What Fortive (FTV) Said on Its Q3 Earnings Call

Key Points

• Fortive reported strong Q3 results: Revenue rose 8% to $1.1 billion, core revenue increased 7.2%, adjusted EBITDA grew 10%, and adjusted EPS climbed more than 13% to $0.77, marking its fifth consecutive quarter of double-digit adjusted EPS growth.
• Full-year guidance was raised: Fortive now expects 2026 adjusted EPS of $3.10-$3.14, or just over 15% growth at the midpoint, with reported revenue projected to exceed $4.4 billion.
• Growth was led by Intelligent Operating Solutions, while Advanced Healthcare Solutions faced margin pressure from planned investments. Fortive also generated more than $280 million in quarterly free cash flow, repurchased $300 million of shares and increased its quarterly dividend by 17%.

Fortive NYSE: FTV reported third-quarter results marked by accelerating organic growth, double-digit adjusted earnings growth and increased full-year earnings guidance, as management cited demand for professional instrumentation, enterprise software and worker-safety products.

Revenue rose 8% year over year on a reported basis to $1.1 billion, while core revenue increased 7.2%. Adjusted EBITDA increased about 10% to $340 million, and adjusted EBITDA margin expanded 50 basis points to 30.6%. Adjusted earnings per share rose more than 13% to $0.77, representing the company’s fifth consecutive quarter of double-digit adjusted EPS growth.

“Q3 marked our fifth consecutive quarter of strong execution and sequential core growth acceleration,” President and Chief Executive Officer Olumide Soroye said. He attributed performance to demand conditions and execution under the company’s Fortive Accelerated strategy, which centers on innovation, commercial investments and expanding recurring customer value.

Full-Year EPS Outlook Raised

Fortive raised its full-year 2026 adjusted EPS guidance to a range of $3.10 to $3.14, which would represent growth of just over 15% at the midpoint. The company said the outlook reflects its year-to-date performance, its confidence in the business trajectory and an assumption that current market conditions and tariff rates continue.

Chief Financial Officer Mark Okerstrom said the company now expects full-year reported revenue to be just above $4.4 billion, based on current foreign-exchange rates, with core growth also just above 5%. Fortive expects adjusted EBITDA margin expansion to be around the midpoint of its medium-term target range of 50 to 100 basis points.

For the fourth quarter, Fortive expects four fewer selling days than in the prior-year quarter. The company said this will create a $15 million to $20 million headwind to reported revenue and a 150-basis-point headwind to core growth. The selling-day impact is expected to reduce Intelligent Operating Solutions core growth by 100 basis points and Advanced Healthcare Solutions core growth by 300 basis points.

IOS Segment Leads Growth

Intelligent Operating Solutions revenue increased 10% on a reported basis, while core revenue growth accelerated to 9%. The segment benefited from volume growth in professional instrumentation, facilities and asset lifecycle solutions, and gas detection.

Fluke delivered broad-based growth led by industrial and network products, with order growth accelerating from the second quarter and book-to-bill remaining above one, according to Okerstrom. The company said Fluke is investing in areas including data centers, defense and early-career technicians.

Soroye said data centers currently account for only a low-single-digit percentage of Fortive’s total revenue, but represent an early-stage opportunity. He said Fluke participates in data-center construction, certification, ongoing operations and maintenance through offerings including power-quality monitoring, calibration, high-voltage diagnostics and ground-fault detection.

Fortive is also developing products intended for hyperscale data centers, including its CertiFiber Max offering, while building specialized sales capacity to pursue hyperscalers, construction companies and technical advisers globally, Soroye said.

Facilities and Asset Lifecycle Solutions growth accelerated, supported by ServiceChannel’s multi-site facility maintenance and marketplace software as well as Gordian’s planning and procurement products. Fortive said demand and adoption of AI-enabled features contributed to results. In gas detection, the company cited demand for worker-safety solutions and hardware-as-a-service offerings across North America, Europe and the Middle East.

IOS adjusted EBITDA rose 13% to $275 million, and its adjusted EBITDA margin expanded 120 basis points to just under 36%. However, adjusted gross margin declined 90 basis points year over year to just under 65%, primarily because of growth in lower-margin products serving certain multi-site retail customers.

Healthcare Growth and Investment

Advanced Healthcare Solutions generated revenue of $340 million, up 3.7% year over year and 3.1% on a core basis. Fortive cited demand for low-temperature sterilization capital, healthcare consumables, biomedical testing equipment, radiation monitoring solutions and Provation’s SaaS offerings.

The segment’s adjusted EBITDA was $88 million, down 5% from the prior year, while adjusted EBITDA margin contracted 230 basis points to 26%. Okerstrom said the decline reflected growth investments and the annualization of discrete cost benefits from the prior-year third quarter. About 100 basis points of the year-over-year margin headwind came from those prior-year cost benefits.

Soroye said Fortive is making deliberate, time-bounded investments to expand its installed base, commercial capacity and innovation in healthcare. The company is targeting opportunities with ambulatory surgical centers and expects those investments to support multi-year growth and margin expansion.

Management described the U.S. healthcare environment as stable to improving, noting that procedure volumes remain healthy and capital-spending trends have improved from last year, though they remain somewhat constrained. Soroye said markets outside the United States were strong, while elective procedures continued shifting toward ambulatory surgical centers.

Cash Flow, Buybacks and Margins

Fortive generated more than $280 million of free cash flow during the quarter, with trailing 12-month free cash flow above $1 billion. GAAP earnings and free cash flow included an $18 million benefit from refunds related to International Emergency Economic Powers Act tariffs. The company expects an additional $5 million to $10 million in tariff refunds over coming quarters, though it excludes those refunds from adjusted earnings metrics.

The company repurchased $300 million of shares in the third quarter, bringing repurchases since the launch of the “new Fortive” to $2.3 billion, or 13% of shares outstanding. Fortive ended the quarter with 302 million diluted shares outstanding and gross debt of 2.6 times adjusted EBITDA.

Fortive also raised its quarterly dividend by 17% in the third quarter. Okerstrom said the company continues to evaluate bolt-on acquisitions, with Aeroqual and UV Smart performing in line with their deal cases.

Companywide adjusted gross margin was about 63%, down 80 basis points year over year due mainly to product mix. Okerstrom said price-cost remained solidly positive despite increased inflation in electrical and electronic components and freight. He said Fortive’s sourcing, productivity and supply-chain actions helped offset inflationary pressures.

About Fortive (NYSE:FTV)

Fortive Corporation NYSE: FTV is a diversified industrial technology company that develops and provides products, software and services designed to improve the productivity, safety, reliability and efficiency of businesses and public-sector organizations. Its offerings support customers in industries including manufacturing, healthcare, utilities, transportation, commercial facilities and government.

The company's portfolio includes electronic test and measurement equipment, calibration and asset-management solutions, workplace and facility-management software, engineering and infrastructure software, product identification and traceability systems, and healthcare technology.

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