Slide 1: Fourth Quarter 2019 Earnings Release
Fourth Quarter 2019 Earnings Release February 6, 2020 1
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS & NON-GAAP FINANCIAL MEASURES Statements in this presentation that are not strictly historical, statements regarding the Company's anticipated earnings, business and acquisition opportunities, timing of the separation of Vontier, timing of acquisitions, dispositions and ot
Slide 3: Q4 2019 Financial Performance: Summary of Key Financial Items
Q4 2019 FINANCIAL PERFORMANCE* Summary of Key Financial Items Revenue ($M) Adjusted Operating Profit Adjusted Diluted Net Free Cash Flow ($M) Margin (%) Earnings Per Share ($) • Core growth: 0.4% • Adjusted Margins +60bps Y/Y • Adjusted EPS +13.2% Y/Y • FCF: +17% Y/Y – Price: 1.2% – Core OMX: 150bps
Slide 4: Q4 2019 Financial Performance: Cash Flow
Q4 2019 FINANCIAL PERFORMANCE* Cash Flow • Q4 2019: Free Cash Flow ($M) - Q4 2019 – Free Cash Flow: $452M (+17% versus Prior Year) – +$104M versus Q3 2019 – FCF Conversion: 253% of GAAP Net Earnings; 123% of Adjusted Net Earnings • FY 2019: – Free Cash Flow: $1,172M** (+8% versus Prior Year) Free Ca
Slide 5: Segment Detail
@ FORTIVE Segment Detail
Slide 6: Professional Instrumentation Q4 Performance Overview
PROFESSIONAL INSTRUMENTATION Q4 Performance Overview • Slow short-cycle demand dynamics persisted at Fluke and Tektronix – Some early signs of stability in North America at Fluke – China more challenging with negative POS at Fluke and continued impact from Huawei restrictions at Tektronix – Western
Slide 7: Industrial Technologies Q4 Performance Overview
INDUSTRIAL TECHNOLOGIES* Q4 Performance Overview • Solid growth continued at GVR – North America driven by sustained momentum from EMV-related sales; approaching October 2020 liability deadline – China slower due to headwinds from winding down of the double-wall tank upgrade cycle – GVR recently rec
Slide 8: Guidance
@ FORTIVE Guidance
Slide 9: 2020 Guidance Highlights
2020 GUIDANCE HIGHLIGHTS* Full-Year 2020 Guidance • Adjusted Diluted EPS: $3.68 to $3.78 (+6% to +9%) – Assumptions: – Core Revenue Growth (Y/Y): LSD – Core OMX: +50bps – Adjusted Operating Margins: ~22% (Segments: ~24% at PI; ~Mid-21% at IT) – Tax Rate: ~16.0% Q1 2020 Guidance • Adjusted Diluted EP
Slide 10: Full-Year 2020 Adjusted EPS Bridge
FULL-YEAR 2020 ADJUSTED EPS BRIDGE * Assumptions noted above 10
Slide 11: Q1 2020 Adjusted EPS Bridge
Q1 2020 ADJUSTED EPS BRIDGE * Assumptions noted above 11
Slide 12: Supplemental Data
Supplemental Data* * From Continuing Operations 12
Slide 13: Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT MARGIN Three Months Ended Year Ended $ in millions December 31, 2018 December 31, 2019 December 31, 2018 December 31, 2019 Revenue (GAAP) $ 1,757.5 $ 2,002.4 $ 6,452.7 $ 7,320.0 Acquisition-Related Fair Value Adjustments to Deferred Revenue 31.4 10.8 34.4 54.5 Adjusted Revenue
Slide 14: 2019 Adjusted Operating Profit & Margin (GAAP to Adjusted Walk)
2019 ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN (GAAP TO ADJUSTED WALK) Three Months Ended December 31, 2019 Year Ended December 31, 2019 $ in millions Professional Industrial Corporate Total Professional Industrial Corporate Total Instrumentation Technologies Fortive Instrumentati
Slide 15: 2018 Adjusted Operating Profit & Margin (GAAP to Adjusted Walk)
2018 ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN (GAAP TO ADJUSTED WALK) Three Months Ended December 31, 2018 Year Ended December 31, 2018 $ in millions Professional Industrial Corporate Total Professional Industrial Corporate Total Instrumentation Technologies Fortive Instrumentati
Slide 16: Operating Profit Margin (Y/Y Walk)
OPERATING PROFIT MARGIN (Y/Y WALK) Three Months Ended December 31, 2019 Year Ended December 31, 2019 $ in millions Professional Industrial Total Professional Industrial Total Instrumentation Technologies Fortive Instrumentation Technologies Fortive 2018 Adjusted Operating Profit Margin (Non-GAAP) 25
Slide 17: Adjusted Net Earnings
ADJUSTED NET EARNINGS Three Months Ended Year Ended $ in millions December 31, 2018 December 31, 2019 December 31, 2018 December 31, 2019 Net Earnings From Continuing Operations Attributable to Common Stockholders (GAAP) $ 222.8 $ 161.6 $ 883.4 $ 656.4 Dividends on the mandatory convertible preferre
Slide 18: Adjusted Diluted Net EPS
ADJUSTED DILUTED NET EPS Three Months Ended (a) Year Ended (a) December 31, 2018 December 31, 2019 December 31, 2018 December 31, 2019 Diluted Net Earnings Per Share from Continuing Operations Attributable to Common Stockholders (GAAP) $ 0.66 $ 0.48 $ 2.52 $ 1.93 Dividends on the mandatory convertib
Slide 19: Forecasted Adjusted Diluted Net EPS from Continuing Operations
FORECASTED ADJUSTED DILUTED NET EPS FROM CONTINUING OPERATIONS Three Months Ending Year Ending March 27, 2020 December 31, 2020 Low End High End Low End High End Forecasted Diluted Net Earnings Per Share from Continuing Operations Attributable to Common Stockholders $ 0.24 $ 0.28 $ 2.16 $ 2.26 Antic
Slide 20: Adjusted Diluted Shares Outstanding
ADJUSTED DILUTED SHARES OUTSTANDING Three Months Ended Year Ended (shares in millions) December 31, 2018 December 31, 2019 December 31, 2018 December 31, 2019 Average common diluted stock outstanding 339.3 340.1 350.7 340.0 MCPS Converted Shares (a) 18.4 18.3 8.7 18.3 Adjusted average common stock a
Slide 21: Free Cash Flow Conversion Ratio
FREE CASH FLOW CONVERSION RATIO $ in millions Three Months Ended Year Ended December 31, 2018 December 31, 2019 % Change December 31, 2018 December 31, 2019 % Change Operating Cash Flows from Continuing Operations $ 422.5 $ 484.5 14.7% $ 1,201.3 $ 1,284.9 7.0% (GAAP) Less: purchases of property, pla
Slide 22: Adjusted Free Cash Flow Conversion Ratio
ADJUSTED FREE CASH FLOW CONVERSION RATIO $ in millions Three Months Ended Year Ended December 31, 2018 December 31, 2019 % Change December 31, 2018 December 31, 2019 % Change Operating Cash Flows from Continuing Operations $ 422.5 $ 484.5 14.7% $ 1,201.3 $ 1,284.9 7.0% (GAAP) Less: purchases of prop
Slide 23: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended Year Ended December 31, 2019 December 31, 2019 Total Fortive Total Revenue Growth (GAAP) 13.9% 13.4% Core (Non-GAAP) 0.4% 2.0% Acquisitions (Non-GAAP) 14.6% 13.2% Impact of currency translation (Non-GAAP) (1.1)% (1.8)% Professional
Slide 24: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Year Ended $ in millions December 31, 2018 December 31, 2019 December 31, 2018 December 31, 2019 Earnings before income taxes from continuing operations $ 267.4 $ 242.7 $ 1,078.4 $ 874.5 Income tax expense (27.3) (63.9) (160.1) (149.1) Effective tax rat
Slide 25: (2) FORTIVE
(2) FORTIVE