Fortive(US:FTV)2025-02-25 21:16Financial Liabilities and Risks - The company may face unexpected liabilities from acquisition agreements, which could adversely affect financial results [129]. - Significant debt may be incurred from acquisitions, investments, or joint ventures, potentially leading to increased borrowing costs and diminished access to capital markets [127]. - The company has retained responsibility for known and unknown contingent liabilities related to divested businesses, which could negatively impact financial results [130]. - The company may face civil and criminal liabilities under the federal False Claims Act for submitting false claims to the government [138]. - Regulatory compliance failures could lead to significant penalties and damage to the company's reputation, impacting financial performance [137]. - Environmental, health, and safety liabilities could result in significant costs and adversely affect the company's reputation and financial results [135]. - Changes in effective tax rates or exposure to additional tax liabilities could affect the company's profitability [140]. - The company may incur significant liability if its separation transactions are determined to be taxable [141]. - Compliance with regulations may require significant expenses and could impair the company's flexibility in modifying business strategies [139]. - The company is subject to audits by tax authorities which could result in unfavorable adjustments to tax liabilities [140]. Acquisitions and Integration - The company may experience difficulties in integrating acquired businesses, which could affect operational efficiency and financial outcomes [127]. - The company acquired EA Elektro-Automatik Holding GmbH for a purchase price of $1.72 billion, with estimated fair value of finite-lived intangible assets at $681.2 million [300]. - The acquisition of EA Elektro-Automatik Holding GmbH constituted approximately 12% of the company's total assets and less than 2% of total revenues for the year ended December 31, 2024 [284]. - For the year ended December 31, 2024, the company incurred $33.2 million in pretax transaction-related costs associated with the EA acquisition [367]. - The fair value of net assets acquired from EA included $18.1 million in accounts receivable, $34.4 million in inventories, and $1,175 million in goodwill [369]. - In 2023, the company made four acquisitions in the Intelligent Operating Solutions segment for a total cash consideration of $101.4 million, resulting in $57.3 million of goodwill [370]. - The company recorded a net realized loss of $25.6 million from the divestiture of Invetech, which accounted for less than 1.0% of total revenue for the fiscal year ended December 31, 2023 [371]. Financial Performance - Total sales for the year ended December 31, 2024, reached $6,231.8 million, an increase of 2.74% from $6,065.3 million in 2023 [305]. - Gross profit for 2024 was $3,731.0 million, compared to $3,594.1 million in 2023, reflecting a gross margin improvement [305]. - Net earnings for 2024 were $832.9 million, a decrease of 3.3% from $865.8 million in 2023 [305]. - Basic net earnings per share for 2024 were $2.39, down from $2.46 in 2023 [305]. - The company reported a comprehensive income of $693.6 million for 2024, down from $865.4 million in 2023 [308]. - Research and development expenses for 2024 were $414.0 million, compared to $397.8 million in 2023, indicating a focus on innovation [305]. - The company’s goodwill increased to $10,156.0 million in 2024 from $9,121.7 million in 2023, reflecting the impact of the acquisition [303]. - Net cash provided by operating activities increased to $1,526.8 million in 2024, up from $1,353.6 million in 2023, representing a growth of 12.8% [314]. - The company reported a net cash used in investing activities of $1,796.0 million in 2024, significantly higher than $195.4 million in 2023, primarily due to cash paid for acquisitions [314]. Debt and Capital Structure - The company had approximately $3.7 billion of long-term debt as of December 31, 2024 [144]. - The company’s ability to satisfy debt obligations depends on future operating performance and economic factors [145]. - As of December 31, 2024, the current portion of long-term debt was $376.2 million, while long-term debt, net of current maturities, was $3,331.1 million [387]. - The company issued Euro-denominated senior unsecured notes with net proceeds of approximately $1.3 billion, which were used to refinance existing debt and for general corporate purposes [408]. - The company entered into a delayed-draw term loan facility of up to $1.3 billion, drawing down $550 million and $450 million for the acquisition of EA, with $1.0 billion outstanding [420]. - The company repaid $250 million of the Delayed-Draw Term Loan Due 2023 on August 24, 2023, and the remaining $750 million on December 14, 2023 [421]. Tax and Deferred Tax - Total deferred tax assets decreased from $524.6 million in 2023 to $512.5 million in 2024, a reduction of approximately 2.0% [455]. - Total deferred tax liabilities increased from $1,033.4 million in 2023 to $1,156.0 million in 2024, an increase of approximately 11.9% [455]. - The net deferred tax liability rose from $508.8 million in 2023 to $643.5 million in 2024, reflecting an increase of approximately 26.4% [455]. - Deferred tax assets related to tax credit and loss carryforwards increased from $377.7 million in 2023 to $432.9 million in 2024, an increase of approximately 14.6% [455]. - Valuation allowances for deferred tax assets increased from $282.4 million in 2023 to $311.8 million in 2024, an increase of approximately 10.4% [455]. Revenue Recognition and Sales - The company recognized revenue from product sales, including software and SaaS offerings, when control is transferred to customers [339]. - Total sales of services in 2024 were $949.5 million, up from $927.6 million in 2023, reflecting a growth of 2.03% [446][447]. - Sales of products and software reached $5,282.3 million in 2024, up from $5,137.7 million in 2023, indicating a growth of 2.83% [446][447]. - The United States contributed $3,372.0 million to total revenue in 2024, compared to $3,288.4 million in 2023, reflecting an increase of 2.55% [446][447]. - Direct sales in the healthcare sector amounted to $1,451.8 million in 2024, a slight increase from $1,431.7 million in 2023, showing a growth of 1.77% [446][447]. Pension and Employee Benefits - The company recorded a funded status of $(2.9) million for U.S. Pension Benefits and $(70.6) million for Non-U.S. Pension Benefits as of December 31, 2024 [425]. - The net periodic pension cost for U.S. pension benefits decreased to $0.1 million in 2024 from $0.4 million in 2023, while non-U.S. pension benefits decreased to $3.3 million from $5.1 million [429]. - The company contributed $1 million to its U.S. defined benefit pension plan and $8 million to its non-U.S. plan in 2024, with similar contributions expected in 2025 [435].