Oct 27, 2026 earnings call — Strong organic growth and margin expansion
Raised full year GAAP EPS guidance by $0.05 to a midpoint of $11.50, representing 10% year-over-year growth.
Revenue $4.2B (est $4.3B) · EPS $3.04 (est $2.97)
Key quotes
"As I mentioned, we are now projecting that CBI will exceed 3% for the full year."
"Moving to the bottom line, operating margin expanded by 40 basis points year over year to 27.8% with another solid 130 basis points contribution from enterprise initiatives."
"Test and Measurement and Electronics had another outstanding quarter with 16% organic growth led by a 31% surge in electronics."
Analyst Q&A 6
Price/cost impact and pricing timing
Q (Jamie Cook · Truist): They asked how price versus cost actually performed this quarter versus the earlier 30 bps headwind estimate, and when pricing in automotive and construction will flow into margins. The analyst also asked where CBI gains are strongest and whether that momentum continues into 2027.
A: Management said price/cost was modestly favorable in Q3 and they expect the full year margin impact to be about neutral. They said 2027 should normalize, with a typical 10 to 20 basis points tailwind from price/cost. On auto and construction, they are recovering price now and making progress on enterprise initiatives and higher-margin innovation that should sustain into next year; CBI contribution has stepped up and they expect it to continue improving.
"What we can say is that for the full year, we also expect the margin impact to be about neutral for the full year." — Michael Larsen (CFO)
Backlog and 2027 growth drivers
Q (Andy Kaplowitz · Citi): He asked if recent strong organic growth created backlog in CapEx businesses and how that positions the company for 2027, and whether there are other puts and takes besides CBI. He also asked about backlog size.
A: Management said they have a little more backlog than usual, measured in months not years, because the business is still short-cycle. They noted backlog increases in welding, test and measurement electronics, and food equipment, which supports the 5%+ organic growth implied in guidance and gives momentum heading into 2027. They added that growth in welding and test and measurement is broad based, which gives confidence for next year.
"So we do have a little bit more backlog than usual." — Michael Larsen (CFO)
Welding and polymers margins
Q (Julian Mitchell · JPMorgan): He asked what the underlying welding margins were in Q3 and what to expect in Q4. He also asked whether the strong polymers and fluids margins this quarter are one-time or sustainable.
A: Management said they expect welding to return to typical best-in-class margins in the 32%, 33%, 34% range. For polymers and fluids, they said Q3 may have been a record and they expect a bit less operating leverage in Q4, so margins might be somewhat lower than Q3 but still very healthy.
"I think what I said in the prepared remarks was that we will expect to return to kind of our typical best in class margins in that, you know, 32%, 33%, 34% range." — Michael Larsen (CFO)
Financing sensitivity of products
Q (Steven Fisher · UBS): He asked whether any of ITW’s products or businesses are especially affected by higher interest rates or financing costs, and whether they are hearing anecdotes of impact from customers financing purchases.
A: Management did not provide a direct answer to that financing-cost sensitivity question in this exchange of the transcript. There is no specific management comment here about financing costs or customer financing impacts.
Regional sales momentum
Q (Steven Fisher · UBS): He asked for a geographic update: whether Europe can hold flat, whether North America might accelerate to offset any weakness, and the general momentum by region.
A: Management said North America is the fastest-growing region, up 6% in Q3, and they expect that momentum to continue or build into Q4, driven by test and measurement, welding, and polymers and fluids. They said Europe was flat in Q3 and they do not expect much improvement there, and China has slowed to flat or low-single-digit declines but has potential going forward; they also noted food equipment is up mid-single-digits in Europe.
"North America is the fastest growing region like I said, up 6% here in the third quarter." — Michael Larsen (CFO)
Q4 margins drivers and electronics growth
Q (Deutsche Bank): She asked what will keep margins roughly flat sequentially in Q4 after the loss of the welding insurance gain and polymers easing, and whether there were any tariff refunds. She also asked if the 31% organic growth in electronics is sustainable into Q4 and 2027.
A: Management said they expect sequential revenues to rise about 1% to 2% in Q4, which should provide operating leverage; enterprise initiatives remain a major structural driver and they expect year-over-year margin improvement and sequentially about flat. They said they are cautious on price/cost swings but are confident overall; on electronics, they said the growth is very sustainable given strong order activity from semi and electronics customers who are expanding fab capacity, and ITW is well positioned to take share.
"The reason that we do not think that is the case is based on current run rates, we actually expect revenues to go up sequentially." — Michael Larsen (CFO)