Fortive Announces Replenishment of Share Repurchase Authorization

Rhea-AI Summary

Fortive Corporation (NYSE: FTV) has announced a replenishment of 11 million shares of its common stock, bringing the total amount for future repurchases to 20 million shares. This move reflects the company's focus on disciplined M&A, capital allocation, and delivering profitable growth. The Board of Directors is confident in the company's ability to enhance total shareholder returns, aiming to double earnings and cash flow by 2028.

Positive

• Replenishment of 11 million shares of common stock for future repurchases
• Focus on disciplined M&A and capital allocation
• Increased quarterly dividend and accelerated M&A returns
• Confident in ability to enhance total shareholder returns and double earnings and cash flow by 2028

Negative

• None.

Insights

Financial Analyst

The announcement by Fortive Corporation of an expanded share repurchase program is a strategic move that typically signals a company's confidence in its own financial health and future prospects. By increasing the authorization for stock buybacks from 9 million to 20 million shares, Fortive is effectively communicating to the market that it believes its shares are undervalued or that it is an opportune time to return capital to shareholders. This could be interpreted as a positive indicator for investors, as share repurchases can often lead to earnings per share (EPS) accretion, given that they reduce the number of shares outstanding.

Moreover, management's commentary on targeting to double earnings and cash flow by 2028 provides a long-term growth perspective. However, it is essential for stakeholders to consider the opportunity cost of such repurchases, particularly the trade-off between buybacks and potential investments in business growth or acquisitions that could also drive shareholder value. The market's reaction to such news will likely depend on the balance between these strategic priorities and the overall market conditions at the time of the buybacks.

Market Research Analyst

Fortive's repurchase plan should be examined within the broader context of market trends and investor sentiment. Share buyback programs are often well-received in bullish markets, where companies look to leverage excess capital to enhance shareholder value. However, in more volatile or bearish markets, investors might prefer companies to retain cash to hedge against uncertainties. Fortive's approach to capital allocation, which includes a mix of share repurchases, dividends and M&A activity, is indicative of a balanced strategy aimed at both short-term shareholder return and long-term growth.

It is also worth noting that Fortive's robust cash generation capabilities, as highlighted by the CEO, provide it with the flexibility to pursue this strategy. The impact on the stock market will be contingent on the execution of the buyback program and the company's ability to meet its ambitious earnings and cash flow targets. If successful, it could set a precedent for similar companies in the industrial technology sector, influencing market expectations and investment strategies.

EVERETT, Wash.--(BUSINESS WIRE)-- Fortive Corporation (“Fortive”) (NYSE: FTV) announced today that its Board of Directors approved a replenishment of 11 million shares of Fortive common stock to the Company’s previously announced share repurchase authorization, bringing the total amount for future repurchases to 20 million shares, including 9 million shares available under the prior authorization by the Board of Directors announced on February 17, 2022.

James Lico, President and Chief Executive Officer, stated, “Fortive is focused on maintaining a thoughtful approach to capital allocation, prioritizing the pursuit of disciplined M&A, in order to drive value for our shareholders. We are pleased to replenish our repurchase authorization, which along with an increased quarterly dividend and accelerated M&A returns, reflects the execution of our strategy, robust cash generation and ability to deliver profitable growth. The Board of Directors remains confident that Fortive is well positioned to enhance total shareholder returns as we look to roughly double our earnings and cash flow by 2028.”

Under the share repurchase authorization, Fortive may purchase its common stock on a discretionary basis from time to time on the open market or in privately negotiated transactions, including through the use of trading plans that satisfy the conditions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with the requirements of the Securities and Exchange Commission.

The timing and amount of common stock repurchases made under the authorization will be determined by Fortive’s management based on its evaluation of market conditions and other factors. Repurchases may be made from time to time through open market purchases and/or privately negotiated transactions. The repurchase authorization has no expiration date and does not obligate Fortive to acquire any particular amount of shares and may be suspended or discontinued at any time.

FORWARD-LOOKING STATEMENTS

Statements in this release that are not strictly historical, including statements regarding Fortive’s plans with respect to share repurchases, ability to deliver shareholder value or return, and future financial performance and any other statements identified by their use of words like “anticipate,” “expect,” “believe,” “outlook,” “guidance,” or “will” or other words of similar meaning are “forward-looking statements” within the meaning of the federal securities laws. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including, but not limited to, the possibility that the share repurchase program may be suspended or discontinued, deterioration of or instability in the economy, the markets we serve, international trade policies, the condition of the financial markets and the banking systems, the spread of, and the future resurgence of COVID-19, our ability to adjust purchases, supply chain management, and manufacturing capacity to reflect market conditions and customer demand, reliance on sole sources of supply, changes in 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, including our cost of debt, 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, security breaches or other disruptions of our information technology systems, adverse effects of restructuring activities, risk related to tax treatment of the 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, 2022. These forward-looking statements speak only as of the date of this release, 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.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240123683784/en/

Elena Rosman

Vice President - Investor Relations

Fortive Corporation

6920 Seaway Boulevard

Everett, WA 98203

Telephone: (425) 446-5000

Source: Fortive Corporation

FAQ

How many shares were replenished for future repurchases?

Fortive Corporation replenished 11 million shares of common stock for future repurchases, bringing the total to 20 million shares.

What is the ticker symbol for Fortive Corporation?

The ticker symbol for Fortive Corporation is FTV.

What is the company's focus in capital allocation?

Fortive Corporation is focused on maintaining a thoughtful approach to capital allocation, prioritizing the pursuit of disciplined M&A to drive value for shareholders.

What is the goal for total shareholder returns by 2028?

The Board of Directors aims to roughly double earnings and cash flow by 2028, enhancing total shareholder returns.

How will the common stock repurchases be made?

Fortive may purchase its common stock on a discretionary basis from time to time on the open market or in privately negotiated transactions, including through the use of trading plans that satisfy the conditions of Rule 10b5-1 under the Securities Exchange Act of 1934.

Does the repurchase authorization have an expiration date?

The repurchase authorization has no expiration date and does not obligate Fortive to acquire any particular amount of shares and may be suspended or discontinued at any time.