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Fortive (FTV) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

Fortive Corporation FTV reported first-quarter 2023 adjusted earnings of 75 cents per share, outpacing the Zacks Consensus Estimate by 2.7% and increased 7% year over year.

Revenues increased 6% year over year to $1.461 billion and beat the Zacks Consensus Estimate by 3.1%. Core revenues also moved up 8.8% from the year-ago quarter’s levels.

The top line was driven by healthy customer demand, especially for new products and services, strength in Fortive business system and strong execution amid a challenging macroeconomic environment.

Fortive Corporation Price, Consensus and EPS Surprise

Fortive Corporation Price, Consensus and EPS Surprise
Fortive Corporation Price, Consensus and EPS Surprise

Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote

Top Line in Detail

Fortive operates under the following three organized segments.

Intelligent Operating Solutions: The segment generated revenues of $632 million (contributing 43.3% to total revenues), up 7.6% on a year-over-year basis.

Precision Technologies: This segment generated revenues of $516 million (35.3% of total revenues), up 11.5% from the prior-year quarter’s levels.

Advanced Healthcare Solutions: This segment generated revenues of $313 million (21.4% of total revenues), declining 4.1% from the prior-year quarter’s levels owing to unfavorable forex changes and product mix coupled with lower volume.

Operating Details

In the quarter under review, adjusted gross margin came in at 58.4%, which expanded 80 basis points (bps) year over year.

Total operating expenses (selling, general and administrative expenses, and research and development expenses) were $607.8 million, up 4.8% year over year.

Adjusted operating margin was 24%, expanding 100 bps on a year-over-year basis.

Segment-wise, the adjusted operating margins from Intelligent Operating Solutions and Precision Technologies were 30.2% and 24.6%, expanding 300 bps and 190 bps, respectively, year over year.

However, Advanced Healthcare Solutions’ adjusted operating margin of 20.7% contracted 260 bps.

Balance Sheet & Cash Flow

As of Mar 31, cash and cash equivalents were $672.8 million compared with $709.2 million as of Dec 31, 2022.

As of Mar 31, accounts receivables were $940.7 million compared with $958.5 million as of Dec 31, 2022.

FTV generated an operating cash flow of $174.4 million compared with $214.8 million reported in the previous-year quarter.

Free cash flow was $149.6 million compared with $196 million in the prior-year quarter.

Guidance

For second-quarter 2023, management expects adjusted net earnings in the range of 78-82 cents per share. The Zacks Consensus Estimate is pegged at 82 cents.

Revenues are projected in the range of $1.48-$1.515 billion. The Zacks Consensus Estimate is pegged at $1.5 billion.

Fortive expects adjusted operating margin to be between 24.5% and 25%. Free cash flow is expected to be $285 million.

For 2023, Fortive now projects adjusted net earnings in the range of $3.29-$3.40 per share (earlier view: $3.25-$3.40). The Zacks Consensus Estimate is pegged at $3.35.

Revenues are now anticipated in the range of $6-$6.1 billion (earlier view: $5.950-$6.1 billion). The Zacks Consensus Estimate is pegged at $6.02 billion.

For 2023, the company expects adjusted operating margin to be between 25% and 25.5%. Free cash flow is expected to be around $1.250 billion.

Zacks Rank & Stocks to Consider

Currently, Fortive has a Zacks Rank #4 (Sell).

ADVERTISEMENT

Some better-ranked stocks in the broader technology space are Arista Networks ANET, Asure Software ASUR and Salesforce CRM. Asure Software and Salesforce currently sport a Zacks Rank #1 (Strong Buy) whereas Arista Networks carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arista Networks’ 2023 earnings has increased 0.7% in the past 60 days to $5.83 per share. The long-term earnings growth rate is anticipated to be 14.2%.

Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 29% in the past year.

The Zacks Consensus Estimate for Asure Software’s 2023 earnings has increased 25% in the past 60 days to 35 cents per share. The long-term earnings growth rate is anticipated to be 25%.

Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 445.8%. Shares of ASUR have increased 122.3% in the past year.

The Zacks Consensus Estimate for Salesforce’s 2023 earnings has increased 22% in the past 60 days to $7.11 per share. The long-term earnings growth rate is anticipated to be 16.8%.

Salesforce’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.6%. Shares of the company have increased 3.2% in the past year.

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Fortive Corporation (FTV) : Free Stock Analysis Report

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