• Gross Margin: 60% for the fourth quarter.
• Adjusted Operating Margin: Nearing 27% for the fourth quarter.
• Adjusted Earnings Per Share (EPS): $1.17, up 19% year-over-year.
• Free Cash Flow: Record Q4 free cash flow of $465 million, up 13% year-over-year.
• Core Revenue Growth: 2% in the fourth quarter.
• Adjusted Operating Margin Expansion: 100 basis points in the fourth quarter.
• Full Year Core Revenue Growth: 1% for 2024.
• Full Year Adjusted EPS: $3.89, up 13% for 2024.
• Full Year Free Cash Flow: $1.4 billion, representing 23% free cash flow margins for 2024.
• Intelligent Operating Solutions Revenue Growth: 4% in the fourth quarter.
• Advanced Healthcare Solutions Core Revenue Growth: 5% in the fourth quarter.
• Precision Technologies Core Revenue Decline: 3% in the fourth quarter.
• 2025 Revenue Guidance: Core revenues expected to grow 1.5% to 3.5%.
• 2025 Adjusted EPS Guidance: $4 to $4.12, up 3% to 6% for the year.
• 2025 Adjusted Free Cash Flow Guidance: Approximately $1.5 billion.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fortive Corp (NYSE:FTV) delivered better-than-expected performance in the fourth quarter, with higher core growth, earnings, and free cash flow.
• The company achieved record margins, with gross margins of 60% and adjusted operating margins nearing 27%.
• Fortive Corp (NYSE:FTV) compounded adjusted earnings and free cash flow by 13%, contributing to a strong multiyear track record.
• The company is progressing well on the separation of its precision technologies company, Ralliant, expected to close early in the third quarter.
• Fortive Corp (NYSE:FTV) utilized record free cash flow to repurchase shares, reflecting a commitment to returning capital to shareholders.

Negative Points

• China headwinds continue to mute recovery in certain markets, impacting overall performance.
• Precision Technologies experienced a core revenue decline of 3% in the quarter, with adjusted operating margins contracting by 200 basis points.
• The company faces FX headwinds, with an expected $90 million impact for the year.
• Fortive Corp (NYSE:FTV) anticipates a slower start to the year in Q1 due to Fluke's stronger finish in Q4 and fewer days in Q1.
• The company is dealing with capacity constraints in some areas, which may impact growth potential.

Q & A Highlights

Q: Can you provide insights into the product side of the business, particularly for IOS and AHS, and any changes in plans for 2025? A: James Lico, President and CEO, explained that the software and healthcare sectors are performing well, with Fluke showing resilience and durability through product innovation. He noted a headwind in China, particularly in the first quarter, due to tougher comps from last year. Overall, the company anticipates good performance in Q1 across the portfolio.

Q: Are you seeing any changes in government-related business post-election, particularly in PT? A: James Lico stated that there have been no significant changes in government-related business. He mentioned that productivity solutions are expected to resonate well, driving cost reductions, and noted strength in product orders from government-related sectors.

Q: Can you elaborate on the Precision Tech organic sales guide and the factors influencing year-on-year improvement? A: James Lico highlighted that the improvement is due to easier comps, particularly in China, some market improvement, and increased capacity. He also mentioned that innovation, especially at Tektronix, will contribute to growth in the second half of the year.

Q: How are tariffs impacting your business, and what measures have you taken to counteract them? A: James Lico explained that the company has enacted countermeasures against the 10% China tariffs, which are embedded in their guidance. He noted that the macro perspective in China includes some economic impact from tariffs, and the company has planned for mid-single-digit declines in China for the year.

Q: Can you provide details on the impact of FX and days on margins, particularly in AHS? A: Charles McLaughlin, CFO, noted that FX impacts margins, especially in AHS, and mentioned a 200 basis point headwind in the first quarter due to fewer days. He also discussed the impact of FX on margin conversion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.