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Stock Analysis on Net

Illinois Tool Works Inc. (NYSE:ITW)

This company has been moved to the archive! The financial data has not been updated since February 11, 2022.

Common-Size Income Statement

Illinois Tool Works Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Operating revenue 100.00 100.00 100.00 100.00 100.00
Cost of revenue -58.73 -58.65 -58.03 -58.26 -58.05
Gross profit 41.27% 41.35% 41.97% 41.74% 41.95%
Selling, administrative, and research and development expenses -16.30 -17.20 -16.73 -16.19 -16.77
Legal settlement income 0.00 0.00 0.00 0.00 0.66
Amortization and impairment of intangible assets -0.92 -1.22 -1.13 -1.28 -1.44
Operating income 24.05% 22.92% 24.11% 24.27% 24.41%
Interest expense -1.40 -1.64 -1.57 -1.74 -1.82
Interest income 0.08 0.14 0.21 0.24 0.31
Other net periodic benefit income 0.16 0.10 0.17 0.14 0.00
Income from investments 0.20 0.06 0.11 0.06 0.11
Gain (loss) on disposal of operations and affiliates 0.00 0.00 0.31 -0.01 0.01
Loss on foreign currency transactions, net -0.06 -0.04 -0.07 -0.01 -0.17
Other, net -0.03 -0.04 0.04 0.04 -0.01
Other income (expense) 0.35% 0.22% 0.76% 0.45% 0.25%
Income before taxes 23.01% 21.50% 23.30% 22.98% 22.84%
Income taxes -4.37 -4.73 -5.44 -5.63 -11.06
Net income 18.64% 16.77% 17.87% 17.36% 11.79%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The financial performance between 2017 and 2021 is characterized by high stability in core operational margins and a significant expansion in net profitability. While gross and operating margins remained relatively constant, a substantial reduction in the tax burden as a percentage of revenue served as the primary driver for increased net income.

Gross Profitability and Cost Management
Gross profit margins exhibited minimal volatility over the five-year period, fluctuating within a narrow range between 41.27% and 41.97%. The cost of revenue remained remarkably consistent, averaging approximately 58% of operating revenue, indicating a stable pricing strategy and effective management of direct production costs.
Operating Efficiency
Selling, administrative, and research and development expenses remained stable, typically ranging between 16.19% and 17.20% of revenue. Operating income margins demonstrated resilience, maintaining a level around 24% for most of the period, with a temporary contraction to 22.92% in 2020 before recovering to 24.05% in 2021.
Non-Operating Items and Interest
Interest expense as a percentage of operating revenue followed a general downward trend, decreasing from 1.82% in 2017 to 1.40% in 2021. Other income and expenses remained marginal, contributing minimally to the overall margin fluctuations, although a legal settlement income of 0.66% was noted in 2017.
Taxation and Net Margin Expansion
A significant downward trend is observed in income taxes as a percentage of operating revenue, which fell from 11.06% in 2017 to 4.37% in 2021. This reduction in the effective tax rate directly correlated with a substantial increase in net income margins, which rose from 11.79% in 2017 to a peak of 18.64% in 2021.

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