Financial Data and Key Metrics Changes - In Q3, total revenue was just over $1 billion, reflecting a year-over-year increase of approximately 2% on both a reported and core basis [12][13] - Adjusted EBITDA grew by 10% year-over-year to $309 million, with an adjusted EBITDA margin expanding approximately 200 basis points to 30% [14][12] - Adjusted EPS increased by 15% year-over-year to $0.68, driven by growth in adjusted EBITDA and favorable interest expense [14][12] - Free cash flow for Q3 was $266 million, with trailing twelve-month free cash flow growing to $922 million [15][20] Business Line Data and Key Metrics Changes - Intelligent Operating Solutions (iOS) segment revenue grew just over 2.5% on a reported basis, with core revenue growth at 2% [15][16] - Advanced Healthcare Solutions (AHS) segment revenue was $328 million, growing approximately 2% year-over-year, with adjusted EBITDA margin expanding from roughly 27% to 28% [18][17] Market Data and Key Metrics Changes - North America showed solid growth, improving sequentially from Q2, driven by strengthening demand trends for professional instrumentation and healthcare equipment [13][12] - Europe experienced a year-over-year decline, worsened by weakening macro conditions [13] - The rest of the world showed mixed results, with significant acceleration in South Asia, particularly India [10][12] Company Strategy and Development Direction - The company is focused on driving profitable organic growth through the Fortive Business System, with a strategy centered on innovation acceleration, commercial acceleration, and recurring customer value [8][9] - Capital allocation priorities include investing in organic growth, pursuing accretive bolt-on M&A, returning capital through share repurchases, and maintaining a modest growing dividend [11][10] - The company is committed to maximizing medium to long-term shareholder returns through disciplined capital allocation [25][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory, emphasizing the benefits of simplification and a customer-centric approach [23][24] - The outlook for Q4 anticipates a moderation in overall core growth, with AHS core growth expected to be broadly in line with Q3 levels [21][22] - Management remains confident in the resilience of healthcare spending despite potential policy changes, citing strong customer loyalty and ongoing demand trends [104][105] Other Important Information - The company successfully completed the spin-off of its Precision Technologies segment, now operating independently as Rallian [3] - The company has revamped its M&A strategy to focus on smaller, bolt-on acquisitions rather than transformational M&A [41][42] Q&A Session Summary Question: Margin performance and Q4 guidance - Management acknowledged that Q3 margin performance was aided by cost discipline and discrete actions taken to free up resources for growth initiatives, with expectations for some reinvestment in Q4 [31][32] Question: Impact of government shutdown - Management indicated that the federal government shutdown has not significantly impacted their business, as their exposure is primarily to state and local agencies [34][35] Question: Capital allocation and buybacks - The company expressed satisfaction with the $1 billion share repurchase in Q3, reflecting strong free cash flow and attractive valuations, while emphasizing a balanced approach to capital allocation between buybacks and bolt-on M&A [40][41] Question: Demand trends in AHS - Management reported sequential improvement in demand for healthcare capital equipment in North America, driven by increased certainty around legislative conditions [58][59] Question: Software business performance - The software segment continues to perform well, with strong demand for facilities software and ongoing product innovation [66][67] Question: Simplification impact on growth - Management expects increasing impact from simplification efforts as they continue to free up resources for growth initiatives [75][76] Question: Regional demand trends - North America remains the strongest market, while Western Europe has been the softest, with mixed results in other regions [78][79]

Financial Data and Key Metrics Changes - In Q3, total revenue was just over $1 billion, reflecting a year-over-year increase of approximately 2% on both a reported and core basis [12][13] - Adjusted EBITDA was $309 million, up 10% year-over-year, with an adjusted EBITDA margin expanding approximately 200 basis points to 30% [14][15] - Adjusted EPS was $0.68, representing a 15% year-over-year increase, driven by growth in adjusted EBITDA and favorable interest expense [14][15] Business Line Data and Key Metrics Changes - **Intelligent Operating Solutions (iOS)**: Revenue grew just over 2.5% on a reported basis, with core revenue growth at 2%. Growth was driven by demand for facility and asset lifecycle software and professional instrumentation [15][16] - **Advanced Healthcare Solutions (AHS)**: Total revenue was $328 million, growing approximately 2% year-over-year. Demand trends improved sequentially, particularly for healthcare equipment and software [18][19] Market Data and Key Metrics Changes - North America showed solid growth, improving sequentially from Q2, driven by strengthening demand trends for professional instrumentation and healthcare equipment [13][18] - Europe experienced a decline year-over-year, worsened by weakening macro conditions [13] - The rest of the world showed mixed results, with significant acceleration in South Asia, particularly India [10][13] Company Strategy and Development Direction - The company is focused on driving profitable organic growth through its Fortive Business System, emphasizing innovation acceleration, commercial acceleration, and recurring customer value [8][10] - Capital allocation priorities include investing in organic growth, pursuing accretive bolt-on M&A, returning capital through share repurchases, and maintaining a modest growing dividend [11][19] - The company aims to simplify operations and enhance customer-centric approaches, which are expected to yield positive outcomes in the future [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory, citing strong customer relationships and a robust pipeline of growth opportunities [24][25] - The company anticipates a moderation in overall core growth in Q4, with AHS core growth expected to align with Q3 levels [21][22] - Management remains confident in the healthcare market's resilience despite potential policy changes, driven by aging demographics and increasing healthcare needs [105][106] Other Important Information - The company successfully completed the spin-off of its Precision Technologies segment, now operating as Rallian, on June 28, 2025 [3][4] - The company deployed $1 billion for share repurchases in Q3, retiring approximately 21 million shares, reflecting confidence in its value creation plan [7][19] Q&A Session Summary Question: Margin performance and Q4 guidance - Management acknowledged that Q3 margin performance was aided by cost discipline and discrete actions taken to free up resources for growth initiatives, with expectations to maintain cost discipline in Q4 [31][32] Question: Impact of government shutdown - Management indicated that the federal government shutdown has minimal direct exposure for the company, primarily affecting state and local government agencies [34][35] Question: Capital allocation and M&A strategy - Management confirmed that share repurchases will be a significant part of capital allocation, focusing on smaller bolt-on acquisitions rather than transformational M&A [40][42] Question: Fluke performance and demand indicators - Management reported strong order growth and stable sell-through patterns for Fluke, with improvements in channel inventory and ongoing product innovation [43][44] Question: AHS segment demand trends - Management noted sequential improvement in demand for healthcare capital equipment and consumables, driven by more certainty in legislative conditions [56][58] Question: Tax rate outlook - Management projected a mid-teens effective tax rate for the next few years, with potential risks from new proposals [59][60] Question: Software business performance - Management highlighted strong growth in the software segment, particularly in AI-related applications, and noted that IT spending remains robust [66][68] Question: Demand trends by region - Management indicated strong performance in North America, while Western Europe remains soft, with mixed results in other regions [78][79]

Financial Data and Key Metrics Changes - In Q3 2025, total revenue was just over $1 billion, reflecting a year-over-year increase of approximately 2% on both a reported and core basis [11] - Adjusted EBITDA grew by 10% year-over-year to $309 million, with an adjusted EBITDA margin expanding by approximately 200 basis points to 30% [12] - Adjusted EPS was $0.68, up 15% year-over-year, driven by growth in adjusted EBITDA and favorable interest expense on lower debt balances [12][19] Business Line Data and Key Metrics Changes - Intelligent Operating Solutions (iOS) segment revenue grew just over 2.5% on a reported basis, with core revenue growth at 2% [14] - Advanced Healthcare Solutions (AHS) segment revenue was $328 million, growing approximately 2% year-over-year, with adjusted EBITDA margin expanding from roughly 27% to 28% [17] Market Data and Key Metrics Changes - North America showed solid growth, improving sequentially from Q2, driven by strengthening demand trends for professional instrumentation and healthcare equipment [11] - Europe experienced a year-over-year decline, worsened modestly from Q2 due to weakening macro conditions [11] - The rest of the world showed mixed results, with significant acceleration in South Asia, particularly India, which is expected to drive strong momentum in the coming years [9] Company Strategy and Development Direction - The company is focused on driving profitable organic growth through its Fortive Business System, with a strategy centered on innovation acceleration, commercial acceleration, and recurring customer value [6][24] - Capital allocation priorities include investing in organic growth, pursuing accretive bolt-on M&A, returning capital through share repurchases, and maintaining a modest growing dividend [10][39] - The company is committed to maximizing medium to long-term shareholder returns and has demonstrated this through significant share repurchases [5][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory, emphasizing the importance of customer-centric operations and the simplification of the organizational model [22][23] - The company expects overall core growth to moderate in Q4, with AHS core growth broadly in line with Q3 levels and very modest core growth at iOS [19][95] - Management remains confident in the healthcare market's resilience, citing aging demographics and increasing healthcare needs as long-term growth drivers [97] Other Important Information - The company successfully completed the spin-off of its Precision Technologies segment, now operating independently as Rallian, on June 28, 2025 [2] - Free cash flow for Q3 was $266 million, with trailing twelve-month free cash flow growing to $922 million [13][18] Q&A Session Summary Question: Margin performance and Q4 guidance - Management noted that Q3 margin performance was driven by revenue performance and cost discipline, with expectations to maintain cost discipline while reinvesting some resources in Q4 [31][32] Question: Impact of government shutdown on performance - The company indicated that its exposure to federal government funding is minimal, and the shutdown has not significantly impacted performance [34] Question: Capital allocation and buyback strategy - Management explained that the $1 billion share repurchase was based on strong free cash flow and attractive valuations, with a focus on smaller bolt-on acquisitions for growth [38][39] Question: Demand trends in AHS segment - Management reported sequential improvement in demand for healthcare capital equipment and consumables, driven by more certainty in legislative conditions [52] Question: Tax rate outlook - The CFO indicated that a mid-teens tax rate is a good framework for modeling through 2026, with potential risks from new proposals [53] Question: Demand by region - North America continues to perform strongly, while Western Europe remains soft, with mixed results in other regions [69]

Core Insights - The company is executing the Fortive Accelerated strategy aimed at accelerating profitable growth and shareholder value creation in the coming years [3][4] - The strategy is built on three key pillars: innovation, commercial acceleration, and recurring customer value, with strong progress reported in these areas [4] - The company is on track with the guidance provided during the Q2 earnings call, attributing this success to focused execution by its teams [5]

Core Insights - The company is executing the Fortive Accelerated strategy aimed at accelerating profitable growth and enhancing shareholder value creation in the coming years [3][4] - The strategy is built on three key pillars: innovation acceleration, commercial acceleration, and recurring customer value, with strong progress reported in these areas [4] - The company is on track with the guidance provided during the Q2 earnings call, attributing this success to focused execution by its teams [5]

Q2 2025 Consolidated Financial Performance - Revenue decreased by 2.2% from $1,552 million in Q2 2024 to $1,519 million in Q2 2025[11] - Core growth declined by 2.5% compared to approximately flat growth in the previous year[11] - Adjusted EPS decreased by 3.2% year-over-year, from $0.93 to $0.90[11] - Adjusted Free Cash Flow increased to $297 million, compared to $280 million in the same quarter last year[11] - Trailing Twelve Month (TTM) Adjusted Free Cash Flow grew by 8.4% to $1,416 million[11] New Fortive Overview - New Fortive has approximately $4.1 billion in revenue[14] - The company's core growth 5-year Compound Annual Growth Rate (CAGR) is 4%[14] - Adjusted EBITDA margin is 29%[14] - Approximately 50% of revenue is recurring[14] - Free Cash Flow is approximately $0.9 billion[14] - Adjusted Gross Margin is 64%[14] Q2 2025 Continuing Operations Performance - Revenue decreased slightly by 0.4% from $1,020 million to $1,016 million[23] - Core growth declined by 0.7%[23] - Adjusted EPS increased by 3.6% from $0.56 to $0.58[23] - Trailing Twelve Month (TTM) Free Cash Flow grew by 13.6% to $939 million[23] Tariff Impact - Estimated total gross incremental tariff impact for the second half of 2025 is $40 million to $55 million[30] - The annualized impact of tariffs is estimated to be $80 million to $120 million[30]