- Delivered robust margin expansion and record cash flow in
2024
- Strong execution and FBS-driven innovation enabled
better-than-expected Q4 operating performance, including record
margins and cash flow
- Q4 GAAP diluted EPS of $0.60, adjusted diluted EPS of $1.17,
up 19% year-over-year
- Q4 reported operating cash flow of $502 million and free
cash flow of $465 million, up 13% year-over-year
- Introducing 2025 outlook; GAAP diluted EPS of $2.38 to
$2.50, year-over-year increase of 1% to 6%; adjusted diluted EPS of
$4.00 to $4.12, year-over-year increase of 3% to 6%
- Separation of PT segment progressing well, expect to close
early Q3’25
Fortive Corporation (“Fortive”) (NYSE: FTV) today announced
financial results for the fourth quarter and full year 2024.
For the fourth quarter, net earnings were $209 million. For the
same period, adjusted net earnings were $406 million. Diluted net
earnings per share for the fourth quarter were $0.60. For the same
period, adjusted diluted net earnings per share were $1.17.
For the fourth quarter, revenues increased 2% year-over-year to
$1.62 billion, which included 2% core revenue growth.
For the full year, net earnings were $833 million. For the same
period, adjusted net earnings were $1.37 billion. Diluted net
earnings per share for the full year were $2.36. For the same
period, adjusted diluted net earnings per share were $3.89.
For the full year, revenues increased 3% year-over-year to $6.23
billion, which included 1% core revenue growth.
James A. Lico, President and Chief Executive Officer, stated,
“Our fourth quarter results once again demonstrated strong
execution despite the mixed macro environment, leading to
better-than-expected core growth, earnings, and free cash flow.
Continued growth in our Intelligent Operating Solutions (IOS) and
Advanced Healthcare Solutions (AHS) segments was driven by steady
demand for our safety and productivity solutions and increased
contributions from FBS-driven product innovations. We saw strong
order growth across all of our segments, including the second
consecutive quarter of double-digit orders growth for our Precision
Technologies (PT) segment. This momentum drove sequential
improvement in PT core growth and supports our view of a gradual
recovery as we move through 2025. As we look ahead, Fortive is
poised for improving core sales growth and continued strong
operating performance again in 2025.”
For the first quarter of 2025, Fortive anticipates revenue of
$1.48 billion to $1.51 billion, diluted net earnings per share of
$0.39 to $0.42, and adjusted diluted net earnings per share of
$0.83 to $0.86.
For the full year 2025, Fortive anticipates revenue of
approximately $6.23 billion to $6.35 billion, diluted net earnings
per share of $2.38 to $2.50, and adjusted diluted net earnings per
share of $4.00 to $4.12. The foregoing guidance for the full year
2025 does not give effect to the pending separation of the
Precision Technologies segment.
Mr. Lico continued, “We have a proven track record of evolving
Fortive to ensure sustained performance. Our enhanced portfolio of
leading brands and dedication to the Fortive Business System have
enabled us to deliver consistent, compounding results over the past
five years. As we move through the separation, we are well-prepared
to continue this success in 2025 and beyond. I am incredibly
excited for the future. Both companies are strategically positioned
to build on our performance history and thrive with focused growth
and capital allocation strategies that reflect our unwavering
commitment to creating sustained value for all stakeholders.”
Update on Pending Separation Into Two Independent, Publicly
Traded Companies
On September 4, 2024, Fortive announced its intention to
separate its Precision Technologies business into an independent
publicly traded company, which will be named Ralliant. The
Separation 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
and safety to customers, and (ii) a global technology company
consisting of the brands currently operating under the Precision
Technologies segment with a focus on precision instruments and
highly engineered products essential for breakthrough innovation
and aligned to powerful secular trends. The Separation is intended
to qualify as a tax-free spin-off to Fortive shareholders for U.S.
federal income tax purposes. Fortive is currently targeting
completion of the Separation early in the third 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 Friday, February 21, 2025. 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: 13750805).
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 other
countries, 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 prior or pending separation,
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 STATEMENTS OF
EARNINGS
($ and shares in millions,
except per share amounts)
Three Months Ended
Year Ended
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
(unaudited)
(unaudited)
(unaudited)
Sales
$
1,620.3
$
1,583.7
$
6,231.8
$
6,065.3
Cost of sales
(643.1
)
(636.2
)
(2,500.8
)
(2,471.2
)
Gross profit
977.2
947.5
3,731.0
3,594.1
Operating costs:
Selling, general and administrative
expenses
(563.0
)
(537.4
)
(2,173.5
)
(2,062.6
)
Research and development expenses
(107.1
)
(99.2
)
(414.0
)
(397.8
)
Gain on sale of property
—
—
63.1
—
Operating profit
307.1
310.9
1,206.6
1,133.7
Non-operating income (expense), net:
Interest expense, net
(33.1
)
(28.5
)
(152.8
)
(123.5
)
Loss from divestiture
—
—
(25.6
)
—
Other non-operating expense, net
0.7
(4.9
)
(58.6
)
(19.4
)
Earnings before income taxes
274.7
277.5
969.6
990.8
Income taxes
(65.9
)
(12.3
)
(136.7
)
(125.0
)
Net earnings
$
208.8
$
265.2
$
832.9
$
865.8
Net earnings per share:
Basic
$
0.61
$
0.75
$
2.39
$
2.46
Diluted
$
0.60
$
0.75
$
2.36
$
2.43
Average common stock and common equivalent
shares outstanding:
Basic
344.5
351.3
349.2
352.5
Diluted
348.0
354.5
352.8
355.6
This information is presented for reference only. Final audited
statements will include footnotes, which should be referenced when
available, to more fully understand the contents of this
information.
FORTIVE CORPORATION AND
SUBSIDIARIES
SEGMENT INFORMATION
($ in millions)
Three Months Ended
Year Ended
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
(unaudited)
(unaudited)
(unaudited)
Sales:
Intelligent Operating Solutions
$
710.8
$
682.7
$
2,714.7
$
2,612.2
Precision Technologies
567.7
569.8
2,229.4
2,223.7
Advanced Healthcare Solutions
341.8
331.2
1,287.7
1,229.4
Total
$
1,620.3
$
1,583.7
$
6,231.8
$
6,065.3
Operating Profit:
Intelligent Operating Solutions
$
199.6
$
176.8
$
704.6
$
628.8
Precision Technologies
113.6
142.9
500.0
544.2
Advanced Healthcare Solutions
46.9
35.8
155.6
101.6
Other (a)
(53.0
)
(44.6
)
(153.6
)
(140.9
)
Total
$
307.1
$
310.9
$
1,206.6
$
1,133.7
Operating Margins:
Intelligent Operating Solutions
28.1
%
25.9
%
26.0
%
24.1
%
Precision Technologies
20.0
%
25.1
%
22.4
%
24.5
%
Advanced Healthcare Solutions
13.7
%
10.8
%
12.1
%
8.3
%
Total
19.0
%
19.6
%
19.4
%
18.7
%
(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. Final audited
statements will include footnotes, which should be referenced when
available, to more fully understand the contents of this
information.
FORTIVE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
($ and shares in millions,
except per share amounts)
As of December 31,
2024
2023
(unaudited)
ASSETS
Current assets:
Cash and equivalents
$
813.3
$
1,888.8
Accounts receivable less allowance for
doubtful accounts of $30.7 and $39.2, respectively
945.4
960.8
Inventories:
Finished goods
220.1
214.1
Work in process
105.4
108.9
Raw materials
219.3
213.9
Inventories
544.8
536.9
Prepaid expenses and other current
assets
288.8
285.1
Total current assets
2,592.3
3,671.6
Property, plant and equipment, net
433.1
439.8
Other assets
494.7
518.9
Goodwill
10,156.0
9,121.7
Other intangible assets, net
3,340.0
3,159.8
Total assets
$
17,016.1
$
16,911.8
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
376.2
$
—
Trade accounts payable
677.4
608.6
Accrued expenses and other current
liabilities
1,184.8
1,182.7
Total current liabilities
2,238.4
1,791.3
Other long-term liabilities
1,251.0
1,149.0
Long-term debt
3,331.1
3,646.2
Commitments and Contingencies (Note
13)
Equity:
Common stock: $0.01 par value, 2.0 billion
shares authorized; 366.6 and 363.7 issued; 341.2 and 350.7
outstanding; respectively
3.7
3.6
Additional paid-in capital
4,035.0
3,851.3
Treasury shares, at cost
(1,612.3
)
(715.8
)
Retained earnings
8,227.6
7,505.9
Accumulated other comprehensive loss
(465.4
)
(326.1
)
Total Fortive stockholders’ equity
10,188.6
10,318.9
Noncontrolling interests
7.0
6.4
Total stockholders’ equity
10,195.6
10,325.3
Total liabilities and equity
$
17,016.1
$
16,911.8
This information is presented for reference only. Final audited
statements will include footnotes, which should be referenced when
available, to more fully understand the contents of this
information.
FORTIVE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
($ in millions)
Year Ended December 31
2024
2023
(unaudited)
Cash flows from operating activities:
Net earnings from continuing
operations
$
832.9
$
865.8
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Amortization
453.3
370.4
Depreciation
90.6
86.4
Stock-based compensation
109.2
113.3
Gain on sale of property
(63.1
)
—
Loss from divestiture
25.6
—
Loss from equity investments
39.4
17.3
Change in certain assets and
liabilities:
Change in deferred income taxes
(65.0
)
(104.1
)
Change in accounts receivable, net
(4.5
)
9.8
Change in inventories
8.8
(1.7
)
Change in trade accounts payable
74.3
(16.8
)
Change in prepaid expenses and other
assets
8.5
(86.3
)
Change in accrued expenses and other
liabilities
16.8
99.5
Net cash provided by operating
activities
1,526.8
1,353.6
Cash flows from investing activities:
Cash paid for acquisitions, net of cash
received
(1,721.8
)
(95.8
)
Purchases of property, plant and
equipment
(120.4
)
(107.8
)
Proceeds from sale of property
61.2
7.4
Cash infusion into divestiture
(14.0
)
—
All other investing activities
(1.0
)
0.8
Net cash used in investing
activities
(1,796.0
)
(195.4
)
Cash flows from financing activities:
Net proceeds from (repayments of)
commercial paper borrowings
(596.5
)
839.9
Proceeds from borrowings (maturities
greater than 90 days), net of issuance costs
1,733.5
549.3
Repayment of borrowings (maturities
greater than 90 days)
(1,000.0
)
(1,000.0
)
Repurchase of common shares
(889.6
)
(272.9
)
Payment of common stock cash dividend to
shareholders
(111.2
)
(102.0
)
All other financing activities
71.1
18.0
Net cash provided by (used in)
financing activities
(792.7
)
32.3
Effect of exchange rate changes on cash
and equivalents
(13.6
)
(10.9
)
Net change in cash and equivalents
(1,075.5
)
1,179.6
Beginning balance of cash and
equivalents
1,888.8
709.2
Ending balance of cash and equivalents
$
813.3
$
1,888.8
This information is presented for reference only. Final audited
statements will include footnotes, which should be referenced when
available, to more fully understand the contents of this
information.
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, divestiture, and
separation 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;
- 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;
- Excluding the discrete tax expense resulting from the
Separation of NewCo; and
- Excluding discrete non-cash tax benefits.
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 three and twelve month periods ended
December 31, 2023, we recognized $2.3 million and $5.2 million,
respectively, 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, Divestiture, and Separation 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. As a result of the Separation, we also incurred
costs primarily related to professional fees for legal, tax,
accounting and finance, information technology services, and other
general and administrative costs as well as costs to stand up the
new company to operate as a stand alone entity . We adjust for
transaction costs, costs related to the Separation, 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 in
November 2024. During the year ended December 31, 2024, we recorded
a gain on sale of property of $63.1 million in the Consolidated
Statements of Earnings.
Concurrently, during the first quarter of 2024, we pledged to
make a charitable donation of $20 million to the Fortive Foundation
(“the Foundation”), a related party, without any donor imposed
conditions or restrictions. In the third quarter of 2024, $20
million of the promissory note due in November 2024 was reassigned
to the Foundation. We recorded a charitable contribution expense of
$20 million within the “Other non-operating expense, net” line in
the Consolidated 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. In the fourth quarter of
2024, we initiated a discrete restructuring plan related to the
Separation that is expected to be completed by December 31, 2025,
we adjusted for the related discrete restructuring charges in the
fourth quarter of 2024. Discrete restructuring charges adjusted for
in the quarter and the year-to-date period in 2023 are related to
our 2023 discrete plan.
Discrete Tax Expense Resulting from the Separation of NewCo
We adjust for discrete tax expense items that resulted from the
Separation of NewCo. These discrete items are non-recurring
expenses that resulted from the US GAAP calculation of income taxes
from continuing operations and do not reflect our current or future
cash tax obligations.
Discrete Non-cash Tax Benefit
As a result of revaluation of deferred tax assets required due
to changes in tax rates in Switzerland, we recognized a non-cash
tax benefit during the three and twelve month period ended December
31, 2023. We adjust for this non-cash tax benefit because we
believe such benefit occurs with inconsistent frequency and for
reasons that are unrelated to our commercial performance. We
believe such adjustment facilitates comparison with prior and
future periods and provides our investors with additional insight
into our ongoing tax expenses.
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 foreign 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 net 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
Year Ended
($ in millions)
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
Revenue (GAAP)
$
1,620.3
$
1,583.7
$
6,231.8
$
6,065.3
Operating Profit (GAAP)
$
307.1
$
310.9
$
1,206.6
$
1,133.7
Amortization of acquisition-related
intangible assets and non-cash impairments
112.9
95.5
453.3
375.6
Acquisition, divestiture, and separation
related Items
24.7
2.7
59.6
4.4
Gain on sale of property
—
—
(63.1
)
—
Discrete restructuring charges
19.7
29.4
19.7
58.6
Adjusted Operating Profit
(Non-GAAP)
$
464.4
$
438.5
$
1,676.1
$
1,572.3
Operating Profit Margin (GAAP)
19.0
%
19.6
%
19.4
%
18.7
%
Adjusted Operating Profit Margin
(Non-GAAP)
28.7
%
27.7
%
26.9
%
25.9
%
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
Year Ended
($ in millions, except per share
amounts)
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
Per share values
Per share values
Per share values
Per share values
Net Earnings and Net Earnings Per Share
(GAAP)
$
208.8
$
0.60
$
265.2
$
0.75
$
832.9
$
2.36
$
865.8
$
2.43
Pretax amortization of acquisition related
intangible assets and non-cash impairments
112.9
0.32
95.5
0.27
453.3
1.28
375.6
1.06
Pretax acquisition, divestiture, and
separation related items
24.7
0.07
2.7
0.01
59.6
0.17
4.4
0.01
Pretax losses from equity investments
—
—
4.4
0.01
39.4
0.11
17.3
0.05
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
19.7
0.06
29.4
0.08
19.7
0.06
58.6
0.16
Tax effect of the adjustments reflected
above (a)
(25.4
)
(0.07
)
(23.0
)
(0.07
)
(80.7
)
(0.23
)
(76.1
)
(0.21
)
Discrete tax expense resulting from the
Separation of NewCo
65.6
0.19
—
—
65.6
0.19
—
—
Discrete non-cash tax benefit
—
—
(25.5
)
(0.07
)
—
—
(25.5
)
(0.07
)
Adjusted Net Earnings and Adjusted Net
Earnings Per Share (Non-GAAP)
$
406.3
$
1.17
$
348.7
$
0.98
$
1,372.3
$
3.89
$
1,220.1
$
3.43
Average Common Diluted Stock
Outstanding (shares in millions)
348.0
354.5
352.8
355.6
(a) The loss from divestiture had no tax
impact. The tax effect of the adjustments includes all other line
items above.
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
December 31, 2024 vs.
Comparable 2023 Period
% Change Year Ended
December 31, 2024
vs.
Comparable 2023 Period
Total Revenue Growth (GAAP)
2.3
%
2.7
%
Impact of:
Acquisitions and divestitures
(Non-GAAP)
(1.1
)%
(2.0
)%
Impact of currency translation
(Non-GAAP)
0.6
%
0.6
%
Core Revenue Growth (Non-GAAP)
1.8
%
1.3
%
Free Cash Flow (unaudited)
($ in millions)
Three Months Ended
Year Ended
December 31,
2024
December 31,
2023
% Change
December 31,
2024
December 31,
2023
% Change
Operating Cash Flows (GAAP)
$
502.2
$
446.8
12.4
%
$
1,526.8
$
1,353.6
12.8
%
Less: purchases of property, plant &
equipment (capital expenditures) (GAAP)
(37.0
)
(34.1
)
(120.4
)
(107.8
)
Free Cash Flow (Non-GAAP)
$
465.2
$
412.7
12.7
%
$
1,406.4
$
1,245.8
12.9
%
Forecasted Adjusted Diluted Net
Earnings Per Share (unaudited)
Three Months Ending
March 28, 2025
Twelve Months Ending
December 31,
2025
Low
High
Low
High
Forecasted Diluted Net Earnings Per
Share (GAAP)
$
0.39
$
0.42
$
2.38
$
2.50
Anticipated pretax amortization of
acquisition related intangible assets
0.33
0.33
1.33
1.33
Anticipated pretax acquisition,
divestiture, and separation related items
0.11
0.11
0.40
0.40
Anticipated pretax discrete restructuring
charges
0.02
0.02
0.04
0.04
Tax effect of the adjustments reflected
above
(0.07
)
(0.07
)
(0.27
)
(0.27
)
Discrete tax expense resulting from the
Separation of NewCo
0.05
0.05
0.12
0.12
Forecasted Adjusted Diluted Net
Earnings Per Share (Non-GAAP)
$
0.83
$
0.86
$
4.00
$
4.12
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/20250207412002/en/
Elena Rosman Investor Relations Fortive Corporation 6920 Seaway
Boulevard Everett, WA 98203 Telephone: (425) 446-5000
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