ILLINOIS TOOL WORKS INC - Quarter Report: 2025 June (Form 10-Q)

Stock-based compensation expense Cumulative effect of change in inventory accounting method ()Other non-cash items, net Change in assets and liabilities, net of acquisitions and divestitures: (Increase) decrease in- Trade receivables()()Inventories()()Prepaid expenses and other assets()()Increase (decrease) in- Accounts payable Accrued expenses and other liabilities()()Income taxes()()Other, net ()Net cash provided by operating activities Cash Provided by (Used for) Investing Activities: Acquisition of businesses (excluding cash and equivalents) ()Additions to plant and equipment()()Proceeds from investments Proceeds from sale of plant and equipment Proceeds from sale of operations and affiliates Other, net()()Net cash provided by (used for) investing activities()()Cash Provided by (Used for) Financing Activities: Cash dividends paid()()Issuance of common stock Repurchases of common stock()()Net proceeds from (repayments of) debt with original maturities of three months or less Proceeds from debt with original maturities of more than three months Repayments of debt with original maturities of more than three months ()Other, net()()Net cash provided by (used for) financing activities()()Effect of Exchange Rate Changes on Cash and Equivalents ()Cash and Equivalents: Increase (decrease) during the period()()Beginning of period End of period$ $ Supplementary Cash Flow Information:Cash Paid During the Period for Interest$ $ Cash Paid During the Period for Income Taxes, Net of Refunds$ $

The Notes to Financial Statements are an integral part of this statement.

Illinois Tool Works Inc. and Subsidiaries

Notes to Financial Statements (Unaudited)

(1)

% of total inventories, and the first-in, first-out ("FIFO") method, which approximates current cost, was used for all other inventories.

The LIFO provision for the year ended December 31, 2023 was $ million of expense and was not material to the Company’s results of operations, financial position or cash flows. Therefore, the Company recorded the pre-tax cumulative effect of this change in accounting method of $ million as a reduction of Cost of revenue in the first quarter of 2024. Refer to Note 6. Inventories for additional information regarding the Company’s inventory balances.

New Accounting Pronouncements

(2)

business in the Test & Measurement and Electronics segment for $ million, net of cash acquired. On April 1, 2024, the Company completed the acquisition of business in the Test & Measurement and Electronics segment for $ million, net of cash acquired. The Company has completed the allocation of purchase price for both of these acquisitions. These acquisitions were not material, individually or in the aggregate, to the Company’s results of operations, financial position or cash flows.

(3)

diversified operating divisions are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products.

$ $ $ Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products

Total segments

Intersegment revenue()()()()Total operating revenue$ $ $ $

The following is a description of the product offerings, end markets and typical revenue transactions for each of the Company's segments:

(4)

% in both periods and % and % for the six months ended June 30, 2025 and 2024, respectively. The effective tax rates for 2025 and 2024 included discrete tax benefits related to excess tax benefits from stock-based compensation of $ million and $ million for the three months ended June 30, 2025 and 2024, respectively, and $ million and $ million for the six months ended June 30, 2025 and 2024, respectively. Additionally, the effective tax rate for the six months ended June 30, 2025 included a discrete tax benefit of $ million in the first quarter of 2025 related to the reversal of a valuation allowance on net operating loss carryforwards.

The Company and its subsidiaries file tax returns in the U.S. and various state, local and foreign jurisdictions. These tax returns are routinely audited by the tax authorities in these jurisdictions, including the Internal Revenue Service, His Majesty's Revenue and Customs, German Fiscal Authority, French Fiscal Authority, and Australian Tax Office, and a number of these audits are currently ongoing, which may increase the amount of the unrecognized tax benefits in future periods. The Company believes it is reasonably possible that within the next twelve months the amount of the Company's unrecognized tax benefits may be decreased by approximately $ million related predominantly to the potential resolution of federal, state and foreign examinations. The Company has recorded its best estimate of the potential exposure for these issues.

On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was enacted in the United States. The provisions of the Act extend and modify certain provisions of the 2017 Tax Cuts and Jobs Act. While the provisions of the Act are not expected to have a material impact on the Company's operating results, financial position or cash flows for the twelve months ending December 31, 2025, the Company is assessing the potential impact of the Act on future periods.

(5)

$ $ $ Net income per share—Basic:Weighted-average common shares Net income per share—Basic$ $ $ $ Net income per share—Diluted:Weighted-average common shares Effect of dilutive stock options and restricted stock units Weighted-average common shares assuming dilution Net income per share—Diluted$ $ $ $

million and million antidilutive options outstanding for the three months ended June 30, 2025 and 2024, respectively, and million and million antidilutive options outstanding for the six months ended June 30, 2025 and 2024, respectively.

(6)

$ Work-in-process Finished goods Total inventories$ $

(7)

$ $ $ $ $ $ $ Interest cost Expected return on plan assets()()()()()()()()Amortization of actuarial loss (gain) () ()()Settlements Total net periodic benefit cost (income)$ $ $()$ $ $ $()$

The service cost component of net periodic benefit cost is presented within Cost of revenue and Selling, administrative, and research and development expenses in the Statement of Income while the other components of net periodic benefit cost are presented within Other income (expense).

The Company expects to contribute approximately $ million to its pension plans and $ million to its other postretirement benefit plans in 2025. As of June 30, 2025, contributions of $ million to pension plans and $ million to other postretirement benefit plans have been made.

(8)

$ Long-term debt Total debt$ $

Short-term debt included commercial paper of $ billion and $ million as of June 30, 2025 and December 31, 2024, respectively. The weighted-average interest rate on commercial paper as of June 30, 2025 and December 31, 2024 was % and %, respectively.

As of December 31, 2024, Short-term debt also included $ million related to the Euro-denominated credit agreement entered into on May 5, 2023 (the "Euro Credit Agreement"). On February 24, 2025, the Company entered into an amendment to the Euro Credit Agreement to extend the termination date from April 30, 2025 to February 28, 2027, with an option to further extend the termination date to September 15, 2027. The amendment also decreased the interest rate spread applicable to the loans from % to % and removed the option for a one-month interest period. As of June 30, 2025, the Company had $ million outstanding under the Euro Credit Agreement with an interest rate of %, which was included in Long-term debt.

On May 17, 2024, the Company issued € million of % Euro notes due May 17, 2028 at % of face value and € million of % Euro notes due May 17, 2032 at % of face value. Proceeds from the issuance were used for general corporate purposes, including the repayment of a portion of the indebtedness under the commercial paper program and repayment of € million of the term loans under the Euro Credit Agreement.

The Company also has a $ billion revolving credit facility with a termination date of October 21, 2027, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. amounts were outstanding under the revolving credit facility as of June 30, 2025 or December 31, 2024.

$ Carrying value

The approximate fair values of the Company's long-term debt, including current maturities, were based on a valuation model using Level 2 observable inputs which included market rates for comparable instruments for the respective periods.

(9)

)$()$()$()Foreign currency translation adjustments during the period()()()()Income taxes () ()Total foreign currency translation adjustments, net of tax () ()Three Months EndedSix Months EndedSix Months Ended100 bps— — — 100 bps

•Operating revenue increased in the second quarter due to the favorable effect of foreign currency translation and higher organic revenue. In the year-to-date period, operating revenue grew due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation.

•Organic revenue increased 0.3% in the second quarter as equipment sales grew 7.5% and consumables decreased 1.7%. In the year-to-date period, organic revenue grew 0.6% as equipment sales increased 2.0% and consumables grew 0.2%. Product line simplification activities reduced organic revenue by 120 basis points in both the second quarter and year-to-date periods.

◦North American organic revenue increased 1.2% in the second quarter primarily driven by growth in the consumer packaging and specialty films businesses, partially offset by a decline in the strength films business. In the year-to-date period, organic revenue grew 1.6% primarily due to growth in the specialty films, consumer packaging and ground support equipment businesses, partially offset by a decline in the filter medical and strength films businesses.

◦International organic revenue declined 1.1% in the second quarter primarily due to a decline in Asia Pacific, primarily in the appliance business, partially offset by growth in the European consumer packaging equipment businesses. In the year-to-date period, organic revenue decreased 1.2% primarily driven by a decline in Europe, primarily in the appliance and consumer packaging businesses, partially offset by growth in the ground support equipment business and growth in Asia Pacific.

•Operating margin was 32.6% in the second quarter. The increase of 70 basis points was primarily due to benefits from the Company's enterprise initiatives, favorable price/cost of 30 basis points and lower restructuring expenses of 30 basis points, partially offset by higher employee-related expenses and product mix.

•In the year-to-date period, operating margin of 31.8% increased 100 basis points primarily driven by benefits from the Company's enterprise initiatives and favorable price/cost of 30 basis points, partially offset by higher employee-related expenses and product mix.

OTHER FINANCIAL HIGHLIGHTS

•Interest expense was $74 million and $142 million in the second quarter and year-to-date periods of 2025, respectively, versus $75 million and $146 million in 2024, respectively. Refer to Note 8. Debt in Item 1. Financial Statements for further information regarding the Company's outstanding debt.

•Other income (expense) was income of $4 million in the second quarter of 2025 and $16 million in the year-to-date period, a decrease of $22 million compared to the second quarter of 2024 and a decrease of $26 million in the year-to-date period primarily due to foreign currency transaction losses in 2025 versus foreign currency transaction gains in 2024.

NEW ACCOUNTING PRONOUNCEMENTS

Information regarding new accounting pronouncements is included in Note 1. Significant Accounting Policies in Item 1. Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity are free cash flow and short-term credit facilities. As of June 30, 2025, the Company had $788 million of cash and equivalents on hand and no outstanding borrowings under its $3.0 billion revolving credit facility. The Company also has maintained strong access to public debt markets. Management believes that these sources are sufficient to service debt and to finance the Company's capital allocation priorities, which include:

•internal investments to support organic growth and sustain core businesses;

•payment of an attractive dividend to shareholders; and

•external investments in selective strategic acquisitions that support the Company's organic growth focus and an active share repurchase program.

The Company believes that, based on its operating revenue, operating margin, free cash flow, and credit ratings, it could readily obtain additional financing, if necessary.

Cash Flow

The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. The Company believes this non-GAAP financial measure is useful to investors in evaluating the Company's financial performance and measures the Company's ability to generate cash internally to fund Company initiatives. Free cash flow represents net cash provided by operating activities less additions to plant and equipment. Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies. Summarized cash flow information for the second quarter and year-to-date periods of 2025 and 2024 was as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2025		2024		2025		2024
Net cash provided by operating activities	$	550	$	687	$	1,142	$	1,276
Additions to plant and equipment	(101)		(116)		(197)		(211)
Free cash flow	$	449	$	571	$	945	$	1,065

Cash dividends paid	$	(439)	$	(418)	$	(880)	$	(837)
Repurchases of common stock	(375)		(375)		(750)		(750)
Acquisition of businesses (excluding cash and equivalents)	(1)		(58)		1		(115)

Net proceeds from (repayments of) debt with original maturities of three months or less	262		(818)		464		134
Proceeds from debt with original maturities of more than three months	—		1,606		—		1,606
Repayments of debt with original maturities of more than three months	—		(595)		—		(1,295)
Other, net	(1)		4		27		22
Effect of exchange rate changes on cash and equivalents	20		(14)		33		(33)
Net increase (decrease) in cash and equivalents	$	(85)	$	(97)	$	(160)	$	(203)

Stock Repurchase Programs

On August 4, 2023, the Company announced a new stock repurchase program which provides for the repurchase of up to $5.0 billion of the Company's common stock over an open-ended period of time (the "2023 Program"). Under the 2023 program, the Company repurchased approximately 38,000 shares of its common stock at an average price of $263.44 per share in the fourth quarter of 2023, approximately 1.4 million shares of its common stock at an average price of $259.07 per share in the first quarter of 2024, approximately 1.6 million shares of its common stock at an average price of $247.42 in the second quarter of 2024, approximately 1.5 million shares of its common stock at an average price of $244.88 in the third quarter of 2024, approximately 1.4 million shares of its common stock at an average price of $265.95 in the fourth quarter of 2024, approximately 1.5 million shares of its common stock at an average price of $257.14 in the first quarter of 2025, and approximately 1.5 million shares of its common stock at an average price of $241.19 in the second quarter of 2025. As of June 30, 2025, there were approximately $2.7 billion of authorized repurchases remaining under the 2023 Program.

After-tax Return on Average Invested Capital

The Company uses after-tax return on average invested capital ("After-tax ROIC") to measure the effectiveness of its operations' use of invested capital to generate profits. After-tax ROIC is not defined under U.S. generally accepted accounting principles ("GAAP"). After-tax ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company's ability to generate returns from cash invested in its operations and may be different than the method used by other companies to calculate After-tax ROIC. The Company defines After-tax ROIC as operating income after taxes divided by average invested capital, which is annualized when presented in interim periods. Operating income after taxes is a non-GAAP measure consisting of net income before interest expense and other income (expense), on an after-tax basis, which are excluded as they do not represent returns generated by the Company's operations. For comparability, the Company also excluded the discrete tax benefit of $21 million in the first quarter of 2025 from net income and the effective tax rate for the six months ended June 30, 2025. Total invested capital represents the net assets of the Company, other than cash and equivalents and outstanding debt which do not represent capital investment in the Company's operations. The most comparable GAAP measure to operating income after taxes is net income. Net income to average invested capital and After-tax ROIC for the second quarter and year-to-date periods of 2025 and 2024 were as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
Dollars in millions	2025			2024			2025			2024
Numerator:
Net Income	$	755		$	759		$	1,455		$	1,578
Discrete tax benefit related to the first quarter 2025	—			—			(21)			—
Interest expense, net of tax (1)	56			57			108			111
Other (income) expense, net of tax (1)	(3)			(20)			(12)			(32)
Operating income after taxes	$	808		$	796		$	1,530		$	1,657

Denominator:
Invested capital:
Cash and equivalents	$	788		$	862		$	788		$	862
Trade receivables	3,320			3,250			3,320			3,250
Inventories	1,710			1,819			1,710			1,819
Net plant and equipment	2,177			2,011			2,177			2,011
Goodwill and intangible assets	5,596			5,551			5,596			5,551
Accounts payable and accrued expenses	(2,157)			(2,191)			(2,157)			(2,191)
Debt	(8,937)			(8,473)			(8,937)			(8,473)
Other, net	714			133			714			133
Total net assets (stockholders' equity)	3,211			2,962			3,211			2,962
Cash and equivalents	(788)			(862)			(788)			(862)
Debt	8,937			8,473			8,937			8,473
Total invested capital	$	11,360		$	10,573		$	11,360		$	10,573

Average invested capital (2)	$	10,996		$	10,480		$	10,741		$	10,357

Net income to average invested capital (3)	27.4		%	29.0		%	27.1		%	30.5		%
After-tax return on average invested capital (3)	29.4		%	30.4		%	28.5		%	32.0		%

(1) Effective tax rate used for interest expense and other (income) expense for the three months ended June 30, 2025 and 2024 was 24.4% in both periods. Effective tax rate used for interest expense and other (income) expense for the six months ended June 30, 2025 and 2024 was 24.2% and 24.0%, respectively.

(2) Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within each of the periods presented.

(3) Returns for the three months ended June 30, 2025 and 2024 were converted to an annual rate by multiplying the calculated return by 4. Returns for the six months ended June 30, 2025 and 2024 were converted to an annual rate by multiplying the calculated return by 2.

After-tax ROIC for the six months ended June 30, 2024 included 170 basis points of favorable impact related to the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax) in the first quarter of 2024. Refer to Note 1. Significant Accounting Policies in Item 1. Financial Statements for additional information regarding this change in accounting method.

A reconciliation of the tax rate for the six month period ended June 30, 2025, excluding the first quarter 2025 discrete tax benefit of $21 million related to the reversal of a valuation allowance on net operating loss carryforwards, is as follows:


	Six Months Ended
	June 30, 2025
Dollars in millions	Income Taxes		Tax Rate
As reported	$	438	23.1	%
Discrete tax benefit related to the first quarter 2025	21		1.1	%
As adjusted	$	459	24.2	%

Refer to Note 4. Income Taxes in Item 1. Financial Statements for additional information regarding the discrete tax benefit related to the first quarter 2025.

Working Capital

Management uses working capital as a measurement of the short-term liquidity of the Company. Net working capital as of June 30, 2025 and December 31, 2024 is summarized as follows:


In millions	June 30, 2025		December 31, 2024		Increase/ (Decrease)
Current assets:
Cash and equivalents	$	788	$	948	$	(160)
Trade receivables	3,320		2,991		329
Inventories	1,710		1,605		105
Prepaid expenses and other current assets	416		312		104
Total current assets	6,234		5,856		378
Current liabilities:
Short-term debt	1,242		1,555		(313)
Accounts payable and accrued expenses	2,157		2,095		62
Other	533		658		(125)
Total current liabilities	3,932		4,308		(376)
Net working capital	$	2,302	$	1,548	$	754

As of June 30, 2025, a significant portion of the Company's cash and equivalents was held by international subsidiaries. Cash and equivalents held internationally may be subject to foreign withholding taxes if repatriated to the U.S. Cash and equivalents held internationally are typically used for international operating needs or reinvested to fund expansion of existing international businesses. International funds may also be used to fund international acquisitions or, if not considered permanently invested, may be repatriated to the U.S. The Company has accrued for foreign withholding taxes related to foreign held cash and equivalents that are not permanently invested.

In the U.S., the Company utilizes cash flows from operations to fund domestic cash needs and the Company's capital allocation priorities. This includes operating needs of the U.S. businesses, dividend payments, share repurchases, acquisitions, servicing of domestic debt obligations, reinvesting to fund expansion of existing U.S. businesses and general corporate needs. The Company may also use its commercial paper program, which is supported by a long-term credit facility, for short-term liquidity needs.

The Company believes cash generated by operations and liquidity provided by the Company's commercial paper program will continue to be sufficient to fund cash requirements in the U.S.

Debt

Total debt as of June 30, 2025 and December 31, 2024 was as follows:


In millions	June 30, 2025		December 31, 2024
Short-term debt	$	1,242	$	1,555
Long-term debt	7,695		6,308
Total debt	$	8,937	$	7,863

Short-term debt included commercial paper of $1.2 billion and $778 million as of June 30, 2025 and December 31, 2024, respectively. The weighted-average interest rate on commercial paper as of June 30, 2025 and December 31, 2024 was 4.35% and 4.56%, respectively.

As of December 31, 2024, Short-term debt also included $777 million related to the Euro-denominated credit agreement entered into on May 5, 2023 (the "Euro Credit Agreement"). On February 24, 2025, the Company entered into an amendment to the Euro Credit Agreement to extend the termination date from April 30, 2025 to February 28, 2027, with an option to further extend the termination date to September 15, 2027. The amendment also decreased the interest rate spread applicable to the loans from 0.75% to 0.70% and removed the option for a one-month interest period. As of June 30, 2025, the Company had $884 million outstanding under the Euro Credit Agreement with an interest rate of 2.71%, which was included in Long-term debt.

On May 17, 2024, the Company issued €650 million of 3.25% Euro notes due May 17, 2028 at 99.525% of face value and €850 million of 3.375% Euro notes due May 17, 2032 at 99.072% of face value. Proceeds from the issuance were used for general corporate purposes, including the repayment of a portion of the indebtedness under the commercial paper program and repayment of €550 million of the term loans under the Euro Credit Agreement.

The Company also has a $3.0 billion revolving credit facility with a termination date of October 21, 2027, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. No amounts were outstanding under the revolving credit facility as of June 30, 2025 or December 31, 2024.

Total Debt to EBITDA

The Company uses the ratio of total debt to EBITDA as a measure of its ability to repay its outstanding debt obligations. EBITDA and the ratio of total debt to EBITDA are non-GAAP financial measures. The Company believes that total debt to EBITDA is a meaningful metric to investors in evaluating the Company's long term financial liquidity and may be different than the method used by other companies to calculate total debt to EBITDA. The ratio of total debt to EBITDA represents total debt divided by net income before interest expense, other income (expense), income taxes, depreciation, and amortization and impairment of intangible assets on a trailing twelve month basis. Total debt to EBITDA for the trailing twelve month periods ended June 30, 2025 and December 31, 2024 was as follows:


Dollars in millions	June 30, 2025		December 31, 2024
Total debt	$	8,937	$	7,863

Net income	$	3,365	$	3,488
Add:
Interest expense	279		283
Other (income) expense	(415)		(441)
Income taxes	873		934
Depreciation	307		301
Amortization and impairment of intangible assets	93		101
EBITDA	$	4,502	$	4,666
Total debt to EBITDA ratio	2.0		1.7

Stockholders' Equity

The changes to stockholders' equity during the six months ended 2025 were as follows:


In millions
Total stockholders' equity, December 31, 2024	$	3,317
Net income	1,455
Repurchases of common stock	(750)
Dividends declared	(877)
Other comprehensive income (loss)	9
Other, net	57
Total stockholders' equity, June 30, 2025	$	3,211

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "intend," "may," "strategy," "prospects," "estimate," "will," "should," "could," "project," "target," "anticipate," "guidance," "forecast," and other similar words, and may include, without limitation, statements regarding the duration and potential effects of global supply chain challenges, the current and expected impact of U.S. trade policy, including tariffs and related retaliatory countermeasures, the expected impact of the One Big Beautiful Bill Act, future financial and operating performance, free cash flow, economic and regulatory conditions in various geographic regions, the impact of foreign currency fluctuations, the timing and amount of benefits from the Company's enterprise strategy initiatives, the timing and amount of dividends and share repurchases, the protection of the Company's intellectual property, the likelihood of future goodwill or intangible asset impairment charges, the impact of adopting new accounting pronouncements, the adequacy of internally generated funds and credit facilities to service debt and finance the Company's capital allocation priorities, the sufficiency of U.S. generated cash to fund cash requirements in the U.S., the cost and availability of additional financing, the availability of raw materials and energy and the impact of raw material cost inflation, the Company's enterprise initiatives, the Company's portion of future benefit payments related to pension and postretirement benefits, the Company's information technology infrastructure, potential acquisitions and divestitures and the expected performance of acquired businesses and impact of divested businesses, the impact of U.S. and global tax legislation and the estimated timing and amount related to the resolution of tax matters, the cost of compliance with environmental regulations, the impact of interest rate changes, the impact of failure of the Company's employees to comply with applicable laws and regulations, and the outcome of outstanding legal proceedings. These statements are subject to certain risks, uncertainties, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that may influence future results include (1) weaknesses or downturns in the markets served by the Company, (2) changes or deterioration in international and domestic political and economic conditions, such as the Russia and Ukraine conflict or U.S.-China trade relations and the impact of related economic and other sanctions, (3) the unfavorable impact of foreign currency fluctuations, (4) the Company's enterprise strategy initiatives may not have the desired impact on organic revenue growth, (5) market conditions and cost and availability of financing to fund the Company's share repurchases, (6) a delay or decrease in the introduction of new products into the Company's product lines, (7) any failure to protect the Company's intellectual property, (8) potential negative impact of impairments to goodwill and other intangible assets on the Company's return on invested capital, financial condition or results of operations, (9) raw material price increases and supply shortages or delays, (10) financial market risks to the Company's obligations under its defined benefit pension plans, (11) negative effects of service interruptions, data corruption, cyber-based attacks, security breaches of our technology networks and systems or those of our vendors and third-party service providers, or violations of data privacy laws, (12) the potential negative impact of acquisitions on the Company's profitability and returns, (13) potential negative effects of divestitures, including retained liabilities and unknown contingent liabilities, (14) impact of tax legislation and regulatory action and changing tax rates, (15) potential adverse outcomes in legal proceedings or enforcement actions, (16) uncertainties related to environmental regulation and the physical risks of climate change, (17) potential failure of the Company's employees, agents or business partners to comply with anti-bribery, competition, import/export, trade sanctions, data privacy, human rights and other laws, (18) public health crises and related government actions, and (19) increases in inflation or interest rates and the possibility of economic recession. A more detailed description of these risks is contained under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. These risks are not all inclusive and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Any forward-looking statements made by ITW speak only as of the date on which they are made. ITW is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise, except as required by law.

ITW practices fair disclosure for all interested parties. Investors should be aware that while ITW regularly communicates with securities analysts and other investment professionals, it is against ITW's policy to disclose to them any material non-public information or other confidential commercial information. Investors should not assume that ITW agrees with any statement or report issued by any analyst irrespective of the content of the statement or report.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to exposures to market risk as reported in the Company's 2024 Annual Report on Form 10-K.

ITEM 4. Controls and Procedures

The Company's management, with the participation of the Company's President & Chief Executive Officer and Senior Vice President & Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a–15(e)) as of June 30, 2025. Based on such evaluation, the Company's President & Chief Executive Officer and Senior Vice President & Chief Financial Officer have concluded that, as of June 30, 2025, the Company's disclosure controls and procedures were effective.

In connection with the evaluation by management, including the Company's President & Chief Executive Officer and Senior Vice President & Chief Financial Officer, no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended June 30, 2025 were identified that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

None. The Company's threshold for disclosing environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.

ITEM 1A. Risk Factors

The Company's business, financial condition, results of operations and cash flows are subject to various risks which could cause actual results to vary materially from recent results or from anticipated future results. Refer to the description of the Company's risk factors previously disclosed in Part I - Item 1A - Risk Factors in the Company's 2024 Annual Report on Form 10-K. There have been no material changes to the risk factors described therein.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

On August 4, 2023, the Company announced a new stock repurchase program which provides for the repurchase of up to an additional $5.0 billion of the Company's common stock over an open-ended period of time (the "2023 Program"). As of June 30, 2025, there were approximately $2.7 billion of authorized repurchases remaining under the 2023 Program.

Share repurchase activity for the second quarter of 2025 was as follows:


In millions except per share amounts
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Value of Shares That May Yet Be Purchased Under Programs
April 2025	0.6	$	234.10	0.6	$	2,984
May 2025	0.5	$	245.35	0.5	$	2,853
June 2025	0.4	$	245.01	0.4	$	2,740
Total	1.5			1.5

ITEM 6. Exhibits

Exhibit Index


Exhibit Number						Exhibit Description

31						Rule 13a-14(a) Certifications.

32						Section 1350 Certification.

101						The following financial and related information from the Illinois Tool Works Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 is formatted in Inline Extensible Business Reporting Language (iXBRL) and submitted electronically herewith: (i) Statement of Income, (ii) Statement of Comprehensive Income, (iii) Statement of Financial Position, (iv) Statement of Changes in Stockholders' Equity, (v) Statement of Cash Flows, and (vi) related Notes to Financial Statements.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		ILLINOIS TOOL WORKS INC.

Dated:	July 31, 2025	By:	/s/ Randall J. Scheuneman
			Randall J. Scheuneman
			Vice President & Chief Accounting Officer
			(Principal Accounting Officer and Duly Authorized Officer)

ILLINOIS TOOL WORKS INC - Quarter Report: 2025 June (Form 10-Q)

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