Fortive (FTV) Status Update summary

Strategic transformation and separation plans

• Fortive will separate into two independent, publicly traded companies via a tax-free spinoff of the Precision Technologies (PT) business, creating focused entities with distinct growth and capital allocation priorities.

• The transaction is expected to close in Q4 2025, subject to board, regulatory, and tax approvals, with further details to be shared at future investor events.

• Fortive will retain Intelligent Operating Solutions and Advanced Healthcare Solutions, targeting about 50% recurring revenue, while NewCo will focus on test and measurement, specialty sensors, and aerospace and defense subsystems.

• The separation aims to unlock value, reduce portfolio complexity, and provide strategic clarity, with each company maintaining strong investment-grade balance sheets.

• The spin-off will be executed via a pro-rata distribution and is intended to be tax-free for shareholders.

Leadership and succession

• Olumide Soroye will become CEO of Fortive (RemainCo), and Tami Newcombe will lead PT NewCo; CFO Chuck McLaughlin will retire after Q1 2025.

• James A. Lico will retire as President, CEO, and director upon spin completion.

• Leadership transitions are part of long-term succession planning to ensure continuity and growth.

• Both boards will be refreshed as needed to align with the new strategic focus, leveraging expertise in software and healthcare.

• Deliberate succession planning aims to enhance management focus and ensure smooth leadership transitions.

Capital allocation and financial outlook

• Fortive will prioritize returning capital to shareholders before the spinoff, deploying about 75% of free cash flow to share buybacks, with the remainder to dividends and deleveraging.

• After the spin, Fortive will adopt a balanced approach between M&A and share repurchases, focusing on enhancing recurring revenue and free cash flow.

• Both companies are expected to have net leverage of 1.4-1.7x, supporting investment-grade ratings.

• Fortive (IOS and AHS) expects ~$4B FY 2024 revenue, ~65% gross margin, ~31% operating margin, and ~50% recurring revenue; NewCo projects ~$2.3B FY 2024 revenue, ~53% gross margin, ~25.5% operating margin, and ~25% recurring revenue.

• Guidance for Q3 and full year 2024 remains unchanged, with continued double-digit adjusted earnings growth and strong free cash flow compounding.