What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-29 compared with 2025-07-30 · 140 added, 205 removed, 193 unchanged (64% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Fortive Corporation (“Fortive,” the “Company,” “we,” “us,” or “our”) is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets.

Our strategic segments - Intelligent Operating Solutions (“IOS”), Precision Technologies (“PT”), and Advanced Healthcare Solutions (“AHS”) - include well-known brands with leading positions in their markets.

Our businesses design, develop, manufacture, and service professional and engineered products, software, and services, building upon leading brand names, innovative technologies, and significant market positions.

We are headquartered in Everett, Washington and have a workforce of more than 18,000 research and development, manufacturing, sales, distribution, service, and administrative professionals in more than 50 countries around the world.

Fortive Corporation (“Fortive,” the “Company,” “we,” “us,” or “our”) innovates essential technologies to keep the world safe and productive.

Our strategic segments - Intelligent Operating Solutions (“IOS”) and Advanced Healthcare Solutions (“AHS”) - include iconic inventor brands with leading positions in their markets.

Our businesses design, develop, manufacture, and market products, software, and services, building upon leading brand names, innovative technologies, and strong market positions.

Our research and development, manufacturing, sales, distribution, service, and administrative facilities are located in approximately 50 countries around the world.

Precision Technologies Separation

On June 28, 2025 (the “Distribution Date”), the Company completed the separation (the “Separation” or the “PT Separation”) of its former Precision Technologies segment by distributing to Fortive shareholders on a pro rata basis all of the issued and outstanding common stock of Ralliant Corporation (“Ralliant”), the entity incorporated to hold the PT businesses.

The accounting requirements for reporting Ralliant as a discontinued operation were met when the Separation was completed.

Accordingly, the accompanying consolidated condensed financial statements for all periods presented reflect this business as a discontinued operation.

Unless otherwise indicated, all references in this report refer to continuing operations.

Refer to Note 2 of the consolidated condensed financial statements for additional information.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of management.

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Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements.

Accordingly, you should not place undue reliance on any such forward-looking statements.

Accordingly, you should not

place undue reliance on any such forward-looking statements.

Important factors that could cause actual results to differ materially from those envisaged in the forward-looking statements include, among others, the following:

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• Conditions in the global economy, the markets we serve, and the financial markets may adversely affect our business and financial results.

• If we cannot adjust our manufacturing capacity, supply chain management or the purchases required for our manufacturing activities to reflect changes in market conditions, customer demand and supply chain disruptions, our profitability may suffer.

• If we cannot adjust our manufacturing capacity, supply chain management or the purchases required for our manufacturing activities to reflect changes in market conditions, international trade policies, customer demand, prolonged government shutdown, and supply chain disruptions, our profitability may suffer.

In addition, our reliance upon sole or limited sources of supply for certain materials, components, and services could cause production interruptions, delays and inefficiencies.

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• Climate change, or legal or regulatory measures to address climate change, may negatively affect us.

• We may use artificial intelligence in our business and in our products, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

• We use artificial intelligence in our business and in our products, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

Risk Related to our International Operations

• International economic, political, legal, trade policies, compliance, and business factors could negatively affect our financial results.

• Trade relations between the United States and other countries, including imposition of new or increased tariffs and related uncertainty thereof, could have a material adverse effect on our business and financial results.

• Trade relations between the United States and other countries, including imposition of tariffs and related uncertainty thereof, and the impact on cost and demand resulting therefrom could continue to have a material adverse effect on our business and financial results.

• Foreign currency exchange rates, including the volatility thereof, may adversely affect our financial results.

Risk Related to Our Acquisitions, Investments, and Dispositions

• Any inability to consummate acquisitions at our anticipated rate and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price.

• Any inability to consummate acquisitions at appropriate prices, and to make appropriate investments and capital allocation that support our long-term strategy, could negatively impact our growth rate and stock price.

• Our acquisition of businesses, investments, joint ventures, and other strategic relationships could negatively impact our financial results.

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In addition, audits by tax authorities could result in additional tax payments for prior periods.

• We could incur significant liability if our separation from Danaher, our separation of our Automation and Specialty business, our separation of Ralliant, or our separation of Vontier (collectively, the “Separation Transactions”) is determined to be a taxable transaction.

• We could incur significant liability if our separation from Danaher, our separation of our Automation and Specialty business, our separation of Vontier, or our separation of Ralliant (collectively, the “Separation Transactions”) is determined to be a taxable transaction.

• Changes in U.S.

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See “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and in this Quarterly Report on Form 10-Q for further discussion regarding reasons that actual results may differ materially from the

results, developments, and business decisions contemplated by our forward-looking statements.

Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made (or such earlier date as may be specified in such statement).

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Fortive is a multinational business with global operations with approximately 44% of our sales derived from customers outside the United States in 2024.

As a company with global operations, our businesses are affected by worldwide, regional, and industry-specific economic, regulatory, and political factors.

As a company with global operations, our businesses are affected by worldwide, regional, and industry-specific economic, trade policies, fiscal policies, regulatory, and political factors.

Our geographic and industry diversity, as well as the range of products, software, and services we offer, typically help limit the impact of any one industry or the economy of any single country, except for the United States, on our operating results.

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Our individual businesses monitor key competitors and customers, including their sales, to the extent possible, to gauge relative performance and the outlook for the future.

As a result of our geographic and industry diversity, we face a variety of opportunities and challenges, including technological development in most of the markets we serve, the expansion and evolution of opportunities in growing markets, trends and costs associated with a global labor force, and consolidation of our competitors.

We operate in a highly competitive business environment in most markets, and our long-term growth and profitability will depend, in particular, on our ability to expand our business across geographies and market segments, identify, consummate, and integrate appropriate acquisitions, develop innovative and differentiated new products, services, and software, expand and improve the effectiveness of our sales force, continue to reduce costs and improve operating efficiency and quality, attract relevant talent and retain, grow, and empower our talented workforce, and effectively address the demands of an increasingly regulated environment.

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Segment Presentation

Prior to the separation of Ralliant Corporation on June 28, 2025, we operated and reported our results in three segments, IOS, PT, and AHS.

The IOS segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows.

The PT segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything.

The AHS segment supplies critical workflow solutions enabling healthcare providers to deliver exceptional patient care more efficiently.

Refer to Note 11 for further description of each segment.

In January 2024, we realigned Invetech from the AHS segment to the PT segment (the “Segment Realignment”) based on our strategic decision to divest the equipment design and manufacturing businesses of Invetech, while retaining the motion solution businesses (the “Motion Solution Business”) that are more closely aligned with the PT segment than the AHS segment.

In June 2024, we divested and transferred ownership of Invetech, excluding the Motion Solution Business, to its management team (the “Invetech Divestiture”).

Refer to Note 10 of the consolidated condensed financial statements for further description of each segment.

Non-GAAP Measures

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References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition, less the amount of sales attributable to certain businesses or product lines that have been divested, or, at the time of reporting, are pending divestiture, but are not, and will not be, considered discontinued operations prior to the first anniversary of the divestiture.

The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales impact from acquired businesses) and (b) the period-to-period change in sales (excluding sales impact from acquired businesses) after applying the current period foreign exchange rates to the prior year

Core revenue should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies.

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References to sales volume from existing businesses refer to the impact of both price and unit sales.

Precision Technologies Separation

Beginning with the third quarter of 2025, the Company will classify Ralliant as a discontinued operation in its financial statements, as a result of the Separation.

Refer to Note 2 for additional information.

Business Performance and Outlook

Business Performance for the Period Ended June 27, 2025

During the three and six-month period ended June 27, 2025 (the “quarter” or the “second quarter” and “year-to-date period,” respectively), our sales decreased by 2.2% and 2.7%, respectively.

The year-over-year decrease in the second quarter was a result of a 2.5% decrease in our core revenue, which was comprised of favorable pricing of 2.9% including countermeasures to mitigate the unfavorable tariffs impact, offset by volume declines of 5.4%.

Additionally, there was a 0.9% increase from favorable foreign currency exchange rates and a 0.6% decrease from the effect of divested businesses.

Year-over-year decrease in the year-to-date period was primarily a result of a 2.1% decrease in our core revenue, which was comprised of favorable pricing of 2.4% including countermeasures to mitigate the unfavorable tariffs impact, offset by volume declines of 4.5%.

Additionally, there was a 0.5% decrease from the effect of divested businesses.

Geographically, in the second quarter, the core revenue decline was driven primarily by market dynamics in Western Europe largely in the PT segment.

North America and China also experienced softness in the quarter.

Geographically, in the year-to-date period, the core revenue decline was again driven primarily by the PT segment in Western Europe.

Further, declines in China were partially offset by growth in North America and Latin America.

For further detail, refer to the Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions sections below.

In 2025, the U.S.

government began imposing tariffs on products from all countries and additional individualized reciprocal tariffs on certain countries.

In response, China, in particular, and other countries have announced retaliatory tariffs against certain imports from the United States.

Currently, certain of these tariffs have been temporarily paused until August of 2025.

There may be additional changes to tariff levels, trade restrictions, and other aspects of global trade policy in the U.S.

and other countries due to global trade negotiations and other factors.

These changes to trade policies, retaliatory measures, and prolonged uncertainty in trade relationships negatively impact operations and financial results, including potential impairment of certain intangible assets, through resulting supply chain disruptions, delayed shipments, and increased operational complexities and costs.

We continue to evaluate the impact of tariffs on our financial results, as the application and imposition of these tariffs remains unpredictable.

Business Trends

Our financial outlook is subject to various assumptions and risks, including but not limited to:

ongoing geopolitical events;

global economic and consumer trends and sentiments;

monetary policies;

inflationary pressures on expenses and pricing;

uncertainties in governmental policies on international trade, regulations, sanctions, and healthcare;

prolonged government shutdown;

operational challenges from tariffs;

foreign exchange rate volatility, including the impact of unhedged foreign currency debts;

reduction in U.S.

government spending due to H.R.1, also known as the One Big Beautiful Bill Act;

and overall fiscal policies, including investment and taxation policy initiatives being considered in the U.S.;

the incremental impacts of the Pillar Two initiative from the Organization for Economic Co-operation and Development (“OECD”);

and the impact from the Separation.

The development of tariffs and trade relations remains uncertain.

While most of the reciprocal tariffs have been implemented in August of 2025, certain of these tariffs have been temporarily postponed until November of 2025, with periodic escalation.

For additional discussion of risks related to tariffs and trade relations, please refer to the risk factor, “Trade relations between the United States and other countries, including the imposition of new or increased tariffs and related uncertainty thereof, could have a material adverse effect on our business and financial results” in Part II, Item 1A.

Risk Factors of the Quarterly Report on Form 10-Q for the fiscal quarter ended March 28, 2025.

We also expect foreign exchange rates to remain volatile throughout the year, which could continue to impact our financial results.

Additionally, our financial outlook is subject to various assumptions and risks, including but not limited to, ongoing geopolitical developments and events, uncertainties related to governmental policies on international trade and healthcare, monetary and fiscal policies, including the current uncertainty about the future relationship between the United States and other regions with respect to tariffs as mentioned above, trade policies, treaties, government regulations and sanctions, reductions in spending by the U.S.

government as a result of the recently enacted One Big Beautiful Bill Act (“OBBBA”) and the formation of the Department of Government Efficiency, increased economic nationalism, macroeconomic conditions in the United States, China, and other critical regions, impact from our separation into two independent publicly traded companies, and the impact of inflationary dynamics on our expenses or our ability to realize price increases and/or competitiveness in our sales, interest rates, market conditions in key product segments, and elective surgery rates.

We continue to deploy the Fortive Business System (“FBS”), including tools and processes to leverage existing sourcing strategies and optimize production and logistics to actively manage these challenges and utilize pricing, cost and productivity actions and other countermeasures designed to offset the aforementioned dynamics.

We continue to monitor these conditions and potential adverse global economic trends and sentiments, monetary and fiscal policies, international trade policies and relations between the U.S., China and other nations, and investment and taxation policy initiatives being considered in the United States and by the Organization for Economic Co-operation and Development (“OECD”), including incremental impacts of the Pillar Two initiative.

In addition, we are continuing to assess the potential impact, including on our tax liabilities and our strategies, of the OBBBA.

Refer to Income Taxes below for further detail on the OECD initiatives and the OBBBA.

We continue to monitor the conditions above and deploy the Fortive Business System (“FBS”), including tools and processes to leverage existing sourcing strategies and optimize production and logistics to actively manage these challenges and utilize pricing, cost and productivity actions and other countermeasures designed to offset the aforementioned dynamics.

RESULTS OF OPERATIONS

The following table summarizes total aggregate year-over-year sales growth and the components thereof for the second quarter as compared to the comparable period of 2024:

The following table summarizes total aggregate year-over-year sales growth and the components thereof for the third quarter as compared to the comparable period of 2024:

Components of Sales Growth

% Change Three Months Ended June 27, 2025 vs.

% Change Three Months Ended September 26, 2025 vs.

Comparable 2024 Period

% Change Six Months Ended June 27, 2025 vs.

% Change Nine Months Ended September 26, 2025 vs.

Comparable 2024 Period

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Core revenue growth (Non-GAAP)

(2.5) % (2.1) %

Sales in the three months ended September 26, 2025 (the “quarter” or the “third quarter”) were driven by favorable pricing of 2.6%, partially offset by volume decline of 0.7%.

Sales in the nine months ended September 26, 2025 (“year-to-date period”) were driven by favorable pricing of 2.3%, partially offset by volume decline of 1.2%.

Geographically, in the third quarter, core revenue growth was driven primarily by strengthening demand in North America, led by the IOS segment, partially offset by modest declines in Europe, Middle East, and Africa (“EMEA”), mostly in Europe.

In the year-to-date period, core revenue growth was driven by moderate growth in North America in both segments, partially offset by modest declines in EMEA, mostly in Europe.

For further detail, refer to the Intelligent Operating Solutions and Advanced Healthcare Solutions sections below.

Operating Profit Margins

Operating profit margin was 14.6% for the second quarter, representing a decrease of 480 basis points as compared to 19.4% in the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• The year-over-year increase in price and gains from productivity measures through our FBS initiatives were offset by overall volume declines, higher employee compensation, and unfavorable impacts from tariffs net of countermeasures — unfavorable 170 basis points

• The year-over year effect of all other items was an unfavorable 310 basis points comprised of -270 basis points from Separation, acquisition, and divestiture-related costs, -55 basis points in discrete restructuring charges, +30 basis points from the net effect of divested businesses, and -15 basis points from amortization of existing businesses

Operating profit margin was 15.2% for the year-to-date period, yielding a decrease of 440 basis points as compared to 19.6% in the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• The year-over-year increase in price and gains from productivity measures were offset by volume declines, higher employee compensation, investments in growth initiatives, and the unfavorable impact from tariffs net of countermeasures — unfavorable 95 basis points

• The year-over year effect of all other items was an unfavorable 345 basis points comprised of -205 basis points from the gain on sale of property in PT in 2024, -125 basis points from Separation, acquisition, and divestiture-related costs, -40 basis points in discrete restructuring charges, +40 basis points from the net effect of acquired and divested businesses, and -15 basis points from amortization of existing businesses

In the third quarter and year-to-date period, respectively, operating profit margin was 15.5% and 16.3%, comparing to 17.1% and 16.8% in the comparable period of 2024, resulting in a decrease of 160 basis points and 50 basis points:

• The year-over-year increase in price and gains from productivity measures through our FBS initiatives partially offset by volume declines, higher employee compensation, and unfavorable impacts from tariffs net of countermeasures — favorable 205 basis points and 105 basis points, in the third quarter and year-to-date period, respectively

• The year-over year effect of all other items in the third quarter including -370 basis points primarily from incremental stock-based compensation costs related to the Separation, +25 basis points from amortization of existing businesses and -20 basis points in discrete restructuring charges — unfavorable 365 basis points

• The year-over year effect of all other items in the year-to-date period including -125 basis points primarily from incremental stock-based compensation costs related to the Separation , -45 basis points in discrete restructuring charges, +15 basis points from amortization of existing businesses — unfavorable 155 basis points

INTELLIGENT OPERATING SOLUTIONS

Selected Financial Data

Three Months Ended Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Three Months Ended Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 698.8 $ 681.3 $ 2,086.6 $ 2,062.3

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Components of Sales Growth

% Change Three Months Ended June 27, 2025 vs.

Comparable 2024 Period

% Change Six Months Ended June 27, 2025 vs.

Comparable 2024 Period

Total revenue growth (GAAP) (0.2) % 0.3 %

Excluding impact of:

Currency exchange rates (0.8) % 0.2 %

Core revenue growth (Non-GAAP)

(0.4) % 0.8 %

The sales results in both the second quarter and year-to-date period were driven by favorable pricing of 2.3% and 2.0%, respectively, including countermeasures to mitigate unfavorable tariff impacts, and volume increases in gas detection offerings.

These benefits were offset by modest declines in professional instrumentation.

Additionally, foreign currency exchange rates impacted sales results as indicated above.

Geographically, in the second quarter, the core revenue decline was driven primarily by lower sales in China in professional instrumentation, partially offset by growth in Latin America from gas detection offerings.

North America core revenue has remained stable despite tariff-related uncertainty and lower government procurement spend.

Geographically, in the year-to-date period, core revenue growth was driven primarily by expansion in North America across majority of the segment led by facility and asset lifecycle SaaS products and gas detection solutions, as well as Latin America from strong demand in professional instrumentation and gas detection.

This growth was partially offset by declines in Western Europe and China from softening demand in certain product lines in professional instrumentation and certain software and services in facility and asset lifecycle applications.

Operating profit margin decreased 90 basis points during the second quarter as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• The year-over-year increase in price and efficiency gains achieved from productivity measures through our FBS initiatives were offset by a net decrease in sales volume in the segment, higher employee compensation, investments in growth initiatives, and the unfavorable impact from tariffs net of countermeasures — unfavorable 30 basis points

• The year-over year effect of all other items was an unfavorable 60 basis points comprised of -85 basis points in discrete restructuring charges, +15 basis points from acquisition and divestiture-related costs, and +10 basis points from amortization of existing businesses

Operating profit margin increased 20 basis points during the year-to-date period, as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin comparisons were comprised of the following:

• Year-over-year increase from favorable pricing and efficiency gains achieved from productivity through our FBS initiatives were partially offset by a net decrease in sales volume, higher employee compensation, and unfavorable impact from tariffs net of countermeasures — favorable 60 basis points

• The year-over year effect of all other items was an unfavorable 40 basis points comprised of -70 basis points in discrete restructuring charges, +20 basis points from amortization from existing businesses, and +10 basis points from acquisition and divestiture-related costs

PRECISION TECHNOLOGIES

Selected Financial Data

Three Months Ended Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Sales $ 523.6 $ 551.8 $ 1,024.2 $ 1,110.8

Operating profit 93.2 115.3 180.5 264.4

Depreciation 6.8 7.9 13.7 16.2

Amortization 21.9 20.9 42.2 42.0

Operating profit as a % of sales 17.8 % 20.9 % 17.6 % 23.8 %

Depreciation as a % of sales 1.3 % 1.4 % 1.3 % 1.5 %

Amortization as a % of sales 4.2 % 3.8 % 4.1 % 3.8 %

C omponents of Sales Growth

% Change Three Months Ended June 27, 2025 vs.

% Change Three Months Ended September 26, 2025 vs.

Comparable 2024 Period

% Change Six Months Ended June 27, 2025 vs.

% Change Nine Months Ended September 26, 2025 vs.

Comparable 2024 Period

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Core revenue growth (Non-GAAP)

The sales results for the second quarter and year-to-date period were driven by favorable pricing of 3.5% and 2.6%, respectively, including countermeasures to mitigate unfavorable tariff impacts, and increased demand in the utilities sector for grid modernization.

These benefits were offset by volume reductions in test and measurement, energetic materials, and certain industrial sensing products, as well as the Invetech Divestiture.

Additionally, foreign currency exchange rates impacted sales results as indicated above.

Geographically, in the second quarter and the year-to-date period, core revenue declines were experienced in Western Europe, North America, and China, from slow downs in test and measurement amid tariff-related uncertainties and volume decline in energetic materials.

These declines were partially by growth in Latin America from increased demand in the utilities sector for grid modernization.

Operating profit margin decreased 310 basis points for the second quarter as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increase in price and gains from productivity measures through our FBS initiatives were offset by net volume reductions, higher compensation costs, and unfavorable impacts from tariffs net of countermeasures— unfavorable 320 basis points

• The year-over year effect of all other items was a favorable 10 basis points comprised of +70 basis points from the Invetech Divestiture, -40 basis points from amortization of existing businesses, -15 basis points from acquisition and divestiture-related costs, and -5 basis points in discrete restructuring charges

Operating profit margin decreased 620 basis points during the year-to-date period as compared to the comparable period of 2024.

Year-over-year changes in operating profit margins were comprised of the following:

• Year-over-year increase in price from existing businesses and gains from productivity measures through our FBS initiatives were offset by net volume reduction in the segment, higher compensation costs, and unfavorable impacts from tariffs net of countermeasures — unfavorable 350 basis points

• The year-over year effect of all other items was an unfavorable 270 basis points comprised of -570 from the gain on sale of property in 2024, +225 basis points from acquisition and divestiture-related costs, +115 basis points from the Invetech Divestiture and acquisition-related fair value adjustments, -30 basis points from amortization of existing businesses, and -10 basis points in discrete restructuring charges

Sales growth in the third quarter and year-to-date period were driven by favorable pricing of 2.4%, and 2.1%, respectively, including countermeasures to mitigate unfavorable tariff impacts.

Volume declined slightly in the third quarter, and declined modestly in the year-to-date period, driven by declines in professional instrumentation, partially offset by increases in facilities and asset lifecycle software and gas detection.

Geographically, in the third quarter, core revenue growth was driven primarily by solid growth in North America, partially offset by declines in EMEA, mostly in Europe.

In the year to date period, core revenue growth was driven by moderate growth in North America, partially offset by modest declines in EMEA, mostly in Europe.

In the third quarter and year-to-date period, operating profit margin increased 110 basis points and 60 basis points, respectively, as compared to the comparable periods of 2024:

• The year-over-year increase in price and gains achieved from productivity measures through our FBS initiatives partially offset by volume decline, higher employee compensation, and unfavorable impact from tariffs net of

countermeasures — favorable 110 basis points and 90 basis points, in the third quarter and year-to-date period, respectively

• The year-over year effect of all other items in the third quarter, including +20 basis points from amortization of existing businesses, offset by -20 basis points in discrete restructuring charges — relatively flat

• The year-over year effect of all other items in the year-to-date period, including -55 basis points in discrete restructuring charges, offset by +20 basis points from amortization from existing businesses, and +5 basis points from lower acquisition and divestiture-related costs — unfavorable 30 basis points

ADVANCED HEALTHCARE SOLUTIONS

Selected Financial Data

Three Months Ended Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Three Months Ended Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 328.3 $ 322.4 $ 950.0 $ 945.8

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Components of Sales Growth

% Change Three Months Ended June 27, 2025 vs.

% Change Three Months Ended September 26, 2025 vs.

Comparable 2024 period

% Change Six Months Ended June 27, 2025 vs.

% Change Nine Months Ended September 26, 2025 vs.

Comparable 2024 Period

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Core revenue growth (Non-GAAP)

(1.9) % 0.2 %

The sales results for the second quarter and year-to-date period were driven by favorable pricing of 2.9% and 2.6%, respectively, and volume increases in software products and dosimetry services.

These benefits were offset by a decline in sterilization healthcare equipment and biomedical test tools.

Additionally, foreign currency exchange rates impacted sales results as indicated above.

Geographically, in the second quarter, the core revenue decline was driven primarily by weakness in Latin America from sterilization healthcare equipment due to government healthcare budgetary restraints.

Western Europe also observed sales declines in certain biomedical test products.

In North America, healthcare software experienced increased demand, mitigating the unfavorable impact of softening healthcare equipment sales driven by healthcare policy uncertainty.

Geographically, in the year-to-date period, core revenue was stable, which was driven primarily by growth in North America where increased demand in software products and dosimetry services mitigated the weakness in sterilization healthcare equipment sales.

This growth was mostly offset by declines in Latin America, Western Europe and China, from demand weakness in sterilization healthcare equipment and certain biomedical and radiation detection products.

Operating profit margin decreased 20 basis points during the second quarter, as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increases due to favorable pricing, gains from productivity measures through our FBS initiatives, offset by a net volume decline in the segment, higher employee compensation, and investments in growth initiatives — unfavorable 10 basis points

• The year-over-year effect of amortization from existing businesses — unfavorable 10 basis points

Operating profit margin decreased 40 basis points during the year-to-date period as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increase due to favorable pricing and gains from productivity measures, offset by a net volume decline, higher employee compensation, and higher costs to support product innovation — unfavorable 50 basis points

• The year-over-year effect of amortization from existing businesses — favorable 10 basis points

Sales growth in the third quarter was primarily driven by favorable pricing of 3.0%.

Volume declined modestly driven by reduced demand for sterilization equipment due to uncertainty surrounding hospital responses to recent changes in healthcare policy, partially offset by modest volume increases in healthcare software.

Sales growth in the year-to-date period was driven by favorable pricing of 2.8%.

Volume declined moderately resulting from demand decline in sterilization equipment and biomedical test products partially offset by growth in healthcare software and dosimetry services.

Geographically, in the third quarter, core revenue growth was driven by a modest increase in North America.

In the year-to-date period, core revenue was relatively stable with modest increases in North America mostly offset by moderate declines in Latin America and EMEA driven mostly by Europe.

In the third quarter and year-to-date period, operating profit margin increased 150 basis points and 40 basis points, respectively, as compared to the comparable periods of 2024:

• Year-over-year increases due to favorable pricing, gains from productivity measures through our FBS initiatives partially offset by moderate volume decline and higher employee compensation — favorable 120 basis points and favorable 30 basis points, in the third quarter and year-to-date period, respectively

• The year-over-year effect of amortization from existing businesses — favorable 30 basis points and 10 basis points, in the third quarter and year-to-date period, respectively

COST OF SALES AND GROSS PROFIT

Three Months Ended Six Months Ended

($ in millions) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Three Months Ended Nine Months Ended

($ in millions) September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 1,027.1 $ 1,003.7 $ 3,036.6 $ 3,008.1

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Gross profit margin 63.2 % 63.9 % 63.6 % 63.9 %

The year-over-year decrease in gross profit during both the second quarter and year-to-date period was due to an overall volume decline, higher employee compensation, discrete restructuring charges, and the unfavorable impact from tariffs net of countermeasures.

These impacts were partially offset by favorable pricing, gains from productivity measures and FBS initiatives.

Additionally, the effect of foreign currency exchanges rates was favorable in the second quarter but unfavorable in the year-to-date period.

The year-over-year increase in gross profit during both the third quarter and year-to-date period was driven by favorable pricing and gains from productivity measures and FBS initiatives, partially offset by volume decline, higher employee compensation, di screte restructuring charges, and unfavorable tariff impacts.

OPERATING EXPENSES

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

($ in millions)

June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

September 26, 2025 September 27, 2024 September 26, 2025 September 27, 2024

Sales $ 1,027.1 $ 1,003.7 $ 3,036.6 $ 3,008.1

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R&D as a % of sales 6.0 % 6.2 % 6.4 % 6.2 %

The year-over-year increase in SG&A during both the second quarter and year-to-date period were primarily due to costs incurred in 2025 related to the Separation, higher employee compensation, investment for growth initiatives, and discrete restructuring charges, all partially offset by benefits from productivity measures through our FBS initiatives.

Additionally, in the year-to-date period, there were lower costs incurred related to acquisitions when compared to last year.

R&D, consisting principally of internal and contract engineering personnel costs, increased during the second quarter and the year-to-date period as compared to the comparable periods of 2024 due to ongoing investments in innovation and higher compensation.

The year-over-year increase in SG&A during both the third quarter and year-to-date period were primarily due to incremental stock-based compen sation related to the Separation incurred in 2025, higher employee compensation costs, and discrete restructuring charges, all partially offset by benefits from productivity measures through our FBS initiatives.

R&D, consisting principally of internal and contract engineering personnel costs, remained relatively flat during the third quarter and increased slightly during the year-to-date period as compared to the comparable period of 2024 due to ongoing investments in innovation.

NON-OPERATING INCOME (EXPENSE), NET

Interest costs

Net interest expense for the second quarter and year-to-date period was $32.1 million and $64.1 million as compared to $38.7 million and $82.7 million in the comparable periods in 2024.

The year-over-year decrease in net interest expense was primarily due to overall debt mix consisting of lower fixed rate debt instruments, and lower interest rate on floating rate debt instruments.

Net interest expense for the third quarter and year-to-date period was $25.4 million and $89.5 million as compared to $37.1 million and $119.8 million in the comparable periods in 2024.

The year-over-year decrease in net interest expense was primarily due to a decrease in outstanding debt and lower interest rates on floating rate debt instruments.

For discussion of our outstanding indebtedness, refer to Note 4 to the consolidated condensed financial statements.

Loss from divestiture

During the three and six-month periods ended June 28, 2024, we recognized a net realized loss of $25.6 million related to the Invetech Divestiture.

For further discussion of this transaction, refer to Note 1 to the consolidated condensed financial statements.

Other non-operating income (expense), net

Other non-operating income for the second quarter and year-to-date period was $1.9 million and $1.7 million, as compared to expense of $8.8 million and $33.0 million in the comparable periods in 2024.

The year-over-year change in both the second quarter and year-to-date was primarily due to losses from our equity investments recognized in the comparable prior year periods.

Additionally there was a charitable contribution made in the first quarter of 2024.

For further discussion of the charitable contribution, refer to Note 1 to the consolidated condensed financial statements.

Our effective tax rate for the three and six-month period ended June 27, 2025 was 13.2% and 14.0%, respectively, as compared to 14.7% and 13.0%, respectively, for the three and six-month period ended June 28, 2024.

The decrease in the effective tax rate for the three-month period ended June 27, 2025 as compared to the three-month period ended June 28, 2024 was primarily related to a change in mix of earnings in the comparable prior year period.

The increase in the effective tax rate for the six-month period ended June 27, 2025 as compared to the six-month period ended June 28, 2024 was primarily related to a discrete tax credit in the comparable prior year period from cash repatriation.

Our effective tax rate for the three and six-month period ended June 27, 2025 , differs from the U.S.

Other non-operating income for the third quarter and year-to-date period was $0.8 million and $3.1 million, as compared to expense of $25.8 million and $58.2 million in the comparable periods in 2024.

The year-over-year change in both the third quarter and year-to-date was primarily due to losses from our equity investments recognized in the comparable prior year periods.

Additionally, in the first quarter of 2024, there was a charitable contribution made to the Fortive Foundation, a related party, without any donor imposed conditions or restrictions.

Our effective tax (benefit) rate for the three and nine months ended September 26, 2025 was 13.3% and 16.4%, respectively, as compared to (2.2)% and 11.3%, respectively, for the three and nine months ended September 27, 2024.

The increase in the effective tax rate for the three months ended September 26, 2025 as compared to the three months ended September 27, 2024 was primarily related to changes in applicable statutory tax rates, resulting in a discrete benefit in the comparable prior year period.

The increase in the effective tax rate for the nine months ended September 26, 2025 as compared to the nine months ended September 27, 2024 was primarily related to changes in applicable statutory tax rates.

Our effective tax rate for the three and nine months ended September 26, 2025, differs from the U.S.

federal statutory rate of 21% due primarily to the impact of credits and deductions provided by law, including those associated with state income taxes, and changes in our uncertain tax position reserves.

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We continue to monitor further guidance and legislative developments related to the Pillar Two framework.

The One Big Beautiful Bill Act (“OBBBA”) enacted in the U.S on July 4, 2025 resulted in significant income tax provisions with effective dates spanning from 2025 through 2027.

Changes from OBBBA include modifications to allow for immediate expensing of certain business investments and provides certain permanent extensions and modifications to the U.S.

H.R.1, also known as the One Big Beautiful Bill Act, enacted in the U.S on July 4, 2025 resulted in significant income tax provisions with effective dates spanning from 2025 through 2027.

Changes from H.R.1 include modifications to allow for immediate expensing of certain business investments and provides certain permanent extensions and modifications to the U.S.

international tax framework.

We are currently assessing the impact of OBBBA on our consolidated financial statements.

There is no material impact of H.R.1 to our continuing operations financial statements.

Foreign cumulative earnings remain subject to foreign remittance taxes.

We have made an election regarding the amount of earnings that we do not intend to repatriate due to local working capital needs, local law restrictions, high foreign remittance costs, previous investments in physical assets and acquisitions, or future growth needs.

For most of our foreign operations, we make an assertion regarding the amount of earnings in excess of intended repatriation that are expected to be held for indefinite reinvestment.

No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely.

The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives we could employ if we repatriated these earnings.

COMPREHENSIVE INCOME

Comprehensive income increased by $101 million during the second quarter as compared to the comparable period in 2024 due to favorable changes in foreign currency translation of $129 million, partially offset by a $29 million decrease in net income.

Comprehensive income increased by $212 million during the year-to-date period as compared to the comparable period in 2024 due primarily to favorable changes in foreign currency translation adjustments of $276 million, partially offset by a $64 million decrease in net income.

Comprehensive income decreased by $267 million during the third quarter as compared to the comparable period in 2024 due to unfavorable changes in foreign currency translation of $100 million, partially offset by a $6 million increase in net earnings from continuing operations.

Additionally, there was a $172 million decrease in net earnings from discontinued operations.

Comprehensive income decreased by $55 million during the year-to-date period as compared to the comparable period in 2024 due primarily to favorable changes in foreign currency translation adjustments of $176 million and a $52 million increase in net earnings from continuing operations.

Additionally, there was a $283 million decrease in net earnings from discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities.

We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, execute strategic separations, repurchase common stock on the open market or in privately negotiated transactions, make interest and principal payments on our outstanding indebtedness, fulfill our contractual obligations, and manage our capital structure on a short and long-term basis.

We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, execute strategic separations, repurchase common stock, make interest and principal payments on our outstanding indebtedness, fulfill our contractual obligations, and manage our capital structure on a short and long-term basis.

As of September 26, 2025, we held approximately $431 million of cash and equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less, of which approximately 93% was held outside of the United States.

We have generally satisfied any short-term liquidity needs that are not met through operating cash flows and available cash through issuances of commercial paper under our U.S.

dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”).

Credit support for the Commercial Paper Programs is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on October 18, 2027 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit

support for the commercial paper programs, can also be used for working capital and other general corporate purposes.

As of June 27, 2025, no borrowings were outstanding under the Revolving Credit Facility.

The availability of the Revolving Credit Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the existing credit ratings of the Commercial Paper Programs when we have outstanding borrowings.

dollar-denominated commercial paper program.

Credit support for this program is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on October 18, 2027 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit support for the commercial paper programs, can also be used for working capital and other general corporate purposes.

As of September 26, 2025, no borrowings were outstanding under the Revolving Credit Facility.

We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.

We expect to limit any future borrowings under the Revolving Credit Facility to amounts that would leave sufficient credit available under the facility to allow us to borrow, if needed, and repay any outstanding commercial paper as it matures.

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If changes in financial markets or other areas of the economy or downgrade in our credit rating adversely affect our access to the capital markets and other financing sources, we would expect to rely on a combination of available cash and existing available capacity under our credit facilities to provide short-term funding.

As of September 26, 2025, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

Refer to Note 4 of the consolidated condensed financial statements for additional information regarding our financing activities and indebtedness.

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Following is an overview of our cash flows and liquidity ($ in millions):

Six Months Ended

June 27, 2025 June 28, 2024

Net cash provided by operating activities $ 552.9 $ 565.6

Nine Months Ended

September 26, 2025 September 27, 2024

Total operating cash provided by continuing operations $ 691.5 $ 700.8

Purchases of property, plant and equipment $ (74.7) $ (63.5)

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Cash paid for acquisitions, net of cash received — (3.7)

Cash infusion into divestiture — (14.0)

All other investing activities 10.8 (1.6)

Net cash used in investing activities $ (50.8) $ (1,782.2)

Total investing cash used in continuing operations $ (63.5) $ (68.0)

Net proceeds from (repayments of) commercial paper borrowings $ 105.8 $ (571.2)

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Repayment of borrowings (maturities greater than 90 days) (715.7) (1,000.0)

Proceeds from Ralliant Dividend 1,150.0 —

All other financing activities 15.6 47.9

Net cash provided by (used in) financing activities

Total financing cash used in continuing operations

$ (862.8) $ (296.7)

Operating Activities

Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.

Operating cash flows were $553 million during the year-to-date period, representing a decrease of $13 million when compared to the comparable period of 2024.

Operating cash flows from continuing operations can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.

Operating cash flows from continuing operations were $692 million during the year-to-date period, representing a decrease of $9 million when compared to the comparable period of 2024.

The year-over-year change in operating cash flows was primarily attributable to the following factors:

• Year-over-year decrease of $25 million in Operating cash flows from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, Gain on sale of property, and Loss from divestiture).

• Year-over-year increase of $46 million in Operating cash flows from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, and Loss from equity investments).

• The aggregate changes in accounts receivable, inventories, and trade accounts payable generated $12 million of cash during the year-to-date period as compared to generating $48 million in the comparable period of 2024.

The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories, and trade accounts payable depends upon how effectively we manage the cash conversion cycle, which generally represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.

days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.

• The aggregate changes in prepaid expenses and other assets, and accrued expenses and other liabilities used $85 million of cash in the year-to-date period as compared to using $66 million of cash in the comparable period of 2024.

The year-over-year changes were driven by timing differences related to payments of employee compensation, income taxes, interest.

The year-over-year changes were driven by timing differences related to contract assets, contract liabilities, and payments of income taxes and interest.

Investing Activities

Cash outflows from investing activities declined $1.73 billion when compared with the prior year, which had outflows related to the EA acquisition, net of cash acquired, and cash infusion into divestiture.

Investing cash outflows from continuing operations were $5 million less than the prior year.

The current year had higher capital expenditures offset by cash inflows related to acquisitions and divestments.

Capital expenditures are made primarily for increasing production capacity, replacing aged equipment, supporting product development initiatives for hardware and software offerings, improving information technology systems, and purchasing equipment that is used in revenue arrangements with customers.

Financing Activities and Indebtedness

Cash flows from financing activities consist primarily of cash flows associated with the issuance and repayment of debt and commercial paper, payments of cash dividends to shareholders and share repurchases.

In the year-to-date period, financing activities generated cash of $509 million, reflecting the following transactions:

• We repaid $253 million in net commercial paper borrowings.

• We repurchased 4.4 million shares of our common stock for approximately $345 million, under our share repurchase program.

Financing Activities

Financing cash flows from continuing operations consist primarily of cash flows associated with the issuance and repayment of debt and commercial paper, payments of cash dividends to shareholders and share repurchases.

In the year-to-date period, financing activities from continuing operations used cash of $863 million, reflecting the following transactions:

• We incurred $106 million in net commercial paper borrowings.

• We received a cash dividend of $1.15 billion from Ralliant in connection with the Separation (the “Ralliant Dividend”).

• We repurchased 25.2 million shares of our common stock for approximately $1,345 million, with $426 million from the Ralliant Dividend.

• On July 15, 2025, we used approximately $294 million of the Ralliant Dividend to redeem €252 million of the outstanding principal of the 3.7% Euro-denominated senior unsecured notes due 2026.

• On July 24, 2025 and July 25, 2025, we used approximately $421 million of the Ralliant Dividend to repay the outstanding principal of the Euro Term Loan and Yen Term Loan.

• We made dividend payments to common shareholders totaling $73 million.

• On June 27, 2025, in preparation for the Separation, Ralliant, a wholly-owned, consolidated subsidiary prior to the Separation, borrowed $1.15 billion in aggregate principal amount of USD Term Loans due 2026 and 2028 (the “Ralliant Debt”).

In the comparable 2024 period, financing activities used cash of $15 million, reflecting the following transaction:

In the comparable 2024 period, financing activities from continuing operations used cash of $297 million, reflecting the following transaction:

• We repaid $571 million in net commercial paper borrowings.

• On January 2, 2024, we drew down an additional $450 million of the Delayed-Draw Term Loan due 2024 as part of the funding for the acquisition of EA.

• On January 2, 2024, we drew down $450 million of the Delayed-Draw Term Loan due 2024.

• On February 13, 2024, we completed the sale of our registered offering of the 2026 Notes and the 2029 Notes, yielding net proceeds of approximately $1.3 billion.

• On February 13 2024, Fortive repaid $1.0 billion in outstanding principal of the Delayed-Draw Term Loan due 2024, using net proceeds from the 2026 Notes and 2029 Notes.

• We repurchased 2 million shares of our common stock for approximately $153 million under our share repurchase program.

• We repurchased 5.8 million shares of our common stock for approximately $423 million.

• We made dividend payments to common shareholders totaling $84 million.

Cash and Cash Requirements

As of June 27, 2025, we held approximately $1,833 million of cash and equivalents, including the proceeds from the Ralliant Dividend, that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less, of which approximately 32% was held outside of the United States.

We have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund our pension plans as required, pay dividends to shareholders, and support other business needs or objectives.

With respect to our cash requirements, we generally intend to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions and repayment of maturing debt, we may also borrow under our commercial paper programs or credit facilities or enter into new credit facilities and either borrow directly thereunder or use such credit facilities to backstop

additional borrowing capacity under our commercial paper programs.

We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.

Foreign cumulative earnings remain subject to foreign remittance taxes.

For most of our foreign operations, we make an assertion regarding the amount of earnings in excess of intended repatriation that are expected to be held for indefinite reinvestment.

No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely.

As of June 27, 2025, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

CRITICAL ACCOUNTING ESTIMATES

There were no material changes during the three and six-month periods ended June 27, 2025 to the items we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K.

There were no material changes during the three and nine-month periods ended September 26, 2025 to the items we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis