Illinois Tool Works Inc. reported third-quarter revenue that dropped 4.9% year over year in part due to reduced commercial demand for the company's fasteners during the pandemic. That was nonetheless better than the 16.8% decline anticipated by analysts, S&P Global Market Intelligence data shows.

Panjiva data shows that U.S. seaborne imports associated with Illinois Tool Works, or ITW, to the U.S. have fallen by 7.0% year over year in the third quarter, signaling the company perhaps had more confidence in its sales needs than consensus estimates factored in.

While demand was weak, the company's supply chain has remained flexible with CEO Scott Scanti noting that "his company operates with localized supply chains" which "remains in position, robust and ready to flex with us." The company does not appear to have suffered a repeat of the closure of a factory early in the pandemic, as outlined in Panjiva's research of March 16.

ITW mostly sources from China, which accounted for 52.5% of imports in 2019. China seems to have also maintained much of ITW’s business, with imports falling by 1.0% year over year in the third quarter. ITW suppliers in Europe and other parts of the world fared worse. Europe provided 24.0% of imports in 2019, and fell by 22.3% year over year in the third quarter, while imports from other countries fell by 6.4% year over year.

Panjiva data also shows which product lines have fared better or worse through the pandemic.

Volumes of ITW-associated imports of auto parts increased 25.4% year over year in the third quarter after falling by 39.2% year over year in the second. Imports of nails and tacks increased as well, with third-quarter imports improving by 12.1% year over year in the third quarter. Notably, nail and tack imports increased by 67.5% and 91.2% year over year in the first and second quarters, respectively. This provides some evidence that the pandemic cut ITW off from domestic supplies of these parts.

ITW-associated imports of machinery used in food processing and plant and laboratory machines performed worse, likely an indicator of decreased capital budgets in domestic industries. Imports of food-processing equipment fell 12.4% year over year in the third quarter, while imports of industrial plant and laboratory machinery fell 54.4% in the same period.

Eric Oak is a researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.