Fortive Corporation · NYSE:FTV
Fortive — Q2 2024 Earnings Presentation
20 slides from Fortive's earnings presentation, Jul 24, 2024
Slide 1: Second Quarter 2024 Earnings Release
Second Quarter 2024 Earnings Release July 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, interest rate and current exchange r
Slide 3: Q2 2024 Highlights
Q2 2024 Highlights Resilient Earnings and Free Cash Flow Performance High quality EPS growth in • Achieved high-end of adj. EPS/FCF guide on low-end of revenue low growth environment • Strong execution driven by FBS-led growth/productivity Benefiting from long-term • Continued +HSD software ARR grow
Slide 4: Q2 2024 Financial Highlights
Q2 2024 Financial Highlights Strong Operational Execution Driving Results Q2 2024 YTD 2024 What We Are Seeing • IOS & AHS momentum continues driven by Revenue $1,552M $3,077M durable and recurring growth drivers REVENUE & Core Growth ~Flat +1% • +LDD recurring revenue growth expected to GROWTH conti
Slide 5: Q2 2024 Segment Highlights
Q2 2024 Segment Highlights IOS and AHS Momentum Offset Weaker Demand at PT INTELLIGENT OPERATING PRECISION ADVANCED HEALTHCARE SOLUTIONS TECHNOLOGIES SOLUTIONS +3.1% (6.6)% +5.0% ($ in millions) Core Growth Core Growth Core Growth $677 $653 $560 $552 $324 $313 33.0% 32.8% 24.9% 24.8% 26.4% 23.8% Q2
Slide 6: Key Regional Trends
Key Regional Trends Delayed Recovery in Certain End Markets; Expect 2H Orders Growth North America Western Europe Asia Q2 2024 Core Q2 2024 Core Q2 2024 Core Up Slightly (MSD) (LSD) • IOS +MSD driven by industrial • Revenue normalized to bookings • China (MSD); rest of Asia +LSD products and softwar
Slide 7: Q3 and FY 2024 Outlook
Q3 and FY 2024 Outlook Execution Offsetting Lower PT Outlook Annual Revenue & Core Growth Q3 2024 FY 2024 Revenue $1,535M to $1,560M $6,250M to $6,300M ~7% REVENUE & 5-yr Total Growth CAGR Core Growth 2% to 3.5% 2% to 3% GROWTH Total Growth 3% to 4.5% 3% to 4% MARGINS AOP Margin ~27% 27% to 27.5% ~6
Slide 8: FBS Growth & Innovation Acceleration
FBS Growth & Innovation Acceleration More Growth, More Productivity R&D Investment $1B+ 2X 3X ion Fun n el Innovation spend Innovation revenue v a t o since 2021 opportunity since 2021 Inn 2021 2022 2023 2024E (R&D Expense) Sustaining Growth 8
Slide 9: On the Path to Achieving Long Term Targets
On the Path to Achieving Long Term Targets Differentiating Performance and Value Creation DURABLE, HIGH-GROWTH COMPOUNDING CREATING SHAREHOLDER 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 10: Fortive - Executing on High Expectations
Fortive - Executing on High Expectations Remaining Disciplined and Focused Resilient performance despite low growth environment A MORE DURABLE INDUSTRIAL • Balanced end market outlook, narrowed FY EPS outlook GROWTH COMPANY Innovation and focus on execution position us for 2H growth • Robust NPI tra
Slide 11: Appendix & Supplemental Reconciliation Data
@ FORTIVE Appendix & Supplemental Reconciliation Data
Slide 12: Q3, Q4, and FY 2024 Outlook
Q3, Q4, and FY 2024 Outlook1 Q3 2024 Q4 2024 FY 2024 FY 2024 Regional Growth Expectations Revenue $1,535M to $1,560M $1,635M to $1,660M $6,250M to $6,300M Core Growth 2% to 3.5% 2.5% to 4% 2% to 3% North Core America LSD+ REVENUE & M&A +1.5% +1.5% +2% GROWTH FX (0.5)% (0.5)% (1)% Western Core Europe
Slide 13: Adjusted Operating Profit & Adjusted Operating Profit Margin (Three Months)
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended June 28, 2024 Three Months Ended June 30, 2023 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Operating Tec
Slide 14: Adjusted Operating Profit & Adjusted Operating Profit Margin (Six Months)
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Six Months Ended June 28, 2024 Six Months Ended June 30, 2023 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Operating Technol
Slide 15: Adjusted Net Earnings and Adjusted Diluted Net EPS
ADJUSTED NET EARNINGS AND ADJUSTED DILUTED NET EPS Three Months Ended Six Months Ended $ in millions, except per share amounts June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023 Per share value Per share value Per share value Per share value Net Earnings and Net Earnings Per Share (GAAP) $ 195.
Slide 16: Forecasted Adjusted Diluted Net EPS
FORECASTED ADJUSTED DILUTED NET EPS Three Months Ending Twelve Months Ending September 27, 2024 December 31, 2024 Low High Low High Forecasted Diluted Net Earnings Per Share (GAAP) $ 0.63 $ 0.66 $ 2.68 $ 2.74 Anticipated pretax amortization of acquisition related intangible assets 0.32 0.32 1.28 1.2
Slide 17: Free Cash Flow Conversion Ratio
FREE CASH FLOW CONVERSION RATIO (in millions) Three Months Ended June 28, 2024 Six Months Ended June 28, 2024 Operating Cash Flows (GAAP) $ 308.9 $ 565.6 Less: purchases property, plant & equipment (capital expenditures) (GAAP) (29.2) (55.6) Free Cash Flow (Non-GAAP) $ 279.7 $ 510.0 Adjusted Net Ear
Slide 18: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended June 28, 2024 Six Months Ended June 28, 2024 Total Fortive Total Revenue Growth (GAAP) 1.7 % 3.0 % Core (Non-GAAP) —% 1.2 % Acquisitions and divestitures (Non-GAAP) 2.7 % 2.6 % Impact of currency translation (Non-GAAP) (1.0)% (0.8)%
Slide 19: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Six Months Ended $ in millions June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023 Earnings before income taxes $ 228.7 $ 250.4 $ 462.7 $ 456.2 Income tax expense (33.6) (41.4) (60.2) (73.6) Effective tax rate (GAAP) 14.7 % 16.5 % 13.0 % 16.1 % Earn
Slide 20: (2) FORTIVE
(2) FORTIVE