Illinois Tool Works Inc. (NYSE:ITW) Q4 2023 Earnings Conference Call February 1, 2024 10:00 AM ET

Company Participants

Karen Fletcher - Vice President of Investor Relations

Christopher O'Herlihy - President and Chief Executive Officer

Michael Larsen - Senior Vice President and Chief Financial Officer

Conference Call Participants

Tami Zakaria - JPMorgan Chase & Co.

Stephen Volkmann - Jefferies

Andrew Kaplowitz - Citigroup Inc.

Joseph O'Dea - Wells Fargo Securities, LLC

Sabrina Abrams - Bank of America

Steven Fisher - UBS

Julian Mitchell - Barclays Bank PLC

Mircea Dobre - Robert W. Baird & Co.

Operator

Good morning. My name is Eric, and I'll be your conference operator today. At this time, I would like to welcome everyone to the ITW Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Karen Fletcher, Vice President of Investor Relations. You may begin your conference.

Karen Fletcher

Thank you, Eric. Good morning, and welcome to ITW's fourth quarter 2023 conference call. I'm joined by our President and CEO, Chris O'Herlihy; and Senior Vice President and CFO, Michael Larsen. Also with us today is Erin Linnihan who joined our Investor Relations team last month as Vice President. Erin, welcome to ITW.

During today's call, we'll discuss ITW's fourth quarter and full-year 2023 financial results and provide guidance for full-year 2024. Slide 2 is a reminder that this presentation contains forward-looking statements. Please refer to the Company's 2022 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 3, and it's now my pleasure to turn the call over to our President and CEO, Chris O'Herlihy.

Christopher O'Herlihy

Thank you, Karen, and good morning, everyone. In Q4, we delivered a solid finish to a year of high quality execution and face some pretty unique challenges, including slowing demand for CapEx, headwinds from customer and channel inventory reductions and an automotive industry strike. As a result, organic growth was essentially flat in the fourth quarter. Operating margin came in at 24.8% with 150 basis point contribution from enterprise initiatives and free cash flow grew almost 40%. GAAP EPS of $2.38 included $0.04 of unfavorable impact from the devaluation of the Argentine currency.