Fortive Corporation · NYSE:FTV
Fortive — Q4 2020 Earnings Presentation
31 slides from Fortive's earnings presentation, Feb 4, 2021
Slide 1: Fourth Quarter 2020 Earnings Release
Fourth Quarter 2020 Earnings Release February 4, 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 the COVID-19 pandemic on our financial condition and our operations on a consolidated basis and by operating company and prod
Slide 3: Q4 & Full-Year 2020 Summary
Q4 & FULL-YEAR 2020 SUMMARY Continued Sequential Improvement Led to a Strong Finish to 2020 Q4 2020 FY 2020 • Total revenue growth above high end of guidance; core growth • Nimble execution drove strong results in challenging environment turned positive – Total growth of +1.5%; SaaS growth +HSD – Im
Slide 4: Q4 2020 Financial Performance: Summary of Key Financial Items
Q4 2020 FINANCIAL PERFORMANCE Summary of Key Financial Items Revenue ($M) Adjusted Operating Profit Adjusted Diluted Net Free Cash Flow ($M) Margin (%) Earnings Per Share ($) $0.70 $1,325 23.2% $1,263 $0.59 $313 22.2% $225 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020 • Core growth
Slide 5: Q4 2020 Financial Performance: Free Cash Flow Detail
Q4 2020 FINANCIAL PERFORMANCE Free Cash Flow Detail Free Cash Flow ($M) - Q4 2020 $313 • Q4 2020: $225 2019 – Free Cash Flow: $313 million (+39% versus Prior Year) 2020 – FCF Conversion: 124% of Adjusted Net Earnings QTD Free Cash Flow ($M) - FY 2020 • Full Year 2020: $902 – Free Cash Flow: $902 mil
Slide 6: Q4 2020 Regional Commentary
Q4 2020 REGIONAL COMMENTARY Major Regions Showed Continued Sequential Revenue Improvement • Asia Pacific +LSD core • China +HSD core in Q4. Broad-based strength highlighted by: Asia Pacific – +Mid-Teens growth at Fluke and ISC; +High-Teens growth at ASP; +Mid-20% growth at Sensing • Japan Up Slightl
Slide 7: Segment Detail
Segment Detail @ FORTIVE
Slide 8: Q4 2020 Intelligent Operating Solutions
Q4 2020 INTELLIGENT OPERATING SOLUTIONS Fluke Returned to Growth; Continued SaaS Strength • Fluke revenue increased +LSD: Continued sequential improvement drove first positive Y/Y revenue quarter since Q2 2019; China +Mid-Teens, W. Europe -LSD, N. America Flat – POS trends: China POS +HSD, similar t
Slide 9: Q4 2020 Precision Technologies
Q4 2020 PRECISION TECHNOLOGIES Better End Market Trends Drove Return to Growth at Tektronix, and Sensing Improvement • Tektronix revenue increased +MSD: Returned to positive Y/Y growth; +Low-Teens growth in North America and +HSD growth in Western Europe partially offset by a -LSD decline in China –
Slide 10: Q4 2020 Advanced Healthcare Solutions
Q4 2020 ADVANCED HEALTHCARE SOLUTIONS Growth at Fluke Health Solutions and Censis Partially Offset by Elective Procedure Headwind at ASP • ASP revenue declined -MSD: N. America -LSD Y/Y, but continued to see sequential improvement; Strong growth in China (+High-Teens) and W. Europe (+MSD) – Consumab
Slide 11: Significant CSR Progress in 2020
SIGNIFICANT CSR PROGRESS IN 2020 Living Our Values Drives Our CSR Initiatives • Adoption of Intelex platform driving significant progress across the organization – Transitioned EHS, sustainability and risk assessment process while accelerating data analytics • Accelerated Inclusion & Diversity effor
Slide 12: 2021 Guidance
2021 GUIDANCE Key Anticipated Financial Metrics FY 2021 Q1 2021 • Adjusted diluted net EPS of $2.40 to $2.55 (+15% to +22% Y/Y) • Adjusted diluted net EPS of $0.56 to $0.60 (+22% to +30% Y/Y) • Assumptions: • Assumptions: – Core revenue growth of +4.0% to +7.0% – Core revenue growth of +5.0% to +8.0
Slide 13: Thoughts on 2021
THOUGHTS ON 2021 Focus on Capital Allocation Priorities and Driving Organic Growth • Fortive well prepared for the year - Focusing on growth in an uncertain environment – Macro trends and pace of recovery anticipated to be impacted by COVID-19 rates and vaccination trends • Macro assumptions – Incre
Slide 14: Supplemental Reconciliation Data
Supplemental Reconciliation Data 14
Slide 15: Adjusted Gross Profit Margin
ADJUSTED GROSS PROFIT MARGIN Three Months Ended Year Ended $ in millions December 31, 2019 December 31, 2020 December 31, 2019 December 31, 2020 Revenue (GAAP) $ 1,263.3 $ 1,324.9 $ 4,563.9 $ 4,634.4 Acquisition-Related Fair Value Adjustments to Deferred Revenue 10.8 0.5 54.5 12.9 Adjusted Revenue (
Slide 16: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Three Months Ended December 31, 2019 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 17: Adjusted Operating Profit & Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN Year Ended December 31, 2019 Year Ended December 31, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Technologies Healthca
Slide 18: Adjusted Operating Profit Margin
ADJUSTED OPERATING PROFIT MARGIN Three Months Ended December 31, 2020 Year Ended December 31, 2020 Intelligent Precision Advanced Total Intelligent Operating Precision Advanced Total Operating Technologies Healthcare Fortive Solutions Technologies Healthcare Fortive Solutions Solutions Solutions 201
Slide 19: Incremental Adjusted Operating Profit Margin
INCREMENTAL ADJUSTED OPERATING PROFIT MARGIN Three Months Ended December 31, 2019 Three Months Ended December 31, 2020 $ in millions Intelligent Precision Advanced Corporate Total Intelligent Precision Advanced Corporate Total Operating Technologies Healthcare Fortive Operating Technologies Healthca
Slide 20: Adjusted Net Earnings from Continuing Operations
ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS Three Months Ended Year Ended $ in millions December 31, December 31, December 31, December 31, 2019 2020 2019 2020 Net Earnings Attributable to Common Stockholders from Continuing Operations (GAAP) (a) $ 57.5 $ 199.1 Dividends on the mandatory conver
Slide 21: Adjusted Diluted Net EPS
ADJUSTED DILUTED NET EPS Three Months Ended (a) Year Ended (a) December December December December 31, 2019 31, 2020 31, 2019 31, 2020 Diluted Net Earnings Per Share from Continuing Operations (GAAP) (b) $ 0.17 $ 3.47 $ 0.59 $ 4.05 Dividends on the mandatory convertible preferred stock to apply if-c
Slide 22: Adjusted Diluted Shares Outstanding
ADJUSTED DILUTED SHARES OUTSTANDING Three Months Ended Year Ended (shares in millions) December 31, 2019 December 31, 2020 December 31, 2019 December 31, 2020 Average common diluted stock outstanding 340.1 360.7 340.0 359.0 MCPS Converted Shares (a) 18.3 — 18.3 — Adjusted average common stock and co
Slide 23: Forecasted Adjusted Diluted Net EPS from Continuing Operations
FORECASTED ADJUSTED DILUTED NET EPS FROM CONTINUING OPERATIONS Three Months Ending Year Ending April 2, 2021 (a) December 31, 2021 (a) High Low High Low Forecasted Diluted Net Earnings Per Share from Continuing Operations Attributable to Common Stockholders $ 0.18 $ 0.22 $ 1.37 $ 1.52 Anticipated di
Slide 24: Free Cash Flow Conversion Ratio
FREE CASH FLOW CONVERSION RATIO $ in millions Three Months Ended Year Ended December 31, 2019 December 31, 2020 % Change December 31, 2019 December 31, 2020 % Change Operating Cash Flows from Continuing Operations (GAAP) $ 247.1 $ 329.4 33.3 % $ 702.0 $ 977.7 39.3 % Less: purchases of property, plan
Slide 25: Adjusted Free Cash Flow Conversion Ratio
ADJUSTED FREE CASH FLOW CONVERSION RATIO $ in millions Three Months Ended Year Ended December 31, 2019 December 31, 2020 % Change December 31, 2019 December 31, 2020 % Change Operating Cash Flows from Continuing Operations (GAAP) $ 247.1 $ 329.4 33.3 % $ 702.0 $ 977.7 39.3 % Less: purchases of prope
Slide 26: Core Revenue Growth
CORE REVENUE GROWTH Components of Revenue Growth Three Months Ended December 31, 2020 Year Ended December 31, 2020 Total Fortive Total Revenue Growth (GAAP) 4.9 % 1.5 % Core (Non-GAAP) 0.7 % (5.9)% Acquisitions (Non-GAAP) 2.6 % 7.3 % Impact of currency translation (Non-GAAP) 1.6 % 0.1 % Intelligent
Slide 27: Adjusted Effective Tax Rate
ADJUSTED EFFECTIVE TAX RATE Three Months Ended Year Ended $ in millions December 31, 2019 December 31, 2020 December 31, 2019 December 31, 2020 Earnings before income taxes from continuing operations $ 93.1 $ 1,264.1 $ 336.7 $ 1,507.7 Income tax expense (18.4) (12.5) (68.6) (55.5) Effective tax rate
Slide 28: Supplemental Information: Core Revenue Growth by Segment
SUPPLEMENTAL INFORMATION: CORE REVENUE GROWTH BY SEGMENT Components of Revenue Growth Three Months Ended Three Months Ended Three Months Ended Three Months Ended Year Ended March 27, 2020 June 26, 2020 September 25, 2020 December 31, 2020 December 31, 2020 Total Fortive Total Revenue Growth (GAAP) 1
Slide 29: Supplemental Information: Core Revenue Growth by Segment
SUPPLEMENTAL INFORMATION: CORE REVENUE GROWTH BY SEGMENT Components of Revenue Growth Three Months Ended Three Months Ended Three Months Ended Three Months Ended Year Ended March 29, 2019 June 28, 2019 September 27, 2019 December 31, 2019 December 31, 2019 Total Fortive Total Revenue Growth (GAAP) 7
Slide 30: Supplemental Information: Core Revenue Growth by Segment
SUPPLEMENTAL INFORMATION: CORE REVENUE GROWTH BY SEGMENT Components of Revenue Growth Year Ended December 31, 2018 Total Fortive Total Revenue Growth (GAAP) 16.3 % Core (Non-GAAP) 4.0 % Acquisitions (Non-GAAP) 11.5 % Impact of currency translation (Non-GAAP) 0.8 % Intelligent Operating Solutions Tot
Slide 31: (2) FORTIVE
(2) FORTIVE