Fortive Corporation · NYSE:FTV
Fortive — Q1 2021 Earnings Presentation
35 slides from Fortive's earnings presentation, Apr 29, 2021
Slide 1: First Quarter 2021 Earnings Release
First Quarter 2021 Earnings Release April 29, 2021 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, including statements regarding the future impact of the COVID-19 pandemic, the Company's anticipated financial results, business, investment and acquisition opportunities, timin
Slide 3: Q1 2021 Summary
Q1 2021 SUMMARY • Improving top-line momentum with total revenue growth of 13.6% and core revenue growth of 9.1% - both above high- end of guidance – Strong growth across all segments: – Core revenue growth: +5.5% at IOS, +12.1% at PT, +10.9% at AHS – Continued momentum among SaaS offerings with +LD
Slide 4: Q1 2021 Financial Performance
Q1 2021 FINANCIAL PERFORMANCE Summary of Key Financial Items Revenue ($M) Adjusted Operating Profit Adjusted Diluted Net Free Cash Flow ($M) Margin (%) Earnings Per Share ($) • Core growth: 9.1% • Adjusted Margins +220bps Y/Y • Adjusted EPS +37.0% Y/Y • FCF: +50% Y/Y – Price: 0.9% – Core OMX: 240bps
Slide 5: Q1 2021 Regional Commentary
Q1 2021 REGIONAL COMMENTARY North America Western Europe Asia Pacific Q1 Growth (Y/Y): +LSD +LDD +Low-20% • Strong growth at Tektronix, Sensing • Broad strength highlighted by • Growth led by Sensing, Tektronix, and Fluke Health Solutions Tektronix, Sensing, ASP, and Fluke Fluke and ASP Health Solut
Slide 6: Segment Detail
@ FORTIVE Segment Detail
Slide 7: Q1 2021 Intelligent Operating Solutions
Q1 2021 INTELLIGENT OPERATING SOLUTIONS • Fluke revenue increased +HSD: Growth led by China, which saw broad strength – Q1 growth driven by +LDD growth at Fluke Industrial and +High-Teens growth at Fluke Calibration, partially offset by a -MSD decline in Industrial Imaging due to a tough prior year
Slide 8: Q1 2021 Precision Technologies
Q1 2021 PRECISION TECHNOLOGIES • Tektronix revenue increased +High Teens: +LDD in North America; +Mid-20% in Western Europe; +Low-20% in China – POS solidly positive in all regions in Q1 – Mainstream scopes and Keithley both had a strong quarter, posting High-30% and Mid-Teens growth respectively –
Slide 9: Q1 2021 Advanced Healthcare Solutions
Q1 2021 ADVANCED HEALTHCARE SOLUTIONS • ASP returned to growth (+MSD): N. America -LSD; W. Europe +MSD; China +50% – Elective procedures ~91% of pre-COVID levels globally in Q1 (Consumables revenue Flat Y/Y) - Hospitals beginning to move to a more normal operating and purchasing environment – Low-40
Slide 10: Q1 2021 Financial Performance: Free Cash Flow Detail
Q1 2021 FINANCIAL PERFORMANCE Free Cash Flow Detail Free Cash Flow ($M) - Q1 2021 • Q1 2021: – Free Cash Flow: $144 million (+50% versus Prior Year) – FCF Conversion: 63% of Adjusted Net Earnings – Q1 FCF driven by high fall-through of strong volume at Fluke, Tektronix and Sensing, as well as contin
Slide 11: FY 2021 Guidance
FY 2021 GUIDANCE New Prior What We Are Seeing / Expectations Guidance Guidance Core Growth +7.0% - +10.0% +4.0% - +7.0% • Continued strong momentum across core industrial end markets as recovery proceeds Adjusted Operating Profit • Improvement in customer site access to allow for increased ~22.0% -
Slide 12: Q2 2021 Guidance
Q2 2021 GUIDANCE Guidance What We Are Seeing / Expectations • Addressing strengthening customer demand across key end markets Core Growth +16.0% - +19.0% • Comparison against prior-year quarter with most COVID-related impact Adjusted Operating Profit • Prior year quarter had ~$60M of temporary cost
Slide 13: Continuing to Make Progress on Our ESG Goals
CONTINUING TO MAKE PROGRESS ON OUR ESG GOALS • Making progress... – Substantial reduction in Scope 1 & 2 carbon emissions intensity since 2017 2020 global employee engagement • ...with more to come in 2021 score of 77% – Targeting >5% of our capital spend on new emission reduction projects – Announc
Slide 14: Q1 2021 Wrap Up
Q1 2021 WRAP UP • Delivered strong start to the year in Q1; raised core revenue and adjusted earnings per share outlook for the full-year • Application of FBS and strong execution continuing to drive share gains and enhance margins across the portfolio • Expanding investments in innovation to accele
Slide 15: Supplemental Reconciliation Data
Supplemental Reconciliation Data 15
Slide 16: Q2 & FY 2021 Guidance Summary
Q2 & FY 2021 GUIDANCE SUMMARY FY 2021 Q2 2021 • Adjusted diluted net EPS of $2.50 to $2.60 (+20% to +24% Y/Y) • Adjusted diluted net EPS of $0.56 to $0.60 (+30% to +40% Y/Y) • Assumptions: • Assumptions: – Core revenue growth of +7.0% to +10.0% – Core revenue growth of +16.0% to +19.0% – IOS ~8.0% t
Slide 17: FY 2021 Segment Guidance Detail
FY 2021 SEGMENT GUIDANCE DETAIL Core Total Adjusted Operating What We Are Seeing / Expectations Growth Growth Profit Margin • Demand accelerating broadly across key industrial end markets IOS +8.0% - +11.0% +10.0% - +13.0% ~27.0% - ~28.0% • Strong growth continuing across software offerings • Some a
Slide 18: Adjusted Gross Profit and Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS PROFIT MARGIN Three Months Ended $ in millions April 2, 2021 March 27, 2020 Revenue (GAAP) $ 1,259.2 $ 1,108.1 Acquisition-Related Fair Value Adjustments to Deferred Revenue — 6.9 Adjusted Revenue (Non-GAAP) $ 1,259.2 $ 1,115.0 Adjusted Gross Profit Gross Pro
Slide 19: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended April 2, 2021 Three Months Ended March 27, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Technologies
Slide 20: Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT MARGIN Three Months Ended April 2, 2021 Intelligent Precision Advanced Total Operating Technologies Healthcare Fortive Solutions Solutions 2020 Adjusted Operating Profit Margin (Non-GAAP) 26.4 % 19.9 % 19.5 % 20.5 % Core (Non-GAAP) 2.3 % 2.5 % 2.3 % 2.4 % Acquisitions (Non-
Slide 21: Incremental Adjusted Operating Profit Margin
INCREMENTAL ADJUSTED OPERATING PROFIT MARGIN Three Months Ended April 2, 2021 Three Months Ended March 27, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Technologies Healthcare Fort
Slide 22: Adjusted Net Earnings from Continuing Operations
ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS Three Months Ended $ in millions April 2, 2021 March 27, 2020 Net Earnings Attributable to Common Stockholders from Continuing Operations (GAAP) (a) $ 94.4 $ 37.5 Dividends on the mandatory convertible preferred stock to apply if-converted method (a)
Slide 23: Adjusted Diluted Net EPS
ADJUSTED DILUTED NET EPS Three Months Ended (a) April 2, 2021 March 27, 2020 Diluted Net Earnings Per Share from Continuing Operations (GAAP) (b) $ 0.28 $ 0.11 Dividends on the mandatory convertible preferred stock to apply if-converted method 0.05 0.05 Assumed dilutive impact on the Diluted Net Ear
Slide 24: Adjusted Diluted Shares Outstanding
ADJUSTED DILUTED SHARES OUTSTANDING Three Months Ended (shares in millions) April 2, 2021 March 27, 2020 Average common diluted stock outstanding 341.7 340.0 MCPS Converted Shares (a) 20.0 18.4 Adjusted average common stock and common equivalent shares outstanding 361.7 358.4 (a) The MCPS were anti-
Slide 25: Forecasted Adjusted Diluted Net EPS from Continuing Operations
FORECASTED ADJUSTED DILUTED NET EPS FROM CONTINUING OPERATIONS Three Months Ending Year Ending July 2, 2021(a) December 31, 2021(a) Low High Low High Forecasted Diluted Net Earnings Per Share from Continuing Operations Attributable to Common Stockholders $ 0.32 $ 0.36 $ 1.50 $ 1.60 Anticipated divid
Slide 26: Free Cash Flow Conversion Ratio
FREE CASH FLOW CONVERSION RATIO $ in millions Three Months Ended April 2, 2021 March 27, 2020 % Change Operating Cash Flows from Continuing Operations (GAAP) $ 152.0 $ 121.7 24.9 % Less: purchases of property, plant & equipment (capital expenditures) from continuing operations (GAAP) (8.4) (26.2) Fr
Slide 27: Free Cash Flow Conversion Ratio - Twelve Months Ended April 2, 2021
FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED APRIL 2, 2021 $ in millions Three Months Ended Twelve Months Ended April 2, 2021 December 31, 2020 September 25, 2020 June 26, 2020 April 2, 2021 Operating Cash Flows from Continuing Operations (GAAP) $ 152.0 $ 329.4 $ 217.5 $ 309.1 $ 1,008.0 Les
Slide 28: Free Cash Flow Conversion Ratio - Six Months Ended April 2, 2021
FREE CASH FLOW CONVERSION RATIO - SIX MONTHS ENDED APRIL 2, 2021 $ in millions Three Months Ended Six Months Ended April 2, 2021 December 31, 2020 April 2, 2021 Operating Cash Flows from Continuing Operations (GAAP) $ 152.0 $ 329.4 $ 481.4 Less: purchases of property, plant & equipment (capital expe
Slide 29: Free Cash Flow Conversion Ratio - Twelve Months Ended March 27, 2020
FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED MARCH 27, 2020 $ in millions Three Months Ended Twelve Months Ended March 27, 2020 December 31, 2019 September 27, 2019 June 28, 2019 March 27, 2020 Operating Cash Flows from Continuing Operations (GAAP) $ 121.7 $ 247.1 $ 230.0 $ 147.8 $ 746.6 Le
Slide 30: Adjusted Free Cash Flow Conversion Ratio
ADJUSTED FREE CASH FLOW CONVERSION RATIO $ in millions Three Months Ended April 2, 2021 March 27, 2020 % Change Operating Cash Flows from Continuing Operations (GAAP) $ 152.0 $ 121.7 24.9 % Less: purchases of property, plant & equipment (capital expenditures) from continuing operations (GAAP) (8.4)
Slide 31: Adjusted Free Cash Flow Conversion Ratio - Twelve Months Ended April 2, 2021
ADJUSTED FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED APRIL 2, 2021 $ in millions Three Months Ended Twelve Months Ended April 2, 2021 December 31, 2020 September 25, 2020 June 26, 2020 April 2, 2021 Operating Cash Flows from Continuing Operations (GAAP) $ 152.0 $ 329.4 $ 217.5 $ 309.1 $ 1,
Slide 32: Adjusted Free Cash Flow Conversion Ratio - Twelve Months Ended March 27, 2020
ADJUSTED FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED MARCH 27, 2020 $ in millions Three Months Ended Twelve Months Ended March 27, 2020 December 31, 2019 September 27, 2019 June 28, 2019 March 27, 2020 Operating Cash Flows from Continuing Operations (GAAP) $ 121.7 $ 247.1 $ 230.0 $ 147.8 $
Slide 33: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended April 2, 2021 Total Fortive Total Revenue Growth (GAAP) 13.6 % Core (Non-GAAP) 9.1 % Acquisitions (Non-GAAP) 1.9 % Impact of currency translation (Non-GAAP) 2.6 % Intelligent Operating Solutions Total Revenue Growth (GAAP) 9.5 % Cor
Slide 34: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended $ in millions April 2, 2021 March 27, 2020 Earnings before income taxes from continuing operations $ 118.7 $ 72.3 Income tax expense (7.0) (17.5) Effective tax rate (GAAP) 5.9 % 24.2 % Earnings before income taxes from continuing operations (GAAP) $ 118
Slide 35: (2) FORTIVE
(2) FORTIVE