- Strong earnings and cash flow performance, above the
high-end of Q3 guidance
- Delivered consistent revenue growth of 3% year-over-year to
$1.54 billion
- Operating profit margin was 19%, with adjusted operating
profit margin of 27%, up 90 bps year-over-year
- GAAP diluted EPS of $0.63, adjusted diluted EPS of $0.97, up
14% year-over-year; reported operating cash flow of $459 million
and free cash flow of $431 million, up 12% year-over-year
- Strong full-year 2024 outlook; GAAP diluted EPS of $2.47 to
$2.50, year-over-year increase of 2% to 3%; adjusted diluted EPS of
$3.84 to $3.87, year-over-year increase of 12% to 13%
Fortive Corporation (“Fortive”) (NYSE: FTV) today announced
financial results for the third quarter of 2024.
For the third quarter, net earnings were $222 million. For the
same period, adjusted net earnings were $342 million. Diluted net
earnings per share for the third quarter were $0.63. For the same
period, adjusted diluted net earnings per share were $0.97.
For the third quarter, revenues increased 3% year-over-year to
$1.54 billion, which included 1% core revenue growth.
James A. Lico, President and Chief Executive Officer, stated,
“Fortive generated strong operating performance in the third
quarter, with better than expected earnings and free cash flow. Our
portfolio of high-quality businesses is delivering consistent and
more profitable growth, evidenced by robust recurring revenue
growth in Intelligent Operating Solutions and Advanced Healthcare
Solutions. We are also pleased with the positive momentum in orders
growth across all our segments, including double-digit orders
growth in Precision Technologies in the third quarter.”
For the fourth quarter of 2024, Fortive anticipates revenue of
$1.63 billion to $1.65 billion, diluted net earnings per share of
$0.72 to $0.75 and adjusted diluted net earnings per share of $1.11
to $1.14.
For the full year 2024, Fortive anticipates revenue of
approximately $6.24 billion to $6.26 billion, diluted net earnings
per share of $2.47 to $2.50, and adjusted diluted net earnings per
share of $3.84 to $3.87.
Mr. Lico continued, “Our updated outlook for 2024 continues to
forecast double-digit growth in both earnings and cash flow. We
maintain a balanced perspective on our end markets, as stabilizing
demand trends drive sequential improvement as we move through the
remainder of the year. Looking forward to 2025, we are poised to
accelerate our strategy and ensure consistent value creation as we
progress toward the separation of Fortive and the PT segment,
creating two focused, independent public companies, both positioned
to provide greater value to all of our stakeholders.”
Pending Separation Into Two Independent, Publicly Traded
Companies
On September 4, 2024, Fortive announced its intention to
separate into two independent, publicly traded companies (the
“Separation”). The Separation, if effectuated, will create (i) a
technology solutions company, retaining the Fortive name, with a
portfolio of the brands currently operating under Fortive’s
Intelligent Operating Solutions and Advanced Healthcare Solutions
business segments, focused on resilient, high-quality recurring
growth by delivering productivity, safety, and reliability value to
customers, and (ii) a new global industrial company consisting of
the brands currently operating under the Precision Technologies
business segment with a focus on powerful secular growth trends by
leveraging mission critical technologies in test and measurement,
specialty sensors, and aerospace and defense subsystems. The
Separation is expected to be structured in a tax-free manner for
Fortive shareholders. Fortive is targeting to complete the
Separation by the fourth quarter of 2025, subject to the
satisfaction of certain conditions, including, among others, final
approval of Fortive’s Board of Directors, satisfactory completion
of financing, receipt of a favorable opinion of legal counsel
and/or a private letter ruling from the U.S. Internal Revenue
Service with respect to the tax treatment of the transaction for
U.S. federal income tax purposes, the effectiveness of a Form 10
registration statement filed with the SEC, and other regulatory
approvals.
CONFERENCE CALL DETAILS
Fortive will discuss results and outlook during its quarterly
investor conference call today starting at 12:00 p.m. ET. The call
and an accompanying slide presentation will be webcast on the
“Investors” section of Fortive’s website, www.fortive.com, under
“Events/Presentations.” A replay of the webcast will be available
at the same location shortly after the conclusion of the
presentation.
The conference call can be accessed by dialing 877-407-3110
within the U.S. or by dialing 215-268-9915 outside the U.S. a few
minutes before 12:00 p.m. ET and notifying the operator that you
are dialing in for Fortive’s earnings conference call. A digital
recording of the conference call will be available two hours after
the completion of the call until Wednesday, November 13, 2024. You
can access the conference call replay on the “Investors” section of
Fortive’s website, www.fortive.com, under “Events/Presentations,”
or by dialing 877-660-6853 within the U.S. or 201-612-7415 outside
the U.S (Access ID: 13747614).
ABOUT FORTIVE
Fortive is a provider of essential technologies for connected
workflow solutions across a range of attractive end-markets.
Fortive’s strategic segments - Intelligent Operating Solutions,
Precision Technologies, and Advanced Healthcare Solutions - include
well-known brands with leading positions in their markets. The
company’s businesses design, develop, service, manufacture, and
market professional and engineered products, software, and
services, building upon leading brand names, innovative
technologies, and significant market positions. Fortive is
headquartered in Everett, Washington and employs a team of more
than 18,000 research and development, manufacturing, sales,
distribution, service and administrative employees in more than 50
countries around the world. With a culture rooted in continuous
improvement, the core of our company’s operating model is the
Fortive Business System. For more information please visit:
www.fortive.com.
NON-GAAP FINANCIAL MEASURES
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), this earnings
release also references “adjusted net earnings,” “adjusted diluted
net earnings per share,” “adjusted operating profit margin,” “free
cash flow,” and “core revenue growth,” which are non-GAAP financial
measures. The reasons why we believe these measures, when used in
conjunction with the GAAP financial measures, provide useful
information to investors, how management uses such non-GAAP
financial measures, a reconciliation of these measures to the most
directly comparable GAAP measures and other information relating to
these measures are included in the supplemental reconciliation
schedule attached. The non-GAAP financial measures should not be
considered in isolation or as a substitute for the GAAP financial
measures, but should instead be read in conjunction with the GAAP
financial measures. The non-GAAP financial measures used by Fortive
in this release may be different from similarly-titled non-GAAP
measures used by other companies.
FORWARD-LOOKING STATEMENTS
Statements in this presentation that are not strictly
historical, including statements regarding anticipated financial
results, global and regional economic conditions, industry trends,
geopolitical events, our plans to separate into two independent,
publicly-traded companies, including the timing and cost related to
the planned separation, interest rate and current exchange rate
impact, future prospects, shareholder value, and any other
statements identified by their use of words like “anticipate,”
“expect,” “believe,” “outlook,” “guidance,” "target", or “will” or
other words of similar meaning, are “forward-looking statements”
within the meaning of the United States federal securities laws.
Factors that could cause actual results to differ materially from
those in the forward-looking statements include, among other
things: deterioration of or instability in the economy, the markets
we serve, geopolitical conditions and conflicts, international
trade policies and the financial markets, security breaches or
other disruptions of our information technology systems, supply
chain constraints, our ability to adjust purchases and
manufacturing capacity to reflect market conditions, reliance on
sole sources of supply, changes in trade relations with China,
contractions or lower growth rates and cyclicality of markets we
serve, competition, changes in industry standards and governmental
regulations, our ability to recruit and retain key employees, our
ability to successfully identify, consummate, integrate and realize
the anticipated value of appropriate acquisitions and successfully
complete divestitures and other dispositions, our ability to
develop and successfully market new products, software, and
services and expand into new markets, the potential for improper
conduct by our employees, agents or business partners, contingent
liabilities relating to acquisitions and divestitures, impact of
changes to tax laws, our compliance with applicable laws and
regulations and changes in applicable laws and regulations, risks
relating to international economic, geopolitical, including war and
sanctions, legal, compliance and business factors, risks relating
to potential impairment of goodwill and other intangible assets,
currency exchange rates, tax audits and changes in our tax rate and
income tax liabilities, the impact of our debt obligations on our
operations, litigation and other contingent liabilities including
intellectual property and environmental, health and safety matters,
our ability to adequately protect our intellectual property rights,
risks relating to product, service or software defects, product
liability and recalls, risks relating to product manufacturing, our
relationships with and the performance of our channel partners,
commodity costs and surcharges, adverse effects of restructuring
activities, our plans to separate into two independent,
publicly-traded companies, risk related to tax treatment of our
separation of Vontier, impact of our indemnification obligation to
Vontier, impact of changes to U.S. GAAP, labor matters, and
disruptions relating to man-made and natural disasters and climate
change. Additional information regarding the factors that may cause
actual results to differ materially from these forward-looking
statements is available in our SEC filings, including our Annual
Report on Form 10-K for the year ended December 31, 2023 and
Quarterly Report on Form 10-Q for the quarter ended September 27,
2024. These forward-looking statements speak only as of the date of
this presentation, and Fortive does not assume any obligation to
update or revise any forward-looking statement, whether as a result
of new information, future events and developments or
otherwise.
FORTIVE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED CONDENSED
STATEMENTS OF EARNINGS
($ and shares in millions,
except per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 27, 2024
September 29, 2023
September 27, 2024
September 29, 2023
Sales
$
1,534.6
$
1,494.5
$
4,611.5
$
4,481.6
Cost of sales
(613.3
)
(601.5
)
(1,857.7
)
(1,835.0
)
Gross profit
921.3
893.0
2,753.8
2,646.6
Operating costs:
Selling, general and administrative
expenses
(524.1
)
(503.5
)
(1,610.5
)
(1,525.2
)
Research and development expenses
(101.7
)
(98.4
)
(306.9
)
(298.6
)
Gain on sale of property
—
—
63.1
—
Operating profit
295.5
291.1
899.5
822.8
Non-operating income (expense), net:
Interest expense, net
(37.0
)
(29.8
)
(119.7
)
(95.0
)
Loss from divestiture
—
—
(25.6
)
—
Other non-operating expense, net
(26.3
)
(4.2
)
(59.3
)
(14.5
)
Earnings before income taxes
232.2
257.1
694.9
713.3
Income taxes
(10.6
)
(39.1
)
(70.8
)
(112.7
)
Net earnings
$
221.6
$
218.0
$
624.1
$
600.6
Net earnings per share:
Basic
$
0.63
$
0.62
$
1.78
$
1.70
Diluted
$
0.63
$
0.61
$
1.76
$
1.69
Average common stock and common equivalent
shares outstanding:
Basic
349.2
352.1
350.7
352.9
Diluted
352.3
356.1
354.4
356.0
This information is presented for reference only. A complete
copy of Fortive’s Form 10-Q financial statements is available on
the Company’s website (www.fortive.com).
FORTIVE CORPORATION AND
SUBSIDIARIES
SEGMENT INFORMATION
($ in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 27, 2024
September 29, 2023
September 27, 2024
September 29, 2023
Sales:
Intelligent Operating Solutions
$
661.2
$
644.3
$
2,003.9
$
1,929.5
Precision Technologies
550.9
552.5
1,661.7
1,653.9
Advanced Healthcare Solutions
322.5
297.7
945.9
898.2
Total
$
1,534.6
$
1,494.5
$
4,611.5
$
4,481.6
Operating Profit:
Intelligent Operating Solutions
$
167.7
$
156.8
$
505.0
$
452.0
Precision Technologies
122.0
140.9
386.4
401.3
Advanced Healthcare Solutions
41.0
25.0
108.7
65.8
Other (a)
(35.2
)
(31.6
)
(100.6
)
(96.3
)
Total
$
295.5
$
291.1
$
899.5
$
822.8
Operating Margins:
Intelligent Operating Solutions
25.4
%
24.3
%
25.2
%
23.4
%
Precision Technologies
22.1
%
25.5
%
23.3
%
24.3
%
Advanced Healthcare Solutions
12.7
%
8.4
%
11.5
%
7.3
%
Total
19.3
%
19.5
%
19.5
%
18.4
%
(a) Operating profit amounts in the Other
category consist of unallocated corporate costs and other costs not
considered part of our evaluation of reportable segment operating
performance.
This information is presented for reference only. A complete
copy of Fortive’s Form 10-Q financial statements is available on
the Company’s website (www.fortive.com).
FORTIVE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE
SHEETS
($ and shares in millions,
except per share amounts)
As of
September 27, 2024
December 31, 2023
(unaudited)
ASSETS
Current assets:
Cash and equivalents
$
811.3
$
1,888.8
Accounts receivable less allowance for
doubtful accounts of $29.4 and $39.2, respectively
912.2
960.8
Inventories:
Finished goods
225.6
214.1
Work in process
111.8
108.9
Raw materials
226.5
213.9
Inventories
563.9
536.9
Prepaid expenses and other current
assets
347.8
285.1
Total current assets
2,635.2
3,671.6
Property, plant and equipment, net of
accumulated depreciation of $816.6 and $809.0, respectively
425.1
439.8
Other assets
561.0
518.9
Goodwill
10,322.3
9,121.7
Other intangible assets, net
3,510.0
3,159.8
Total assets
$
17,453.6
$
16,911.8
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
408.1
$
—
Trade accounts payable
623.8
608.6
Accrued expenses and other current
liabilities
1,068.9
1,182.7
Total current liabilities
2,100.8
1,791.3
Other long-term liabilities
1,339.5
1,149.0
Long-term debt
3,451.8
3,646.2
Commitments and Contingencies (Note 9)
Equity:
Common stock: $0.01 par value, 2,000.0
shares authorized; 366.1 and 363.7 issued; 346.9 and 350.7
outstanding, respectively
3.7
3.6
Additional paid-in capital
3,982.1
3,851.3
Treasury shares, at cost
(1,142.8
)
(715.8
)
Retained earnings
8,046.1
7,505.9
Accumulated other comprehensive loss
(334.2
)
(326.1
)
Total Fortive stockholders’ equity
10,554.9
10,318.9
Noncontrolling interests
6.6
6.4
Total stockholders’ equity
10,561.5
10,325.3
Total liabilities and equity
$
17,453.6
$
16,911.8
This information is presented for reference only. A complete
copy of Fortive’s Form 10-Q financial statements is available on
the Company’s website (www.fortive.com).
FORTIVE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
($ in millions)
(unaudited)
Nine Months Ended
September 27, 2024
September 29, 2023
Cash flows from operating activities:
Net earnings
$
624.1
$
600.6
Noncash items:
Amortization
340.4
277.2
Depreciation
68.7
63.9
Stock-based compensation
81.0
85.2
Gain on sale of property
(63.1
)
—
Loss from divestiture
25.6
—
Loss from equity investments
39.4
12.9
Change in trade accounts receivable,
net
64.6
25.0
Change in inventories
4.3
(21.7
)
Change in trade accounts payable
10.6
(45.7
)
Change in prepaid expenses and other
assets
(57.0
)
(45.8
)
Change in accrued expenses and other
liabilities
(114.0
)
(44.8
)
Net cash provided by operating
activities
1,024.6
906.8
Cash flows from investing activities:
Cash paid for acquisitions, net of cash
received
(1,721.8
)
(57.7
)
Payments for additions to property, plant
and equipment
(83.4
)
(73.7
)
Proceeds from sale of property
21.0
7.2
Cash infusion into divestiture
(14.0
)
—
All other investing activities
(1.6
)
—
Net cash used in investing
activities
(1,799.8
)
(124.2
)
Cash flows from financing activities:
Net proceeds from (repayments of)
commercial paper borrowings
(571.2
)
(252.6
)
Proceeds from borrowings (maturities
greater than 90 days), net of issuance costs
1,733.5
—
Repayment of borrowings (maturities
greater than 90 days)
(1,000.0
)
(250.0
)
Repurchase of common shares
(423.0
)
(207.9
)
Payment of dividends
(83.9
)
(73.9
)
All other financing activities
47.9
18.1
Net cash used in financing
activities
(296.7
)
(766.3
)
Effect of exchange rate changes on cash
and equivalents
(5.6
)
(11.4
)
Net change in cash and equivalents
(1,077.5
)
4.9
Beginning balance of cash and
equivalents
1,888.8
709.2
Ending balance of cash and equivalents
$
811.3
$
714.1
This information is presented for reference only. A complete
copy of Fortive’s Form 10-Q financial statements is available on
the Company’s website (www.fortive.com).
FORTIVE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES AND
OTHER INFORMATION
Management believes that each of the non-GAAP financial measures
described below provide useful information to investors by
reflecting additional ways of viewing aspects of our operations
that, when reconciled to the corresponding GAAP measure, help our
investors to understand the long-term profitability trends of our
business, and facilitate comparisons of our operational performance
and profitability to prior and future periods and to our peers.
These non-GAAP measures should be considered in addition to, and
not as a replacement for or superior to, the comparable GAAP
measures, and may not be comparable to similarly titled measures
reported by other companies.
Adjusted Net Earnings, Adjusted Diluted Net
Earnings per Share, and Adjusted Operating Profit Margin
We disclose the non-GAAP measures of historical adjusted net
earnings, historical and forecasted adjusted diluted net earnings
per share and historical adjusted operating profit margin, which to
the extent applicable, make the following adjustments to GAAP net
earnings, GAAP diluted net earnings per share, and GAAP operating
profit margin:
- Excluding on a pretax basis amortization of acquisition related
intangible assets and non-cash impairments;
- Excluding on a pretax basis acquisition and divestiture related
items;
- Excluding on a pretax basis the gain on sale of property;
and
- Excluding on a pretax basis the costs incurred pursuant to
discrete restructuring plans that are fundamentally different from
ongoing productivity improvements in terms of the size, strategic
nature, planning requirements and the inconsistent frequency of
such plans as well as the associated macroeconomic drivers which
underlie such plans (the “Discrete Restructuring Charges”).
In addition, with respect to the non-GAAP measures of historical
adjusted net earnings and historical and forecasted adjusted
diluted net earnings per share, we make the following adjustments
to GAAP net earnings and GAAP diluted net earnings per share:
- Excluding on a pretax basis the effect of gains and losses from
our equity investments;
- Excluding the loss from divestiture;
- Excluding on a pretax basis the charitable contribution
expense; and
- Excluding the tax effect (to the extent tax deductible) of the
pretax adjustments noted above. The tax effect of such adjustments
was calculated by applying our overall estimated effective tax rate
to the pretax amount of each adjustment (unless the nature of the
item and/or the tax jurisdiction in which the item has been
recorded requires application of a specific tax rate or tax
treatment, in which case the tax effect of such item is estimated
by applying such specific tax rate or tax treatment). We expect to
apply our overall estimated effective tax rate to each adjustment
going forward.
Amortization of Acquisition Related Intangible Assets and
Non-cash Impairments
As a result of our acquisition activity, we have significant
amortization expense associated with definite-lived intangible
assets. We adjust for amortization expense of acquisition related
intangible assets incurred in each period, and impairment charges
incurred, if any. During the nine-month periods ended September 29,
2023 we recognized $2.9 million related to impairment charges. We
believe that this adjustment provides our investors with additional
insight into our operational performance and profitability as such
impacts are not related to our core business performance.
Acquisition and Divestiture Related Items
While we have a history of acquisition and divestiture activity,
we do not acquire and divest businesses or assets on a predictable
cycle. The amount of an acquisition’s purchase price allocated to
inventory fair value adjustments are unique to each acquisition and
can vary significantly from acquisition to acquisition. In
addition, transaction costs, which include acquisition,
divestiture, integration, restructuring, and separation costs
related to completed or announced transactions, and the
non-recurring gains on divestitures of businesses or assets are
unique to each transaction and are impacted from period to period
depending on the number of acquisitions or divestitures evaluated,
pending, or completed during such period, and the complexity of
such transactions. We adjust for transaction costs, acquisition
related fair value adjustments to inventory, integration costs and
corresponding restructuring charges related to acquisitions, in
each case, incurred in a given period.
Gains and Losses from Equity Investments
We adjust for the effect of earnings and losses from our equity
method investments over which we do not exercise control over the
operations or the resulting earnings or losses. We believe that
this adjustment provides our investors with additional insight into
our operational performance. However, it should be noted that
earnings and losses from our equity method investments will recur
in future periods while we maintain such investments.
In addition, we adjust for remeasurement gains and losses,
including impairment loss, on equity investments. We believe such
adjustments facilitate comparison of our performance with prior and
future periods and provides our investors with additional insight
into our operational performance.
Loss from Divestiture
In June 2024, we divested and transferred ownership of Invetech,
excluding the Motion Solution Business, to its management team (the
“Invetech Divestiture”). We adjust for the loss from the Invetech
Divestiture because we believe the adjustment facilitates
comparison of our performance with prior and future periods and
provides our investors with additional insight into our operational
performance.
Gain on Sale of Property and Charitable Contribution Expense
On March 14, 2024 we completed a transaction to sell land and
certain office buildings in our Precision Technologies segment for
$90 million, for which we received $20 million cash proceeds and a
$70 million promissory note secured by a letter of credit. We
received $10 million of principal in August and the remaining is
due in November 2024. During the nine-month period ended September
27, 2024, we recorded a gain on sale of property of $63.1 million
in the Consolidated Condensed Statements of Earnings.
Concurrently, we pledged to make a charitable donation of $20
million to the Fortive Foundation, a related party, without any
donor imposed conditions or restrictions. During the first quarter
of 2024, we recorded a charitable contribution expense of $20
million within the “Other non-operating expense, net” line in the
Consolidated Condensed Statements of Earnings.
We adjust for the gain on sale of property and charitable
donation expense because we believe the adjustment facilitates
comparison of our performance with prior and future periods and
provides our investors with additional insight into our operational
performance.
Discrete Restructuring Costs
We will exclude costs incurred pursuant to discrete
restructuring plans that are fundamentally different in terms of
the size, strategic nature and planning requirements, as well as
the inconsistent frequency, of such plans originating from
significant macroeconomic trends or material disruptions to
operations, economy or capital markets from the ongoing
productivity improvements that result from application of the
Fortive Business System or from execution of general cost saving
strategies. Because these restructuring plans will be incremental
to the fundamental activities that arise in the ordinary course of
our business and we believe are not indicative of our ongoing
operating costs in a given period, we exclude these costs to
facilitate a more consistent comparison of operating results over
time. Restructuring costs related primarily to an acquisition are
not included in this adjustment but are instead included in
acquisition and divestiture related items. Discrete restructuring
charges adjusted for in the quarter and the year-to-date period in
2023 are related to our 2023 discrete plan. We expect to execute a
discrete restructuring plan related to the Separation beginning in
the fourth quarter of 2024, for which we will adjust for the
related discrete restructuring charges.
Management believes that each of the non-GAAP financial measures
noted above provide useful information to investors by reflecting
additional ways of viewing aspects of our operations that, when
reconciled to the corresponding GAAP measure, help our investors to
understand the long-term profitability trends of our business, and
facilitate comparisons of our operational performance and
profitability to prior and future periods and to our peers.
These non-GAAP measures should be considered in addition to, and
not as a replacement for or superior to, the comparable GAAP
measures, and may not be comparable to similarly titled measures
reported by other companies.
Core Revenue Growth
We use the term “core revenue growth” when referring to a
corresponding year-over-year GAAP revenue measure, excluding (1)
the impact from acquired or divested businesses and (2) the impact
of currency translation. References to sales attributable to
acquisitions or acquired businesses refer to GAAP sales from
acquired businesses recorded prior to the first anniversary of the
acquisition less the amount of sales attributable to certain
divested businesses or product lines that have been divested or, at
the time of reporting, are pending divestiture but are not, and
will not be, considered discontinued operations prior to the first
anniversary of the divestiture. The portion of sales attributable
to the impact of currency translation is calculated as the
difference between (a) the period-to-period change in sales
(excluding sales impact from acquired businesses) and (b) the
period-to-period change in sales (excluding sales impact from
acquired businesses) after applying the current period foreign
exchange rates to the prior year period. This non-GAAP measure
should be considered in addition to, and not as a replacement for
or superior to, the comparable GAAP measure, and may not be
comparable to similarly titled measures reported by other
companies.
Management believes that this non-GAAP measure provides useful
information to investors by helping identify underlying growth
trends in our business and facilitating comparisons of our revenue
performance with prior and future periods and to our peers. We
exclude the effect of acquisition and divestiture-related items
because the nature, size and number of such transactions can vary
dramatically from period to period and between us and our peers. We
exclude the effect of currency translation from sales measures
because currency translation is not under management’s control and
is subject to volatility. We believe that such exclusions, when
presented with the corresponding GAAP measures, may assist in
assessing the business trends and making comparisons of long-term
performance.
Free Cash Flow
We use the term “free cash flow” when referring to cash provided
by operating activities calculated according to GAAP less payments
for capital expenditures.
Management believes that such non-GAAP measure provides useful
information to investors in assessing our ability to generate cash
without external financing, fund acquisitions and other investments
and, in the absence of refinancing, repay our debt obligations.
However, it should be noted that free cash flow as a liquidity
measure has material limitations because it excludes certain
expenditures that are required or that we have committed to, such
as debt service requirements and other non-discretionary
expenditures. Such non-GAAP measure should be considered in
addition to, and not as a replacement for or superior to, the
comparable GAAP measure, and may not be comparable to similarly
titled measures reported by other companies.
Adjusted Operating Profit and Adjusted
Operating Profit Margin (unaudited)
Three Months Ended
Nine Months Ended
($ in millions)
September 27, 2024
September 29, 2023
September 27, 2024
September 29, 2023
Revenue (GAAP)
$
1,534.6
$
1,494.5
$
4,611.5
$
4,481.6
Operating Profit (GAAP)
$
295.5
$
291.1
$
899.5
$
822.8
Amortization of Acquisition-Related
Intangible Assets and Non-cash Impairments
113.3
93.1
340.4
280.1
Acquisition and Divestiture Related
Items
3.2
1.7
34.9
1.7
Gain on sale of property
—
—
(63.1
)
—
Discrete Restructuring Charges
—
0.9
—
29.2
Adjusted Operating Profit
(Non-GAAP)
$
412.0
$
386.8
$
1,211.7
$
1,133.8
Operating Profit Margin (GAAP)
19.3
%
19.5
%
19.5
%
18.4
%
Adjusted Operating Profit Margin
(Non-GAAP)
26.8
%
25.9
%
26.3
%
25.3
%
The sum of the components of adjusted
operating profit may not equal due to rounding.
Adjusted Net Earnings and Adjusted
Diluted Net Earnings Per Share (unaudited)
Three Months Ended
Nine Months Ended
($ in millions, except per share
amounts)
September 27, 2024
September 29, 2023
September 27, 2024
September 29, 2023
Per share values
Per share values
Per share values
Per share values
Net Earnings and Net Earnings Per Share
(GAAP)
$
221.6
$
0.63
$
218.0
$
0.61
$
624.1
$
1.76
$
600.6
$
1.69
Pretax amortization of acquisition related
intangible assets and non-cash impairments
113.3
0.32
93.1
0.26
340.4
0.96
280.1
0.79
Pretax acquisition and divestiture related
items
3.2
0.01
1.7
—
34.9
0.10
1.7
—
Pretax losses from equity investments
26.2
0.07
3.8
0.01
39.4
0.11
12.9
0.04
Loss from divestiture
—
—
—
—
25.6
0.07
—
—
Pretax gain on sale of property and
charitable contribution expense
—
—
—
—
(43.1
)
(0.12
)
—
—
Pretax discrete restructuring charges
—
—
0.9
—
—
—
29.2
0.08
Tax effect of the adjustments reflected
above (a)
(22.7
)
(0.06
)
(15.9
)
(0.04
)
(55.3
)
(0.16
)
(53.1
)
(0.15
)
Adjusted Net Earnings and Adjusted Net
Earnings Per Share (Non-GAAP)
$
341.6
$
0.97
$
301.6
$
0.85
$
966.0
$
2.73
$
871.4
$
2.45
Average Common Diluted Stock
Outstanding (shares in millions)
352.3
356.1
354.4
356.0
(a) The loss from divestiture had no tax
impact. The tax effect of the adjustments includes all other line
items.
The sum of the components of adjusted
diluted net earnings per share may not equal due to rounding.
Core Revenue Growth (unaudited)
% Change Three Months
Ended September 27, 2024 vs. Comparable 2023 Period
% Change Nine Months Ended
September 27, 2024 vs. Comparable 2023 Period
Total Revenue Growth (GAAP)
2.7
%
2.9
%
Core (Non-GAAP)
1.1
%
1.2
%
Acquisitions and divestitures
(Non-GAAP)
1.6
%
2.3
%
Impact of currency translation
(Non-GAAP)
—
%
(0.6
)%
Free Cash Flow (unaudited)
($ in millions)
Three Months Ended
Nine Months Ended
September 27, 2024
September 29, 2023
% Change
September 27, 2024
September 29, 2023
% Change
Operating Cash Flows (GAAP)
$
459.0
$
411.4
11.6
%
$
1,024.6
$
906.8
13.0
%
Less: purchases of property, plant &
equipment (capital expenditures) (GAAP)
(27.8
)
(27.9
)
(83.4
)
(73.7
)
Free Cash Flow (Non-GAAP)
$
431.2
$
383.5
12.4
%
$
941.2
$
833.1
13.0
%
Forecasted Adjusted Diluted Net
Earnings Per Share (unaudited)
Three Months Ending
December 31, 2024
Twelve Months Ending
December 31, 2024
Low
High
Low
High
Forecasted Diluted Net Earnings Per
Share (GAAP)
$
0.72
$
0.75
$
2.47
$
2.50
Anticipated pretax amortization of
acquisition related intangible assets
0.33
0.33
1.29
1.29
Anticipated pretax acquisition and
divestiture related items
0.07
0.07
0.18
0.18
Anticipated pretax discrete restructuring
charges
0.06
0.06
0.06
0.06
Anticipated pretax losses from equity
investments
—
—
0.11
0.11
Loss from divestiture
—
—
0.07
0.07
Pretax gain from sale of property and
charitable contribution expense
—
—
(0.12
)
(0.12
)
Tax effect of the adjustments reflected
above
(0.07
)
(0.07
)
(0.22
)
(0.22
)
Forecasted Adjusted Diluted Net
Earnings Per Share (Non-GAAP)
$
1.11
$
1.14
$
3.84
$
3.87
The sum of the components of forecasted
adjusted diluted net earnings per share may not equal due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030059595/en/
Elena Rosman Investor Relations Fortive Corporation 6920 Seaway
Boulevard Everett, WA 98203 Telephone: (425) 446-5000
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