Fortive Corporation · NYSE:FTV
Fortive — Q4 2023 Earnings Presentation
29 slides from Fortive's earnings presentation, Jan 31, 2024
Slide 1: Fourth Quarter 2023 Earnings Release
Fourth Quarter 2023 Earnings Release January 31, 2024
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: The Fortive Formula for Value Creation
The Fortive Formula for Value Creation Delivers Outstanding Performance Again in 2023 CORE REVENUE RECORD KAIZEN ACTIVITY GROWTH STRATEGY IS YIELDING ACCELERATING OUR CULTURE OF MSD DURABLE MSD CORE GROWTH CONTINUOUS IMPROVEMENT (THROUGH THE CYCLE) THROUGH-CYCLE FBS CULTURE OF CONTINUOUS IMPROVEMENT
Slide 4: Evolving to a Premier Company
Evolving to a Premier Company Consistent Performance and Value Creation DRIVING GROWTH DRIVING PROGRESS DRIVING VALUE +5% +15% +160 BPS +280 BPS 'Rule of 35' Y/Y 2-yr stack Y/Y 2-yr stack Avg. '19 - '24E High Quality Portfolio CORE GROWTH ADJ. OMX 33% ~60% >20 pts Increase in NPI Revenue associated
Slide 5: Accelerating Innovation & Growth
Accelerating Innovation & Growth Organic and Inorganic Investments Aligned with Secular Drivers Productivity Growth Fluke's new Multi-Product Calibrators provide the broadest workload INTELLIGENT coverage and highest accuracy OPERATING SOLUTIONS Accruent bolt-on RedEye enhances SaaS offering with cl
Slide 6: M&A Spotlight
M&A Spotlight Recent M&A Contributing to Higher Core Growth and Margin Expansion ~High- twenties ~HSD Revenue Revenue CAGR CAGR ~200 ~2,000 bps bps Adj. OMX Adj. OMX 110% 2023 NDR 112% 2023 GI Solution NDR 15% 2023 ARR growth 17% 2023 ARR growth 2021 figures represent proforma full year 2021 perform
Slide 7: Power of FBS: Sustaining Differentiated Results
Power of FBS: Sustaining Differentiated Results Delivering Value Through Innovation, Leadership and Productivity EVOLUTION OF FBS TOOLS AND RIGOROUS … DELIVERING SUSTAINED MULTI-YEAR OPERATING CADENCE … PERFORMANCE Building capabilities and leaders to enable extraordinary results Since 2019: Maximiz
Slide 8: Q4 & FY 2023 Financials and Highlights
Q4 & FY 2023 Financials and Highlights Strong Finish to the Year, Delivering Outstanding Operational Performance Q4 2023 FY 2023 Progression to more Revenue $1,584M $6,065M REVENUE & recurring revenue Q4 core growth at high-end of drives higher, more Core Growth +3% +5% expectations GROWTH durable g
Slide 9: Q4 & FY 2023 Segment Highlights
Q4 & FY 2023 Segment Highlights All Segments Outperform Q4 Margin Expectations IOS PT AHS Q4 FY Q4 FY Q4 FY Revenue $683M $2,612M $549M $2,133M $352M $1,320M Core Growth +6% +6% -1% +5% +3% +2% Adj. Op. Profit Margin 34.2% 32.4% 29.0% 26.5% 25.7% 22.9% Adj. OMX +300 bps +310 bps +270 bps +170 bps +1
Slide 10: Q4 2023 Revenue
Q4 2023 Revenue Normalizing Growth Across All Regions REGIONAL HIGHLIGHTS +4% Core: +3% NORTH AMERICA Core • Growth in all segments North America • Driven by software growth at IOS and $6 $7 MSD +HSD ASP Consumables growth $41 • 2-year stack +High-teens PT WESTERN EUROPE $1,584 Core • Growth driven
Slide 11: Q1 & FY 2024 Outlook
Q1 & FY 2024 Outlook Reflects Durable Portfolio and Normalizing Macro Environment Q1 2024 FY 2024 Progression to more Revenue $1,515M to $1,540M $6,425M to $6,525M REVENUE & recurring revenue drives higher, more Core Growth ~Flat to 2% 2% to 4% GROWTH durable growth Total Growth 3% to 5% 6% to 8% Ad
Slide 12: 2024 Outlook: Segment Highlights
2024 Outlook: Segment Highlights Recurring and Secular Drivers Underpin Growth in All Segments INTELLIGENT ADVANCED PRECISION OPERATING HEALTHCARE TECHNOLOGIES SOLUTIONS SOLUTIONS Revenue $2,730M to $2,770M $2,420M to $2,465M $1,275M to $1,290M Core Growth 4% to 5% Flat to 2% 4% to 5% Total Growth 5
Slide 13: Strategy Delivering Differentiated Multi-Year Performance
Strategy Delivering Differentiated Multi-Year Performance Leveraging FBS and our connected workflow strategy to relentlessly drive sustainable results REVENUE ($B) ADJ. OP MARGIN ADJ. EPS NWC % SALES FREE CASH FLOW ($B) $6.5 $1.4 27% 13% $3.81 $4.6 21% 7.5% $2.03 120 $0.6 7% BPS/YR 13% Growth OMX CA
Slide 14: On the Path to Achieving Long Term Targets
On the Path to Achieving Long Term Targets Differentiating Performance and Value Creation DURABLE, HIGH-GROWTH CREATING SHAREHOLDER COMPOUNDING VALUE $ ~2X ~ 8B FCF EPS growth 2023 to 2028 To deploy in next 5 years ADJ. EARNINGS PER SHARE ANNUAL FREE CASH FLOW ($B) ~$6.75 >2.3 CAPITAL DEPLOYMENT UPS
Slide 15: Appendix & Supplemental Reconciliation Data
@ FORTIVE Appendix & Supplemental Reconciliation Data
Slide 16: 2023 Segment Results (Pro Forma PT & AHS)
2023 Segment Results (Pro Forma PT & AHS) Intelligent Operating Precision Advanced Healthcare Solutions Technologies Solutions "Pro Forma" "Pro Forma" 1Q23 2Q23 3Q23 4Q23 1Q23 2Q23 3Q23 4Q23 1Q23 2Q23 3Q23 4Q23 Core 10% 4% 4% 6% 12% 7% Flat (2%) 1% 6% 3% 6% Growth $683 $653 $644 $632 $560 $553 $570
Slide 17: FY 2024 Assumptions & Regional Outlooks
FY 2024 Assumptions & Regional Outlooks Q1 2024 FY 2024 FY 2024 REGIONAL GROWTH EXPECTATIONS1 Core Growth ~Flat to 2% 2% to 4% REVENUE M&A ~3% ~4% Core North America FX ~Flat Slight Tailwind MSD Total Growth 3% to 5% 6% to 8% Corporate ~$43M $145M to 150M Core Interest ~$47M $175M to 180M Western Eu
Slide 18: Adjusted Gross Profit and Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS PROFIT MARGIN Three Months Ended Year Ended $ in millions December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2019 Revenue (GAAP) $ 1,583.7 $ 1,529.9 $ 6,065.3 $ 5,825.7 $ 4,563.9 Acquisition-Related Fair Value Adjustments to
Slide 19: Adjusted Operating Profit & Margin (Q4)
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended December 31, 2023 Three Months Ended December 31, 2022 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Opera
Slide 20: Adjusted Operating Profit & Margin (Full Year)
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Year Ended December 31, 2023 Year Ended December 31, 2022 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Operating Technologie
Slide 21: Multi-Year Stack - Adjusted Operating Profit and Margin
MULTI-YEAR STACK - ADJUSTED OPERATING PROFIT AND ADJUSTED OPERATING PROFIT MARGIN Year Ended $ in millions December 31, 2023 December 31, 2021 December 31, 2019 Revenue (GAAP) $ 6,065.3 $ 5,254.7 $ 4,563.9 Acquisition-Related Fair Value Adjustments to Deferred Revenue — — 54.5 Adjusted Revenue (Non-
Slide 22: Adjusted Net Earnings and Adjusted Diluted Net EPS
ADJUSTED NET EARNINGS AND ADJUSTED DILUTED NET EPS Three Months Ended Year Ended $ in millions, except per share amounts December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Per share value Per share value Per share value Per share value Net Earnings and Net Earnings Per Share (GA
Slide 23: Multi-Year Stack Adjusted Net Earnings and Adjusted Diluted EPS
MULTI-YEAR STACK ADJUSTED NET EARNINGS AND ADJUSTED DILUTED NET EPS Year Ended $ in millions, except per share amounts December 31, 2023 12/31/2019 (a) Per share value Per share value Net Earnings Attributable to Common Stockholders (GAAP) $ 865.8 $ 2.43 $ 199.1 $ 0.59 Dividends on the mandatory con
Slide 24: Forecasted Adjusted Diluted Net EPS
FORECASTED ADJUSTED DILUTED NET EPS Three Months Ending Twelve Months Ending March 29, 2024 December 31, 2024 Low High Low High Forecasted Diluted Net Earnings Per Share (GAAP) $ 0.44 $ 0.47 $ 2.58 $ 2.70 Anticipated pretax amortization of acquisition related intangible assets 0.31 0.31 1.25 1.25 An
Slide 25: Free Cash Flow Conversion Ratio
FREE CASH FLOW CONVERSION RATIO - TRAILING TWELVE MONTHS AND MULTI YEAR STACK (in millions) Twelves Months Three Months Ended Ended December 31, 2023 September 29, 2023 June 30, 2023 March 31, 2023 December 31, 2023 Operating Cash Flows (GAAP) $ 446.8 $ 411.4 $ 321.0 $ 174.4 $ 1,353.6 Less: purchase
Slide 26: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended December 31, 2023 Year Ended December 31, 2023 Total Fortive Total Revenue Growth (GAAP) 3.5 % 4.1 % Core (Non-GAAP) 2.7 % 4.8 % Acquisitions and divestitures (Non-GAAP) 0.4 % (0.1)% Impact of currency translation (Non-GAAP) 0.4 % (
Slide 27: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Year Ended $ in millions December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Earnings before income taxes $ 277.5 $ 257.0 $ 990.8 $ 873.5 Income tax expense (12.3) (29.8) (125.0) (118.3) Effective tax rate (GAAP) 4.5 % 11.6 % 12.6 %
Slide 28: Pro Forma 2023 Adjusted Operating Profit and Margin for PT and AHS
"PRO FORMA" (a) 2023 ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN FOR PT AND AHS Three months ended March 31, 2023 June 30, 2023 September 29, 2023 December 31, 2023 $ in millions Advanced Advanced Advanced Advanced Precision Precision Precision Precision Healthcare Healthcare Health
Slide 29: (2) FORTIVE
(2) FORTIVE