Illinois Tool Works Inc. (ITW) reported a 13% year-over-year decline in operating revenues for the three months ended Nov 30. The decline in operating revenues was driven by a 15% drop in base revenues, offset by a 2% positive contribution from acquisitions.
 
The Power Systems and Electronics segment posted the highest year-over-year decline of 25.4%. Industrial Packaging, Food Equipment, Polymers and Fluids, Decorative Surfaces and All Other businesses revenues declined in a 10%-18% range. Revenues in the Construction Products and Transportation segments declined in single digits, compared to last year.
 
The company said that the base revenues were higher, compared to the Aug-Oct period due to an improvement in discrete end markets, particularly automotive and construction. It forecasts a sequential revenue growth of -1% to 5% for the fourth quarter.
 
A majority of the company’s revenues are dependent on industrial production and capex spending. Given the low activity levels in the key end markets, we do not expect a significant improvement in the company’s base revenues in the near term.
 
Illinois Tool Works raised its forecast for fourth quarter earnings. It now expects fourth quarter earnings in the range of 69–81 cents per share, compared to the previous guidance of 54–66. The higher guidance is a result of a $75 million nonrecurring tax benefit from a German tax audit settlement. The company now expects fourth quarter tax rate in a range of 10.5% to 11.5% versus the original range of 29.25% to 29.75%.
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