Exhibit

GLENVIEW, IL., July 26, 2019 - Illinois Tool Works Inc. (NYSE: ITW) today reported its second-quarter 2019 results including GAAP earnings per share (EPS) of $1.91 compared to $1.97 in the second quarter of 2018. Revenue of $3.6 billion was down 5.8 percent with organic revenue down 2.8 percent and unfavorable foreign currency translation impact of 2.7 percent. Operating margin was 24.1 percent.

“In the second quarter, we experienced a deceleration in demand across our portfolio relative to the demand levels we were seeing exiting the first quarter. On a sequential basis, second quarter organic revenue declined approximately two percentage points versus first quarter run rates,” said E. Scott Santi, Chairman and Chief Executive Officer.

“In this more challenging demand environment, the ITW team executed well on the elements within our own control and delivered solid financial results. Operating margin improved year-over-year to 24.4 percent, excluding higher restructuring impact of 30 basis points, as enterprise initiatives contributed 110 basis points. The combination of unfavorable foreign currency translation, higher restructuring expenses and a small loss on two divestitures reduced EPS by $0.09 year-over-year. Excluding these three items, EPS would have increased two percent to $2.00. Free cash flow increased 14 percent year-on-year.”

“We are updating our full year guidance to reflect current levels of demand. All other assumptions remain essentially unchanged. We continue to expect a stronger second half on a relative basis, as known headwinds from foreign currency and higher restructuring expenses dissipate. We expect continued strong contributions from enterprise initiatives, positive price/cost margin dynamics, and strong free cash flow as we progress through the balance of the year. While we will be prudent in making appropriate adjustments due to the near-term demand environment, we remain focused on managing and investing to maximize ITW’s performance over the long term. The highly differentiated nature of ITW’s core competitive advantages and the strength and resilience of our proprietary business model and diversified portfolio position us well for strong financial performance across a wide range of economic scenarios,” Santi concluded.

Revenue of $3.6 billion was down 5.8 percent with organic revenue down 2.8 percent, unfavorable foreign currency translation impact of 2.7 percent, and divestiture impact of 0.3 percent. As expected, the company’s ongoing Product Line Simplification (PLS) activities reduced organic growth by 70 basis points.

Operating margin was 24.1 percent. Excluding 30 basis points of unfavorable margin impact from higher year-over-year restructuring expenses, operating margin improved 10 basis points to 24.4 percent. Free Cash Flow increased 14 percent and the company repurchased $375 million of its own shares. After-tax return on invested capital was 28.6 percent.

Current levels of demand, adjusted for normal seasonality, project full year organic revenue to be down one to three percent. As a result, the company is updating its full year GAAP EPS guidance to a range of $7.55 to $7.85, which includes approximately $0.25 of headwind from foreign currency translation and higher restructuring expenses. Operating margin is forecast to be flat to up 50 basis points, largely due to strong contributions from enterprise initiatives of 100 basis points, partially offset by 25 basis points of higher restructuring expenses. Free cash flow is expected to be above 100 percent of net income, and the company is on pace to repurchase approximately $1.5 billion of its shares. The effective tax rate for the full year is expected to be in the range of 24 to 25 percent.

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding diluted earnings per share, foreign exchange rates, total and organic revenue growth, operating margin, economic and regulatory conditions in various geographic regions, price/cost impact, restructuring expenses, free cash flow, effective tax rate, after-tax return on invested capital, and timing and amount of

ITW (NYSE: ITW) is a Fortune 200 global multi-industrial manufacturing leader with revenues totaling $14.8 billion in 2018. The company’s seven industry-leading segments leverage the unique ITW Business Model to drive solid growth with best-in-class margins and returns in markets where highly innovative, customer-focused solutions are required. ITW has approximately 48,000 dedicated colleagues in operations around the world who thrive in the company’s unique, decentralized and entrepreneurial culture. www.itw.com



	Three Months Ended						Six Months Ended
	June 30,						June 30,
In millions except per share amounts	2019			2018			2019			2018
Operating Revenue	$	3,609		$	3,831		$	7,161		$	7,575
Cost of revenue	2,099			2,231			4,158			4,412
Selling, administrative, and research and development expenses	598			620			1,209			1,232
Amortization and impairment of intangible assets	41			48			84			96
Operating Income	871			932			1,710			1,835
Interest expense	(55		)	(64		)	(118		)	(130		)
Other income (expense)	9			26			23			38
Income Before Taxes	825			894			1,615			1,743
Income Taxes	202			228			395			425
Net Income	$	623		$	666		$	1,220		$	1,318

Net Income Per Share:
Basic	$	1.92		$	1.98		$	3.74		$	3.90
Diluted	$	1.91		$	1.97		$	3.72		$	3.87

Cash Dividends Per Share:
Paid	$	1.00		$	0.78		$	2.00		$	1.56
Declared	$	1.00		$	0.78		$	2.00		$	1.56

Shares of Common Stock Outstanding During the Period:
Average	324.8			336.7			326.0			338.5
Average assuming dilution	326.6			338.9			327.9			340.8



In millions	June 30, 2019			December 31, 2018
Assets
Current Assets:
Cash and equivalents	$	1,677		$	1,504
Trade receivables	2,629			2,622
Inventories	1,256			1,318
Prepaid expenses and other current assets	288			334
Assets held for sale	439			—
Total current assets	6,289			5,778

Net plant and equipment	1,717			1,791
Goodwill	4,503			4,633
Intangible assets	928			1,084
Deferred income taxes	516			554
Other assets	1,234			1,030
	$	15,187		$	14,870

Liabilities and Stockholders' Equity
Current Liabilities:
Short-term debt	$	—		$	1,351
Accounts payable	512			524
Accrued expenses	1,207			1,271
Cash dividends payable	323			328
Income taxes payable	53			68
Liabilities held for sale	93			—
Total current liabilities	2,188			3,542

Noncurrent Liabilities:
Long-term debt	7,809			6,029
Deferred income taxes	683			707
Noncurrent income taxes payable	462			495
Other liabilities	950			839
Total noncurrent liabilities	9,904			8,070

Stockholders’ Equity:
Common stock	6			6
Additional paid-in-capital	1,270			1,253
Retained earnings	21,788			21,217
Common stock held in treasury	(18,276		)	(17,545		)
Accumulated other comprehensive income (loss)	(1,697		)	(1,677		)
Noncontrolling interest	4			4
Total stockholders’ equity	3,095			3,258
	$	15,187		$	14,870



Three Months Ended June 30, 2019
Dollars in millions	Total Revenue			Operating Income			Operating Margin
Automotive OEM	$	788		$	174		22.1	%
Food Equipment	548			140			25.6	%
Test & Measurement and Electronics	533			131			24.5	%
Welding	422			122			28.8	%
Polymers & Fluids	427			97			22.8	%
Construction Products	424			106			25.0	%
Specialty Products	473			124			26.1	%
Intersegment	(6		)	—			—	%
Total Segments	3,609			894			24.8	%
Unallocated	—			(23		)	—	%
Total Company	$	3,609		$	871		24.1	%



Six Months Ended June 30, 2019
Dollars in millions	Total Revenue			Operating Income			Operating Margin
Automotive OEM	$	1,594		$	341		21.4	%
Food Equipment	1,066			269			25.3	%
Test & Measurement and Electronics	1,057			257			24.3	%
Welding	849			242			28.5	%
Polymers & Fluids	843			186			22.1	%
Construction Products	825			193			23.4	%
Specialty Products	938			247			26.3	%
Intersegment	(11		)	—			—	%
Total Segments	7,161			1,735			24.2	%
Unallocated	—			(25		)	—	%
Total Company	$	7,161		$	1,710		23.9	%



Q2 2019 vs. Q2 2018 Favorable/(Unfavorable)
Operating Revenue	Automotive OEM		Food Equipment		Test & Measurement and Electronics		Welding		Polymers & Fluids		Construction Products		Specialty Products		Total ITW
Organic	(7.1	)%	1.7	%	(1.3	)%	(2.4	)%	0.1	%	(0.7	)%	(6.4	)%	(2.8	)%
Acquisitions/Divestitures	—	%	—	%	—	%	(0.8	)%	(0.8	)%	—	%	(0.8	)%	(0.3	)%
Translation	(3.3	)%	(2.7	)%	(2.3	)%	(1.0	)%	(3.2	)%	(3.8	)%	(2.1	)%	(2.7	)%
Operating Revenue	(10.4	)%	(1.0	)%	(3.6	)%	(4.2	)%	(3.9	)%	(4.5	)%	(9.3	)%	(5.8	)%



Q2 2019 vs. Q2 2018 Favorable/(Unfavorable)
Change in Operating Margin	Automotive OEM	Food Equipment	Test & Measurement and Electronics	Welding	Polymers & Fluids	Construction Products	Specialty Products	Total ITW
Operating Leverage	(120) bps	40 bps	(40) bps	(40) bps	10 bps	(20) bps	(130) bps	(60) bps
Changes in Variable Margin & OH Costs	90 bps	—	90 bps	10 bps	170 bps	60 bps	(50) bps	60 bps
Total Organic	(30) bps	40 bps	50 bps	(30) bps	180 bps	40 bps	(180) bps	—
Acquisitions/Divestitures	—	—	—	20 bps	20 bps	—	30 bps	10 bps
Restructuring/Other	(10) bps	(20) bps	50 bps	(40) bps	(40) bps	10 bps	(50) bps	(30) bps
Total Operating Margin Change	(40) bps	20 bps	100 bps	(50) bps	160 bps	50 bps	(200) bps	(20) bps

Total Operating Margin % *	22.1%	25.6%	24.5%	28.8%	22.8%	25.0%	26.1%	24.1%

*Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets	50 bps	70 bps	220 bps	30 bps	350 bps	30 bps	100 bps	120 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.09) on GAAP earnings per share for the second quarter of 2019.



1H 2019 vs 1H 2018 Favorable/(Unfavorable)
Operating Revenue	Automotive OEM		Food Equipment		Test & Measurement and Electronics		Welding		Polymers & Fluids		Construction Products		Specialty Products		Total ITW
Organic	(6.7	)%	1.7	%	(0.9	)%	0.2	%	(0.4	)%	(1.0	)%	(4.1	)%	(2.2	)%
Acquisitions/Divestitures	—	%	—	%	—	%	(0.7	)%	(0.9	)%	—	%	(0.4	)%	(0.2	)%
Translation	(3.7	)%	(3.0	)%	(2.7	)%	(1.1	)%	(3.7	)%	(4.4	)%	(2.4	)%	(3.1	)%
Operating Revenue	(10.4	)%	(1.3	)%	(3.6	)%	(1.6	)%	(5.0	)%	(5.4	)%	(6.9	)%	(5.5	)%



1H 2019 vs. 1H 2018 Favorable/(Unfavorable)
Change in Operating Margin	Automotive OEM	Food Equipment	Test & Measurement and Electronics	Welding	Polymers & Fluids	Construction Products	Specialty Products	Total ITW
Operating Leverage	(110) bps	40 bps	(30) bps	10 bps	(10) bps	(10) bps	(90) bps	(40) bps
Changes in Variable Margin & OH Costs	20 bps	40 bps	100 bps	(10) bps	120 bps	50 bps	(10) bps	50 bps
Total Organic	(90) bps	80 bps	70 bps	—	110 bps	40 bps	(100) bps	10 bps
Acquisitions/Divestitures	—	—	—	20 bps	20 bps	—	20 bps	10 bps
Restructuring/Other	(100) bps	(50) bps	10 bps	(20) bps	(30) bps	(30) bps	(30) bps	(50) bps
Total Operating Margin Change	(190) bps	30 bps	80 bps	—	100 bps	10 bps	(110) bps	(30) bps

Total Operating Margin % *	21.4%	25.3%	24.3%	28.5%	22.1%	23.4%	26.3%	23.9%

*Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets	50 bps	70 bps	240 bps	20 bps	350 bps	30 bps	100 bps	120 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.19) on GAAP earnings per share for the first half of 2019.



	Three Months Ended						Six Months Ended
	June 30,						June 30,
Dollars in millions	2019			2018			2019			2018
Operating income	$	871		$	932		$	1,710		$	1,835
Tax rate	24.5		%	25.5		%	24.5		%	25.2		%
Income taxes	(213		)	(238		)	(418		)	(462		)
Operating income after taxes	$	658		$	694		$	1,292		$	1,373

Invested capital:
Trade receivables	$	2,629		$	2,878		$	2,629		$	2,878
Inventories	1,256			1,320			1,256			1,320
Net assets held for sale	346			—			346			—
Net plant and equipment	1,717			1,783			1,717			1,783
Goodwill and intangible assets	5,431			5,852			5,431			5,852
Accounts payable and accrued expenses	(1,719		)	(1,847		)	(1,719		)	(1,847		)
Other, net	(433		)	(407		)	(433		)	(407		)
Total invested capital	$	9,227		$	9,579		$	9,227		$	9,579

Average invested capital	$	9,206		$	9,675		$	9,182		$	9,724
Adjusted return on average invested capital	28.6		%	28.7		%	28.1		%	28.2		%



Dollars in millions	Twelve Months Ended December 31, 2018
Operating income	$	3,584
Tax rate	24.9		%
Income taxes	(893		)
Operating income after taxes	$	2,691

Invested capital:
Trade receivables	$	2,622
Inventories	1,318
Net plant and equipment	1,791
Goodwill and intangible assets	5,717
Accounts payable and accrued expenses	(1,795		)
Other, net	(519		)
Total invested capital	$	9,134

Average invested capital	$	9,533
Adjusted return on average invested capital	28.2		%



	Three Months Ended						Six Months Ended
	June 30,						June 30,
Dollars in millions	2019			2018			2019			2018
Net cash provided by operating activities	$	685		$	620		$	1,301		$	1,158
Less: Additions to plant and equipment	(77		)	(87		)	(154		)	(181		)
Free cash flow	$	608		$	533		$	1,147		$	977

Net income	$	623		$	666		$	1,220		$	1,318
Free cash flow to net income conversion rate	98		%	80		%	94		%	74		%



	Three Months Ended
	June 30, 2019
As reported	$	1.91
Foreign currency translation	0.06
Higher restructuring expenses	0.02
Loss on divestitures	0.01
As adjusted	$	2.00



	Six Months Ended
	June 30, 2018
Dollars in millions	Income Taxes		Tax Rate
As reported	$	425	24.4	%
Discrete tax benefit	14		0.8	%
As adjusted	$	439	25.2	%



	Twelve Months Ended
	December 31, 2018
Dollars in millions	Income Taxes		Tax Rate
As reported	$	831	24.5	%
Net discrete tax benefit	15		0.4	%
As adjusted	$	846	24.9	%