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Fortive (FTV) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Information Technology· Apr 30, 2026

Source: earnings call transcript

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

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

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

FTV operating KPIs by quarter

FTV operating KPIs stated on its earnings calls, by fiscal quarter
KPIThis call Mar 2026 Q1 FY26 Jun 2026 Q2 FY26Change vs prior quarter
Customers
100K I want to thank our Fortive team members around the world for their commitment to our shared purpose of innovating essential technologies to keep our world safe and productive and 100,000 customers for placing their trust in us every day. Source: earnings call transcript
100K I mean, we've been really clear in our Fortive Accelerated strategy are the three factors that would drive this company to grow faster, first of those is innovation and new products, second commercial and this recurring cost on value, which means we do more for the 100,000 customers we have that trust us every day. Source: earnings call transcript
0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Orders growth faster than 5.3% core, 7.7% total revenue growth Q1 FY26

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

Fluke book-to-bill over 1 Q1 FY26

healthy backlog to end quarter

Product announcements

ProductTypeDetails
CertiFiber MAXlaunch
Provision Mirror Documentation Assistlaunch
SteriLITE Ultra GIlaunch

Deals & partnerships

Corbin Wallburger joining 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.

unspecified small bolt-on acquisitions

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

Risks & headwinds

Tariff impact on gross margin Q1 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 pressures Q1 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 Q4 Q4 FY26

$15 million to $20 million revenue headwind

What to watch in Q2 FY26

Full-year adjusted EPS guidance

Next quarter (Q2 FY26 call)
Current $2.90 to $3.00
Target Trending 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.

Find out whether FTV delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 8 chapters

Detailed narrative

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.

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.

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.

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.

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%.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.