filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
Illinois Tool Works Inc. and Subsidiaries
Statement of Income (Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| In millions except per share amounts | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Operating Revenue | $ | 4,301 | $ | 4,053 | $ | 8,317 | $ | 7,892 | |||||||||||||||
| Cost of revenue | 2,403 | 2,271 | 4,659 | 4,432 | |||||||||||||||||||
| Selling, administrative, and research and development expenses | 735 | 693 | 1,457 | 1,399 | |||||||||||||||||||
| Amortization and impairment of intangible assets | 16 | 21 | 34 | 42 | |||||||||||||||||||
| Operating Income | 1,147 | 1,068 | 2,167 | 2,019 | |||||||||||||||||||
| Interest expense | (79) | (74) | (152) | (142) | |||||||||||||||||||
| Other income (expense) | 12 | 4 | 32 | 16 | |||||||||||||||||||
| Income Before Taxes | 1,080 | 998 | 2,047 | 1,893 | |||||||||||||||||||
| Income Taxes | 265 | 243 | 464 | 438 | |||||||||||||||||||
| Net Income | $ | 815 | $ | 755 | $ | 1,583 | $ | 1,455 | |||||||||||||||
| Net Income Per Share: | |||||||||||||||||||||||
| Basic | $ | 2.85 | $ | 2.58 | $ | 5.51 | $ | 4.97 | |||||||||||||||
| Diluted | $ | 2.84 | $ | 2.58 | $ | 5.50 | $ | 4.95 | |||||||||||||||
| Shares of Common Stock Outstanding During the Period: | |||||||||||||||||||||||
| Average | 286.4 | 292.3 | 287.3 | 292.9 | |||||||||||||||||||
| Average assuming dilution | 287.0 | 292.9 | 288.1 | 293.7 |
The Notes to Financial Statements are an integral part of this statement.
Illinois Tool Works Inc. and Subsidiaries
Statement of Comprehensive Income (Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net Income | $ | 815 | $ | 755 | $ | 1,583 | $ | 1,455 | |||||||||||||||
| Foreign currency translation adjustments, net of tax | 43 | 10 | 67 | 10 | |||||||||||||||||||
| Pension and other postretirement benefit adjustments, net of tax | 1 | — | 2 | (1) | |||||||||||||||||||
| Other comprehensive income (loss) | 44 | 10 | 69 | 9 | |||||||||||||||||||
| Comprehensive Income | $ | 859 | $ | 765 | $ | 1,652 | $ | 1,464 |
The Notes to Financial Statements are an integral part of this statement.
Illinois Tool Works Inc. and Subsidiaries
Statement of Financial Position (Unaudited)
| In millions except per share amounts | June 30, 2026 | December 31, 2025 | |||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and equivalents | $ | 839 | $ | 851 | |||||||
| Trade receivables | 3,564 | 3,227 | |||||||||
| Inventories | 1,756 | 1,659 | |||||||||
| Prepaid expenses and other current assets | 441 | 463 | |||||||||
| Total current assets | 6,600 | 6,200 | |||||||||
| Net plant and equipment | 2,235 | 2,230 | |||||||||
| Goodwill | 5,074 | 5,098 | |||||||||
| Intangible assets | 558 | 591 | |||||||||
| Deferred income taxes | 489 | 519 | |||||||||
| Other assets | 1,538 | 1,510 | |||||||||
| $ | 16,494 | $ | 16,148 | ||||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current Liabilities: | |||||||||||
| Short-term debt | $ | 3,145 | $ | 2,286 | |||||||
| Accounts payable | 636 | 522 | |||||||||
| Accrued expenses | 1,592 | 1,636 | |||||||||
| Cash dividends payable | 457 | 465 | |||||||||
| Income taxes payable | 123 | 217 | |||||||||
| Total current liabilities | 5,953 | 5,126 | |||||||||
| Noncurrent Liabilities: | |||||||||||
| Long-term debt | 6,549 | 6,683 | |||||||||
| Deferred income taxes | 162 | 154 | |||||||||
| Other liabilities | 935 | 959 | |||||||||
| Total noncurrent liabilities | 7,646 | 7,796 | |||||||||
| Stockholders' Equity: | |||||||||||
| Common stock (Authorized- 700.0 shares; par value of $0.01 per share): | |||||||||||
| Issued- 550.0 shares in 2026 and 2025 Outstanding- 284.8 shares in 2026 and 288.6 shares in 2025 | 6 | 6 | |||||||||
| Additional paid-in-capital | 1,838 | 1,771 | |||||||||
| Retained earnings | 30,812 | 30,150 | |||||||||
| Common stock held in treasury | (28,004) | (26,875) | |||||||||
| Accumulated other comprehensive income (loss) | (1,758) | (1,827) | |||||||||
| Noncontrolling interest | 1 | 1 | |||||||||
| Total stockholders' equity | 2,895 | 3,226 | |||||||||
| $ | 16,494 | $ | 16,148 |
The Notes to Financial Statements are an integral part of this statement.
Illinois Tool Works Inc. and Subsidiaries
Statement of Changes in Stockholders' Equity (Unaudited)
| In millions except per share amounts | Common Stock | Additional Paid-in Capital | Retained Earnings | Common Stock Held in Treasury | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total | ||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
| Balance at March 31, 2026 | $ | 6 | $ | 1,817 | $ | 30,454 | $ | (27,246) | $ | (1,802) | $ | 1 | $ | 3,230 | |||||||||
| Net income | — | — | 815 | — | — | — | 815 | ||||||||||||||||
| Common stock issued for stock-based compensation | — | (1) | — | — | — | — | (1) | ||||||||||||||||
| Stock-based compensation expense | — | 22 | — | — | — | — | 22 | ||||||||||||||||
| Repurchases of common stock | — | — | — | (750) | — | — | (750) | ||||||||||||||||
| Excise tax on repurchases of common stock | — | — | — | (8) | — | — | (8) | ||||||||||||||||
| Dividends declared ($1.61 per share) | — | — | (457) | — | — | — | (457) | ||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | 44 | — | 44 | ||||||||||||||||
| Balance at June 30, 2026 | $ | 6 | $ | 1,838 | $ | 30,812 | $ | (28,004) | $ | (1,758) | $ | 1 | $ | 2,895 | |||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||
| Balance at March 31, 2025 | $ | 6 | $ | 1,705 | $ | 29,154 | $ | (25,746) | $ | (1,878) | $ | 1 | $ | 3,242 | |||||||||
| Net income | — | — | 755 | — | — | — | 755 | ||||||||||||||||
| Common stock issued for stock-based compensation | — | 1 | — | — | — | — | 1 | ||||||||||||||||
| Stock-based compensation expense | — | 19 | — | — | — | — | 19 | ||||||||||||||||
| Repurchases of common stock | — | — | — | (375) | — | — | (375) | ||||||||||||||||
| Excise tax on repurchases of common stock | — | — | — | (3) | — | — | (3) | ||||||||||||||||
| Dividends declared ($1.50 per share) | — | — | (438) | — | — | — | (438) | ||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | 10 | — | 10 | ||||||||||||||||
| Balance at June 30, 2025 | $ | 6 | $ | 1,725 | $ | 29,471 | $ | (26,124) | $ | (1,868) | $ | 1 | $ | 3,211 | |||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| Balance at December 31, 2025 | $ | 6 | $ | 1,771 | $ | 30,150 | $ | (26,875) | $ | (1,827) | $ | 1 | $ | 3,226 | |||||||||
| Net income | — | — | 1,583 | — | — | — | 1,583 | ||||||||||||||||
| Common stock issued for stock-based compensation | — | 27 | — | 6 | — | — | 33 | ||||||||||||||||
| Stock-based compensation expense | — | 40 | — | — | — | — | 40 | ||||||||||||||||
| Repurchases of common stock | — | — | — | (1,125) | — | — | (1,125) | ||||||||||||||||
| Excise tax on repurchases of common stock | — | — | — | (10) | — | — | (10) | ||||||||||||||||
| Dividends declared ($3.22 per share) | — | — | (921) | — | — | — | (921) | ||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | 69 | — | 69 | ||||||||||||||||
| Balance at June 30, 2026 | $ | 6 | $ | 1,838 | $ | 30,812 | $ | (28,004) | $ | (1,758) | $ | 1 | $ | 2,895 | |||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||
| Balance at December 31, 2024 | $ | 6 | $ | 1,669 | $ | 28,893 | $ | (25,375) | $ | (1,877) | $ | 1 | $ | 3,317 | |||||||||
| Net income | — | — | 1,455 | — | — | — | 1,455 | ||||||||||||||||
| Common stock issued for stock-based compensation | — | 21 | — | 7 | — | — | 28 | ||||||||||||||||
| Stock-based compensation expense | — | 35 | — | — | — | — | 35 | ||||||||||||||||
| Repurchases of common stock | — | — | — | (750) | — | — | (750) | ||||||||||||||||
| Excise tax on repurchases of common stock | — | — | — | (6) | — | — | (6) | ||||||||||||||||
| Dividends declared ($3.00 per share) | — | — | (877) | — | — | — | (877) | ||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | 9 | — | 9 | ||||||||||||||||
| Balance at June 30, 2025 | $ | 6 | $ | 1,725 | $ | 29,471 | $ | (26,124) | $ | (1,868) | $ | 1 | $ | 3,211 |
The Notes to Financial Statements are an integral part of this statement.
Illinois Tool Works Inc. and Subsidiaries
Statement of Cash Flows (Unaudited)
| Six Months Ended | |||||||||||
| June 30, | |||||||||||
| In millions | 2026 | 2025 | |||||||||
| Cash Provided by (Used for) Operating Activities: | |||||||||||
| Net income | $ | 1,583 | $ | 1,455 | |||||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
| Depreciation | 163 | 152 | |||||||||
| Amortization and impairment of intangible assets | 34 | 42 | |||||||||
| Change in deferred income taxes | 7 | (30) | |||||||||
| Net provision for (recoveries of) uncollectible accounts | 2 | 3 | |||||||||
| (Income) loss from investments | 1 | — | |||||||||
| (Gain) loss on sale of plant and equipment | — | 2 | |||||||||
| Stock-based compensation expense | 40 | 35 | |||||||||
| Other non-cash items, net | 10 | 4 | |||||||||
| Change in assets and liabilities, net of acquisitions and divestitures: | |||||||||||
| (Increase) decrease in- | |||||||||||
| Trade receivables | (349) | (190) | |||||||||
| Inventories | (107) | (30) | |||||||||
| Prepaid expenses and other assets | (1) | (63) | |||||||||
| Increase (decrease) in- | |||||||||||
| Accounts payable | 118 | 61 | |||||||||
| Accrued expenses and other liabilities | (43) | (105) | |||||||||
| Income taxes | (112) | (194) | |||||||||
| Net cash provided by operating activities | 1,346 | 1,142 | |||||||||
| Cash Provided by (Used for) Investing Activities: | |||||||||||
| Acquisition of businesses (excluding cash and equivalents) | — | 1 | |||||||||
| Additions to plant and equipment | (187) | (197) | |||||||||
| Proceeds from investments | 1 | 5 | |||||||||
| Proceeds from sale of plant and equipment | 4 | 7 | |||||||||
| Proceeds from sale of operations and affiliates | — | 1 | |||||||||
| Other, net | (2) | (1) | |||||||||
| Net cash provided by (used for) investing activities | (184) | (184) | |||||||||
| Cash Provided by (Used for) Financing Activities: | |||||||||||
| Cash dividends paid | (928) | (880) | |||||||||
| Issuance of common stock | 52 | 47 | |||||||||
| Repurchases of common stock | (1,125) | (750) | |||||||||
| Net proceeds from (repayments of) debt with original maturities of three months or less | 855 | 464 | |||||||||
| Other, net | (33) | (32) | |||||||||
| Net cash provided by (used for) financing activities | (1,179) | (1,151) | |||||||||
| Effect of Exchange Rate Changes on Cash and Equivalents | 5 | 33 | |||||||||
| Cash and Equivalents: | |||||||||||
| Increase (decrease) during the period | (12) | (160) | |||||||||
| Beginning of period | 851 | 948 | |||||||||
| End of period | $ | 839 | $ | 788 | |||||||
| Supplementary Cash Flow Information: | |||||||||||
| Cash Paid During the Period for Interest | $ | 189 | $ | 181 | |||||||
| Cash Paid During the Period for Income Taxes, Net of Refunds | $ | 568 | $ | 662 |
The Notes to Financial Statements are an integral part of this statement.
Illinois Tool Works Inc. and Subsidiaries
Notes to Financial Statements (Unaudited)
(1) Significant Accounting Policies
Financial Statements— The unaudited financial statements included herein have been prepared by Illinois Tool Works Inc. and Subsidiaries (the "Company"). In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. Interim results are not necessarily indicative of results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and notes to financial statements included in the Company's 2025 Annual Report on Form 10-K. Certain reclassifications of prior year data have been made to conform with current year reporting.
New Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance which expands annual and interim disclosure requirements related to certain costs and expenses recorded in the income statement. The primary provisions of this new guidance require companies to provide additional footnote disclosures disaggregating income statement line items that include purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The guidance will be effective for the Company beginning with its annual reporting for the year ending December 31, 2027 and is required to be applied prospectively, with retrospective application to prior periods allowed. The Company is currently assessing the impact the guidance will have on its disclosures.
(2) Acquisitions
On October 1, 2025, the Company completed the acquisition of one business in the Test & Measurement and Electronics segment for $120 million, net of cash acquired, and subject to certain closing adjustments. The allocation of purchase price for this acquisition will be completed as soon as practicable, but no later than one year from the acquisition date. This acquisition was not material to the Company's results of operations, financial position or cash flows.
(3) Operating Revenue
The Company's 88 diversified operating divisions are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. Operating revenue by product category, which is consistent with the Company's segment presentation, for the three and six months ended June 30, 2026 and 2025 was as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Automotive OEM | $ | 857 | $ | 845 | $ | 1,677 | $ | 1,631 | |||||||||||||||
| Food Equipment | 692 | 680 | 1,329 | 1,307 | |||||||||||||||||||
| Test & Measurement and Electronics | 769 | 686 | 1,484 | 1,338 | |||||||||||||||||||
| Welding | 549 | 479 | 1,056 | 951 | |||||||||||||||||||
| Polymers & Fluids | 476 | 438 | 928 | 867 | |||||||||||||||||||
| Construction Products | 494 | 473 | 952 | 916 | |||||||||||||||||||
| Specialty Products | 468 | 455 | 899 | 890 | |||||||||||||||||||
| Total segments | 4,305 | 4,056 | 8,325 | 7,900 | |||||||||||||||||||
| Intersegment revenue | (4) | (3) | (8) | (8) | |||||||||||||||||||
| Total operating revenue | $ | 4,301 | $ | 4,053 | $ | 8,317 | $ | 7,892 |
The following is a description of the product offerings, end markets and typical revenue transactions for each of the Company's seven segments:
Automotive OEM**—** This segment is a global, niche supplier to top tier OEMs, providing unique innovation to address pain points for sophisticated customers with complex problems. Businesses in this segment produce components and fasteners for automotive-related applications. This segment primarily serves the automotive OEMs and tiers market. Products in this segment include:
- plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses.
Products sold in this segment are primarily manufactured to the customer's specifications and are sold under long-term supply agreements with OEM auto manufacturers and other top tier auto parts suppliers. The Company typically recognizes revenue for products in this segment at the time of shipment. Certain products may be produced utilizing tooling that is owned by the customer that the Company developed and is reimbursed by the customer for the associated cost. In these arrangements, the Company typically retains a contractual right to use the customer-owned tooling for the purpose of fulfilling its obligations under the supply agreement. The Company records reimbursements for the cost of customer-owned tooling as a cost offset rather than operating revenue as tooling is not considered a product offering central to the Company's operations.
Food Equipment**—** This segment is a highly focused and branded industry leader in commercial food equipment differentiated by innovation and integrated service offerings. This segment primarily serves the food service, food retail and food institutional/restaurant markets. Products in this segment include:
-
warewashing equipment;
-
cooking equipment, including ovens, ranges and broilers;
-
refrigeration equipment, including refrigerators, freezers and prep tables;
-
food processing equipment, including slicers, mixers and scales;
-
kitchen exhaust, ventilation and pollution control systems; and
-
food equipment service, maintenance and repair.
Revenue for equipment sold in this segment is typically recognized at the time of product shipment. In limited circumstances involving installation of equipment and customer acceptance, the Company may recognize revenue upon completion of installation and acceptance by the customer. Annual service contracts are typically sold separate from equipment and the related revenue is recognized on a straight-line basis over the annual service period. Operating revenue for on-demand service repairs and parts is recorded upon completion and customer acceptance of the work performed.
Test & Measurement and Electronics**—** This segment is a branded and innovative producer of test and measurement and electronic manufacturing and maintenance, repair, and operations, or "MRO" solutions that improve efficiency and quality for customers in diverse end markets. Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. This segment primarily serves the electronics, general industrial, automotive OEMs and tiers, energy, industrial capital goods and consumer durables markets. Products in this segment include:
-
equipment, consumables, and related software for testing and measuring of materials, structures, gases and fluids;
-
electronic assembly equipment;
-
electronic components and component packaging;
-
static control equipment and consumables used for contamination control in clean room environments; and
-
pressure sensitive adhesives and components for electronics, medical, transportation and telecommunications applications.
Revenue for products sold in this segment is typically recognized at the time of shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue recognition is deferred until such obligations have been completed. In other limited arrangements involving the sale of highly specialized systems that include a high degree of customization and installation at the customer site, revenue is recognized over time if the product does not have an alternative use and the Company has an enforceable right to payment for work performed to date. Revenue for transactions meeting these criteria is recognized over time as work is performed based on the costs incurred to date relative to the total estimated costs at completion.
Welding**—** This segment is a branded value-added equipment and specialty consumable manufacturer with innovative and leading technology. Businesses in this segment produce arc welding equipment, consumables and accessories for a wide array
of industrial and commercial applications. This segment primarily serves the general industrial market, which includes fabrication, shipbuilding and other general industrial markets, and construction, energy, MRO, industrial capital goods and automotive OEMs and tiers markets. Products in this segment include:
-
arc welding equipment; and
-
metal arc welding consumables and related accessories.
Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment.
Polymers & Fluids**—** This segment is a branded supplier to niche markets that require value-added, differentiated products. Businesses in this segment produce engineered adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. This segment primarily serves the automotive aftermarket, general industrial and MRO markets. Products in this segment include:
-
adhesives for industrial, construction and consumer purposes;
-
chemical fluids which clean or add lubrication to machines;
-
epoxy and resin-based coating products for industrial applications;
-
hand wipes and cleaners for industrial applications;
-
fluids, polymers and other supplies for auto aftermarket maintenance and appearance;
-
fillers and putties for auto body repair; and
-
polyester coatings and patch and repair products for the marine industry.
Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment.
Construction Products**—** This segment is a branded supplier of innovative engineered fastening systems and solutions. This segment primarily serves the residential construction, renovation/remodel and commercial construction markets. Products in this segment include:
-
fasteners and related fastening tools for wood and metal applications;
-
anchors, fasteners and related tools for concrete applications;
-
metal plate truss components and related equipment and software; and
-
packaged hardware, fasteners, anchors and other products for retail.
Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment.
Specialty Products**—** This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. This segment primarily serves the food and beverage, consumer durables, airlines, general industrial, industrial capital goods and printing and publishing markets. Products in this segment include:
-
conveyor systems and line automation for the food and beverage industries;
-
plastic consumables that multi-pack cans and bottles and related equipment;
-
foil, film and related equipment used to decorate consumer products;
-
product coding and marking equipment and related consumables;
-
plastic and metal closures and components for appliances;
-
airport ground support equipment; and
-
components for medical devices.
Products in this segment are primarily manufactured to meet anticipated customer demand. The Company typically recognizes revenue for these products at the time of product shipment. In limited circumstances where significant obligations to the customer are unfulfilled at the time of shipment, typically involving installation of equipment and customer acceptance, revenue is recognized when such obligations have been completed.
(4) Income Taxes
On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted in the United States, which extended and modified certain provisions of the 2017 Tax Cuts and Jobs Act (the "TCJA"). The provisions of the OBBBA did not have a material impact on the Company's operating results, financial position or cash flows for the three and six months ended June 30, 2026.
The Company's effective tax rate for the three months ended June 30, 2026 and 2025 was 24.4% in both periods and 22.6% and 23.1% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate for the six months ended June 30, 2026 included a discrete tax benefit of $34 million in the first quarter of 2026 primarily related to the resolution of a U.S. tax audit. Additionally, the effective tax rate for the six months ended June 30, 2025 included a discrete tax benefit of $21 million in the first quarter of 2025 related to the reversal of a valuation allowance on net operating loss carryforwards. The effective tax rates for 2026 and 2025 also included excess tax benefits from stock-based compensation of $1 million for the three months ended June 30, 2025, and $4 million and $5 million for the six months ended June 30, 2026 and 2025, respectively.
The Company and its subsidiaries file tax returns in the U.S. and various state, local and foreign jurisdictions. These tax returns are routinely audited by the tax authorities in these jurisdictions, including the Internal Revenue Service, His Majesty's Revenue and Customs, German Fiscal Authority, French Fiscal Authority, and Australian Tax Office, and a number of these audits are currently ongoing, which may change the amount of the unrecognized tax benefits in future periods. The Company has recorded its best estimate of the potential exposure for these issues.
(5) Net Income Per Share
Net income per basic share is computed by dividing net income by the weighted-average number of shares outstanding for the period. Net income per diluted share is computed by dividing net income by the weighted-average number of shares assuming dilution for stock options and restricted stock units. Dilutive shares reflect the potential additional shares that would be outstanding if the dilutive stock options outstanding were exercised and the unvested restricted stock units vested during the period. The computation of net income per share for the three and six months ended June 30, 2026 and 2025 is as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| In millions except per share amounts | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net Income | $ | 815 | $ | 755 | $ | 1,583 | $ | 1,455 | |||||||||||||||
| Net income per share—Basic: | |||||||||||||||||||||||
| Weighted-average common shares | 286.4 | 292.3 | 287.3 | 292.9 | |||||||||||||||||||
| Net income per share—Basic | $ | 2.85 | $ | 2.58 | $ | 5.51 | $ | 4.97 | |||||||||||||||
| Net income per share—Diluted: | |||||||||||||||||||||||
| Weighted-average common shares | 286.4 | 292.3 | 287.3 | 292.9 | |||||||||||||||||||
| Effect of dilutive stock options and restricted stock units | 0.6 | 0.6 | 0.8 | 0.8 | |||||||||||||||||||
| Weighted-average common shares assuming dilution | 287.0 | 292.9 | 288.1 | 293.7 | |||||||||||||||||||
| Net income per share—Diluted | $ | 2.84 | $ | 2.58 | $ | 5.50 | $ | 4.95 |
Options that were considered antidilutive were not included in the computation of diluted net income per share. There were 0.7 million antidilutive options outstanding for both the three months ended June 30, 2026 and 2025, and 0.7 million and 0.4 million antidilutive options outstanding for the six months ended June 30, 2026 and 2025, respectively.
(6) Inventories
Inventories as of June 30, 2026 and December 31, 2025 were as follows:
| In millions | June 30, 2026 | December 31, 2025 | |||||||||
| Raw material | $ | 672 | $ | 640 | |||||||
| Work-in-process | 210 | 191 | |||||||||
| Finished goods | 874 | 828 | |||||||||
| Total inventories | $ | 1,756 | $ | 1,659 |
(7) Pension and Other Postretirement Benefits
Pension and other postretirement benefit costs for the three and six months ended June 30, 2026 and 2025 were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| Pension | Other Postretirement Benefits | Pension | Other Postretirement Benefits | ||||||||||||||||||||||||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||
| Components of net periodic benefit cost: | |||||||||||||||||||||||||||||||||||||||||||||||
| Service cost | $ | 7 | $ | 8 | $ | 1 | $ | 1 | $ | 14 | $ | 16 | $ | 2 | $ | 2 | |||||||||||||||||||||||||||||||
| Interest cost | 21 | 23 | 6 | 6 | 42 | 46 | 11 | 12 | |||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | (31) | (32) | (7) | (6) | (63) | (64) | (14) | (13) | |||||||||||||||||||||||||||||||||||||||
| Amortization of actuarial loss (gain) | 3 | 1 | (2) | (2) | 7 | 2 | (4) | (4) | |||||||||||||||||||||||||||||||||||||||
| Settlements | — | 1 | — | — | — | 1 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total net periodic benefit cost (income) | $ | — | $ | 1 | $ | (2) | $ | (1) | $ | — | $ | 1 | $ | (5) | $ | (3) |
The service cost component of net periodic benefit cost is presented within Cost of revenue and Selling, administrative, and research and development expenses in the Statement of Income while the other components of net periodic benefit cost are presented within Other income (expense).
The Company expects to contribute approximately $24 million to its pension plans and $31 million to its other postretirement benefit plans in 2026. As of June 30, 2026, contributions of $16 million to pension plans and $13 million to other postretirement benefit plans have been made.
(8) Debt
Total debt as of June 30, 2026 and December 31, 2025 was as follows:
| In millions | June 30, 2026 | December 31, 2025 | |||||||||
| Short-term debt | $ | 3,145 | $ | 2,286 | |||||||
| Long-term debt | 6,549 | 6,683 | |||||||||
| Total debt | $ | 9,694 | $ | 8,969 |
Short-term debt included commercial paper of $2.1 billion and $1.3 billion as of June 30, 2026 and December 31, 2025, respectively. The weighted-average interest rate on commercial paper as of June 30, 2026 and December 31, 2025 was 3.78% and 3.84%, respectively. Short-term debt also included $1.0 billion and $999 million as of June 30, 2026 and December 31, 2025, respectively, related to the 2.65% notes due November 15, 2026, which were reclassified from Long-term debt to Short-term debt in the fourth quarter of 2025.
On February 24, 2025, the Company entered into an amendment to the Euro-denominated credit agreement entered into on May 5, 2023 (the "Euro Credit Agreement") to extend the termination date from April 30, 2025 to February 28, 2027, with an option
to further extend the termination date to September 15, 2027. The amendment also decreased the interest rate spread applicable to the loans from 0.75% to 0.70% and removed the option for a one-month interest period. As of June 30, 2026, the Company had $856 million outstanding under the Euro Credit Agreement with an interest rate of 2.90%, which was included in Long-term debt as the Company intends to exercise its option to extend the termination date. As of December 31, 2025, the Company had $881 million outstanding under the Euro Credit Agreement with an interest rate of 2.77%, which was included in Long-term debt.
On February 20, 2026, the Company entered into a $3.0 billion, five-year revolving credit facility with a termination date of February 20, 2031, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. This agreement replaced the existing $3.0 billion, five-year revolving credit facility with a termination date of October 21, 2027. No amounts were outstanding under the revolving credit facility as of June 30, 2026 or December 31, 2025.
The approximate fair value and related carrying value of the Company's total long-term debt, including current maturities of long-term debt presented as short-term debt, as of June 30, 2026 and December 31, 2025 were as follows:
| In millions | June 30, 2026 | December 31, 2025 | |||||||||
| Fair value | $ | 7,291 | $ | 7,451 | |||||||
| Carrying value | 7,549 | 7,682 |
The approximate fair values of the Company's long-term debt, including current maturities, were based on a valuation model using Level 2 observable inputs which included market rates for comparable instruments for the respective periods.
(9) Accumulated Other Comprehensive Income (Loss)
The following table summarizes changes in Accumulated other comprehensive income (loss) for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Beginning balance | $ | (1,802) | $ | (1,878) | $ | (1,827) | $ | (1,877) | |||||||||||||||
| Foreign currency translation adjustments during the period | 57 | (89) | 100 | (136) | |||||||||||||||||||
| Income taxes | (14) | 99 | (33) | 146 | |||||||||||||||||||
| Total foreign currency translation adjustments, net of tax | 43 | 10 | 67 | 10 | |||||||||||||||||||
| Pension and other postretirement benefit adjustments reclassified to income | 1 | — | 3 | (1) | |||||||||||||||||||
| Income taxes | — | — | (1) | — | |||||||||||||||||||
| Total pension and other postretirement benefit adjustments, net of tax | 1 | — | 2 | (1) | |||||||||||||||||||
| Ending balance | $ | (1,758) | $ | (1,868) | $ | (1,758) | $ | (1,868) |
Pension and other postretirement benefit adjustments reclassified to income related primarily to the amortization of actuarial gains and losses. Refer to Note 7. Pension and Other Postretirement Benefits for additional information.
The outstanding balances of the Euro notes issued in May 2014, May 2015, June 2019 and May 2024, and the Euro term loan under the Euro Credit Agreement are designated as hedges of a portion of the Company’s net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations. Changes in the value of this debt resulting from fluctuations in the Euro to U.S. Dollar exchange rate have been recorded as foreign currency translation adjustments within Accumulated other comprehensive income (loss). The amount of pre-tax gain (loss) related to this debt recorded in Other comprehensive income (loss) was a gain of $55 million and a loss of $411 million for the three months ended June 30, 2026 and 2025, respectively, and a gain of $137 million and a loss of $607 million for the six months ended June 30, 2026 and 2025, respectively. The carrying value of the outstanding balance of Euro-denominated debt that was designated as a
net investment hedge as of June 30, 2026 and December 31, 2025 was $4.8 billion and $5.0 billion, respectively. Refer to Note 8. Debt for additional information regarding the Company’s outstanding Euro debt.
As of June 30, 2026 and 2025, the ending balance of Accumulated other comprehensive income (loss) consisted of after-tax cumulative translation adjustment losses of $1.5 billion and $1.6 billion, respectively, and after-tax unrecognized pension and other postretirement benefit costs of $235 million and $267 million, respectively.
(10) Segment Information
The Company's operations are organized and managed based on similar product offerings and end markets, and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The following is a description of the Company's seven segments:
Automotive OEM— This segment is a global, niche supplier to top tier OEMs, providing unique innovation to address pain points for sophisticated customers with complex problems. Businesses in this segment produce components and fasteners for automotive-related applications.
Food Equipment— This segment is a highly focused and branded industry leader in commercial food equipment differentiated by innovation and integrated service offerings.
Test & Measurement and Electronics— This segment is a branded and innovative producer of test and measurement and electronic manufacturing and MRO solutions that improve efficiency and quality for customers in diverse end markets. Businesses in this segment produce equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics.
Welding— This segment is a branded value-added equipment and specialty consumable manufacturer with innovative and leading technology. Businesses in this segment produce arc welding equipment, consumables and accessories for a wide array of industrial and commercial applications.
Polymers & Fluids— This segment is a branded supplier to niche markets that require value-added, differentiated products. Businesses in this segment produce engineered adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance.
Construction Products— This segment is a branded supplier of innovative engineered fastening systems and solutions.
Specialty Products— This segment is focused on diversified niche market opportunities with substantial patent protection producing beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.
The Company's chief operating decision maker ("CODM") is the President & Chief Executive Officer. The CODM primarily uses operating revenue, operating income and related operating margins in assessing the current and expected long-term performance of the Company's segments, including the application of the Company's enterprise strategies which focus on profitable growth and continuous improvement to margins and returns through the application of the Company's business model. Operating income and margins are also used by the CODM when evaluating segment investments in capital projects and restructuring initiatives. The CODM regularly reviews summarized financial information related to segment operating revenue, variable margins, overhead expenses, operating income and operating margins as compared to forecasted results.
Intersegment sales transactions are accounted for at prices consistent with sales to third parties and are not considered material. Segments are allocated a fixed overhead charge for general corporate administrative expenses based on a percentage of the segment's operating revenue. Expenses not allocated to the segments are reported separately as Unallocated. Because the Unallocated category includes a variety of items, it is subject to fluctuations on a quarterly and annual basis.
Segment operating revenue, significant expenses and operating income for the three and six months ended June 30, 2026 and 2025 were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Operating revenue: | |||||||||||||||||||||||
| Automotive OEM | $ | 857 | $ | 845 | $ | 1,677 | $ | 1,631 | |||||||||||||||
| Food Equipment | 692 | 680 | 1,329 | 1,307 | |||||||||||||||||||
| Test & Measurement and Electronics | 769 | 686 | 1,484 | 1,338 | |||||||||||||||||||
| Welding | 549 | 479 | 1,056 | 951 | |||||||||||||||||||
| Polymers & Fluids | 476 | 438 | 928 | 867 | |||||||||||||||||||
| Construction Products | 494 | 473 | 952 | 916 | |||||||||||||||||||
| Specialty Products | 468 | 455 | 899 | 890 | |||||||||||||||||||
| Total segments | 4,305 | 4,056 | 8,325 | 7,900 | |||||||||||||||||||
| Intersegment revenue | (4) | (3) | (8) | (8) | |||||||||||||||||||
| Operating Revenue | $ | 4,301 | $ | 4,053 | $ | 8,317 | $ | 7,892 | |||||||||||||||
| Variable cost of revenue: | |||||||||||||||||||||||
| Automotive OEM | $ | 461 | $ | 459 | $ | 903 | $ | 894 | |||||||||||||||
| Food Equipment | 322 | 313 | 620 | 597 | |||||||||||||||||||
| Test & Measurement and Electronics | 335 | 302 | 644 | 584 | |||||||||||||||||||
| Welding | 254 | 215 | 481 | 429 | |||||||||||||||||||
| Polymers & Fluids | 223 | 208 | 433 | 413 | |||||||||||||||||||
| Construction Products | 221 | 210 | 427 | 410 | |||||||||||||||||||
| Specialty Products | 217 | 207 | 412 | 408 | |||||||||||||||||||
| Total segments | $ | 2,033 | $ | 1,914 | $ | 3,920 | $ | 3,735 | |||||||||||||||
| Overhead expenses: | |||||||||||||||||||||||
| Automotive OEM | $ | 211 | $ | 206 | $ | 416 | $ | 406 | |||||||||||||||
| Food Equipment | 182 | 178 | 364 | 355 | |||||||||||||||||||
| Test & Measurement and Electronics | 241 | 227 | 483 | 458 | |||||||||||||||||||
| Welding | 117 | 105 | 234 | 210 | |||||||||||||||||||
| Polymers & Fluids | 113 | 109 | 229 | 219 | |||||||||||||||||||
| Construction Products | 122 | 118 | 239 | 231 | |||||||||||||||||||
| Specialty Products | 103 | 100 | 204 | 199 | |||||||||||||||||||
| Total segments | $ | 1,089 | $ | 1,043 | $ | 2,169 | $ | 2,078 | |||||||||||||||
| Operating income: | |||||||||||||||||||||||
| Automotive OEM | $ | 185 | $ | 180 | $ | 358 | $ | 331 | |||||||||||||||
| Food Equipment | 188 | 189 | 345 | 355 | |||||||||||||||||||
| Test & Measurement and Electronics | 193 | 157 | 357 | 296 | |||||||||||||||||||
| Welding | 178 | 159 | 341 | 312 | |||||||||||||||||||
| Polymers & Fluids | 140 | 121 | 266 | 235 | |||||||||||||||||||
| Construction Products | 151 | 145 | 286 | 275 | |||||||||||||||||||
| Specialty Products | 148 | 148 | 283 | 283 | |||||||||||||||||||
| Total segments | 1,183 | 1,099 | 2,236 | 2,087 | |||||||||||||||||||
| Unallocated | (36) | (31) | (69) | (68) | |||||||||||||||||||
| Operating Income | 1,147 | 1,068 | 2,167 | 2,019 | |||||||||||||||||||
| Interest expense | (79) | (74) | (152) | (142) | |||||||||||||||||||
| Other income (expense) | 12 | 4 | 32 | 16 | |||||||||||||||||||
| Income Before Taxes | $ | 1,080 | $ | 998 | $ | 2,047 | $ | 1,893 |
Segment depreciation and amortization and impairment of intangible assets for the three and six months ended June 30, 2026 and 2025 was as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| In millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Automotive OEM | $ | 36 | $ | 34 | $ | 71 | $ | 66 | |||||||||||||||
| Food Equipment | 9 | 10 | 19 | 20 | |||||||||||||||||||
| Test & Measurement and Electronics | 19 | 18 | 37 | 36 | |||||||||||||||||||
| Welding | 8 | 9 | 17 | 17 | |||||||||||||||||||
| Polymers & Fluids | 8 | 11 | 17 | 21 | |||||||||||||||||||
| Construction Products | 9 | 8 | 17 | 16 | |||||||||||||||||||
| Specialty Products | 9 | 9 | 19 | 18 | |||||||||||||||||||
| Total | $ | 98 | $ | 99 | $ | 197 | $ | 194 |
Asset and capital expenditure information by segment is not regularly provided to or reviewed by the CODM and is therefore not disclosed.
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