Annual Report
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2020 ANNUAL REPORT 2020 ANNUAL ANNUAL REPORT Essential technology for the people who accelerate progress. Fortive’s essential technology makes the world stronger, safer, and smarter. We accelerate transformation across a broad range of applications including environmental, health and safety compliance, industrial condition monitoring, next-generation product design, and healthcare safety solutions. “Our culture of continuous improvement helps us stay a step ahead of the evolving needs of our customers and our teams.” James A. Lico President and Chief Executive Officer 56.9% ADJUSTED GROSS PROFIT MARGIN 21.0% ADJUSTED OPERATING PROFIT MARGIN 7% 7% 17% ld 1 ld 1 ld or or 2% or W W 2 W f f ld of o o or t st 2% st % s 5% 7% W 3%1 e 6% e e % f % R R R 10 2 o t % s % 2 e 9 1 2 $751.9 R 6 2 % 0 MILLION % 9 % % 4 % 5 4 ADJUSTED NET 1 9 % % % 3 FY 2020 2 a 5 EARNINGS 1 7 % n % i % TOTAL SALES a 6 5 h 1 n i C a % h n 9 i N C N N N % h a % o o o o 5 % n C 2 r r r r i 5 $4,634.4 t t t t 1 h h h h h ($ IN MILLIONS) 9 C A A A A % % % 1 % m m m m 7 6 1 e e e e % % r r r r 2 1 e i i i % i 5 c c c c 3 2 p 1 $902.0 a a a % a 1 % o % % 5 5 5 5 r e 6 4 9 % e 8 1 7 7 4 u 6 % p 3 MILLION p % % E % % o 1 o r 1 r 1 n % u e r % u 9 % E 8 1 % 0 p e E FREE CASH FLOW t o n n s r r r e u e e t t E W s s n e e r e W W t s e W $0.28 Precision Tech Advanced Health TOTAL FORTIVE IOS CASH DIVIDEND RATE PER SHARE $70.82 SHARE PRICE AS OF 12/31/2020 All financial metrics are presented on a continuing operations basis for the fiscal year 2020. Financial Highlights for Fiscal Year Ended December 31, 2020 Sales by Segment ($ IN MILLIONS) Intelligent Operating Precision Advanced Healthcare Solutions Technologies Solutions % % % 17% 17% 17% 17% 17% 17% 17 17 17 rld rld rld rld rld rld % % % rld rld rld o o o o o o 22 22 22 o o o W W W W W W d d d f W f W f W of of of of of of rl rl rl o o o t t t t t t o o o t t t s s % 2%s % 2% % 2% s s s7 7 7 1% 1% 1% s s s e e 5 e 5 5 e e % e %% %% % W W 3% W 3% 3 % e e 6% e 6% 6 % R R0 R 0 0 f 2f % f 2% 2% R R R R R R 1 1 1 o o o t t t % % % s s s e e e % % % 2 2 2 9 9 9 1 1 1 2 2 2 R R R 6 6 6 2 2 2 % % % 0 0 0 % % % 9 9 9 % % % % % % 4 4 4 % % % 5 5 5 4 4 4 1 1 1 % % % 9 9 9 % % % % % % 3 3 3 2 2 2 a 5 a 5 a 5 1 1 1 7 7 7 % % % n n n % % % i i i % % % a a a 6 6 6 TOTAL SALES TOTAL SALES TOTAL SALES 5 5 5 h h h 1 1 1 n n n i i i C C C a a a % % % h h h n n n 9 9 9 i i i N N N C C C N N N N N N N N N % % % h h h a a a % % % o o o o o o o o o o o o 5 5 5 % % % n n n C C C 2 2 2 r r r r r r r r r r r r i i i 5 5 5 t t t t t t $1,883.7 $1,651.3 $1,099.4 t t t t t t 1 1 1 h h h h h h h h h h h h h h h 9 9 9 C C C A A A A A A A A A A A A % % % % % % % % % 1 1 1 % % % m m m m m m m m m m m m 7 7 7 6 6 6 1 1 1 e e e e e e e e e e e e % % % % % % r r r r r r r r r r r r 2 2 2 1 1 1 e e e i i i i i i i i i % % % i i i 5 5 5 c c c c c c c c c c c c 3 3 3 2 2 2 p p p 1 1 1 a a a a a a a a a % % % a a a 1 1 1 % % % o o o % % % % % % 5 5 5 5 5 5 5 5 5 5 5 5 r r r e e e 6 6 6 4 4 4 9 9 9 % % % e e e 8 8 8 1 1 1 7 7 7 7 7 7 4 4 4 u u u 6 6 6 % % % p p p 3 3 3 p p p % % % % % % E E E % % % % % % o o o 1 1 1 o o o r r r 1 1 1 r r r 1 1 1 n n n % % % u u u e e e r r r % % % u u u 9 9 9 % % % E E E 8 8 8 1 1 1 % % % 0 0 0 p p p e e e E E E t t t o o o n n n n n n s s s r r r r r r r r r e e e u u u e e e e e e t t t t t t E E E W W W s s s s s s n n n e e e e e e r r r e e e W W W W W W t t t s s s e e e W W W Medical Industrial & Manufacturing Utilities & Power Government IOS IOS ■IOS ■ PrecisionPrecision Tech Precision Tech■ Tech Advanced■ Advanced HealthAdvanced Health Health TOTAL FORTIVETOTAL TOTALFORTIVE FORTIVE ■ Communication, Electronics & Semiconductor ■ Aerospace & Defense ■ Oil & Gas ■ Retail & Consumer ■ Other ■ Distributors About Fortive Fortive Corporation is a provider of essential technologies for connected workflow solutions across a range of attractive end markets. Our strategic segments—Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions—include well-known brands with leading positions in their markets. Our businesses design, develop, service, manufacture, and market professional and engineered products, software, and services for a variety of end markets, 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 across North America, Asia Pacific, Europe, and Latin America. Fellow Shareholders, In 2020, the COVID-19 pandemic challenged our businesses, our employees, and our communities in countless ways. Our Fortive team members around the world demonstrated courage and adaptability as we pulled together to keep our employees safe, adjust to remote work, help frontline workers with innovative new technologies, and support our customers while making significant progress against a broad range of strategic imperatives. Our portfolio has never been better positioned to make significant impact across a broad range of growth opportunities. This year has demonstrated the true capability of our team and the power of the Fortive Business System (FBS), even under the most challenging conditions. James A. Lico President and Chief Executive Officer 2020 Highlights A Transformative Year Despite the challenges posed by the pandemic, our Fortive is more focused than ever on essential technologies team’s disciplined application of FBS and the resilience for connected workflow solutions across a broad range of and durability of our portfolio resulted in outstanding free applications including environmental, health and safety cash flow performance and a notable increase in adjusted compliance, industrial condition monitoring, next-generation operating profit and earnings per share. We achieved product design, and healthcare safety solutions. Following strong results across a range of financial metrics and the integration of ASP and the spin-off of our mobility and strategic initiatives: transportation businesses to form Vontier, we have realigned our portfolio around three strategic segments. Generated free cash flow of $902 million, a year-over- year increase of 44%. Across our new segments, our strong brands and market Achieved adjusted gross profit margin of 56.9%. positions form a stable foundation for an increasingly resilient Expanded core operating margin expansion of portfolio with high growth potential. By unlocking the power +50 basis points. of our proprietary hardware data with data-driven software solutions, we empower our customers to achieve new Accelerated investments in AI and machine learning breakthroughs in productivity, quality, and innovation using through investments in our innovation hub, The Fort, next-generation technologies. Our Intelligent Operating and the acquisition of ehsAI, a leading provider of Solutions harness applied intelligence and advanced AI-driven compliance management. analytics to ensure safety and compliance, improve energy Formed a joint innovation studio with Pioneer Square efficiency, and optimize performance.