- Revenue of $4.1 billion, an increase of 2% with organic growth of 3%
- Record operating income of $1.01 billion, an increase of 9%
- Operating margin of 24.8%, an increase of 170 bps
- Record GAAP EPS of $2.48, an increase of 5%; Excl. one-time tax items, EPS increased 9%
- Raising full year GAAP EPS guidance by $0.10 to a range of $9.55 to $9.95 per share
GLENVIEW, Ill., Aug. 01, 2023 (GLOBE NEWSWIRE) -- Illinois Tool Works Inc. (NYSE: ITW) today reported its second quarter 2023 results.
“The ITW team delivered another quarter of strong operational execution and financial performance. Quarterly operating income grew nine percent and exceeded $1 billion for the first time in ITW’s history, operating margin expanded 170 basis points year on year, and GAAP EPS of $2.48 was a Q2 record for the company,” said E. Scott Santi, Chairman and Chief Executive Officer. “Organic growth was three percent as resilient demand in many of ITW’s industrial end markets was partially offset by inventory reduction efforts by our end customers and channel partners in response to stabilizing supply chain performance, which we estimate to have impacted organic growth by 1 to 1.5 percent in the quarter. While customer and channel inventory normalization will continue to be a factor for the next several quarters, we expect stable underlying demand and continued strong margin and profitability performance through the balance of the year. As a result, we are raising our full-year 2023 GAAP EPS guidance by $0.10 at the mid-point.”
Second Quarter 2023 Results
Second quarter revenue of $4.1 billion increased two percent with organic revenue growth of three percent, as divestitures reduced revenue by one percent.
GAAP EPS increased five percent to $2.48 and included $0.07 of a one-time tax benefit. GAAP EPS of $2.37 in the second quarter of 2022 included a $0.16 one-time tax benefit. Excluding one-time tax items in both periods, EPS increased nine percent. Operating income grew nine percent to a record $1.01 billion. Operating margin of 24.8 percent improved 170 basis points as enterprise initiatives contributed 130 basis points. Operating cash flow was $790 million, and free cash flow was $705 million, an increase of 68 percent, with a conversion rate to net income of 94 percent. The company repurchased $375 million of its own shares and the effective tax rate was 21.4 percent.
2023 Guidance
ITW is raising its full-year GAAP EPS guidance by $0.10 to $9.55 to $9.95 per share. The company is projecting organic growth of three to five percent based on first half 2023 performance and current levels of demand. Divestitures are expected to reduce revenue by one percent resulting in total revenue growth of two to four percent. Operating margin is projected to be in the range of 24.5 to 25.5 percent, with enterprise initiatives contributing more than 100 basis points. Free cash flow is projected to be greater than 100 percent of net income and the company plans to repurchase approximately $1.5 billion of its own shares. The expected tax rate is in the range of 22.5 to 23.5 percent.
Non-GAAP Measures
This earnings release contains certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the attached supplemental reconciliation schedule. The estimated guidance of free cash flow conversion rate is based on assumptions that are difficult to predict, and estimated guidance for the most directly comparable GAAP measure and a reconciliation of this forward-looking estimate to its most directly comparable GAAP estimate have been omitted due to the unreasonable efforts required in connection with such a reconciliation and the lack of reliable forward-looking cash flow information.
Forward-looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements regarding global supply chain challenges, expected impact of inflation including raw material inflation and rising interest rates, the impact of enterprise initiatives, future financial and operating performance, free cash flow and free cash flow conversion rate, organic and total revenue, operating and incremental margin, price/cost impact, statements regarding diluted income per share, restructuring expenses and related benefits, expected dividend payments, after-tax return on invested capital, effective tax rates, exchange rates, expected access to liquidity sources, expected capital allocation, expected timing and amount of share repurchases, end market economic and regulatory conditions, the impact of recent or potential acquisitions and/or divestitures, and the company’s 2023 guidance. These statements are subject to certain risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from those anticipated. Such factors include those risk factors contained in ITW's Form 10-K for 2022 and subsequent reports filed with the SEC.
About Illinois Tool Works
ITW (NYSE: ITW) is a Fortune 200 global multi-industrial manufacturing leader with revenue of $15.9 billion in 2022. The company’s seven industry-leading segments leverage the unique ITW Business Model to drive solid growth with best-in-class margins and returns in markets where highly innovative, customer-focused solutions are required. ITW’s approximately 46,000 dedicated colleagues around the world thrive in the company’s decentralized and entrepreneurial culture. www.itw.com
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 | |
| | | | | | | | |
| Cash Dividends Per Share: | | | | | | | |
| Paid | $ | 1.31 | | | $ | 1.22 | | | $ | 2.62 | | | $ | 2.44 | |
| Declared | $ | 1.31 | | | $ | 1.22 | | | $ | 2.62 | | | $ | 2.44 | |
| | | | | | | | |
| 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 | |
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
|
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
|
| |
| In millions | 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 | | 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 | |
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES |
| SEGMENT DATA (UNAUDITED) |
| Three Months Ended June 30, 2023 |
| Dollars in millions | Total Revenue | Operating Income | Operating Margin |
| Automotive OEM | $ | 826 | | | $ | 139 | | | 16.8 | % |
| Food Equipment | | 654 | | | | 182 | | | 27.8 | % |
| Test & Measurement and Electronics | | 700 | | | | 162 | | | 23.2 | % |
| Welding | | 490 | | | | 167 | | | 33.9 | % |
| Polymers & Fluids | | 459 | | | | 119 | | | 25.9 | % |
| Construction Products | | 526 | | | | 154 | | | 29.3 | % |
| Specialty Products | | 423 | | | | 109 | | | 26.0 | % |
| Intersegment | | (4 | ) | | | — | | | — | % |
| Total Segments | | 4,074 | | | | 1,032 | | | 25.3 | % |
| Unallocated | | — | | | | (22 | ) | | — | % |
| Total Company | $ | 4,074 | | | $ | 1,010 | | | 24.8 | % |
| Six Months Ended June 30, 2023 |
| Dollars in millions | Total Revenue | Operating Income | Operating Margin |
| Automotive OEM | $ | 1,622 | | | $ | 267 | | | 16.4 | % |
| Food Equipment | | 1,289 | | | | 351 | | | 27.2 | % |
| Test & Measurement and Electronics | | 1,403 | | | | 334 | | | 23.8 | % |
| Welding | | 983 | | | | 324 | | | 32.9 | % |
| Polymers & Fluids | | 906 | | | | 228 | | | 25.2 | % |
| Construction Products | | 1,052 | | | | 299 | | | 28.4 | % |
| Specialty Products | | 846 | | | | 218 | | | 25.8 | % |
| Intersegment | | (8 | ) | | | — | | | — | % |
| Total Segments | | 8,093 | | | | 2,021 | | | 25.0 | % |
| Unallocated | | — | | | | (39 | ) | | — | % |
| Total Company | $ | 8,093 | | | $ | 1,982 | | | 24.5 | % |
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES |
| SEGMENT DATA (UNAUDITED) |
Q2 2023 vs. Q2 2022 Favorable/(Unfavorable)
|
| Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | | Construction Products | Specialty Products | Total ITW |
| Organic | 16.3 | % | 6.9 | % | 1.1 | % | 0.7 | % | (0.5) | % | (5.7) | % | (3.6) | % | 3.0 | % |
| Acquisitions/ Divestitures | — | % | (1.0) | % | — | % | — | % | (5.7) | % | — | % | (2.3) | % | (1.1) | % |
| Translation | (0.1) | % | 0.4 | % | (0.4) | % | — | % | (1.4) | % | (1.1) | % | 0.5 | % | (0.3) | % |
| Operating Revenue | 16.2 | % | 6.3 | % | 0.7 | % | 0.7 | % | (7.6) | % | (6.8) | % | (5.4) | % | 1.6 | % |
| Q2 2023 vs. Q2 2022 Favorable/(Unfavorable) |
| Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW |
| Operating Leverage | 320 bps | 140 bps | 30 bps | - | (10) bps | (90) bps | (80) bps | 60 bps |
| Changes in Variable Margin & OH Costs | (210) bps | 140 bps | 70 bps | 460 bps | 150 bps | 320 bps | 20 bps | 100 bps |
| Total Organic | 110 bps | 280 bps | 100 bps | 460 bps | 140 bps | 230 bps | (60) bps | 160 bps |
Acquisitions/
Divestitures | — | 30 bps | — | — | 30 bps | — | 60 bps | 10 bps |
| Restructuring/Other | 140 bps | — | (30) bps | — | (90) bps | (60) bps | (90) bps | — |
| Total Operating Margin Change | 250 bps | 310 bps | 70 bps | 460 bps | 80 bps | 170 bps | (90) bps | 170 bps |
| | | | | | | | | |
| Total Operating Margin % * | 16.8 | % | 27.8 | % | 23.2 | % | 33.9 | % | 25.9 | % | 29.3 | % | 26.0 | % | 24.8 | % |
| | | | | | | | | |
| * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 30 bps | 50 bps | 170 bps | 10 bps | 180 bps | 10 bps | 60 bps | 70 bps ** |
| ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.07) on GAAP earnings per share for the second quarter of 2023. |
| ILLINOIS TOOL WORKS INC. and SUBSIDIARIES |
| SEGMENT DATA (UNAUDITED) |
H1 2023 vs. H2 2022 Favorable/(Unfavorable)
|
| Operating Revenue | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | | Construction Products | Specialty Products | | Total ITW |
| Organic | 11.9 | % | 11.3 | % | 3.3 | % | 5.3 | % | (0.3) | % | (3.6) | % | (4.3) | % | 4.1 | % |
| Acquisitions/Divestitures | — | % | (1.1) | % | — | % | — | % | (5.1) | % | — | % | (1.1) | % | (0.9) | % |
| Translation | (1.6) | % | (1.0) | % | (1.7) | % | (0.3) | % | (1.9) | % | (2.1) | % | (0.5) | % | (1.4) | % |
| Operating Revenue | 10.3 | % | 9.2 | % | 1.6 | % | 5.0 | % | (7.3) | % | (5.7) | % | (5.9) | % | 1.8 | % |
| H1 2023 vs. H2 2022 Favorable/(Unfavorable) |
| Change in Operating Margin | Automotive OEM | Food Equipment | Test & Measurement and Electronics | Welding | Polymers & Fluids | Construction Products | Specialty Products | Total ITW |
| Operating Leverage | 230 bps | 210 bps | 80 bps | 80 bps | (10) bps | (60) bps | (90) bps | 90 bps |
| Changes in Variable Margin & OH Costs | (330) bps | 140 bps | 100 bps | 210 bps | 80 bps | 310 bps | — | 60 bps |
| Total Organic | (100) bps | 350 bps | 180 bps | 290 bps | 70 bps | 250 bps | (90) bps | 150 bps |
| Acquisitions/Divestitures | — | 20 bps | — | — | 30 bps | — | 30 bps | 10 bps |
| Restructuring/Other | 110 bps | (10) bps | (20) bps | — | (60) bps | (30) bps | (40) bps | — |
| Total Operating Margin Change | 10 bps | 360 bps | 160 bps | 290 bps | 40 bps | 220 bps | (100) bps | 160 bps |
| | | | | | | | | |
| Total Operating Margin % * | 16.4 | % | 27.2 | % | 23.8 | % | 32.9 | % | 25.2 | % | 28.4 | % | 25.8 | % | 24.5 | % |
| | | | | | | | | |
| * Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets | 30 bps | 50 bps | 180 bps | 10 bps | 190 bps | 10 bps | 60 bps | 80 bps ** |
| ** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.15) on GAAP earnings per share for the first half 2023. |
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
|
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)
|
| |
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
|
| |
| | 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 | % |
(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 | % |
AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)
|
| |
| | Twelve Months Ended |
| Dollars in millions | December 31, 2022 |
| Numerator: | |
| Net income | $ | 3,034 | |
| Discrete tax benefit related to the fourth quarter 2022 | | (32 | ) |
| Discrete tax benefit related to the second quarter 2022 | | (51 | ) |
| Interest expense, net of tax (1) | | 156 | |
| Other (income) expense, net of tax (1) | | (196 | ) |
| Operating income after taxes | $ | 2,911 | |
| | |
| Denominator: | |
| Invested capital: | |
| Cash and equivalents | $ | 708 | |
| Trade receivables | | 3,171 | |
| Inventories | | 2,054 | |
| Net assets held for sale | | 7 | |
| Net plant and equipment | | 1,848 | |
| Goodwill and intangible assets | | 5,632 | |
| Accounts payable and accrued expenses | | (2,322 | ) |
| Debt | | (7,763 | ) |
| Other, net | | (246 | ) |
| Total net assets (stockholders' equity) | | 3,089 | |
| Cash and equivalents | | (708 | ) |
| Debt | | 7,763 | |
| Total invested capital | $ | 10,144 | |
| | |
| Average invested capital (2) | $ | 10,017 | |
| | |
| Net income to average invested capital | | 30.3 | % |
| After-tax return on average invested capital | | 29.1 | % |
(1) Effective tax rate used for interest expense and other (income) expense for the year ended December 31, 2022 was 23.2%.
(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 the period presented.
A reconciliation of the 2022 effective tax rate excluding the fourth quarter 2022 discrete tax benefit of $32 million related to the utilization of capital loss carryforwards and the second quarter 2022 discrete tax benefit of $51 million related to the resolution of a U.S. tax audit is as follows:
| | Twelve Months Ended |
| | December 31, 2022 |
| Dollars in millions | Income Taxes | | Tax Rate |
| As reported | $ | 808 | | | 21.0 | % |
| Discrete tax benefit related to the fourth quarter 2022 | | 32 | | | 0.8 | % |
| Discrete tax benefit related to the second quarter 2022 | | 51 | | | 1.4 | % |
| As adjusted | $ | 891 | | | 23.2 | % |
FREE CASH FLOW (UNAUDITED)
|
| |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| Dollars in millions | | 2023 | | | | 2022 | | | | 2023 | | | | 2022 | |
| Net cash provided by operating activities | $ | 790 | | | $ | 501 | | | $ | 1,518 | | | $ | 824 | |
| Less: Additions to plant and equipment | | (85 | ) | | | (81 | ) | | | (198 | ) | | | (155 | ) |
| Free cash flow | $ | 705 | | | $ | 420 | | | $ | 1,320 | | | $ | 669 | |
| | | | | | | | |
| Net income | $ | 754 | | | $ | 738 | | | $ | 1,468 | | | $ | 1,400 | |
| | | | | | | | |
| Net cash provided by operating activities to net income conversion rate | | 105 | % | | | 68 | % | | | 103 | % | | | 59 | % |
| Free cash flow to net income conversion rate | | 94 | % | | | 57 | % | | | 90 | % | | | 48 | % |
ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED)
|
| | |
| | Three Months Ended |
| | June 30, |
| | | 2023 | | | | 2022 | |
| As reported | $ | 2.48 | | | $ | 2.37 | |
| Discrete tax benefit related to the second quarter 2023 | | (0.07 | ) | | | — | |
| Discrete tax benefit related to the second quarter 2022 | | — | | | | (0.16 | ) |
| As adjusted | $ | 2.41 | | | $ | 2.21 | |
| | Twelve Months Ended |
| | December 31, 2022 |
| As reported | $ | 9.77 | |
| Net impact of gains from two divestitures in the fourth quarter 2022 | | (0.60 | ) |
| As adjusted | $ | 9.17 | |
