Slide 1: Third Quarter 2022 Earnings Release
Third Quarter 2022 Earnings Release October 26, 2022 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 anticipated financial results, economic, inflationary, currency, and market trends, future prospects, impact of supply chain constraints, anticipa
Slide 3: Q3 2022 Financials and Highlights
Q3 2022 FINANCIALS AND HIGHLIGHTS BEATING ON ALL KEY METRICS Q3 & YTD 2022 FINANCIALS HIGHLIGHTS Revenue Core Growth 12% core revenue growth in Q3 • High-quality portfolio & strong execution deliver upside Q3 $1,456M Q3 12.1% YTD $4,296M YTD 8.8% 80 bps adj. GMX | 160 bps adj. OMX in Q3 Adj. Gross A
Slide 4: Delivering on 2022 Expectations
DELIVERING ON 2022 EXPECTATIONS CONTINUED STRONG MOMENTUM... WHAT WE ARE SEEING WHAT WE EXPECT STRENGTH OF PORTFOLIO DELIVER AT THE HIGH-END OF INITIAL '22 GUIDE Strong short-cycle demand and double-digit software1 Demand momentum, sustainable competitive advantages revenue growth reflect accelerate
Slide 5: Executing Our Strategy
EXECUTING OUR STRATEGY OVER 60% OF REVENUE MARKET RELEVANT WORKFLOW SOLUTIONS WITH ROBUST GROWTH DRIVERS ALIGNED TO UN SDGs1 SECULAR TAILWINDS REGULATION, AUTOMATION & INTERNET OF ELECTRIFICATION RESHORING / DEMOGRAPHICS AND SAFETY, ESG DIGITIZATION THINGS OF EVERYTHING MANUFACTURING LABOR MARKETS M
Slide 6: Q3 2022: Intelligent Operating Solutions
Q3 2022: INTELLIGENT OPERATING SOLUTIONS STRONG GROWTH AND MARGIN EXPANSION INTELLIGENT OPERATING SOLUTIONS $ in millions Q3 2022 Highlights REVENUE ADJUSTED OPERATING PROFIT MARGIN • Strong growth across segment more than offset supply chain and F/X headwinds +14.3% +260 BPS • As expected, HW produ
Slide 7: Q3 2022: Precision Technologies
Q3 2022: PRECISION TECHNOLOGIES BROAD-BASED STRENGTH ACROSS THE SEGMENT PRECISION TECHNOLOGIES $ in millions Q3 2022 Highlights REVENUE ADJUSTED OPERATING PROFIT MARGIN • New product innovation and strong secular trends in product realization drive another +14.9% +280 BPS quarter of DD revenue and o
Slide 8: Q3 2022: Advanced Healthcare Solutions
Q3 2022: ADVANCED HEALTHCARE SOLUTIONS GROWTH CONTINUES TO BE IMPACTED BY SUPPLY CHAIN CONSTRAINTS ADVANCED HEALTHCARE SOLUTIONS $ in millions Q3 2022 Highlights REVENUE ADJUSTED OPERATING PROFIT MARGIN • Lower than expected performance driven by NA supply chain constraints and bad debt +3.3% -250 B
Slide 9: FBS in Action
FBS IN ACTION A KEY DIFFERENTIATOR ANNUAL CEO KAIZEN IOS PT AHS • Annual in-person CEO Kaizen accelerates culture of • Doubled 3-year product • >25% reduction in average test • Maximizing availability of performance opportunity at Fluke, with strong time at Tektronix machines drove DD capital alignm
Slide 10: Q3 2022 Revenue
Q3 2022 REVENUE STRONG CORE GROWTH IN MAJOR GEOGRAPHIES HIGHLIGHTS • ServiceChannel acquisition 11.9% became core mid-August 12.1% NORTH WESTERN ASIA Core AMERICA EUROPE • Acquisition contributions as expected ~4% • ~4% F/X headwind, higher than $158 $49 $(52) $1,456 LDD Mid- expected Core Teens Low
Slide 11: Q3 2022 Performance Summary
Q3 2022 PERFORMANCE SUMMARY ANOTHER QUARTER OF STRONG FINANCIAL PERFORMANCE PERFORMANCE HIGHLIGHTS • Favorable price/cost and ADJ. GROSS ADJ. OPERATING ADJ. EARNINGS FREE CASH volume drive strong Y/Y gross MARGIN PROFIT MARGIN PER SHARE FLOW ($M) margin expansion +80 BPS +160 BPS +20% +22% • 160 bps
Slide 12: Q4 and FY 2022 Outlook
Q4 AND FY 2022 OUTLOOK STRONG CORE GROWTH OFFSETS F/X HEADWINDS Q4 AND FY DETAILS Q4 2022 FY 2022 REVENUE $1,482 – 1,502M $5,780 – 5,800M •Q4: M&A ~2%, FX ~(4.5)% Core Growth2 ~11% ~9.5% •FY: M&A ~4%, FX ~(3.5)% Total Growth ~8.5% ~10% ADJ. OP. PROFIT MARGIN2 ~25.4% ~24.1% •Q4: Corporate ~$33M Adjus
Slide 13: Sustainability-Linked Credit Facility
SUSTAINABILITY-LINKED CREDIT FACILITY REINFORCES COMMITMENT TO SUSTAINABILITY SUSTAINABILITY TARGET • Aligned with publicly stated goal CREDIT UPDATE CREDIT FACILITY TERMS of 50% reduction by 20291 OUTSTANDING DEBT 66.5 • ~5 year weighted average debt maturity • Amended and extended $2.0B Revolving
Slide 14: Framing 2023
FRAMING 2023 EARLY INDICATIONS REINFORCE PORTFOLIO QUALITY INITIAL EXPECTATIONS 2022 Revenue3 • Preparing scenarios for potential Potential slowdown in 2023 slowdown Hardware • Orders outpaced sales last 3 years; >$300M "excess" backlog at YE ~$3.2B Products1 • Potential orders decline as supply cha
Slide 15: Value Creation Compounding
VALUE CREATION COMPOUNDING MORE RESILIENT FINANCIAL PROFILE AND HIGHER FCF POWER SUMMARY SUSTAINABLE COMPETITIVE ANNUAL FREE CASH FLOW • Strong year-to-date performance ADVANTAGES ($ million) reinforces confidence in FY 2022 outlook Leadership positions in attractive growth markets • Portfolio strat
Slide 16: Appendix & Supplemental Reconciliation Data
Appendix & Supplemental Reconciliation Data 16
Slide 17: Q4 and FY 2022 Segment Outlooks
Q4 AND FY 2022 SEGMENT OUTLOOKS Q4 2022 FY 2022 IOS PT AHS IOS PT AHS REVENUE GROWTH Core 11.5% to 13% 14.5% to 16% 3.5% to 5% 11.5% to 12% 11.5% to 12% 1.5% to 2% Total 7.5% to 9% 10% to 11.5% 5.5% to 7% 13% to 13.5% 8.5% to 9% 6.5% to 7% ADJ. OP. PROFIT ~30% ~26% ~26% ~29% ~25% ~23% MARGIN1 +200 b
Slide 18: 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 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Revenue (GAAP) $ 1,456.0 $ 1,301.0 $ 4,295.8 $ 3,879.9 Adjusted Gross Profit Gross Profit (GAAP) $ 845.4 $ 745.7 $ 2,470.9 $
Slide 19: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended September 30, 2022 Three Months Ended October 1, 2021 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Techno
Slide 20: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Nine Months Ended September 30, 2022 Nine Months Ended October 1, 2021 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Technolo
Slide 21: Two Year Stack - Adjusted Operating Profit and Margin
TWO YEAR STACK - ADJUSTED OPERATING PROFIT AND ADJUSTED OPERATING PROFIT MARGIN Three Months Ended September 30, 2022 Three Months Ended September 25, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fo
Slide 22: Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT MARGIN Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Intelligent Precision Advanced Total Intelligent Precision Advanced Total Operating Technologies Healthcare Fortive Operating Technologies Healthcare Fortive Solutions Solutions Solutions Solu
Slide 23: Adjusted Net Earnings from Continuing Operations
ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS Three Months Ended Nine Months Ended $ in millions September 30, October 1, 2021 September 30, October 1, 2021 2022 2022 Net Earnings Attributable to Common Stockholders from Continuing Operations (GAAP) (a) $ 189.9 $ 152.6 $ 528.0 $ 411.8 Dividends o
Slide 24: Adjusted Diluted Net EPS
ADJUSTED DILUTED NET EPS Three Months Ended (a) Nine Months Ended (a) September October 1, September October 1, 30, 2022 2021 30, 2022 2021 Net Earnings Attributable to Common Stockholders from $ 0.53 $ 0.42 $ 1.46 $ 1.18 Continuing Operations (GAAP) (b) Dividends on the mandatory convertible prefer
Slide 25: Forecasted Adjusted Diluted Net EPS from Continuing Operations
FORECASTED ADJUSTED DILUTED NET EPS FROM CONTINUING OPERATIONS Three Months Ending Year Ending December 31, 2022 December 31, 2022 Low High Low High Forecasted Net Earnings Per Share from Continuing Operations (GAAP) $ 0.59 $ 0.61 $ 2.05 $ 2.07 Anticipated pretax amortization of acquisition-related
Slide 26: Free Cash Flow Conversion Ratio - Twelve Months Ended September 30, 2022
FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED SEPTEMBER 30, 2022 AND OCTOBER 1, 2021 $ in millions Three Months Ended Twelve Months Ended September 30, 2022 July 1, 2022 April 1, 2022 December 31, 2021 September 30, 2022 Operating Cash Flows from Continuing Operations (GAAP) $ 329.8 $ 294.4
Slide 27: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Total Fortive Total Revenue Growth (GAAP) 11.9 % 10.7 % Core (Non-GAAP) 12.1 % 8.8 % Acquisitions (Non-GAAP) 3.8 % 4.8 % Impact of currency translation (Non-GAAP) (4.0)% (2.9)%
Slide 28: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Nine Months Ended $ in millions September 30, October 1, 2021 September 30, October 1, 2021 2022 2022 Earnings before income taxes from continuing operations $ 217.5 $ 175.6 $ 616.5 $ 501.8 Income tax expense (27.6) (23.0) (88.5) (55.5) Effective tax ra
Slide 29: Fortive
(2) FORTIVE