Fortive (FTV) Status Update summary

Strategic transformation and separation

• Fortive will separate into two independent, publicly traded companies—Fortive (Intelligent Operating Solutions and Advanced Healthcare Solutions) and Precision Technologies (NewCo)—via a tax-free spinoff targeted for completion in Q4 2025, subject to regulatory and board approvals.

• Each company will have a focused business model, distinct growth priorities, and tailored investment profiles, aiming to unlock value and reduce portfolio complexity.

• Leadership changes include Olumide Soroye as future CEO of Fortive and Tami Newcombe as CEO of PT NewCo; CFO Chuck McLaughlin will retire after the transition.

• Both companies will maintain strong investment-grade balance sheets and disciplined capital allocation strategies.

• The spin-off is intended to be tax-free for shareholders and will be executed via a pro-rata distribution.

Capital allocation and financial outlook

• Fortive will allocate approximately 75% of available free cash flow to share repurchases before the spinoff, with the remainder to dividends and deleveraging.

• Post-spin, Fortive will balance M&A and share repurchases, focusing on recurring revenue and free cash flow growth.

• Both companies are expected to have net leverage of 1.4–1.7x, supporting investment-grade ratings.

• Financial guidance for Q3 and full year 2024 remains unchanged, with confidence in double-digit adjusted earnings growth.

• Q3 2024 outlook: $1,535M–$1,560M revenue, ~27% operating margin, $0.92–$0.95 adjusted EPS, ~$360M free cash flow.

Business profiles and growth drivers

• Fortive RemainCo will focus on Intelligent Operating Solutions and Advanced Healthcare Solutions, with about 50% recurring revenue and 25% software.

• PT NewCo will target secular trends in electrification, AI, data centers, and aerospace/defense, leveraging mission-critical technologies and industry-leading margins.

• Fortive (IOS and AHS) expects ~$4B FY 2024 revenue, ~65% gross margin, ~31% operating margin, and ~50% recurring revenue.

• NewCo (Precision Technologies) projects ~$2.3B FY 2024 revenue, ~53% gross margin, ~25.5% operating margin, and ~25% recurring revenue.

• Both companies will be led by experienced executives with deep operational and strategic expertise.