Fortive Corporation · NYSE:FTV
Fortive — Q1 2024 Earnings Presentation
23 slides from Fortive's earnings presentation, Apr 24, 2024
Slide 1: First Quarter 2024 Earnings Release
First Quarter 2024 Earnings Release April 24, 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, timing of transactions, interest rat
Slide 3: Fortive - A More Durable, Industrial Growth Company
Fortive - A More Durable, Industrial Growth Company Making Customers Safer and More Productive INTELLIGENT OPERATING Strong start to year, Q1 SOLUTIONS (IOS) ahead of expectations PRECISION TECHNOLOGIES (PT) FBS powering differentiated operating performance ADVANCED HEALTHCARE SOLUTIONS (AHS) Execut
Slide 4: Strategy Is Working
Strategy Is Working Delivering Improved Through-cycle Performance MSD core growth CAGR over the last 5 years Healthcare >75% recurring revenue ~$2.3B ~50% Precision Products ~$1.3B ~60% of revenue Technologies Advanced continued to grow through Healthcare Solutions ~$1B niche software industrial slo
Slide 5: IOS Strategic Transformation
IOS Strategic Transformation Into a Higher Growth, Higher Margin Segment INTELLIGENT OPERATING SOLUTIONS ~$30B (Revenue $ in millions) TAM ~8% Revenue CAGR ~5% Core Growth >$800M CAGR annualized software revenue* ~33% ~13% Adj. Op. recurring revenue* Profit CAGR >700 bps adj. OMX since 2019* *Based
Slide 6: Winning in Electrification/AI
Winning in Electrification/AI Innovation for a Smarter, Electrified Ecosystem Qualitrol Sensors & Software Tektronix Monitoring the world's HIGH power grid ANCE Oscilloscopes, PERFORM COMPUTE AWGs, SMUs Enabling massive compute for AI, renewable energy, and more power-efficient Fluke Solar Tools MOB
Slide 7: FBS Differentiating Operating Performance
FBS Differentiating Operating Performance Innovation Enabling Profitable Growth Again in 2024 Our Way of Working FBS FBS-Driven Results >$1B New Revenue identified by LPM Dream 17% Increase in OTD in LPM Develop + = 24% Reduction in sustaining engineering, funding more growth ~625 Adj. OMX since 201
Slide 8: Poised for Continued Outperformance
Poised for Continued Outperformance Confident in Raised Outlook & Long-Term Compounding 2024 Unfolding as Expected … … Compounding EPS & FCF Double-digits Continued Momentum in IOS Durable Growth Continues Stable demand and NPI traction drive consistent hardware and Transformed, high-quality portfol
Slide 9: Q1 2024 Financials and Highlights
Q1 2024 Financials and Highlights Strong Start to the Year, Delivering Outstanding Operational Performance Q1 2024 Progression to more Revenue $1,525M Q1 core growth above high-end of REVENUE & recurring revenue expectations in all segments; ~60bps drives higher, more Core Growth +3% GROWTH FX headw
Slide 10: Q1 2024 Segment Highlights
Q1 2024 Segment Highlights All Segments Outperform Expectations INTELLIGENT PRECISION ADVANCED OPERATING TECHNOLOGIES HEALTHCARE SOLUTIONS SOLUTIONS Revenue $666M $559M $300M +5% (2)% +6% Core Growth Total Growth +5% +3% +4% Adj. Op. Profit Margin 31.8% 24.4% 24.2% Adj. OMX +160 bps +80 bps +200 bps
Slide 11: Q1 2024 Revenue
Q1 2024 Revenue Growth Across All Regions REGIONAL HIGHLIGHTS +4% Core: +3% NORTH AMERICA • Growth in all segments despite Core North America normalizing hardware demand LSD • 2-year stack +HSD $37 $(10) $37 PT WESTERN EUROPE • Growth driven by backlog conversion $1,525 in hardware products $1,461 C
Slide 12: Q2 & FY 2024 Outlook
Q2 & FY 2024 Outlook Strength of Portfolio Driving Resilient Results Q2 2024 FY 2024 Progression to more Revenue $1,550M to $1,575M $6,350M to $6,425M REVENUE & recurring revenue drives higher, more Core Growth Flat to 2% 2% to 4% GROWTH durable growth Total Growth 2% to 3% 4.5% to 6% Adj. Operating
Slide 13: 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 ~2X EPS growth 2023 to 2028 FCF growth 2023 to 2028 ~$8B FCF to deploy in next 5 years ADJ. EARNINGS PER SHARE ANNUAL FREE CASH FLOW ($B) ~$6.75 >
Slide 14: Appendix & Supplemental Reconciliation Data
@ FORTIVE Appendix & Supplemental Reconciliation Data
Slide 15: FY 2024 Assumptions & Regional Outlooks
FY 2024 Assumptions & Regional Outlooks Q2 2024 FY 2024 FY 2024 REGIONAL GROWTH EXPECTATIONS1 Core Growth ~Flat to 2% 2% to 4% REVENUE M&A ~3% ~3% Core Net of Divestiture* North America FX ~(1.5%) ~(1%) MSD Total Growth 2% to 3% 4.5% to 6% Corporate ~$35M ~$145M Core Interest ~$39M $160M to 165M Wes
Slide 16: Adjusted Gross Profit and Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS PROFIT MARGIN Three Months Ended $ in millions March 29, 2024 March 31, 2023 Revenue (GAAP) $ 1,524.5 $ 1,460.7 Gross Profit (GAAP) $ 904.2 $ 848.2 Acquisition-Related Fair Value Adjustments to Inventory 2.3 — Discrete Restructuring Charges — 4.2 Adjusted Gro
Slide 17: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended March 29, 2024 Three Months Ended March 31, 2023 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Operating T
Slide 18: Adjusted Net Earnings and Adjusted Diluted Net EPS
ADJUSTED NET EARNINGS AND ADJUSTED DILUTED NET EPS Three Months Ended $ in millions, except per share amounts March 29, 2024 March 31, 2023 Per share value Per share value Net Earnings and Net Earnings Per Share (GAAP) $ 207.4 $ 0.58 $ 173.6 $ 0.49 Pretax amortization of acquisition related intangib
Slide 19: Forecasted Adjusted Diluted Net EPS
FORECASTED ADJUSTED DILUTED NET EPS Three Months Ending Twelve Months Ending June 28, 2024 December 31, 2024 Low High Low High Forecasted Diluted Net Earnings Per Share (GAAP) $ 0.57 $ 0.60 $ 2.61 $ 2.70 Anticipated pretax amortization of acquisition related intangible assets 0.32 0.32 1.27 1.27 Ant
Slide 20: Free Cash Flow Conversion Ratio - Trailing Twelve Months
FREE CASH FLOW CONVERSION RATIO - TRAILING TWELVE MONTHS (in millions) Three Months Ended Trailing Twelve Months March 29, 2024 December 31, 2023 September 29, 2023 June 30, 2023 Operating Cash Flows (GAAP) $ 256.7 $ 446.8 $ 411.4 $ 321.0 $ 1,435.9 Less: purchases property, plant & equipment (capita
Slide 21: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended March 29, 2024 Total Fortive Total Revenue Growth (GAAP) 4.4 % Core (Non-GAAP) 2.5 % Acquisitions and divestitures (Non-GAAP) 2.5 % Impact of currency translation (Non-GAAP) (0.6)% Intelligent Operating Solutions Total Revenue Growt
Slide 22: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended $ in millions March 29, 2024 March 31, 2023 Earnings before income taxes $ 234.0 $ 205.8 Income tax expense (26.6) (32.2) Effective tax rate (GAAP) 11.4 % 15.7 % Earnings before income taxes (GAAP) $ 234.0 $ 205.8 Pretax amortization of acquisition rela
Slide 23: Fortive
(2) FORTIVE