Circuits Assembly Online Magazine - ITW's Test/Electronics Unit Sees Flat Q4

GLENVIEW, IL -- Illinois Tool Works reported fourth-quarter organic revenue was down 0.3% year-over-year at its Test & Measurement and Electronics unit.

The segment had total sales of $487 million for the period ended Dec. 31, down from $500 million a year ago. Currency translation and divestitures lowered fourth-quarter rvenue by 2.1%

Operating income was $98 million, versus $90 million last year. Operating margin for the quarter was 20.1%, up 200 basis points from the December 2015 period.

For the year, Test & Measurement and Electronics reported sales rose 1.8%, including revenue from acquisitions, offset in part by a 1.5% drop due to currency translation and divestitures. Operating margin rose a net 260 basis points to 18.9%.

The Test & Measurement and Electronics unit includes such companies as Speedline Technologies, Kester Solder and Vitronics Soltec.

For the year, total revenue increased 1% to $13.6 billion with organic growth of 1%. Operating margin was 22.5%, up 110 basis points versus 2015, or up 140 basis points to 22.8% excluding the margin dilution impact from EF&C.

Operating income was $742 million and operating margin for the quarter was 21.8%, an increase of 110 basis points year-on-year. Fourth-quarter net income was $507 million and the company converted 117% of net income to free cash flow.

“The fourth quarter closed out a year of record financial performance and strong execution by the ITW team. In 2016, we grew EPS 11%, improved operating margin by 110 basis points to an all-time high of 22.5% and increased after tax return on invested capital 170 basis points to a record 22.1%,” said E. Scott Santi, chairman and chief executive. “Throughout 2016, we continued to invest in our businesses to sustain above-market organic growth, strengthened our highly differentiated business portfolio and returned more than $2.8 billion of surplus capital to shareholders. We continue to work hard to push our performance to best-in-class levels, and we are well-positioned to deliver continued progress and strong results in 2017.

ITW reaffirmed its 2017 full-year expectations for organic growth of 1.5 to 3.5% and operating margins in excess of 23.5%.