Slide 1: Fourth Quarter & Full-Year 2021 Earnings Release
Fourth Quarter & Full-Year 2021 Earnings Release February 3, 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 the future impact of supply chain constraints, the COVID-19 pandemic, the Company's anticipated financial results, business, investment and acquis
Slide 3: Q4 & FY 2021 Highlights
Q4 & FY 2021 HIGHLIGHTS EXECUTING WELL IN A CHALLENGING ENVIRONMENT REVENUE FULL YEAR HIGHLIGHTS $1.4B $5.3B Q4 +3.8% Y/Y FY +13.1% Y/Y 9.5% CORE GROWTH STRONG CUSTOMER DEMAND, SECULAR TAILWINDS ADJUSTED OPERATING PROFIT DRIVING MID-TEENS HARDWARE ORDERS GROWTH $335M $1.2B Q4 margin 24.4% FY margin
Slide 4: Q4 2021 Highlights by Segment
Q4 2021 HIGHLIGHTS BY SEGMENT STRONG OPERATING PERFORMANCE DESPITE SUPPLY CHAIN CONSTRAINTS AND COVID DISRUPTION INTELLIGENT OPERATING PRECISION ADVANCED HEALTHCARE SOLUTIONS TECHNOLOGIES SOLUTIONS (~40% of FY21 Revenue) (~35%) (~25%) Total Growth 6.4% 2.1% 1.7% Core Growth 0.8% 2.6% (0.8)% Acquisit
Slide 5: Fortive Business System (FBS) in Action
FORTIVE BUSINESS SYSTEM (FBS) IN ACTION ENABLING AND EMPOWERING OUR TEAMS TO DRIVE SUSTAINABLE RESULTS LEAN GROWTH LEADERSHIP DAILY IMPROVEMENT & DRIVING GROWTH & DRIVING THE DEVELOPMENT EFFICIENCY IN OUR INNOVATION ACROSS THE & ENGAGEMENT OF OUR OPERATIONS PORTFOLIO TEAMS • Reduced supply chain ris
Slide 6: Strategic and Accretive Software Acquisitions
STRATEGIC AND ACCRETIVE SOFTWARE ACQUISITIONS STRENGTHENING ESTABLISHED POSITIONS WITH DISCIPLINED M&A • Added >$100M of high-growth • Added >$100M of high-growth BUILDING SCALE AND software revenue software revenue DIFFERENTIATION WITH • Combines leading workflow software • Builds on established he
Slide 7: 2021 Sustainability Highlights
2021 SUSTAINABILITY HIGHLIGHTS ALIGNED TO OUR SHARED PURPOSE AND VALUES OUR SUSTAINABILITY PILLARS EMPOWER INCLUSIVE & INVEST IN OUR PROTECT THE WORK AND SOURCE OPERATE WITH DIVERSE TEAMS COMMUNITIES PLANET RESPONSIBLY PRINCIPLE • Strong increase in • Fortive Foundation • Accelerated GHG goal to • L
Slide 8: Q4 2021 Revenue
Q4 2021 REVENUE BROAD SUPPLY CHAIN CHALLENGES CONSTRAINED CORE GROWTH IN N. AMERICA AND W. EUROPE NORTH WESTERN ASIA AMERICA EUROPE 3.8% 1.0% Core -HSD Flat (Core) +LDD (Core) (Core) Customer Demand Remains Robust with Record Orders and Backlog in 2021 8
Slide 9: Q4 and FY 2021 Free Cash Flow
Q4 AND FY 2021 FREE CASH FLOW Q4 2021 FREE CASH FLOW ($M) INVESTED IN INVENTORY TO DE-RISK CUSTOMER DELIVERIES IN 2022 CUSTOMER RECEIPTS PUSHED OUT DUE TO COVID / STAFFING DISRUPTIONS FY 2021 FREE CASH FLOW ($M) FY 2021 FCF DRIVEN BY HIGHER EARNINGS, PARTIALLY OFFSET BY WORKING CAPITAL INVESTMENT EN
Slide 10: 2022 Outlook
2022 OUTLOOK DEMAND MOMENTUM, ROBUST BACKLOG CARRIES INTO 2022 WHAT TO EXPECT KEY ASSUMPTIONS SUSTAINED CORE GROWTH SUPPLY CHAIN CONSTRAINTS 5.5% to 8.5% core growth driven by strong Expected to persist throughout much of 2022, customer demand, secular tailwinds and record with continued strength in
Slide 11: FY 2022 Guidance
FY 2022 GUIDANCE FY 2022 GUIDANCE INTELLIGENT OPERATING PRECISION ADVANCED HEALTHCARE FORTIVE SOLUTIONS TECHNOLOGIES SOLUTIONS Segment Sales (M) $5,725 to $5,875 $2,400 to $2,450 $1,950 to $2,000 $1,375 to $1,425 Core Growth 5.5% to 8.5% 6.5% to 9.5% 7% to 9% 3% to 5% Total Growth 9% to 12% 10% to 1
Slide 12: Q1 2022 Guidance
Q1 2022 GUIDANCE Q1 2022 GUIDANCE INTELLIGENT OPERATING PRECISION ADVANCED HEALTHCARE FORTIVE SOLUTIONS TECHNOLOGIES SOLUTIONS Segment Sales (M) $1,325 to $1,365 $545 to $565 $460 to $470 $320 to $330 Core Growth 1.5% to 4.5% 1% to 4.5% 2.5% to 5.5% 0.5% to 3% Total Growth 5.5% to 8.5% 6.5% to 10% 1
Slide 13: Framing Our Portfolio Evolution
FRAMING OUR PORTFOLIO EVOLUTION STRATEGY DELIVERING RESULTS EVOLVING FINANCIAL PROFILE Key Metrics 2016* 2021 2022E (Midpoint) Core Growth GDP / GDP+ 9.5% 7% Recurring Revenue % 18% 38% ~40% Software Revenue Minimal $670M ~$950M Adj. Gross Profit 49% 57.4% ~59% Margin FCF Profile and AOP Margin 20.5
Slide 14: Executing Our Strategy
EXECUTING OUR STRATEGY CONTINUED PROGRESS TOWARD MULTI-YEAR TARGETS 2021 INVESTOR DAY TARGETS RESULTS Delivering leading workflow solutions for factories, buildings and hospitals that facilitate safety, reliability and productivity 2020-2022E reflects MSD growth through cycle, +300 bps OMX and +50%
Slide 15: Appendix & Supplemental Reconciliation Data
Appendix & Supplemental Reconciliation Data 15
Slide 16: Adjusted Gross Profit and Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS PROFIT MARGIN Three Months Ended Twelve Months Ended $ in millions December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Revenue (GAAP) $ 1,374.8 $ 1,324.9 $ 5,254.7 $ 4,634.4 Acquisition-Related Fair Value Adjustments to Deferred Revenue —
Slide 17: Adjusted Operating Profit & Margin (Three Months)
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended December 31, 2021 Three Months Ended December 31, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Techn
Slide 18: Adjusted Operating Profit & Margin (Twelve Months)
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Twelve Months Ended December 31, 2021 Twelve Months Ended December 31, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Tec
Slide 19: Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT MARGIN Three Months Ended December 31, 2021 Twelve Months Ended December 31, 2021 Intelligent Precision Advanced Total Intelligent Precision Advanced Total Operating Technologies Healthcare Fortive Operating Technologies Healthcare Fortive Solutions Solutions Solutions Solu
Slide 20: Adjusted Net Earnings from Continuing Operations
ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS Three Months Ended Twelve Months Ended $ in millions December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Net Earnings Attributable to Common Stockholders from Continuing Operations (GAAP) (a) $ 167.9 $ 579.7 Dividends on the mandat
Slide 21: Adjusted Diluted Net EPS
ADJUSTED DILUTED NET EPS Three Months Ended (a) Twelve Months Ended (a) December 31, December 31, December 31, December 31, 2021 2020 2021 2020 Diluted Net Earnings Per Share from Continuing Operations (GAAP) (b) $ 0.46 $ 3.47 $ 1.65 $ 4.05 Dividends on the mandatory convertible preferred stock to a
Slide 22: Forecasted Adjusted Diluted Net EPS from Continuing Operations
FORECASTED ADJUSTED DILUTED NET EPS FROM CONTINUING OPERATIONS Three Months Ending Twelve Months Ending April 1, 2022 December 31, 2022 Low High Low High Forecasted Diluted Net Earnings Per Share from Continuing Operations Attributable to Common Stockholders $ 0.40 $ 0.44 $ 2.03 $ 2.17 Anticipated p
Slide 23: Free Cash Flow Conversion Ratio
FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED DECEMBER 31, 2021 AND DECEMBER 31, 2020 $ in millions Three Months Ended Twelve Months Ended December 31, 2021 October 1, 2021 July 2, 2021 April 2, 2021 December 31, 2021 Operating Cash Flows from Continuing Operations (GAAP) $ 287.0 $ 262.9 $ 2
Slide 24: Adjusted Free Cash Flow Conversion Ratio
ADJUSTED FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED DECEMBER 31, 2021 AND DECEMBER 31, 2020 $ in millions Three Months Ended Twelve Months Ended December 31, 2021 October 1, 2021 July 2, 2021 April 2, 2021 December 31, 2021 Operating Cash Flows from Continuing Operations (GAAP) $ 287.0 $
Slide 25: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended December 31, 2021 Twelve Months Ended December 31, 2021 Total Fortive Total Revenue Growth (GAAP) 3.8 % 13.4 % Core (Non-GAAP) 1.0 % 9.5 % Acquisitions (Non-GAAP) 3.4 % 2.4 % Impact of currency translation (Non-GAAP) (0.6) % 1.5 % I
Slide 26: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Twelve Months Ended $ in millions December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Earnings before income taxes from continuing operations $ 175.7 $ 1,264.1 $ 677.5 $ 1,507.7 Income tax expense (7.8) (12.5) (63.3) (55.5) Effective
Slide 27: Fortive
(2) FORTIVE