Financial Overview. Bill Humes. Executive Vice President and Chief Financial Officer

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1 Financial Overview Bill Humes Executive Vice President and Chief Financial Officer 51

2 Update Since Last Year s s Meeting FY 2006 Financial Highlights Sales +9% to $31.4 B Operating Income $422.4 M or 135 bps of operating margin Net Income $265.8 million or $1.56 per diluted share Record sales All regions delivered more than 100 bps of operating margin Annual record Annual gross margins at 5.37% of revenues 2

3 Worldwide Sales: Seasonality And Growth 13 Consecutive Quarters Of YOY Growth 10 25% % Sales $ billions % 10% Change vs. prior year 2 5% 1 0 0% Q4'03 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Sales Sales YOY Change 3

4 Stable Gross Margins 6% 5.48% 5.41% 5.51% 5.47% 5.37% Stability a result of: 5% Strategic pricing Profit-enhancement program taking hold 4% Enhanced services offerings 3%

5 Operating Income Reflects Efficient Growth ($ millions) $400 $300 $200 $100 GAAP 2.00% % % 0.80% 0.40% $0 0.00% Operating Income Operating M argin 5

6 Regional Mix Sales & Op. Income Four Strong, Profitable Engines 9% 5% 32% Sales 54% Operating Income 25% 2% 73% % 5% 34% 43% 15% 7% 28% 50% * No. America Europe Asia Pacific Latin America * 2006 operating income mix does not include stock based compensation expense, which is not allocated to the regional operations. 6

7 Income And Earnings Per Share ($ millions except per share) $300 $1.56 $250 $1.38 $1.32 $266 $200 $150 $0.98 $220 $217 $149 $100 $50 $0 $0.04* $6* *Income before cumulative effect of adoptions of a new accounting standard. 7

8 Earnings Leverage: Efficient Growth YOY Percentage Change Sales GAAP Net Income Non-GAAP Net Income Actual Results FY % 23% 7% FY % (1)% 54% FY % 47% 47% Outlook Q2 07 8% - 12% 10% - 21% NA *Please refer to slides located in the GAAP to non-gaap Reconciliation section of the handouts or to the Investor Relations section of the company s website, 8

9 Benchmarks vs. Competitors 3-Year CAGR IM* Tech Data* Synnex* Revenue 12% 7% 17% Operating Income 39% -129% 19% Net Income 21% -198% 20% 3-Year Average IM* Tech Data* Synnex* WC Days * Based on fiscal year results for : Working Capital average based on 12 quarters. Ingram Micro fiscal year ends in December, Tech Data ends in January and Synnex ends in November 9

10 Appropriate Leverage: Balance Sheet $700 ($ in millions) $600 $500 $400 $515 $605 $510 $300 $200 $100 $366 $368 $ Debt to Capital Ratio* 18% 16% 19% 20% 15% * Excludes off-balance sheet debt of $75 million in 2002, $60 million in 2003, and $69 million in 2006 associated with accounts receivable financing programs. 10

11 Working Capital WC Days Inventory Turns Working Capital Days Inventory Turns Working capital equals accounts receivable days of sales outstanding plus days of inventory outstanding less days of accounts payable outstanding. Excludes off-balance sheet debt of debt of $75 million in 2002, $60 million in 2003, and $69 million in 2006 associated with accounts receivable financing programs. Working capital days are based on end of period for Q4. 11

12 Return On Invested Capital Driving Toward 15% 14% 12% 10% 8% 6% 4% 5.8% 11.5% 7.5% 12.9% ROIC 10.2% 10.3% 11.3% 10.6% Improvement Drivers: Better operating leverage Specialty businesses 2% 0% 1.9% GAAP Non-GAAP Working capital efficiency * ROIC = net operating profit after tax divided by average invested capital. Please refer to slides located in the GAAP to non-gaap Reconciliation section of the handouts. 12

13 Key Uses Of Capital Working Capital: Needs fluctuate throughout the quarter Incremental WC of $65 million req d for each $1B of additional revenue at 24 WC days Internal Investments: Capital expenditures expectation for FY 2007: $60 million Enhancements of global processes and systems 13

14 Key Uses of Capital Acquisitions: Hurdle rates above weighted average cost of capital Attractive growth rates and margin profile Strategically significant Share Repurchase, Dividends: Continuous review Reinvest in growth initiatives 14

15 Company Targets: Years Sales Gross Margin Op. Expenses Growing greater than the overall IT market; 7-10% per year Remain relatively stable, at approximately 5.4% annualized Growing at approximately one-half the rate of sales in the core business + new investments and business models Op. Income Growing greater than the rate of sales; Worldwide operating margin at least 150 bps 15

16 Company Targets: Years Interest Tax Increasing at about one-half the rate of sales Stable at approximately 28% ETR Working capital Debt to Capital Days Could increase with investments to 20-30% ROIC 12-15% 16

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ITW Conference Call Third Quarter 2013

ITW Conference Call Third Quarter 2013 October 22, 2013 SOLID GROWTH. STRONG RETURNS. BEST-IN-CLASS OPERATOR. Forward-Looking Statements Safe Harbor Statement This conference call contains forward-looking