Differentiated Business Model =

Differentiated Performance

Christopher A. O’Herlihy, Vice Chairman

Michael M. Larsen, SVP & CFO

June 9, 2016

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Safe Harbor Statement

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation

Reform Act of 1995 including, without limitation, statements regarding the expected impact of product line

simplification activities and enterprise initiatives, future financial performance, operating performance, growth in

free cash flow, organic and total revenue growth, operating margin growth, growth in diluted income per share,

restructuring expenses and related benefits, tax rates, exchange rates, timing and amount of share repurchases,

after-tax return on invested capital, end market economic conditions, and the company’s related 2016 guidance.

These statements are subject to certain risks, uncertainties, 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 2015.

Non-GAAP Measures

The company uses certain non-GAAP measures in discussing the company’s performance. The reconciliation of

those measures to the most comparable GAAP measures is detailed in ITW’s press release for the fourth

quarter of 2015, which is available at www.itw.com, together with this presentation.

Forward Looking Statement

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ITW is a “Business Model Centric” Company

• A set of highly powerful and proprietary business practices and capabilities

• The core source of our competitive advantage … drives our ability to win with customers and deliver long-term differentiated returns for our shareholders

• ITW’s “secret sauce,” and through the execution of our Enterprise Strategy, we are focused on leveraging it to its full potential

• By doing so, we are positioning the company to deliver solid growth with best-in-class margins and returns on capital

• ITW’s strong results in 2015 and since the launch of our Enterprise Strategy in 2012 gives us confidence that we are on the right track

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The ITW Business Model is Composed of Three Elements

• Radically simplify and focus on high value items (the “80”)

• Apply to the whole business (not just manufacturing)

• Unique to ITW, deeply embedded in the culture and executed

in multiple business contexts, extremely difficult to replicate

→ Best-In-Class margins and returns

• Focus on solving “80” customer “pain points” by inventing solutions

• Higher velocity, lower risk, serial innovation

• High level of product differentiation with IP/patent protection

→ Solid above-market organic growth

• One company/one team focused on executing ITW’s Enterprise Strategy

• Divisions have “flexibility within the ITW framework”

→ A culture of execution and performance … “ITW gets things done”

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• Vs. Industry or Geography Centric

• A key corporate Portfolio Management role is to make

thoughtful choices to insure we are only investing and

operating in industries that have great raw material for

leveraging the ITW Business Model into strong

sustainable competitive advantages and differentiated

financial performance:

– Sustainable differentiation a must-have with minimal

commoditization risk over the medium to long term

– End customers with sophisticated/complex needs

– Long term core market growth at GDP or above

ITW’s Strategic Focus/Approach is “Business Model Centric”

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Automotive

OEM

Test &

Measurement

and Electronics

Food

Equipment

Polymers &

FluidsWelding

Construction

Products

Specialty

Products

2015

Operating

Margin24.2% 16.3% 23.7% 19.6% 25.2% 19.9% 23.3%

vs. 2012

(bps) +480 +140 +660 +380 (20) +830 +380

ITW’s “Business Model Centric” Portfolio Strategy

*Test & Measurement and Electronics and Polymers & Fluids include 410 and 440 basis points, respectively, of unfavorable operating margin impact of amortization

expense from acquisition-related intangible assets.

Solid Above-

Market Organic

Growth

Best-in-Class

Margins &

Returns

Comprehensive

Strategy

Review

2011-2012

Shift Primary

Growth

Engine to

Organic

Leverage ITW

Business

Model to

Deliver

Best-in-Class

Margins &

Returns

Accelerate

Organic

Growth

2016-

Forward

Prepare to

Accelerate

Organic

Growth

2014-2016

BSS/

Scale-Up

2013-2014

Realign

Portfolio

2013-2016

Strategic

Sourcing

2013-Forward

80/20 Excellence

2015-Forward

ENTERPRISE

STRATEGY

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Portfolio Management

We have aligned our portfolio with our organic growth focus

• Exited businesses operating in low-growth commoditized markets

• ITW is now focused on seven core segments that each have strong sustainable competitive

advantages and favorable long-term growth fundamentals

• Our portfolio is both highly profitable and highly diversified. As a result, ITW is well-positioned

to perform at a high level across a wide range of economic scenarios.

• After executing more than 30 divestitures, we are in the final stages of our portfolio

repositioning efforts as our businesses complete the exiting of slower-growth product lines and

begin to transition their focus to accelerating organic growth

We have scaled-up our divisional structure to accelerate organic growth

Divisional structure needed sufficient scale to support investments in engineering,

marketing, and sales resources necessary to drive accelerated organic growth

• 800+ regional to 84 global divisions in a well-planned, deliberate, and well-executed process

• Significant emphasis on maintaining customer, operational, and financial performance

throughout

Created scaled-up, more focused divisions able to

compete and drive accelerated organic growth globally

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Business Structure Simplification/Scale-Up

Delivering high-quality growth consistently and sustainably requires a strong

foundation of operational and financial performance.

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Prepare for Accelerated Organic Growth

• All ITW businesses must demonstrate that they are serving existing customers with excellence

and delivering acceptable financial performance to be deemed “ready to grow”

• Through the re-application of 80/20 at all of our scaled-up 84 global divisions, we are ensuring

that every business can fully leverage its growth investments and organic growth potential

• In 2015, 60 percent of our businesses achieved “ready to grow” status … we expect to have

85 percent or more of our businesses “ready to grow” by the end of 2016

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Accelerate Organic Growth

• All “ready to grow” divisions are now executing growth strategies and action plans for

all three growth levers in our organic growth framework:

– “80” focused selling … sell more to existing customers

– Core market expansion … identify and sell to customers that are like our “80” customers

– Customer-Back Innovation

• In 2016, we expect to deliver meaningful progress on our path to accelerated organic

growth and our long term organic growth goal of 200 bps or more above market

• Through our more differentiated business portfolio, scaled up operating structure and

growth investments, our strong foundation of operational execution and financial

performance, and a tight focus on our most compelling long-term growth

opportunities, we are confident that ITW is well-positioned to deliver on our growth

goal.

Bolt-on Acquisitions that support our organic growth focus

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• In alignment with our Enterprise Strategy and disciplined capital allocation, we will

use bolt-on acquisitions selectively to reinforce and further enhance the organic

growth potential of our seven core segments.

• In January, 2016 ITW announced the acquisition of Engineered Fasteners &

Components (EF&C) business from ZF TRW

– Annual revenues of $470 million, ~10% EBIT margin

– Highly complementary addition to ITW’s Automotive OEM segment

– Broadens our ability to serve global and regional automotive OEM/tier customers and

expands our long-term growth potential

– Significant potential to improve the performance of EF&C through the application of ITW’s

80/20 business management system

– Expect to generate returns on invested capital of 16 - 20% by year 7

ITW’s Performance Goals

200+ bps

Organic revenue

growth above global

GDP

20%+

After-tax ROIC

23%+

Operating margin

ITW Performance Goals

12-14%

Total shareholder

returns

The focus of ITW’s Enterprise Strategy is to position the Company for solid growth

with best-in-class margins and returns

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BEYOND 2017

Best-in-class business model = Best-in-class financial performance

Enterprise Strategy will generate best-in-class financial performance

and create sustainable, long-term shareholder value

ITW Business Model Delivers 12-14% TSR Beyond 2017

Earnings Per

Share

Operating

Income

3% Global GDP

Total

Shareholder

Returns

+200 bps

~9-10%~10-12%

~12-14%

+~2%

DIVIDEND

YIELD

+1-2%

SHARE

REPURCHASE/

ACQUISITIONS

~35%

INCREMENTAL

MARGINS

~5%

ORGANIC

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16

Operating Margin After-tax ROIC Earnings per Share (CAGR)

2012

21.4%

15.9%

2015

+550 bps

2012

20.4%

14.5%

2015

+590 bps

17%

2012 – 2015

Notes:

2012 Operating Margin as reported in the 2012 Form 10-K.

After-tax ROIC : see ITW’s fourth quarter 2015 press release for the reconciliation of non-GAAP measurements.

12.4%

Peer Group

Average

13.9%

Peer Group

Average

4%

Peer Group

Average

Progress since launch of ITW’s Enterprise Strategy

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1 Year 3 Year 5 Year

95.7%

56.6%

Peer Group

Average

62.8%

36.5%

Peer Group

Average

0.1%

(9.7)%

Peer Group

Average

Differentiated Total Shareholder Returns