Fourth Quarter & Full-Year 2021 Earnings Release

February 3, 2022

FORWARD LOOKING STATEMENTS & NON-GAAP FINANCIAL MEASURES

Statements in this presentation that are not strictly historical, including statements regarding the future impact of supply chain constraints, the COVID-19 pandemic, the Company's anticipated financial results, business, investment and acquisition opportunities, economic conditions, future prospects, anticipated impact of geopolitical events, pending tax and fiscal policies, 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. These factors include, among other things: the duration and impact of the COVID-19 pandemic, deterioration of or instability in the economy, the markets we serve, international trade policies and the financial markets, changes in trade relations with China, contractions or lower growth rates and cyclicality of markets we serve, competition, changes in industry standards and governmental regulations, our ability to recruit and retain key employees, our ability to successfully identify, consummate, integrate and realize the anticipated value of appropriate acquisitions and successfully complete divestitures and other dispositions, our ability to develop and successfully market new products, software, and services and expand into new markets, the potential for improper conduct by our employees, agents or business partners, contingent liabilities relating to acquisitions and divestitures, impact of the phase out of LIBOR, 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, political, 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, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, security breaches or other disruptions of our information technology systems, adverse effects of restructuring activities, risk related to tax treatment of our separation of Vontier, impact of our indemnification obligation to Vontier, impact of changes to U.S. GAAP, labor matters, and disruptions relating to man-made and natural disasters. 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, 2020. 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.

This presentation contains references to "adjusted revenue," "adjusted gross profit," "adjusted gross profit margin (adjusted gross margin)," "adjusted operating profit," "adjusted operating profit margin (adjusted operating margins)," "incremental adjusted operating profit margin (adjusted incremental margin), "adjusted net earnings from continuing operations," "adjusted diluted net earnings per share (adjusted EPS)," "core revenue growth (core growth)," "core operating margin expansion (core OMX)," "free cash flow," "free cash flow conversion," "adjusted free cash flow conversion," "adjusted diluted shares outstanding," "adjusted income tax expense," and "adjusted effective tax rate," which are, in each case, not presented in accordance with generally accepted accounting principles ("GAAP"). We have not reconciled forward-looking outlook regarding core revenue growth, adjusted operating profit margin, and adjusted free cash flow conversion because any corresponding projected GAAP measures and the reconciliations thereto would require us to make estimates or assumptions about unidentified and unknown acquisitions, currency exchange rate, capital expenditures and similar adjustments during the relevant period.

Information required by Regulation G with respect to such non-GAAP financial measures are provided herewith. We have not reconciled forward-looking outlook regarding adjusted operating profit margins, adjusted gross profit margin, adjusted free cash flow conversion, and adjusted diluted shares outstanding because any corresponding GAAP measures and the reconciliations thereto would require us to make estimates or assumptions about unidentified and unknown acquisitions, capital expenditures, investments, restructuring activities, and similar adjustments during the relevant period. The historical 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 corresponding GAAP financial measures.

On October 9, 2020, Fortive completed the separation of its Industrial Technologies segment by distributing 80.1% of the outstanding shares of Vontier Corporation, the entity incorporated to hold such businesses, to Fortive stockholders on a pro rata basis. As the separation occurred during the fourth fiscal quarter of 2020, we have classified Vontier as discontinued operations in our financial statements for all periods. Unless otherwise indicated, all of the financial results in this presentation are presented on a continuing operations basis.

2

Q4 & FY 2021 HIGHLIGHTS

EXECUTING WELL IN A CHALLENGING ENVIRONMENT

REVENUE

$1.4B

$5.3B

Q4 +3.8% Y/Y

FY +13.1% Y/Y

ADJUSTED OPERATING PROFIT

$335M

$1.2B

Q4 margin 24.4%

FY margin 23.1%

ADJUSTED EARNINGS PER SHARE

$0.79

$2.75

Q4 +12.9% Y/Y

FY +31.6% Y/Y

FREE CASH FLOW

$943M

$265M

Q4 (15.2)% Y/Y

FY +4.5% Y/Y

FULL YEAR HIGHLIGHTS

9.5% CORE GROWTH

STRONG CUSTOMER DEMAND, SECULAR TAILWINDS DRIVING MID-TEENS HARDWARE ORDERS GROWTH

210 BPS ADJ. OP. MARGIN EXPANSION

ENHANCED PORTFOLIO AND APPLICATION OF FBS DRIVES HIGHER MARGINS

32% ADJUSTED EPS GROWTH

COMPOUNDING EARNINGS AND CASH FLOW, REINVESTING AND CREATING LONG-TERM VALUE

Delivered Strong Core Revenue and Adj. EPS Growth in FY21 | 2-Yr Stacks of 4% and 35% Respectively 3

Q4 2021 HIGHLIGHTS BY SEGMENT

STRONG OPERATING PERFORMANCE DESPITE SUPPLY CHAIN CONSTRAINTS AND COVID DISRUPTION

INTELLIGENT OPERATING

PRECISION

ADVANCED HEALTHCARE

SOLUTIONS

TECHNOLOGIES

SOLUTIONS

(~40% of FY21 Revenue)

(~35%)

(~25%)

Total Growth

Core Growth Acquisitions

Adj. Op. Profit

Margin

Core OMX

Acquisitions

Highlights

6.4%

0.8%

6.1%

27.9%

  • 120 BPS (200) BPS

  • Fluke: Down Slightly: NPIs and SaaS momentum driving +HSD order growth
  • EHS (ISC/Intelex): +HSD: Strong net dollar retention
  • Accruent: Down MSD: 2nd highest quarter for SaaS bookings on record
  • ServiceChannel: Strong start with SaaS bookings up >100%

2.1%

2.6%

-%

23.9%

  • 160 BPS

    - BPS

  • Tektronix: +LSD: +DD order growth in major regions; shipments challenged; record backlog
  • Sensing Tech: +HSD: Strength in Industrial, Semi, HVAC and Medical
  • PacSci EMC: Down Mid-Teens:Strong demand for aircraft and space products, but shipments delayed

1.7%

(0.8)%

3.4%

26.7%

  • 260 BPS

    - BPS

  • ASP: Down LSD: Consumables down LSD on down DD elective rates; High growth markets +HSD
  • Censis: +MSD: Strong growth for core SaaS offering, +Low-20%
  • Fluke Health Solutions (FHS): +MSD: Momentum from growth investments and pricing actions

FBS Drives Triple-Digit Core Margin Expansion Across Every Segment

4

FORTIVE BUSINESS SYSTEM (FBS) IN ACTION

ENABLING AND EMPOWERING OUR TEAMS TO DRIVE SUSTAINABLE RESULTS

LEAN

DAILY IMPROVEMENT &

EFFICIENCY IN OUR

OPERATIONS

  • Reduced supply chain risk at Fluke, ISC, Sensing and Tektronix through visual / daily management
  • Used problem solving and standard work to mitigate rising freight costs in Q4 at ASP reduced freight expense as a % of revenue by >100 basis points

GROWTH

DRIVING GROWTH &

INNOVATION ACROSS THE

PORTFOLIO

  • Deploying Lean Portfolio Management (LPM) to accelerate profitable growth
  • NPI revenue achievement of >110% of plan at Tektronix for FY 2021
  • Increasing Net Dollar Retention and renewals across software businesses - eMaint NDR ended 2021 at 108%

LEADERSHIP

DRIVING THE DEVELOPMENT

    • ENGAGEMENT OF OUR TEAMS
  • Ran kaizens to drive process improvement, engage our teams and embolden ownership and ideation
  • FBS Ignite program develops high potential talent outside traditional roles to drive business results through FBS

FBS is the Foundation of Our Culture, Key Enabler of Competitive Advantage & Core to Value Creation 5

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Fortive Corporation published this content on 03 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 February 2022 15:10:04 UTC.