Slide 1: First Quarter 2023 Earnings Release
First Quarter 2023 Earnings Release April 26, 2023 1
Slide 2: Forward Looking Statements & Non-GAAP Financial Measures
FORWARD LOOKING STATEMENTS & NON-GAAP FINANCIAL MEASURES Statements in this release that are not strictly historical, including statements regarding anticipated financial results, economic conditions, industry trends, geopolitical events, interest rate and current exchange rate impact, future prospe
Slide 3: Q1 2023 Financials and Highlights
Q1 2023 FINANCIALS AND HIGHLIGHTS CONTINUED TOP-LINE MOMENTUM AND MARGIN EXPANSION Q1 2023 FINANCIALS HIGHLIGHTS Revenue Core Growth Core revenue growth higher than expectations • Demand remained strong, backlog up sequentially, ARR up 9% $1,461M 8.8% 80 bps adj. GMX; 100 bps adj. OMX in Q1 Adj. Gro
Slide 4: Balanced 2023 Outlook
BALANCED 2023 OUTLOOK RAISING LOW-END OF 2023 GUIDE WITH Q1 BEAT WHAT WE ARE SEEING WHAT WE EXPECT DEMAND INDICATORS RESILIENT CORE GROWTH CONTINUES Hardware Products* orders better than expected, with book- 2H'23 Y/Y core growth slows to low-to-mid single digit; to-bill of 1.0 as backlog burndown h
Slide 5: Increasing Our Durability
INCREASING OUR DURABILITY WELL POSITIONED TO NAVIGATE EVOLVING MACRO ENVIRONMENT PORTFOLIO ALIGNED WITH STRONG SECULAR DRIVERS Software REGULATION, SAFETY, ESG AUTOMATION & DIGITIZATION Hardware Non-recurring ELECTRIFICATION Recurring ex- OF EVERYTHING Software RESHORING/ MANUFACTURING Backlog Prote
Slide 6: Unleashing FBS
UNLEASHING FBS RIGOROUS CONTINUOUS IMPROVEMENT CREATES SUSTAINABLE COMPETITIVE ADVANTAGE Empowering Teams Go-to-Market and R&D Returns Engage and develop our Deploy standard work & lean teams to drive results across portfolio management to drive all core value drivers innovation and increase custome
Slide 7: Fortive: A Force for Good
FORTIVE: A FORCE FOR GOOD ACCELERATING PROGRESS FOR ALL STAKEHOLDERS 2022 HIGHLIGHTS • Leveraging FBS to advance our sustainability strategy and drive performance • 20% reduction in Scope 1 & 2 GHG emissions 2019-2022 • Strengthening responsible sourcing initiative Annual Sustainability Report • Adv
Slide 8: Q1 2023: Intelligent Operating Solutions
Q1 2023: INTELLIGENT OPERATING SOLUTIONS DELIVERED GROWTH AND MARGIN UPSIDE INTELLIGENT OPERATING SOLUTIONS $ in millions REVENUE ADJUSTED OPERATING PROFIT MARGIN Highlights • MSD order growth at Fluke, with strong POS in all major regions +7.6% +300 BPS • Record quarter for eMaint; LPM driving reco
Slide 9: Q1 2023: Precision Technologies
Q1 2023: PRECISION TECHNOLOGIES DOUBLE-DIGIT CORE GROWTH AND SUBSTANTIAL MARGIN IMPROVEMENT PRECISION TECHNOLOGIES $ in millions REVENUE ADJUSTED OPERATING PROFIT MARGIN Highlights • Record first quarter revenue and margins at Tektronix; POS positive in all major regions and +11.5% +190 BPS backlog
Slide 10: Q1 2023: Advanced Healthcare Solutions
Q1 2023: ADVANCED HEALTHCARE SOLUTIONS INDUSTRY CHALLENGES PERSIST ADVANCED HEALTHCARE SOLUTIONS $ in millions REVENUE ADJUSTED OPERATING PROFIT MARGIN Highlights • Improvement in elective procedures ex-China • China / Russia headwinds as expected in Q1 -4.1% -260 BPS • Supply chain constraints stal
Slide 11: Q1 2023 Revenue
Q1 2023 REVENUE STRONG GROWTH ACROSS ALL GEOGRAPHIES Q1 HIGHLIGHTS • North America driven by solid growth at IOS and PT; continued NORTH WESTERN ASIA Software resilience 6.1% AMERICA EUROPE Core: 8.8% • W. Europe growth strong in all segments $121 $(6) $(31) Core Core Core • China up low-30%, lappin
Slide 12: Q1 2023 Performance Summary
Q1 2023 PERFORMANCE SUMMARY A STRONG START TO 2023 PERFORMANCE HIGHLIGHTS ADJ. GROSS ADJ. OPERATING ADJ. EARNINGS FREE CASH • Adj. gross margin +80bps driven MARGIN PROFIT MARGIN PER SHARE FLOW ($M) by favorable price / cost +80 BPS +100 BPS +7.1% -23.5% • +100 bps of adj. OMX • +130 bps adj. OMX on
Slide 13: Q2 and FY 2023 Outlook
Q2 AND FY 2023 OUTLOOK KEY ASSUMPTIONS Q2 2023 FY 2023 •Q2: FX (0.5)% headwind •FY: FX ~(1)% full year headwind REVENUE $1,480 to 1,515M $6,000 to 6,100M Core Growth 2.5% to 4.5% 4% to 5.5% •Q2: Corporate ~$32M Total Growth 1.5% to 3.5% 3% to 4.5% •FY: Corporate ~$128M ADJ. OP. PROFIT $363 to 378M $
Slide 14: Strong Cash Generation and Balance Sheet
STRONG CASH GENERATION AND BALANCE SHEET ACCELERATED CASH FLOW GROWTH DRIVES SUSTAINABLE VALUE CREATION HIGHLIGHTS $ in billions • Enhanced portfolio and asset-lite ~$3.1 operating model accelerates FCF $1.6+ growth and improves FCF conversion $1.3 • Accelerated FCF growth provides significant capac
Slide 15: Fortive Investor Day Preview: Enduring Principles
Fortive Investor Day Preview Our Future Builds on a Strong Foundation & Continued Evolution STRONG TODAY’S TREMENDOUS FOUNDATION INFLECTION FUTURE SHARED PURPOSE ADDED WORKFLOW STRATEGY, SW & UPGRADED PORTFOLIO WITH 3 LEADING SEGMENTS WITH RUNWAY DISCIPLINED REINVESTMENT TO LEADING BRANDS INNOVATIVE
Slide 16: Fortive's Value Creation Framework
FORTIVE’S VALUE CREATION FRAMEWORK… High quality portfolio with focused segments and durable growth drivers Culture of leadership continues to build capability for Fortive of the future Resilient financial profile with leading margins and free cash flow growth Unleashing the power of FBS to drive co
Slide 17: Appendix & Supplemental Reconciliation Data
Appendix & Supplemental Reconciliation Data 17
Slide 18: Q2 and FY 2023 Segment Outlooks
Q2 AND FY 2023 SEGMENT OUTLOOKS Q2 2023 FY 2023 IOS PT AHS IOS PT AHS REVENUE GROWTH Core 3% to 5% 2.5% to 4.5% 1% to 3% 4% to 6% 3% to 5% 3% to 5% Total 2.5% to 4.5% 2% to 4% (1.5)% to 0.5% 3.5% to 5.5% 2.5% to 4.5% 1% to 3% ADJ. OP. PROFIT 30.5% to 31.0% 24% to 24.5% 22.5% to 23% 31% to 31.5% 25.5
Slide 19: Adjusted Gross Profit and Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS PROFIT MARGIN Three Months Ended $ in millions March 31, 2023 April 1, 2022 Revenue (GAAP) $ 1,460.7 $ 1,376.5 Gross Profit (GAAP) $ 848.2 $ 792.0 Acquisition-Related Fair Value Adjustments to Inventory — 0.4 Discrete Restructuring Charges 4.2 — Adjusted Gros
Slide 20: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended March 31, 2023 Three Months Ended April 1, 2022 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Year over Operating Technologies Healthcare Fortive Operating Te
Slide 21: Two Year Stack - Adjusted Operating Profit and Margin
TWO YEAR STACK - ADJUSTED OPERATING PROFIT AND ADJUSTED OPERATING PROFIT MARGIN Three Months Ended March 31, 2023 Three Months Ended April 2, 2021 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Ope
Slide 22: Adjusted Net Earnings and Adjusted Diluted Net EPS
ADJUSTED NET EARNINGS AND ADJUSTED DILUTED NET EPS Three Months Ended Three Months Ended $ in millions, except per share amounts March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Per share value Net Earnings and Net Earnings Per Share(GAAP) $ 173.6 $ 165.1 $ 0.49 $ 0.45 Interest on the Conve
Slide 23: Forecasted Adjusted Diluted Net EPS
FORECASTED ADJUSTED DILUTED NET EPS Three Months Ending Twelve Months Ending June 30, 2023 December 31, 2023 Low High Low High Forecasted Diluted Net Earnings Per Share (GAAP) $ 0.52 $ 0.56 $ 2.33 $ 2.44 Anticipated pretax amortization of acquisition related intangible assets 0.26 0.26 1.03 1.03 Ant
Slide 24: 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 31, 2023 December 31, 2022 September 30, 2022 July 1, 2022 Operating Cash Flows (GAAP) $ 174.4 $ 464.2 $ 329.8 $ 294.4 $ 1,262.8 Less: purchases property, plant & equipment (capital
Slide 25: Core Revenue Growth and Two Year Stack Core Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended March 31, 2023 Total Fortive Total Revenue Growth (GAAP) 6.1 % Core (Non-GAAP) 8.8 % Acquisitions and divestitures (Non-GAAP) (0.4)% Impact of currency translation (Non-GAAP) (2.3)% Intelligent Operating Solutions Total Revenue Grow
Slide 26: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended $ in millions March 31, 2023 April 1, 2022 Earnings before income taxes $ 205.8 $ 190.8 Income tax expense (32.2) (25.7) Effective tax rate (GAAP) 15.7 % 13.5 % Earnings before income taxes (GAAP) $ 205.8 $ 190.8 Pretax amortization of acquisition relat
Slide 27: Fortive
(2) FORTIVE