Q2 was the most profitable quarter in ITW's history
ITW delivered strong Q2 2026 results with 4.5% organic growth, record operating income, and a second guidance raise for the year. The company highlighted accelerating momentum in welding and test/measurement/electronics, supported by robust CBI contribution, while managing through a temporary price-cost headwind. Organic growth of 4.5% in Q2, driven by strong performances in welding (+14%), test & measurement/electronics (+10%), and polymers & fluids (+7%).
Buzzberg readQ2 was the most profitable quarter in ITW's historyITW delivered strong Q2 2026 results with 4.5% organic growth, record operating income, and a second guidance raise for the year. The company highlighted accelerating momentum in welding and test/measurement/electronics, supported by robust CBI contribution, while managing through a temporary price-cost headwind. Organic growth of 4.5% in Q2, driven by strong performances in welding (+14%), test & measurement/electronics (+10%), and polymers & fluids (+7%).Read full analysisCollapse analysis
ITW delivered strong Q2 2026 results with 4.5% organic growth, record operating income, and a second guidance raise for the year. The company highlighted accelerating momentum in welding and test/measurement/electronics, supported by robust CBI contribution, while managing through a temporary price-cost headwind. Organic growth of 4.5% in Q2, driven by strong performances in welding (+14%), test & measurement/electronics (+10%), and polymers & fluids (+7%).
CBI (customer-backed innovation) contributed 3% to H1 revenue growth, ahead of the 2.4% full-year 2025 level and on track to be the key driver of sustained 4%+ growth.
Raised full-year organic growth guidance to 3-4% and EPS to $11.35-$11.55, the second upward revision this year.
Price-cost timing dragged margins by ~40bps in Q2, with recovery expected through H2, supporting positive incremental margins.
Revenue$4.301B
+7% QoQ
EPS$2.84
+7% QoQ
Gross margin44.13%
reported
Op margin26.67%
reported
What changed this quarter
01
Margins
Q2 was the most profitable quarter in ITW's history
Reported gross margin was 44.13%, reinforcing the quarter's better-than-guided profitability.
02
Innovation
CBI contributed 3% to growth in H1, ahead of plan
Organic growth of 4.5% in Q2, driven by strong performances in welding (+14%), test & measurement/electronics (+10%), and polymers & fluids (+7%).
03
Guidance
Full-year organic growth guidance raised to 3-4%
Guidance · revenue to 3.5%
04
Demand
Welding growth of 14% driven by broad-based demand
Management highlighted strong acceleration in growth, raised guidance for the second time, and expressed high confidence in the sustainability of momentum across most segments.
Demand & capex
Demand
Bookings & conversion
Welding growth of 14% driven by broad-based demand. Management highlighted strong acceleration in growth, raised guidance for the second time, and expressed high confidence in the sustainability of momentum across most segments.
Capex
Investment and capacity
Management emphasized proactive capacity investments, particularly in semiconductor and electronics businesses, which were maintained through a down cycle to capitalize on the current ramp in demand. They noted they are well positioned to fully capitalize on growth without running out of capacity.
Tone · Upbeat
Management highlighted strong acceleration in growth, raised guidance for the second time, and expressed high confidence in the sustainability of momentum across most segments.
Supply-chain alpha
A1
In welding and T&M/electronics, order intake is running ahead of revenue recognition, suggesting near-term revenue acceleration and potential capacity constraints.
“The order activity that we've seen in welding and test measurement electronics has been a good bit ahead of the revenue rates we've been demonstrating.”
“The Q2 impact was primarily from crude oil derivatives, so we're talking resin and chemicals. I'll also add to the logistics, transportation, freight costs.”
Welding growth of 19% in North America is tied to infrastructure, energy, aerospace/defense, and data center construction, reflecting a broad-based industrial capex upcycle.
“broad-based growth across both industrial and commercial markets, as demand continued to strengthen in areas such as infrastructure, energy, aerospace, and defense.”
In welding and T&M/electronics, order intake is running ahead of revenue recognition, suggesting near-term revenue acceleration and potential capacity constraints. — Indicates stronger demand than reported and could signal share gains at competitors' expense, plus potential pricing power.
Christopher, Mike, obviously the growth in your CapEx focus segments was quite impressive, but maybe you could talk about the durability of that growth. You mentioned orders continue to outpace revenues. While we don't think of ITW as a backlog business, does that mean you're building significant backlog in those segments? And I know you're forecasting current run rates, but I would surmise you obviously have more confidence regarding your CapEx businesses in particular.
Yeah, so Andy, you're absolutely correct. I mean, we typically don't forecast the economy. Our forecast is largely based on run rates and also what we're hearing from our customers. And we don't carry a whole lot of backlog, but it has to be said that The order activity that we've seen in welding and test measurement electronics has been a good bit ahead of the revenue rates we've been demonstrating. So, again, a bit more backlog there than normal. I would say we're very confident going to the back half of the year based on what we see in terms of the order rates, based on what we hear from our customers. And I would also underscore the fact that the whole thing is also underpinned by some real nice progress on customer-backed innovation, which, again, strengthens our confidence that the growth is very sustainable here on the back half.
Raw material and logistics inflation is driving a temporary price-cost margin headwind of ~40bps in Q2, with full catch-up expected by Q4. — Confirms supply chain cost pressures across materials and freight, potentially affecting chemical suppliers' pricing power.
Okay, excellent. Sorry. Yeah, so just a question on inflation. Just would appear that There is quite a bit of it, and I think you've sort of said that the timing of inflation is what influenced incrementals this quarter. What are you seeing six months out, and what levers internally do you have if inflation continues to persist?
Well, it's certainly true that we are seeing meaningful inflation this year. The Q2 impact was primarily from crude oil derivatives, so we're talking resin and chemicals. I'll also add to the logistics, transportation, freight costs. Electronic components continue to be fairly inflationary. The biggest lever we have is obviously the price lever that we talked a fair bit about, but it's also you know driving productivity across our across our businesses and our strategic sourcing efforts which are part of that enterprise initiative number that we report on a quarterly basis so those are kind of the big the big levers that we're working I'd say inflation is for ITW very manageable everything we know about is included in our guidance you know we have this unique ability to Given how we're organized in this highly decentralized environment, our divisions are so good at reading and reacting to what they're seeing from an inflationary standpoint. So we're highly confident that we'll be able to manage our way through this with some of the levers that I just described as kind of the more obvious ones.
Welding growth of 19% in North America is tied to infrastructure, energy, aerospace/defense, and data center construction, reflecting a broad-based industrial capex upcycle. — Confirms robust demand in end markets that are directly relevant to heavy equipment and machinery manufacturers.
… is worth noting that order growth continues to outpace revenue growth in this segment, which is also the case in our welding segment. Speaking of welding and moving on to slide six, Welding delivered record top-line results, driven by 14% organic growth, as equipment surged 19%, driven by market tailwinds and strong new product adoption. North America, which represents about 85% of the welding segment, led the charge of 19%, with broad-based growth across both industrial and commercial markets, as demand continued to strengthen in areas such as infrastructure, energy, aerospace, and defense. operating margin remain best in class at 32.4%. As you may have heard, a storm impacted two of our welding facilities in Appleton, Wisconsin yesterday, with one manufacturing facility and one warehouse building sustaining damage. First, we're grateful that all our ITW colleagues are safe and accounted for. As for the business, our teams are in the process of executing contingency plans with a focus on minimizing disruption for our customers. In terms of our guidance, we do not expect any material impact on ITW. In polymers and fluids, organic growth reached 7% driven by strength across the …
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