Fortive (FTV) Q2 Earnings & Revenues Beat Estimates, Rise Y/Y
Fortive Corporation FTV reported second-quarter 2023 adjusted earnings of 85 cents per share, outpacing the Zacks Consensus Estimate by 4.9%. The bottom line increased 9% year over year.
Revenues rose 4.3% year over year to $1.526 billion and beat the Zacks Consensus Estimate by 1.7%. Core revenues also moved up 5.5% from the year-ago quarter’s levels.
The top line was driven by continued momentum in software and services businesses, recovery in the healthcare segment, strength in Fortive business system and strong execution amid a challenging macroeconomic environment.
Fortive Corporation Price, Consensus and EPS Surprise
Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote
The company also raised guidance for 2023. Fortive now projects adjusted net earnings in the range of $3.36-$3.42 per share (earlier view: $3.29-$3.40). The Zacks Consensus Estimate is pegged at $3.35.
Revenues are now anticipated in the $6.070-$6.1 billion band (earlier view: $6-$6.1 billion). The Zacks Consensus Estimate is pegged at $6.05 billion.
The stock was trading up 1.7% in the after-market hours on Jul 26. In the past year, shares of FTV have gained 22.8% of their value against the sub-industry’s decline of 17.3%.
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Top Line in Detail
Fortive operates under the following three organized segments.
Intelligent Operating Solutions: The segment generated revenues of $653 million (contributing 42.8% to total revenues), up 3.6% on a year-over-year basis.
Precision Technologies: Segmental revenues totaled $537 million (35.2%), up 7.7% from the prior-year quarter’s levels.
Advanced Healthcare Solutions: This segment registered revenues of $336 million (22%), up 0.6% from the prior-year quarter’s levels owing to consumables demand recovery in China as well as high new logos and deployments in software business.
Operating Details
In the quarter under review, adjusted gross margin came in at 59.5%, which expanded 250 basis points (bps) year over year.
Total operating costs (selling, general and administrative expenses, and research and development expenditures) were $614.1 million, up 2.1% year over year.
Adjusted operating margin was 26%, expanding 190 bps on a year-over-year basis.
Segment-wise, adjusted operating margins from Intelligent Operating Solutions and Precision Technologies were 33% and 25.7%, expanding 420 bps and 190 bps, respectively, year over year.
However, Advanced Healthcare Solutions’ adjusted operating margin of 22.5% contracted 60 bps.
Balance Sheet & Cash Flow
As of Jun 30, cash and cash equivalents were $712.8 million compared with $672.8 million as of Mar 31.
As of Jun 30, accounts receivables were $935.2 million compared with $940.7 million as of Mar 31.
FTV generated operating cash flow of $321 million compared with $294.4 million reported in the previous-year quarter.
Non -GAAP free cash flow was $300 million compared with $276 million in the prior-year quarter.
Q3, Q4 & 2023 Guidance
For third-quarter 2023, management expects adjusted net earnings in the range of 82-85 cents per share. The Zacks Consensus Estimate is pegged at 86 cents.
Revenues are projected in the $1.505-$1.520 billion band. The Zacks Consensus Estimate is pegged at $1.51 billion.
Fortive expects adjusted operating margin to be between 25.5% and 26%. Free cash flow is projected to be $345 million.
For fourth-quarter 2023, management estimates adjusted net earnings in the range of 94-97 cents per share. Revenues are projected in the $1.580-$1.595 billion band. Fortive anticipates adjusted operating margin to be between 27% and 27.5%. Free cash flow is suggested to be $465 million.
For 2023, the company expects adjusted operating margin to be between 25.5% and 26%. Free cash flow is projected to be around $1.260 billion.
Zacks Rank & Other Key Picks
Currently, Fortive has a Zacks Rank #2 (Buy).
Some other top-ranked stocks worth consideration in the broader technology space are Woodward WWD, Salesforce CRM and Adobe ADBE. Salesforce sports a Zacks Rank #1 (Strong Buy) while each of Adobe and Woodward carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 0.8% in the past 60 days to $3.61 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have risen 17.4% in the past year.
The consensus mark for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 4.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.5%. Shares of CRM have increased 25.2% in the past year.
The consensus estimate for Adobe’s fiscal 2023 earnings is pegged at $15.70 per share, up 1.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 13.3%.
Adobe’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 3.1%. Shares of ADBE have improved 33.7% in the past year.
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