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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 5, 2025
_________________________

ILLINOIS TOOL WORKS INC.
(Exact name of registrant as specified in its charter)
Delaware 1-4797 36-1258310
(State or other jurisdiction of incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
155 Harlem Avenue Glenview IL 60025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 847-724-7500

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock ITW New York Stock Exchange
0.625% Euro Notes due 2027 ITW27 New York Stock Exchange
3.250% Euro Notes due 2028 ITW28 New York Stock Exchange
2.125% Euro Notes due 2030 ITW30 New York Stock Exchange
1.00% Euro Notes due 2031 ITW31 New York Stock Exchange
3.375% Euro Notes due 2032 ITW32 New York Stock Exchange
3.00% Euro Notes due 2034 ITW34 New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02    Results of Operations and Financial Condition

On February 5, 2025, Illinois Tool Works Inc. (the "Company") announced its 2024 fourth quarter results of operations in the press release furnished as Exhibit 99.1.

Non-GAAP Financial Measures

The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. The Company believes this non-GAAP financial measure is useful to investors in evaluating the Company's financial performance and measures the Company's ability to generate cash internally to fund Company initiatives. Free cash flow represents net cash provided by operating activities less additions to plant and equipment. Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies. A reconciliation of free cash flow to net cash provided by operating activities is included in the press release furnished as Exhibit 99.1.

The Company uses after-tax return on average invested capital ("After-tax ROIC") to measure the effectiveness of its operations' use of invested capital to generate profits. After-tax ROIC is not defined under U.S. generally accepted accounting principles ("GAAP"). After-tax ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company's ability to generate returns from cash invested in its operations and may be different than the method used by other companies to calculate After-tax ROIC. The Company defines After-tax ROIC as operating income after taxes divided by average invested capital, which is annualized when presented in interim periods. Operating income after taxes is a non-GAAP measure consisting of net income before interest expense and other income (expense), on an after-tax basis, which are excluded as they do not represent returns generated by the Company's operations. For comparability, the Company also excluded the net discrete tax benefit of $121 million in the third quarter of 2024 from net income and the effective tax rate for the year ended December 31, 2024. Additionally, for comparability, the Company also excluded the discrete tax benefit of $20 million in the second quarter of 2023 from net income and the effective tax rate for the year ended December 31, 2023. Total invested capital represents the net assets of the Company, other than cash and equivalents and outstanding debt which do not represent capital investment in the Company's operations. The most comparable GAAP measure to operating income after taxes is net income. Calculations of net income to average invested capital and After-tax ROIC are included in the press release furnished as Exhibit 99.1.

The Company presented diluted net income per share for the twelve months ended December 31, 2024 excluding the cumulative effect of a change in inventory accounting method and the impact of the sale of the Company's noncontrolling interest in Wilsonart International Holdings LLC. The Company believes this non-GAAP measure enhances investors' understanding of the Company's underlying financial performance and improves comparability with other periods. A reconciliation of this non-GAAP measure to diluted net income per share is included in the press release furnished as Exhibit 99.1 Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Item 9.01    Financial Statements and Exhibits
(d) Exhibits
Exhibit Number Exhibit Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).



SIGNATURES


ILLINOIS TOOL WORKS INC.
Dated: February 5, 2025
By: /s/ Michael M. Larsen
Michael M. Larsen
Senior Vice President & Chief Financial Officer


EX-99.1 2 a20241231-4q24ex991pressre.htm EX-99.1 Document

Exhibit 99.1

ITW Reports Fourth Quarter and Full Year 2024 Results

Fourth Quarter 2024 Highlights
•Revenue of $3.9 billion, a decrease of 1.3% as organic growth declined 0.5%; Organic growth of 0.4% turned positive excluding Product Line Simplification (PLS) reduction of 0.9%
•Record operating margin of 26.2%, an increase of 140 bps as enterprise initiatives contributed 120 bps
•Operating cash flow of $1.1B; record free cash flow of $1B, an increase of 10% with a conversion of 133%
•GAAP EPS of $2.54, an increase of 7%

2024 Highlights
•Revenue of $15.9 billion, a decrease of 1.3% as organic growth declined 0.7% in markets that were down low to mid-single digits
•Record operating margin of 26.8% as enterprise initiatives contributed 130 bps
•Record GAAP EPS of $11.71, an increase of 20%

2025 Guidance
•Above-market organic growth of 0 to 2% based on current levels of demand; Organic growth of 1 to 3% excluding PLS reduction of approximately 1%-point
•Enterprise initiatives contributing approximately 100 bps to margin improvement
•GAAP EPS of $10.15 to $10.55 including foreign currency translation headwind of $0.30

GLENVIEW, IL., February 5, 2025 - Illinois Tool Works Inc. (NYSE: ITW) today reported its fourth quarter and full year 2024 results and initiated guidance for full year 2025.

“ITW delivered a solid finish to the year as we outperformed underlying end markets, expanded operating margin by 140 basis points, generated record free cash flow, and delivered seven percent earnings per share growth in the fourth quarter,” said Christopher A. O’Herlihy, President and Chief Executive Officer.

“Throughout 2024, the ITW team delivered a year of solid operational and financial performance, achieving record financial results by consistently exceeding market growth and significantly improving profitability and margins. Building on this momentum, we will continue to outperform our key end markets in 2025 as we build above-market organic growth, driven by continuous improvement in Customer-Back Innovation, into a core ITW strength. I extend my sincere gratitude to our global colleagues for their unwavering dedication to serving our customers and executing our strategy with excellence,” O’Herlihy concluded.

Fourth Quarter 2024 Results
Fourth quarter revenue of $3.9 billion decreased by 1.3 percent as organic revenue declined 0.5 percent. Organic revenue growth was positive 0.4 percent adjusted for PLS reduction of 0.9 percent. Foreign currency translation reduced revenue by one percent and acquisitions added 0.2 percent.

GAAP EPS of $2.54 increased seven percent. Operating margin of 26.2 percent increased 140 basis points as enterprise initiatives contributed 120 basis points. Operating cash flow was $1.1 billion, and free cash flow grew 10 percent to $1.0 billion, with a conversion of 133 percent to net income. During the quarter, the company repurchased $375 million of its own shares and the effective tax rate was 23.7 percent.

Full Year 2024 Results
Full year revenue of $15.9 billion declined 1.3 percent as organic revenue declined 0.7 percent. Organic revenue growth was essentially flat adjusted for PLS reduction of 0.6 percent. Foreign currency translation reduced revenue by 0.7 percent and acquisitions contributed 0.1 percent to revenues.

GAAP EPS of $11.71 included two previously disclosed favorable one-time items; $0.30 from a LIFO inventory accounting change in the first quarter, and $1.26 from the sale of the Company’s equity interest in Wilsonart in the third quarter. Excluding these items, EPS was $10.15.



Operating income of $4.3 billion grew six percent, and operating margin increased 170 basis points to 26.8 percent with enterprise initiatives contributing 130 basis points. Excluding 70 basis points of favorable impact from the above-mentioned LIFO inventory accounting change, operating margin increased 100 basis points to 26.1 percent. Six of seven segments expanded margins in 2024 with two segments achieving margins above 30 percent.

Operating cash flow was $3.3 billion and free cash flow was $2.8 billion, with a conversion of 94 percent to adjusted net income. The company invested approximately $0.8 billion to support the long-term profitable growth of its businesses and returned $3.2 billion to shareholders through dividends and share repurchases. The effective tax rate was 21.1 percent.

2025 Guidance
The company is initiating 2025 guidance including GAAP EPS in the range of $10.15 to $10.55 per share which includes a foreign currency translation headwind of $0.30. The company projects above-market organic growth of zero to two percent based on current levels of demand, including an expected PLS reduction of approximately one percentage point. Organic revenue growth is projected to be one to three percent adjusted for the above-mentioned PLS. Based on current foreign exchange rates, foreign currency translation is expected to reduce revenue by three percent, resulting in a projected total revenue decline of one to three percent.

Operating margin is projected to be in the range of 26.5 to 27.5 percent, an improvement of approximately 100 basis points excluding the above-mentioned 2024 LIFO inventory accounting change, with enterprise initiatives contributing approximately 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 projected effective tax rate is 24 to 24.5 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 to adjusted net income 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. For the same reasons, the company is unable to address the potential significance of the unavailable information, which could be material to future results.

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 and specialty material inflation and fluctuating interest rates, the impact of enterprise initiatives, future financial and operating performance, free cash flow and free cash flow to net income 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 and the impact of foreign currency translation, 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 2025 guidance. These statements are subject to certain risks, uncertainties, assumptions, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that could cause actual results to differ materially from the Company’s expectations include those that are detailed in ITW’s Form 10-K for 2023 and subsequent reports filed with the SEC.

About Illinois Tool Works
ITW (NYSE: ITW) is a Fortune 300 global multi-industrial manufacturing leader with revenue of $15.9 billion in 2024. 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 44,000 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 Twelve Months Ended
December 31, December 31,
In millions except per share amounts 2024 2023 2024 2023
Operating Revenue $ 3,932  $ 3,983  $ 15,898  $ 16,107 
Cost of revenue 2,221  2,312  8,858  9,316 
Selling, administrative, and research and development expenses 655  658  2,675  2,638 
Amortization and impairment of intangible assets 25  25  101  113 
Operating Income 1,031  988  4,264  4,040 
Interest expense (68) (70) (283) (266)
Other income (expense) 20  9  441  49 
Income Before Taxes 983  927  4,422  3,823 
Income taxes 233  210  934  866 
Net Income $ 750  $ 717  $ 3,488  $ 2,957 
Net Income Per Share:
Basic
 $ 2.55  $ 2.39  $ 11.75  $ 9.77 
Diluted
 $ 2.54  $ 2.38  $ 11.71  $ 9.74 
Cash Dividends Per Share:
Paid
 $ 1.50  $ 1.40  $ 5.70  $ 5.33 
Declared
 $ 1.50  $ 1.40  $ 5.80  $ 5.42 
Shares of Common Stock Outstanding During the Period:
Average
 294.7 300.1 296.8 302.6
Average assuming dilution
 295.8 301.1 297.8 303.6



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (UNAUDITED)

In millions December 31, 2024 December 31, 2023
Assets    
Current Assets:    
Cash and equivalents $ 948  $ 1,065 
Trade receivables 2,991  3,123 
Inventories 1,605  1,707 
Prepaid expenses and other current assets 312  340 
Total current assets 5,856  6,235 
Net plant and equipment 2,036  1,976 
Goodwill 4,839  4,909 
Intangible assets 592  657 
Deferred income taxes 369  479 
Other assets 1,375  1,262 
  $ 15,067  $ 15,518 
Liabilities and Stockholders' Equity    
Current Liabilities:    
Short-term debt $ 1,555  $ 1,825 
Accounts payable 519  581 
Accrued expenses 1,576  1,663 
Cash dividends payable 441  419 
Income taxes payable 217  187 
Total current liabilities 4,308  4,675 
Noncurrent Liabilities:    
Long-term debt 6,308  6,339 
Deferred income taxes 119  326 
Noncurrent income taxes payable —  151 
Other liabilities 1,015  1,014 
Total noncurrent liabilities 7,442  7,830 
Stockholders' Equity:    
Common stock 6  6 
Additional paid-in-capital 1,669  1,588 
Retained earnings 28,893  27,122 
Common stock held in treasury (25,375) (23,870)
Accumulated other comprehensive income (loss) (1,877) (1,834)
Noncontrolling interest 1  1 
Total stockholders' equity 3,317  3,013 
$ 15,067  $ 15,518 



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)

Three Months Ended December 31, 2024
Dollars in millions Total Revenue Operating Income Operating Margin
Automotive OEM $ 785  $ 156  19.8  %
Food Equipment 672  182  27.2  %
Test & Measurement and Electronics 747  202  27.0  %
Welding 447  139  31.2  %
Polymers & Fluids 430  120  27.9  %
Construction Products 438  123  28.0  %
Specialty Products 416  118  28.4  %
Intersegment (3) —  —  %
Total Segments 3,932  1,040  26.5  %
Unallocated —  (9) —  %
Total Company $ 3,932  $ 1,031  26.2  %
Twelve Months Ended December 31, 2024
Dollars in millions Total Revenue Operating Income Operating Margin
Automotive OEM $ 3,188  $ 625  19.6  %
Food Equipment 2,647  719  27.2  %
Test & Measurement and Electronics 2,818  703  24.9  %
Welding 1,851  597  32.3  %
Polymers & Fluids 1,764  484  27.4  %
Construction Products 1,909  559  29.3  %
Specialty Products 1,743  528  30.3  %
Intersegment (22) —  —  %
Total Segments 15,898  4,215  26.5  %
Unallocated —  49  —  %
Total Company $ 15,898  $ 4,264  26.8  %


ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)

Q4 2024 vs. Q4 2023 Favorable/(Unfavorable)
Operating Revenue Automotive OEM Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW
Organic (2.3) % 3.4  % 1.7  % (0.4) % 0.8  % (4.5) % (3.6) % (0.5) %
Acquisitions/
Divestitures		 —  % —  % 0.9  % —  % —  % —  % —  % 0.2  %
Translation (1.4) % (0.7) % (0.4) % (0.6) % (3.2) % (0.2) % (1.0) % (1.0) %
Operating Revenue (3.7) % 2.7  % 2.2  % (1.0) % (2.4) % (4.7) % (4.6) % (1.3) %
Q4 2024 vs. Q4 2023 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 (50) bps 70 bps 50 bps (10) bps 20 bps (100) bps (70) bps (10) bps
Changes in Variable Margin & OH Costs 140 bps (60) bps 160 bps 150 bps (60) bps 200 bps 260 bps 130 bps
Total Organic 90 bps 10 bps 210 bps 140 bps (40) bps 100 bps 190 bps 120 bps
Acquisitions/
Divestitures		 — — (50) bps — — — — (10) bps
Restructuring/Other  130 bps  10 bps  10 bps  20 bps  (20) bps  10 bps  (10) bps  30 bps
Total Operating Margin Change 220 bps 20 bps 170 bps 160 bps (60) bps 110 bps 180 bps 140 bps
Total Operating Margin % * 19.8% 27.2% 27.0% 31.2% 27.9% 28.0% 28.4% 26.2%
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets  30 bps  50 bps  160 bps  10 bps  150 bps  10 bps  20 bps  70 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.06) on GAAP earnings per share for the fourth quarter of 2024.


ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)

Full Year 2024 vs Full Year 2023 Favorable/(Unfavorable)
Operating Revenue Automotive OEM Food Equipment Test & Measurement and Electronics Welding Polymers & Fluids Construction Products Specialty Products Total ITW
Organic (0.4) % 1.1  % (1.0) % (2.4) % 0.9  % (6.1) % 3.5  % (0.7) %
Acquisitions/
Divestitures		 —  % —  % 0.9  % —  % —  % —  % (0.6) % 0.1  %
Translation (1.1) % (0.1) % (0.4) % (0.3) % (3.1) % —  % (0.2) % (0.7) %
Operating Revenue (1.5) % 1.0  % (0.5) % (2.7) % (2.2) % (6.1) % 2.7  % (1.3) %
Full Year 2024 vs Full Year 2023 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 (10) bps 20 bps (20) bps (40) bps 20 bps (110) bps 70 bps (20) bps
Changes in Variable Margin & OH Costs 190 bps (10) bps 150 bps 80 bps 60 bps 220 bps 280 bps 190 bps
Total Organic 180 bps 10 bps 130 bps 40 bps 80 bps 110 bps 350 bps 170 bps
Acquisitions/
Divestitures		 — — (50) bps — — — 10 bps (10) bps
Restructuring/Other  50 bps  (10) bps  (10) bps  10 bps  (10) bps  (20) bps  20 bps  10 bps
Total Operating Margin Change 230 bps — 70 bps 50 bps 70 bps 90 bps 380 bps 170 bps
Total Operating Margin % * 19.6% 27.2% 24.9% 32.3% 27.4% 29.3% 30.3% 26.8%
* Includes unfavorable operating margin impact of amortization expense from acquisition-related intangible assets  30 bps  40 bps  180 bps  10 bps  160 bps  10 bps  20 bps  70 bps **
** Amortization expense from acquisition-related intangible assets had an unfavorable impact of ($0.26) on GAAP earnings per share for 2024.



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATIONS (UNAUDITED)

AFTER-TAX RETURN ON AVERAGE INVESTED CAPITAL (UNAUDITED)

Three Months Ended Twelve Months Ended
December 31, December 31,
Dollars in millions 2024 2023 2024 2023
Numerator:
Net income $ 750  $ 717  $ 3,488  $ 2,957 
Net discrete tax benefit related to the third quarter 2024 —  —  (121) — 
Discrete tax benefit related to the second quarter 2023 —  —  —  (20)
Interest expense, net of tax (1)
 51  54  215  204 
Other (income) expense, net of tax (1)
 (16) (7) (336) (38)
Operating income after taxes $ 785  $ 764  $ 3,246  $ 3,103 
Denominator:
Invested capital:
Cash and equivalents $ 948  $ 1,065  $ 948  $ 1,065 
Trade receivables 2,991  3,123  2,991  3,123 
Inventories 1,605  1,707  1,605  1,707 
Net plant and equipment 2,036  1,976  2,036  1,976 
Goodwill and intangible assets 5,431  5,566  5,431  5,566 
Accounts payable and accrued expenses (2,095) (2,244) (2,095) (2,244)
Debt (7,863) (8,164) (7,863) (8,164)
Other, net 264  (16) 264  (16)
Total net assets (stockholders' equity) 3,317  3,013  3,317  3,013 
Cash and equivalents (948) (1,065) (948) (1,065)
Debt 7,863  8,164  7,863  8,164 
Total invested capital $ 10,232  $ 10,112  $ 10,232  $ 10,112 
Average invested capital (2)
 $ 10,511  $ 10,096  $ 10,419  $ 10,214 
Net income to average invested capital (3)
 28.6  % 28.4  % 33.5  % 29.0  %
After-tax return on average invested capital (3)
 29.9  % 30.3  % 31.2  % 30.4  %

(1)    Effective tax rate used for interest expense and other (income) expense for the three months ended December 31, 2024 and 2023 was 23.7% and 22.6%, respectively, and 23.8% and 23.2% for the twelve months ended December 31, 2024 and 2023, 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 December 31, 2024 and 2023 were converted to an annual rate by multiplying the calculated return by 4.



A reconciliation of the 2024 effective tax rate excluding the third quarter 2024 net discrete tax benefit of $121 million, which included favorable discrete tax benefits of $107 million related to the utilization of capital loss carryforwards upon the sale of Wilsonart and $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, is as follows:
Twelve Months Ended
December 31, 2024
Dollars in millions Income Taxes Tax Rate
As reported $ 934  21.1  %
Net discrete tax benefit related to the third quarter 2024 121  2.7  %
As adjusted $ 1,055  23.8  %

A reconciliation of the 2023 effective tax rate excluding the second quarter 2023 discrete tax benefit of $20 million related to amended 2021 U.S. taxes is as follows:

Twelve Months Ended
December 31, 2023
Dollars in millions Income Taxes Tax Rate
As reported $ 866  22.6  %
Discrete tax benefit related to the second quarter 2023 20  0.6  %
As adjusted $ 886  23.2  %



FREE CASH FLOW (UNAUDITED)

Three Months Ended Twelve Months Ended
December 31, December 31,
Dollars in millions 2024 2023 2024 2023
Net cash provided by operating activities $ 1,114  $ 1,039  $ 3,281  $ 3,539 
Less: Additions to plant and equipment (118) (131) (437) (455)
Free cash flow $ 996  $ 908  $ 2,844  $ 3,084 
Net income $ 750  $ 717  $ 3,488  $ 2,957 
Net cash provided by operating activities to net income conversion rate 149  % 145  % 94  % 120  %
Free cash flow to net income conversion rate 133  % 127  % 82  % (1) 104  %

(1)    Excluding the impact of the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax), the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes, and a discrete tax benefit of $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, the free cash flow to net income conversion rate would have been 94% for the twelve months ended December 31, 2024.

Three Months Ended
March 31, June 30, September 30,
Dollars in millions 2024 2024 2024
Net cash provided by operating activities $ 589  $ 687  $ 891 
Less: Additions to plant and equipment (95) (116) (108)
Free cash flow $ 494  $ 571  $ 783 
Net income $ 819  $ 759  $ 1,160 
Net cash provided by operating activities to net income conversion rate 72  % 91  % 77  %
Free cash flow to net income conversion rate 60  % (1) 75  % 68  % (2)

(1)    Excluding the impact of the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax), the free cash flow to net income conversion rate would have been 68% for the three months ended March 31, 2024.

(2)    Excluding the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes, and a discrete tax benefit of $87 million related to a reorganization of the Company's intellectual property, partially offset by a $73 million discrete tax expense related to the remeasurement of unrecognized tax benefits associated with various intercompany transactions, the free cash flow to net income conversion rate would have been 102% for the three months ended September 30, 2024.




ADJUSTED NET INCOME PER SHARE - DILUTED (UNAUDITED)

Twelve Months Ended
December 31, 2024
As reported $ 11.71 
Impact of sale of noncontrolling interest in Wilsonart (1)
 (1.26)
Cumulative effect of change in inventory accounting method, net of tax (2)
 (0.30)
As adjusted $ 10.15 

(1)    Includes the $363 million pre-tax gain on the sale of noncontrolling interest in Wilsonart and related taxes.

(2)    Represents the cumulative effect of the change from the LIFO method of accounting to the FIFO method for certain U.S. businesses ($117 million pre-tax, or $88 million after-tax).