Fortive : Presentation PDF Q1 2025

Published: 2025-05-01 07:36:10 ET FTV

Published on 05/01/2025 at 07:36

First Quarter 2025 Earnings Release

May 1, 2025

Key Messages

Adj. EPS at midpoint of guidance

range and Adj. Free Cash Flow above our expectations

Continued growth in IOS and AHS,

offset by unfavorable PT decline

Delivered adj. gross margin and adj.

operating margin expansion despite lower revenue

New Fortive benefiting from durable

markets and recurring revenue growth

Broad policy and macro uncertainty

delaying recovery in PT

Proven FBS playbook to rapidly

countermeasure headwinds

Updated FY 2025 guidance to reflect

moderated demand at PT; includes net tariff impact

Form 10 to be filed in early May with

pro forma financials

Investor days scheduled for June

10th; road shows and when-issued trading to follow

Mark Okerstrom appointed CFO of

Fortive, effective March 24th

Solid Q1 performance despite dynamic macro

Navigating the current environment

Separation on track, targeting by end of Q2

Q1 2025 Financial Highlights

Earnings in line with expectations

Q1 2025

Q1 Highlights

REVENUE & GROWTH

MARGINS

EARNINGS & FCF

Revenue

Total Growth Core Growth

IOS + AHS

Adj. Op. Profit

Adj. OMX

Adj. EPS

Adj. EPS Growth

Adj. Free Cash Flow

Adj. FCF Growth

$1.47B

(3)%

(2)%

+2%

(8)%

$373M

+20 bps

$0.85

+2%

$222M

(4)%

IOS and AHS growth reflects resilient demand and traction on innovation; strong SaaS and ARR growth

Trade and macro uncertainty delaying PT recovery as customers delay spending decisions

Operating leverage and accretive software growth drive +20bps adj. operating profit margin expansion

Adj. EPS at mid-point of guide

Better than expected adj. FCF performance, last 6 month adj. FCF growth of 7%; repurchased 2.5M shares in the first quarter

Q1 2025 Segment Highlights - IOS & AHS

Resilient demand for New Fortive

TOTAL IOS + AHS

INTELLIGENT OPERATING SOLUTIONS

ADVANCED HEALTHCARE SOLUTIONS

($ in millions)

Core Growth: +2.2%

Core Growth: +2.0%

Core Growth: +2.5%

Total Growth: +0.8% Total Growth: +0.9% Total Growth: +0.8%

31.8%

$666

33.3%

$671

23.5%

$302

24.2%

$300

29.5%

$966

30.3%

$974

Q1 2024 Q1 2025 Q1 2024 Q1 2025

Q1 2024 Q1 2025

Q1 performance as expected; fewer days, Q4 sales timing ~(200) bps impact

Adj. OMX +80 bps

Stable industrial products demand

Europe/China weak as expected

Continued growth and share gains at FAL

Adj. OMX driven by software & recurring revenue businesses

Continued strength in infection prevention (ASP/Censis), partially offset by days impact

Robust software growth driven by continued SaaS conversions

Investments for growth and unfavorable FX more than offset AOP volume leverage

Q1 2025 Segment Highlights - PT

Customer caution given policy and macro uncertainty

PRECISION TECHNOLOGIES

Q1 Highlights

($ in millions)

Core Growth: (8.4)%

Total Growth: (10.5)%

Solid core orders growth driven by North America and Asia ex-China

Test & measurement core decline (high-teens) reflects tough comp and customer order delays

Continued strong demand in sensors & safety systems; demand pressure on supply chain continues

AOP margins reflect lower T&M volumes off strong Q1-24 comp and FX headwinds, partially offset by strong margin expansion at Sensing

21.8%

$501

24.4%

$559

Q1 2024 Q1 2025

Q1 performance below (MSD) core growth expectation

Navigating the Current Environment

Proven FBS playbook to rapidly countermeasure headwinds

Estimated Gross Incremental Tariff Impacts1

Countermeasure Playbook

2025 IMPACT

China $165 to $175M

US imports from China (~145% tariff) $75 to $80M

US exports to China (~125% tariff) $90 to $95M

Asia (ex-China) $10 to $15M

(~15% tariff)

Europe $10 to $15M

(~15% tariff)

North America $0 to $5M

(~25% tariff)

Rest of World $5 to $10M

(10-15% tariff)

Total2$190 to $220M

Pricing/surcharges where appropriate

Leveraging existing sourcing strategies

Optimizing production and logistics

Cost and productivity actions

Mitigation Implications & Phasing

Pricing actions implemented throughout Q2

Accelerating supply chain and manufacturing actions to offset new tariffs; reduced exposure to imports from China by 70% since 2018

Expect to fully offset the estimated tariff exposure by Q4, completely mitigate in 2026

Proactive restructuring plus new cost actions

Estimated impact as of 5/1/25; regional tariff rates are as of 5/1/25 and reflects a weighted average 7

~60% / 40% New Fortive / Ralliant split

Q2 and FY 2025 Outlook

Managing through dynamic, more uncertain environment

Q2'25 Expectations FY'25 Expectations

ADJUSTED EPS

$0.85 to $0.90

KEY ASSUMPTIONS

PT/Ralliant core decline, modest sequential improvement

"New Fortive" continues steady pace of growth in IOS/AHS

Adj. operating margins pressured by tariffs

Tariff mitigation actions phase in throughout quarter

ADJUSTED EPS

$3.80 to $4.00

KEY ASSUMPTIONS

Guide reduced for moderated demand at PT/Ralliant

Durable growth at "New Fortive"

Offsetting tariff impact

"New Fortive" and Ralliant to provide updated guidance post-separation

All statements on this page are forward-looking. 8

Track Record of Durable Growth

Innovation and diversification driving resilient revenue profile

New Fortive Ralliant

5Yr Core Growth CAGR MSD

LSD+

Strategic actions to enhance durability

Continued diversification and geographic expansion into attractive growth markets

Accelerated innovation and growth investments aligned to favorable secular trends

Increased recurring revenue profile

Resilient margins and free cash flow

Investor Day & Separation Update

Launching two independent companies

Separation Timeline

May

June

July

Form 10 filed

early May

Investor Day

June 10th

Roadshows

for both companies

Fortive & Ralliant 2025

Investor Days

Tuesday, June 10th @ 10am ET @

NYSE, +webcast

Ralliant presentation (morning session)

Fortive presentation (afternoon session)

Innovation showcase (registration & lunch)

Target separation by end of Q2'25

Solid Q1 performance despite dynamic macro environment

Proven FBS playbook to navigate the current trade landscape

Updated FY outlook reflects more uncertain macro and policy environment

Separation on-track to be completed by the end of Q2; investor days scheduled for June 10th

Wrap

Supplemental Reconciliation Data

ADJUSTED OPERATING PROFIT & ADJUSTED OPERATING PROFIT MARGIN

$ in millions Intelligent

Amortization of acquisition-related intangible assets

Acquisition, divestiture, and separation related items (a)

46.6 44.6 91.2 20.3 - 111.5 47.6 45.0 92.6 21.1 - 113.7

- - - 1.0 22.6 23.6 0.2 - 0.2 29.4 - 29.6

Gain on sale of property - - - - - - - - - (63.1) - (63.1) Discrete restructuring charges 3.4 - 3.4 0.5 - 3.9 - - - - - -

2024 Adjusted Operating Profit Margin 31.8 % (Non-GAAP)

24.2 %

29.5 %

24.4 %

25.1 %

Core (Non-GAAP) 1.5 %

(0.7)%

0.8 %

(3.8)%

(0.2)%

Acquisitions and divestitures (Non- - % GAAP)

- %

1.2 %

0.4 %

2025 Adjusted Operating Profit Margin 33.3 %

23.5 %

30.3 %

21.8 %

25.3 %

Includes pretax transaction costs, acquisition related fair value adjustments to inventory, integration costs, corresponding restructuring charges related to acquisitions, and separation costs.

Incremental adjusted operating profit margin is calculated as the increase in adjusted operating profit between two periods, divided by the increase in adjusted revenue between the same two periods.

The sum of the components of adjusted operating profit and adjusted operating profit margin may not equal due to rounding.

ADJUSTED NET EARNINGS AND ADJUSTED DILUTED NET EPS

$ in millions, except per share amounts March 28, 2025 March 29, 2024

Per share Per share

value value

Net Earnings and Net Earnings Per Share (GAAP)

$ 171.9

$ 0.50

$ 207.4

$ 0.58

Pretax amortization of acquisition related intangible assets

111.5

0.32

113.7

0.32

Pretax acquisition, divestiture, and separation related items (a)

23.6

0.07

29.6

0.09

Pretax discrete restructuring charges

3.9

0.02

Pretax losses from equity investments

4.6

0.01

Pretax gain on sale of property and charitable contribution expense

(43.1)

(0.12)

Tax effect of the adjustments reflected above

(16.7)

(0.05)

(16.9)

(0.05)

Discrete tax expense resulting from the Separation of Ralliant

(2.7)

(0.01)

Adjusted Net Earnings and Adjusted Net Earnings Per Share (Non-GAAP)

$ 291.5

$ 0.85

$ 295.3

$ 0.83

Average Common Diluted Stock Outstanding (shares in millions)

344.6

356.0

(a) Includes pretax transaction costs, acquisition related fair value adjustments to inventory, integration costs, corresponding restructuring charges related to acquisitions, and costs related to the Separation.

The sum of the components of adjusted diluted net earnings per share may not equal due to rounding.

FORECASTED ADJUSTED DILUTED NET EPS

Forecasted Diluted Net Earnings Per Share (GAAP)

$ 0.44

$ 0.49

$ 2.23

$ 2.43

Anticipated pretax amortization of acquisition related intangible assets

0.33

1.32

Anticipated pretax acquisition, divestiture, and separation related items

0.13

0.39

Anticipated pretax discrete restructuring charges

0.01

0.04

Tax effect of the adjustments reflected above

(0.07)

(0.24)

Discrete tax expense resulting from the Separation of Ralliant

0.01

0.06

Forecasted Adjusted Diluted Net Earnings Per Share

$ 0.85

$ 0.90

$ 3.80

$ 4.00

The sum of the components of forecasted adjusted diluted net earnings per share may not equal due to rounding.

FREE CASH FLOW AND ADJUSTED FREE CASH FLOW - TRAILING SIX MONTHS (in millions)

Trailing Six Months

March 28, 2025

December 31, 2024

Operating Cash Flows (GAAP)

241.7

502.2

743.9

Less: Purchases of property, plant & equipment (capital expenditures)

(GAAP)

(26.7)

(37.0)

(63.7)

Free Cash Flow (Non-GAAP)

215.0

465.2

680.2

Add: Cash separation costs (GAAP)

6.8

Adjusted Free Cash Flow (Non-GAAP)

221.8

465.2

687.0

Operating Cash Flows (GAAP)

256.7

446.8

703.5

Less: Purchases of property, plant & equipment (capital expenditures)

(GAAP)

(26.4)

(34.1)

(60.5)

Free Cash Flow (Non-GAAP)

230.3

412.7

643.0

Add: Cash separation costs (GAAP)

Adjusted Free Cash Flow (Non-GAAP)

230.3

412.7

643.0

CORE REVENUE GROWTH

Total revenue growth (GAAP)

0.9 %

0.8 %

(10.5)%

(3.3)%

Excluding impact of:

Acquisitions and divestitures

- %

1.0 %

0.4 %

Currency exchange rates

1.1 %

1.7 %

1.4 %

1.1 %

1.2 %

Core revenue growth (Non-GAAP)

2.0 %

2.5 %

2.2 %

(8.4)%

(1.7)%

ADJUSTED EFFECTIVE TAX RATE

$ in millions

March 28, 2025

March 29, 2024

Earnings before income taxes

201.4

234.0

Income tax expense

(29.5)

(26.6)

Effective tax rate (GAAP)

14.6 %

11.4 %

Earnings before income taxes (GAAP)

201.4

234.0

Pretax amortization of acquisition related intangible assets and non-cash impairments

111.5

113.7

Pretax acquisition and divestiture related items (a)

23.6

29.6

Pretax discrete restructuring charges

3.9

Pretax losses from equity investments

4.6

Pretax gain on sale of property and charitable contribution expense

(43.1)

Pretax Adjusted Earnings before income taxes (Non-GAAP)

340.4

338.8

Tax effect of the adjustments reflected above

(16.7)

(16.9)

Discrete tax expense resulting from the Separation of Ralliant

(2.7)

Adjusted income tax expense (Non-GAAP)

(48.9)

(43.5)

Adjusted effective tax rate (Non-GAAP)

14.4 %

12.8 %

(a) Includes pretax transaction costs, acquisition related fair value adjustments to inventory, integration costs and corresponding restructuring charges related to acquisitions, and costs related to the Separation. The recalculation of certain percentages may not equal due to rounding.

Disclaimer

Fortive Corporation published this content on May 01, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 01, 2025 at 11:34 UTC.