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Illinois Tool Works Lifts Earnings View As Q1 Profit Tops Estimates

Industrial products and equipment maker Illinois Tool Works, Inc. (ITW: Quote) Tuesday lifted its full year earnings per share guidance, citing better-than-expected first quarter results and its share repurchase activity. Income from continuing operations exceeded analysts' expectations, while revenues missed view.

Illinois Tool Works also said it remains optimistic about its full-year prospects, despite an uneven end market demand in Europe. Meanwhile, the company returned more than $600 million to shareholders through share repurchase and dividends.

David Speer, chairman and chief executive officer of the company said, "Our strong first quarter operating performance reflects a number of ITW attributes: balanced geographic footprint, our established 80/20 operating discipline and our return-based approach to allocating cash to both our businesses and our shareholders."

In the first quarter, the company's net income declined to $486 million or $1.00 per share from $623 million or $1.24 per share in the same quarter last year.

Income from continuing operations was $0.97 per share, down from $1.21 per share a year ago. Excluding one-time tax benefit of $0.33 associated with an Australian tax matter in the 2011 first quarter, income per share from continuing operations in the recent quarter increased 10.2 percent from last year.

For the quarter, the company posted income tax expenses of $192 million, significantly higher than $15 million in the preceding year.

On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.95 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter rose 6.4 percent to $4.55 billion from $4.27 billion in the prior-year quarter, but was below analysts' consensus of $4.60 billion. Organic revenue growth was 3.2 percent. Acquisitions net of divestitures added 4.4 percent to revenues, while currency translation negatively impacted revenues by 1.3 percent.

Operating margins for the recent quarter improved 10 basis points to 15.5 percent.

Looking ahead to the second quarter, the company expects income per share from continuing operations to be in the range of $1.08 to $1.16 and total revenue growth range of 3.5 to 6 percent. Analysts expect the company to report earnings of $1.08 per share on revenues of $4.92 billion for the second-quarter.

For the full year 2012, the company now expects income per share from continuing operations to be in the range of $4.14 to $4.38, up from the prior forecast of $4.02 to $4.26 per share. Full-year revenue growth is now expected to be in a range of 5 to 7 percent. Previously, Total revenue growth was expected in the range of 5 to 8 percent.

Analysts expect the company to report earnings of $4.15 per share on revenues of $19.04 billion for fiscal 2012.

ITW is currently trading at $56.42, up $1.20 or 2.17 percent, on a volume of 797 thousand shares on the NYSE.

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by RTT Staff Writer

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