Fortive Q1 Earnings Meet Estimates, Revenues Miss & Fall Y/Y

Fortive Corporation FTV reported first-quarter 2025 adjusted earnings per share (EPS) of 85 cents, which came in line with the Zacks Consensus Estimate. The bottom line increased 2.4% year over year.

Revenues declined 3.3% year over year to $1.47 billion. The top line missed the Zacks Consensus Estimate by 1.2%. Core revenues decreased 1.7% year over year.

(See the Zacks Earnings Calendar to stay ahead of market-making news.)

The year-over-year decline in the top line was due to softness in the Precision Technologies (PT) segment, partially offset by continued strength in Intelligent Operating Solutions (IOS) and Advanced Healthcare Solutions (AHS).

Fortive Corporation Price, Consensus and EPS Surprise

Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote

On Sept. 4, 2024, Fortive announced plans to separate its Precision Technologies business into an independent publicly traded company, Ralliant. This will create two companies: Fortive, focused on IOS and AHS, delivering productivity and safety with strong recurring growth, and Ralliant, a global technology company specializing in precision instruments and highly engineered products for breakthrough innovation. The separation is intended to be a tax-free spin-off for Fortive shareholders under U.S. federal income tax law. Management aims to complete the separation by the end of the second quarter of 2025, subject to the fulfillment of several conditions.

The company revised its 2025 guidance to account for the delayed recovery in Precision Technologies and the net effect of global tariffs. While increased uncertainty is affecting some of its customers, its commitment to continuous improvement and the strength of the Fortive Business System (FBS) enable them to effectively navigate these challenges, capitalize on opportunities and deliver strong, differentiated performance. Both Fortive and Ralliant are well-positioned to evolve into more strategically focused businesses following their split.

After the separation, Fortive plans to provide independent guidance for both New Fortive and Ralliant during their respective second-quarter earnings call in July.
The company repurchased 2.5 million shares in the first quarter as planned, maintaining its consistent pace of buybacks and reinforcing its commitment to value-driven capital allocation.

Top Line in Detail

Fortive operates under the following three organized segments:

Intelligent Operating Solutions: The segment generated revenues of $671.4 million (contributing 45.5% to total revenues), up 0.9% on a year-over-year basis.

Precision Technologies: Segmental revenues totaled $500.6 million (34%), down 10.5% year over year. The decline in test and measurement was due to tough year-over-year comps and customer order delays, while strong demand continued in sensors and safety systems despite ongoing supply chain pressures. Core orders grew steadily, driven by strength in North America and Asia ex-China.

Advanced Healthcare Solutions: This segment registered revenues of $302.2 million (20.5%), up 0.8% year over year.

Operating Details

In the reported quarter, gross profit decreased 3.1% to $880.9 million on a year-over-year basis.

Adjusted operating margin was 25.3%, extending 20 basis points (bps) on a year-over-year basis, driven by solid performance in the IOS segment.

Segment-wise, the adjusted operating margins of Intelligent Operating Solutions were 33.3%, expanding 150 bps year over year.

Adjusted operating margins of Advanced Healthcare Solutions were 23.5%, contracting 70 bps.

Precision Technologies’ adjusted operating margin of 21.8% fell 260 bps.

Balance Sheet & Cash Flow

As of March 31, 2025, cash and cash equivalents were $892.1 million compared with $813.3 million as of Dec. 31, 2024.

As of March 31, 2025, accounts receivables were $929.3 million compared with $945.4 million as of Dec. 31, 2024.

FTV generated an operating cash flow of $241.7 million for the first quarter compared with $502.2 million in the previous quarter. Non-GAAP free cash flow was $221.8 million compared with $465.2 million in the prior quarter.

Fortive’s Outlook

Management provided guidance for the second quarter and 2025. For the full year, adjusted diluted EPS is expected to be $3.80 to $4, down from the previous guidance of $4 to $4.12. The Zacks Consensus Estimate is pegged at $4. This incorporates the impact of tariffs, net of mitigation actions, as well as underlying demand moderation in PT. Fortive anticipates PT core revenues to decline in the low single digits due to softer demand in Test and Measurement, partially offset by new pricing actions aimed at mitigating tariff effects. Additionally, the company’s revised adjusted EPS guidance accounts for an incremental tailwind from foreign exchange rates and a lower tax expense in the current environment.

At the same time, the company is maintaining its core growth outlook for the “New Fortive,” which factors in the potential for more subdued demand in certain areas of IOS and AHS, as government customers manage through budget uncertainties. This outlook also includes further pricing actions in response to tariffs. Management had earlier projected core revenue growth of 1.5% to 3.5%.

For the second quarter, core performance in PT/Ralliant is expected to show a decline, though with modest sequential improvement. The “New Fortive,” comprising IOS and AHS, is anticipated to maintain its steady growth trajectory. Adjusted operating margins are likely to remain under pressure due to the impact of global tariffs. However, mitigation actions are expected to phase in progressively over the course of the quarter. Adjusted EPS is expected to be between 85 cents and 90 cents. The Zacks Consensus Estimate is pegged at 99 cents.

Zacks Rank

Currently, Fortive has a Zacks Rank #4 (Sell). Shares of the company have lost 12.2% in the past year compared with the Zacks Electronics - Testing Equipment industry's decline of 7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Electronics - Testing Equipment Firms

Itron Inc. ITRI reported non-GAAP earnings per share of $1.52 for first-quarter 2025, which beat the Zacks Consensus Estimate by 16.9%. ITRI reported earnings of $1.24 per share in the prior-year quarter. Amid the ongoing tariff tensions and global trade volatility, ITRI’s regional supply strategy supports the bottom line, with most U.S. products made locally and key parts imported tariff-free from Mexico.

In the past year, shares of ITRI have inched up 1%.

AMETEK, Inc. AME reported first-quarter 2025 non-GAAP earnings of $1.75 per share, beating the Zacks Consensus Estimate by 3.6%. The figure increased 7% year over year. AMETEK’s top line of $1.73 billion missed the Zacks Consensus Estimate by 0.51%. The figure decreased 0.2% year over year.

In the past year, shares of AME have inched up 0.5%.

Cognex Corporation CGNX came out with first-quarter 2025 earnings of 16 cents per share, beating the Zacks Consensus Estimate of 13 cents. This compares to earnings of 11 cents per share a year ago. These figures are adjusted for non-recurring items. Cognex posted revenues of $216.04 million for the quarter, surpassing the Zacks Consensus Estimate by 5.72%.

In the past six months, shares of CGNX have decreased 31.9%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research