Illinois Tool Works Inc.

Good morning. My name is Tammy 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, if needed, one follow-up question. Thank you. Karen Fletcher, Vice President of Investor Relations, you may begin your conference.

Karen Fletcher Thanks, Tammy. Good morning and welcome to ITW's third quarter 2021 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 will discuss ITW's third quarter financial results and update our guidance for full year 2021. Slide two is a reminder that this presentation contains forward-looking statements. We refer you to the company's 2020 Form 10-K and subsequent reports filed with the SEC for more detail about important risks that could cause actual results to differ materially from our expectations. This presentation uses certain non-GAAP measures, and the reconciliation of those measures to the most directly comparable GAAP measures is contained in the press release. Please turn to slide three, and it's now my pleasure to turn the call over to our Chairman and CEO, Scott Santee. Scott Santee Thank you, Karen.

Good morning, everyone. In the third quarter, we saw continued strong growth momentum in six of our seven segments and delivered excellent operational execution and financial results. Revenue grew 8% with organic growth of 6%, and earnings per share of $2.02 was up 10%. At the segment level, organic growth was led by welding at plus 22%, food equipment at plus 19%, test and measurement and electronics at plus 12%, and specialty products at plus 8%. Our automotive OEM segment continued to be impacted in the near term by auto production cutbacks associated with the well-publicized supply chain challenges affecting our auto customers. In Q3, auto production cutbacks ended up being significantly larger than what was projected heading into the quarter. And as a result, our auto OEM segment revenues were down 11% in Q3 versus the minus 2% we were expecting as of the end of June. In a very challenging environment, our teams around the world continue to do an exceptional job of executing for our customers and for the company. In Q3, our people leveraged the combination of ITW's robust and highly flexible 80-20 front-to-back operating system, the company's close-to-the-customer manufacturing and supply chain capabilities and systems, and our decision to stay fully staffed and invested through the pandemic to sustain world-class service levels for our customers. They also executed appropriate and timely price adjustments in response to rapidly rising raw material costs. And as a result, we were able to fully offset input cost increases on a dollar-for-dollar basis in Q3, resulting in zero EPS impact from price cost in the quarter. And, oh, by the way, our teams also managed to continue to drive progress on our long-term strategy, execute on our win-the-recovery positioning initiative, and deliver another 100 basis points of margin improvement benefit from enterprise initiatives. Moving forward, we remain very focused on sustaining our growth momentum and on fully leveraging the competitive strength of the ITW business model and the investments we have made and continue to make in support of the execution of our enterprise strategy. Before turning it over to Michael, I want to thank all of our ITW colleagues around the world for all their efforts and for their dedication to keeping themselves and their ITW colleagues safe, to serving our customers with excellence, and to driving continued progress on our path to ITW's full potential.