From my perspective, the highlights are the Q4 revenues got back to year-ago levels despite food equipment being down 17% and net operating income, operating margin and after-tax ROIC were all Q4 records for the Company.
For 2021, our Win the Recovery posture in mindset continues on and serves as the central theme driving the 2021operating plans for every one of our 83 divisions.
In the fourth quarter, we continue to see solid recovery progress in many of the end markets that we serve as evidenced by our revenue being up sequentially 5% versus the third quarter.
The increase is 8% when you adjust for equal number of days when historically our revenue per day has increased by 1% from Q3 to Q4.
Overall, we delivered revenue of $3.5 billion, operating income of $883 million, an increase of 7% year-over-year, operating margin of 24.4%, free cash flow of $705 million, and GAAP earnings per share of $2.02.
After-tax return on invested capital improved to 32%.
On a year-over-year basis, North America organic revenue declined 3%, International revenue grew 1%, Europe was down 2%.
Similar to Q3, China was the bright spot with 11% growth.
As we've talked about before, the operating flexibility that is core to our 80/20 Front-to-Back operating system also applies to the cost structure, which was on full display through our operating margin performance in Q4.
We improved operating margin by 170 basis points to 25.4%, the second-highest margin rate in a quarter in the history of the Company.
And like I say, grew operating income 7% to $883 million, the highest fourth quarter ever.
The biggest driver of our margin improvement remains our enterprise initiatives, as the ITW team executed on projects and activities that contributed 130 basis points in Q4.
The impact was broad-based with all segments delivering enterprise initiative benefits in the range of 80 basis points to 170 basis points.
GAAP earnings per share was $2.02 sets, up 2%, but keep in mind, the Q4 last year had $0.11of one-time gains from divestitures.
To exclude those gains, earnings per share was up 7%, the same as operating income.
Working capital performance was excellent and free cash flow of $705 million was solid with a conversion rate of 110% of net income.
Finally, the effective tax rate was 22.1%, down slightly from last year.
You can see the rapid recovery in our end markets, relative to the Q2 bottom, but down 27%.
The most pronounced recovery has been in automotive OEM, which is more than doubled since Q2 and grew 8% year-over-year in Q4, as did construction products.
Polymers and Fluids grew 7% while demand in three segments, Test & Measurement and electronics, welding and specialty products was only slightly lower year-over-year.
Overall, you can see the benefit of having a high quality diversified portfolio and the fact that we're back to demand levels of a year ago with total revenue essentially flat year-over-year despite one of our core segments being down organically by 19%.
At the bottom, in Q2, we still delivered solid operating margins of 17.5% and only two segments were below 20%.
In Q4, were almost 800 basis points higher at 25.4% despite no volume growth year-over-year and every segment is back about 22% including food equipment and six out of seven segments achieved record fourth quarter operating margins.
In Q4, organic growth of 8% year-over-year was the highest growth rate since the first quarter of 2017.
While North America was flat in Q2, it was more than offset by strong demand in Europe, which grew 10% and China, which grew 20%.
As expected, food equipment end markets remained challenged in Q4, organic revenue was down 19%, a little better than the third quarter, and demand in Q4 was similar to Q3 when you look at it by geography and the end markets.
North America was down 20%, international down 18%, equipment sales were down 20% and service was down 18%.
Institutional demand was down about 30% with restaurants down a little bit more than that.
And not surprisingly, the bright spot throughout the year, continue to be retail with organic growth of 8%.
Q4 organic revenue declined 3% with Test & Measurement down 8% against the tough comparison of plus 6% in Q4 '19.
Electronics was up 3% and while demand for capital equipment remains sluggish, the segment benefited from considerable strength in several end-markets, including semiconductor, healthcare and clean room.
Pre-COVID revenues in fiscal year 2019 were $559 million with operating margin of 6%.
We expect to get the business to generate ITW caliber operating margins by the end of year five and generate after-tax ROIC in the high teens by the end of year 10.
in welding, where we saw a meaningful pickup in demand as organic revenue improved from being down 10% year-over-year in Q3 to only being down 2% in Q4.
Our commercial business which primarily serves smaller businesses and individual users and accounts for 35% of the revenue in this segment remained strong and grew 12% year-over-year.
Our Industrial business showed signs of strong recovery from being down 23% in Q3 to down only 5% in Q4 as customer activity and equipment orders gained strength.
Overall organic revenue for equipment was flat versus prior year and much improved versus a 10% decline in the third quarter.
Polymers & Fluids delivered strong organic growth of 7% with fluids up 16% with continued strong demand in end-markets related to healthcare and hygiene.
The automotive aftermarket business benefited from strong retail sales with organic growth of 5% and polymers grew 4% with solid demand for MRO and automotive applications.
Construction continue to benefit from strong demand in the home center channel and delivered organic growth of 8% in Q4.
Growth was strong across all geographies with North America up 10%, double-digit growth in the residential renovation market offset by commercial construction, which represents only about 15% of North America revenue down 11%.
Europe grew 9% and Australia/New Zealand grew 5% due to strong retail sales.
Specialty organic revenue was down 3% this quarter with North America down 2% and international revenue down 4%.
And in the face of unprecedented challenges that included temporary customer shutdowns across wide swaths of our end markets during the year, organic revenue was down 10%.
we delivered operating income of $2.9 billion and highly resilient operating margin of 22.9%, only down 120 basis points year-over-year despite no major cost takeout initiatives on mandates, and with the strong contribution of 120 basis points from our Enterprise Initiatives.
After-tax ROIC was 26.2% and free cash flow was $2.6 billion.
We did not have a need to issue any debt or commercial paper in 2020 and we ended the year with total debt to EBITDA leverage of 2.5 times, which is only slightly above our 2.25 times target.
At year-end, we had approximately $2.6 billion of cash and cash equivalents on hand.
The outcome of that exercise is a forecast of solid broad-based organic growth of 7% to 10% at the enterprise level.
Foreign currency at today's exchange rates is favorable and has 2 percentage points revenue for total revenue growth forecast of 9% to 12%.
At our typical incremental margins of 35% to 40%, we expect GAAP earnings per share in the range of $7.60 to $8 a share, up 18% at the midpoint.
We're forecasting operating margin in the range of 24% to 25%, which is an improvement of more than 150 basis points year-over-year at the midpoint.
Enterprise Initiatives are a key driver of operating margin expansion in 2021, as are expected to contribute approximately 100 basis points.
We expect strong free cash flow in 2021 with a conversion rate greater than 100% of net income.
In line with our capital allocation, we returned surplus capital to shareholders and we are reinstating share repurchases with a plan to invest approximately $1 billion in 2021.
We expect our tax rate for the year to be in the range of 23% to 24%.
At the enterprise level, it all adds up to solid organic growth of 7% to 10%.

Summary:
The increase is 8% when you adjust for equal number of days when historically our revenue per day has increased by 1% from Q3 to Q4.
Overall, we delivered revenue of $3.5 billion, operating income of $883 million, an increase of 7% year-over-year, operating margin of 24.4%, free cash flow of $705 million, and GAAP earnings per share of $2.02.
On a year-over-year basis, North America organic revenue declined 3%, International revenue grew 1%, Europe was down 2%.
GAAP earnings per share was $2.02 sets, up 2%, but keep in mind, the Q4 last year had $0.11of one-time gains from divestitures.
The outcome of that exercise is a forecast of solid broad-based organic growth of 7% to 10% at the enterprise level.
At our typical incremental margins of 35% to 40%, we expect GAAP earnings per share in the range of $7.60 to $8 a share, up 18% at the midpoint.
Enterprise Initiatives are a key driver of operating margin expansion in 2021, as are expected to contribute approximately 100 basis points.
In line with our capital allocation, we returned surplus capital to shareholders and we are reinstating share repurchases with a plan to invest approximately $1 billion in 2021.
At the enterprise level, it all adds up to solid organic growth of 7% to 10%.