Fortive Earnings Call Transcripts
Fiscal Year 2026
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Management highlighted strong sequential growth, disciplined capital allocation, and robust Q1 results, with innovation and targeted investments driving performance across segments. Software and hardware businesses are both leveraging AI and operational efficiencies, supporting positive long-term outlook and shareholder returns.
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Q1 2026 saw strong core revenue, EBITDA, and EPS growth, driven by innovation, disciplined capital allocation, and robust demand across segments. Guidance for the year was reaffirmed at the upper end, with continued focus on margin expansion and strategic investments.
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The company is executing its accelerated strategy, maintaining 3%-4% core growth and margin expansion targets, with recurring revenue now at 50% and growing faster than the overall business. Innovation, AI integration, and targeted sales investments are driving growth across segments, especially in software, Fluke, and healthcare.
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Exited 2025 with strong, broad-based growth and a stable outlook for 2026, driven by innovation, recurring revenue, and disciplined capital allocation. AI capabilities and software moats support resilience, while margin expansion and bolt-on M&A remain key priorities.
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Leadership is driving a focused strategy on organic growth, disciplined capital allocation, and investor trust, with early momentum across all pillars. Innovation, especially in AI and recurring revenue, is accelerating growth in key segments, while strong free cash flow supports ongoing investment and selective M&A.
Fiscal Year 2025
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Q4 saw 3% core growth, 8% Adjusted EBITDA growth, and 13% Adjusted EPS growth, with full-year Adjusted EPS of $2.71, exceeding guidance. 2026 Adjusted EPS is guided at $2.90-$3.00, with strong capital deployment and margin expansion expected.
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Following a major spin-off, the company is executing a focused growth strategy centered on innovation, disciplined capital allocation, and expanding recurring revenues. Q3 results exceeded expectations, with strong share repurchases and margin expansion, while targeted investments and selective M&A support long-term value creation.
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Q3 saw 2% core revenue growth, 10% adjusted EBITDA growth, and 15% adjusted EPS growth, with $1B deployed to share repurchases and full-year EPS guidance raised. North America led growth, recurring revenues outpaced averages, and disciplined capital allocation remains a focus.
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Management is executing a focused growth strategy, emphasizing innovation, customer engagement, and disciplined capital allocation. Despite near-term headwinds, confidence remains high in achieving 2026-2027 financial targets, supported by strong brands, recurring revenue, and AI integration.
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Q2 saw adjusted EPS rise 4% year-over-year and free cash flow grow 14%, despite late-quarter demand pressures from tariffs and government spending. Full-year adjusted EPS guidance is $2.50–$2.60, with capital allocation focused on growth, M&A, and share repurchases.
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A newly focused company post-spinoff, targeting 3-4% revenue growth and 29% EBITDA margins, is leveraging high recurring revenues, AI-driven innovation, and disciplined capital allocation to accelerate shareholder value. Strategic priorities include bolt-on M&A, share repurchases, and a growing dividend.
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Ralliant will spin off from Fortive by end of Q2, focusing on sensors, safety, and test & measurement, with strong utility and defense demand. New Fortive emphasizes software growth, recurring revenue, and disciplined capital allocation, while managing tariff impacts and preparing for new product launches in 2025.
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Q1 2025 saw solid execution with adjusted EPS of $0.85 and margin expansion despite revenue softness. Tariff headwinds are being mitigated through pricing and supply chain actions, with full-year EPS guidance of $3.80–$4.00. Separation of Rallyant remains on track for end of Q2.
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U.S. and healthcare markets are strong, while China and some industrial sectors face uncertainty. The company is advancing its spin-off, focusing on mid-single digit organic growth, margin expansion, and bolt-on M&A. AI and innovation drive both product and operational improvements.
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Precision Technologies' spin-out will create a more focused company with strong financials, targeting mid-single-digit growth and high margins. Growth is driven by innovation, recurring revenue, and disciplined bolt-on M&A, with no major portfolio changes expected in the next three years.
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A transformative spin-off is underway, creating two focused companies with strong balance sheets and disciplined capital allocation. Growth is driven by innovation, platform-based product launches, and operational efficiency, while AI and automation accelerate productivity. Electrification, digitization, and regionalization are key industry trends shaping future strategy.
Fiscal Year 2024
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Q4 and full-year 2024 saw record margins, strong free cash flow, and robust innovation, despite China headwinds. 2025 guidance calls for modest core growth, continued margin expansion, and the spin-off of Precision Technologies (Raliant) in early Q3.
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Plans to spin out Precision Technologies in Q4 2025 will create two focused, investment-grade companies, each with strong recurring revenue and growth profiles. Robust order growth, resilient recurring revenue, and a revamped innovation process position both entities for success, while capital allocation will emphasize buybacks and targeted M&A.
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Q3 delivered strong adjusted EPS and free cash flow growth, with record margins and robust innovation. All segments showed margin expansion, recurring revenue momentum, and positive order trends, while the PT spinoff and major share repurchases remain on track.
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A major portfolio split will create two focused entities, unlocking value by separating recurring and cyclical businesses. PT faces near-term softness but expects order growth and recovery, while RemainCo will emphasize recurring revenue and margin expansion. Both are positioned for long-term growth and innovation.
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A major separation will create two focused, investable companies, each with distinct growth strategies and leadership. Emphasis on recurring revenue, disciplined capital allocation, and AI-driven innovation underpins future growth and margin expansion.
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A tax-free spinoff of Precision Technologies will create two focused, publicly traded companies, each with distinct growth strategies and leadership. Fortive will prioritize share repurchases pre-spin and maintain a balanced capital allocation post-spin, while both entities are expected to have strong financial profiles and investment-grade ratings.
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Q2 delivered strong margin and earnings growth despite revenue at the low end of guidance, with robust free cash flow and recurring revenue expansion. Full-year outlook raised for EPS and margins, while segment performance was mixed due to macro headwinds and project delays.