 to $11.55, with a new midpoint of $11.50 representing 10% year-over-year growth.
  • Organic growth guidance: Organic growth projection remains 3% to 4% for the full year, implying organic growth of 5% plus in Q4.
  • Revenue guidance: Total revenue growth guidance was raised by 50 basis points to 4.5% to 5.5% to account for current foreign exchange rates.We're raising total revenue growth guidance by 50 basis points to 4.5% to 5.5% to account for current foreign exchange rates.
  • Margin guidance: Operating margin guidance remains unchanged at 26.5% to 27.5%.our operating margin guidance remains unchanged at 26.5% to 27.5%
  • Tax rate and cash flow: The projected effective tax rate remains unchanged at 23% to 24%, and free cash flow conversion is projected to be approximately 100% of net income.The projected effective tax rate remains unchanged at 23% to 24%, free cash flow conversion is projected to be approximately 100% of net income

Welding tornado event

  • Impact: The tornado event damaged two welding facilities and reduced revenues by about $40 million or 1 percentage point in the third quarter.damaged 2 of our welding facilities and reduced our revenues by about $40 million or 1 percentage point in the third quarter.
  • Insurance offset: The loss of operating income associated with the tornado event was offset by business interruption insurance, which favorably impacted margins.The loss of operating income associated with the tornado event was offset by business interruption insurance, which favorably impacted margins.

Q3 2026 results

MetricResultChange
Total revenue growth4.4%versus prior year
Organic growth3.8%4% or 5% excluding the tornado event
Operating margin27.8%up 40 basis points
GAAP EPS$3up 7%
Free cash flow$851 million100% of net income

How management sounded

Balanced (+30 on our -100 to +100 scale). Management highlighted strong operational results, accelerating order momentum, and raised full-year EPS guidance despite headwinds from a welding facility tornado event. Management sounded more upbeat than on 16% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

  • Welding margin recovery to best-in-class levels following the tornado event.
  • Price/cost recovery in Automotive OEM and Construction Products segments.
  • Continuation of strong order momentum in Test & Measurement and Electronics.

Earlier calls

  • Q2 2026 (Jul 28, 2026), tone Positive: ITW reported record second quarter operating income of $1.15 billion with 4.5% organic growth, driven by strength in CapEx-related segments and customer-back innovation, prompting raised full year guidance.