Fortive Corp. (NYSE:FTV) Q3 2023 Earnings Conference Call October 25, 2023 12:00 PM ET

Company Participants

Elena Rosman - Vice President of Investor Relations

James Lico - President and Chief Executive Officer

Charles McLaughlin - Senior Vice President and Chief Financial Officer

Conference Call Participants

Julian Mitchell - Barclays

Stephen Tusa - JPMorgan

Jeffrey Sprague - Vertical Research Partners

Deane Dray - RBC Capital Markets

Andrew Obin - Bank of America

Scott Davis - Melius Research

Nigel Coe - Wolfe Research

Andrew Kaplowitz - Citigroup

Joseph Giordano - TD Cowen

Joseph O’Dea - Wells Fargo

Operator

My name is Krista, and I’ll be your conference facilitator this afternoon. At this time, I would like to welcome everyone to the Fortive Corporation Third Quarter 2023 Earnings Results Conference Call. [Operator Instructions] I would now like to turn the call over to Ms. Elena Rosman, Vice President of Investor Relations.

Ms. Rosman, you may begin your conference

Elena Rosman

Thank you, Krista, and thank you, everyone, for joining us on today’s call. With us today are Jim Lico, our President and Chief Executive Officer; and Chuck McLaughlin, our Senior Vice President and Chief Financial Officer. We present certain non-GAAP financial measures on today’s call. Information required by Regulation G are available on the Investors section of our website at fortive.com. Our statements on period-to-period increases or decreases refer to year-over-year comparisons unless otherwise specified.

During the call, we will make forward-looking statements, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks, and actual results might differ materially from any forward-looking statements that we make today. Information regarding these risk factors is available in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2022. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements. With that, I’d like to turn the call over to Jim.

James Lico

Thanks, Elena. Hello, everyone, and thank you for joining us. I’ll begin on Slide 3. In the third quarter, we continued to see the benefits of our portfolio strategy with core growth and margin expansion in all segments. Third quarter core revenue growth was 2.5%, tempered by specific headwinds in health care and slowing in parts of Sensing in China. Strong execution by our teams drove substantial improvement in gross and operating margins, earnings and free cash flow. Adjusted gross margins expanded by 160 basis points to 59.7%. Adjusted operating margins increased by 150 basis points to 25.9%, and adjusted earnings per share grew 8% and free cash flow increased 25% to $384 million.