Fortive (FTV) Citi's Global Industrial Tech and Mobility Conference 2025 summary

Strategic transformation and spin-off plans

• Preparing for a major spin-off, creating two focused companies, with Ralliant as the new entity and a dedicated leadership team and board in place.

• Spin-off timeline accelerated to early Q3 2025, with Form 10 expected in spring and strong progress on organizational readiness.

• Ralliant's financial profile features $2.2B revenue, 52% gross margin, 25% adjusted operating margin, and 4% three-year core growth CAGR, with industry-leading brands.

• Both companies will be set up with strong balance sheets, targeting 1.5–2x leverage and investment-grade ratings.

• 75% of free cash flow will be allocated to share repurchases through the spin, with timing weighted toward the second half of the year.

Operational performance and growth outlook

• Achieved record 2024 performance with 60% gross margin, 27% adjusted operating margin, and 13% FCF growth, driven by the Fortive Business System and accelerated new product introduction.

• Five-year track record includes mid-single-digit core growth, ~600 bps adjusted operating margin expansion, and 18% free cash flow CAGR.

• 2025 growth outlook is slightly up, with 35% of the portfolio expected to grow double digits, driven by grid expansion and defense programs.

• Capacity expansion will focus on operational efficiencies in 2025, with capital investments and facility expansion planned for 2026.

• Fluke and other short-cycle businesses show stable demand in North America, with mixed trends in Europe and continued weakness in China.

Innovation, technology, and product development

• Platform-based product development enables faster innovation cycles, with major launches in oscilloscopes and Keithley portfolios in 2025.

• Data center, high-performance compute, and memory segments represent about 30% of Tektronix and Keithley exposure.

• AI and automation are being infused into R&D and back-office processes, yielding significant productivity gains and accelerating innovation.

• New product introductions and software platforms are expected to drive growth, especially in the second half of the year.

• Ralliant's strategy emphasizes continuous improvement, accelerated innovation, and a capital-light model to sustain margin expansion and industry-leading free cash flow generation.