10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	June 30, 2023
	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______________ to _______________

Commission File Number: 1-4797

ILLINOIS TOOL WORKS INC.

(Exact name of registrant as specified in its charter)

Delaware				36-1258310
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification Number)
	155 Harlem Avenue	Glenview	IL	60025
(Address of principal executive offices)				(Zip Code)

(Registrant's telephone number, including area code) 847-724-7500

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock	ITW	New York Stock Exchange
0.250% Euro Notes due 2024	ITW24A	New York Stock Exchange
0.625% Euro Notes due 2027	ITW27	New York Stock Exchange
2.125% Euro Notes due 2030	ITW30	New York Stock Exchange
1.00% Euro Notes due 2031	ITW31	New York Stock Exchange
3.00% Euro Notes due 2034	ITW34	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x                        No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                        No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐                      No ☒

The number of shares of registrant's common stock, $0.01 par value, outstanding at June 30, 2023: 302,390,322

	Table of Contents
	PART I - Financial Information
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 4.	Controls and Procedures	32
	PART II - Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35
Signatures		36

2

PART I – FINANCIAL INFORMATION

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	2023		2022		2023		2022
Operating Revenue	$	4,074	$	4,011	$	8,093	$	7,950
Cost of revenue	2,344		2,392		4,685		4,749
Selling, administrative, and research and development expenses	690		659		1,365		1,311
Amortization and impairment of intangible assets	30		34		61		69
Operating Income	1,010		926		1,982		1,821
Interest expense	(69)		(47)		(129)		(95)
Other income (expense)	20		24		30		38
Income Before Taxes	961		903		1,883		1,764
Income Taxes	207		165		415		364
Net Income	$	754	$	738	$	1,468	$	1,400
Net Income Per Share:
Basic	$	2.49	$	2.37	$	4.83	$	4.49
Diluted	$	2.48	$	2.37	$	4.81	$	4.48
Shares of Common Stock Outstanding During the Period:
Average	303.3		310.6		304.1		311.5
Average assuming dilution	304.2		311.5		305.2		312.6

The Notes to Financial Statements are an integral part of this statement.

3

Illinois Tool Works Inc. and Subsidiaries

Statement of Comprehensive Income (Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Net Income	$	754	$	738	$	1,468	$	1,400
Foreign currency translation adjustments, net of tax	(16)		(210)		21		(184)
Pension and other postretirement benefit adjustments, net of tax	—		4		—		9
Other comprehensive income (loss)	(16)		(206)		21		(175)
Comprehensive Income	$	738	$	532	$	1,489	$	1,225

The Notes to Financial Statements are an integral part of this statement.

4

Illinois Tool Works Inc. and Subsidiaries

Statement of Financial Position (Unaudited)

In millions except per share amounts	June 30, 2023		December 31, 2022
Assets
Current Assets:
Cash and equivalents	$	922	$	708
Trade receivables	3,216		3,171
Inventories	1,921		2,054
Prepaid expenses and other current assets	345		329
Assets held for sale	—		8
Total current assets	6,404		6,270
Net plant and equipment	1,901		1,848
Goodwill	4,887		4,864
Intangible assets	708		768
Deferred income taxes	500		494
Other assets	1,252		1,178
	$	15,652	$	15,422
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term debt	$	1,275	$	1,590
Accounts payable	590		594
Accrued expenses	1,625		1,728
Cash dividends payable	396		400
Income taxes payable	154		147
Liabilities held for sale	—		1
Total current liabilities	4,040		4,460
Noncurrent Liabilities:
Long-term debt	6,947		6,173
Deferred income taxes	451		484
Noncurrent income taxes payable	151		273
Other liabilities	969		943
Total noncurrent liabilities	8,518		7,873
Stockholders' Equity:
Common stock (par value of $0.01 per share):
Issued- 550.0 shares in 2023 and 2022 Outstanding- 302.4 shares in 2023 and 305.0 shares in 2022	6		6
Additional paid-in-capital	1,550		1,501
Retained earnings	26,473		25,799
Common stock held in treasury	(23,116)		(22,377)
Accumulated other comprehensive income (loss)	(1,820)		(1,841)
Noncontrolling interest	1		1
Total stockholders' equity	3,094		3,089
	$	15,652	$	15,422

The Notes to Financial Statements are an integral part of this statement.

5

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, 2023
Balance at March 31, 2023	$	6	$	1,526	$	26,115	$	(22,743)	$	(1,804)	$	1	$	3,101
Net income	—		—		754		—		—		—		754
Common stock issued for stock-based compensation	—		6		—		6		—		—		12
Stock-based compensation expense	—		18		—		—		—		—		18
Repurchases of common stock	—		—		—		(375)		—		—		(375)
Excise tax on repurchases of common stock	—		—		—		(4)		—		—		(4)
Dividends declared ($1.31 per share)	—		—		(396)		—		—		—		(396)
Other comprehensive income (loss)	—		—		—		—		(16)		—		(16)
Balance at June 30, 2023	$	6	$	1,550	$	26,473	$	(23,116)	$	(1,820)	$	1	$	3,094
Three Months Ended June 30, 2022
Balance at March 31, 2022	$	6	$	1,447	$	24,607	$	(21,008)	$	(1,471)	$	1	$	3,582
Net income	—		—		738		—		—		—		738
Common stock issued for stock-based compensation	—		—		—		1		—		—		1
Stock-based compensation expense	—		17		—		—		—		—		17
Repurchases of common stock	—		—		—		(375)		—		—		(375)
Dividends declared ($1.22 per share)	—		—		(378)		—		—		—		(378)
Other comprehensive income (loss)	—		—		—		—		(206)		—		(206)
Balance at June 30, 2022	$	6	$	1,464	$	24,967	$	(21,382)	$	(1,677)	$	1	$	3,379
Six Months Ended June 30, 2023
Balance at December 31, 2022	$	6	$	1,501	$	25,799	$	(22,377)	$	(1,841)	$	1	$	3,089
Net income	—		—		1,468		—		—		—		1,468
Common stock issued for stock-based compensation	—		14		—		17		—		—		31
Stock-based compensation expense	—		35		—		—		—		—		35
Repurchases of common stock	—		—		—		(750)		—		—		(750)
Excise tax on repurchases of common stock	—		—		—		(6)		—		—		(6)
Dividends declared ($2.62 per share)	—		—		(794)		—		—		—		(794)
Other comprehensive income (loss)	—		—		—		—		21		—		21
Balance at June 30, 2023	$	6	$	1,550	$	26,473	$	(23,116)	$	(1,820)	$	1	$	3,094
Six Months Ended June 30, 2022
Balance at December 31, 2021	$	6	$	1,432	$	24,325	$	(20,636)	$	(1,502)	$	1	$	3,626
Net income	—		—		1,400		—		—		—		1,400
Common stock issued for stock-based compensation	—		(1)		—		4		—		—		3
Stock-based compensation expense	—		33		—		—		—		—		33
Repurchases of common stock	—		—		—		(750)		—		—		(750)
Dividends declared ($2.44 per share)	—		—		(758)		—		—		—		(758)
Other comprehensive income (loss)	—		—		—		—		(175)		—		(175)
Balance at June 30, 2022	$	6	$	1,464	$	24,967	$	(21,382)	$	(1,677)	$	1	$	3,379

The Notes to Financial Statements are an integral part of this statement.

6

Illinois Tool Works Inc. and Subsidiaries

Statement of Cash Flows (Unaudited)

	Six Months Ended
	June 30,
In millions	2023		2022
Cash Provided by (Used for) Operating Activities:
Net income	$	1,468	$	1,400
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	138		140
Amortization and impairment of intangible assets	61		69
Change in deferred income taxes	(5)		(60)
Provision for uncollectible accounts	4		3
(Income) loss from investments	(7)		(5)
(Gain) loss on sale of plant and equipment	(2)		(1)
(Gain) loss on sale of operations and affiliates	—		—
Stock-based compensation expense	35		33
Other non-cash items, net	(5)		1
Change in assets and liabilities, net of acquisitions and divestitures:
(Increase) decrease in-
Trade receivables	(42)		(396)
Inventories	140		(374)
Prepaid expenses and other assets	(26)		(1)
Increase (decrease) in-
Accounts payable	(4)		124
Accrued expenses and other liabilities	(105)		(27)
Income taxes	(131)		(81)
Other, net	(1)		(1)
Net cash provided by operating activities	1,518		824
Cash Provided by (Used for) Investing Activities:
Acquisition of businesses (excluding cash and equivalents)	—		(2)
Additions to plant and equipment	(198)		(155)
Proceeds from investments	7		7
Proceeds from sale of plant and equipment	5		5
Proceeds from sales of operations and affiliates	7		—
Other, net	(1)		(1)
Net cash provided by (used for) investing activities	(180)		(146)
Cash Provided by (Used for) Financing Activities:
Cash dividends paid	(798)		(762)
Issuance of common stock	40		17
Repurchases of common stock	(750)		(750)
Net proceeds from (repayments of) debt with original maturities of three months or less	(342)		635
Proceeds from debt with original maturities of more than three months	1,425		454
Repayments of debt with original maturities of more than three months	(678)		(863)
Other, net	(14)		(15)
Net cash provided by (used for) financing activities	(1,117)		(1,284)
Effect of Exchange Rate Changes on Cash and Equivalents	(7)		(42)
Cash and Equivalents:
Increase (decrease) during the period	214		(648)
Beginning of period	708		1,527
End of period	$	922	$	879
Supplementary Cash Flow Information:
Cash Paid During the Period for Interest	$	141	$	113
Cash Paid During the Period for Income Taxes, Net of Refunds	$	550	$	506

The Notes to Financial Statements are an integral part of this statement.

7

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 2022 Annual Report on Form 10-K. Certain reclassifications of prior year data have been made to conform with current year reporting.

(2)    Divestitures

The Company routinely reviews its portfolio of businesses relative to its business portfolio criteria and evaluates if further portfolio refinements may be needed. As such, the Company may commit to a plan to exit or dispose of certain businesses and present them as held for sale in periods prior to the sale of the business.

In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment. These two businesses were classified as held for sale beginning in the second quarter of 2022. In the fourth quarter of 2022, both of these businesses were divested. On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million. On December 1, 2022, the business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million. Operating revenue related to these divested businesses that was included in the Company's results of operations for the three and six months ended June 30, 2022 was $34 million and $63 million, respectively.

In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment. This business was presented as held for sale beginning in the fourth quarter of 2022. Assets and liabilities held for sale related to this business were $8 million and $1 million, respectively, as of December 31, 2022. This business was sold on April 3, 2023, with no significant gain or loss upon sale. Operating revenue related to this business that was included in the Company's results of operations was $9 million for the six months ended June 30, 2023, and $10 million and $19 million for the three and six months ended June 30, 2022, respectively. There was no operating revenue related to this business included in the Company's results of operations for the three months ended June 30, 2023.

(3)    Operating Revenue

The Company's 84 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, 2023 and 2022 was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Automotive OEM	$	826	$	711	$	1,622	$	1,471
Food Equipment	654		614		1,289		1,180
Test & Measurement and Electronics	700		696		1,403		1,381
Welding	490		486		983		936
Polymers & Fluids	459		496		906		977
Construction Products	526		565		1,052		1,116
Specialty Products	423		447		846		899
Intersegment revenue	(4)		(4)		(8)		(10)
Total operating revenue	$	4,074	$	4,011	$	8,093	$	7,950

8

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 original equipment manufacturers 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 original equipment manufacturers and tiers, energy, consumer durables and industrial capital goods 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.

9

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 original equipment manufacturers 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, 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.

10

(4)    Income Taxes

The Company's effective tax rate for the three months ended June 30, 2023 and 2022 was 21.4% and 18.3%, respectively, and 22.0% and 20.7% for the six months ended June 30, 2023 and 2022, respectively. The effective tax rate for the three and six months ended June 30, 2023 included a discrete income tax benefit of $20 million related to amended 2021 U.S. taxes. The effective tax rate for the three and six months ended June 30, 2022 included a discrete income tax benefit of $51 million related to a decrease in unrecognized tax benefits resulting from the resolution of a U.S. tax audit. Additionally, the effective tax rates for 2023 and 2022 included discrete income tax benefits related to excess tax benefits from stock-based compensation of $4 million and $1 million for the three months ended June 30, 2023 and 2022, respectively, and $17 million and $8 million for the six months ended June 30, 2023 and 2022, 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 increase the amount of the unrecognized tax benefits in future periods. The Company believes it is reasonably possible that within the next twelve months the amount of the Company's unrecognized tax benefits may be decreased by approximately $45 million related predominantly to the potential resolution of income tax examinations. The Company has recorded its best estimate of the potential exposure for these issues.

(5)    Inventories

Inventories as of June 30, 2023 and December 31, 2022 were as follows:

In millions	June 30, 2023		December 31, 2022
Raw material	$	808	$	887
Work-in-process	248		228
Finished goods	976		1,050
LIFO reserve	(111)		(111)
Total inventories	$	1,921	$	2,054

(6)    Pension and Other Postretirement Benefits

Pension and other postretirement benefit costs for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	Pension				Other Postretirement Benefits				Pension				Other Postretirement Benefits
In millions	2023		2022		2023		2022		2023		2022		2023		2022
Components of net periodic benefit cost:
Service cost	$	9	$	12	$	1	$	1	$	18	$	24	$	2	$	3
Interest cost	23		12		6		4		46		25		12		7
Expected return on plan assets	(32)		(25)		(6)		(7)		(64)		(52)		(11)		(13)
Amortization of actuarial loss (gain)	1		6		(1)		(1)		2		13		(2)		(2)
Total net periodic benefit cost (income)	$	1	$	5	$	—	$	(3)	$	2	$	10	$	1	$	(5)

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 $14 million to its pension plans and $4 million to its other postretirement benefit plans in 2023. As of June 30, 2023, contributions of $5 million to pension plans and $2 million to other postretirement benefit plans have been made.

11

(7)    Debt

Total debt as of June 30, 2023 and December 31, 2022 was as follows:

In millions	June 30, 2023		December 31, 2022
Short-term debt	$	1,275	$	1,590
Long-term debt	6,947		6,173
Total debt	$	8,222	$	7,763

Short-term debt included commercial paper of $575 million and $1.1 billion as of June 30, 2023 and December 31, 2022, respectively. The weighted-average interest rate on commercial paper as of June 30, 2023 and December 31, 2022 was 5.27% and 4.35%, respectively. Short-term debt as of June 30, 2023 also included $699 million related to the 3.50% notes due March 1, 2024, which were reclassified from Long-term debt to Short-term debt in the first quarter of 2023. Additionally, Short-term debt as of December 31, 2022 included $535 million related to the 1.25% Euro notes due May 22, 2023, which were repaid on the due date.

In 2022, the $568 million of 1.75% Euro notes due May 20, 2022 were redeemed in full at face value on February 22, 2022.

On May 5, 2023, the Company entered into a Euro-denominated credit agreement (the “Euro Credit Agreement”) with a termination date of May 3, 2024; provided, however, that the Company may extend the termination date by six months on up to two occasions. Under the Euro Credit Agreement, the Company may borrow up to €1.3 billion. Any loan under the Euro Credit Agreement may not be re-borrowed once repaid, in full or in part, and will bear interest at a per annum rate equal to the applicable EURIBOR (adjusted for any statutory reserves) plus 0.75% for the interest period selected by the Company of one, three or six months.

On May 12, 2023, the Company borrowed €1.3 billion under the Euro Credit Agreement. Proceeds from the borrowing were used for general corporate purposes, including the repayment of outstanding debt. As of June 30, 2023, the Company had $1.4 billion outstanding under the Euro Credit Agreement with an interest rate of 4.01%, which was included in Long-term debt as the Company intends to exercise its options to extend the termination date.

The Company also has a $3.0 billion revolving credit facility with a termination date of October 21, 2027, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. No amounts were outstanding under the revolving credit facility as of June 30, 2023 or December 31, 2022.

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, 2023 and December 31, 2022 were as follows:

In millions	June 30, 2023		December 31, 2022
Fair value	$	7,231	$	6,228
Carrying value	7,647		6,708

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.

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(8)    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, 2023 and 2022:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Beginning balance	$	(1,804)	$	(1,471)	$	(1,841)	$	(1,502)
Foreign currency translation adjustments during the period	(20)		(167)		7		(118)
Income taxes	4		(43)		14		(66)
Total foreign currency translation adjustments, net of tax	(16)		(210)		21		(184)
Pension and other postretirement benefit adjustments reclassified to income	—		5		—		11
Income taxes	—		(1)		—		(2)
Total pension and other postretirement benefit adjustments, net of tax	—		4		—		9
Ending balance	$	(1,820)	$	(1,677)	$	(1,820)	$	(1,677)

Pension and other postretirement benefit adjustments reclassified to income related to the amortization of actuarial gains and losses. Refer to Note 6. Pension and Other Postretirement Benefits for additional information.

The Company designated the €1.0 billion of Euro notes issued in May 2014, the €1.0 billion of Euro notes issued in May 2015, the €1.6 billion of Euro notes issued in June 2019 and the €1.3 billion 2023 term loan under the Euro Credit Agreement as hedges of a portion of its 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). On February 22, 2022, €500 million of the Euro notes issued in May 2014 were redeemed in full and on May 22, 2023, €500 million of the Euro notes issued in May 2015 were repaid on the due date. Refer to Note 7. Debt for additional information regarding the redemption and repayment of these notes. The carrying values of the outstanding 2019, 2015 and 2014 Euro notes and 2023 Euro term loan as of June 30, 2023 were $1.7 billion, $542 million, $536 million, and $1.4 billion, respectively. The amount of pre-tax gain (loss) related to this debt recorded in Other comprehensive income (loss) was a loss of $17 million for the three months ended June 30, 2023, a gain of $179 million for the three months ended June 30, 2022, a loss of $58 million for the six months ended June 30, 2023 and a gain of $273 million for the six months ended June 30, 2022.

As of June 30, 2023 and 2022, the ending balance of Accumulated other comprehensive income (loss) consisted of after-tax cumulative translation adjustment losses of $1.5 billion in both periods, and after-tax unrecognized pension and other postretirement benefit costs of $293 million and $187 million, respectively.

(9)    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. Refer to Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for information regarding operating revenue and operating income for the Company's segments.

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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

Illinois Tool Works Inc. (the "Company" or "ITW") is a global manufacturer of a diversified range of industrial products and equipment with 84 divisions in 51 countries. As of December 31, 2022, the Company employed approximately 46,000 people.

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.

Due to the large number of diverse businesses and the Company's decentralized operating structure, the Company does not require its businesses to provide detailed information on operating results. Instead, the Company's corporate management collects data on several key measurements: operating revenue, operating income, operating margin, overhead costs, number of months on hand in inventory, days sales outstanding in accounts receivable, past due receivables and return on invested capital. These key measures are monitored by management and significant changes in operating results versus current trends in end markets and variances from forecasts are discussed with operating unit management.

THE ITW BUSINESS MODEL

The powerful and highly differentiated ITW Business Model is the Company's core source of value creation. It is the Company's competitive advantage and defines how ITW creates value for its shareholders. The ITW Business Model is comprised of three unique elements:

•ITW's 80/20 Front-to-Back process is the operating system that is applied in every ITW business. Initially introduced as a manufacturing efficiency tool in the 1980s, ITW has continually refined, improved and expanded 80/20 into a proprietary, holistic business management process that generates significant value for the Company and its customers. Through the application of data driven insights generated by 80/20 practice, ITW focuses on its largest and best opportunities (the "80") and eliminates cost, complexity and distractions associated with the less profitable opportunities (the "20"). 80/20 enables ITW businesses to consistently achieve world-class operational excellence in product availability, quality, and innovation, while generating superior financial performance;

•Customer-back Innovation has fueled decades of profitable growth at ITW. The Company's unique innovation approach is built on insight gathered from the 80/20 Front-to-Back process. Working from the customer back, ITW businesses position themselves as the go-to problem solver for their "80" customers. ITW's innovation efforts are focused on understanding customer needs, particularly those in "80" markets with solid long-term growth fundamentals, and creating unique solutions to address those needs. These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately 19,200 granted and pending patents;

•ITW's Decentralized, Entrepreneurial Culture enables ITW businesses to be fast, focused, and responsive. ITW businesses have significant flexibility within the framework of the ITW Business Model to customize their approach in order to best serve their specific customers' needs. ITW colleagues recognize their unique responsibilities to execute the Company's strategy and values. As a result, the Company maintains a focused and simple organizational structure that, combined with outstanding execution, delivers best-in-class services and solutions adapted to each business' customers and end markets.

ENTERPRISE STRATEGY: 2012-2022

In late 2012, ITW began its strategic framework transitioning the Company to fully leverage the unique and powerful set of capabilities and operating practices of the ITW Business Model. The Company undertook a complete review of its performance, focusing on its businesses delivering consistent above-market growth with best-in-class margins and returns, and developing a strategy to replicate that performance across its operations. ITW determined that solid and consistent above-market organic growth is the core growth engine to deliver world-class financial performance and compelling long-term returns for its shareholders.

Key initiatives in the Company’s enterprise strategy included portfolio management, business structure simplification, strategic sourcing and the diligent re-application of ITW’s proprietary 80/20 Front-to-Back process.

•As part of the Portfolio Management initiative, ITW exited businesses that were operating in commoditized market spaces and prioritized sustainable differentiation as a must-have requirement for all ITW businesses. This process

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included both divesting entire businesses and exiting commoditized product lines and customers inside otherwise highly differentiated ITW divisions.

•Business Structure Simplification was implemented to simplify and scale up ITW's operating structure to support increased engineering, marketing, and sales resources, and improve global reach and competitiveness, all of which were critical to driving accelerated organic growth. ITW now has 84 scaled-up divisions with significantly enhanced focus on growth investments, core customers and products, and customer-back innovation.

•The Strategic Sourcing initiative established sourcing as a core strategic and operational capability at ITW, delivering an average of one percent reduction in spend each year from 2013 through 2022 and continues to be a key contributor to the Company's ongoing enterprise strategy.

•With the initial portfolio realignment and scale-up work largely completed, the Company shifted its focus to preparing for and accelerating organic growth, reapplying the 80/20 Front-to-Back process to optimize its scaled-up divisions for growth, first, to build a foundation of operational excellence, and second, to identify the best opportunities to drive organic growth.

Since implementing the Company’s enterprise strategy in 2012, the Company has demonstrated the compelling performance potential of the ITW Business Model and superior 80/20 management, resulting in meaningful incremental improvement in margins and returns as evidenced by the Company’s operating margin and after-tax return on invested capital. At the same time, these 80/20 initiatives can also result in restructuring initiatives that reduce costs and improve profitability and returns.

OUR NEXT PHASE: 2023-2030

ITW’s enterprise strategy framework has evolved every year since it was launched in late 2012 and it will continue to evolve. With the “heavy lifting” essentially completed in the last decade, the Company is focused on two key priorities:

1.Execute on ITW's growth agenda, with consistent high-quality organic growth at the enterprise level, and high-quality acquisitions that extend ITW's long-term organic growth potential.

2.Sustain foundational strengths the Company has built over the past decade, including high-quality ITW Business Model practice throughout the Company, and the quality/depth of ITW’s leadership bench and pipeline.

Portfolio Discipline

The Company only operates in industries where it can generate significant, long-term competitive advantage from the ITW Business Model. ITW businesses have the right "raw material" in terms of market and business attributes that best fit the ITW Business Model and have significant potential to drive above-market organic growth over the long-term.

The Company focuses on high-quality businesses, ensuring it operates in markets with positive long-term macro fundamentals and with customers that have critical needs and value ITW's differentiated products, services and solutions. ITW's portfolio operates in highly diverse end markets and geographies which makes the Company more resilient in the face of uncertain or volatile market environments.

The Company routinely evaluates its portfolio to ensure it delivers sustainable differentiation and drives consistent long-term performance. This includes both implementing portfolio refinements and assessing selective high-quality acquisitions to supplement ITW's long-term growth potential.

In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment. These two businesses were classified as held for sale beginning in the second quarter of 2022. In the fourth quarter of 2022, both of these businesses were divested. On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million. On December 1, 2022, the business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million. Operating revenue related to these divested businesses that was included in the Company's results of operations for the three and six months ended June 30, 2022 was $34 million and $63 million, respectively.

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In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment. This business was presented as held for sale beginning in the fourth quarter of 2022. Assets and liabilities held for sale related to this business were $8 million and $1 million, respectively, as of December 31, 2022. This business was sold on April 3, 2023, with no significant gain or loss upon sale. Operating revenue related to this business that was included in the Company's results of operations was $9 million for the six months ended June 30, 2023, and $10 million and $19 million for the three and six months ended June 30, 2022, respectively. There was no operating revenue related to this business included in the Company's results of operations for the three months ended June 30, 2023. Refer to Note 2. Divestitures in Item 1. Financial Statements for further information regarding the Company's divestitures.

80/20 Front-to-Back Practice Excellence

ITW will continue to drive 80/20 Front-to-Back practice excellence in every division in the Company, every day. Driving strong operational excellence in the quality of 80/20 Front-to-Back practice across the Company, division by division, will produce further customer-facing performance improvement in a number of divisions and additional structural margin expansion at the enterprise level.

TERMS USED BY ITW

Management uses the following terms to describe the financial results of operations of the Company:

•Organic business - acquired businesses that have been included in the Company's results of operations for more than 12 months on a constant currency basis.

•Operating leverage - the estimated effect of the organic revenue volume changes on organic operating income, assuming variable margins remain the same as the prior period.

•Price/cost - represents the estimated net impact of increases or decreases in the cost of materials used in the Company's products versus changes in the selling price to the Company's customers.

•Product line simplification (PLS) - focuses businesses on eliminating the complexity and overhead costs associated with smaller product lines and customers, and focuses businesses on supporting and growing their largest customers and product lines. In the short-term, PLS may result in a decrease in revenue and overhead costs while improving operating margin. In the long-term, PLS is expected to result in growth in revenue, profitability, and returns.

Unless otherwise stated, the changes in financial results in the consolidated results of operations and the results of operations by segment represent the current year period versus the comparable period in the prior year. The following discussion of operating results should be read in conjunction with Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2022 Annual Report on Form 10-K.

CONSOLIDATED RESULTS OF OPERATIONS

Starting in early 2020, the COVID-19 pandemic and the measures taken to reduce its spread negatively impacted the global economy and caused significant disruptions in the Company's global operations as COVID-19 spread and impacted the countries in which the Company operates and the markets the Company serves.

Despite the ongoing disruptions caused by the COVID-19 pandemic, the Company experienced solid recovery progress in many of its end markets during the past two years. However, the pandemic and resurgence of outbreaks could continue to adversely impact the operations of the Company and its customers and suppliers. A description of the risks relating to the impact of the COVID-19 outbreak on the Company's business, operations and financial condition is contained in Part I, Item 1A. Risk Factors in the Company's 2022 Annual Report on Form 10-K.

During the first quarter of 2022, Russian military forces invaded Ukraine. In response, the United States and several other countries imposed economic and other sanctions on Russia. The Company has four immaterial Russian subsidiaries with total assets of approximately $22 million as of June 30, 2023. The revenue for these subsidiaries for the three and six months ended June 30, 2023 was approximately $7 million and $13 million, respectively. These subsidiaries are not material to the Company’s results of operations or financial position.

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In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment. These two businesses were classified as held for sale beginning in the second quarter of 2022. In the fourth quarter of 2022, both of these businesses were divested. On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million. On December 1, 2022, the business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million. Operating revenue related to these divested businesses that was included in the Company's results of operations for the three and six months ended June 30, 2022 was $34 million and $63 million, respectively.

In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment. This business was presented as held for sale beginning in the fourth quarter of 2022. Assets and liabilities held for sale related to this business were $8 million and $1 million, respectively, as of December 31, 2022. This business was sold on April 3, 2023, with no significant gain or loss upon sale. Operating revenue related to this business that was included in the Company's results of operations was $9 million for the six months ended June 30, 2023, and $10 million and $19 million for the three and six months ended June 30, 2022, respectively. There was no operating revenue related to this business included in the Company's results of operations for the three months ended June 30, 2023. Refer to Note 2. Divestitures in Item 1. Financial Statements for further information regarding the Company's divestitures.

In a challenging and dynamic environment, the Company delivered strong financial results in the second quarter and year-to-date periods of 2023 primarily due to the continued successful execution of enterprise initiatives and continued focus on the highly differentiated ITW Business Model. The Company generated operating revenue growth of 1.6 percent and 1.8 percent in the second quarter and year-to-date periods of 2023, respectively, with organic revenue growth of 3.0 percent and 4.1 percent, respectively. Operating income was $1.0 billion in the second quarter and $2.0 billion in the year-to-date period of 2023. Operating margin was 24.8 percent and 24.5 percent in the second quarter and year-to-date periods of 2023, respectively.

The Company's consolidated results of operations for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	4,074		$	4,011		1.6	%	3.0	%	(1.1)	%	—	%	(0.3)	%	1.6	%
Operating income	$	1,010		$	926		9.0	%	10.2	%	(0.7)	%	(0.1)	%	(0.4)	%	9.0	%
Operating margin %	24.8		%	23.1		%	170 bps		160 bps		10 bps		—		—		170 bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	8,093		$	7,950		1.8	%	4.1	%	(0.9)	%	—	%	(1.4)	%	1.8	%
Operating income	$	1,982		$	1,821		8.8	%	10.8	%	(0.6)	%	0.1	%	(1.5)	%	8.8	%
Operating margin %	24.5		%	22.9		%	160 bps		150 bps		10 bps		—		—		160 bps

•Operating revenue increased in the second quarter and year-to-date periods due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation and the impact of divestiture activity in the second quarter of 2023 and the fourth quarter of 2022.

•Organic revenue grew 3.0% and 4.1% in the second quarter and year-to-date periods, respectively, as growth in four segments was partially offset by a decline in the Construction Products, Specialty Products and Polymers & Fluids segments. Product line simplification activities reduced organic revenue by 40 basis points in the second quarter and 50 basis points in the year-to-date period.

◦North American organic revenue was flat in the second quarter as growth in the Food Equipment, Automotive OEM and Polymers & Fluids segments was offset by a decline in the Specialty Products, Test & Measurement and Electronics, Construction Products and Welding segments. In the year-to-date period, organic revenue grew 2.6% as growth in four segments was partially offset by a decline in the Specialty Products, Construction Products and Test & Measurement and Electronics segments.

◦Europe, Middle East and Africa organic revenue increased 5.4% in the second quarter as growth in four segments was partially offset by a decline in the Construction Products, Polymers & Fluids and Welding

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segments. In the year-to-date period, organic revenue increased 5.9% as growth in five segments was partially offset by a decline in the Construction Products and Polymers & Fluids segments.

◦Asia Pacific increased 11.0% in the second quarter due to growth in four segments, partially offset by a decline in the Construction Products, Test & Measurement and Electronics and Specialty Products segments. In the year-to-date period, organic revenue grew 6.4% due to growth in five segments, partially offset by a decline in the Specialty Products and Food Equipment segments. Organic revenue in China increased 22.4% in the second quarter due to an increase in five segments, partially offset by a decline in the Food Equipment and Specialty Products segments. In the year-to-date period, China organic revenue increased 7.1% as growth in four segments was partially offset by a decline in the Specialty Products, Food Equipment and Polymers & Fluids segments.

•Operating income of $1.0 billion and $2.0 billion in the second quarter and year-to-date periods increased 9.0% and 8.8%, respectively, compared to the prior year primarily due to higher organic revenue, partially offset by unfavorable foreign currency translation and the impact of divestiture activity in the second quarter of 2023 and the fourth quarter of 2022.

•Operating margin was 24.8% in the second quarter. The increase of 170 basis points was primarily due to favorable price/cost of 260 basis points, benefits from the Company's enterprise initiatives of 130 basis points and positive operating leverage of 60 basis points, partially offset by higher operating expenses, including employee-related expenses.

•In the year-to-date period, operating margin of 24.5% increased 160 basis points primarily driven by favorable price/cost of 230 basis points, benefits from the Company's enterprise initiatives of 120 basis points and positive operating leverage of 90 basis points, partially offset by higher operating expenses, including employee-related expenses.

•The Company's effective tax rate for the second quarter of 2023 and 2022 was 21.4% and 18.3%, respectively, and 22.0% and 20.7% for the year-to-date periods of 2023 and 2022, respectively. The effective tax rate for the second quarter and year-to-date periods of 2023 included a discrete income tax benefit of $20 million related to amended 2021 U.S. taxes. The effective tax rate for the second quarter and year-to-date periods of 2022 included a discrete income tax benefit of $51 million related to a decrease in unrecognized tax benefits resulting from the resolution of a U.S. tax audit. Additionally, the effective tax rates for 2023 and 2022 included discrete income tax benefits related to excess tax benefits from stock-based compensation of $4 million and $1 million for the second quarter of 2023 and 2022, respectively, and $17 million and $8 million for the year-to-date period of 2023 and 2022, respectively.

•Diluted earnings per share (EPS) of $2.48 for the second quarter and $4.81 for the year-to-date period of 2023 increased 4.6% and 7.4%, respectively. Excluding the favorable impact of the second quarter 2023 discrete income tax benefit of $0.07 related to amended 2021 U.S. taxes and the second quarter 2022 discrete income tax benefit of $0.16 related to the resolution of a U.S. tax audit, EPS increased 9.0% in the second quarter and 9.7% in the year-to-date period.

•The Company repurchased approximately 1.6 million and 3.2 million shares of its common stock in the second quarter and year-to-date periods of 2023, respectively, for approximately $375 million and $750 million, respectively.

RESULTS OF OPERATIONS BY SEGMENT

Total operating revenue and operating income for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended June 30,								Six Months Ended June 30,
Dollars in millions	Operating Revenue				Operating Income				Operating Revenue				Operating Income
	2023		2022		2023		2022		2023		2022		2023		2022
Automotive OEM	$	826	$	711	$	139	$	101	$	1,622	$	1,471	$	267	$	239
Food Equipment	654		614		182		152		1,289		1,180		351		278
Test & Measurement and Electronics	700		696		162		157		1,403		1,381		334		306
Welding	490		486		167		142		983		936		324		281
Polymers & Fluids	459		496		119		125		906		977		228		243
Construction Products	526		565		154		156		1,052		1,116		299		292
Specialty Products	423		447		109		121		846		899		218		241
Intersegment revenue	(4)		(4)		—		—		(8)		(10)		—		—
Unallocated	—		—		(22)		(28)		—		—		(39)		(59)
Total	$	4,074	$	4,011	$	1,010	$	926	$	8,093	$	7,950	$	1,982	$	1,821

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Segments are allocated a fixed overhead charge based on the segment's revenue. Expenses not charged 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.

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 original equipment manufacturers and tiers market. Products in this segment include:

•plastic and metal components, fasteners and assemblies for automobiles, light trucks and other industrial uses.

The results of operations for the Automotive OEM segment for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	826		$	711		16.2	%	16.3	%	—	%	—	%	(0.1)	%	16.2	%
Operating income	$	139		$	101		36.2	%	25.0	%	—	%	11.9	%	(0.7)	%	36.2	%
Operating margin %	16.8		%	14.3		%	250 bps		110 bps		—		150 bps		(10) bps		250 bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	1,622		$	1,471		10.3	%	11.9	%	—	%	—	%	(1.6)	%	10.3	%
Operating income	$	267		$	239		11.4	%	5.4	%	—	%	8.2	%	(2.2)	%	11.4	%
Operating margin %	16.4		%	16.3		%	10 bps		(100) bps		—		120 bps		(10) bps		10 bps

•Operating revenue grew in the second quarter and year-to-date periods due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation.

•Organic revenue increased 16.3% and 11.9% in the second quarter and year-to-date periods, respectively, compared to worldwide auto builds which grew 16% in the second quarter and 11% in the year-to-date period. Product line simplification activities reduced organic revenue by 50 basis points in the second quarter and 40 basis points in the year-to-date period primarily in North America.

◦North American organic revenue increased 2.9% and 3.0% in the second quarter and year-to-date periods, respectively, compared to North American auto builds which grew 15% in the second quarter and 12% in the year-to-date period primarily due to customer mix and product line simplification.

◦European organic revenue grew 18.2% and 16.9% in the second quarter and year-to-date periods, respectively, compared to European auto builds which increased 14% in the second quarter and 16% in the year-to-date period.

◦Asia Pacific organic revenue increased 39.0% and 20.5% in the second quarter and year-to-date periods, respectively. China organic revenue grew 51.3% and 19.1% in the second quarter and year-to-date periods, respectively, versus China auto builds which increased 20% in the second quarter and 7% in the year-to-date period. Auto builds of foreign automotive manufacturers in China, where the Company has higher content, increased 7% in the second quarter and decreased 2% in the year-to-date period.

•Operating margin was 16.8% in the second quarter. The increase of 250 basis points was primarily due to positive operating leverage of 320 basis points, favorable price/cost of 180 basis points, benefits from the Company's enterprise initiatives and lower restructuring expenses, partially offset by higher operating expenses, including employee-related expenses and continued investment in the business, and product mix.

•In the year-to-date period, operating margin of 16.4% increased 10 basis points primarily driven by positive operating leverage of 230 basis points, benefits from the Company's enterprise initiatives, lower restructuring expenses and favorable price/cost of 90 basis points, partially offset by higher operating expenses, including employee-related expenses and continued investment in the business, and product mix.

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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.

The results of operations for the Food Equipment segment for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	654		$	614		6.3	%	6.9	%	(1.0)	%	—	%	0.4	%	6.3	%
Operating income	$	182		$	152		19.6	%	19.2	%	(0.2)	%	—	%	0.6	%	19.6	%
Operating margin %	27.8		%	24.7		%	310 bps		280 bps		30 bps		—		—		310 bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	1,289		$	1,180		9.2	%	11.3	%	(1.1)	%	—	%	(1.0)	%	9.2	%
Operating income	$	351		$	278		26.2	%	28.0	%	(0.4)	%	(0.5)	%	(0.9)	%	26.2	%
Operating margin %	27.2		%	23.6		%	360 bps		350 bps		20 bps		(10) bps		—		360 bps

•Operating revenue grew in the second quarter primarily due to higher organic revenue, partially offset by the impact of a divestiture in the fourth quarter of 2022. Operating revenue grew in the year-to-date period due to higher organic revenue, partially offset by the impact of a divestiture in the fourth quarter of 2022 and the unfavorable effect of foreign currency translation.

•Operating revenue in the second quarter and year-to-date periods of 2022 included approximately $6 million and $13 million, respectively, related to the business divested in the fourth quarter of 2022.

•Organic revenue increased 6.9% in the second quarter as equipment and service organic revenue grew 3.1% and 16.2%, respectively. In the year-to-date period, organic revenue increased 11.3% as equipment and service organic revenue grew 8.8% and 17.4%, respectively.

◦North American organic revenue increased 8.5% in the second quarter and 14.5% in the year-to-date period. Equipment organic revenue grew 5.4% in the second quarter and 14.2% in the year-to-date period with growth in the restaurant and institutional end markets, partially offset by a decline in the food retail end market. Service organic revenue increased 15.3% and 16.0% in the second quarter and year-to-date periods, respectively.

◦International organic revenue increased 4.7% and 6.6% in the second quarter and year-to-date periods, respectively. Equipment organic revenue was flat in the second quarter as higher demand in the European warewash and refrigeration end markets was offset by lower demand in Asia Pacific. In the year-to-date period, equipment organic revenue grew 1.6% primarily due to higher demand in the European warewash and refrigeration end markets, partially offset by lower demand in Asia Pacific. Service organic revenue increased 18.1% and 20.0% in the second quarter and year-to-date periods, respectively.

•Operating margin was 27.8% in the second quarter. The increase of 310 basis points was primarily due to favorable price/cost of 270 basis points, positive operating leverage of 140 basis points, benefits from the Company's enterprise initiatives and the favorable impact of a divestiture in the fourth quarter of 2022, partially offset by higher operating expenses, including employee-related expenses.

20

•In the year-to-date period, operating margin of 27.2% increased 360 basis points primarily driven by favorable price/cost of 280 basis points, positive operating leverage of 210 basis points, benefits from the Company's enterprise initiatives and the favorable impact of a divestiture in the fourth quarter of 2022, partially offset by higher operating expenses, including employee-related expenses.

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 original equipment manufacturers and tiers, energy, consumer durables and industrial capital goods 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.

The results of operations for the Test & Measurement and Electronics segment for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	700		$	696		0.7	%	1.1	%	—	%	—	%	(0.4)	%	0.7	%
Operating income	$	162		$	157		3.5	%	5.2	%	—	%	(1.0)	%	(0.7)	%	3.5	%
Operating margin %	23.2		%	22.5		%	70 bps		100 bps		—		(30) bps		—		70 bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	1,403		$	1,381		1.6	%	3.3	%	—	%	—	%	(1.7)	%	1.6	%
Operating income	$	334		$	306		9.2	%	11.8	%	—	%	(0.7)	%	(1.9)	%	9.2	%
Operating margin %	23.8		%	22.2		%	160 bps		180 bps		—		(20) bps		—		160 bps

•Operating revenue grew in the second quarter and year-to-date periods due to higher organic revenue, partially offset by the unfavorable effect of foreign currency translation.

•Organic revenue increased 1.1% in the second quarter and 3.3% in the year-to-date period.

◦Organic revenue for the test and measurement businesses increased 10.1% in the second quarter and 11.0% in the year-to-date period primarily driven by the impact of a stronger capital spending environment, growth in the MTS Test & Simulation business and higher demand in the automotive, defense and oil and gas end markets, partially offset by lower semiconductor demand in North America. Instron, where demand is more closely tied to the capital spending environment, had organic revenue growth of 30.2% and 26.1% in the second quarter and year-to-date periods, respectively.

◦Electronics organic revenue decreased 12.7% and 8.4% in the second quarter and year-to-date periods, respectively, primarily due to a decline in the consumer electronics and semiconductor end markets. The electronics assembly businesses decreased 20.3% in the second quarter and 13.4% in the year-to-date period primarily due to lower demand in North America and Asia Pacific. The other electronics businesses, which include the contamination control, static control and pressure sensitive adhesives businesses, decreased 8.8% and 5.7% in the second quarter and year-to-date periods, respectively, primarily due to lower demand in the semiconductor end market, partially offset by higher demand in the automotive end market.

•Operating margin was 23.2% in the second quarter. The increase of 70 basis points was primarily due to favorable price/cost of 210 basis points, benefits from the Company's enterprise initiatives, positive operating leverage of 30

21

basis points and lower intangible asset amortization expense, partially offset by higher operating expenses, including employee-related expenses.

•In the year-to-date period, operating margin of 23.8% increased 160 basis points primarily driven by favorable price/cost of 150 basis points, benefits from the Company's enterprise initiatives, positive operating leverage of 80 basis points and lower intangible asset amortization expense, partially offset by higher operating expenses, including employee-related expenses.

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 original equipment manufacturers and tiers markets. Products in this segment include:

•arc welding equipment; and

•metal arc welding consumables and related accessories.

The results of operations for the Welding segment for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	490		$	486		0.7	%	0.7	%	—	%	—	%	—	%	0.7	%
Operating income	$	167		$	142		16.8	%	16.6	%	—	%	(0.2)	%	0.4	%	16.8	%
Operating margin %	33.9		%	29.3		%	460 bps		460 bps		—		—		—		460 bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	983		$	936		5.0	%	5.3	%	—	%	—	%	(0.3)	%	5.0	%
Operating income	$	324		$	281		15.1	%	15.1	%	—	%	(0.2)	%	0.2	%	15.1	%
Operating margin %	32.9		%	30.0		%	290 bps		290 bps		—		—		—		290 bps

•Operating revenue grew in the second quarter and year-to-date periods primarily due to higher organic revenue.

•Organic revenue increased 0.7% in the second quarter, which had a challenging comparable in the prior year second quarter of 22.1% growth. In the second quarter, consumables grew 2.2%, partially offset by a decline in equipment of 0.2%. In the year-to-date period, organic revenue increased 5.3%, which had a challenging comparable in the prior year of 17.5% growth. Consumables grew 6.3% and equipment increased 4.6% in the year-to-date period. In both the second quarter and year-to-date periods, organic revenue grew primarily due to higher demand in the industrial end markets related to heavy equipment for the agriculture, infrastructure and oil and gas end markets.

◦North American organic revenue was essentially flat in the second quarter as a decline in the commercial end markets of 8.6% was offset by growth in the industrial end markets of 5.2%. In the year-to-date period, organic revenue grew 4.7% driven by growth in the industrial end markets of 10.9%, partially offset by a decline in the commercial end markets of 5.4%.

◦International organic revenue grew 4.8% in the second quarter and 8.5% in the year-to-date period primarily due to higher equipment demand in the oil and gas end markets.

•Operating margin was 33.9% in the second quarter. The increase of 460 basis points was primarily due to favorable price/cost of 440 basis points and benefits from the Company's enterprise initiatives, partially offset by higher operating expenses, including employee-related expenses.

•In the year-to-date period, operating margin of 32.9% increased 290 basis points primarily driven by favorable price/cost of 370 basis points, benefits from the Company's enterprise initiatives and positive operating leverage of 80 basis points, partially offset by higher operating expenses, including employee-related expenses.

22

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.

The results of operations for the Polymers & Fluids segment for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	459		$	496		(7.6)	%	(0.5)	%	(5.7)	%	—	%	(1.4)	%	(7.6)	%
Operating income	$	119		$	125		(4.4)	%	5.0	%	(4.6)	%	(2.8)	%	(2.0)	%	(4.4)	%
Operating margin %	25.9		%	25.1		%	80 bps		140 bps		30 bps		(70) bps		(20) bps		80 bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	906		$	977		(7.3)	%	(0.3)	%	(5.1)	%	—	%	(1.9)	%	(7.3)	%
Operating income	$	228		$	243		(6.0)	%	2.4	%	(3.8)	%	(2.0)	%	(2.6)	%	(6.0)	%
Operating margin %	25.2		%	24.8		%	40 bps		70 bps		30 bps		(40) bps		(20) bps		40 bps

•Operating revenue declined in the second quarter and year-to-date periods due to the impact of a divestiture in the fourth quarter of 2022, the unfavorable effect of foreign currency translation and lower organic revenue.

•Operating revenue in the second quarter and year-to-date periods of 2022 included approximately $28 million and $50 million, respectively, related to the business divested in the fourth quarter of 2022.

•Organic revenue decreased 0.5% and 0.3% in the second quarter and year-to-date periods, respectively, as a decline in Europe was partially offset by growth in North America and Asia Pacific. Product line simplification activities reduced organic revenue by 90 basis points in the second quarter and 80 basis points in the year-to-date period.

◦Organic revenue for the automotive aftermarket businesses increased 1.4% in the second quarter primarily due to an increase in the car care and tire repair businesses in North America, partially offset by a decline in the body repair and engine repair businesses in North America. In the year-to-date period, organic revenue was essentially flat as growth in the North America engine repair and European tire repair and additives businesses was offset by a decline in the North America body repair, car care and tire repair businesses.

◦Organic revenue for the fluids businesses declined 1.2% in the second quarter and was essentially flat in the year-to-date period driven by lower demand in North America primarily due to a decrease in the health and hygiene end markets, partially offset by growth in the industrial maintenance, repair and operations end market.

◦Organic revenue for the polymers businesses decreased 2.5% and 0.9% in the second quarter and year-to-date periods, respectively, due to a decline in Europe, partially offset by growth in North America and Asia Pacific. Demand in Europe was negatively impacted by the wind and industrial end markets.

•Operating margin was 25.9% in the second quarter. The increase of 80 basis points was primarily due to favorable price/cost of 200 basis points, benefits from the Company's enterprise initiatives, the favorable impact of a divestiture in the fourth quarter of 2022 and lower intangible asset amortization expense, partially offset by higher operating expenses, including employee-related expenses, and higher restructuring expenses.

23

•In the year-to-date period, operating margin of 25.2% increased 40 basis points primarily driven by favorable price/cost of 170 basis points, benefits from the Company's enterprise initiatives, the favorable impact of a divestiture in the fourth quarter of 2022 and lower intangible asset amortization expense, partially offset by higher operating expenses, including employee-related expenses, and higher restructuring expenses.

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.

The results of operations for the Construction Products segment for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	526		$	565		(6.8)	%	(5.7)	%	—	%	—	%	(1.1)	%	(6.8)	%
Operating income	$	154		$	156		(1.2)	%	1.9	%	—	%	(2.1)	%	(1.0)	%	(1.2)	%
Operating margin %	29.3		%	27.6		%	170 bps		230 bps		—		(60) bps		—		170 bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	1,052		$	1,116		(5.7)	%	(3.6)	%	—	%	—	%	(2.1)	%	(5.7)	%
Operating income	$	299		$	292		2.4	%	5.8	%	—	%	(1.6)	%	(1.8)	%	2.4	%
Operating margin %	28.4		%	26.2		%	220 bps		250 bps		—		(40) bps		10 bps		220 bps

•Operating revenue declined in the second quarter and year-to-date periods due to lower organic revenue and the unfavorable effect of foreign currency translation.

•Organic revenue decreased 5.7% and 3.6% in the second quarter and year-to-date periods, respectively, primarily due to a decline in Europe and North America. Product line simplification activities reduced organic revenue by 30 basis points in the second quarter and 40 basis points in the year-to-date period.

◦North American organic revenue declined 2.6% in the second quarter and 1.1% in the year-to-date period due to lower demand in the residential and commercial end markets. Organic revenue in the United States residential end market declined 1.9% and 1.2% in the second quarter and year-to-date periods, respectively, and the commercial end market decreased 5.2% in the second quarter and 0.7% in the year-to-date period. Organic revenue in Canada declined 9.2% and 3.9% in the second quarter and year-to-date periods, respectively.

◦International organic revenue decreased 8.9% in the second quarter and 6.0% in the year-to-date period. European organic revenue declined 13.5% in the second quarter and 10.9% in the year-to-date period primarily due to lower demand in the commercial and residential end markets. Asia Pacific organic revenue declined 3.1% in the second quarter primarily due to lower demand in the Australia and New Zealand residential end markets. In the year-to-date period, Asia Pacific organic revenue grew 0.5% driven by higher demand in China, partially offset by a decline in the Australia and New Zealand residential end markets primarily in the second quarter.

•Operating margin was 29.3% in the second quarter. The increase of 170 basis points was primarily due to favorable price/cost of 440 basis points and benefits from the Company's enterprise initiatives, partially offset by higher operating expenses, including employee-related expenses, unfavorable operating leverage of 90 basis points and higher restructuring expenses.

24

•In the year-to-date period, operating margin of 28.4% increased 220 basis points primarily driven by favorable price/cost of 470 basis points and benefits from the Company's enterprise initiatives, partially offset by higher operating expenses, including employee-related expenses, unfavorable operating leverage of 60 basis points and higher restructuring expenses.

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, 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.

The results of operations for the Specialty Products segment for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	423		$	447		(5.4)	%	(3.6)	%	(2.3)	%	—	%	0.5	%	(5.4)	%
Operating income	$	109		$	121		(8.6)	%	(5.5)	%	(0.1)	%	(3.6)	%	0.6	%	(8.6)	%
Operating margin %	26.0		%	26.9		%	(90) bps		(60) bps		60 bps		(90) bps		—		(90) bps

	Six Months Ended
Dollars in millions	June 30,								Components of Increase (Decrease)
	2023			2022			Inc (Dec)		Organic		Acquisition/ Divestiture		Restructuring		Foreign Currency		Total
Operating revenue	$	846		$	899		(5.9)	%	(4.3)	%	(1.1)	%	—	%	(0.5)	%	(5.9)	%
Operating income	$	218		$	241		(9.2)	%	(7.3)	%	(0.1)	%	(1.8)	%	—	%	(9.2)	%
Operating margin %	25.8		%	26.8		%	(100) bps		(90) bps		30 bps		(40) bps		—		(100) bps

•Operating revenue declined in the second quarter and year-to-date periods primarily due to lower organic revenue and the impact of a divestiture in the second quarter of 2023.

•The Company divested a business on April 3, 2023, and there was no operating revenue for this business in the second quarter and $9 million in the year-to-date period of 2023. In the second quarter and year-to-date periods of 2022, operating revenue included approximately $10 million and $19 million, respectively, related to the divested business.

•Organic revenue decreased 3.6% and 4.3% in the second quarter and year-to-date periods, respectively. Consumable sales declined 8.7% in the second quarter and 6.6% in the year-to-date period due to lower demand in all major regions. Equipment sales increased 23.4% and 7.3% in the second quarter and year-to-date periods, respectively, primarily driven by higher demand in Europe. Product line simplification activities reduced organic revenue by 100 basis points in the second quarter and 220 basis points in the year-to-date period.

◦North American organic revenue decreased 6.7% and 5.5% in the second quarter and year-to-date periods, respectively, primarily driven by a decline in the consumer packaging, strength films, specialty films and decorating equipment businesses, partially offset by growth in the ground support equipment and filter medical businesses.

◦International organic revenue increased 3.8% in the second quarter primarily due to growth in Europe in the ground support equipment and consumer packaging businesses, partially offset by a decline in the appliance businesses. In the year-to-date period, organic revenue declined 1.2% primarily due to a decrease in Europe and Asia Pacific in the strength films, graphics and decorating equipment businesses, partially offset by growth in the ground support equipment business in Europe.

25

•Operating margin was 26.0% in the second quarter. The decrease of 90 basis points was primarily due to unfavorable operating leverage of 80 basis points, higher employee-related expenses, product mix and higher restructuring expenses, partially offset by benefits from the Company's enterprise initiatives, the favorable impact of a divestiture in the second quarter of 2023 and favorable price/cost of 100 basis points.

•In the year-to-date period, operating margin of 25.8% decreased 100 basis points primarily driven by unfavorable operating leverage of 90 basis points, higher employee-related expenses, product mix and higher restructuring expenses, partially offset by benefits from the Company's enterprise initiatives, the favorable impact of a divestiture in the second quarter of 2023 and favorable price/cost of 100 basis points.

OTHER FINANCIAL HIGHLIGHTS

•Interest expense was $69 million and $129 million in the second quarter and year-to-date periods of 2023, respectively, versus $47 million and $95 million in 2022, respectively. Interest expense in 2023 was higher than 2022 primarily due to higher average outstanding commercial paper and higher interest rates. Refer to Note 7. Debt in Item 1. Financial Statements for further information regarding the Company's outstanding debt.

•Other income (expense) was income of $20 million in the second quarter of 2023 and $30 million in the year-to-date period, a decrease of $4 million compared to the second quarter of 2022 and a decrease of $8 million in the year-to-date period primarily due to foreign currency translation losses in 2023 versus foreign currency gains in 2022, partially offset by higher interest income.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity are free cash flow and short-term credit facilities. As of June 30, 2023, the Company had $922 million of cash and equivalents on hand and no outstanding borrowings under its $3.0 billion revolving credit facility. The Company also has maintained strong access to public debt markets. Management believes that these sources are sufficient to service debt and to finance the Company's capital allocation priorities, which include:

•internal investments to support organic growth and sustain core businesses;

•payment of an attractive dividend to shareholders; and

•external investments in selective strategic acquisitions that support the Company's organic growth focus and an active share repurchase program.

The Company believes that, based on its operating revenue, operating margin, free cash flow, and credit ratings, it could readily obtain additional financing, if necessary.

26

Cash Flow

The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. The Company believes this non-GAAP financial measure is useful to investors in evaluating the Company's financial performance and measures the Company's ability to generate cash internally to fund Company initiatives. Free cash flow represents net cash provided by operating activities less additions to plant and equipment. Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies. Summarized cash flow information for the second quarter and year-to-date periods of 2023 and 2022 was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Net cash provided by operating activities	$	790	$	501	$	1,518	$	824
Additions to plant and equipment	(85)		(81)		(198)		(155)
Free cash flow	$	705	$	420	$	1,320	$	669
Cash dividends paid	$	(398)	$	(380)	$	(798)	$	(762)
Repurchases of common stock	(375)		(375)		(750)		(750)
Acquisition of businesses (excluding cash and equivalents)	—		—		—		(2)
Net proceeds from (repayments of) debt with original maturities of three months or less	(1,051)		71		(342)		635
Proceeds from debt with original maturities of more than three months	1,425		97		1,425		454
Repayments of debt with original maturities of more than three months	(540)		(207)		(678)		(863)
Other, net	23		7		44		13
Effect of exchange rate changes on cash and equivalents	(10)		(50)		(7)		(42)
Net increase (decrease) in cash and equivalents	$	(221)	$	(417)	$	214	$	(648)

Free cash flow was lower in the second quarter and year-to-date periods of 2022 due to higher working capital investments to support revenue growth, including increased inventory levels to help mitigate supply chain risk and sustain customer service levels.

Stock Repurchase Programs

On August 3, 2018, the Company's Board of Directors authorized a stock repurchase program which provided for the repurchase of up to $3.0 billion of the Company's common stock over an open-ended period of time (the "2018 Program"). Under the 2018 Program, the Company repurchased approximately 6.7 million shares of its common stock at an average price of $158.11 per share during 2019, approximately 4.2 million shares of its common stock at an average price of $167.69 per share during 2020, approximately 4.4 million shares of its common stock at an average price of $227.29 during 2021 and approximately 1.2 million shares of its common stock at an average price of $216.62 in the first quarter of 2022. The 2018 Program was completed in the first quarter of 2022.

On May 7, 2021, the Company's Board of Directors authorized a new stock repurchase program which provides for the repurchase of up to an additional $3.0 billion of the Company's common stock over an open-ended period of time (the "2021 Program"). Under the 2021 Program, the Company repurchased approximately 0.6 million shares of its common stock at an average price of $209.29 in the first quarter of 2022, approximately 1.8 million shares of its common stock at an average price of $205.03 in the second quarter of 2022, approximately 2.4 million shares of its common stock at an average price of $204.54 in the third quarter of 2022, approximately 2.3 million shares of its common stock at an average price of $221.59 in the fourth quarter of 2022, approximately 1.6 million shares of its common stock at an average price of $233.62 in the first quarter of 2023, and approximately 1.6 million shares of its common stock at an average price of $229.30 in the second quarter of 2023. As of June 30, 2023, there were approximately $740 million of authorized repurchases remaining under the 2021 Program.

27

After-tax Return on Average Invested Capital

The Company uses after-tax return on average invested capital ("After-tax ROIC") to measure the effectiveness of its operations' use of invested capital to generate profits. After-tax ROIC is not defined under U.S. generally accepted accounting principles ("GAAP"). After-tax ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company's ability to generate returns from cash invested in its operations and may be different than the method used by other companies to calculate After-tax ROIC. The Company defines After-tax ROIC as operating income after taxes divided by average invested capital, which is annualized when presented in interim periods. Operating income after taxes is a non-GAAP measure consisting of net income before interest expense and other income (expense), on an after-tax basis, which are excluded as they do not represent returns generated by the Company's operations. For comparability, the Company also excluded the discrete tax benefit of $20 million in the second quarter of 2023 from net income and the effective tax rate for the three and six months ended June 30, 2023. Additionally, for comparability, the Company excluded the discrete tax benefit of $51 million in the second quarter of 2022 from net income and the effective tax rate for the three and six months ended June 30, 2022. Total invested capital represents the net assets of the Company, other than cash and equivalents and outstanding debt which do not represent capital investment in the Company's operations. The most comparable GAAP measure to operating income after taxes is net income. Net income to average invested capital and After-tax ROIC for the second quarter and year-to-date periods of 2023 and 2022 were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
Dollars in millions	2023			2022			2023			2022
Numerator:
Net Income	$	754		$	738		$	1,468		$	1,400
Discrete tax benefit related to the second quarter 2023	(20)			—			(20)			—
Discrete tax benefit related to the second quarter 2022	—			(51)			—			(51)
Interest expense, net of tax (1)	53			36			99			73
Other (income) expense, net of tax (1)	(15)			(18)			(23)			(29)
Operating income after taxes	$	772		$	705		$	1,524		$	1,393
Denominator:
Invested capital:
Cash and equivalents	$	922		$	879		$	922		$	879
Trade receivables	3,216			3,109			3,216			3,109
Inventories	1,921			1,975			1,921			1,975
Net assets held for sale	—			73			—			73
Net plant and equipment	1,901			1,736			1,901			1,736
Goodwill and intangible assets	5,595			5,702			5,595			5,702
Accounts payable and accrued expenses	(2,215)			(2,241)			(2,215)			(2,241)
Debt	(8,222)			(7,640)			(8,222)			(7,640)
Other, net	(24)			(214)			(24)			(214)
Total net assets (stockholders' equity)	3,094			3,379			3,094			3,379
Cash and equivalents	(922)			(879)			(922)			(879)
Debt	8,222			7,640			8,222			7,640
Total invested capital	$	10,394		$	10,140		$	10,394		$	10,140
Average invested capital (2)	$	10,366		$	10,143		$	10,292		$	10,024
Net income to average invested capital (3)	29.1		%	29.1		%	28.5		%	27.9		%
After-tax return on average invested capital (3)	29.8		%	27.8		%	29.6		%	27.8		%

28

(1)    Effective tax rate used for interest expense and other (income) expense for the three months ended June 30, 2023 and 2022 was 23.6% and 23.9%, respectively. Effective tax rate used for interest expense and other (income) expense for the six months ended June 30, 2023 and 2022 was 23.1% and 23.5%, respectively.

(2)    Average invested capital is calculated using the total invested capital balances at the start of the period and at the end of each quarter within each of the periods presented.

(3)    Returns for the three months ended June 30, 2023 and 2022 were converted to an annual rate by multiplying the calculated return by 4. Returns for the six months ended June 30, 2023 and 2022 were converted to an annual rate by multiplying the calculated return by 2.

A reconciliation of the tax rate for the three and six months ended June 30, 2023, excluding the second quarter 2023 discrete tax benefit of $20 million related to amended 2021 U.S. taxes, is as follows:

	Three Months Ended				Six Months Ended
	June 30, 2023				June 30, 2023
Dollars in millions	Income Taxes		Tax Rate		Income Taxes		Tax Rate
As reported	$	207	21.4	%	$	415	22.0	%
Discrete tax benefit related to the second quarter 2023	20		2.2	%	20		1.1	%
As adjusted	$	227	23.6	%	$	435	23.1	%

A reconciliation of the tax rate for the three and six months ended June 30, 2022, excluding the second quarter 2022 discrete tax benefit of $51 million related to the resolution of a U.S. tax audit, is as follows:

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
Dollars in millions	Income Taxes		Tax Rate		Income Taxes		Tax Rate
As reported	$	165	18.3	%	$	364	20.7	%
Discrete tax benefit related to the second quarter 2022	51		5.6	%	51		2.8	%
As adjusted	$	216	23.9	%	$	415	23.5	%

Refer to Note 4. Income Taxes in Item 1. Financial Statements for further information regarding the second quarter 2023 and second quarter 2022 discrete tax benefits.

29

Working Capital

Management uses working capital as a measurement of the short-term liquidity of the Company. Net working capital as of June 30, 2023 and December 31, 2022 is summarized as follows:

In millions	June 30, 2023		December 31, 2022		Increase/ (Decrease)
Current assets:
Cash and equivalents	$	922	$	708	$	214
Trade receivables	3,216		3,171		45
Inventories	1,921		2,054		(133)
Prepaid expenses and other current assets	345		329		16
Assets held for sale	—		8		(8)
Total current assets	6,404		6,270		134
Current liabilities:
Short-term debt	1,275		1,590		(315)
Accounts payable and accrued expenses	2,215		2,322		(107)
Liabilities held for sale	—		1		(1)
Other	550		547		3
Total current liabilities	4,040		4,460		(420)
Net working capital	$	2,364	$	1,810	$	554

As of June 30, 2023, a significant portion of the Company's cash and equivalents was held by international subsidiaries. Cash and equivalents held internationally may be subject to foreign withholding taxes if repatriated to the U.S. Cash and equivalents held internationally are typically used for international operating needs or reinvested to fund expansion of existing international businesses. International funds may also be used to fund international acquisitions or, if not considered permanently invested, may be repatriated to the U.S. The Company has accrued for foreign withholding taxes related to foreign held cash and equivalents that are not permanently invested.

In the U.S., the Company utilizes cash flows from operations to fund domestic cash needs and the Company's capital allocation priorities. This includes operating needs of the U.S. businesses, dividend payments, share repurchases, acquisitions, servicing of domestic debt obligations, reinvesting to fund expansion of existing U.S. businesses and general corporate needs. The Company may also use its commercial paper program, which is supported by a long-term credit facility, for short-term liquidity needs. The Company believes cash generated by operations and liquidity provided by the Company's commercial paper program will continue to be sufficient to fund cash requirements in the U.S.

Debt

Total debt as of June 30, 2023 and December 31, 2022 was as follows:

In millions	June 30, 2023		December 31, 2022
Short-term debt	$	1,275	$	1,590
Long-term debt	6,947		6,173
Total debt	$	8,222	$	7,763

Short-term debt included commercial paper of $575 million and $1.1 billion as of June 30, 2023 and December 31, 2022, respectively. The weighted-average interest rate on commercial paper as of June 30, 2023 and December 31, 2022 was 5.27% and 4.35%, respectively. Short-term debt as of June 30, 2023 also included $699 million related to the 3.50% notes due March 1, 2024, which were reclassified from Long-term debt to Short-term debt in the first quarter of 2023. Additionally, Short-term debt as of December 31, 2022 included $535 million related to the 1.25% Euro notes due May 22, 2023, which were repaid on the due date.

In 2022, the $568 million of 1.75% Euro notes due May 20, 2022 were redeemed in full at face value on February 22, 2022.

30

On May 5, 2023, the Company entered into a Euro-denominated credit agreement (the “Euro Credit Agreement”) with a termination date of May 3, 2024; provided, however, that the Company may extend the termination date by six months on up to two occasions. Under the Euro Credit Agreement, the Company may borrow up to €1.3 billion. Any loan under the Euro Credit Agreement may not be re-borrowed once repaid, in full or in part, and will bear interest at a per annum rate equal to the applicable EURIBOR (adjusted for any statutory reserves) plus 0.75% for the interest period selected by the Company of one, three or six months.

On May 12, 2023, the Company borrowed €1.3 billion under the Euro Credit Agreement. Proceeds from the borrowing were used for general corporate purposes, including the repayment of outstanding debt. As of June 30, 2023, the Company had $1.4 billion outstanding under the Euro Credit Agreement with an interest rate of 4.01%, which was included in Long-term debt as the Company intends to exercise its options to extend the termination date.

The Company also has a $3.0 billion revolving credit facility with a termination date of October 21, 2027, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. No amounts were outstanding under the revolving credit facility as of June 30, 2023 or December 31, 2022.

Total Debt to EBITDA

The Company uses the ratio of total debt to EBITDA as a measure of its ability to repay its outstanding debt obligations. EBITDA and the ratio of total debt to EBITDA are non-GAAP financial measures. The Company believes that total debt to EBITDA is a meaningful metric to investors in evaluating the Company's long term financial liquidity and may be different than the method used by other companies to calculate total debt to EBITDA. The ratio of total debt to EBITDA represents total debt divided by net income before interest expense, other income (expense), income taxes, depreciation, and amortization and impairment of intangible assets on a trailing twelve month basis. Total debt to EBITDA for the trailing twelve month periods ended June 30, 2023 and December 31, 2022 was as follows:

Dollars in millions	June 30, 2023		December 31, 2022
Total debt	$	8,222	$	7,763
Net income	$	3,102	$	3,034
Add:
Interest expense	237		203
Other (income) expense	(247)		(255)
Income taxes	859		808
Depreciation	274		276
Amortization and impairment of intangible assets	126		134
EBITDA	$	4,351	$	4,200
Total debt to EBITDA ratio	1.9		1.8

Stockholders' Equity

The changes to stockholders' equity during the six months ended 2023 were as follows:

In millions
Total stockholders' equity, December 31, 2022	$	3,089
Net income	1,468
Repurchases of common stock	(750)
Dividends declared	(794)
Foreign currency translation adjustments, net of tax	21
Other, net	60
Total stockholders' equity, June 30, 2023	$	3,094

31

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "intend," "may," "strategy," "prospects," "estimate," "will," "should," "could," "project," "target," "anticipate," "guidance," "forecast," and other similar words, and may include, without limitation, statements regarding the duration and potential effects of the COVID-19 pandemic and global supply chain challenges, related government actions and the Company's strategy in response thereto on the Company's business, future financial and operating performance, free cash flow, economic and regulatory conditions in various geographic regions including inflation, the impact of foreign currency fluctuations, the timing and amount of benefits from the Company's enterprise strategy initiatives, the timing and amount of dividends and share repurchases, the protection of the Company's intellectual property, the likelihood of future goodwill or intangible asset impairment charges, the impact of adopting new accounting pronouncements, the adequacy of internally generated funds and credit facilities to service debt and finance the Company's capital allocation priorities, the sufficiency of U.S. generated cash to fund cash requirements in the U.S., the cost and availability of additional financing, the availability of raw materials and energy and the impact of raw material cost inflation, the Company's portion of future benefit payments related to pension and other postretirement benefits, the Company's information technology infrastructure, potential acquisitions and divestitures and the expected performance of acquired businesses and impact of divested businesses, the impact of U.S. and global tax legislation and the estimated timing and amount related to the resolution of tax matters, the cost of compliance with environmental regulations, the impact of failure of the Company's employees to comply with applicable laws and regulations, and the outcome of outstanding legal proceedings. These statements are subject to certain risks, uncertainties, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that may influence future results include (1) the COVID-19 pandemic and other pandemics or public health crises, related government actions and the Company's strategy in response thereto, (2) weaknesses or downturns in the markets served by the Company, (3) changes or deterioration in international and domestic political and economic conditions, such as the Russia and Ukraine conflict or U.S.-China trade relations and the impact of related economic and other sanctions, (4) the unfavorable impact of foreign currency fluctuations, (5) the Company's enterprise strategy initiatives may not have the desired impact on organic revenue growth, (6) market conditions and cost and availability of financing to fund the Company's share repurchases, (7) a delay or decrease in the introduction of new products into the Company's product lines, (8) any failure to protect the Company's intellectual property, (9) potential negative impact of impairments to goodwill and other intangible assets on the Company's return on invested capital, financial condition or results of operations, (10) raw material price increases and supply shortages or delays, (11) financial market risks to the Company's obligations under its defined benefit pension plans, (12) negative effects of service interruptions, data corruption, cyber-based attacks, security breaches of our technology networks and systems or those of our vendors and third-party service providers, or violations of data privacy laws, (13) the potential negative impact of acquisitions on the Company's profitability and returns, (14) potential negative effects of divestitures, including retained liabilities and unknown contingent liabilities, (15) impact of tax legislation and regulatory action and changing tax rates, (16) potential adverse outcomes in legal proceedings or enforcement actions, (17) uncertainties related to environmental regulation and the physical risks of climate change, (18) potential failure of the Company's employees, agents or business partners to comply with anti-bribery, competition, import/export, trade sanctions, data privacy, human rights and other laws, and (19) increases in inflation or interest rates and the possibility of economic recession. A more detailed description of these risks is contained under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. These risks are not all-inclusive and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Any forward-looking statements made by ITW speak only as of the date on which they are made. ITW is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise.

ITW practices fair disclosure for all interested parties. Investors should be aware that while ITW regularly communicates with securities analysts and other investment professionals, it is against ITW's policy to disclose to them any material non-public information or other confidential commercial information. Investors should not assume that ITW agrees with any statement or report issued by any analyst irrespective of the content of the statement or report.

ITEM 4. Controls and Procedures

The Company's management, with the participation of the Company's Chairman & Chief Executive Officer and Senior Vice President & Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a–15(e)) as of June 30, 2023. Based on such evaluation, the Company's Chairman & Chief Executive Officer and Senior Vice President & Chief Financial Officer have concluded that, as of June 30, 2023, the Company's disclosure controls and procedures were effective.

32

In connection with the evaluation by management, including the Company's Chairman & Chief Executive Officer and Senior Vice President & Chief Financial Officer, no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended June 30, 2023 were identified that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

33

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

None. The Company's threshold for disclosing environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.

ITEM 1A. Risk Factors

The Company's business, financial condition, results of operations and cash flows are subject to various risks which could cause actual results to vary materially from recent results or from anticipated future results. Refer to the description of the Company's risk factors previously disclosed in Part I - Item 1A - Risk Factors in the Company's 2022 Annual Report on Form 10-K. There have been no material changes to the risk factors described therein.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

On August 3, 2018, the Company's Board of Directors authorized a stock repurchase program which provided for the repurchase of up to $3.0 billion of the Company's common stock over an open-ended period of time (the "2018 Program"). The 2018 Program was completed in the first quarter of 2022.

On May 7, 2021, the Company's Board of Directors authorized a new stock repurchase program which provides for the repurchase of up to an additional $3.0 billion of the Company's common stock over an open-ended period of time (the "2021 Program"). As of June 30, 2023, there were approximately $740 million of authorized repurchases remaining under the 2021 Program.

Share repurchase activity for the second quarter of 2023 was as follows:

In millions except per share amounts
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Value of Shares That May Yet Be Purchased Under Programs
April 2023	—	$	—	—	$	1,115
May 2023	1.2	$	227.41	1.2	$	825
June 2023	0.4	$	235.96	0.4	$	740
Total	1.6			1.6

34

ITEM 6. Exhibits

Exhibit Index

Exhibit Number	Exhibit Description
10	Euro Credit Agreement dated as of May 5, 2023 among Illinois Tool Works Inc., the lender(s) party thereto and ING Bank, N.V., London Branch, as Agent. Filed as Exhibit 10(a) to the Company’s Current Report on Form 8-K filed May 10, 2023 (Commission File No. 001-04797) and incorporated herein by reference.
31	Rule 13a-14(a) Certifications.
32	Section 1350 Certification.
101	The following financial and related information from the Illinois Tool Works Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 is formatted in Inline Extensible Business Reporting Language (iXBRL) and submitted electronically herewith: (i) Statement of Income, (ii) Statement of Comprehensive Income, (iii) Statement of Financial Position, (iv) Statement of Changes in Stockholders' Equity, (v) Statement of Cash Flows, and (vi) related Notes to Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ILLINOIS TOOL WORKS INC.
Dated:	August 3, 2023	By:	/s/ Randall J. Scheuneman
			Randall J. Scheuneman
			Vice President & Chief Accounting Officer
			(Principal Accounting Officer and Duly Authorized Officer)

36

EX-31

Exhibit 31

Rule 13a-14(a) Certification

I, E. Scott Santi, certify that:

1.I have reviewed this report on Form 10-Q of Illinois Tool Works Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	August 3, 2023	/s/ E. Scott Santi
		E. Scott Santi
		Chairman & Chief Executive Officer

Exhibit 31

Rule 13a-14(a) Certification

I, Michael M. Larsen, certify that:

1.I have reviewed this report on Form 10-Q of Illinois Tool Works Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	August 3, 2023	/s/ Michael M. Larsen
		Michael M. Larsen
		Senior Vice President & Chief Financial Officer

EX-32

Exhibit 32

Section 1350 Certification

The following statement is being made to the Securities and Exchange Commission solely for purposes of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), which carries with it certain criminal penalties in the event of a knowing or willful misrepresentation.

Each of the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the period ended June 30, 2023 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Dated:	August 3, 2023	/s/ E. Scott Santi
		E. Scott Santi
		Chairman & Chief Executive Officer

Dated:	August 3, 2023	/s/ Michael M. Larsen
		Michael M. Larsen
		Senior Vice President & Chief Financial Officer

XML

Cover Page	6 Months Ended
	Jun. 30, 2023 shares
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	1-4797
Entity Registrant Name	ILLINOIS TOOL WORKS INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-1258310
Entity Address, Address Line One	155 Harlem Avenue
Entity Address, City or Town	Glenview
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60025
City Area Code	847
Local Phone Number	724-7500
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	302,390,322
Entity Central Index Key	0000049826
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock
Trading Symbol	ITW
Security Exchange Name	NYSE
0.250% Euro Notes due 2024
Entity Information [Line Items]
Title of 12(b) Security	0.250% Euro Notes due 2024
Trading Symbol	ITW24A
Security Exchange Name	NYSE
0.625% Euro Notes due 2027
Entity Information [Line Items]
Title of 12(b) Security	0.625% Euro Notes due 2027
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Security Exchange Name	NYSE
2.125% Euro Notes due 2030
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Title of 12(b) Security	2.125% Euro Notes due 2030
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Security Exchange Name	NYSE
1.00% Euro Notes due 2031
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Title of 12(b) Security	1.00% Euro Notes due 2031
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Security Exchange Name	NYSE

XML

Statement of Income (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Operating Revenue	$ 4,074	$ 4,011	$ 8,093	$ 7,950
Cost of revenue	2,344	2,392	4,685	4,749
Selling, administrative, and research and development expenses	690	659	1,365	1,311
Amortization and impairment of intangible assets	30	34	61	69
Operating Income	1,010	926	1,982	1,821
Interest expense	(69)	(47)	(129)	(95)
Other income (expense)	20	24	30	38
Income Before Taxes	961	903	1,883	1,764
Income Taxes	207	165	415	364
Net Income	$ 754	$ 738	$ 1,468	$ 1,400
Net Income Per Share:
Basic (in dollars per share)	$ 2.49	$ 2.37	$ 4.83	$ 4.49
Diluted (in dollars per share)	$ 2.48	$ 2.37	$ 4.81	$ 4.48
Shares of Common Stock Outstanding During the Period:
Average (in shares)	303.3	310.6	304.1	311.5
Average assuming dilution (in shares)	304.2	311.5	305.2	312.6

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Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net Income	$ 754	$ 738	$ 1,468	$ 1,400
Foreign currency translation adjustments, net of tax	(16)	(210)	21	(184)
Pension and other postretirement benefit adjustments, net of tax	0	4	0	9
Other comprehensive income (loss)	(16)	(206)	21	(175)
Comprehensive Income	$ 738	$ 532	$ 1,489	$ 1,225

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Statement of Financial Position (Unaudited) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Current Assets:
Cash and equivalents	$ 922	$ 708
Trade receivables	3,216	3,171
Inventories	1,921	2,054
Prepaid expenses and other current assets	345	329
Assets held for sale	0	8
Total current assets	6,404	6,270
Net plant and equipment	1,901	1,848
Goodwill	4,887	4,864
Intangible assets	708	768
Deferred income taxes	500	494
Other assets	1,252	1,178
Total assets	15,652	15,422
Current Liabilities:
Short-term debt	1,275	1,590
Accounts payable	590	594
Accrued expenses	1,625	1,728
Cash dividends payable	396	400
Income taxes payable	154	147
Liabilities held for sale	0	1
Total current liabilities	4,040	4,460
Noncurrent Liabilities:
Long-term debt	6,947	6,173
Deferred income taxes	451	484
Noncurrent income taxes payable	151	273
Other liabilities	969	943
Total noncurrent liabilities	8,518	7,873
Stockholders' Equity:
Common stock (par value of $0.01 per share): Issued- 550.0 shares in 2023 and 2022 Outstanding- 302.4 shares in 2023 and 305.0 shares in 2022	6	6
Additional paid-in-capital	1,550	1,501
Retained earnings	26,473	25,799
Common stock held in treasury	(23,116)	(22,377)
Accumulated other comprehensive income (loss)	(1,820)	(1,841)
Noncontrolling interest	1	1
Total stockholders' equity	3,094	3,089
Total liabilities and stockholders' equity	$ 15,652	$ 15,422

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Statement of Financial Position (Unaudited) - Parenthetical - $ / shares shares in Millions	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, issued (in shares)	550.0	550.0
Common stock, outstanding (in shares)	302.4	305.0

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Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Millions	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Common Stock Held in Treasury	Accumulated Other Comprehensive Income (Loss)	Non-controlling Interest
Beginning balance at Dec. 31, 2021	$ 3,626	$ 6	$ 1,432	$ 24,325	$ (20,636)	$ (1,502)	$ 1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,400			1,400
Common stock issued for stock-based compensation	3		(1)		4
Stock-based compensation expense	33		33
Repurchases of common stock	(750)				(750)
Dividends declared	(758)			(758)
Other comprehensive income (loss)	(175)					(175)
Ending balance at Jun. 30, 2022	3,379	6	1,464	24,967	(21,382)	(1,677)	1
Beginning balance at Mar. 31, 2022	3,582	6	1,447	24,607	(21,008)	(1,471)	1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	738			738
Common stock issued for stock-based compensation	1				1
Stock-based compensation expense	17		17
Repurchases of common stock	(375)				(375)
Dividends declared	(378)			(378)
Other comprehensive income (loss)	(206)					(206)
Ending balance at Jun. 30, 2022	3,379	6	1,464	24,967	(21,382)	(1,677)	1
Beginning balance at Dec. 31, 2022	3,089	6	1,501	25,799	(22,377)	(1,841)	1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,468			1,468
Common stock issued for stock-based compensation	31		14		17
Stock-based compensation expense	35		35
Repurchases of common stock	(750)				(750)
Excise tax on repurchases of common stock	(6)				(6)
Dividends declared	(794)			(794)
Other comprehensive income (loss)	21					21
Ending balance at Jun. 30, 2023	3,094	6	1,550	26,473	(23,116)	(1,820)	1
Beginning balance at Mar. 31, 2023	3,101	6	1,526	26,115	(22,743)	(1,804)	1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	754			754
Common stock issued for stock-based compensation	12		6		6
Stock-based compensation expense	18		18
Repurchases of common stock	(375)				(375)
Excise tax on repurchases of common stock	(4)				(4)
Dividends declared	(396)			(396)
Other comprehensive income (loss)	(16)					(16)
Ending balance at Jun. 30, 2023	$ 3,094	$ 6	$ 1,550	$ 26,473	$ (23,116)	$ (1,820)	$ 1

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Statement of Changes in Stockholders' Equity (Unaudited) - Parenthetical - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends declared (in dollars per share)	$ 1.31	$ 1.22	$ 2.62	$ 2.44

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Statement of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Provided by (Used for) Operating Activities:
Net Income	$ 1,468	$ 1,400
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	138	140
Amortization and impairment of intangible assets	61	69
Change in deferred income taxes	(5)	(60)
Provision for uncollectible accounts	4	3
(Income) loss from investments	(7)	(5)
(Gain) loss on sale of plant and equipment	(2)	(1)
(Gain) loss on sale of operations and affiliates	0	0
Stock-based compensation expense	35	33
Other non-cash items, net	(5)	1
(Increase) decrease in-
Trade receivables	(42)	(396)
Inventories	140	(374)
Prepaid expenses and other assets	(26)	(1)
Increase (decrease) in-
Accounts payable	(4)	124
Accrued expenses and other liabilities	(105)	(27)
Income taxes	(131)	(81)
Other, net	(1)	(1)
Net cash provided by operating activities	1,518	824
Cash Provided by (Used for) Investing Activities:
Acquisition of businesses (excluding cash and equivalents)	0	(2)
Additions to plant and equipment	(198)	(155)
Proceeds from investments	7	7
Proceeds from sale of plant and equipment	5	5
Proceeds from sales of operations and affiliates	7	0
Other, net	(1)	(1)
Net cash provided by (used for) investing activities	(180)	(146)
Cash Provided by (Used for) Financing Activities:
Cash dividends paid	(798)	(762)
Issuance of common stock	40	17
Repurchases of common stock	(750)	(750)
Net proceeds from (repayments of) debt with original maturities of three months or less	(342)	635
Proceeds from debt with original maturities of more than three months	1,425	454
Repayments of debt with original maturities of more than three months	(678)	(863)
Other, net	(14)	(15)
Net cash provided by (used for) financing activities	(1,117)	(1,284)
Effect of Exchange Rate Changes on Cash and Equivalents	(7)	(42)
Cash and Equivalents:
Increase (decrease) during the period	214	(648)
Beginning of period	708	1,527
End of period	922	879
Supplementary Cash Flow Information:
Cash Paid During the Period for Interest	141	113
Cash Paid During the Period for Income Taxes, Net of Refunds	$ 550	$ 506

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Significant Accounting Policies	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Significant Accounting Policies	Significant Accounting PoliciesFinancial 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 2022 Annual Report on Form 10-K. Certain reclassifications of prior year data have been made to conform with current year reporting.

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Divestitures

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

Divestitures

The Company routinely reviews its portfolio of businesses relative to its business portfolio criteria and evaluates if further portfolio refinements may be needed. As such, the Company may commit to a plan to exit or dispose of certain businesses and present them as held for sale in periods prior to the sale of the business.

In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment. These two businesses were classified as held for sale beginning in the second quarter of 2022. In the fourth quarter of 2022, both of these businesses were divested. On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million. On December 1, 2022, the business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million. Operating revenue related to these divested businesses that was included in the Company's results of operations for the three and six months ended June 30, 2022 was $34 million and $63 million, respectively.

In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment. This business was presented as held for sale beginning in the fourth quarter of 2022. Assets and liabilities held for sale related to this business were $8 million and $1 million, respectively, as of December 31, 2022. This business was sold on April 3, 2023, with no significant gain or loss upon sale. Operating revenue related to this business that was included in the Company's results of operations was $9 million for the six months ended June 30, 2023, and $10 million and $19 million for the three and six months ended June 30, 2022, respectively. There was no operating revenue related to this business included in the Company's results of operations for the three months ended June 30, 2023.

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Operating Revenue

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Operating Revenue

Operating Revenue

The Company's 84 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, 2023 and 2022 was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Automotive OEM	$	826	$	711	$	1,622	$	1,471
Food Equipment	654		614		1,289		1,180
Test & Measurement and Electronics	700		696		1,403		1,381
Welding	490		486		983		936
Polymers & Fluids	459		496		906		977
Construction Products	526		565		1,052		1,116
Specialty Products	423		447		846		899
Intersegment revenue	(4)		(4)		(8)		(10)
Total operating revenue	$	4,074	$	4,011	$	8,093	$	7,950

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 original equipment manufacturers 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 original equipment manufacturers and tiers, energy, consumer durables and industrial capital goods 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 original equipment manufacturers 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, 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.

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Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's effective tax rate for the three months ended June 30, 2023 and 2022 was 21.4% and 18.3%, respectively, and 22.0% and 20.7% for the six months ended June 30, 2023 and 2022, respectively. The effective tax rate for the three and six months ended June 30, 2023 included a discrete income tax benefit of $20 million related to amended 2021 U.S. taxes. The effective tax rate for the three and six months ended June 30, 2022 included a discrete income tax benefit of $51 million related to a decrease in unrecognized tax benefits resulting from the resolution of a U.S. tax audit. Additionally, the effective tax rates for 2023 and 2022 included discrete income tax benefits related to excess tax benefits from stock-based compensation of $4 million and $1 million for the three months ended June 30, 2023 and 2022, respectively, and $17 million and $8 million for the six months ended June 30, 2023 and 2022, 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 increase the amount of the unrecognized tax benefits in future periods. The Company believes it is reasonably possible that within the next twelve months the amount of the Company's unrecognized tax benefits may be decreased by approximately $45 million related predominantly to the potential resolution of income tax examinations. The Company has recorded its best estimate of the potential exposure for these issues.

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Inventories

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories as of June 30, 2023 and December 31, 2022 were as follows:

In millions	June 30, 2023		December 31, 2022
Raw material	$	808	$	887
Work-in-process	248		228
Finished goods	976		1,050
LIFO reserve	(111)		(111)
Total inventories	$	1,921	$	2,054

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Pension and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

Pension and other postretirement benefit costs for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	Pension				Other Postretirement Benefits				Pension				Other Postretirement Benefits
In millions	2023		2022		2023		2022		2023		2022		2023		2022
Components of net periodic benefit cost:
Service cost	$	9	$	12	$	1	$	1	$	18	$	24	$	2	$	3
Interest cost	23		12		6		4		46		25		12		7
Expected return on plan assets	(32)		(25)		(6)		(7)		(64)		(52)		(11)		(13)
Amortization of actuarial loss (gain)	1		6		(1)		(1)		2		13		(2)		(2)
Total net periodic benefit cost (income)	$	1	$	5	$	—	$	(3)	$	2	$	10	$	1	$	(5)

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 $14 million to its pension plans and $4 million to its other postretirement benefit plans in 2023. As of June 30, 2023, contributions of $5 million to pension plans and $2 million to other postretirement benefit plans have been made.

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Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

Total debt as of June 30, 2023 and December 31, 2022 was as follows:

In millions	June 30, 2023		December 31, 2022
Short-term debt	$	1,275	$	1,590
Long-term debt	6,947		6,173
Total debt	$	8,222	$	7,763

Short-term debt included commercial paper of $575 million and $1.1 billion as of June 30, 2023 and December 31, 2022, respectively. The weighted-average interest rate on commercial paper as of June 30, 2023 and December 31, 2022 was 5.27% and 4.35%, respectively. Short-term debt as of June 30, 2023 also included $699 million related to the 3.50% notes due March 1, 2024, which were reclassified from Long-term debt to Short-term debt in the first quarter of 2023. Additionally, Short-term debt as of December 31, 2022 included $535 million related to the 1.25% Euro notes due May 22, 2023, which were repaid on the due date.

In 2022, the $568 million of 1.75% Euro notes due May 20, 2022 were redeemed in full at face value on February 22, 2022.

On May 5, 2023, the Company entered into a Euro-denominated credit agreement (the “Euro Credit Agreement”) with a termination date of May 3, 2024; provided, however, that the Company may extend the termination date by six months on up to two occasions. Under the Euro Credit Agreement, the Company may borrow up to €1.3 billion. Any loan under the Euro Credit Agreement may not be re-borrowed once repaid, in full or in part, and will bear interest at a per annum rate equal to the applicable EURIBOR (adjusted for any statutory reserves) plus 0.75% for the interest period selected by the Company of one, three or six months.

On May 12, 2023, the Company borrowed €1.3 billion under the Euro Credit Agreement. Proceeds from the borrowing were used for general corporate purposes, including the repayment of outstanding debt. As of June 30, 2023, the Company had $1.4 billion outstanding under the Euro Credit Agreement with an interest rate of 4.01%, which was included in Long-term debt as the Company intends to exercise its options to extend the termination date.

The Company also has a $3.0 billion revolving credit facility with a termination date of October 21, 2027, which is available to provide additional liquidity, including to support the potential issuances of commercial paper. No amounts were outstanding under the revolving credit facility as of June 30, 2023 or December 31, 2022.

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, 2023 and December 31, 2022 were as follows:

In millions	June 30, 2023		December 31, 2022
Fair value	$	7,231	$	6,228
Carrying value	7,647		6,708

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.

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

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, 2023 and 2022:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Beginning balance	$	(1,804)	$	(1,471)	$	(1,841)	$	(1,502)
Foreign currency translation adjustments during the period	(20)		(167)		7		(118)
Income taxes	4		(43)		14		(66)
Total foreign currency translation adjustments, net of tax	(16)		(210)		21		(184)
Pension and other postretirement benefit adjustments reclassified to income	—		5		—		11
Income taxes	—		(1)		—		(2)
Total pension and other postretirement benefit adjustments, net of tax	—		4		—		9
Ending balance	$	(1,820)	$	(1,677)	$	(1,820)	$	(1,677)

Pension and other postretirement benefit adjustments reclassified to income related to the amortization of actuarial gains and losses. Refer to Note 6. Pension and Other Postretirement Benefits for additional information.

The Company designated the €1.0 billion of Euro notes issued in May 2014, the €1.0 billion of Euro notes issued in May 2015, the €1.6 billion of Euro notes issued in June 2019 and the €1.3 billion 2023 term loan under the Euro Credit Agreement as hedges of a portion of its 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). On February 22, 2022, €500 million of the Euro notes issued in May 2014 were redeemed in full and on May 22, 2023, €500 million of the Euro notes issued in May 2015 were repaid on the due date. Refer to Note 7. Debt for additional information regarding the redemption and repayment of these notes. The carrying values of the outstanding 2019, 2015 and 2014 Euro notes and 2023 Euro term loan as of June 30, 2023 were $1.7 billion, $542 million, $536 million, and $1.4 billion, respectively. The amount of pre-tax gain (loss) related to this debt recorded in Other comprehensive income (loss) was a loss of $17 million for the three months ended June 30, 2023, a gain of $179 million for the three months ended June 30, 2022, a loss of $58 million for the six months ended June 30, 2023 and a gain of $273 million for the six months ended June 30, 2022.

As of June 30, 2023 and 2022, the ending balance of Accumulated other comprehensive income (loss) consisted of after-tax cumulative translation adjustment losses of $1.5 billion in both periods, and after-tax unrecognized pension and other postretirement benefit costs of $293 million and $187 million, respectively.

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Segment Information	6 Months Ended
	Jun. 30, 2023
Segment Reporting [Abstract]
Segment Information	Segment InformationThe 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. Refer to Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for information regarding operating revenue and operating income for the Company's segments.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Revenue

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 original equipment manufacturers 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 original equipment manufacturers and tiers, energy, consumer durables and industrial capital goods 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 original equipment manufacturers 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, 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.

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Operating Revenue (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

Operating revenue by product category, which is consistent with the Company's segment presentation, for the three and six months ended June 30, 2023 and 2022 was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Automotive OEM	$	826	$	711	$	1,622	$	1,471
Food Equipment	654		614		1,289		1,180
Test & Measurement and Electronics	700		696		1,403		1,381
Welding	490		486		983		936
Polymers & Fluids	459		496		906		977
Construction Products	526		565		1,052		1,116
Specialty Products	423		447		846		899
Intersegment revenue	(4)		(4)		(8)		(10)
Total operating revenue	$	4,074	$	4,011	$	8,093	$	7,950

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Inventories (Tables)

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories as of June 30, 2023 and December 31, 2022 were as follows:

In millions	June 30, 2023		December 31, 2022
Raw material	$	808	$	887
Work-in-process	248		228
Finished goods	976		1,050
LIFO reserve	(111)		(111)
Total inventories	$	1,921	$	2,054

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Pension and Other Postretirement Benefits (Tables)

6 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Schedule of Pension and Other Postretirement Benefit Costs

Pension and other postretirement benefit costs for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	Pension				Other Postretirement Benefits				Pension				Other Postretirement Benefits
In millions	2023		2022		2023		2022		2023		2022		2023		2022
Components of net periodic benefit cost:
Service cost	$	9	$	12	$	1	$	1	$	18	$	24	$	2	$	3
Interest cost	23		12		6		4		46		25		12		7
Expected return on plan assets	(32)		(25)		(6)		(7)		(64)		(52)		(11)		(13)
Amortization of actuarial loss (gain)	1		6		(1)		(1)		2		13		(2)		(2)
Total net periodic benefit cost (income)	$	1	$	5	$	—	$	(3)	$	2	$	10	$	1	$	(5)

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Debt (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Debt

Total debt as of June 30, 2023 and December 31, 2022 was as follows:

In millions	June 30, 2023		December 31, 2022
Short-term debt	$	1,275	$	1,590
Long-term debt	6,947		6,173
Total debt	$	8,222	$	7,763

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, 2023 and December 31, 2022 were as follows:

In millions	June 30, 2023		December 31, 2022
Fair value	$	7,231	$	6,228
Carrying value	7,647		6,708

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of 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, 2023 and 2022:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
In millions	2023		2022		2023		2022
Beginning balance	$	(1,804)	$	(1,471)	$	(1,841)	$	(1,502)
Foreign currency translation adjustments during the period	(20)		(167)		7		(118)
Income taxes	4		(43)		14		(66)
Total foreign currency translation adjustments, net of tax	(16)		(210)		21		(184)
Pension and other postretirement benefit adjustments reclassified to income	—		5		—		11
Income taxes	—		(1)		—		(2)
Total pension and other postretirement benefit adjustments, net of tax	—		4		—		9
Ending balance	$	(1,820)	$	(1,677)	$	(1,820)	$	(1,677)

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Divestitures (Details) - 2022 Divestitures Plan			3 Months Ended			6 Months Ended
	Dec. 01, 2022 USD ($)	Oct. 03, 2022 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($) business	Jun. 30, 2022 USD ($) business	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)
Disposal Group, Held-for-Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of businesses to be divested | business					2
Disposal Group, Held-for-Sale | Polymers & Fluids
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of businesses to be divested | business					1
Disposal Group, Held-for-Sale | Food Equipment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of businesses to be divested | business					1
Disposal Group, Held-for-Sale | Specialty Products
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of businesses to be divested | business				1
Assets held for sale				$ 8,000,000
Liabilities held for sale				$ 1,000,000
Disposal Group, Disposed of by Sale | Polymers & Fluids
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of business		$ 220,000,000
Gain on sale of business		$ 156,000,000
Disposal Group, Disposed of by Sale | Food Equipment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of business	$ 59,000,000
Gain on sale of business	$ 41,000,000
Operating revenue					$ 34,000,000		$ 63,000,000
Disposal Group, Disposed of by Sale | Specialty Products
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Operating revenue			$ 0		$ 10,000,000	$ 9,000,000	$ 19,000,000

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Operating Revenue - Narrative (Details)	6 Months Ended
	Jun. 30, 2023 segment division
Revenue from Contract with Customer [Abstract]
Number of company divisions | division	84
Number of reportable segments | segment	7

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Operating Revenue - Segment Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 4,074	$ 4,011	$ 8,093	$ 7,950
Operating segments | Automotive OEM
Disaggregation of Revenue [Line Items]
Revenue	826	711	1,622	1,471
Operating segments | Food Equipment
Disaggregation of Revenue [Line Items]
Revenue	654	614	1,289	1,180
Operating segments | Test & Measurement and Electronics
Disaggregation of Revenue [Line Items]
Revenue	700	696	1,403	1,381
Operating segments | Welding
Disaggregation of Revenue [Line Items]
Revenue	490	486	983	936
Operating segments | Polymers & Fluids
Disaggregation of Revenue [Line Items]
Revenue	459	496	906	977
Operating segments | Construction Products
Disaggregation of Revenue [Line Items]
Revenue	526	565	1,052	1,116
Operating segments | Specialty Products
Disaggregation of Revenue [Line Items]
Revenue	423	447	846	899
Intersegment revenue
Disaggregation of Revenue [Line Items]
Revenue	$ (4)	$ (4)	$ (8)	$ (10)

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Valuation Allowance [Line Items]
Effective income tax rate reconciliation, percent	21.40%	18.30%	22.00%	20.70%
Possible decrease in unrecognized tax benefits resulting from ongoing audits			$ 45
Discrete income tax benefit	$ 4	$ 1	17	$ 8
Settlement with Taxing Authority
Valuation Allowance [Line Items]
Discrete income tax benefit		$ 51		$ 51
Tax Year 2021
Valuation Allowance [Line Items]
Discrete income tax benefit	$ 20		$ 20

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Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw material	$ 808	$ 887
Work-in-process	248	228
Finished goods	976	1,050
LIFO reserve	(111)	(111)
Total inventories	$ 1,921	$ 2,054

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Pension and Other Postretirement Benefits - Periodic Benefit Cost (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pension
Components of net periodic benefit cost:
Service cost	$ 9	$ 12	$ 18	$ 24
Interest cost	23	12	46	25
Expected return on plan assets	(32)	(25)	(64)	(52)
Amortization of actuarial loss (gain)	1	6	2	13
Total net periodic benefit cost (income)	1	5	2	10
Other Postretirement Benefits
Components of net periodic benefit cost:
Service cost	1	1	2	3
Interest cost	6	4	12	7
Expected return on plan assets	(6)	(7)	(11)	(13)
Amortization of actuarial loss (gain)	(1)	(1)	(2)	(2)
Total net periodic benefit cost (income)	$ 0	$ (3)	$ 1	$ (5)

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Pension and Other Postretirement Benefits - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($)
Pension
Defined Benefit Plan Disclosure [Line Items]
Expected current year company contributions	$ 14
Contributions	5
Other Postretirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Expected current year company contributions	4
Contributions	$ 2

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Debt - Schedule of Debt (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Short-term debt	$ 1,275	$ 1,590
Long-term debt	6,947	6,173
Total debt	$ 8,222	$ 7,763

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Debt - Narrative (Details)	May 12, 2023 EUR (€)	May 05, 2023 EUR (€) business	Feb. 22, 2022 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Commercial paper				$ 575,000,000	$ 1,100,000,000
Commercial Paper
Debt Instrument [Line Items]
Weighted average interest rate				5.27%	4.35%
3.50% Euro Notes Due March 1, 2024
Debt Instrument [Line Items]
Short-term debt				$ 699,000,000
Stated interest rate				3.50%
1.25% Euro Notes Due May 22, 2023
Debt Instrument [Line Items]
Short-term debt					$ 535,000,000
Stated interest rate					1.25%
1.75% Euro Notes Due May 20, 2022
Debt Instrument [Line Items]
Stated interest rate			1.75%
Debt repayment			$ 568,000,000
Euro Credit Agreement | Line of Credit
Debt Instrument [Line Items]
Line of credit facility, expiration period		6 months
Number of term extensions available | business		2
Maximum borrowing capacity | €		€ 1,300,000,000
Proceeds from lines of credit | €	€ 1,300,000,000
Long-term line of credit				$ 1,400,000,000
Effective interest rate				4.01%
Euro Credit Agreement | Line of Credit | EURIBOR rate
Debt Instrument [Line Items]
Derivative, basis spread on variable rate		0.75%
Note Due October 21, 2027 | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity				$ 3,000,000,000
Long-term line of credit				$ 0	$ 0

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Debt - Fair Value and Related Carrying Values (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Fair value	$ 7,231	$ 6,228
Carrying value	$ 7,647	$ 6,708

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Accumulated Other Comprehensive Income (Loss) - Summary of AOCI(L) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	$ 3,101	$ 3,582	$ 3,089	$ 3,626
Other comprehensive income (loss)	(16)	(206)	21	(175)
Ending balance	3,094	3,379	3,094	3,379
Accumulated Other Comprehensive Income (Loss)
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	(1,804)	(1,471)	(1,841)	(1,502)
Other comprehensive income (loss)	(16)	(206)	21	(175)
Ending balance	(1,820)	(1,677)	(1,820)	(1,677)
Accumulated Foreign Currency Adjustment Attributable to Parent
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Foreign currency translation adjustments during the period	(20)	(167)	7	(118)
Income taxes	4	(43)	14	(66)
Other comprehensive income (loss)	(16)	(210)	21	(184)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Other comprehensive income (loss), adjustments reclassified to income	0	5	0	11
Income taxes	0	(1)	0	(2)
Other comprehensive income (loss)	$ 0	$ 4	$ 0	$ 9

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Accumulated Other Comprehensive Income (Loss) - Narrative (Details) $ in Millions			3 Months Ended		6 Months Ended
	May 22, 2023 EUR (€)	Feb. 22, 2022 EUR (€)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	May 12, 2023 EUR (€)	Jun. 30, 2019 EUR (€)	May 31, 2015 EUR (€)	May 31, 2014 EUR (€)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cumulative translation adjustment losses, net of tax			$ 1,500	$ 1,500	$ 1,500	$ 1,500
Unrecognized pension and other postretirement benefits costs, net of tax			293	187	293	187
Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income (loss), foreign currency transaction and translation adjustment, before tax			(17)	$ 179	(58)	$ 273
Euro Notes Issued May 2014 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | €										€ 1,000,000,000
Debt repayment | €		€ 500,000,000
Long-term debt			536		536
Euro Notes Issued May 2015 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | €									€ 1,000,000,000
Debt repayment | €	€ 500,000,000
Long-term debt			542		542
Euro Notes Issued June 2019 | Net Investment Hedging | Euro Notes
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | €								€ 1,600,000,000
Long-term debt			1,700		1,700
Euro Credit Agreement | Net Investment Hedging | Line of Credit
Accumulated Other Comprehensive Income (Loss) [Line Items]
Face value of notes | €							€ 1,300,000,000
Long-term debt			$ 1,400		$ 1,400

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Segment Information (Details)	6 Months Ended
	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of reportable segments	7