Illinois Tool Works Inc.

Good morning. My name is Julianne and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. For those participating in the Q&A, you will have the opportunity to ask one question And one follow-up question. Thank you. Karen Fletcher, Vice President of Investor Relations. You may begin your conference.

Okay. Thank you, Julianne. Good morning, and welcome to ITW's third quarter 2019 conference call. I'm joined by our Chairman and CEO, Scott Santee, and Senior Vice President and CFO, Michael Larson. During today's call, we'll discuss third quarter financial results and provide an update on our 2019 full-year outlook. Slide 2 is a reminder that this presentation contains our financial forecast for the remainder of 2019, as well as other forward-looking statements identified on this slide. We refer you to the company's 2018 Form 10-K for more detail about important risks that could cause actual results to differ materially from our expectations. Please note that this presentation uses certain non-GAAP measures, and a reconciliation of those measures to the most comparable GAAP measures is contained in the press release. Please turn to slide three. Today we're announcing the date and location for ITW's next Investor Day. We hope you can join us on Friday, March 13th in Fort Worth, Texas, at which time we'll provide an update on our long-term strategy and offer a tour of our Charleston refrigeration plant site and the opportunity to see the ITW business model in action. Today's announcement is strictly a save the date alert, and we'll provide more details on the event, including how to sign up for it when the date gets closer. So now we'll move on to slide four, and it's my pleasure to turn the call over to our chairman and CEO, Scott Santee.

Thank you, Karen, and good morning. While slowing CapEx investment and declines in auto production in North America and China impacted the demand environment across a broad cross-section of our portfolio, we delivered another solid quarter with excellent operational execution. Despite the macro challenges, we delivered earnings per share growth, operating margin of 25%, and a 12% increase in free cash flow. Despite lower volumes, we improved operating margin 40 basis points year-over-year, with enterprise initiatives contributing 120 basis points, and increased after-tax return on invested capital by 120 basis points to more than 29%. Looking ahead at the balance of the year based on demand rates and our margin performance exiting Q3, we are maintaining our full-year 2019 EPS guidance range of 755 to 785, while acknowledging that the combination of near-term macro uncertainties and the lingering strike at General Motors likely skews the probabilities of potential outcomes toward the lower end of the range. Moving forward, we continue to focus on executing at a high level on the things that are within our control in the context of the near-term macro uncertainties, while remaining fully invested in driving progress on our finish the job enterprise strategy agenda. and on positioning the company to deliver on our 2023 enterprise performance goals. Our demonstrated ability to deliver strong results across a range of economic scenarios while continuing to make consistent progress towards our long-term full potential performance is a direct result of the combination of the performance power and resilience of the ITW business model and the dedicated team of ITW professionals around the world who leverage it to serve our customers and execute our strategy with excellence day in and day out. With that, I'll now turn the call over to Michael for some more detail on our Q3 results. Michael? Thanks, Scott, and good morning, everyone.