Name: Illinois Tool Works Inc. (NYSE:ITW) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Illinois Tool Works Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income	2,694)	2,109)	2,521)	2,563)	1,687)
Depreciation	277)	273)	267)	272)	256)
Amortization and impairment of intangible assets	133)	154)	159)	189)	206)
Change in deferred income taxes	(148)	(30)	32)	34)	64)
Provision for uncollectible accounts	3)	7)	6)	5)	3)
Income from investments	(29)	(8)	(15)	(9)	(16)
(Gain) loss on sale of plant and equipment	—)	2)	(9)	(7)	(1)
(Gain) loss on sale of operations and affiliates	—)	—)	(44)	2)	(1)
Stock-based compensation expense	53)	42)	41)	40)	36)
Other non-cash items, net	13)	8)	9)	10)	10)
(Increase) decrease in trade receivables	(240)	95)	40)	(60)	(138)
(Increase) decrease in inventories	(450)	43)	98)	(108)	(81)
(Increase) decrease in prepaid expenses and other assets	(36)	41)	11)	3)	(121)
Increase (decrease) in accounts payable	37)	19)	(16)	(46)	39)
Increase (decrease) in accrued expenses and other liabilities	202)	17)	(95)	(36)	(42)
Increase (decrease) in income taxes	49)	34)	(7)	(41)	501)
Other, net	(1)	1)	(3)	—)	—)
Change in assets and liabilities, net of acquisitions and divestitures	(439)	250)	28)	(288)	158)
Adjustments to reconcile net income to cash provided by operating activities	(137)	698)	474)	248)	715)
Net cash provided by operating activities	2,557)	2,807)	2,995)	2,811)	2,402)
Acquisition of businesses, excluding cash and equivalents	(731)	—)	(4)	—)	(3)
Additions to plant and equipment	(296)	(236)	(326)	(364)	(297)
Proceeds from investments	38)	14)	20)	16)	43)
Proceeds from sale of plant and equipment	8)	10)	25)	26)	14)
Proceeds from sale of operations and affiliates	—)	1)	120)	1)	2)
Other, net	(3)	(3)	(18)	(4)	(10)
Net cash used for investing activities	(984)	(214)	(183)	(325)	(251)
Cash dividends paid	(1,463)	(1,379)	(1,321)	(1,124)	(941)
Issuance of common stock	50)	66)	85)	22)	84)
Repurchases of common stock	(1,000)	(706)	(1,500)	(2,000)	(1,000)
Net proceeds from (repayments of) debt with original maturities of three months or less	120)	—)	(1)	(850)	849)
Proceeds from debt with original maturities of more than three months	90)	—)	1,774)	—)	—)
Repayments of debt with original maturities of more than three months	(351)	(4)	(1,351)	(1)	(652)
Other, net	(10)	(26)	(12)	(11)	(14)
Net cash used for financing activities	(2,564)	(2,049)	(2,326)	(3,964)	(1,674)
Effect of exchange rate changes on cash and equivalents	(46)	39)	(9)	(112)	145)
Cash and equivalents, increase (decrease) during the year	(1,037)	583)	477)	(1,590)	622)
Cash and equivalents, beginning of year	2,564)	1,981)	1,504)	3,094)	2,472)
Cash and equivalents, end of year	1,527)	2,564)	1,981)	1,504)	3,094)

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).

Operating cash flow remained relatively stable between 2017 and 2021, despite fluctuations in net income. Net cash provided by operating activities peaked in 2019 at 2,995 million US dollars before declining to 2,557 million US dollars by 2021. A notable divergence occurred in 2021, where net income reached a five-year high of 2,694 million US dollars, yet operating cash flow decreased, primarily due to a significant increase in working capital requirements.

Working Capital Dynamics: A substantial cash outflow was observed in 2021 related to trade receivables (240 million US dollars) and inventories (450 million US dollars), indicating a buildup of current assets that offset the gains in net income.
Non-Cash Adjustments: Depreciation and amortization expenses remained consistent throughout the period, with depreciation hovering between 236 million and 364 million US dollars and amortization gradually declining from 206 million US dollars in 2017 to 133 million US dollars in 2021.

Investing activities were characterized by steady capital expenditures on plant and equipment, with a marked shift toward inorganic growth in the final year of the analyzed period. Net cash used for investing activities remained below 325 million US dollars annually from 2017 to 2020, but surged to 984 million US dollars in 2021.

Capital Expenditures: Additions to plant and equipment showed a general downward trend from a peak of 364 million US dollars in 2018 to 296 million US dollars in 2021.
Strategic Acquisitions: The sharp increase in investing outflows in 2021 is attributed to the acquisition of businesses totaling 731 million US dollars, representing a significant departure from previous years where acquisitions were minimal or absent.

Financing activities consistently resulted in net cash outflows, reflecting a disciplined strategy of returning capital to shareholders. The company maintained a combination of increasing dividend payments and opportunistic share repurchases.

Shareholder Distributions: Cash dividends paid exhibited a steady annual increase, rising from 941 million US dollars in 2017 to 1,463 million US dollars in 2021.
Equity Repurchases: Repurchases of common stock were volatile, peaking at 2,000 million US dollars in 2018 and fluctuating between 706 million and 1,500 million US dollars in subsequent years.
Debt Management: Debt activity varied significantly, with a notable issuance of debt in 2019 (1,774 million US dollars) followed by repayments, suggesting active liquidity management to fund operations or shareholder returns.

The overall cash position experienced significant volatility. Cash and equivalents ended 2017 at 3,094 million US dollars but declined to 1,527 million US dollars by the end of 2021. This reduction is primarily linked to the intensified investing activity in 2021 and the sustained high levels of capital return to shareholders.

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