Illinois Tool Works lifts 2026 earnings guidance as third-quarter revenue falls short

Revenue came in at $4.24 billion against $4.30 billion expected, while the full-year profit range moved higher.

Illinois Tool Works reported third-quarter earnings of $3.00 per share on a GAAP basis, in line with expectations. Revenue was $4.24 billion, below the $4.30 billion expected.

The company raised its full-year 2026 GAAP earnings per share guidance by $0.05 at the midpoint, to a range of $11.45 to $11.55. At the midpoint, that is 10 per cent growth on the year before. It raised its full-year revenue growth guidance to 4.5 to 5.5 per cent and kept its organic growth guidance at 3 to 4 per cent. It expects an operating margin of 26.5 to 27.5 per cent and a tax rate of 23 to 24 per cent.

Free cash flow is expected to be about 100 per cent of net income. The company plans to buy back about $1.5 billion of its own shares. It raised its dividend 7 per cent, to an annualized $6.88 per share. It is the 63rd consecutive year of dividend increases.

Chief Executive Christopher O'Herlihy said accelerating demand in capex-related segments and a growing contribution from the company's Customer-Back Innovation efforts drove the results. He said Illinois Tool Works enters the fourth quarter with strong operational momentum.

Revenue missed while earnings per share matched expectations, so the guidance raise carries most of the weight in this report. The new midpoint of $11.50 is a smaller step than the $0.15 raise the company gave with its second-quarter results, when organic growth picked up to 4.5 per cent. Management credits capex-related demand for the momentum, but the organic growth range was held at 3 to 4 per cent. The fourth quarter will show whether that demand is strengthening.