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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-25 · 178 added, 250 removed, 254 unchanged (63% of the section changed)

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

The following discussion and analysis of Fortive’s financial condition and results of operations for the fiscal years ended December 31, 2024 and December 31, 2023 should be read in conjunction with our audited consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K.

This Item generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.

Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 2023 with the Securities and Exchange Commission on February 27, 2024.

Fortive 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.

The following discussion and analysis of Fortive’s financial condition and results of operations for the fiscal years ended December 31, 2025, December 31, 2024, and December 31, 2023 should be read in conjunction with our audited consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K.

This Item generally discusses 2025, 2024, and 2023 items and year-to-year comparisons between 2025 and 2024, and 2024 and 2023.

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

Our strategic segments - Intelligent Operating Solutions and Advanced Healthcare Solutions - 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 financial statements for all periods presented reflect this business as a discontinued operation.

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

Refer to Note 3 of the consolidated financial statements for additional information.

This MD&A is designed to provide a reader of our financial statements with a narrative from the perspective of management.

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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 2025.

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 high-growth markets, trends and costs associated with a global labor force, and consolidation of our competitors.

We define high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America, and Asia with the exception of Japan and Australia.

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, trade policies, 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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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

(excluding sales impact from acquired businesses) after applying the current period foreign exchange rates to the prior year period.

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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Management believes the exclusion of the effect of acquisitions and divestitures and currency translation may facilitate the assessment of underlying business trends and may assist in comparisons of long-term performance.

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

Update on Pending Separation of the Precision Technologies Segment

On September 4, 2024, we announced our intention to separate our PT segment business into an independent publicly-traded company (the “Separation”), which will be named Ralliant.

The Separation will create (i) a technology solutions company, retaining the Fortive name, with a portfolio of the brands currently operating under Fortive’s IOS and AHS business segments, focused on resilient, high-quality recurring growth by delivering productivity and safety to customers, and (ii) a global technology company consisting of our brands currently operating under the PT segment with a focus on precision instruments and highly engineered products essential for breakthrough innovation and aligned to powerful secular trends.

The Separation is intended to qualify as a tax-free spin-off for Fortive shareholders for U.S.

federal income tax purposes.

The Company is targeting completion of the Separation early in the third quarter of 2025, subject to the satisfaction of certain conditions, including, among others, final approval of Fortive’s Board of Directors, satisfactory completion of financing, receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S.

Internal Revenue Service with respect to the tax treatment of the transaction for U.S.

federal income tax purposes, the effectiveness of a Form 10 registration statement filed with the SEC, and other regulatory approvals.

All assets, liabilities, revenues and expenses of Ralliant are included in the consolidated results of the Company in the accompanying consolidated financial statements.

Segment Realignment and Divestiture

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”).

As a result of the divestiture, in the year ended December 31, 2024, we recorded a net realized loss of $25.6 million, which is identified as “Loss from divestiture” in the Consolidated Statements of Earnings.

The divested businesses accounted for less than 1.0% of total revenue and less than 1.0% of total assets for the fiscal year ended December 31, 2023.

The Invetech Divestiture did not represent a strategic shift with a major effect on the Company’s operations and financial results, and therefore the divested businesses are not reported as discontinued operations.

On January 3, 2024, we acquired EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications.

The acquisition of EA will bolster the PT segment’s innovative portfolio of products and services for engineers with complementary test and measurement solutions enabling the global energy transition.

The total consideration paid was approximately $1.72 billion, net of acquired cash.

We recorded approximately $1.18 billion of goodwill within our PT segment related to the EA acquisition, which is not tax deductible.

We also anticipate future tax benefits as a result of the transaction.

Other Matters

In the fourth quarter of 2024, we initiated a discrete restructuring plan that is expected to be completed by December 31, 2025.

The nature of the plan initiated in 2024 was related to the Separation and consisted primarily of targeted workforce reductions to realign the cost structures between the two companies.

In the first quarter of 2023, we initiated a separate discrete restructuring plan that was completed by the end of 2023.

The nature of the activities in 2023 was broadly consistent throughout our segments and consisted primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions.

We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties.

We incurred charges of $19.7 million and $58.6 million during the years ended December 31, 2024 and 2023, respectively.

Business Performance and Outlook

Business Performance

During 2024, aggregate year-over-year sales increased 2.7%, driven by a 1.3% increase in our core revenue and a 2.0% increase from acquisitions, net of divestiture, partially offset by a decline of 0.6% due to unfavorable foreign currency translation.

Core revenue growth included favorable pricing of 2.7%, partially offset by volume decline of 1.4%.

Geographically, core revenue in developed markets increased by low single-digits during 2024, driven by low single-digit growth in North America, while Western Europe decreased slightly.

Core revenue in high growth markets increased slightly, driven by low double-digit growth in Latin America, partially offset by a low single-digit decline in Asia, where China declined by high single-digits.

We anticipate full year sales growth to be between approximately flat and 2.0% with year-over-year growth from existing businesses of approximately 1.5% and 3.5%.

We 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, global uncertainties related to governmental policies toward international trade, monetary and fiscal policies, including the current uncertainty about the future relationship between the United States and other major regions with respect to trade policies, treaties, government regulations, sanctions and tariffs, macroeconomic conditions in the United States, China, and other critical regions, impact from our pending separation into two independent publicly traded companies, and the impact of inflationary dynamics on our expenses or our ability to realize price increases in our sales, interest rates, market conditions in key product segments, and elective surgery rates.

We will continue to deploy FBS to actively manage these challenges and utilize pricing and other countermeasures to offset the aforementioned dynamics.

We continue to monitor these conditions which may continue to impact our business, as well as potential adverse global economic trends and sentiments, monetary and fiscal policies, international trade 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 the potential impact of the Pillar Two initiative.

References to core sales growth refer to the impact of both price and unit sales.

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;

operational challenges from existing, new, or increased tariffs, in some cases, subsequent rollbacks or suspensions;

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 (“OBBBA”);

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.

In addition, our financial outlook is subject to the impact of the recent ruling by the Supreme Court of the United States invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act ("the IEEPA Ruling"), including the impact on operational and transaction costs, any responsive legislative or executive action seeking to reimpose similar tariffs, our ability to seek and obtain refunds for previously paid tariffs that have been subsequently invalidated, expectations or actions of customers, suppliers and other distribution or supply chain partners on pricing or costs as a result of the IEEPA Ruling, and responsive actions from other countries, including with respect to counter tariffs that had been imposed or trade agreements that had been adopted in response to tariffs that have been subsequently invalidated by the IEEPA Ruling.

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

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Total revenue growth (GAAP) 1.9 % 4.3 %

Excluding impact of:

Acquisitions and Divestitures

0.2 % (0.6) %

Currency exchange rates

(0.4) % 0.6 %

Core revenue growth (Non-GAAP)

Sales growth in 2025 was driven by favorable pricing of 2.2%, partially offset by a volume decline of 0.6%.

Sales growth in 2024 was driven by favorable pricing of 2.9% and a volume increase of 1.4%.

Geographically, core revenue growth in 2025 was driven primarily by strengthening demand in North America, led by the IOS segment, partially offset by modest declines in Europe.

Core revenue growth in 2024 was driven by modest to moderate growth across all regions, including North America, Europe, the Middle East, and Africa (“EMEA”), Latin America (“LATAM”), and Asia-Pacific (“APAC”).

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

Operating Profit Margins

Operating profit margins were 19.4% in 2024, an increase of 70 basis points as compared to 18.7% in 2023.

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

• Year-over-year increase in price from existing businesses, volume growth in IOS and AHS, and benefits from productivity measures were partially offset by a volume decline in certain businesses and end markets within our PT segment, higher employee compensation and investment growth initiatives.

Additionally, there were unfavorable foreign exchange rates — favorable 80 basis points

• The year-over-year effect of amortization from existing businesses, and impairment of intangible assets incurred in 2023 — favorable 30 basis points

• The year-over-year net effect of acquisition, divestiture and separation related transaction costs incurred in the year — unfavorable 85 basis points

• The year-over-year net effect of acquired and divested businesses, including amortization and acquisition-related fair value adjustments — unfavorable 120 basis points

• The year-over-year effect of costs relating to discrete restructuring plans — favorable 65 basis points

• The year-over-year effect of the gain on sale of land and certain office buildings in the PT segment during the year - favorable 100 basis points

Business Segments and Geographic Area Results

Sales by business segment and geographic area for the year ended December 31 are as follows ($ in millions):

Intelligent Operating Solutions $ 2,714.7 $ 2,612.2

Precision Technologies 2,229.4 2,223.7

Advanced Healthcare Solutions 1,287.7 1,229.4

Total $ 6,231.8 $ 6,065.3

Geographic area

United States $ 3,372.0 $ 3,288.4

China 648.2 694.9

2,211.6 2,082.0

Total $ 6,231.8 $ 6,065.3

Operating profit margin was 17.3% in 2025, compared to 17.6% in 2024, resulting in a decrease of 30 basis points due to:

• The year-over-year increase from favorable pricing across the segments and benefits from productivity measures and FBS initiatives, partially offset by volume decline and higher employee compensation in both segments;

additionally, within the year, the unfavorable impact from tariffs was mitigated by countermeasures — favorable 105 basis points

• The year-over-year effect of all other items, including -100 basis points primarily from incremental stock-based compensation costs related to the Separation , -55 basis points in discrete restructuring charges, partially offset by +20 basis points from amortization expense for existing businesses — unfavorable 135 basis points

Operating profit margin was 17.6% 2024, compared to 14.7% in 2023, resulting in an increase of 290 basis points due to:

• The year-over-year increase in price and volume from existing businesses and benefits from productivity measures were partially offset by higher employee compensation, growth investments and the impact of unfavorable changes in foreign exchange rates — favorable 170 basis points

• The year-over-year effect of all other items, including +70 basis points in discrete restructuring charges, +55 basis points from amortization expense associated with existing businesses and impairment of intangible assets in 2023, offset by -5 basis points from net effects of acquired businesses — favorable 120 basis points

INTELLIGENT OPERATING SOLUTIONS

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

These offerings include electrical test & measurement, facility and asset lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others.

Intelligent Operating Solutions Selected Financial Data

For the Year Ended December 31

($ in millions) 2024 2023

Sales $ 2,714.7 $ 2,612.2

Operating profit 704.6 628.8

Depreciation 40.5 33.9

Amortization 188.3 185.5

Operating profit as a % of sales 26.0 % 24.1 %

Depreciation as a % of sales 1.5 % 1.3 %

Amortization as a % of sales 6.9 % 7.1 %

Components of Sales Growth

Total revenue growth (GAAP) 3.9 %

Acquisitions and divestitures (0.8) %

Currency exchange rates 0.3 %

Core revenue growth (Non-GAAP)

2024 COMPARED TO 2023

The sales growth in 2024 was driven primarily by favorable pricing across the segment and increased volume in our gas detection products, as well as software and service offerings in facility and assets lifecycle applications, including software as a service (“SaaS”).

The acquisitions in 2023 also contributed 0.8% to revenue growth during the year.

Geographically, core revenue in developed markets increased by mid-single-digits during 2024, driven by a mid-single-digit growth in North America and low single-digit growth in Western Europe.

Core revenue in high growth markets increased by low single-digits during 2024, driven by a high single-digit growth in Latin America and low single-digit growth in Asia, despite a low single-digit decline in China.

Year-over-year price increases in our IOS segment contributed 2.8% to sales growth in 2024, as compared to 2023, and is reflected as a component of the change in core revenue.

Operating profit margin increased 190 basis points during 2024 as compared to 2023.

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

• Year-over-year increase from favorable pricing and higher sales volume from existing businesses, partially offset by higher employee compensation, customer acquisition costs and marketing costs to support growth initiatives — favorable 100 basis points

• The year-over-year effect of amortization from existing businesses, and impairment of intangible assets incurred in 2023— favorable 50 basis points

• The year-over-year net effect of acquired businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 15 basis points

• The year-over-year effect of costs relating to d iscrete restructuring plans — favorable 55 basis points

PRECISION TECHNOLOGIES

Our 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.

Our expertise in materials, methods and measurements are reflected in our electrical test & measurement and sensing and material technologies offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries.

Precision Technologies Selected Financial Data

Selected Financial Data

For the Year Ended December 31

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Total revenue growth (GAAP) 2.3 % 4.1 %

Excluding impact of:

Acquisitions and Divestitures 0.4 % (0.8) %

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Core revenue growth (Non-GAAP)

2024 COMPARED TO 2023

The sales result for 2024 was driven by price increases across the segment and volume increases in energetic materials and utility sensing and solutions, offset by volume reductions in test and measurement and industrial sensing products.

The acquisition of EA, partially offset by the Invetech Divestiture, contributed 4.4% to revenue growth during the year.

Geographically, core revenue in developed markets decreased by mid-single-digits during 2024, driven by a low single-digit decline in North America, a mid-single-digit decline in Western Europe, and a low double-digit decline in Japan.

Core revenue in high growth markets decreased by mid-single-digits during 2024, driven by high-teens growth in Latin America, offset by a mid-single-digit decline in Asia, where China decreased by low double-digits.

Year-over-year price increases in our PT segment contributed 2.4% to sales growth during 2024 as compared to 2023, and is reflected as a component of the change in core revenue.

Operating profit margin decreased 210 basis points during 2024 as compared to 2023.

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

• Year-over-year increases in price from existing businesses and benefits from productivity measures were offset by net volume reductions in the segment, and higher employee compensation — unfavorable 80 basis points

• The year-over-year net effects of acquisition and divestiture-related transaction costs incurred in the year primarily related to the EA acquisition — unfavorable 145 basis points

• The year-over-year net effects of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 320 basis points

• The year-over-year effect of costs relating to discrete restructuring plans — favorable 50 basis points

• The year-over-year effect of the gain on sale of land and certain office buildings in 2024 — favorable 285 basis points

Sales growth in 2025 was driven by favorable pricing of 2.2%, including actions taken to mitigate unfavorable tariff impacts.

Volume declined slightly, primarily in professional instrumentation during the first half of the year, partially offset by increases in gas detection products and facilities and asset lifecycle (“FAL”) software and services.

Sales growth in 2024 was driven primarily by favorable pricing of 2.7% and volume gains with FAL software and services and gas detection products.

Geographically, core revenue growth in 2025 was driven primarily by moderate growth in North America, partially offset by modest declines in Europe.

Core revenue growth in 2024 was driven by modest growth across all regions.

Operating Profit Margins

Operating profit margin increased 50 basis points during 2025 as compared to 2024 resulting from:

• The year-over-year increase in price and gains achieved from FBS and productivity initiatives which were partially offset by slight volume decline and higher employee compensation;

additionally, within the year, the unfavorable impact from tariffs was mitigated by countermeasures — favorable 85 basis points

• The year-over-year effect of all other items, including -60 basis points in discrete restructuring charges, offset by +20 basis points from amortization expense for existing businesses, and +5 basis points from lower net acquisition and divestiture-related costs — unfavorable 35 basis points

Operating profit margin increased 180 basis points during 2024 as compared to 2023 resulting from:

• The year-over-year increase in price and volume from existing businesses, partially offset by higher employee compensation, customer acquisition costs and marketing costs to support growth initiatives — favorable 95 basis points

• The year-over-year effect of all other items, including +50 basis points from lower discrete restructuring charges than in the prior year, +50 basis points from amortization expense for existing businesses and impairment of intangible assets incurred in 2023, offset by -15 basis points from net effects of acquired businesses — favorable 85 basis points

ADVANCED HEALTHCARE SOLUTIONS

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

Our offerings include instrument sterilization solutions, instrument tracking, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions.

Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.

Advanced Healthcare Solutions Selected Financial Data

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Total revenue growth (GAAP) 1.2 % 4.7 %

Excluding impact of:

Currency exchange rates (0.4) % 1.4 %

Core revenue growth (Non-GAAP)

2024 COMPARED TO 2023

The sales results for 2024 were driven by growth in our existing businesses due to price increases across the segment and volume increases primarily in our sterilization and dosimetry products.

Geographically, core revenue in developed markets increased by mid-single-digits during 2024, driven by mid-single-digit growth in North America and Western Europe, and high single-digit growth in Japan.

Core revenue in high growth markets increased by high single-digits during 2024, with mid-teens growth in Latin America and low single-digit growth in Asia.

Year-over-year price increases in our Advanced Healthcare Solutions segment contributed 3.4% to sales growth during 2024, as compared to 2023, and is reflected as a component of the change in core revenue.

Operating profit margin increased 380 basis points during 2024 as compared to 2023.

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

• Year-over-year sales increases due to favorable pricing and higher volume from existing businesses, and benefits from productivity measures, partially offset by higher employee compensation, and unfavorable changes in foreign currency exchange rates — favorable 200 basis points

• The year-over-year effect of amortization from existing businesses — favorable 70 basis points

• The year-over-year effect of costs relating to discrete restructuring plans — favorable 110 basis points

Sales growth in 2025 was driven by favorable pricing of 2.2%.

Volume declined modestly on reduced demand for sterilization equipment and biomedical test products due to the impact of recent changes in healthcare policy, partially offset by growth in healthcare software and dosimetry services.

Sales growth in 2024 was driven primarily by favorable pricing of 3.4% and volume increases primarily in sterilization and dosimetry products.

Geographically, core revenue growth in 2025 was relatively stable with modest increases in North America mostly offset by modest declines in EMEA.

Core revenue growth in 2024 was driven by modest to moderate growth across all regions.

Operating Profit Margins

Operating profit margin decreased 20 basis points during 2025 as compared to 2024 resulting from:

• Year-over-year increases due to favorable pricing and gains achieved from FBS and from productivity initiatives, partially offset by modest volume decline and higher employee compensation — unfavorable 20 basis points

• The year-over-year effect of all other items, including +20 basis points from amortization expense for existing businesses, -20 basis points in discrete restructuring charges — relatively flat

Operating profit margin increased 400 basis points during 2024 as compared to 2023 resulting from:

• Year-over-year increases due to favorable pricing and higher volume, and benefits from productivity measures, partially offset by higher employee compensation and unfavorable changes in foreign currency exchange rates — favorable 215 basis points

• The year-over-year effect of all other items, including +115 basis points in discrete restructuring charges and +70 basis points from amortization expense for existing businesses — favorable 185 basis points

COST OF SALES AND GROSS PROFIT

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Gross profit margin 63.5 % 64.2 % 63.3 %

Gross profit increased during 2024 as compared to 2023, primarily due to favorable pricing from existing businesses, contributions from our acquired businesses, increased volume from the IOS and AHS segments, benefits from productivity measures and FBS initiatives, partially offset by net volume reductions in the PT segment, higher employee compensation, and unfavorable changes in foreign currency exchange rates.

Gross profit increased during 2025 as compared to 2024, primarily due to favorable pricing, gains from FBS and productivity measures all partially offset by volume declines, higher employee compensation, and discrete restructuring charges.

Within the year, the unfavorable impact of tariffs were mitigated by the countermeasures deployed.

Gross profit increased during 2024 as compared to 2023, primarily due to favorable pricing and increased volume from existing businesses, benefits from productivity measures and FBS initiatives, partially offset by higher employee compensation, and unfavorable changes in foreign currency exchange rates.

OPERATING EXPENSES

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Sales $ 4,159.1 $ 4,080.9 $ 3,913.9

Selling, general, and administrative (“SG&A”) expenses 2,173.5 2,062.6

Research and development (“R&D”) expenses 414.0 397.8

Selling, general, and administrative (“SG&A”)

1,661.7 1,651.5 1,666.1

Research and development (“R&D”)

259.2 251.3 237.0

SG&A as a % of sales 40.0 % 40.5 % 42.6 %

R&D as a % of sales 6.2 % 6.2 % 6.1 %

SG&A expenses increased during 2024 as compared to 2023, primarily due to higher intangible amortization and incremental operating costs from our recent acquisitions, transaction and separation costs, and employee compensation, partially offset by benefits from productivity measures and lower discrete restructuring costs.

R&D expenses, consisting principally of internal and contract engineering personnel costs, increased slightly during 2024 as compared to 2023 due to the incremental costs from our recent acquisitions and ongoing investments in innovation.

SG&A increased in 2025 as compared to 2024, primarily due to incremental stock-based compensation related to the Separation, higher employee compensation costs, discrete restructuring charges, and innovation and commercial investments to support strategic growth initiatives, all partially offset by reductions of excess costs subsequent to the Separation and benefits from productivity measures and FBS initiatives.

SG&A expenses decreased during 2024 as compared to 2023, primarily due to benefits from productivity measures and lower discrete restructuring costs, partially offset by higher employee compensation.

R&D, consisting principally of internal and contract engineering personnel costs, increased year over year during both 2025 and 2024 due to ongoing investments in innovation.

NON-OPERATING INCOME (EXPENSE), NET

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Net interest expense was $120.5 million during 2025, compared to $152.8 million during 2024.

The year-over-year interest expense increase was primarily due to higher overall debt balances.

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

Net interest expense was $152.8 million during 2024, compared to $123.5 million during 2023.

The year-over-year increase was primarily due to higher overall debt balances.

For a discussion of our outstanding indebtedness, refer to Note 8 to the accompanying consolidated financial statements.

Loss from divestiture

During the year-to-date period, we recognized a net realized loss of $25.6 million related to the Invetech Divestiture.

For further discussion of this transaction, refer to Note 3 to the consolidated financial statements.

Other non-operating expense, net

Other non-operating expense was $58.6 million during 2024, compared to $19.4 million during 2023.

The year-over-year increase was primarily due to an increase in losses from equity investments of $22.1 million and a charitable contribution of $20.0 million made in the first quarter of 2024.

For further discussion of these transactions, refer to Note 6 and Note 1 to the consolidated financial statements, respectively.

Other non-operating expense was $2.5 million, $57.2 million, and $17.4 million during 2025, 2024, and 2023, respectively.

The year over year changes were primarily due to losses from equity investments incurred in 2024 and 2023, and a charitable contribution of $20.0 million made to the Fortive Foundation, a related party, without any donor imposed conditions or restrictions, in the first quarter of 2024.

Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in our financial statements.

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Our future income tax rates could be volatile and difficult to predict due to changes in business profit by jurisdiction, changes in the amount and recognition of deferred tax assets and liabilities, or by changes in tax laws, regulations, or accounting principles.

For example, the Organisation for Economic Co-operation and Development continues to advance proposals for modernizing international tax rules, including the introduction of global minimum tax standards.

For example, the OECD continues to advance proposals for modernizing international tax rules, including the introduction of global minimum tax standards and the more recent Side-by-Side System.

We closely monitor changes to tax laws, regulations, accounting principles, and global tax standards;

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If these audits result in payments or assessments different from our reserves, our future results may include unfavorable adjustments to our tax liabilities and our financial statements could be adversely affected.

The Company is subject to examination in the United States, various states and foreign jurisdiction for the tax years 2014 to 2024.

We are subject to examination in the United States, various states and foreign jurisdiction for the tax years 2011 to 2024.

These examinations include filings of tax returns prior to our separation from Danaher, tax returns of enterprises no longer in our portfolio, and tax returns for pre-acquisition periods of enterprises added to our portfolio.

In addition, significant obligations are detailed in our tax matters agreements in connection with the separation of Fortive from Danaher on July 1, 2016, the split-off of the Automation and Specialty business on October 1, 2018, and the Vontier separation on October 9, 2020.

We review our global tax positions on a quarterly basis, considering many factors including the results of discussions and resolutions of matters with certain tax authorities, tax rulings and court decisions, and the expiration of statutes of limitations reserves for contingent tax liabilities are accrued or adjusted as necessary.

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Effective Tax Rate

Our effective tax rate was 14.1% during 2024 and 12.6% during 2023, respectively.

Our effective tax rate for 2024 differs from the U.S.

federal statutory rate of 21% due primarily to the positive and negative effects of the Tax Cuts and Jobs Act (“TCJA”), U.S.

federal permanent differences, the impacts of credits and deductions provided by law, including those associated with state income taxes, a decrease in our uncertain tax positions, non-deductible transaction costs related to the Separation and the effect of changes in tax rates enacted in the current period.

Our effective tax rate was 11.5%, 4.7%, 5.7% during 2025, 2024, and 2023, respectively.

Our effective tax rate for 2025, 2024 and 2023 differs from the U.S.

federal statutory rate of 21% due primarily to the positive and negative effects of foreign income taxed at a different rate, the U.S.

federal permanent differences, the impacts of credits and deductions provided by law, including those associated with state income taxes, decreases in our uncertain tax positions and the effect of changes in tax rates enacted.

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.

Estimating the amount of potential tax is not practicable because of the complexity and variety of assumptions necessary to compute the tax.

COMPREHENSIVE INCOME

Comprehensive income decreased by $172 million in 2024 as compared to 2023, primarily due to an unfavorable change in foreign currency translation adjustments of $149 million, offset by an increase in net income of $33 million and a favorable change in pension benefit adjustments of $11 million.

Comprehensive income increased by $60 million in 2025 as compared to 2024, primarily due to favorable changes in foreign currency translation of $314 million, and a $50 million increase in net earnings from continuing operations.

Additionally, there was a $304 million decrease in net earnings from discontinued operations.

Comprehensive income decreased by $172 million in 2024 as compared to 2023, primarily due to an unfavorable change in foreign currency translation adjustments of $149 million, partially offset by a $74 million increase in net earnings from continuing operations and a favorable change in pension benefit adjustments of $11 million.

Additionally, there was a $107 million decrease in net earnings from discontinued operations.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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Interest Rate Risk

We manage interest cost using a mixture of fixed-rate and variable-rate debt.

A change in interest rates on long-term debt impacts the fair value of our fixed-rate long-term debt but not our earnings or cash flows because the interest on such debt is fixed.

Generally, the fair market value of fixed-rate debt will increase as interest rates fall and decrease as interest rates rise.

As of December 31, 2024, an increase of 100 basis points in interest rates would have decreased the fair value of our fixed-rate long-term debt by approximately $101 million.

We utilize a mixture of fixed-rate and variable-rate debt.

A change in interest rates impacts the fair value of our fixed-rate debt but not our earnings or cash flows because the interest on such debt is fixed.

As of December 31, 2025, an increase of 100 basis points in interest rates would have decreased the fair value of our fixed-rate debt by approximately $86 million.

As of December 31, 2025, our variable-rate debt obligations consist of U.S.

dollar denominated commercial paper and senior unsecured term facilities denominated in either Euros or Japanese Yen (refer to Note 9 to the consolidated financial statements for information regarding our outstanding indebtedness as of December 31, 2024).

dollar-denominated commercial paper (refer to Note 8 to the consolidated financial statements for information regarding our outstanding indebtedness).

As a result, our primary interest rate exposure results from changes in short-term interest rates.

As these shorter duration obligations mature, we anticipate issuing additional short-term commercial paper obligations and/or term loans to refinance all or part of these borrowings.

The annual effective rate associated with our outstanding variable-rate obligation was approximately 4.85% with interest expense of $59 million.

As of December 31, 2024, on an annualized basis, a hypothetical 10 basis points increase in market interest rates on our variable-rate debt obligations would have increased our interest expense by approximately $1.0 million in 2024.

The annual effective rate associated with our outstanding variable-rate obligations during the year was approximately 4.1% with interest expense of $36 million.

As of December 31, 2025, on an annualized basis, the impact to our interest expense in 2025 from a hypothetical 10 basis points increase in market interest rates on our variable-rate debt obligations would be immaterial.

Foreign Currency Exchange Rate Risk

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We also face translational exchange rate risk related to the translation of financial statements of our foreign operations into U.S.

dollars, our functional currency.

Costs incurred and sales recorded by subsidiaries operating outside of the United States are translated into U.S.

dollars using exchange rates effective during the respective period.

As a result, we are exposed to movements in the exchange rates of various currencies against the U.S.

dollars (“USD”), our functional currency.

Costs incurred and sales recorded by subsidiaries operating outside of the United States with functional currencies other than the USD, are translated into USD using exchange rates effective during the respective period.

As a result, we are exposed to movements in the exchange rates of various currencies against the USD.

The effect of a change in currency exchange rates on our net investment in international subsidiaries is reflected in the accumulated other comprehensive income (loss) (“AOCI”) component of equity.

A 10% depreciation in major currencies relative to the U.S.

dollar as of December 31, 2024 would have resulted in a reduction of foreign currency-denominated net assets and stockholders’ equity of approximately $326 million.

As of December 31, 2024, our outstanding €500 million Euro-denominated senior unsecured notes due 2026, €700 million Euro-denominated senior unsecured notes due 2029, ¥14.4 billion Yen-denominated variable interest rate term loan, and €275 million Euro-denominated variable interest rate term loan were designated as net investment hedges of our investment in applicable foreign operations.

Accordingly, foreign currency transaction gains or losses on the debt were deferred in the foreign currency translation component of AOCI as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries.

For the years ended December 31, 2024, 2023, and 2022, we recognized after-tax gains of $60.4 million, losses of $1.2 million, and losses of $5.1 million within Other comprehensive income (loss) related to the net investment hedges, respectively.

Currency exchange rates unfavorably impacted 2024 reported sales by 0.6% as compared to 2023, as the U.S.

dollar was, on average, stronger against most major currencies during 2024 as compared to exchange rate levels during 2023.

If the exchange rates in effect as of December 31, 2024 were to prevail throughout 2025, currency exchange rates would negatively impact 2025 estimated sales by approximately 1.4% relative to our performance in 2024.

In general, additional strengthening of the U.S.

dollar against other major currencies would further negatively impact our sales and results of operations on an overall basis.

A 10% depreciation in major currencies relative to the USD as of December 31, 2025 would have resulted in a reduction of foreign currency-denominated net assets and stockholders’ equity of approximately $179 million.

As of December 31, 2025, a portion of the €700 million Euro-denominated senior unsecured notes due 2029 remained designated as a net investment hedge on our investment in applicable foreign operations.

We recognized after-tax foreign currency transaction losses of $161.1 million, gains of $60.4 million, and losses of $1.2 million during the years ended December 31, 2025, 2024, and 2023, respectively, on the debt that was deferred in the foreign currency translation component of AOCI as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries.

Currency exchange rates favorably impacted 2025 reported sales by 0.4% as compared to 2024, as the USD was, on average, weaker against most major currencies during 2025 as compared to exchange rate levels during 2024.

If the exchange rates in effect as of December 31, 2025 were to prevail throughout 2026, currency exchange rates would positively impact 2026 estimated sales by approximately 0.8% relative to our performance in 2025.

In general, strengthening of the USD against other major currencies negatively impacts our sales and results of operations, while weakening of the USD positively impacts our sales and results of operations.

We have generally accepted the exposure to exchange rate movements without using derivative financial instruments to manage this risk.

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We are exposed to potential credit losses in the event of nonperformance by counterparties to our financial instruments.

Financial instruments that potentially subject us to credit risk consist of cash and highly-liquid investment grade cash

equivalents and receivables from customers.

Financial instruments that potentially subject us to credit risk consist of cash and highly-liquid investment grade cash equivalents and receivables from customers.

We place cash and cash equivalents with various high-quality financial institutions throughout the world and exposure is limited at any one institution.

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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.

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.

Credit support for these 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 December 31, 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.

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

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 our U.S.

dollar-denominated commercial paper program when we have outstanding borrowings.

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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Any downgrade in our credit rating would increase the cost of borrowing under our commercial paper programs and the Credit Agreement, and could limit or preclude our ability to issue commercial paper.

If our access to the commercial paper market is adversely affected due to a downgrade, change in market conditions, or otherwise, we would expect to rely on a combination of available cash, operating cash flow, and the Revolving Credit Facility to provide short-term funding.

short-term funding.

In such event, the cost of borrowings under the Revolving Credit Facility could be higher than the historic cost of commercial paper borrowings.

On June 7, 2023, we filed with the SEC an “automatic shelf” registration statement (the “Shelf Registration Statement”).

Under the Shelf Registration Statement, we may from time to time sell shares of common stock, preferred stock, debt securities, depositary shares, purchase contracts, purchase units, warrants and subscription rights in one or more offerings.

For example, in February 2024, we completed our offering of €500 million aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2026 (the “2026 Notes”) and €700 million aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2029 (the “2029 Notes”) under the Shelf Registration Statement.

We continue to monitor the financial markets, the stability of U.S and international banks and general global economic conditions.

Under the Shelf Registration Statement, we may from time to time sell shares of common stock, preferred stock, debt securities, depository shares, purchase contracts, purchase units, warrants and subscription rights in one or more offerings.

We continue to monitor the financial markets, the stability of U.S.

and international banks and general global economic conditions.

In addition, our access to the capital markets and other financing sources is impacted by any change in our credit rating.

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Year Ended December 31,

Net cash provided by operating activities

2025 2024 2023

Cash paid for acquisitions, net of cash received $ (1,721.8) $ (95.8)

Purchases of property, plant and equipment

Total operating cash provided by continuing operations

$ 1,035.7 $ 1,028.5 $ 833.4

Proceeds from sale of property

Cash infusion into divestiture

Purchases of property, plant and equipment $ (105.1) $ (86.1) (78.6)

Cash paid for acquisitions, net of cash received (25.7) (3.6) $ (95.8)

All other investing activities 11.2 0.9 1.4

Net cash used in investing activities

Total investing cash used in continuing operations

$ (119.6) $ (88.8) $ (173.0)

Net proceeds from (repayments of) commercial paper borrowings $ 0.9 $ (596.5) 839.9

$ (596.5) $ 839.9

Proceeds from borrowings (maturities longer than 90 days), net of issuance costs 1,733.5 549.3

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

Repurchase of common shares (1,610.1) (889.6) (272.9)

Payment of dividends (92.2) (111.2) (102.0)

Proceeds from borrowings (maturities greater than 90 days), net of issuance costs

— 1,733.5 $ 549.3

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

Proceeds from Ralliant Dividend

All other financing activities 40.8 71.1 18.0

Net cash provided by (used in) financing activities

Total financing cash provided by (used in) continuing operations

$ (1,226.3) $ (792.7) $ 32.3

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 $1.5 billion in 2024, representing an increase of $173 million, or 12.8%, as compared to 2023, primarily attributable to the following factors:

• Year-over-year increases of $35 million in Operating cash flow from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, Gain on sale of property, Loss from divestiture, and Loss from equity investments).

• The aggregate changes in accounts receivable, inventories, and trade accounts payable generated $79 million of cash during 2024 compared to using $9 million of cash during 2023.

The amount of cash flow generated from or used by the aggregate of 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.

• The aggregate change in prepaid expenses and other assets, accrued expenses and other liabilities, and changes in deferred income taxes used $40 million of cash in 2024 as compared to using $91 million in 2023.

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

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 approximately $1.036 billion in 2025, $1.029 billion in 2024, and $833 million in 2023, representing a year over year increase of $7 million, or 1% in 2025, and $195 million, or 23.4% in 2024, primarily attributable to the following factors:

• Year-over-year increase of $44 million and $97 million in 2025 and 2024, respectively, in Operating cash flow 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 $1.1 million, $28 million, and $9 million of cash during 2025, 2024, and 2023, respectively.

The amount of cash flow generated from or used in a period depends upon how effectively we manage the cash conversion cycle, which can be impacted by timing of revenue and collection from customers, vendor cash disbursement, and purchases of materials and components for certain businesses.

• The aggregate change in prepaid expenses and other assets, accrued expenses and other liabilities, and changes in deferred income taxes used $53 million, $42 million, and $122 million of cash in 2025, 2024, and 2023, respectively.

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

Investing Activities

Cash outflows from investing activities increased by $1.6 billion in 2024 as compared to 2023 with the increase primarily due to a year-over year increase in cash used for acquisitions, net of cash acquired, of approximately $1.6 billion, an increase in capital expenditures of approximately $13 million, and the cash infusion into the Invetech Divestiture entity totaling $14 million, partially offset by the year-over-year increase in proceeds from sale of property and business of approximately $54 million.

Investing cash outflows from continuing operations increased by $31 million in 2025 due to higher capital expenditures and net cash flows related to acquisitions and divestitures.

Investing cash outflows from continuing operations decreased by $84 million in 2024 on less acquisition activity than in 2023, partially offset by higher capital expenditures.

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.

We expect capital spending to be between approximately $120 million and $150 million in 2025, though actual expenditures will ultimately depend on business conditions.

Financing Activities and Indebtedness

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

Financing activities used cash of $793 million in 2024, and generated cash of $32 million in 2023.

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

Financing activities used cash of $1.23 billion in 2025, used cash of $793 million in 2024, and generated cash of $32 million in 2023.

Financing activities during 2025 reflected the following transactions:

• 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.

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

• We borrowed $1 million in net commercial paper activities.

• We repurchased 30 million shares of our common stock for approximately $1.61 billion, with $483 million funded by the Ralliant Dividend and Ralliant Cash Proceeds.

• We made dividend payments to common shareholders totaling $92 million.

• 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.

• All other financing activities primarily include activities related to the stock incentive plan.

Financing activities during 2024 reflected the following transactions:

• We repaid 597 million in net commercial paper activities.

• We repurchased 12 million shares of our common stock for approximately $890 million.

• We made dividend payments to common shareholders totaling $111 million.

• On January 2, 2024, we drew down an additional $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, we 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 repaid $597 million in net commercial paper repayments under the U.S.

dollar-denominated commercial paper program.

• We repurchased 12 million shares of our common stock for approximately $890 million, including excise tax payments, under our share repurchase program.

• We made dividend payments to common shareholders totaling $111 million.

• All other financing activities primarily include activities related to the stock incentive plan.

Financing activities during 2023 reflected the following transactions:

• On December 7, 2023, we entered into a term loan credit agreement, which provides for a 364-days delayed draw term loan facility up to an aggregate principal amount of $1.3 billion.

On December 14, 2023, we drew down $550 million of the $1.3 billion delayed-draw senior unsecured term facility (“Delayed-Draw Term Loan due 2024”) as a Term Secured Overnight Financing Rate (“Term SOFR”) Loan.

The repayment of the principal is due on December 12, 2024.

• We borrowed $840 million in net commercial paper under the U.S.

dollar-denominated commercial paper program.

• On August 24, 2023, we repaid $250 million in outstanding principal of the Delayed-Draw Term Loan due 2023.

On December 14, 2023, we repaid the remaining $750 million in outstanding principal and accrued interest thereon using the proceeds from the Delayed-Draw Term Loan due 2024 and available cash.

• We borrowed $840 million in net commercial paper activities.

• We repurchased 4 million shares of our common stock for approximately $273 million under our share repurchase program.

• Dividend payments to common shareholders totaling $102 million.

We generally expect to satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through term loans or issuances of commercial paper under the Commercial Paper Programs, with credit support provided by the Revolving Credit Facility.

The carrying value of total debt outstanding as of December 31, 2024 was approximately $3.7 billion.

We had $2.0 billion available under the Revolving Credit Facility as of December 31, 2024.

As of December 31, 2024 and 2023, we had $650 million and $1.3 billion borrowings outstanding under our Commercial Paper Program, respectively.

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, to repay any outstanding commercial paper as it matures.

Refer to Note 9 to the consolidated financial statements for additional information regarding the Company’s financing activities and indebtedness, including the Company’s outstanding debt as of December 31, 2024, the Company’s commercial paper program, and the Revolving Credit Facility.

• We made dividend payments to common shareholders totaling $102 million.

• On December 14, 2023, we drew down $550 million of the $1.3 billion Delayed-Draw Term Loan due 2024.

• On August 24, 2023 and December 14, 2023, we repaid $250 million and $750 million in outstanding principal of the Delayed-Draw Term Loan due 2023, respectively, using the proceeds from the Delayed-Draw Term Loan due 2024 and available cash.

Refer to Note 8 to the consolidated financial statements for additional information regarding the Company’s financing activities and indebtedness and access to additional capital.

Refer to Note 14 to the consolidated financial statements for a description of the Company’s share repurchase program.

On November 6, 2024, we declared a regular quarterly dividend of $0.08 per common share paid on December 27, 2024 to holders of record on November 29, 2024.

Cash and Cash Requirements

As of December 31, 2024, we held approximately $813 million of cash and cash equivalents, of which approximately 88% was held outside of the United States.

Our cash and cash equivalents were invested in highly liquid investment-grade instruments with a maturity of 90 days or less.

As of December 31, 2025, we held approximately $376 million of cash and cash equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less, of which approximately 80% 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.

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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.

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.

Cash Requirements

The following table sets forth a summary of our short-term and long-term cash requirements as of December 31, 2024 under (1) long-term debt principal and interest obligations, (2) leases, (3) purchase obligations and (4) other long-term liabilities reflected on our balance sheet under GAAP.

The table below does not reflect any such obligations, as the timing and amounts of any such payments are uncertain.

The following table sets forth a summary of our short-term and long-term cash requirements as of December 31, 2025 under (1) long-term debt principal and interest obligations, (2) leases, (3) purchase obligations and (4) other long-term liabilities reflected on our consolidated balance sheet.

($ in millions) Total Due within one year of December 31, 2025

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Total $ 5,722.9 $ 2,408.3 $ 3,314.6

(a) The amount due within one year of December 31, 2024 is related to the Euro Term Loan due 2025 and Yen Term Loan due 2025.

(a) The amount due within one year of December 31, 2025 is related to the 3.7% Euro-denominated senior unsecured notes due 2026 and 3.15% senior unsecured notes due 2026.

The amount due later than one year from December 31, 2025 includes $650 million outstanding borrowings under the Commercial Paper Programs.

Refer to Note 8 to the consolidated financial statements for additional information regarding the Company’s indebtedness as of December 31, 2025.

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(d) Consist of agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions, and the approximate timing of the transaction.

(e) Primarily consist of obligations under product service and warranty policies and allowances, performance and operating cost guarantees, estimated environmental remediation costs, self-insurance and litigation claims, post-retirement benefits, pension benefit obligations, net tax liabilities, and deferred compensation obligations.

(e) Primarily consist of obligations under contract liabilities, post-retirement benefits, pension benefit obligations, net tax liabilities, and deferred compensation obligations.

The timing of cash flows associated with these obligations is based upon management’s estimates over the terms of these arrangements and is largely based upon historical experience.

(f) Includes non-contractual obligations of $173 million of noncurrent gross unrecognized tax benefits.

Refer to Note 6 to the consolidated financial statements for additional information.

(f) Includes non-contractual obligations of $159 million of noncurrent gross unrecognized tax benefits, including interest and penalties.

However, the timing of these liabilities is uncertain, and therefore, they have been included in the “due later than one year from December 31, 2025” column.

The amounts also include our obligation under the TCJA for the transition tax on cumulative foreign earnings and profits, which we expect to pay over eight years.

Refer to Note 11 to the consolidated financial statements for additional information on unrecognized tax benefits.

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These guarantees are not recorded on our balance sheet and $17 million in commitments expire within one year of December 31, 2025 and $13 million later than one year from December 31, 2025.

During 2024, we contributed $1 million and $8 million to our U.S.

defined benefit pension plans, respectively.

During 2025, our cash contribution requirements for our U.S.

defined benefit pension plans are expected to be approximately $1 million and $8 million, respectively.

The ultimate amounts we will contribute depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates, and other factors.

As of December 31, 2025 we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

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The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We base these estimates and judgments on historical

experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances.

We base these estimates and judgments on historical experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances.

Actual results may differ materially from these estimates and judgments.

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Acquired Intangibles and Goodwill :

Our business acquisitions, including EA, typically result in the recognition of goodwill, developed technology, and other intangible assets, which affect the amount of future period amortization expense and possible impairment charges that we may incur.

The fair value of acquired intangible assets are determined using information available near the acquisition date based on estimates and assumptions that are deemed reasonable by us.

Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted cash flows of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates, customer attrition rates, and technology obsolescence rates.

These assumptions are forward looking and could be affected by future economic and market conditions.

We engage third-party valuation specialists who review our critical assumptions and calculations of the fair value of acquired intangible assets in connection with material acquisitions.

In connection with the EA acquisition in the first quarter of 2024, we recorded approximately $1.18 billion of goodwill and approximately $681 million of intangible assets.

Our business acquisitions typically result in the recognition of goodwill, developed technology, and other intangible assets, which affect the amount of future period amortization expense and possible impairment charges that we may incur.

Refer to Notes 2 and 4 to the consolidated financial statements for a description of our policies relating to goodwill, acquired intangibles, and acquisitions.

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In 2025, we performed goodwill impairment testing for our reporting units.

Reporting units that include recent acquisitions generally present the highest risk of impairment.

We believe the impairment risk associated with these reporting units generally decreases as we integrate these businesses and better position them for potential future earnings growth.

Our annual goodwill impairment analysis in 2025 indicated that, in all instances, the fair values of our reporting units exceeded their carrying values and consequently did not result in an impairment charge.

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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-K

Item 7. Management’s Discussion and Analysis