Illinois Tool Works Inc.

Good morning. My name is Kathleen and I will be your conference operator today. At this time, I would like to welcome everyone to the ITW's third quarter earnings 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. And if you would like to withdraw your question, just press the star one again. 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. Erin Linehan, Vice President of Investor Relations. You may begin your conference.

Thank you, Kathleen. Good morning, and welcome to ITW's third quarter 2024 conference call. Today I'm joined by our President and CEO, Chris O'Harelihy, and Senior Vice President and CFO, Michael Larson. During today's call, we will discuss ITW's third quarter financial results and provide an update on our outlook for full year 2024. Slide two is a reminder that this presentation contains forward-looking statements. Please refer to the company's 2023 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 a 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 president and CEO, Chris O'Herlihy. Chris?

Thank you, Erin, and good morning, everyone. As you saw in our press release this morning, During the third quarter, the market demand environment continued to moderate across our portfolio, with further softness in the automotive and construction markets. Overall, third quarter revenues came in approximately half a percentage point, or $25 million below what they would have been, had demand held at the level we were seeing exiting the second quarter. That said, the slowdown in Q3 was less than in Q2, where revenue came in approximately one percentage point, or $50 million below run rate. As a result, third quarter organic revenue declined 1%, with five segments down year over year, partially offset by growth in two segments. This 1% revenue decline compares to our end markets, which we believe were down in the low to mid single digits. As we have all year, the ITW team continued to successfully navigate and overcome these market challenges with strong operational execution. Those efforts resulted in operating income of $1.05 billion with operating margin of 26.5%, which included a 130 basis point contribution from enterprise initiatives. With little operating leverage, six of seven segments still increased operating margin, resulting in segment operating margin expansion of 110 basis points. EPS grew 4% to $2.65, excluding the gains from the divestiture that Michael will review in more detail. The continued contribution from enterprise initiatives, regardless of volume, speaks to the power and resilience of our business model. And it is notable that for the first time, three of our segments delivered operating margin above 30% in the quarter. And we are well on our way to achieve our goal of 30% operating margin for the company by 2030. Our continued focused execution and typical operational excellence have enabled ITW to effectively counter persistent market headwinds and achieve increased profitability while we continue to invest to maximize growth and performance over the long term. Consistent with our long-term commitment to return surplus capital to shareholders by an attractive and growing dividend, on August 2nd, we announced our 61st consecutive dividend increase, raising our dividend by 7%. And year to date, we have repurchased more than $1.1 billion of our outstanding shares. Today, we are raising our full year gap EPS guidance by $1.33 from a range of 10.30 to 10.40 to a new range of 11.63 to 11.73 to incorporate the impact of the divestiture gain and a lower projected tax rate for the full year. Based on current levels of demand exiting Q3, we are maintaining our previous operational guidance for revenue and organic growth to be approximately flat for the year and our operating margin to be between 26.5 and 27%. While the ITW team is on a commendable job managing the short-term challenges this year, perhaps more importantly, we continue to deliver solid progress on our next phase enterprise strategy priorities. As we outlined to you a year ago, the central focus of the next phase of our enterprise strategy is to elevate high-quality organic growth and customer-backed innovation as key ITW differentiators on par with our best in class operational capabilities and financial performance. This quarter, we made further progress in our journey to achieve this strategic goal. We believe that customer-backed innovation, or CBI as we call it, is the most impactful driver of our ability to consistently grow revenue above market. In essence, the customer-backed innovation revenue of today fuels the ability to drive market penetration and share gain in the future. Over the past few years, we've made progress on expanding our revenue from CBI from less than a percent in 2017 to approximately 2% today. And at our September leadership conference, we launched the next phase CBI framework for our 84 divisions around the world. Just as we successfully focused the entire organization on 80-20 front to back over a decade ago, we are now doubling down on customer back innovation. And I for one can feel the energy, excitement, momentum from our team as they implement this strategy at each division with our continued laser focus on our typical do what we say execution it is with strong conviction that i know we will build above market organic growth fueled by customer back innovation into a defining itw strength in concluding my remarks i want to thank all of our itw colleagues around the world for their exceptional efforts and dedication in serving our customers with excellence and driving continuous progress on our path to ATW's full potential. I now turn the call over to Michael to discuss our Q3 performance and full year guidance in more detail. Michael.