Fortive Corporation · NYSE:FTV
Fortive — Q3 2021 Earnings Presentation
27 slides from Fortive's earnings presentation, Oct 28, 2021
Slide 1: Third Quarter 2021 Earnings Release
Third Quarter 2021 Earnings Release October 28, 2021 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: Q3 2021 Summary
Q3 2021 SUMMARY • 9.1% core revenue growth; 12.0% total revenue growth • 32% adjusted net EPS growth • Excellent adjusted operating margin and FCF performance: +325bps of Core OMX and +23% Y/Y increase in FCF • Strong end market demand and order growth resulted in +40% Y/Y increase in backlog • Clos
Slide 4: Accelerating Innovation to Enhance Competitive Position
ACCELERATING INNOVATION TO ENHANCE COMPETITIVE POSITION Accruent EMS Mobile Application FHS OneQA Test Automation Software Enabling an enhanced Eliminating bottlenecks in mobile experience for the biomedical workflow, to customers executing improve customer safety "return to work" initiatives and co
Slide 5: Q3 2021 Financial Performance
Q3 2021 FINANCIAL PERFORMANCE Summary of Key Financial Items Revenue ($M) Adjusted Operating Profit Adjusted Diluted Net Free Cash Flow ($M) Margin (%) Earnings Per Share ($) • Core growth: 9.1% • Adjusted Margins +280bps Y/Y • Adjusted EPS +32.0% Y/Y • FCF: 23% Y/Y – Price: 2.2% – Core OMX: 325bps
Slide 6: Q3 2021 Intelligent Operating Solutions
Q3 2021 INTELLIGENT OPERATING SOLUTIONS Revenue ($M) Commentary Total Growth: 16.6% • Fluke: +Mid-Teens - Strong demand across key – Core: 13.1% markets/geographies; generating share gains, but component availability challenges driving backlog build – Acquisitions: 2.2% – FX: 1.3% • ISC: +Mid-Teens
Slide 7: Q3 2021 Precision Technologies
Q3 2021 PRECISION TECHNOLOGIES Revenue ($M) Commentary Total Growth: 8.9% – Core: 7.7% – Acquisitions: 0% • Tektronix: +HSD - +DD order growth across major – FX: 1.2% geographies; recent new product introductions performing well; backlog continued to increase in Q3 • Sensing Tech: +LDD - Growth and
Slide 8: Q3 2021 Advanced Healthcare Solutions
Q3 2021 ADVANCED HEALTHCARE SOLUTIONS Revenue ($M) Commentary Total Growth: 9.3% – Core: 4.7% • ASP: +LSD - Capital equipment strength drove continued expansion in installed base; consumables growth impacted – Acquisitions: 3.7% by headwinds in elective procedures; service continuing to – FX: 0.9% i
Slide 9: Q3 2021 Financial Performance: Free Cash Flow Detail
Q3 2021 FINANCIAL PERFORMANCE Free Cash Flow Detail Free Cash Flow ($M) - Q3 2021 • Q3 2021: – Free Cash Flow: $252 million (+23% versus Prior Year) – Adjusted FCF Conversion: 105% of Adjusted Net Earnings • Trailing 12-Months: – Free Cash Flow: $991 million – Adjusted FCF Conversion: 103% of Adjust
Slide 10: FY 2021 Guidance
FY 2021 GUIDANCE New Prior What We Are Seeing / Expectations Guidance Guidance Core Growth +10.5% - +11.0% +10.5% - +12.0% • Broad-based demand momentum across core end markets • Continued strong core growth despite persisting supply chain Total Growth +14.0% - +14.5% +13.5% - +15.0% challenges Adju
Slide 11: Q4 2021 Guidance
Q4 2021 GUIDANCE Guidance What We Are Seeing / Expectations Core Growth +4.0% - +6.0% • Broad-based demand and order strength across end markets to continue Total Growth +6.5% - +8.5% • Supply chain challenges to remain a headwind for revenue conversion at instrumentation businesses Adjusted Operati
Slide 12: Q3 2021 Wrap Up
Q3 2021 WRAP UP • Very strong demand backdrop and continued top line momentum, through accelerated innovation and share gains • Supply chain challenges driving increased backlog which we will carry into 2022 • Building scale and differentiation with software offerings: Almost $750M annualized revenu
Slide 13: Appendix & Supplemental Reconciliation Data
Appendix & Supplemental Reconciliation Data 13
Slide 14: Q3 2021 Regional Commentary
Q3 2021 REGIONAL COMMENTARY North America Western Europe Asia Pacific Q3 Core Growth (Y/Y): +HSD +LDD +MSD • Continued strength at Fluke led by Fluke • Strong revenue and order growth across Industrial Fluke and Tektronix • Growth highlighted by ISC, Sensing, FHS and ASP • Strong growth at Tektronix
Slide 15: Q4 & FY 2021 Guidance Summary
Q4 & FY 2021 GUIDANCE SUMMARY Q4 2021 FY 2021 • Adjusted diluted net EPS of $0.74 to $0.79 (+6% to +13% Y/Y) • Adjusted diluted net EPS of $2.70 to $2.75 (+29% to +32% Y/Y) • Assumptions: • Assumptions: – Core revenue growth of +4.0% to +6.0% – Core revenue growth of +10.5% to +11.0% – IOS ~4.0% to
Slide 16: Adjusted Gross Profit and Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS PROFIT MARGIN Three Months Ended Nine Months Ended $ in millions October 1, 2021 September 25, 2020 October 1, 2021 September 25, 2020 Revenue (GAAP) $ 1,299.5 $ 1,159.8 $ 3,878.4 $ 3,309.5 Acquisition-Related Fair Value Adjustments to Deferred Revenue 1.5 0.
Slide 17: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended October 1, 2021 Three Months Ended September 25, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Techno
Slide 18: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Nine Months Ended October 1, 2021 Nine Months Ended September 25, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Technolo
Slide 19: Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT MARGIN Three Months Ended October 1, 2021 Nine Months Ended October 1, 2021 Intelligent Precision Advanced Total Intelligent Precision Advanced Total Operating Technologies Healthcare Fortive Operating Technologies Healthcare Fortive Solutions Solutions Solutions Solutions
Slide 20: Adjusted Net Earnings from Continuing Operations
ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS Three Months Ended Nine Months Ended $ in millions October 1, 2021 September 25, 2020 October 1, 2021 September 25, 2020 Net Earnings Attributable to Common Stockholders from Continuing Operations (GAAP) (a) $ 151.1 $ 68.7 $ 410.3 $ 148.8 Dividends on
Slide 21: Adjusted Diluted Net EPS
ADJUSTED DILUTED NET EPS Three Months Ended (a) Nine Months Ended (a) October 1, 2021 September 25, October 1, 2021 September 25, 2020 2020 Diluted Net Earnings Per Share from Continuing Operations (GAAP) (b) $ 0.42 $ 0.20 $ 1.18 $ 0.44 Dividends on the mandatory convertible preferred stock to apply
Slide 22: Forecasted Adjusted Diluted Net EPS from Continuing Operations
FORECASTED ADJUSTED DILUTED NET EPS FROM CONTINUING OPERATIONS Three Months Ending Year Ending December 31, 2021(a) December 31, 2021(a) Low High Low High Forecasted Diluted Net Earnings Per Share from Continuing Operations Attributable to Common Stockholders $ 0.45 $ 0.50 $ 1.62 $ 1.67 Anticipated
Slide 23: Free Cash Flow Conversion Ratio - Twelve Months Ended October 1, 2021
FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED OCTOBER 1, 2021 AND SEPTEMBER 25, 2020 $ in millions Three Months Ended Twelve Months Ended October 1, 2021 July 2, 2021 April 2, 2021 December 31, 2020 October 1, 2021 Operating Cash Flows from Continuing Operations (GAAP) $ 262.9 $ 291.0 $ 152.
Slide 24: Adjusted Free Cash Flow Conversion Ratio - Twelve Months Ended October 1, 2021
ADJUSTED FREE CASH FLOW CONVERSION RATIO - TWELVE MONTHS ENDED OCTOBER 1, 2021 AND SEPTEMBER 25, 2020 $ in millions Three Months Ended Twelve Months Ended October 1, 2021 July 2, 2021 April 2, 2021 December 31, 2020 October 1, 2021 Operating Cash Flows from Continuing Operations (GAAP) $ 262.9 $ 291
Slide 25: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended October 1, 2021 Nine Months Ended October 1, 2021 Total Fortive Total Revenue Growth (GAAP) 12.0 % 17.2 % Core (Non-GAAP) 9.1 % 12.9 % Acquisitions (Non-GAAP) 1.7 % 2.0 % Impact of currency translation (Non-GAAP) 1.2 % 2.3 % Intelli
Slide 26: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Nine Months Ended $ in millions October 1, 2021 September 25, 2020 October 1, 2021 September 25, 2020 Earnings before income taxes from continuing operations $ 174.1 $ 99.3 $ 500.3 $ 243.6 Income tax expense (23.0) (13.3) (55.5) (43.0) Effective tax rat
Slide 27: Fortive
(2) FORTIVE