Illinois Tool Works Inc. (ITW) raised its full-year 2026 GAAP earnings-per-share outlook after a third quarter in which operating income reached a company record, even as reported revenue growth slowed from the second quarter.

The Fortune 300 multi-industry manufacturer now projects 2026 GAAP EPS of $11.45 to $11.55, a $0.05 increase at the midpoint from the range it set after the second quarter, representing 10 percent growth at the midpoint. It also raised revenue-growth guidance to 4.5 to 5.5 percent and reaffirmed organic growth of 3 to 4 percent.

Third-quarter revenue was $4.24 billion, up 4.4 percent from a year earlier, after a 6.1 percent year-over-year increase in the second quarter. Organic growth was 3.8 percent, down from 4.5 percent in the prior quarter. Foreign currency translation added 0.3 percent and an acquisition 0.3 percent.

Tornado damage to two Welding facilities in late July reduced third-quarter revenue by an estimated $40 million. Excluding that impact, ITW estimated Welding organic growth of about 15 percent and company organic growth of about 5 percent. The associated loss of operating income was largely offset by business interruption insurance, and the company said the impact going forward is expected to be immaterial.

Operating income was $1.18 billion, up 5.9 percent, after $1.15 billion and 7.4 percent growth in the second quarter. Operating margin expanded 40 basis points to 27.8 percent, a second consecutive 40-basis-point expansion, with enterprise initiatives contributing 130 basis points. Price increases and other actions more than offset rising raw material costs, the company said, producing a favorable impact on both operating income and margin. GAAP EPS was $3.00, up 6.8 percent.

Chief Executive Officer Christopher A. O’Herlihy said top-line results reflected accelerating demand in capex-related segments Welding and Test & Measurement and Electronics, continued strength in Polymers & Fluids, and a meaningful increase in the contribution to revenue growth from Customer-Back Innovation.

Test & Measurement and Electronics organic revenue grew 15.8 percent, with operating margin up 330 basis points to 28.7 percent. Welding organic growth was 6.9 percent and its margin rose 370 basis points to 36.3 percent. Polymers & Fluids organic revenue grew 8.2 percent and its margin rose 280 basis points to 31.3 percent. Automotive OEM organic revenue fell 2.1 percent and its margin declined 170 basis points to 20.1 percent.

Operating cash flow was $953 million and free cash flow $851 million, a 100 percent conversion of net income. The company repurchased $187 million of shares in the quarter and raised its dividend 7 percent, bringing the annualized payout to $6.88 a share, the 63rd consecutive year of dividend increases. The effective tax rate was 24.4 percent.

For the full year, ITW projects operating margin of 26.5 to 27.5 percent, with enterprise initiatives contributing more than 100 basis points. Free cash flow is projected to be approximately 100 percent of net income, and the company expects to repurchase approximately $1.5 billion of its own shares. The projected effective tax rate is 23 to 24 percent.