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    FTV
    Earnings call· Mar 2026(Q1 FY26)

    Fortive Q1 FY26 earnings call FTV

    Apr 30, 2026 Source

    Executive summary

    Fortive Q1 FY26 — Strong Start with Double-Digit EPS Growth and Accelerated Strategy Traction

    Fortive delivered a strong Q1 FY26, driven by solid core revenue growth and significant adjusted EPS expansion, fueled by operational execution and strategic investments. The company is seeing early traction from its accelerated strategy, particularly in innovation and commercial initiatives, and remains confident in its full-year guidance, trending towards the upper half of the range. Capital allocation remains disciplined, with substantial share repurchases and a revamped M&A engine.

    Highlights

    5

    • Consolidated core revenue grew just over 5%, aided by 150 basis points from additional selling days.

    • Adjusted EBITDA grew 13% year-over-year, with margin expanding approximately 140 basis points to just over 29%.

    • Adjusted EPS increased over 25% year-over-year to $0.70, marking the third consecutive quarter of double-digit growth.

    • Deployed approximately $500 million to share repurchases in Q1, reducing share count by over 10% since the spin-off.

    • Intelligent Operating Solutions (iOS) core revenue grew about 5%, with strong order volume and sequential improvement in Europe.

    Concerns

    3

    • Adjusted gross margin declined about 100 basis points year-over-year to just over 63%, primarily due to the net impact of tariffs introduced last year.

    • Hospital spending pressures continue to persist, impacting low temperature sterilization capital demand in Advanced Healthcare Solutions (AHS).

    • Q4 is expected to have 4 fewer year-over-year selling days, resulting in a $15 million to $20 million revenue headwind.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full year adjusted EPS
    $2.90 to $3.00
    high materiality
    High
    Full year reported revenue
    around $4.3 billion
    medium materiality
    Medium
    Full year core growth
    2% to 3% range
    high materiality
    High
    Q2 adjusted EPS
    broadly similar to Q1
    medium materiality
    Medium
    Q3 adjusted EPS
    broadly similar to Q1
    medium materiality
    Medium
    Q2 reported revenue tailwind from FX and M&A
    about 150 basis points
    low materiality
    Medium
    H2 reported revenue tailwind from FX and M&A
    roughly 50 to 100 basis points
    low materiality
    Medium
    Q2 effective tax rate
    mid-teens
    low materiality
    Medium
    Q3 effective tax rate
    high teens
    low materiality
    Medium
    Q4 effective tax rate
    high single-digit to low double-digit range
    low materiality
    Medium
    Full year net interest expense
    just over $135 million
    low materiality
    Medium
    Q4 revenue headwind from selling days
    $15 million to $20 million
    low materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Intelligent Operating Solutions (iOS)
    Growth driven by price and volume across professional instrumentation, facility and asset life cycle solutions, and gas detection products. North America was the strongest growth driver, with sequential improvement in Europe. Adjusted gross margin was just over 65%, down ~150 bps YoY due to product mix and tariffs.
    Core growth benefit from selling days: ~100 bpsOrder volume: strong, outpacing revenue growth
    		—8% reported, 5% core—34% adjusted EBITDA margin
    Advanced Healthcare Solutions (AHS)
    Growth driven by solid demand for health care consumables, services, and software in North America. Low temperature sterilization capital demand improved modestly, but hospital spending pressures persist. Software products continued strong growth, particularly for gastrointestinal case documentation. Adjusted gross margin was about 59%, in line with prior year, with modest operating leverage offset by tariffs.
    Core growth benefit from selling days: ~300 bps
    		$326 million8% reported, 6% core—26% adjusted EBITDA margin

    Operational metrics

    23
    Adjusted EBITDA growth
    13%YoY
    Q1 FY26
    Adjusted EPS growth
    25%YoY
    Q1 FY26

    Third consecutive quarter of double-digit growth.

    Adjusted gross margin
    63%down ~100 bps YoY
    Q1 FY26
    Adjusted EBITDA margin
    29%expanded ~140 bps YoY
    Q1 FY26
    Adjusted EPS
    $0.70up 25% YoY
    Q1 FY26
    Trailing 12-month FCF conversion on adjusted net income
    north of 100%
    TTM
    Gross debt to adjusted EBITDA
    2.8xmodest increase
    Q1 FY26
    Diluted shares outstanding
    309 million
    Q1 FY26
    Share repurchases
    $500 million
    Q1 FY26
    Share count reduction since spin-off
    just over 10%
    since July 2025
    Core revenue growth tailwind from selling days
    150 bpsYoY
    Q1 FY26
    Reported revenue growth
    8%YoY
    Q1 FY26
    Core revenue growth
    5%YoY
    Q1 FY26
    Software revenue growth
    strong growth
    Q1 FY26

    Reflecting underlying strength and robust customer demand for AI-driven new product releases.

    Recurring revenue growth
    grew faster than consolidated revenue
    Q1 FY26

    Across both segments.

    Price/cost ratio
    north of 1
    Q1 FY26

    Expected to persist.

    EBITDA margin expansion target
    50 to 100 bps
    annual

    Part of medium-term financial framework.

    Core revenue growth tailwind from selling days
    100 bpsYoY
    Q1 FY26
    Adjusted gross margin
    65%down ~150 bps YoY
    Q1 FY26
    Adjusted EBITDA
    $255 milliongrew 8%
    Q1 FY26
    Core revenue growth tailwind from selling days
    300 bpsYoY
    Q1 FY26
    Adjusted gross margin
    59%in line with prior year
    Q1 FY26
    Adjusted EBITDA
    $84 millionup ~18% YoY
    Q1 FY26

    Industry KPIs

    6
    MetricValueDetails
    Tariff cost impactdown ~100 bpsbps
    Parts aftermarket businessdouble-digit services growth%
    Data center prime power demandvery excited
    Dealer inventory months of supplyrelatively normal
    Incremental margin operating leverage50 to 100 bpsbps
    Order backlog order intake by segmentstrong

    Orderbook & backlog

    2
    Orders growthfaster than 5.3% core, 7.7% total revenue growthQ1 FY26

    broad-based across the two segments (iOS, AHS)

    Fluke book-to-billover 1Q1 FY26

    healthy backlog to end quarter

    Product announcements

    3
    ProductTypeDetails
    CertiFiber MAXlaunch
    Provision Mirror Documentation Assistlaunch
    SteriLITE Ultra GIlaunch

    Deals & partnerships

    2
    Corbin Wallburgerjoining to run corporate development for us globally and run M&A

    Corbin Wallburger will be joining to run corporate development for Fortive globally and run M&A, expected to be a fantastic fit for the team.

    unspecifiedsmall bolt-on acquisitions

    Two small bolt-on acquisitions completed in Q4 FY25, with integration and execution going according to plan.

    Risks & headwinds

    3
    Tariff impact on gross marginQ1 FY26, persisting through part of Q3 FY26

    down ~100 bps YoY

    Mitigation: countermeasured from a bottom line perspective; countermeasures fully lapped in Q4 FY26

    Hospital spending pressuresQ1 FY26, ongoing

    modestly improved low temperature sterilization capital demand

    Mitigation: underlying capital funnel is strong; expect better setup for rest of year as Q2 FY25 tough comp is lapped

    Fewer selling days in Q4Q4 FY26

    $15 million to $20 million revenue headwind

    What to watch in Q2 FY26

    5

    Full-year adjusted EPS guidance

    Next quarter (Q2 FY26 call)
    Current$2.90 to $3.00
    TargetTrending towards upper half of range

    Why it matters

    Indicates management's confidence in achieving full-year financial targets and overall business momentum.

    We are reaffirming our full year 2026 adjusted EPS guidance range of $2.90 to $3. Based on our Q1 performance and trends to date, we believe results are trending toward the upper half of that range.

    Q&A highlights

    6

    Clarify if Q2/Q3 EPS being similar to Q1 implies flat core growth and margins, given the Q1 selling days benefit.

    Management confirmed the analyst was 'broadly in the zone,' noting Q2 has an easier comp but no selling days benefit. They expect momentum to continue, with iOS slightly ahead of AHS.

    “I think you're broadly in the zone. Again, Q2, we obviously don't have the benefit of the days. We do have a slightly easier comp.”

    asked by Nigel Coe · answered by Mark Okerstrom

    2 min read8 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    Fortive reported a strong Q1 FY26, with consolidated core revenue growth of just over 5%, adjusted EBITDA growth of 13%, and adjusted EPS growth exceeding 25%. This performance was aided by approximately 150 basis points from additional selling days and reflects solid execution across both segments. The company reaffirmed its full-year adjusted EPS guidance of $2.90 to $3.00, with results trending towards the upper half of the range.

    02

    Fortive Accelerated Strategy Execution

    The company is making encouraging progress on its three-pillar strategy. This includes increasing innovation velocity with new product launches like Fluke's CertiFiber MAX for data centers and AHS's AI-powered documentation assist. Commercial investments in high-growth verticals and regions like India and China are showing positive impact, and recurring revenue continues to grow faster than consolidated revenue.

    03

    Disciplined Capital Allocation

    Fortive deployed approximately $500 million to share repurchases in Q1, bringing the total to $1.8 billion since the spin-off, reducing diluted shares outstanding by over 10%. The company's revamped bolt-on M&A engine is in place, with a new corporate development head joining, and it continues to evaluate accretive acquisition opportunities.

    04

    Intelligent Operating Solutions (iOS) Segment

    iOS core revenue grew about 5%, driven by price and volume, with strong performance in professional instrumentation, facility and asset life cycle solutions, and gas detection. Order volume was strong, outpacing revenue growth. North America remained the strongest region, and Europe showed sequential improvement. Adjusted EBITDA margin was just over 34%, in line with the prior year.

    05

    Advanced Healthcare Solutions (AHS) Segment

    AHS core revenue grew approximately 6%, benefiting from strong demand for consumables, services, and software in North America. While low temperature sterilization capital demand improved modestly, hospital spending pressures persist. Software products continued strong growth, particularly for gastrointestinal case documentation. Adjusted EBITDA margin expanded about 200 basis points to just under 26%.

    06

    Data Center Opportunity

    Fortive is highly enthusiastic about the data center investment cycle, both for construction and the larger, more durable opportunity in ongoing operations and maintenance. Fluke's new CertiFiber MAX product is driving significant pull-through of other Fluke offerings, and the company is actively working to be specified into hyperscaler standard maintenance tool sets. New technologies like optical switching are expected to create additional demand.

    07

    Orders Growth and Short-Cycle Demand

    Q1 saw broad-based orders growth across both segments, outpacing revenue growth, which is viewed as a positive signal for business trajectory. Short-cycle indicators, such as Fluke's POS trends, book-to-bill ratio (over 1), and healthy backlog, remain solid, with channel inventories normalizing. AHS consumables also showed continued resilience.

    08

    Tariff Impact and Mitigation

    Tariffs introduced last year continued to be a headwind to gross margins, causing a ~100 basis point decline year-over-year. This impact is expected to persist through part of Q3 but dissipate completely in Q4 as countermeasures are fully lapped. The company maintains a price/cost ratio north of 1, indicating effective management of inflation.

    AI-generated summary of the company’s earnings call. Not investment advice.