Fortive Reports Strong Third Quarter 2024 Results; Raises Full Year 2024 Outlook
Fortive (FTV) reported strong Q3 2024 results with revenue growing 3% year-over-year to $1.54 billion. The company achieved GAAP diluted EPS of $0.63 and adjusted diluted EPS of $0.97, up 14% year-over-year. Operating profit margin was 19%, with adjusted operating profit margin of 27%. Free cash flow increased 12% to $431 million. The company raised its full-year 2024 outlook, expecting revenue of $6.24-6.26 billion and adjusted diluted EPS of $3.84-3.87. Additionally, Fortive announced plans to separate into two independent public companies by Q4 2025.
Fortive (FTV) ha riportato risultati solidi per il terzo trimestre del 2024, con un fatturato in crescita del 3% rispetto all'anno precedente, raggiungendo $1,54 miliardi. L'azienda ha ottenuto un EPS diluito GAAP di $0,63 e un EPS diluito rettificato di $0,97, in aumento del 14% rispetto allo stesso periodo dell'anno precedente. Il margine di profitto operativo è stato del 19%, con un margine di profitto operativo rettificato del 27%. Il flusso di cassa libero è aumentato del 12%, arrivando a $431 milioni. L'azienda ha rivisto al rialzo le previsioni per l'intero anno 2024, prevedendo un fatturato di $6,24-6,26 miliardi e un EPS diluito rettificato di $3,84-3,87. Inoltre, Fortive ha annunciato piani per separarsi in due società pubbliche indipendenti entro il quarto trimestre del 2025.
Fortive (FTV) reportó resultados sólidos para el tercer trimestre de 2024, con ingresos en crecimiento del 3% interanual, alcanzando $1,54 mil millones. La compañía logró un EPS diluido GAAP de $0,63 y un EPS diluido ajustado de $0,97, un aumento del 14% interanual. El margen de beneficio operativo fue del 19%, con un margen de beneficio operativo ajustado del 27%. El flujo de caja libre aumentó un 12%, alcanzando $431 millones. La empresa elevó sus proyecciones para todo el año 2024, esperando ingresos de $6,24-6,26 billones y un EPS diluido ajustado de $3,84-3,87. Además, Fortive anunció planes para separarse en dos compañías públicas independientes para el cuarto trimestre de 2025.
Fortive (FTV)는 2024년 3분기 강력한 실적을 보고하며, 수익이 전년 대비 3% 증가한 15억 4천만 달러에 도달했습니다. 회사는 GAAP 희석 EPS $0.63과 조정 희석 EPS $0.97를 달성하였으며, 이는 전년 대비 14% 증가한 수치입니다. 운영 이익률은 19%였으며, 조정된 운영 이익률은 27%였습니다. 자유 현금 흐름은 12% 증가하여 4억 3천 1백만 달러에 이르렀습니다. 회사는 2024년 전체 전망을 상향 조정하여 수익이 $62억 4천만에서 $62억 6천만 사이가 되고, 조정 희석 EPS는 $3.84에서 $3.87 사이가 될 것으로 예상했습니다. 또한 Fortive는 2025년 4분기까지 두 개의 독립적인 상장 회사로 분리할 계획을 발표했습니다.
Fortive (FTV) a annoncé de solides résultats pour le troisième trimestre 2024, avec un chiffre d'affaires en hausse de 3% par rapport à l'année précédente, atteignant 1,54 milliard de dollars. L'entreprise a réalisé un EPS dilué GAAP de 0,63 dollar et un EPS dilué ajusté de 0,97 dollar, en augmentation de 14% d'une année sur l'autre. La marge bénéficiaire opérationnelle était de 19%, avec une marge bénéficiaire opérationnelle ajustée de 27%. Le flux de trésorerie disponible a augmenté de 12% pour atteindre 431 millions de dollars. L'entreprise a revu à la hausse ses prévisions pour l'année 2024, s'attendant à des revenus de 6,24 à 6,26 milliards de dollars et un EPS dilué ajusté de 3,84 à 3,87 dollars. De plus, Fortive a annoncé son intention de se séparer en deux entreprises publiques indépendantes d'ici le quatrième trimestre 2025.
Fortive (FTV) hat im dritten Quartal 2024 starke Ergebnisse gemeldet, mit einem Umsatzwachstum von 3% im Vergleich zum Vorjahr auf 1,54 Milliarden Dollar. Das Unternehmen erzielte ein GAAP verwässertes EPS von 0,63 Dollar und ein angepasstes verwässertes EPS von 0,97 Dollar, was einem Anstieg von 14% im Jahresvergleich entspricht. Die operative Gewinnmarge betrug 19%, mit einer angepassten operativen Gewinnmarge von 27%. Der freie Cashflow stieg um 12% auf 431 Millionen Dollar. Das Unternehmen hob seine Prognose für das Gesamtjahr 2024 an und erwartet einen Umsatz von 6,24 bis 6,26 Milliarden Dollar und ein angepasstes verwässertes EPS von 3,84 bis 3,87 Dollar. Außerdem kündigte Fortive Pläne an, bis zum vierten Quartal 2025 in zwei unabhängige öffentliche Unternehmen zu spalten.
- Revenue grew 3% YoY to $1.54 billion
- Adjusted diluted EPS increased 14% YoY to $0.97
- Free cash flow up 12% YoY to $431 million
- Adjusted operating profit margin improved 90 bps YoY to 27%
- Double-digit orders growth in Precision Technologies segment
- Raised full-year 2024 guidance
- Core revenue growth to 1%
Insights
The Q3 results showcase robust financial performance with several key highlights: revenue growth of
The raised full-year guidance signals management's confidence, with adjusted EPS now expected between
- 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 of27% , up 90 bps year-over-year -
GAAP diluted EPS of
$0.63 $0.97 14% year-over-year; reported operating cash flow of$459 million $431 million 12% year-over-year -
Strong full-year 2024 outlook; GAAP diluted EPS of
$2.47 $2.50 2% to3% ; adjusted diluted EPS of$3.84 $3.87 12% to13%
For the third quarter, net earnings were
For the third quarter, revenues increased
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
For the full year 2024, Fortive anticipates revenue of approximately
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
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
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
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
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 |
|
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 |
|
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: |
|
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
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
Concurrently, we pledged to make a charitable donation of
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
|
|
% Change Nine Months Ended
|
||
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,
|
|
September 29,
|
|
% Change |
|
September 27,
|
|
September 29,
|
|
% 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
|
|
Twelve Months Ending
|
||||||||||||
|
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
Telephone: (425) 446-5000
Source: Fortive Corporation
FAQ
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