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Fortive's (FTV) Q2 Earnings Beat Estimates, Revenues Up Y/Y
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Fortive Corporation (FTV - Free Report) reported second-quarter 2021 earnings of 66 cents per share, which outpaced the Zacks Consensus Estimate by 8.2%. The figure increased 53.5% year over year.
Revenues increased 26.7% year over year to $1.32 billion. Also, core revenues increased 21.3% from the year-ago quarter.
The top-line growth was driven by strength across the portfolio, led by Fluke and Tektronix. The software businesses delivered low SaaS growth.
The company recently announced the acquisition of ServiceChannel, which is likely to add strength to its SaaS portfolio. The company remains optimistic that the acquisition will generate higher profits in the near term.
Fortive Corporation Price, Consensus and EPS Surprise
Fortive operates under the following three organized segments.
Intelligent Operating Solutions: The segment generated revenues of $541.8 million (accounting for 41% of total second-quarter revenues), which increased 31.2% on a year-over-year basis.
Precision Technologies: This segment generated revenues of $471.9 million (36% of total revenues), which increased 25.1% from the prior-year quarter.
Advanced Healthcare Solutions: This segment generated revenues of $306 million (23% of total revenues), which increased 21.8% from the prior-year quarter.
Operating Details
For the second quarter, gross margin came in at 57.2%, which expanded 120 basis points (bps) year over year.
Total operating expenses were $544.2 million, reflecting a 13.3% year-over-year increase. As a percentage of revenues, selling, general & administrative expenses contracted 409 bps year over year. Also, research & development costs as a percentage of revenues contracted 78 bps year over year.
Operating margin was 16.01%, which expanded 616 bps on a year-over-year basis.
Segment wise, operating margin from Intelligent Operating Solutions came in at 21.3%, which expanded 810 bps year over year.
Precision Technologies operating margins came in at 22.1%, which expanded 170 bps year over year, while Advanced Healthcare Solutions margins of 7.4% expanded 820 bps.
Balance Sheet & Cash Flow
As of Jul 2, 2021, cash and cash equivalents were $1.57 billion compared with $1.30 billion on Apr 2, 2021.
Accounts receivables were $817.9 million for the reported quarter in comparison with $829.5 million in the prior quarter.
The company generated operating cash flow of $291 million in the second quarter, up 91.5% from the previous quarter while free cash flow of $282.3 million increased 96.6%.
Guidance
For third-quarter 2021, management expects adjusted net earnings in the range of 62-66 cents per share. The corresponding Zacks Consensus Estimate for the quarter is pegged at 64 cents per share.
For 2021, Fortive expects adjusted net earnings in the range of $2.65-$2.75 per share. The Zacks Consensus Estimate for the same is pegged at $2.62 per share.
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Fortive's (FTV) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Fortive Corporation (FTV - Free Report) reported second-quarter 2021 earnings of 66 cents per share, which outpaced the Zacks Consensus Estimate by 8.2%. The figure increased 53.5% year over year.
Revenues increased 26.7% year over year to $1.32 billion. Also, core revenues increased 21.3% from the year-ago quarter.
The top-line growth was driven by strength across the portfolio, led by Fluke and Tektronix. The software businesses delivered low SaaS growth.
The company recently announced the acquisition of ServiceChannel, which is likely to add strength to its SaaS portfolio. The company remains optimistic that the acquisition will generate higher profits in the near term.
Fortive Corporation Price, Consensus and EPS Surprise
Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote
Top Line in Detail
Fortive operates under the following three organized segments.
Intelligent Operating Solutions: The segment generated revenues of $541.8 million (accounting for 41% of total second-quarter revenues), which increased 31.2% on a year-over-year basis.
Precision Technologies: This segment generated revenues of $471.9 million (36% of total revenues), which increased 25.1% from the prior-year quarter.
Advanced Healthcare Solutions: This segment generated revenues of $306 million (23% of total revenues), which increased 21.8% from the prior-year quarter.
Operating Details
For the second quarter, gross margin came in at 57.2%, which expanded 120 basis points (bps) year over year.
Total operating expenses were $544.2 million, reflecting a 13.3% year-over-year increase. As a percentage of revenues, selling, general & administrative expenses contracted 409 bps year over year. Also, research & development costs as a percentage of revenues contracted 78 bps year over year.
Operating margin was 16.01%, which expanded 616 bps on a year-over-year basis.
Segment wise, operating margin from Intelligent Operating Solutions came in at 21.3%, which expanded 810 bps year over year.
Precision Technologies operating margins came in at 22.1%, which expanded 170 bps year over year, while Advanced Healthcare Solutions margins of 7.4% expanded 820 bps.
Balance Sheet & Cash Flow
As of Jul 2, 2021, cash and cash equivalents were $1.57 billion compared with $1.30 billion on Apr 2, 2021.
Accounts receivables were $817.9 million for the reported quarter in comparison with $829.5 million in the prior quarter.
The company generated operating cash flow of $291 million in the second quarter, up 91.5% from the previous quarter while free cash flow of $282.3 million increased 96.6%.
Guidance
For third-quarter 2021, management expects adjusted net earnings in the range of 62-66 cents per share. The corresponding Zacks Consensus Estimate for the quarter is pegged at 64 cents per share.
For 2021, Fortive expects adjusted net earnings in the range of $2.65-$2.75 per share. The Zacks Consensus Estimate for the same is pegged at $2.62 per share.
Zacks Rank & Other Stocks to Consider
Currently, Fortive has a Zacks Rank #2 (Buy).
Some similar-ranked stocks in the broader technology sector include NXP Semiconductors (NXPI - Free Report) , Semtech Corporation (SMTC - Free Report) and Agilent Technologies (A - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rates for NXP, Semtech and Agilent are currently projected at 10%, 12.5% and 13%, respectively.