Illinois Tool Works (ITW) needs a name change.

What do you think of when you here the company name ‘Illinois Tool Works’? It brings up the idea of a small machine shop located in Illinois.

This may have been true in 1912 when the company was founded, but it is not true today. Illinois Tool Works now has a market cap over $30 billion and generates 57% of its sales outside the United States.

Illinois Tool Works is one of only 17 Dividend Kings. The company has paid increasing dividends for an amazing 52 consecutive years.

Illinois Tool Works Business Overview

Illinois Tool Works operates in 7 separate business units.  Each business unit is shown below along with the percentage of the company’s total operating income each business unit generated in the company’s most recent quarter:

Illinois Tool Works different business units give it wide diversification. The company generates no more than 20% of total operating income from any one business segment.

Illinois Tool Works has been going through a business line consolidation. The company went from over 800 smaller business units to 90 larger business units in an attempt to simplify the structure and operating procedures of the company.

The company has divested 32 low margin businesses which were responsible for $4.9 billion in revenue a year, and is currently exiting other slow growth commodity business lines which generate $350 million a year in revenue.

The downsizing process has been a success, as Illinois Tool Works has managed to consistently grow its operating margins since 2012.