Welcome, and thank you for standing by. At this time all participants are in a listen-only mode. [Operator Instructions] Today’s conference is being recorded. If you have any objections, you may disconnect at this time. And now, I’d turn today’s meeting over to Aaron Hoffman, Vice President of Investor Relations. Thank you sir, you may begin.

Thank you. Good morning and welcome to ITW’s Fourth Quarter 2014 Conference Call. Joining me this morning on our call our CEO, Scott Santi and Michael Larsen our CFO. During today’s call, we will discuss our Q4 and full year financial results and update you on our earnings forecast. Before we get to the results let me remind you that this presentation contains our financial forecast for the 2015 first quarter and full year as well as other forward-looking questions identified on this slide. We refer you to the company’s 2014 Form 10-Q for the second quarter for more details about important risks that could cause actual results to differ materially from our expectations. Also this presentation uses certain non-GAAP measures; a reconciliation of the non-GAAP measures to the most comparable GAAP measures is contained in the press release. With that, I will turn the call over to Scott.

Thanks, Aaron and good morning. Overall, we were pleased with our performance in the fourth quarter and for the full year as we continued to execute well on our enterprise strategy. In the fourth quarter, earnings per share came in at $1.18, which was an increase of 28% versus Q4 of last year and $0.07 above the midpoint of our forecast. This above forecast earnings performance was driven primarily by margin performance that came in at the high end of what we expected heading into the quarter. Q4 operating margin improved to 190 basis points year-on-year with a 120 basis points of that improvement coming from enterprise strategy initiatives. Organic revenues in the quarter were up 2.3%, largely in line with our forecast with ongoing product line simplification activities reducing organic growth by roughly 1%. The quarter kept the solid year for ITW. For the full year, earnings per share increased 29%, operating income of 2.9 billion, and operating margin of 19.9% were above all time records for the company. After tax return on invested capital improved 260 basis points to 18.9%. In 2014, we made significant progress on the execution of our strategy as we simplified the company through our business structure simplification initiative and generated cost savings from our strategic sourcing initiative that exceeded our plan. We also completed the heavy lifting with regard to divestitures associated with our portfolio management initiative, while our divisions continued to be very active in refining and narrowing the focus of their business portfolios through the implementation of our product line and customer base simplification initiatives. Free cash flow was strong in 2014 and came in at 110% of adjusted net income through the combination of our strong free cash flow and divestiture proceeds. In 2014, we were able to return a record 5 billion to our shareholders in the form of share repurchases and increased dividends. In summary, ITW's unique and highly differentiated business model is delivering strong results as we continue to execute our strategy. As we enter year three of our five year plan, we are well positioned to deliver another year of solid progress in 2015. I’d like to close by thanking all of our people around the world for the great job that they continue to do in serving our customers and in executing our strategy. I’ll now turn the call over to Michael. Michael?

Thank you Scott and good morning everyone. Starting with the financial summary on page 4, fourth quarter EPS was a $1.18, an increase of 28% versus prior year. The EPS number included $0.04 of currency related headwinds versus prior year. Enterprise initiatives contributed 120 basis points of margin expansion and led to operating margin of 19.6% and operating income of 686 million. Also good progress on the after tax return on invested capital metric with an improvement of 220 basis points to 18.6%. Revenues were 3.5 billion, up 2.3% organically after the expected 1 percentage point impact from product line simplification. Foreign currency translation reduced revenues by 3.5% resulting in total revenues declining 1.4%. Cash generation was as expected with pre-operating cash flow conversion at 124%, and we allocated $800 million to our share repurchase program in the quarter. The ending diluted share count was 386 million. Overall, we’re pleased with the results in the quarter and the positive momentum going into 2015. Turning to revenue by geography, organic revenue was up 2.3% with positive growth in all major geographies. North America up 3% as a result of strength in welding up 10%, food equipment up 5%, and automotive OEM up 4%. International growth was stable up 2% with Europe up 1% driven by automotive OEM up 12% and food equipment up 5%. Asia-Pacific and South America were both up 2% with China up 4% on strength in automotive OEM, food equipment, and Test & Measurement and Electronics all up 10%. So 2.3% organic growth after the ongoing product line simplification activities that reduced organic growth by roughly 1% in the quarter. On page 6, operating margin exceeded our expectations going into the quarter, had solid execution on the enterprise initiatives led to an operating margin of 19.6%, an increase…

Thanks Michael. We’ll now open up the call to your questions. Please be brief to allow more people the opportunity to ask a question and remember our policy of one question and one follow up question only. So with that, let’s turn to the questions.

Thank you. [Operator Instructions] Our first question comes from Joel Tiss of BMO.

Well, I usually barely make it at the end. How are you doing guys? It looks like you’re kind of reaching or you’re moving toward your 2017 goals a little faster than expected, is there more benefit you’re getting from your initiatives or do you think you’re going to finish early or I’m just trying to or you’re going to have to enhance your plans as we go down the road? I’m just trying to understand what’s going on at the operating level?

Well, the way I would characterize it is, I think we’re largely on track. We did update our margin goal in December for 2017 to be in the 23% range, that’s certainly reflective of the progress generated to date and also what we see ahead in terms of additional opportunity around these initiatives, but again I think we’re largely where we expect to be executing and making progress quarter-by-quarter and still remain on track with what we’ve set out to do two years ago.

Thank you, next question is Andy Kaplowitz of Barclays.

Hey guys, how are you? Nice quarter. So Scott, you talked about welding a bit, you guys talked about oil and gas that is within welding, but it was up very strong 10% and we know oil and gas has been slow, but you’ve also talked in the past about it being more downstream and midstream. So, as we look at welding in 2015, can you give us a little more clarity about what you think the non-oil and gas businesses will do and then maybe have you gotten more color since the December Analyst Day on what you think oil and gas will do in the business?

I would say relative to the second part of your question, we haven’t seen any real noticeable change in terms of buying behavior out the oil and gas segment to date. That certainly doesn’t mean that we don’t expect there to be some impact from that as we go forward. But on the ground in the fourth quarter, we didn’t see any significant change relative to the run rates we had from the oil and gas sector heading into the quarter. On an overall basis for ’15, I think what we saw that was encouraging was some noticeable improvement in demand in North America through the back half of the year, given certainly the volatility of the current environment, I don’t know that we have anything that we would say is leading us to believe that that won't continue as we go forward, and so I think we’re pleased with the momentum that’s been building there and expect it to continue at a moderate level through ’15.

And Scott let me back up to your last response and just ask you in general, you mentioned the volatility of the market, you can see some of the other guys report on what they’re doing. But you guys have been doing pretty well, it looks like Europe is holding up for you, but it’s pretty heavily weighted towards your auto outperformance and the food equipment. So is there a way to characterize what you see in the different geographies, specifically Europe and U.S., did you see any change in order patterns throughout the end of the year last year and as you started here in January or is it sort of just steady as you go and we can expect the outperformance that we usually get from ITW?

Well, the answer to that is, we really haven’t seen any change I think, from an overall demand standpoint, Q4 I think things held up pretty well right in line with our expectations certainly consistent with Q3 run rate. So, as we’ve talked before, our planning is built on demand that we’re actually seeing on the ground, and as it relates to Q4, things held up pretty well certainly on track again with expectations and consistent with Q3 run rates.

Okay, and throughout Europe as well and major businesses.

Yes.

Thank you. Our next question is Jamie Cook of Credit Suisse.

Good morning and nice quarter, I guess a couple of questions, one within the construction products division, the North America up 8% driven by renovation and commercial was encouraging. You guys have been less optimistic on commercial construction. So can you sort of talk about any change in your outlook, does this get you more excited in what you think potentially, the effect of energy is on the construction business? And then my last question just I am sorry if I missed it, what is your assumption on sort of price cost with -- you talked about some of the tailwinds that you could from resin chemicals, et cetera. Has that changed relative to your December outlook meeting? Thank you.

So let’s start on the construction side. So if you look at the total segment, we were up 2% in line with what we’ve done really throughout 2014. And so, we’ve been growing in the low single digits in the construction segment, and we’re not expecting things to improve much as we go into 2015. Certainly, there are some encouraging headlines but that is -- we're not counting on it as we go into 2015. North America was up 8%, we saw some strength in renovation, some slight growth on the commercial side and then a decline in residential. So, I wouldn’t get too excited about the number of North America 8%. We expect this to continue kind of along with the run rates that we saw in 2014, so low single digit type growth is how we would characterize the construction in North America with some optimism given some of the headlines. On the price cost side, we had 10 points of favorability in 2014. That is still our base assumption for 2015, but clearly as we’ve talked about the impact of lower crude oil prices and what that may mean to our purchase of chemicals, resins, certainly our transportation and freight costs, we would expect as those savings come through to see an improvement in our price cost metric. For now, we are holding on to the base assumption here at 10 basis points favorable and we’ll keep you posted as we go through the quarters.

Thank you. Our next question is Andy Casey of Wells Fargo Securities.

Good morning everybody. A question on -- it’s kind of a specific question, but in North America did you see any benefit in any of your business from the late passage through the Section 179?

No I think as we went through the quarter here really this behaved in line with our expectations. We had a strong finish in December but we always do. And so there was really nothing unusual about the fourth quarter as it unfolded.

Okay, thank you. And then as you look at polymers and fluids going through 2015, are you expecting full year pretty consistent impact from PLS initiatives or does that taper off as you go through the year?

Well, I think that -- as it relates to that segment specifically they have been doing some real heavy lifting with respect to PLS and are getting close to -- getting through the end of that process. So we would expect that to start to dissipate here as we move through ’15.

Thank you. Next question is Ajay Kejriwal of FBR Capital Markets.

Thank you. Good morning. Scott just maybe on the enterprise initiatives I know you gave [a lot of] [ph] detail at the December meeting. Maybe an update on BSS in terms of what are some of the major items things that you’ve been looking to achieve in the course of this year? And then also on sourcing does the recent moves in commodity pricing that has held that how you think about the sourcing gains during the course of this year?

Ajay the connection was a little static so I’m going to -- I think the questions related to some commentary around where we with respect to BSS execution and the second is around sourcing impact relative to lower energy prices and the impact those might have on commodities. Regarding BSS I think we continue to make good progress. I have been very pleased with both the quality and the pace of execution and this is, there has been a lot of moving parts inside the company in support of this initiative and our mantra from day one with our divisions was that we had a lot of important work to do but ultimately we’re going to do that in a way that didn’t impair our ability to serve our customers or deliver for our shareholders throughout and I think we largely been able to sustain that from day one. It is a five year process not a -- and we’re certainly heading into the year three of that. I think organizationally we've got the organizations that we want in place but we’re still doing a lot of work down at the individual division level in terms of plan consolidation, facility consolidations and really getting these businesses in a position to fully operate a single entity global divisions. That work continues. I think we’re well on track but we have a fair load of work still to do in ’15 and probably a decent amount in ’16 on that as well. As it relates to on the sourcing side we are -- any energy savings that accrued this year would be and that’s something we would talk about as it relates to our sourcing initiative that would reflected in our price cost reporting. Sourcing initiatives is much more around permanent changes and structural cost as a result of a much more focused 80-20 driven effort around improving the efficiency with through which we source raw materials. So, as Michael talked about earlier there is certainly some potential for some benefit on this on the input cost side related to lower energy prices but that is something that we would not report as part of our sourcing initiative, we would talk about that as a price cost benefit as we moved down the road.

And then Michael on FX, can you talk about hedging, how do you think about your FX exposures, how much is naturally hedged versus through contracts? Thank you.

Yes, so Ajay, I just maybe reiterate on the sensitivities around foreign exchange and when we were together in December we gave you a rough rule of thumb, I gave everybody a rough rule of thumb that said a penny change in the euro versus dollar rate equates to a penny of EPS on an annualized basis and obviously since then the euro has weakened versus the dollar to a tune of about $0.10 and so that’s the $0.25 of headwind that we talked about now versus the ’15 in December and obviously all currencies are moving. So, this is the rough rule of thumb. Well in terms of hedging, we are well hedged naturally, so we’re a company that manufactures in the regions that we sell into and so this is really just the translation impact for ITW, there are no mismatches in terms of revenues and cost, no structural issues to speak of that need to be addressed here and so beyond that we’re all looking at the same currency rates, we told you what the sensitivities are and in terms of operationally our view hasn’t really changed and the way we run the company hasn’t really changed but obviously the way we report our earnings when we consolidate and back into the U.S. are impacted by currency.

But we’re not a hedger of translation risk.

That’s correct, yes.

Thank you, our next question is Walter Liptak of Global Hunter.

Hi, thanks. Good quarter guys. Wanted to ask you about the welding segment and if you could break out the North America and give us some indication of price versus volume.

We typically do not go into that level of detail for competitive reasons Walter, so we’re not going to go there today I think there is really nothing unusual here.

The plus standard would be largely volume.

Yes, I mean it’s very similar to what we’ve seen in prior quarters nothing unusual.

Okay, got it. And then another question, not a follow up but in the electronics segment you had that plus 11% growth and I wonder if we can get some color on that, the products that, that was going into the geographic regions and trying to get an idea if that's sustainable as you go further into 2015?

I think the increase we were talking about was in the electronic assembly piece primarily sold into Asia, that business can be a little bit lumpy. So, I wouldn’t read too much into one or two quarters here, we’re certainly encouraged by what we saw in the third and the fourth quarter but the long term growth rate here is unfortunately probably a little bit lower than what we saw in the fourth quarter and probably in the low to mid-single digits in that segment.

Thank you, next question is from Rob Wertheimer of Vertical Research Partners.

Hi, not to circle around again but it just seems as though that the risk -- the benefit on the materials cost side and we’ve had a long period of inflation against this kind of flip flop in the last year or so. Have you had more pushback that you’re hearing from your sales staffs on pricing on getting any kind of pricing through that they’re being asked for pass-through or is it really the net risk really does lay your way?

I mean there’s really been no changes in terms of how we look at price cost inside the company and no increased pushback to your question.

Okay, thanks. And then just real quickly on food service, curious about the general feeling in the market propensity to spend whether you’re seeing people do positive capital decisions or whether doing more replacement. I am just curious about what you feel the rest of the market like? Thanks.

The environment overall is still -- I would certainly not describe it as a market with a lot of tailwind. Lot of what we’re benefiting from right now is at number of meaningful new product launches that are -- certainly given us an extra 2% or 3% of organic growth. I think that’s the best color I can give you on it for now is no big changes in demand over the course of the last year but we’ve seen our own growth rate accelerate as we move through the year largely because of some the product commercializations.

Thank you. Next question is Steven Fisher of UBS.

The test and measurement segment was down on tougher comps in the quarter. What do you expect there for 2015 and do you have any visibility to that showing some growth next year or this year?

Yes so if you recall in the fourth quarter ’13 that business test and measurement was up 8% or 9% organically -- 9% organically. And I think as we look forward into 2015, we expect similar to what we saw in 2014 so in the low to mid-single digits as Scott said earlier and we’ve said many times we in our guidance the way we model this is at current rates. So we expect that test and measurement to be at that low to mid-single digit type growth for 2015.

Okay, great. And not sure if I missed it but the China 4% growth in the quarter and how you see that playing out in 2015?

China for us is really primarily driven by the strong performance in our automotive business that continues to outperform in a meaningful way. We also had in the quarter food equipment primarily as a result of an acquisition we did little over year ago. And that’s based strong growth in food equipment and then we talked a little bit about the polymers and fluids business also being positive in China. So the offset here is primarily similar to what we talked about in the third quarter is the welding business where we continue to see some -- two things going on one is product line simplification where we’ve exited some business lines that didn’t meet our threshold from a large end standpoint and then some projects that are still being delayed in China. So I would expect China -- if you look at China for the year we’ve kind of been in that mid-single digit type growth rate and based on the continued outperformance in automotive and food equipment we’d expect that to continue.

Thank you. And at this time we’re showing no further questions.

Thank you everyone for your time today. And we’ll look forward to speaking with you all again very soon. Have a great day.