Yahoo Finanza Fortive Corp (FTV) Q1 2024 Earnings Call Transcript Highlights: Surpassing Expectations with ...
Core Revenue Growth: 3% in Q1, better than expected across all segments.
Total Revenue Growth: 4% in Q1, aided by acquisitions, offset by FX impacts.
Adjusted Operating Margins: Expanded by 110 basis points in Q1.
Adjusted Earnings Per Share: $0.83, up 11% year-over-year, above guidance.
Free Cash Flow: $230 million in Q1, up 54% year-over-year.
Trailing 12-Month Free Cash Flow: $1.33 billion, indicating strong momentum.
Full Year Free Cash Flow Guidance: Expected to be approximately $1.39 billion.
Adjusted Diluted EPS Guidance: Raised to $3.77 to $3.86, reflecting a 10% to 13% increase year-over-year.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you discuss the Precision Tech revenue outlook and how you're thinking about its growth trajectory over the balance of the year, especially in Q2? A: (James A. Lico, President, CEO & Director) We saw a book to bill of about 1 in Q1 and anticipate the same in Q2, indicating orders are coming back. PT's revenue in Q2 will likely be the low point, with no significant step up expected in the first half. We're seeing an order book building and expect orders to start moving to growth by the end of Q2. We've observed green shoots in places like Tektronix, where our Keithley business is expected to see high single-digit revenue growth in the first half.
Q: Have there been any changes to your segment core growth guide for the year, and could you explain the adjustment to the interest expense guide? A: (James A. Lico, President, CEO & Director) The revenue guide has strengthened slightly due to better performance in Q1, particularly in the Health segment. PT is down slightly, so overall growth is flattish but slightly up. We absorbed about $60 million worth of FX as well. The interest expense came down primarily because we secured a euro bond at a better rate, which roughly offsets the operational impact of FX.
Q: Can you provide more details on EA's performance in the quarter and the impact of the acquisition on PT's revenue and margins? A: (Charles E. McLaughlin, Senior VP & CFO) EA's revenue was impacted by FX and the divestiture of some Invetech business, reducing revenue by about $7 million. Despite lower revenue, EA's contribution to PT's margin expansion was significant, reflecting strong operational performance.
Q: How are you managing the expected decline in Tektronix revenue through the year, and what are the expectations for PT's margins given the lower revenue guide? A: (Elena Rosman) PT's revenue guide has been adjusted to $2.3 billion, reflecting impacts from FX and Invetech divestiture. Despite lower revenue expectations, there is no change to the margin expectations for PT, indicating strong operational management.
Q: Could you elaborate on the types of M&A opportunities you are exploring in 2024, and how you are assessing valuations in the current market? A: (James A. Lico, President, CEO & Director) We are seeing a wide variation in valuations and remain disciplined in our approach. We are interested in opportunities similar to the EA acquisition, which are accretive and align with our strategic goals. We are actively looking at software, data, and hardware businesses, ensuring they meet our criteria for adding value.
Q: What are your expectations for the AHS segment's performance through the rest of the year, particularly regarding the distributor transition and margin impacts? A: (Charles E. McLaughlin, Senior VP & CFO) AHS is expected to continue strong performance with consumables in North America growing well. The distributor transition has been beneficial, and we anticipate continued margin expansion throughout the year, contributing positively to the overall performance of the segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
