Illinois Tool Works Inc. (ITW) recently reclassified its historical results giving effect to discontinued operations and announced the impact of its share repurchase activity. The company consummated the repurchase of $550 million or 9.7 million shares in the second quarter 2011, favorably impacting fiscal year 2011 earnings per share by 5 cents.
Per a definitive agreement entered into in April 2011, Illinois Tools will divest its finishing group businesses to Graco Inc. The finishing group generated revenue of $305 million in 2010.
In addition, the company also endorsed plans to sell its consumer packaging and electronics businesses which fetched combined revenue of $100 million in 2010. The company has reclassified the results of these two businesses along with two other businesses exited earlier to discontinued operations.
Earnings per share for the first quarter of 2011 were revised from $1.24 (previously reported) to $1.21, after adjusting 3 cents for discontinued operations. Similarly, the results for the first quarter of 2010 were revised from 66 cents to 64 cents.
Generally, taking into account the impact of reclassification and the share repurchase activity, the company anticipates its EPS from continuing operations to be in a range of $0.95-1.01 for the second quarter 2011 and $4.08-$4.26 for the fiscal year 2011, based on a revenue growth assumption of 17%-20% and 16%-18%, respectively.
Excluding the reclassification for discontinued operations and share repurchase, EPS is likely to be in a range of $0.99-$1.05 for the second quarter and in the $4.16-$4.34 range for the fiscal year 2011.
The company is expected to release its second quarter financial results on July 18, 2011.
Illinois Tool Works is one of the leading manufacturers of industrial products and equipment. The company’s prime competitors include the likes of Cooper Industries plc (CBE), General Electric Co. (GE), and Manitowoc Co. Inc. (MTW). We currently maintain our Outperform recommendation on the stock.
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