UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

________________________________________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March ~~31, 2023~~29, 2024


Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 1-37654

________________________________________________

Fortive Corporation

(Exact name of registrant as specified in its charter)

________________________________________________


Delaware						47-5654583
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification number)


6920 Seaway Blvd
Everett,	WA	98203

(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (425) 446-5000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	FTV	New York Stock Exchange
3.700% Notes due 2026	FTV26A	New York Stock Exchange
3.700% Notes due 2029	FTV29	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock outstanding at April ~~21, 2023~~19, 2024 was ~~353,549,934.~~352,028,662.

FORTIVE CORPORATION

INDEX

FORM 10-Q


PART I -	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Consolidated Condensed Balance Sheets	4
	Consolidated Condensed Statements of Earnings	5
	Consolidated Condensed Statements of Comprehensive Income	6
	Consolidated Condensed Statements of Changes in Equity	7
	Consolidated Condensed Statements of Cash Flows	8
	Notes to Consolidated Condensed Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2123
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3336
Item 4.	Controls and Procedures	3336
PART II -	OTHER INFORMATION
Item 1A.	Risk Factors	3336
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3436
Item 5.	Other Information	37
Item 6.	Exhibits	3437
	Signatures	3639

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

($ in millions, except share and per share amounts)


	As of
	March 29, 2024		December 31, 2023
	(unaudited)
ASSETS
Current assets:
Cash and equivalents	$	704.6	$	1,888.8
Accounts receivable less allowance for doubtful accounts of $33.1 and $39.2, respectively	962.6		960.8
Inventories:
Finished goods	226.6		214.1
Work in process	113.9		108.9
Raw materials	240.3		213.9
Inventories	580.8		536.9
Prepaid expenses and other current assets	365.9		285.1
Total current assets	2,613.9		3,671.6

Property, plant and equipment, net of accumulated depreciation of $793.1 and $809.0, respectively	422.7		439.8
Other assets	536.2		518.9
Goodwill	10,234.6		9,121.7
Other intangible assets, net	3,712.7		3,159.8
Total assets	$	17,520.1	$	16,911.8

LIABILITIES AND EQUITY
Current liabilities:

Trade accounts payable	667.2		608.6
Accrued expenses and other current liabilities	1,071.5		1,182.7
Total current liabilities	1,738.7		1,791.3

Other long-term liabilities	1,356.6		1,149.0
Long-term debt	3,941.7		3,646.2
Commitments and Contingencies (Note 9)

Equity:

Common stock: $0.01 par value, 2.0 billion shares authorized; 365.3 and 363.7 issued; 352.0 and 350.7 outstanding, respectively	3.7		3.6
Additional paid-in capital	3,906.1		3,851.3
Treasury shares, at cost	(715.8)		(715.8)
Retained earnings	7,685.2		7,505.9
Accumulated other comprehensive loss	(402.5)		(326.1)
Total Fortive stockholders’ equity	10,476.7		10,318.9
Noncontrolling interests	6.4		6.4
Total stockholders’ equity	10,483.1		10,325.3
Total liabilities and equity	$	17,520.1	$	16,911.8

As of
March 31, 2023 December 31, 2022
(unaudited)
ASSETS
Current assets:
Cash and equivalents $ 672.8 $ 709.2
Trade accounts receivable less allowance for doubtful accounts of $41.2 at March 31, 2023 and $43.9 at December 31, 2022 940.7 958.5
Inventories:
Finished goods 234.8 215.3
Work in process 103.6 96.4
Raw materials 231.8 225.0
Inventories 570.2 536.7
Prepaid expenses and other current assets 271.6 272.6
Total current assets 2,455.3 2,477.0
Property, plant and equipment, net of accumulated depreciation of $772.7 at March 31, 2023 and $754.5 at December 31, 2022 425.6 421.9
Other assets 470.0 455.8
Goodwill 9,057.1 9,048.5
Other intangible assets, net 3,396.8 3,487.4
Total assets $ 15,804.8 $ 15,890.6
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 999.8 $ 999.7
Trade accounts payable 593.0 623.0
Accrued expenses and other current liabilities 1,037.3 1,104.4
Total current liabilities 2,630.1 2,727.1
Other long-term liabilities 1,204.4 1,223.3
Long-term debt 2,094.6 2,251.6
Commitments and Contingencies (Note 8)
Equity:
Common stock: $0.01 par value, 2.0 billion shares authorized; 362.2 million issued and 353.5 million outstanding at March 31, 2023; 361.5 million issued and 352.9 million outstanding at December 31, 2022 3.6 3.6
Additional paid-in capital 3,730.5 3,706.3
Treasury shares, at cost (442.9) (442.9)
Retained earnings 6,891.0 6,742.1
Accumulated other comprehensive loss (312.3) (325.7)
Total Fortive stockholders’ equity 9,869.9 9,683.4
Noncontrolling interests 5.8 5.2
Total stockholders’ equity 9,875.7 9,688.6
Total liabilities and equity $ 15,804.8 $ 15,890.6

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

($ and shares in millions, except per share amounts)

(unaudited)

Three Months Ended
March 31, 2023 April 1, 2022
Sales of products and software $ 1,236.6 $ 1,152.7
Sales of services 224.1 223.8
Total sales 1,460.7 1,376.5
Cost of product and software sales (488.1) (465.1)
Cost of service sales (124.4) (119.4)
Total cost of sales (612.5) (584.5)
Gross profit 848.2 792.0
Operating costs:
Selling, general and administrative expenses (507.7) (480.6)
Research and development expenses (100.1) (99.1)
Operating profit 240.4 212.3
Non-operating income (expense), net:
Interest expense, net (32.1) (18.8)
Other non-operating expense, net (2.5) (2.7)
Earnings before income taxes 205.8 190.8
Income taxes (32.2) (25.7)
Net earnings $ 173.6 $ 165.1
Net earnings per share:
Basic $ 0.49 $ 0.46
Diluted $ 0.49 $ 0.45
Average common stock and common equivalent shares outstanding:
Basic 353.6 359.3
Diluted 356.5 368.4


	Three Months Ended
	March 29, 2024		March 31, 2023
Sales of products and software	$	1,299.9	$	1,236.6
Sales of services	224.6		224.1
Total sales	1,524.5		1,460.7

Cost of product and software sales	(492.0)		(488.1)
Cost of service sales	(128.3)		(124.4)
Total cost of sales	(620.3)		(612.5)

Gross profit	904.2		848.2
Operating costs:
Selling, general and administrative expenses	(561.0)		(507.7)
Research and development expenses	(104.1)		(100.1)
Gain on sale of property	63.1		—

Operating profit	302.2		240.4
Non-operating income (expense), net:
Interest expense, net	(44.0)		(32.1)





Other non-operating expense, net	(24.2)		(2.5)
Earnings before income taxes	234.0		205.8
Income taxes	(26.6)		(32.2)
Net earnings	$	207.4	$	173.6

Net earnings per share:
Basic	$	0.59	$	0.49
Diluted	$	0.58	$	0.49
Average common stock and common equivalent shares outstanding:
Basic	351.7		353.6
Diluted	356.0		356.5

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

($ in millions)

(unaudited)

Three Months Ended

March 31, 2023

April 1, 2022

March 29, 2024

Net earnings

173.6

165.1

Other comprehensive income (loss), net of income taxes:

Foreign currency translation adjustments

13.4

(39.4)

Pension adjustments

—

0.5

Pension adjustments

Total other comprehensive income (loss), net of income taxes

13.4

(38.9)

Comprehensive income

187.0

126.2

Comprehensive income

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

($ and shares in millions)

(unaudited)


		Common Stock
		Common Stock
		Common Stock																					Additional Paid-In Capital	Treasury Shares	Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests
			Shares Outstanding																									Shares Outstanding	Amount
Balance, December 31, 2023

		Common Stock			Additional Paid-In Capital		Treasury Shares			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests
Net earnings for the period
				Shares Outstanding					Additional Paid-In Capital			Treasury Shares			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests	Amount
Balance, December 31, 2022				352.9	$	5.2

Net earnings for the period

Net earnings for the period	Net earnings for the period			—	—		—			—			173.6			—			—
Dividends to common shareholders	Dividends to common shareholders			—	—		—			—			(24.7)			—			—
Other comprehensive income	Other comprehensive income			—	—		—			—			—			13.4			—
Common stock-based award activity	Common stock-based award activity			0.8	—		36.3			—			—			—			—

Shares withheld for taxes	Shares withheld for taxes			(0.2)	—		(12.1)			—			—			—			—
Change in noncontrolling interests				—	—		—			—			—			—			0.6
Balance, March 31, 2023				353.5	$	3.6	$	3,730.5		$	(442.9)		$	6,891.0		$	(312.3)		$	5.8
Shares withheld for taxes
Shares withheld for taxes

Balance, March 29, 2024
Balance, March 29, 2024
Balance, March 29, 2024

Common Stock Additional Paid-In Capital Treasury Shares Retained Earnings Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests
Shares Outstanding Amount
Balance, December 31, 2021 359.1 $ 3.6 $ 3,670.0 $ — $ 6,023.6 $ (185.0) $ 4.8
Adoption of ASU 2020-06 — — (65.7) — 62.8 — —
Balance, January 1, 2022 359.1 3.6 3,604.3 — 6,086.4 (185.0) 4.8
Net earnings for the period — — — — 165.1 — —
Dividends to common shareholders — — — — (25.1) — —
Other comprehensive income (loss) — — — — — (38.9) —
Common stock-based award activity 0.5 — 23.8 — — — —
Common stock repurchases (1.0) — — (63.8) — — —
Shares withheld for taxes (0.2) — (9.0) — — — —
Change in noncontrolling interest — — — — — — 0.5
Balance, April 1, 2022 358.4 $ 3.6 $ 3,619.1 $ (63.8) $ 6,226.4 $ (223.9) $ 5.3


	Common Stock		Additional Paid-In Capital		Treasury Shares		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
		Shares Outstanding											Amount
Balance, December 31, 2022		352.9	$	3.6	$	3,706.3	$	(442.9)	$	6,742.1	$	(325.7)	$	5.2


Net earnings for the period		—	—		—		—		173.6		—		—
Dividends to common shareholders		—	—		—		—		(24.7)		—		—
Other comprehensive income (loss)		—	—		—		—		—		13.4		—
Common stock-based award activity		0.8	—		36.3		—		—		—		—

Shares withheld for taxes		(0.2)	—		(12.1)		—		—		—		—
Change in noncontrolling interest		—	—		—		—		—		—		0.6
Balance, March 31, 2023		353.5	$	3.6	$	3,730.5	$	(442.9)	$	6,891.0	$	(312.3)	$	5.8

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

($ in millions)

(unaudited)

Three Months Ended

March 31, 2023

April 1, 2022

March 29, 2024

March 31, 2023

Cash flows from operating activities:

Net earnings

173.6

165.1

Net earnings

Noncash items:

Amortization

92.4

96.3

Depreciation

20.4

21.5

Stock-based compensation expense

26.7

19.9

Gain on sale of property

Change in trade accounts receivable, net

21.5

(1.4)

Change in inventories

(33.6)

(43.2)

Change in trade accounts payable

(32.3)

19.2

Change in prepaid expenses and other assets

(16.3)

(31.4)

Change in accrued expenses and other liabilities

(78.0)

(31.2)

Net cash provided by operating activities

174.4

214.8

Net cash provided by operating activities

Cash flows from investing activities:

Cash paid for acquisitions, net of cash received

Payments for additions to property, plant and equipment

(24.8)

(18.8)

Cash paid for acquisitions, net of cash received

—

0.9

Proceeds from sale of property

Net cash used in investing activities

(24.8)

(17.9)

Net cash used in investing activities

Cash flows from financing activities:

Net proceeds from (repayments of) commercial paper borrowings

Proceeds from borrowings (maturities greater than 90 days), net of issuance costs

Repayment of borrowings (maturities greater than 90 days)

Net proceeds from (repayments of) commercial paper borrowings

(159.3)

930.7

Payment of 0.875% convertible senior notes due 2022

—

(1,156.5)

Repurchase of common shares

—

(63.8)

Payment of dividends

(24.7)

(25.1)

Payment of dividends

All other financing activities

(3.1)

(17.9)

Net cash used in financing activities

(187.1)

(332.6)

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and equivalents

1.1

0.7

Net change in cash and equivalents

(36.4)

(135.0)

Beginning balance of cash and equivalents

709.2

819.3

Ending balance of cash and equivalents

672.8

684.3

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1. BUSINESS OVERVIEW

Fortive Corporation (“Fortive,” “the Company,” “we,” “us,” or “our”) is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Our strategic segments - Intelligent Operating Solutions (“IOS”), Precision Technologies (“PT”), and Advanced Healthcare Solutions (“AHS”) - include well-known brands with leading positions in their markets. Our businesses design, develop, manufacture, and service professional and engineered products, software, and services, building upon leading brand names, innovative technologies, and significant market positions. Our research and development, manufacturing, sales, distribution, service, and administrative facilities are located in more than 50 countries around the world.

We prepared the unaudited consolidated condensed financial statements included herein in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) applicable for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations; however, we believe the disclosures are adequate to make the information presented not misleading. The unaudited consolidated condensed financial statements included herein should be read in conjunction with the audited annual consolidated financial statements as of and for the year ended December 31, ~~2022~~2023 and the footnotes (“Notes”) thereto included within our ~~2022~~2023 Annual Report on Form 10-K.

In our opinion, the accompanying financial statements contain all adjustments, which consist of only normal, recurring accruals necessary to fairly present our financial position, results of operations, comprehensive income, stockholders’ equity, and cash flows for the periods presented. The results of operations for the three months ended March ~~31, 2023,~~29, 2024, are not necessarily indicative of the results for the full year.

Segment Realignment

In January 2024, we realigned Invetech from the AHS segment to the PT segment, as we explored strategic alternatives for certain products and services of Invetech (the “Segment Realignment”). In March 2024, we entered into a non-binding memorandum of understanding with the management of Invetech, pursuant to which we will transfer ownership of certain product lines of Invetech to its current management team. The products and operations of Invetech that we will retain following such transfer of ownership are more closely aligned with the PT segment than the AHS segment. Prior period segment amounts in Note 3, 6, and 11 have been recast to conform to the revised segment presentation.

Accumulated Other Comprehensive Loss

Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. ~~During the second quarter~~As of ~~2022,~~March 29, 2024, our outstanding €500 million Euro-denominated senior unsecured notes due 2026, €700 million Euro-denominated senior unsecured notes due 2029, €275 million Euro-denominated term loan, and ¥14.4 billion Yen-denominated ~~term loan and our €275 million Euro-denominated~~ term loan were designated as net investment hedges of our investment in applicable foreign operations.

~~During the three month period ended March 31, 2023, we~~We recognized after-tax foreign currency transaction gains of $8.4 million and losses of $1.7 million during the three-month periods ended March 29, 2024 and March 31, 2023, respectively, on the debt that was deferred in the foreign currency translation component of Accumulated ~~other comprehensive income (loss)~~Other Comprehensive Income (Loss) (“AOCI”) as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries. Any amounts deferred in AOCI will remain until the hedged investment is sold or substantially liquidated. We recorded no ineffectiveness from our net investment hedges during the ~~three month period~~three-month periods ended March 29, 2024 and March 31, 2023.

Table of Contents

The changes in AOCI by component are summarized below ($ in millions):

Foreign
currency
translation
adjustments
Pension & post-retirement plan benefit adjustments (a)
Total
For the Three Months Ended March 31, 2023:
Balance, December 31, 2022 $ (301.4) $ (24.3) $ (325.7)
Other comprehensive income (loss) before reclassifications, net of income taxes 13.4 — 13.4
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease) — 0.1 (b) 0.1
Income tax impact — (0.1) (0.1)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes — — —
Net current period other comprehensive income (loss), net of income taxes 13.4 — 13.4
Balance, March 31, 2023 $ (288.0) $ (24.3) $ (312.3)
For the Three Months Ended April 1, 2022:
Balance, December 31, 2021 $ (122.7) $ (62.3) $ (185.0)
Other comprehensive income (loss) before reclassifications, net of income taxes (39.4) — (39.4)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease) — 0.6 (b) 0.6
Income tax impact — (0.1) (0.1)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes — 0.5 0.5
Net current period other comprehensive income (loss), net of income taxes (39.4) 0.5 (38.9)
Balance, April 1, 2022 $ (162.1) $ (61.8) $ (223.9)
(a) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.
(b) This component of AOCI is included in the computation of net periodic pension cost (refer to Note 12 in our most recently filed Form 10-K for additional details).


	Foreign currency translation adjustments		Pension & post-retirement plan benefit adjustments (a)			Total
For the Three Months Ended March 29, 2024:
Balance, December 31,2023	$	(291.7)	$	(34.4)		$	(326.1)
Other comprehensive income (loss) before reclassifications, net of income taxes	(76.5)		—			(76.5)
Amounts reclassified from AOCI into income:
Increase (decrease)	—		0.1		(b)	0.1
Income tax impact	—		—		(c)	—
Amounts reclassified from AOCI into income, net of income taxes	—		0.1			0.1
Net current period other comprehensive income (loss), net of income taxes	(76.5)		0.1			(76.4)
Balance, March 29, 2024	$	(368.2)	$	(34.3)		$	(402.5)

For the Three Months Ended March 31, 2023:
Balance, December 31, 2022	$	(301.4)	$	(24.3)		$	(325.7)
Other comprehensive income (loss) before reclassifications, net of income taxes	13.4		—			13.4
Amounts reclassified from AOCI into income:
Increase (decrease)	—		0.1		(b)	0.1
Income tax impact	—		(0.1)			(0.1)
Amounts reclassified from AOCI into income, net of income taxes	—		—			—
Net current period other comprehensive income (loss), net of income taxes	13.4		—			13.4
Balance, March 31, 2023	$	(288.0)	$	(24.3)		$	(312.3)






















(a) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.
(b) This component of AOCI is included in the computation of net periodic pension cost (refer to Note 11 in our most recently filed Form 10-K for additional details).
(c) The income tax impact amount was rounded to zero.

Allowances for Doubtful Accounts

All trade accounts and unbilled receivables are ~~reported~~recorded in the Consolidated Condensed Balance ~~Sheet~~Sheets adjusted for any write-offs and net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our unbilled and trade accounts receivable portfolios over the life of the underlying assets. Additions to the allowances are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. During the ~~three month period~~three-month periods ending March 29, 2024 and March 31, 2023, the activity was immaterial.

Property Sale

On March 14, 2024, we sold land and certain office buildings in our PT segment for $90 million, for which we received $20 million in cash proceeds and a $70 million promissory note secured by a letter of credit, with principal due in August and November 2024. The promissory note is recorded within Prepaid expenses and other current assets. During the three-month period ended March 29, 2024, we recorded a gain on sale of property of $63.1 million in the Consolidated Condensed Statements of Earnings.

Concurrently, using a portion of the proceeds from the property sale, we entered into an arm’s length transaction with the Fortive Foundation (the “Foundation”), pledging a charitable contribution of $20 million, which had no donor imposed conditions or restrictions. The Foundation, a not-for-profit entity, is a related party due to certain Fortive executives serving as members of the entity’s board of directors. The charitable contribution is recorded within the “Other non-operating expense, net” line in the Consolidated Condensed Statements of Earnings and the liability related to the pledged donation is recorded within Accrued expenses and other current liabilities in the Consolidated Condensed Balance Sheets.

Table of Contents

Restructuring

We initiated a discrete plan in the first quarter of 2023 ~~focused on improvements in our operational efficiency, which is expected to be~~that was completed ~~by December 31,~~during the fourth quarter of 2023. The nature of these activities were broadly consistent throughout our segments and consist primarily of targeted workforce reductions ~~and facility consolidations or closures~~ in response to overall macroeconomic and other external conditions. We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties. ~~The total restructuring charges~~During the three-month period ended March 31, 2023, we ~~expect to recognize under this discrete plan are approximately $25 to $30 million, with~~incurred charges of $17.6 ~~million incurred in the first quarter, which primarily related to employee severance.~~million. These charges are ~~included in~~recorded within Cost of ~~Sales~~sales and Selling, general, and administrative expenses in the Consolidated Condensed ~~Statement~~Statements of

~~Table of Contents~~

Earnings. Accrued restructuring costs were ~~$13.4~~$13 million and $26 million as of March 29, 2024 and December 31, 2023 and ~~were included~~are recorded within Accrued expenses and other current liabilities in the Consolidated Condensed Balance Sheets.

~~Convertible Senior Notes~~

On February 22, 2019, we issued $1.4 billion in aggregate principal amount of our 0.875% Convertible Senior Notes due 2022 (“Convertible Notes”), including $187.5 million in aggregate principal amount resulting from an exercise in full of an over-allotment option. The Convertible Notes were issued in a private placement to certain initial purchasers for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act. Upon conversion of the Convertible Notes, holders were entitled to receive cash, shares of our common stock, or a combination thereof, at our election. Upon adopting Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ~~(“ASU 2020-06”), on January 1, 2022, we accounted for the Convertible Notes under the if-converted method in our calculation of diluted EPS, as required under the new guidance.~~

~~On February 15, 2022, the maturity date of the Convertible Notes, Fortive repaid, in cash, $1.2 billion in outstanding principal and accrued interest thereon.~~

Recently Issued Accounting Standard

~~The~~In November 2023, the Financial Accounting Standards Board (“FASB”) ~~establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the~~issued Accounting Standards ~~Codification~~Update (“~~ASC”~~ASU”)~~. We consider~~ No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures, which amends the ~~applicability and impact of all ASUs. Any recently issued ASUs were assessed and determined to be either not applicable or are expected to have an immaterial impact~~disclosure requirements for reportable segments on the ~~Company’s result~~interim and annual basis. This standard is effective for fiscal year ending December 31, 2024 and interim periods within fiscal year ending December 31, 2025, with early adoption permitted. The adoption of ~~operations, financials position or cash flows.~~the standard will not impact our consolidated financial statements. Upon adoption, we will update the applicable interim and annual disclosures to align with the new standard.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, which amends certain disclosure requirements related to income taxes on an annual basis. This standard is effective for fiscal year ending December 31, 2025, with early adoption permitted. The adoption of the standard will not impact our consolidated financial statements. Upon adoption, we will update the applicable annual disclosures to align with the new standard.

NOTE 2. ACQUISITIONS

We continually evaluate potential mergers and acquisitions that align with our business portfolio strategy. We have completed a number of acquisitions that have been accounted for as purchases of businesses and resulted in the recognition of goodwill in our financial statements. This goodwill arises when the purchase price for an acquired business exceeds its identifiable assets, net of liabilities. The purchase price for acquired businesses reflect a number of factors, including the future earnings and cash flow potential of the business, the strategic fit and resulting synergies from the complementary portfolio of the acquired business to our existing operations, industry expertise, and market access.

The purchase price allocation is provisional and is subject to further adjustments as we finalize the measurement of the acquired tangible and intangible assets and liabilities, as well as the associated income tax considerations. The preliminary fair value of the net assets acquired was based on several estimates and assumptions. As additional information necessary to complete the valuation is obtained and analyzed, we will make appropriate adjustments to purchase price allocations prior to completion of the applicable measurement period, as required and as soon as practicable.

During the three-month period ended March 29, 2024, immaterial adjustments were made to the purchase price allocation of prior year acquisitions.

2024

On January 3, 2024, we acquired EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications. The acquisition of EA will bolster our innovative portfolio of products and services for engineers with complementary test and measurement solutions enabling the global energy transition. The total consideration paid was approximately $1.72 billion, net of acquired cash. We funded this transaction with financing activities and available cash. We recorded approximately $1.2 billion of goodwill within our PT segment related to the EA acquisition, which is not tax deductible.

For the three-month period ended March 29, 2024, we incurred approximately $27 million of pretax transaction-related costs related to the EA acquisition, which were primarily for banking fees, legal fees, and amounts paid to other third-party advisers. These costs were recorded within Selling, general, and administrative expenses in the Consolidated Condensed Statement of Earnings.

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The following table summarizes the preliminary estimated acquisition date fair values of the assets acquired and liabilities assumed as of March 29, 2024 ($ in millions):


	Total
Accounts receivable	$	21.5
Inventories	35.6
Property, plant and equipment	18.7
Goodwill	1,167.0
Other intangible assets (customer relationships, technology, and trade names)	681.2

Deferred tax liabilities	(183.3)
Other assets and liabilities, net	(22.5)
Net cash consideration	$	1,718.2

2023

During 2023, we made four acquisitions (“the 2023 acquisitions”) in our IOS segment for an aggregate cash consideration of $101.4 million, which includes an immaterial deferred payment, net of acquired cash. The 2023 acquisitions are intended to accelerate our strategy and strengthen our product portfolio, providing world-class solutions to our customers. We recorded approximately $55.8 million of goodwill related to the acquisitions, which is not tax deductible, as well as $43.2 million of intangible assets, primarily consisting of customer relationships, technology, and trade names. All other acquired assets and assumed liabilities are immaterial.

NOTE 3. GOODWILL AND OTHER INTANGIBLE ASSETS

The following is a roll forward of our carrying value of goodwill by segment ($ in millions):

Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions Total Goodwill
Balance, December 31, 2022 $ 4,074.4 $ 1,810.2 $ 3,163.9 $ 9,048.5
Foreign currency translation and other 6.6 1.4 0.6 8.6
Balance, March 31, 2023 $ 4,081.0 $ 1,811.6 $ 3,164.5 $ 9,057.1


	Intelligent Operating Solutions		Precision Technologies		Advanced Healthcare Solutions		Total Goodwill
Balance, December 31, 2023	$	4,148.9	$	1,856.5	$	3,116.3	$	9,121.7
Measurement period adjustments for prior year acquisitions	(0.9)		—		—		(0.9)
Attributable to acquisitions	—		1,167.0		—		1,167.0
Foreign currency translation and other	(10.4)		(33.8)		(9.0)		(53.2)
Balance, March 29, 2024	$	4,137.6	$	2,989.7	$	3,107.3	$	10,234.6

Due to the Segment Realignment, the beginning goodwill balance for PT and AHS have been recast to conform to the revised segment presentation. Refer to Note 1 for further information on the realignment. The increase in the goodwill balance of the PT segment for the three-month period ended March 29, 2024 is a result of the EA acquisition. Refer to Note 2 for more information.

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The following summarizes the gross carrying value and accumulated amortization for each major category of intangible asset ($ in millions):


	March 29, 2024				December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Finite-lived intangibles:
Patents and technology	$	1,275.4	$	(720.0)	$	1,139.6	$	(687.1)
Customer relationships and other intangibles	4,038.6		(1,645.1)		3,568.0		(1,573.2)
Trademarks and trade names	174.7		(23.8)		117.7		(19.8)
Total finite-lived intangibles	5,488.7		(2,388.9)		4,825.3		(2,280.1)
Indefinite-lived intangibles:
Trademarks and trade names	612.9		—		614.6		—
Total intangibles	$	6,101.6	$	(2,388.9)	$	5,439.9	$	(2,280.1)

Finite-lived intangible assets are amortized over the shorter of their legal or estimated useful lives.

During the three-month period ended March 29, 2024, we acquired finite-lived intangible assets, consisting of customer relationships, developed technology, and trade names, with a weighted average life of approximately 9 years as a result of the EA acquisition. Refer to Note 2 for additional information on the intangible assets acquired.

NOTE 3.4. FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value ~~where our~~for assets and liabilities ~~are~~ required to be carried at fair value, and provide for certain disclosures related to the valuation methods used within athe valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation.

•Level 3 inputs are unobservable inputs based on our assumptions. ~~The classification of a~~A financial asset or ~~liability~~liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

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Below is a summary of financial liabilities that are measured at fair value on a recurring basis ($ in millions):

Quoted Prices
in Active
Market
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

March 31, 2023

Quoted Prices
in Active
Market
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

March 29, 2024

Deferred compensation liabilities

—

35.4

—

35.4

December 31, 2022

Deferred compensation liabilities

—

31.5

—

31.5

Deferred compensation liabilities

December 31, 2023

Deferred compensation liabilities

Certain management employees participate in our nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. All amounts deferred under such plans are unfunded, unsecured obligations and are ~~included in~~recorded within Other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Participants may choose among alternative ~~earnings~~earning rates for the amounts they defer, which are primarily based on investment options within our defined contribution plans for the benefit of U.S. employees (except that the earnings rates for amounts contributed unilaterally by the Company are entirely based on changes in the value of Fortive common stock). Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts and are recorded within ~~selling,~~Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings.

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Non-recurring Fair Value Measurements

Certain non-financial assets, primarily property, plant, and equipment, goodwill, and intangible assets, are not required to be measured at fair value on a recurring basis and are reported at their carrying value. However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable, and at least annually for goodwill and indefinite-lived intangible assets.

We evaluated events or circumstances that may indicate the carrying value of our non-financial assets may not be fully recoverable during the ~~three month~~three-month period ended March ~~31, 2023,~~29, 2024, and recorded no impairments.

Fair Value of Financial Instruments

The carrying amount and fair value of financial instruments are as follows ($ in millions):

March 31, 2023 December 31, 2022
Carrying Amount Fair Value Carrying Amount Fair Value
Current portion of long-term debt $ 999.8 $ 1,000.0 $ 999.7 $ 1,000.0
Long-term debt, net of current maturities 2,094.6 1,952.7 2,251.6 2,078.1


	March 29, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Long-term debt	$	3,941.7	$	3,835.4	$	3,646.2	$	3,539.4

As of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, the current portion of long-term debt and long-term debt, net of current maturities were categorized as Level 1.

The fair ~~values~~value of the long-term borrowings were based on quoted market prices. The difference between the fair value and the carrying amounts of long-term borrowings may be attributable to changes in market interest rates and/or our credit ratings subsequent to the borrowing. The fair value of cash and ~~cash~~ equivalents, trade accounts receivable, net, trade accounts payable, and commercial paper approximates their carrying ~~value~~amount due to the short-term maturities of these instruments.

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NOTE 4.5. FINANCING

The components of our debt were as follows ($ in millions):

March 29, 2024

U.S. dollar-denominated commercial paper

3.7% Euro-denominated senior unsecured notes due 2026

3.7% Euro-denominated senior unsecured notes due 2029

Euro Term Loan due 2025

Yen Term Loan due 2025

3.15% senior unsecured notes due 2026

4.30% senior unsecured notes due 2046

Delayed-Draw Term Loan due 2024

Long-term debt, principal amounts

Less: aggregate unamortized debt discounts, premiums, and issuance costs

Long-term debt, carrying value

March 31, 2023

December 31, 2022

U.S. dollar-denominated commercial paper

245.0

405.0

Delayed-Draw Term Loan due 2023

1,000.0

Euro Term Loan due 2025

298.1

294.4

Yen Term Loan due 2025

108.4

109.8

3.15% senior unsecured notes due 2026

900.0

4.30% senior unsecured notes due 2046

550.0

Long-term debt, principal amounts

3,101.5

3,259.2

Less: aggregate unamortized debt discounts, premiums, and issuance costs

7.1

7.9

Long-term debt, carrying value

3,094.4

3,251.3

Less: current portion of long-term debt

999.8

999.7

Long-term debt, net of current maturities

2,094.6

2,251.6

Refer to Note 1110 of our ~~2022~~2023 Annual Report on Form 10-K for further details of our debt financing.

Euro-denominated Senior Unsecured Notes Due 2026 and 2029

On February 13, 2024, we completed the registered offering of the following Euro-denominated senior unsecured notes:

•€500 million in aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2026 (the “2026 Notes”) issued at 99.928% of their principal amount and bearing interest at 3.7% per annum. The 2026 Notes mature on February 13, 2026 with interest payable in arrears on February 13 of each year, beginning in 2025.

•€700 million in aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2029 (the “2029 Notes”) issued at 99.943% of their principal amount and bearing interest at 3.7% per annum. The 2029 Notes mature on August 15, 2029 with interest payable in arrears on August 15 of each year, beginning in 2024.

The net proceeds from the offering, after underwriting discounts and commissions and offering expenses, were approximately $1.3 billion based on the currency exchange rates at which the Euro denominated proceeds were converted into U.S. dollars.

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We used the net proceeds to refinance the $1.0 billion outstanding principal of the Delayed-Draw Term Loan Due 2024, refinance borrowings under the U.S. dollar-denominated commercial paper, and for general corporate purposes.

Redemption Provisions and Covenants Applicable to 2026 and 2029 Notes

Prior to July 15, 2029 for the 2029 Notes, and prior to maturity for the 2026 Notes, we may redeem the applicable series of notes at our option, in whole or in part, at any time and from time to time, at the applicable make-whole redemption price specified in the indentures. On or after July 15, 2029, we may redeem the 2029 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2029 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.

We may, at our option, redeem the applicable series of notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of such series of notes to be redeemed, together with any accrued and unpaid interest thereon to, but not including, the redemption date, at any time, if as a result of any change in, or amendment to, the laws, regulations, treaties, or rulings of the United States or any political subdivision of or in the United States or any taxing authority thereof or therein affecting taxation, or any change in, or amendment to, the application, official interpretation, administration or enforcement of such laws, regulations, treaties or rulings (including a holding by a court of competent jurisdiction in the United States), which change or amendment is enacted, adopted, announced or become effective, we become or, based upon a written opinion of independent counsel selected by us, will become obligated to pay additional amounts with respect to the applicable series of notes.

If a change of control triggering event occurs, we will, in certain circumstances, be required to make an offer to repurchase the notes from each holder at a purchase price equal to 101% of the principal amount of the notes being repurchased, plus accrued and unpaid interest to, but not including the repurchase date. A change of control triggering event is defined as the occurrence of both a change of control and a rating event, each as defined in the indentures. Except in connection with a change of control triggering event, the 2026 Notes and 2029 Notes do not have any credit rating downgrade triggers that would accelerate the maturity of the notes.

The 2026 Notes and 2029 Notes contain customary covenants. None of these covenants are considered restrictive to our operations and as of March 29, 2024, we were in compliance with all of our covenants.

Delayed-Draw Term Loan due 2024

On January 2, 2024, we drew down an additional $450 million of the Delayed-Draw Term Loan due 2024 as part of the funding for the acquisition of EA, with $1.0 billion outstanding immediately following such additional draw. Refer to Note 2 for additional information regarding the EA acquisition. On February 13, 2024, we used the net proceeds from the 2026 Notes and 2029 Notes to refinance the entire $1.0 billion outstanding principal and accrued interest thereon.

Other Liquidity Sources

We generally satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances of commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”). Under these programs, we may issue unsecured promissory notes with maturities not exceeding 397 and 183 days, respectively.

Interest expense on commercial paper is paid at maturity and is generally based on our credit ratings at the time of issuance and prevailing short-term interest rates.

The details of our outstanding Commercial Paper Programs as of March ~~31, 2023~~29, 2024 were as follows ($ in millions):

Carrying value Annual effective rate Weighted average maturity (in days)
U.S. dollar-denominated commercial paper $ 244.9 4.98 % 30


	Carrying value (a)		Annual effective rate		Weighted average maturity (in days)
U.S. dollar-denominated commercial paper	$	818.4	5.56	%	28
(a) Net of unamortized debt discount.

Credit support for the Commercial Paper Programs is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on October 18, 2027 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit support for our commercial paper programs, can also be used for working capital and other general corporate purposes. As of March ~~31, 2023,~~29, 2024, no borrowings were outstanding under the Revolving Credit Facility.

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We classified our borrowings outstanding under the Commercial Paper Programs as Long-term debt in the accompanying Consolidated Condensed Balance Sheets as we had the intent and ability, as supported by availability under the Revolving Credit Facility, to refinance these borrowings for at least one year from the balance sheet date.

NOTE 5.6. SALES

We derive revenue primarily from the ~~sale~~sales of products, including software, and services. Revenue is recognized when control of promised products or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products, software, or services.

Product sales include revenue from the sale of products and equipment, which includes our software and ~~SaaS~~software as a service (“SaaS”) product offerings and equipment rentals. Service sales include revenues from extended warranties, post-contract customer support (“PCS”), maintenance contracts or services, contract labor to perform ongoing service at a customer location, services related to previously sold products, and software implementation services.

Contract Assets — In certain circumstances, we record contract assets which include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not only subject to the passage of time. Contract assets were ~~$96~~$107 million as of March ~~31, 2023~~29, 2024 and ~~$82~~$108 million as of December 31, ~~2022.~~2023. Contract assets are recorded inwithin Prepaid expenses and other current assets in our Consolidated Condensed Balance Sheets.

~~Table of Contents~~

Contract Costs — We incur and capitalize incremental costs to obtain certain contracts, typically sales-related commissions where the amortization period is greater than one year and costs associated with assets used by our customers in certain service arrangements. As of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, we had ~~$44~~$52 million and ~~$42~~$51 million, respectively, in net revenue-related contract costs primarily related to certain software contracts. Revenue-related contract costs are recorded ~~in the Prepaid expenses and other current assets and~~within Other assets ~~line items~~ in our Consolidated Condensed Balance Sheets. These assets have estimated useful lives between three and five years.

Contract Liabilities — Our contract liabilities consist of deferred revenue generally related to subscription-based software contracts, PCS and extended warranty sales, where we generally receive up-front payment and recognize revenue over the service or support term. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue. The current portion of deferred revenue is ~~included in~~recorded within Accrued expenses and other current liabilities and the noncurrent portion of deferred revenue is ~~included in~~recorded within Other long-term liabilities in our Consolidated Condensed Balance Sheets.

Our contract liabilities consisted of the following ($ in millions):


		March 31, 2023		December 31, 2022
	March 29, 2024					March 29, 2024	December 31, 2023
Deferred revenue - current	Deferred revenue - current	$	497.2	$	509.6
Deferred revenue - noncurrent	Deferred revenue - noncurrent	38.9		38.0
Total contract liabilities	Total contract liabilities	$	536.1	$	547.6

During the ~~three month~~three-month period ended March ~~31, 2023,~~29, 2024, we recognized revenue related to our contract liabilities at December 31, ~~2022~~2023 of ~~$175~~$196 million. The change in our contract liabilities from December 31, ~~2022~~2023 to March ~~31, 2023~~29, 2024 was primarily due to the timing of billings and ~~recognition as~~ revenue ofrecognized for subscription-based software contracts, PCS and extended warranty services.

Remaining Performance Obligations — Our remaining performance obligations represent the transaction price of firm, non-cancelable orders and the average contract value for software contracts, for which work has not been performed. We have excluded performance obligations with an original expected duration of one year or less from the amounts below.

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The aggregate remaining performance obligations attributable to each of our segments is as follows ($ in millions):


	March ~~31, 2023~~29, 2024
Intelligent Operating Solutions	$	~~576.2~~565.9
Precision Technologies	~~55.9~~75.7
Advanced Healthcare Solutions	~~67.0~~70.9
Total remaining performance obligations	$	~~699.1~~712.5

The majority of remaining performance obligations are related to service and support contracts, which we expect to fulfill approximately 80 percent within the next two years, approximately 95 percent within the next three years, and substantially all within four years.

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Disaggregation of Revenue

We disaggregate revenue from contracts with customers by sales of products and software and services, geographic location, and end market for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Due to the Segment Realignment, prior period segment amounts have been recast to conform to the revised segment presentation. Refer to Note 1 for further information on the realignment.

Disaggregation of revenue for the ~~three month periods~~three-month period ended March ~~31, 2023~~29, 2024 is presented as follows ($ in millions):


		Total		Intelligent Operating Solutions		Precision Technologies		Advanced Healthcare Solutions
	Total										Total	Intelligent Operating Solutions	Precision Technologies	Advanced Healthcare Solutions
Sales:	Sales:
Sales of products and software
Sales of products and software
Sales of products and software	Sales of products and software	$	1,236.6	$	537.4	$	460.3	$	238.9
Sales of services	Sales of services	224.1		94.7		55.2		74.2
Total	Total	$	1,460.7	$	632.1	$	515.5	$	313.1

Geographic:	Geographic:
Geographic:
Geographic:
United States
United States
United States	United States	$	771.5	$	340.1	$	251.3	$	180.1
China	China	181.4		64.9		92.2		24.3
All other (each country individually less than 5% of total sales)	All other (each country individually less than 5% of total sales)	507.8		227.1		172.0		108.7
Total	Total	$	1,460.7	$	632.1	$	515.5	$	313.1

End markets:(a)
End markets:(a)
End markets:(a)	End markets:(a)
Direct sales:	Direct sales:
Direct sales:
Direct sales:
Healthcare
Healthcare
Healthcare	Healthcare	$	339.4	$	10.9	$	34.5	$	294.0
Industrial & Manufacturing	Industrial & Manufacturing	353.2		228.3		118.2		6.7
Government
Utilities & Power	Utilities & Power	98.9		47.3		51.6		—
Government		111.1		61.8		40.9		8.4
Communications, Electronics & Semiconductor	Communications, Electronics & Semiconductor	105.9		25.6		79.6		0.7
Aerospace & Defense	Aerospace & Defense	67.6		0.1		67.5		—
Retail & Consumer
Oil & Gas	Oil & Gas	70.3		65.9		4.4		—
Retail & Consumer		82.9		62.3		20.6		—
Other	Other	170.1		95.0		75.1		—
Total direct sales	Total direct sales	1,399.4		597.2		492.4		309.8
Distributors	Distributors	61.3		34.9		23.1		3.3
Total	Total	$	1,460.7	$	632.1	$	515.5	$	313.1
										(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer.
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer.
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer.

1517

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Disaggregation of revenue for the ~~three month periods~~three-month period ended ~~April 1, 2022~~March 31, 2023 is presented as follows ($ in millions):


		Total		Intelligent Operating Solutions		Precision Technologies		Advanced Healthcare Solutions
	Total										Total	Intelligent Operating Solutions	Precision Technologies	Advanced Healthcare Solutions
Sales:	Sales:
Sales of products and software
Sales of products and software
Sales of products and software	Sales of products and software	$	1,152.7	$	500.5	$	410.6	$	241.6
Sales of services	Sales of services	223.8		87.1		51.8		84.9
Total	Total	$	1,376.5	$	587.6	$	462.4	$	326.5

Geographic:	Geographic:
Geographic:
Geographic:
United States
United States
United States	United States	$	739.9	$	321.9	$	234.0	$	184.0
China	China	145.4		47.9		69.3		28.2
All other (each country individually less than 5% of total sales)	All other (each country individually less than 5% of total sales)	491.2		217.8		159.1		114.3
Total	Total	$	1,376.5	$	587.6	$	462.4	$	326.5

End markets:(a)
End markets:(a)
End markets:(a)	End markets:(a)
Direct sales:	Direct sales:
Direct sales:
Direct sales:
Healthcare
Healthcare
Healthcare	Healthcare	$	353.3	$	10.3	$	37.1	$	305.9
Industrial & Manufacturing	Industrial & Manufacturing	321.9		211.1		103.7		7.1
Government
Utilities & Power	Utilities & Power	86.3		43.0		43.3		—
Government		105.7		51.6		44.7		9.4
Communications, Electronics & Semiconductor	Communications, Electronics & Semiconductor	87.8		23.8		63.4		0.6
Aerospace & Defense	Aerospace & Defense	55.4		0.1		55.3		—
Retail & Consumer
Oil & Gas	Oil & Gas	64.8		62.3		2.5		—
Retail & Consumer		81.2		63.7		17.5		—
Other	Other	153.9		87.5		66.3		0.1
Total direct sales	Total direct sales	1,310.3		553.4		433.8		323.1
Distributors	Distributors	66.2		34.2		28.6		3.4
Total	Total	$	1,376.5	$	587.6	$	462.4	$	326.5
										(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer.
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer.
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer.

NOTE 6.7. INCOME TAXES

Our effective tax rates for the ~~three month~~three-month period ended March 29, 2024 were 11.4% as compared to 15.7% for the three-month period ended March 31, ~~2023 was 15.7%, as compared to 13.5%, for the three month period ended April 1, 2022.~~2023. The ~~year-over-year increase~~decrease in the effective tax rate for the ~~three month~~three-month period ended March 29, 2024 as compared to the three-month period ended March 31, 2023 ~~as compared~~was primarily related to cash repatriation, resulting in a discrete tax credit in the ~~three month~~three-month period ended ~~April 1, 2022 was primarily due to uncertain tax position reserves released during the three month period ending April 1, 2022.~~March 29, 2024

Our effective tax rates for the ~~three month periods~~three-month period ended March ~~31, 2023 and April 1, 2022,~~29, 2024, differ from the U.S. federal statutory rate of 21% due primarily to the impact of credits and deductions provided by law and changes in our uncertain tax position reserves.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other provisions, implements a 15% corporate alternative minimum tax on book income on corporations whose average annual adjusted financial statement income during the most recently-completed three-year period exceeds $1.0 billion. This provision is effective for tax years beginning after December 31, 2022. Based upon our analysis of the Inflation Reduction Act of 2022 and subsequently released guidance, we believe that the corporate alternative minimum tax will not have a material impact on our financial statements in 2023.

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NOTE 7.8. STOCK-BASED COMPENSATION

The 2016 Stock Incentive Plan (the “Stock Plan”), provides for the grant of stock appreciation rights, restricted stock units, and performance stock units (collectively, “Stock Awards”), stock options, or any other stock-based award. As of March ~~31, 2023,~~29, 2024, approximately 1412 million shares of our common stock were available for subsequent issuance under the Stock Plan. For a full description of our Stock Plan, refer to Note 1715 of our ~~2022~~2023 Annual Report on Form 10-K.

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Stock-based Compensation Expense

Stock-based compensation has been recognized as a component of Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings based on the portion of the awards that are ultimately expected to vest.

The following summarizes the components of our stock-based compensation expense under the Stock Plan ($ in millions):

Three Months Ended

March 31, 2023

April 1, 2022

Stock Awards:

Pretax compensation expense

18.1

12.7

Income tax benefit

(2.6)

(1.7)

Income tax benefit

Stock Award expense, net of income taxes

15.5

11.0

Stock options:

Pretax compensation expense

8.6

7.2

Income tax benefit

(1.2)

(1.0)

Income tax benefit

Stock option expense, net of income taxes

7.4

6.2

Total stock-based compensation:

Pretax compensation expense

26.7

19.9

Income tax benefit

(3.8)

(2.7)

Income tax benefit

Total stock-based compensation expense, net of income taxes

22.9

17.2

Total stock-based compensation expense, net of income taxes

The following summarizes the unrecognized compensation cost for the Stock Plan awards as of March ~~31, 2023.~~29, 2024. This compensation cost is expected to be recognized over a weighted average period of approximately two years, representing the remaining service period related to the awards. Future compensation amounts will be adjusted for any changes in estimated forfeitures ($ in millions):


Stock Awards	$	~~142.6~~64.1
Stock options	~~64.2~~162.8
Total unrecognized compensation cost	$	~~206.8~~226.9

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NOTE 8.9. COMMITMENTS AND CONTINGENCIES

For a description of our litigation and contingencies and additional information about our leases, refer to Note 1614 and Note ~~10,~~9, respectively, in our ~~2022~~2023 Annual Report on Form 10-K.

Warranty

We generally accrue estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly, and appropriately maintained. Warranty period terms depend on the nature of the product and range from 90 days up to the life of the product. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor, and, in certain instances, estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known. During the ~~three month period ending~~three-month periods ended March 29, 2024 and March 31, 2023, warranty related activity was immaterial.

Leases

Operating lease ~~cost~~costs for the ~~three month~~three-month periods ended March 29, 2024 and March 31, 2023 ~~and April 1, 2022~~ was ~~$12~~$13 million and ~~$15~~$12 million, respectively. During both the ~~three month~~three-month periods ended March 29, 2024 and March 31, 2023, ~~and April 1, 2022,~~ cash paid for operating leases included in operating cash flows was $12 ~~million and $14 million, respectively.~~million. Right-of-use (“ROU”) assets obtained in exchange for operating lease obligations were $4 million ~~and $2 million~~ during both the ~~three month~~three-month periods ended March 29, 2024 and March 31, 2023, ~~and April 1, 2022,~~ respectively. Operating lease ROU assets were ~~$155~~$170 million and ~~$162~~$155 million as of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, respectively. Operating lease liabilities were ~~$162~~$177 million and ~~$169~~$164 million as of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, respectively.

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Operating lease ROU assets and operating lease liabilities are ~~reported on~~recorded in the Consolidated Condensed Balance Sheets within Other assets, Accrued expenses and ~~Other~~other current liabilities, and Other long-term liabilities, respectively.

Other Matters

We discovered that a subsidiary of ours made certain incorrect representations regarding status as a small business concern as defined by the Small Business Act for certain contracts that it was awarded by the Defense Logistics Agency (“DLA”). As a result, on January 26, 2024, we voluntarily notified the Department of Defense Office of Inspector General (“OIG”) and the DLA of this matter. While we are continuing to investigate, we currently do not expect this matter to have a material adverse effect on our financial condition or results of operations. However, resolution of this matter could subject us to fines or penalties, and we cannot provide assurance as to the timing or outcome of such resolution.

NOTE 9.10. NET EARNINGS PER SHARE

Basic net ~~EPS~~earnings per share (“EPS”) is calculated by dividing net earnings attributable to common stockholders by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed ~~conversion of 0.875% Convertible Notes and associated issuance of shares under the if-converted method, while outstanding in 2022, and the assumed~~ issuance of shares under stock-based compensation plans under the treasury stock method, except where the inclusion of such shares would have an anti-dilutive impact. Anti-dilutive options excluded from the diluted EPS calculation for the ~~three month~~three-month periods ended March 29, 2024 and March 31, 2023 ~~and April 1, 2022~~ were ~~2.9~~1.2 million and ~~3.1~~2.9 million, respectively.

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Information related to the calculation of net earnings per share of common stock is summarized as follows ($ and shares in millions, except per share amounts):


	Three Months Ended
	March 29, 2024		March 31, 2023
Numerator
Net earnings	$	207.4	$	173.6



Denominator
Weighted average common shares outstanding used in basic earnings per share	351.7		353.6
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive Stock Awards	4.3		2.9

Weighted average common shares outstanding used in diluted earnings per share	356.0		356.5

Net earnings per common share - Basic	$	0.59	$	0.49
Net earnings per common share - Diluted	$	0.58	$	0.49

Three Months Ended
March 31, 2023 April 1, 2022
Numerator
Net earnings $ 173.6 $ 165.1
Convertible note interest add-back (if converted method) — 1.8
Diluted Net Earnings $ 173.6 $ 166.9
Denominator
Weighted average common shares outstanding used in basic earnings per share 353.6 359.3
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive Stock Awards 2.9 2.7
Conversion of convertible notes (if converted method) — 6.4
Weighted average common shares outstanding used in diluted earnings per share 356.5 368.4
Net earnings per common share - Basic $ 0.49 $ 0.46
Net earnings per common share - Diluted $ 0.49 $ 0.45

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We declared and paid cash dividends per common share for the periods as presented ~~below.~~below:

Dividend Per
Common Share

Amount
($ in millions)

2023:

Dividend Per
Common Share

Amount
($ in millions)

2024:

First quarter

0.07

24.7

Total

0.07

24.7

2022:

Total

2023:

First quarter

0.07

25.1

Total

0.07

25.1

* The sum of the components of total dividends paid may not equal the total amount due to rounding.

Total

Share Repurchase Program

On February 17, 2022, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 20 million shares of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions. There is no expiration date for the repurchase program, and the timing and amount of repurchases under the program are determined by the Company's management based on market conditions and other factors. The repurchase program may be suspended or discontinued at any time by the Board of Directors. As of December 31, 2023, there were 9 million shares remaining for repurchase under the program. On January 23, 2024, the Company’s Board of Directors increased the number of shares authorized under the share repurchase program by an additional 11 million shares.

During the ~~three month period~~three-month periods ended March 29, 2024 and March 31, 2023, respectively, the Company made no repurchases under the plan. ~~During the three month period ended April 1, 2022, the Company purchased 1 million shares of its common stock at an average share price of $63.74.~~ As of March ~~31, 2023,~~29, 2024, there were 1320 million shares remaining for repurchase under the program.

NOTE ~~10.~~11. SEGMENT INFORMATION

We report our results in three separate business segments consisting of ~~Intelligent Operating Solutions, Precision Technologies,~~IOS, PT, and ~~Advanced Healthcare Solutions.~~AHS. Our chief operating decision maker (“CODM”) assesses performance and allocates resources based on our operating segments, which are also our reportable segments. Due to the Segment Realignment, prior period segment amounts have been recast to conform to the revised segment presentation. Refer to Note 1 for further information on the realignment.

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lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others.

Our ~~Advanced Healthcare Solutions~~AHS segment supplies critical workflow solutions enabling healthcare providers to deliver exceptional patient care more efficiently. Our offerings include instrument sterilization solutions, instrument tracking, ~~cell therapy equipment design and manufacturing,~~ biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions. Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.

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Our segment results are as follows ($ in millions):

Three Months Ended

March 31, 2023

April 1, 2022

Sales:

Intelligent Operating Solutions

632.1

587.6

Precision Technologies

515.5

462.4

Precision Technologies

Advanced Healthcare Solutions

313.1

326.5

Total

1,460.7

1,376.5

Total

Operating Profit:

Intelligent Operating Solutions

133.5

107.0

Intelligent Operating Solutions

Precision Technologies

122.7

101.4

Advanced Healthcare Solutions

16.3

28.0

Advanced Healthcare Solutions

Other

(32.1)

(24.1)

Total Operating Profit

240.4

212.3

Total Operating Profit

Interest expense, net

(32.1)

(18.8)

Interest expense, net

Other non-operating expense, net

(2.5)

(2.7)

Earnings before income taxes

205.8

190.8

Earnings before income taxes

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Fortive Corporation (“Fortive,” the “Company,” “we,” “us,” or “our”) is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Our strategic segments - Intelligent Operating Solutions (“IOS”), Precision Technologies (“PT”), and Advanced Healthcare Solutions (“AHS”) - include well-known brands with leading positions in their markets. Our businesses design, develop, manufacture, and service professional and engineered products, software, and services, building upon leading brand names, innovative technologies, and significant market positions. We are headquartered in Everett, Washington and ~~employ~~have a ~~team~~workforce of more than 18,000 research and development, manufacturing, sales, distribution, service, and administrative ~~employees~~professionals in more than 50 countries around the world.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of management. The following discussion should be read in conjunction with the MD&A and consolidated financial statements included in our ~~2022~~2023 Annual Report on Form 10-K. Our MD&A is divided into five sections:

•Information Relating to Forward-Looking Statements

•Overview

•Results of Operations

•Liquidity and Capital Resources

•Critical Accounting Estimates

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this quarterly report, in other documents we file with or furnish to the Securities and Exchange Commission (“SEC”), in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the United States federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into, including the expected impact of trade and tariff policies; new or modified laws, regulations and accounting pronouncements; impact of climate-related events or transition activities; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; impact of changes to tax laws; general economic and capital markets conditions, including impact of inflation or interest rate changes; impact of geopolitical events, including the impact of the Ukraine/Russia conflict, conflict in the Middle East, and other hostilities; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that could cause actual results to differ materially from those envisaged in the forward-looking statements include, among others, the following:

Risk Related to Our Business Operations

•Conditions in the global economy, the markets we serve, and the financial markets and banking systems may adversely affect our business and financial statements.

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•If we cannot adjust our manufacturing capacity, supply chain management or the purchases required for our manufacturing activities to reflect changes in market conditions, customer demand and supply chain or transportation disruptions, our profitability may suffer. In addition, our reliance upon sole or limited sources of supply for certain materials, components, and services could cause production interruptions, delays and inefficiencies.

•Our financial results are subject to fluctuations in the cost and availability of commodities or components that we use in our operations.

•~~The~~Pandemics and epidemics, including any resurgence in the spread of COVID-19, and ~~the remedial efforts related to, COVID-19 in certain key jurisdictions~~any corresponding constraints on supply chain, labor force, and the operations of our customers, suppliers, and vendors ~~are continuing to~~could have an adverse impact on our business and results of operations.

•Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated, or experience cyclicality.

•We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce prices for our products and services.

•Our growth depends in part on the timely development and commercialization and customer acceptance of new and enhanced products and services based on technological innovation.

•If we are unable to recruit and retain key employees, our business may be harmed.

•~~A significant disruption~~Significant disruptions in, or ~~breach~~breaches in security of, our information technology systems have adversely affected, and in the future could adversely affect, our business.

•We use artificial intelligence in our business and our products, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

•Defects and unanticipated use or inadequate disclosure with respect to our products (including software) or services could adversely affect our business, reputation, and financial statements.

•Adverse changes in our relationships with, or the financial condition, performance, purchasing patterns, or inventory levels of, key distributors and other channel partners could adversely affect our financial statements.

•Our restructuring activities could have long-term adverse effects on our business.

•Work stoppages, works council campaigns, and other labor disputes could adversely impact our productivity, economic conditions, and results of operations.

•If we suffer loss to our facilities, supply chains, distribution systems, or information technology systems due to catastrophe or other events, our operations could be seriously harmed.

•If we do not or cannot adequately protect our intellectual property, or if third parties infringe our intellectual property rights, we may suffer competitive injury or expend significant resources enforcing our rights.

•Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses, or licensing expenses or be prevented from selling products or services.

•We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our financial statements.

•Climate change, or legal or regulatory measures to address climate change, may negatively affect us.

Risk Related to our International Operations

•International economic, political, legal, compliance, and business factors could negatively affect our financial statements.

•Trade relations between China and the United States could have a material adverse effect on our business and financial statements.

•Foreign currency exchange rates, including the volatility thereof, may adversely affect our financial statements.

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Risk Related to Our Acquisitions, Investments, and Dispositions

•Any inability to consummate acquisitions at our anticipated rate and at appropriate prices could negatively impact our growth rate and stock price.

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•Our acquisition of businesses, joint ventures, and strategic relationships could negatively impact our financial statements.

•The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.

•Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements.

•Potential indemnification liabilities to Vontier Corporation (“Vontier”) pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.

Risk Related to Regulatory and Compliance Matters

•Changes in industry standards and governmental regulations may reduce demand for our products or services or increase our expenses.

•Our reputation, ability to do business, and financial statements may be impaired by improper conduct by any of our employees, agents, or business partners.

•Our operations, products, and services expose us to the risk of environmental, health, and safety liabilities, costs, and violations that could adversely affect our reputation and financial statements.

•Our businesses are subject to extensive ~~regulation; failure~~regulation, including healthcare regulations; existing or future failures to comply with those regulations could adversely affect our financial statements and reputation.

•~~Climate change, or related governmental initiatives, including legal or regulatory measures, may negatively affect us.~~

Risk Related to Our Tax and Accounting Matters

•Changes in our effective tax rates or exposure to additional income tax liabilities or assessments could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.

•We could incur significant liability if our separation from Danaher, our separation of our Automation and Specialty business or our separation of Vontier (collectively, the “Separation Transactions”) are determined to be a taxable transaction.

•Changes in U.S. GAAP could adversely affect our reported financial results and may require significant changes to our internal accounting systems and processes.

•We may be required to recognize impairment charges for our goodwill and other intangible assets.

Risk Related to Our Financing Activities

•We have incurred a significant amount of debt, and our debt obligations, including the cost of such debt, will increase further if we incur additional debt and do not retire existing debt, our credit rating declines, or if the applicable interest rates rise.

See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023 for further discussion regarding reasons that actual results may differ materially from the results, developments, and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made (or such earlier date as may be specified in such statement). We do 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.

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OVERVIEW

General

Fortive is a multinational business with global operations with approximately 46% of our sales derived from customers outside the United States in ~~2022.~~2023. As a company with global operations, our businesses are affected by worldwide, regional, and industry-specific economic, regulatory, and political factors. Our geographic and industry diversity, as well as the range of products, software, and services we offer, typically help limit the impact of any one industry or the economy of any single country (except for the United States) on our operating results. Given the broad range of products manufactured, software and services provided, and geographies served, we do not use any indices other than general economic trends to predict the overall outlook for the Company. Our individual businesses monitor key competitors and customers, including their sales, to the extent possible, to gauge relative performance and the outlook for the future.

As a result of our geographic and industry diversity, we face a variety of opportunities and challenges, including technological development in most of the markets we serve, the expansion and evolution of opportunities in high-growth markets, trends and costs associated with a global labor force, and consolidation of our competitors. We define high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America, and Asia with the exception of Japan and Australia. We operate in a highly competitive business environment in most markets, and our long-term growth and profitability will depend, in particular, on our ability to expand our business across geographies and market segments, identify, consummate, and integrate appropriate acquisitions, develop innovative and differentiated new products, services, and software, expand and improve the effectiveness of our sales force, continue to reduce costs and improve operating efficiency and quality, attract relevant talent and retain, grow, and empower our talented workforce, and effectively address the demands of an increasingly regulated environment. We are making significant investments, organically and through acquisitions, to address technological change in the markets we serve and to improve our manufacturing, research and development, and customer-facing resources in order to be responsive to our customers throughout the world.

Segment Presentation

We operate and report our results in three segments, ~~Intelligent Operating Solutions, Precision Technologies,~~IOS, PT, and ~~Advanced Healthcare Solutions,~~AHS, each of which is further described below.

In January 2024, we realigned Invetech from the AHS segment to the PT segment, as we explored strategic alternatives for certain products and services of Invetech (the “Segment Realignment”). In March 2024, we entered into a non-binding memorandum of understanding with the management of Invetech, pursuant to which we will transfer ownership of certain product lines of Invetech to its current management team. The products and operations of Invetech that we will retain following such transfer of ownership are more closely aligned with the PT segment than the AHS segment. Prior period segment amounts below have been recast to conform to the revised segment presentation.

Our ~~Intelligent Operating Solutions~~IOS segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows. These offerings include electrical test & measurement, facility and asset lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others. Typical users of these safety, productivity and sustainability solutions include electrical engineers, electricians, electronic technicians, EHS professionals, network technicians, facility managers, first-responders, and maintenance professionals.

Our ~~Precision Technologies~~PT segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything. Our expertise in materials, methods and measurements are reflected in our electrical test & measurement, sensing and material technologies, and cell therapy equipment design and manufacturing offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries. Customers for these products and services include design engineers for advanced electronic devices and equipment, process and quality engineers focused on improved process capability and productivity, facility maintenance managers driving increased uptime, and other customers for whom precise measurement, reliability, and compliance are critical in their applications.

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Non-GAAP Measures

In this report, references to sales from existing businesses (“core revenue”) refer to sales from operations calculated according to generally accepted accounting principles in the United States (“GAAP”) but excluding (1) the impact from acquired and divested businesses and (2) the impact of currency translation. References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition, ~~and the effect of purchase accounting adjustments,~~ less the amount of sales attributable to certain ~~divested~~ businesses or product lines ~~not~~

~~Table~~that have been divested or, at the time of ~~Contents~~

reporting, are pending divestiture but are not, and will not be, considered discontinued operations prior to the first anniversary of the divestiture. The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales impact from acquired businesses) and (b) the period-to-period change in sales (excluding sales impact from acquired businesses) after applying the current period foreign exchange rates to the prior year period. Sales from existing businesses should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies.

Management believes that reporting the non-GAAP financial measure of ~~sales from existing businesses~~core revenue provides useful information to investors by helping identify underlying growth trends in our business and facilitating comparisons of our sales performance with our performance in prior and future periods and to our peers. We exclude the effect of acquisition and divestiture related items because the nature, size, and number of such transactions can vary dramatically from period to period and between us and our peers. We exclude the effect of currency translation from ~~sales from existing businesses~~core revenue because the impact of currency translation is not under management’s control and is subject to volatility. Management believes the exclusion of the effect of acquisitions and divestitures and currency translation may facilitate the assessment of underlying business trends and may assist in comparisons of long-term performance. References to sales volume from existing businesses refer to the impact of both price and unit sales.

~~Restructuring~~Acquisitions

On January 3, 2024, we acquired EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications. The acquisition of EA will bolster our innovative portfolio of products and services for engineers with complementary test and measurement solutions enabling the global energy transition. The total consideration paid was approximately $1.72 billion, net of acquired cash. We recorded approximately $1.2 billion of goodwill related to the EA acquisition, which is not tax deductible.

Other Matters

Business Performance and Outlook

Business Performance ~~For~~for the Period Ended March ~~31, 2023~~29, 2024

During the ~~three month~~three-month period ended March ~~31, 2023 (“the quarter”~~29, 2024 (the “quarter” or the “first quarter”), our sales increased by ~~6.1%~~4.4%, driven by a 2.5% increase in our core revenue, and a 2.5% increase from ~~existing businesses,~~acquisitions, net of divestitures, partially offset ~~primarily~~ by 0.6% decrease from unfavorable ~~movements in foreign exchange rates. Year-over-year sales from existing businesses increased 8.8%, reflecting continued strong demand across end markets,~~currency translation. Core revenue growth was comprised of favorable pricing of 2.3% and ~~focused execution on service~~increased volume of 0.2%. The increase in volume from IOS and ~~delivery.~~AHS were mostly offset by declines in PT.

Geographically, in the first quarter, year-over-year ~~sales from existing businesses~~core revenue in developed markets increased ~~mid-single-digit, with growth~~low single-digits, driven by ~~mid-single-digit~~low single-digit growth in North America and ~~high single-digit~~mid-single-digit growth in Western Europe. ~~Sales from existing businesses~~Core revenue in high growth markets increased mid-single-digit year-over-year in the first quarter, ~~at a high-teens rate,~~ driven by ~~low thirties growth in China and~~ low double-digit growth in Latin ~~America.~~

~~In addition to increased volumes, year-over-year price increases contributed 4.6% to sales~~America and low single-digit growth ~~during the quarter, as compared to the comparable period~~ in ~~2022 and is reflected as~~Asia, despite a ~~component of the change~~low single-digit decline in ~~sales from existing businesses. In the first quarter, price increases exceeded inflation impacts on purchased materials.~~

Supply chain issues persisted in the quarter, resulting in lingering challenges with logistics, material availability and absenteeism. We continue to apply the Fortive Business System (“FBS”) to help mitigate the impact of these challenges and to serve our customers. We anticipate that the disruptions which began with the pandemic will continue to impact future periods.China.

Outlook

We anticipate revenue growth to be between ~~1.5%~~2% and ~~3.5%~~3% for the second ~~fiscal~~ quarter of ~~2023,~~2024, and ~~3.0%~~approximately 4.5% and ~~4.5%~~6% for the full ~~2023 fiscal~~ year. We anticipate core revenue growth ~~from existing businesses~~ to be between ~~2.5%~~flat and ~~4.5%~~2% for the second quarter and ~~4.0%~~approximately 2% and ~~5.5%~~4% for the full year.

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We expect ~~that~~ foreign exchange rates ~~will~~to remain volatile throughout the year ~~and~~which could ~~create unfavorable results relative to foreign exchange rates in 2022.~~adversely impact our financial results. Additionally, ~~this~~our financial outlook is subject to various assumptions and risks, including but not limited to, ~~the resilience and durability of the economies of~~macroeconomic conditions in the United States, China and other critical regions, ongoing challenges with global logistics and supply chains, ~~including the availability of electronic components, inflationary pressures, the~~disruption in supply or transportation resulting from geopolitical developments, severe weather or other events, impact of ~~the Russia Ukraine Conflict,~~inflationary dynamics on our expenses or our ability to realize price increases in our sales, interest rates, market conditions in key product segments, and elective surgery rates. We will continue to deploy FBS to actively manage production challenges, collaborate with customers and suppliers to minimize disruptions and utilize ~~price increases~~pricing and other countermeasures to offset ~~inflationary pressures.~~

the aforementioned dynamics. We continue to monitor ~~the macroeconomic and geopolitical~~these conditions which may continue to impact our business, ~~including the lingering societal impact of the pandemic, continued geopolitical conflict, global inflation,~~as well as potential adverse global economic trends and sentiments, monetary and fiscal policies, ~~including impact on our cost of capital, the stability of U.S. and international banking systems,~~ international trade and relations between the U.S., China and other nations, and investment and taxation policy initiatives being considered in the United States and by the Organization for Economic Co-operation and Development (“OECD”)., including the potential impact of the Pillar Two initiative.

RESULTS OF OPERATIONS

Sales Growth

The following table summarizes total aggregate year-over-year sales growth and the components thereof for the first quarter as compared to the comparable period of ~~2022:~~2023:

Components of Sales Growth


	% Change Three Months Ended March ~~31, 2023~~29, 2024 vs. Comparable ~~2022~~2023 Period
Total revenue growth (GAAP)	~~6.1~~4.4	%
~~Existing businesses~~Core (Non-GAAP)	~~8.8~~2.5	%
Acquisitions and divestitures (Non-GAAP)	~~(0.4)~~2.5	%
Currency exchange rates (Non-GAAP)	~~(2.3)~~(0.6)	%

Operating Profit Margins

Operating profit margin was ~~16.5%~~19.8% for the first quarter, yielding an increase of ~~110~~330 basis points as compared to ~~15.4%~~16.5% in the comparable period of ~~2022.~~2023. Year-over-year changes in operating profit margin were comprised of the following:

•Year-over-year increase in price ~~and sales volumes~~ from existing businesses, a slight increase in overall demand despite a decline in certain businesses in PT, and gains from productivity measures, which were partially offset by higher employee compensation, ~~investments in R&D, sales~~customer acquisition and marketing ~~and unfavorable foreign exchange rates~~costs — favorable 90 basis points

•The year-over-year effect of amortization from existing businesses — favorable 7030 basis points

•The year-over-year net effect of acquisition-related transaction costs ~~which were lower~~incurred in the first quarter ~~than those recognized during the comparable period in 2022~~of 2024 — ~~favorable 60~~unfavorable 180 basis points

•The year-over-year net effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — ~~favorable 10~~unfavorable 140 basis points

•The year-over-year effect of costs relating to the ~~formal~~discrete restructuring plan initiated and completed in 2023 — ~~unfavorable~~favorable 120 basis points

•The year-over-year effect of the gain on sale of land and certain office buildings in the PT segment in the first quarter of 2024 — favorable 410 basis points

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Business Segments

Sales by business segment for each of the periods indicated were as follows ($ in millions):

Three Months Ended

March 31, 2023

April 1, 2022

Intelligent Operating Solutions

632.1

587.6

Intelligent Operating Solutions

Precision Technologies

515.5

462.4

Advanced Healthcare Solutions

313.1

326.5

Advanced Healthcare Solutions

Total

1,460.7

1,376.5

Total

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INTELLIGENT OPERATING SOLUTIONS

Intelligent Operating Solutions Selected Financial Data

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

($ in millions)

Sales

632.1

587.6

Operating profit

133.5

107.0

Operating profit

Depreciation

8.4

9.5

Amortization

46.0

46.2

Amortization

Operating profit as a % of sales

21.1

18.2

Depreciation as a % of sales

1.3

1.6

Depreciation as a % of sales

Amortization as a % of sales

7.3

7.9

Amortization as a % of sales

Components of Sales Growth


	% Change Three Months Ended March ~~31, 2023~~29, 2024 vs. Comparable ~~2022~~2023 Period
Total revenue growth (GAAP)	~~7.6~~5.3	%
~~Existing businesses~~Core (Non-GAAP)	~~9.7~~4.6	%
Acquisitions and divestiture (Non-GAAP)	1.1	%
Currency exchange rates (Non-GAAP)	~~(2.1)~~(0.4)	%

~~Year-over-year~~The sales ~~from~~results for the first quarter were driven primarily by growth in our existing businesses ~~increased 9.7% during the quarter, as compared~~due to ~~the comparable period of 2022. The year-over-year results were driven by~~ price increases and ~~strong demand for~~increased volume in our test and measurement instrumentation and gas detection ~~offerings and~~products as well as software and service offerings in both EHS and facility and asset lifecycle applications.

Geographically, ~~sales from existing businesses~~core revenue in developed markets increased in the first quarter by ~~mid-single-digits,~~low single-digits, driven by ~~mid-single-digit~~low single-digit growth in North America and ~~mid-single-digit~~high single-digit growth in Western Europe. ~~Sales~~Core revenue in high growth markets increased by ~~mid-twenties,~~high single-digits, driven by ~~mid-forties growth in China, as well as~~ high single-digit growth in ~~Latin America,~~China and mid-teens growth in ~~Other Asia.~~Latin America.

Year-over-year price increases in our ~~Intelligent Operating Solutions~~IOS segment contributed ~~5.6%~~2.9% to sales growth ~~during~~in the first quarter ~~as compared to the comparable period of 2022,~~ and is reflected as a component of the change in sales from existing businesses.

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Operating profit margin increased ~~290~~360 basis points during the first quarter as compared to the comparable period of ~~2022.~~2023. Year-over-year changes in operating profit margin were comprised of the following:

•Year-over-year increase in price and sales ~~volume~~volumes from existing businesses and gains from productivity measures, ~~were~~ partially offset by higher employee compensation and customer acquisition and marketing costs ~~unfavorable foreign exchange rates and growth investments in R&D, sales and marketing—~~— favorable ~~300~~180 basis points

•The year-over-year effect of amortization from existing businesses — favorable 6035 basis points

•The year-over-year net effect of acquisition-related transaction costs, which were ~~lower than those recognized during~~incurred in the ~~comparable period in 2022~~first quarter of 2023 — ~~favorable 110~~relatively flat

•The year-over-year net effect of acquired business, including amortization — unfavorable 35 basis points

•The year-over-year effect of costs relating to the ~~formal~~discrete restructuring plan initiated and completed in 2023 — ~~unfavorable~~favorable 180 basis points

PRECISION TECHNOLOGIES

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broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries.

Precision Technologies Selected Financial Data

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

($ in millions)

Sales

515.5

462.4

Operating profit

122.7

101.4

Operating profit

Depreciation

6.0

Amortization

1.1

3.6

Amortization

Operating profit as a % of sales

23.8

21.9

Depreciation as a % of sales

1.2

1.3

Depreciation as a % of sales

Amortization as a % of sales

0.2

0.8

Amortization as a % of sales

~~Components~~Components of Sales Growth


	% Change Three Months Ended March ~~31, 2023~~29, 2024 vs. Comparable ~~2022~~2023 Period
Total revenue growth (GAAP)	~~11.5~~3.3	%
~~Existing businesses~~Core (Non-GAAP)	~~13.7~~ (1.5)	%
Acquisitions and divestiture (Non-GAAP)	5.6	%
Currency exchange rates (Non-GAAP)	~~(2.2)~~(0.8)	%

~~Year-over-year~~The sales ~~from existing businesses increased 13.7% during~~results for the first quarter ~~as compared to~~were impacted by the ~~comparable period of 2022. The year-over-year results were driven by~~overall price increases ~~strong performance~~ in ~~our~~the segment and volume increases in energetic materials which were offset by volume reductions in test and measurement ~~business,~~ and ~~improved production execution with our energetic materials~~sensing technology products. The acquisition of EA, partially offset by product ~~line.~~line divestments at Invetech, contributed 5.6% to revenue growth.

Geographically, ~~sales from existing businesses~~core revenue in developed markets ~~increased by high single-digits~~decreased slightly in the first quarter, ~~driven by high~~with low single-digit growth in North America ~~and low double-digit growth~~being offset by a slight decline in Western ~~Europe. Sales~~Europe and a mid-twenties decline in Japan. Core revenue in high growth markets ~~increased~~decreased by ~~high twenties~~low single-digits in the first quarter driven by ~~high thirties growth~~a low double-digit decline in China, ~~as well as mid-single-digit~~partially offset by high single-digit growth in Other Asia.

Year-over-year price increases in our ~~Precision Technologies~~PT segment contributed ~~4.9%~~1.3% to sales growth ~~for~~in the first quarter ~~as compared to the comparable period of 2022,~~ and is reflected as a component of the change in sales from existing businesses.

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Operating profit margin increased ~~190~~390 basis points for the first quarter as compared to the comparable period of ~~2022.~~2023. Year-over-year changes in operating profit margin were comprised of the following:

•~~Higher year-over-year increases~~Year-over-year increase in price from existing businesses and ~~volume,~~gains from productivity measures, partially offset by volume reduction and higher employee compensation ~~costs and unfavorable exchange rates~~ — favorable ~~190~~10 basis points

•The year-over-year effect of amortization from existing businesses — favorable 6010 basis points

•The year-over-year net effect of acquisition-related transaction costs, which were incurred in the first quarter of 2024 related to the EA acquisition — unfavorable 485 basis points

•The year-over-year net effect of acquired and divested business, including amortization, and acquisition-related fair value adjustments — unfavorable 335 basis points

•The year-over-year effect of costs relating to the ~~formal~~discrete restructuring plan initiated and completed in 2023 — ~~unfavorable~~favorable 60 basis points

•The year-over-year effect of the gain on sale of land and certain office buildings in the first quarter of 2024 — favorable 1,130 basis points

ADVANCED HEALTHCARE SOLUTIONS

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Advanced Healthcare Solutions Financial Data

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

($ in millions)

Sales

313.1

326.5

Operating profit

16.3

28.0

Operating profit

Depreciation

5.1

4.7

Amortization

45.3

46.5

Amortization

Operating profit as a % of sales

5.2

8.6

Depreciation as a % of sales

1.6

1.4

Depreciation as a % of sales

Amortization as a % of sales

14.5

14.2

Amortization as a % of sales

Components of Sales Growth

% Change Three Months Ended March ~~31, 2023~~29, 2024 vs. Comparable ~~2022~~2023 period

Total revenue growth (GAAP)

~~(4.1)~~4.3

~~Existing businesses~~Core (Non-GAAP)

~~0.1~~5.5

~~Acquisitions and divestitures(Non-GAAP)~~

~~(1.7)~~

Currency exchange rates (Non-GAAP)

~~(2.5)~~(1.2)

~~Year-over-year~~The sales ~~from existing businesses increased 0.1% during~~results for the ~~quarter, as compared to the comparable period of 2022. The year-over-year results in the~~first quarter were driven by growth in our existing businesses due to price increases across the segment and ~~higher software revenue, which were mostly offset by reduced~~ volume ~~for~~increases, primarily with sterilization products ~~in North America and China, supply issues with quality assurance equipment and reduced demand for system design and related services.~~

Geographically, ~~in the quarter, sales from existing businesses increased by low single-digit~~core revenue in developed markets increased mid-single-digits in the first quarter, driven by ~~slight~~mid-single-digit growth in North America, ~~and mid-single-digit~~low single-digit growth in Western ~~Europe.~~Europe, and high single-digit growth in Japan. In high growth markets, ~~sales from existing businesses declined~~core revenue increased by ~~mid-single-digit,~~high single-digits in the first quarter, driven by ~~a high single-digit decline China.~~low double-digit growth in China and mid-teens growth in Latin America.

Year-over-year price increases in our ~~Advanced Healthcare Solutions~~AHS segment contributed ~~2.2%~~2.8% to sales growth ~~during~~in the first quarter ~~as compared to the comparable period of 2022,~~ and is reflected as a component of the change in sales from existing businesses.

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Operating profit margin ~~decreased 340~~increased 380 basis points during the first quarter, as compared to the comparable period of ~~2022.~~2023. Year-over-year changes in operating profit margin were comprised of the following:

•Year-over-year ~~increase~~increases in price from existing businesses, ~~was~~increased volume, and gains from productivity measures, partially offset by ~~reductions in volume, unfavorable product mix,~~ higher employee compensation and ~~material costs, sales~~customer acquisition and marketing costs ~~and unfavorable changes in foreign exchange rates~~ — ~~unfavorable 300~~favorable 200 basis points

•The year-over-year effect of amortization from existing businesses — ~~unfavorable 25 basis points~~

•~~The year-over-year net effect of acquisition-related transaction costs which were lower in the quarter than those recognized in the comparable period in 2022 —~~ favorable ~~40 basis points~~

•~~The year-over-year effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments to inventory — favorable 45~~70 basis points

•The year-over-year effect of costs relating to the ~~formal~~discrete restructuring plan initiated and completed in 2023 — ~~unfavorable 100~~favorable 110 basis points

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COST OF SALES AND GROSS PROFIT

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

($ in millions)

Sales

1,460.7

1,376.5

Cost of sales

(612.5)

(584.5)

Cost of sales

Gross profit

848.2

792.0

Gross profit margin

58.1

57.5

Gross profit margin

The year-over-year increase in gross profit during the first quarter ~~as compared to the comparable period of 2022, is~~was due ~~primarily~~ to year-over-year increases in price and ~~sales volumes,~~volume from both existing and acquired businesses, productivity ~~gains from~~measures and FBS initiatives, partially offset by higher employee compensation ~~costs, the unfavorable impact of changes in foreign currency exchange rates, unfavorable product mix and restructuring charges.~~costs.

OPERATING EXPENSES

Three Months Ended

($ in millions)

March 31, 2023

April 1, 2022

($ in millions)

Sales

1,460.7

1,376.5

Selling, general and administrative (“SG&A”)

507.7

480.6

Selling, general and administrative (“SG&A”)

Research and development (“R&D”)

100.1

99.1

SG&A as a % of sales

34.8

34.9

SG&A as a % of sales

R&D as a % of sales

6.9

7.2

R&D as a % of sales

The year-over-year increase in SG&A ~~increased~~ during the first quarter ~~as compared to the comparable period of 2022~~was due to ~~increased~~higher intangible amortization and incremental operating costs and transaction expenses from our recent acquisitions, employee compensation ~~expenses,~~costs, customer acquisition and marketing costs, ~~and restructuring costs,~~ partially offset by ~~the impact of changes in currency exchange rates.~~

~~On a year-over-year basis, SG&A represented as a percentage of sales, decreased 10 basis points during the first quarter due to leverage on SG&A costs, which grew at a slower rate than our sales.~~productivity measures.

R&D, consisting principally of internal and contract engineering personnel costs, increased ~~slightly~~ during the first quarter, as compared to the comparable period of ~~2022~~2023 due to the incremental costs from our recent acquisitions and ongoing ~~investment~~investments in ~~innovation and key initiatives and higher employee compensation costs. On a year-over-year basis, R&D expenses represented as a percentage of sales decreased by 30 basis points in~~innovation.

NON-OPERATING INCOME (EXPENSE), NET

Interest Costs

Net interest expense for the first quarter ~~given R&D grew at a slower~~was $44 million as compared to $32 million in the comparable period in 2023. The year-over-year increase in net interest expense was due to higher overall debt balance and higher interest rates incurred on floating rate ~~than our sales.~~

~~INTEREST COSTS~~

debt instruments. For a discussion of our outstanding indebtedness, refer to Note 45 to the consolidated condensed financial statements.

~~Net interest~~Other non-operating expense, net

Other non-operating expense for the first quarter was ~~$32~~$24.2 million as compared to ~~$19~~$2.5 million in the comparable period in ~~2022.~~2023. The year-over-year increase ~~in interest expense~~ was primarily due to ~~higher interest rates incurred on floating rate debt instruments, despite overall lower debt balances.~~a charitable contribution made in the first quarter of 2024. For further discussion of this transaction, refer to Note 1 to the consolidated condensed financial statements.

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INCOME TAXES

Our effective tax rates for the ~~three month~~three-month period ended March 29, 2024 were 11.4%, as compared to 15.7%, for the three-month period ended March 31, ~~2023 was 15.7%, as compared to 13.5%, for the three month period ended April 1, 2022.~~2023. The ~~year-over-year increase~~decrease in the effective tax rate for the ~~three month~~three-month period ended March 29, 2024 as compared to the three-month period ended March 31, 2023 ~~as compared~~was primarily related to cash repatriation, resulting in a discrete tax credit in the ~~three month~~three-month period ended ~~April 1, 2022 was primarily due to uncertain tax position reserves released during the three month period ending April 1, 2022.~~March 29, 2024

~~On August 16, 2022,~~During 2021, the ~~U.S. enacted~~Organisation for Economic Co-operation and Development (the “OECD”) announced an agreed framework for “Pillar Two” and released detailed model rules for a global minimum corporate tax rate of fifteen percent (15%) which requires multilateral agreement(s) and/or country-specific legislative action to be effective. A few jurisdictions have implemented legislation with effective dates spanning from 2024 through 2026. We will continue to monitor further legislation by individual countries and are currently evaluating the ~~Inflation Reduction Act~~potential impact of 2022, which, among other provisions, implements a 15% corporate alternative minimum tax on book income on corporations whose average annual adjusted financial statement income during the most recently-completed three-year period exceeds $1.0 billion. This provision is effective for tax years beginning after December 31, 2022. Based uponPillar Two to our ~~analysis of the Inflation Reduction Act of 2022 and subsequently released guidance, we believe that the corporate alternative minimum tax will not have a material impact on our financial statements~~business in ~~2023~~.future periods.

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COMPREHENSIVE INCOME

Comprehensive income ~~increased~~decreased by ~~$61~~$56 million during the first quarter as compared to the comparable period in ~~2022~~2023 due primarily to ~~favorable~~unfavorable changes in foreign currency translation adjustments of ~~$53~~$90 million, ~~and~~partially offset by an increase in net income.

LIQUIDITY AND CAPITAL RESOURCES

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, make interest and principal payments on our outstanding indebtedness, fulfill our contractual obligations, and manage our capital structure on a short and long-term basis.

We have generally satisfied any short-term liquidity needs that are not met through operating cash flows and available cash through issuances of commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”).

Credit support for the Commercial Paper Programs is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on October 18, 2027 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit support for the commercial paper programs, can also be used for working capital and other general corporate purposes. As of March ~~31, 2023,~~29, 2024, no borrowings were outstanding under the Revolving Credit Facility.

The availability of the Revolving Credit Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the existing credit ratings of the Commercial Paper Programs when we have outstanding borrowings. We expect to limit any future borrowings under the Revolving Credit Facility to amounts that would leave sufficient credit available under the facility to allow us to borrow, if needed, and repay any outstanding commercial paper as it matures.

On June 7, 2023, we filed with the SEC an “automatic shelf” registration statement (the “Shelf Registration Statement”). Under the Shelf Registration Statement, we may from time to time sell shares of common stock, preferred stock, debt securities, depositary shares, purchase contracts, purchase units, warrants and subscription rights in one or more offerings. For example, we recently completed our offering of €500 million aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2026 (the “2026 Notes”) and €700 million aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2029 (the “2029 Notes”) under the Shelf Registration Statement.

We continue to monitor the financial markets, the stability of U.S and international banks and general global economic conditions. In addition, our access to the capital markets and other financing sources are impacted by any change in our credit rating. If changes in financial markets or other areas of the economy or downgrade in our credit rating adversely affect our access to the capital markets and other financing sources, we would expect to rely on a combination of available cash and existing available capacity under our credit facilities to provide short-term funding.

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Overview of Cash Flows and Liquidity

Following is an overview of our cash flows and liquidity ($ in millions):


		Three Months Ended					Three Months Ended
($ in millions)	($ in millions)	March 31, 2023		April 1, 2022		($ in millions)	March 29, 2024	March 31, 2023
Net cash provided by operating activities	Net cash provided by operating activities	$	174.4	$	214.8

Cash paid for acquisitions, net of cash received
Cash paid for acquisitions, net of cash received
Cash paid for acquisitions, net of cash received
Payments for additions to property, plant and equipment	Payments for additions to property, plant and equipment	$	(24.8)	$	(18.8)
Cash paid for acquisitions, net of cash received		—		0.9
Proceeds from sale of property

Net cash used in investing activities	Net cash used in investing activities	$	(24.8)	$	(17.9)

Net cash used in investing activities

Net cash used in investing activities

Net proceeds from (repayments of) commercial paper borrowings	Net proceeds from (repayments of) commercial paper borrowings	$	(159.3)	$	930.7
Payment of 0.875% convertible senior notes due 2022		—		(1,156.5)
Repurchase of common shares		—		(63.8)
Net proceeds from (repayments of) commercial paper borrowings
Net proceeds from (repayments of) commercial paper borrowings
Proceeds from borrowings (maturities greater than 90 days), net of issuance costs
Repayment of borrowings (maturities greater than 90 days)

Payment of dividends	Payment of dividends	(24.7)		(25.1)

Payment of dividends

Payment of dividends

All other financing activities	All other financing activities	(3.1)		(17.9)
Net cash used in financing activities		$	(187.1)	$	(332.6)
All other financing activities
All other financing activities
Net cash provided by (used in) financing activities

Operating Activities

Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.

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Operating cash flows were ~~$174~~$257 million during the ~~quarter,~~year-to-date period, representing ~~a decrease~~an increase of 40$82 million, or ~~19%~~47.2%, as compared to the comparable period of ~~2022.~~2023. The year-over-year change in operating cash flows was primarily attributable to the following factors:

•Year-over-year ~~increases~~decreases of ~~$10~~$3 million in Operating cash flows from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, and ~~Stock-based compensation)~~Gain on sale of property).

•The aggregate changes in trade accounts receivable, inventories, and trade accounts payable ~~used $44~~generated $52 million of cash during the ~~quarter~~year-to-date period as compared to using ~~$25~~$44 million in the comparable period of ~~2022.~~2023. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories, and trade accounts payable depends upon how effectively we manage the cash conversion cycle, which generally represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.

•The aggregate changes in prepaid expenses, other assets, accrued expenses, and other liabilities used ~~$94~~$105 million of cash in the year-to-date period as compared to using ~~$63~~$94 million of cash in the comparable period of ~~2022.~~ 2023. The year-over-year changes were driven byby timing differences related to ~~contract liabilities, tax payments, and~~ employee compensation and ~~benefits.~~benefits, tax payments, contract assets, and contract liabilities.

Investing Activities

Cash ~~flows~~outflows from investing activities ~~consisting primarily of capital expenditures and cash paid for acquisitions, decreased $7 million~~increased by $1.7 billion during the ~~first quarter,~~year-to-date period, as compared to the comparable period of ~~2022. The~~2023 with the increase ~~in investing cash flows was~~ primarily due to cash used for acquisitions, net of cash acquired, totaling $1.7 billion and a year-over-year increase in capital expenditures of approximately ~~$6 million.~~$2 million, partially offset by proceeds from sale of property.

Capital expenditures are made primarily for increasing production capacity, replacing aged equipment, supporting product development initiatives for hardware and software offerings, improving information technology systems, and purchasing equipment that is used in revenue arrangements with customers. For the current year, we expect capital spending to be approximately ~~$90-110~~$100-$120 million, although actual expenditures will ultimately depend on business conditions.

Financing Activities and Indebtedness

Cash flows from financing activities consist primarily of cash flows associated with the issuance and repayment of debt and commercial paper, payments of cash dividends to shareholders and share repurchases.

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In the ~~first quarter of 2023,~~year-to-date period, financing activities ~~used~~generated cash of ~~$187~~$307 million, reflecting the following transactions:

•~~Incurred $159~~We repaid $427 million in net commercial paper repayments under the U.S. dollar-denominated commercial paper ~~program, which had a weighted annual effective rate of 4.98% and a weighted average maturity of approximately 30 days.~~program.

•~~Dividend~~On January 2, 2024, we drew down an additional $450 million of the $1.3 billion Delayed-Draw Term Loan due 2024 as part of the funding for the acquisition of EA.

•On February 13, 2024, we completed the sale of our registered offering of the 2026 Notes and the 2029 Notes, yielding net proceeds of approximately $1.3 billion.

•On February 13 2024, Fortive repaid $1.0 billion in outstanding principal of the Delayed-Draw Term Loan due 2024, using net proceeds from the 2026 Notes and 2029 Notes.

•We made dividend payments to common shareholders totaling ~~$25~~$28 million.

In the comparable ~~2022~~2023 period, financing activities used cash of ~~$333~~$187 million, reflecting the following transaction:

•~~Incurred $931~~We repaid $159 million in net commercial paper borrowings under the U.S. dollar-denominated commercial paper ~~program, which had a weighted annual effective rate of 0.91% and a weighted average remaining maturity of approximately 39 days.~~

•~~Repurchased 1,000,000 shares for approximately $64 million under our share repurchase~~ program.

•~~Made~~We made dividend payments to common shareholders totaling $25 million.

•~~On February 15, 2022, the maturity date of the Convertible Notes, Fortive repaid, in cash, $1.2 billion in outstanding principal and accrued interest thereon.~~

Refer to Note 45 of the consolidated condensed financial statements for additional information regarding our financing activities and indebtedness.

Cash and Cash Requirements

As of March ~~31, 2023,~~29, 2024, we held approximately ~~$673~~$705 million of cash and equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less, ~~and yielded insignificant interest income during the first quarter. Approximately 90%~~ of ~~the $673 million in cash and equivalents~~which approximately 85% was held outside of the United States.

We have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund our pension plans as required, pay dividends to shareholders, and

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support other business needs or objectives. With respect to our cash requirements, we generally intend to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions and repayment of maturing debt, we may also borrow under our commercial paper programs or credit facilities or enter into new credit facilities and either borrow directly thereunder or use such credit facilities to backstop additional borrowing capacity under our commercial paper programs. We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.

Foreign cumulative earnings remain subject to foreign remittance taxes. We have made an election regarding the amount of earnings that we do not intend to repatriate due to local working capital needs, local law restrictions, high foreign remittance costs, previous investments in physical assets and acquisitions, or future growth needs. For most of our foreign operations, we make an assertion regarding the amount of earnings in excess of intended repatriation that are expected to be held for indefinite reinvestment. No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely. The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives we could employ if we repatriated these earnings.

As of March ~~31, 2023,~~29, 2024, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

CRITICAL ACCOUNTING ESTIMATES

There were no material changes during the ~~first quarter~~three-month period ended March 29, 2024 to the items we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2022~~2023 Annual Report on Form ~~10-K.~~10-K, except as noted below.

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Acquisitions

Our business acquisitions, including EA, typically result in the recognition of goodwill, customer relationships, developed technology, and other intangible assets, which affect the amount of future period amortization expense and possible impairment charges that we may incur. The fair value of acquired intangible assets are determined using information available near the acquisition date based on estimates and assumptions that are deemed reasonable by us. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted cash flows of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates, customer attrition rates, and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. We engage third-party valuation specialists who review our critical assumptions and calculations of the fair value of acquired intangible assets in connection with material acquisitions. In connection with the EA acquisition in the first quarter of 2024, we recorded approximately $1.2 billion of goodwill and approximately $0.7 billion of intangible assets. Refer to Note 2 for additional information of the EA acquisition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our concentrations of credit risk arising from trade receivables is limited due to the diversity of our customers. Our businesses perform credit evaluations of their customers’ financial conditions as appropriate and also obtain collateral or other security when appropriate.

Additional quantitative and qualitative disclosures about market risk appear in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Instruments and Risk Management,” in our ~~2022~~2023 Annual Report on Form 10-K. There were no material changes during the ~~three month~~three-month period ended March ~~31, 2023~~29, 2024 to the information reported in our ~~2022~~2023 Annual Report on Form 10-K relating to our evaluation of interest rate, foreign currency exchange, and commodity price risk. Refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for discussion around the impact of these items in the first quarter.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of the President and Chief Executive Officer, and the Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the President and Chief Executive Officer, and the Senior Vice President and Chief Financial Officer, have concluded that, as of the end of such period, these disclosure controls and procedures were effective.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

Information regarding risk factors appears in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Information Relating to Forward-Looking Statements,” in Part I - Item 2 of this Form 10-Q and in the “Risk Factors” section of our ~~2022~~2023 Annual Report on Form 10-K. There were no material changes during the quarter ended March ~~31, 2023~~29, 2024 to the risk factors reported in the “Risk Factors” section of our ~~2022~~2023 Annual Report on Form 10-K.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 17, 2022, the ~~Company's~~Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 20 million shares of the ~~Company's~~Company’s outstanding common stock from time to time on the open market or in privately negotiated ~~transactions,~~transactions. On January 23, 2024, the Company’s Board of Directors increased the number of shares authorized under the share repurchase program by an additional 11 million shares, with 1320 million shares remaining authorized under the share repurchase program as of March ~~31, 2023.~~29, 2024. There is no expiration date for the repurchase program, and the timing and amount of repurchases under the program are determined by the ~~Company's~~Company’s management based on market conditions and other factors. The repurchase program may be suspended or discontinued at any time by the Board of Directors. During the quarter ended March ~~31, 2023,~~29, 2024, the Company did not repurchase any of its common stock.

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ITEM 5. OTHER INFORMATION

During the first quarter ended March 29, 2024, no directors or Section 16 officers adopted, modified, or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS



Exhibit Number						Description

3.1						Restated Certificate of Incorporation of Fortive Corporation (incorporated by reference to Exhibit 3.1 to Fortive Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, ~~2022,~~2022. Commission File No. 1-37654).

3.2						Amended and Restated Bylaws of Fortive Corporation (incorporated by reference from Exhibit 3.1 to Fortive Corporation’s Current Report on Form 8-K, filed on November 8, ~~2022 (Commission~~2022. Commission File No. 1-37654).

~~10.1~~4.1						I ndenture, dated as of February 13, 2024, between Fortive ~~Corporate Executive Officer Cash Severance Policy~~Corporation , as issuer, and The Bank of New York Mellon Trust Com pany, N.A., as trustee (incorporated by ~~reference~~re ference from Exhibit ~~10.1~~4.1 to Fortive ~~Corporation’s~~Corporation ’s Current Report on Form 8-K filed on ~~March 2, 2023 (Commission~~February 13, 2024 . Commission File ~~No.~~ N o. 1-37654).

4.2						S upplemental I ndenture No.1, dated as of February 13, 2024, between Fortive Co rporation , as issuer, and The Bank of New York Mellon Trust Company, N.A., as truste e (incorporated by reference from Exhibit 4.2 to Fortive Corporation ’s Current Report on Form 8-K filed on February 13, 2024. Commission File N o . 1-37654).

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						XBRL Instance Document (1) - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document (1)

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (1)

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (1)

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)

104						The cover page from this Quarterly Report on Form 10-Q for the quarter ended March ~~31, 2023,~~29, 2024, formatted in Inline XBRL and contained in Exhibit 101

* Indicates management contract or compensatory plan, contract or arrangement

(1) Exhibit 101 to this report includes the following documents formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets as of March ~~31, 2023~~29, 2024 and December 31, ~~2022,~~2023, (ii) Consolidated Condensed Statements of Earnings for the ~~three month~~three-month periods ended March 29, 2024 and March 31, 2023, ~~and April 1, 2022,~~ (iii) Consolidated Condensed Statements of Comprehensive Income for the ~~three month~~three-month periods ended March 29, 2024 and

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March 31, 2023, ~~and April 1, 2022,~~ (iv) Consolidated Condensed Statement of Changes in Equity for the ~~three month~~three-month periods ended March ~~31,~~

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~~2023~~29, 2024 and ~~April 1, 2022,~~March 31, 2023, (v) Consolidated Condensed Statements of Cash Flows for the ~~three month~~three-month periods ended March 29, 2024 and March 31, 2023, ~~and April 1, 2022,~~ and (vi) Notes to Consolidated Condensed Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	FORTIVE CORPORATION:

Date: April ~~26, 2023~~24, 2024	By:	/s/ Charles E. McLaughlin
		Charles E. McLaughlin
		Senior Vice President and Chief Financial Officer

Date: April ~~26, 2023~~24, 2024	By:	/s/ Christopher M. Mulhall
		Christopher M. Mulhall
		Chief Accounting Officer

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	Carrying value		Annual effective rate		Weighted average maturity (in days)
U.S. dollar-denominated commercial paper	$	244.9	4.98	%	30