Slide 1: Third Quarter 2023 Earnings Release
Third Quarter 2023 Earnings Release October 25, 2023
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, including statements regarding anticipated financial results, global and regional economic conditions, industry trends, geopolitical events, interest rate and current exchange r
Slide 3: Q3 2023 Financials and Highlights
Q3 2023 Financials and Highlights Benefiting from Portfolio Strategy Q3 2023 YTD 2023 Q3 2023 HIGHLIGHTS Revenue $1,495M $4,482M Core growth in all segments; SW and Core Growth 5.5% recurring revenue growth partially offset by 2.5% slowing in China/parts of Sensing Adj. Gross 59.7% 59.2% Margin GMX
Slide 4: Delivering on 2023 Expectations
Delivering on 2023 Expectations Performance Above Initial Outlook Despite Mixed Macro Environment WHAT WE EXPECTED... WHAT WE'RE DELIVERING... HW Products Orders Normalizing Durable Multi-Year Growth Multi-year order rates still strong at Fluke, Tektronix, and Qualitrol; MSD 2023 core growth; recurr
Slide 5: Our Strategy is Working
Our Strategy is Working Traction on Innovation & Investment in Key Secular Trends Enabling AI-Driven Automation & Productivity Mid-teens YTD core growth tied to SaaS migration AUTOMATION & DIGITIZATION Connected Reliability Bolt-On Subscription-based remote condition monitoring and AI-driven vibrati
Slide 6: EA Elektro-Automatik Enhances Our Durable, High-Growth Profile
EA Elektro-Automatik Enhances Our Durable, High-Growth Profile Best-in-Class Electronic T&M Solutions Electrifying the Future of Everything Strategic Rationale Markets Served Financial Highlights Grid & Energy Storage Early innings of multi-decade, Global proliferation of $1.45B purchase price, net
Slide 7: FBS in Action
FBS in Action CEO Kaizen Spotlight - Accelerating Our Culture of Continuous Improvement Realized >100% improvement in productivity 10 41 500+ Reduced quote to order lead time by 40% OpCos Kaizens Participants Leveraged AI/automation to build and launch sales and customer AI co-pilots to improve cust
Slide 8: Q3 2023: Intelligent Operating Solutions
Q3 2023: Intelligent Operating Solutions Solid Orders Demand and Accelerating Recurring Revenue Growth Highlights REVENUE ($M) ADJ. OP. PROFIT MARGIN • Solid core demand and NPI traction buffer expected channel normalization +5.0% +230 BPS Y/Y • MSD+ POS across major regions in Q3 Core +4.0% Core OM
Slide 9: Q3 2023: Precision Technologies
Q3 2023: Precision Technologies Backlog and Productivity Actions Mitigate China Slowing Highlights REVENUE ($M) ADJ. OP. PROFIT MARGIN • Accelerated core growth (2 Yr stack) at Tektronix driven by backlog and stable core +1.3% +60 BPS Y/Y demand in Power/EV and AI/Compute Core +0.9% Core OMX +60 bps
Slide 10: Q3 2023: Advanced Healthcare Solutions
Q3 2023: Advanced Healthcare Solutions Acceleration in Underlying Growth Despite Channel Transition Headwind Highlights REVENUE ($M) ADJ. OP. PROFIT MARGIN • Non-repeating channel transition at ASP lowered AHS core growth by ~330 bps and +0.3% +200 BPS Y/Y OMX by ~190bps Core +2.2% Core OMX +185 bps
Slide 11: Q3 2023 Revenue
Q3 2023 Revenue Strong Growth Across All Regions REGIONAL HIGHLIGHTS • North America driven by low-twenties 2.6% growth at Tektronix, LDD growth at Core: 2.5% Core PacSci, and SW growth, partially offset North America by declines at parts of Sensing MSD • W. Europe SW growth offsets normalizing HW P
Slide 12: Q3 2023 Performance Summary
Q3 2023 Performance Summary Another Quarter Broadly Ahead of Expectations PERFORMANCE ADJ. GROSS ADJ. OPERATING ADJ. EARNINGS FREE CASH HIGHLIGHTS MARGIN PROFIT MARGIN PER SHARE FLOW ($M) +160 BPS +150 BPS +8% +25% • Record adj. gross margin +160 bps driven by favorable price/cost and continued port
Slide 13: Q4 and FY 2023 Outlook
Q4 and FY 2023 Outlook Reaffirming Mid-point of FY 2023 adj. EPS Guide October 2023 February 2023 October 2023 Guide Guide Guide Q4 20231 FY 20231 FY 20231 FY HIGHLIGHTS Revenue $1,555 to $1,575M ~$6,025 ~$6,045M • Core growth outlook of ~5%; up 75 Core Growth 1.5% to 3% 4.25% ~5% +75bps bps from be
Slide 14: Framing 2024
Framing 2024 Sustainable Core Growth with Robust Margin Expansion and FCF Growth HW Products: LDD 3-Yr CAGR* normalizing to MSD through-cycle ($ in billions) • Pace of orders growth expected to accelerate throughout 2024 • Durability in high-growth segments, product vitality and recurring revenue ~$
Slide 15: FCF and Capital Deployment
FCF and Capital Deployment Differentiating Performance and Value Creation DURABLE, HIGH-GROWTH CREATING SHAREHOLDER COMPOUNDING VALUE $ ~2X > 8B FCF EPS growth targeted over next 5 years Targeted to deploy in next 5 years ADJ. EARNINGS PER SHARE ANNUAL FREE CASH FLOW ($B) ~$6.75 >2.3 CAPITAL DEPLOYM
Slide 16: Appendix & Supplemental Reconciliation Data
@ FORTIVE Appendix & Supplemental Reconciliation Data
Slide 17: 2023 Segment Outlooks
2023 Segment Outlooks Intelligent Operating Precision Advanced Healthcare Solutions Technologies Solutions 1Q23 2Q23 3Q23 4Q23E 1Q23 2Q23 3Q23 4Q23E 1Q23 2Q23 3Q23 4Q23E Core 9.7% 4.2% 4.0% 5% 13.7% 8.4% 0.9% (1.5%) 0.1% 3.5% 2.2% 3.5% Growth1 27.5% to 28% 25% to 26.5% 25.5% 33.0% 33% to 32.0% 33.5%
Slide 18: FY 2023 Assumptions & OpCo Outlooks
FY 2023 Assumptions & OpCo Outlooks KEY OUTLOOK ASSUMPTIONS FY 2023 OPCO CORE GROWTH EXPECTATIONS1 Q4 FY IOS PT AHS FX: Slight Headwind ~(1)% Fluke: MSD Tektronix: HSD+ ASP/Censis: LSD+ Corporate: ~$39M ~$135M EHS: MSD Sensing: (LSD) FHS: LSD Interest: ~$25M ~$120M FAL: LDD PacSci EMC: LDD Invetech:
Slide 19: Adjusted Gross Profit and Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS PROFIT MARGIN Three Months Ended Nine Months Ended $ in millions September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 Revenue (GAAP) $ 1,494.5 $ 1,456.0 $ 4,481.6 $ 4,295.8 Gross Profit (GAAP) $ 893.0 $ 845.4 $ 2,646.6 $ 2,470.9 Acquisi
Slide 20: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended September 29, 2023 Three Months Ended September 30, 2022 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Ope
Slide 21: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Nine Months Ended September 29, 2023 Nine Months Ended September 30, 2022 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Opera
Slide 22: Two Year Stack - Adjusted Operating Profit and Margin
TWO YEAR STACK - ADJUSTED OPERATING PROFIT AND ADJUSTED OPERATING PROFIT MARGIN Three Months Ended September 29, 2023 Three Months Ended October 1, 2021 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Forti
Slide 23: Adjusted Net Earnings and Adjusted Diluted Net EPS
ADJUSTED NET EARNINGS AND ADJUSTED DILUTED NET EPS Three Months Ended Nine Months Ended $ in millions, except per share amounts September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 Per share value Per share value Per share value Per share value Net Earnings and Net Earnings Pe
Slide 24: Forecasted Adjusted Diluted Net EPS
FORECASTED ADJUSTED DILUTED NET EPS Three Months Ending Twelve Months Ending December 31, 2023 December 31, 2023 Low Mid High Low Mid High Forecasted Diluted Net Earnings Per Share (GAAP) $ 0.61 $ 0.63 $ 0.64 $ 2.30 $ 2.32 $ 2.33 Anticipated pretax amortization of acquisition related intangible asse
Slide 25: Free Cash Flow Conversion Ratio - Trailing Twelve Months
FREE CASH FLOW CONVERSION RATIO - TRAILING TWELVE MONTHS (in millions) Three Months Ended Nine Months Ended Trailing Twelve Months September 29, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 29, 2023 Operating Cash Flows (GAAP) $ 411.4 $ 321.0 $ 174.4 $ 464.2 $ 906.8 $ 1,371.0 Less:
Slide 26: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended September 29, 2023 Nine Months Ended September 29, 2023 Total Fortive Total Revenue Growth (GAAP) 2.6 % 4.3 % Core (Non-GAAP) 2.5 % 5.5 % Acquisitions and divestitures (Non-GAAP) (0.2)% (0.3)% Impact of currency translation (Non-GAA
Slide 27: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Nine Months Ended $ in millions September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022 Earnings before income taxes $ 257.1 $ 217.5 $ 713.3 $ 616.5 Income tax expense (39.1) (27.6) (112.7) (88.5) Effective tax rate (GAAP) 15.2 % 12.
Slide 28: Fortive
(2) FORTIVE