Fortive Financial Model
Industrial Equipment Company Financials Example (Free Excel Download)
Fortive is a diversified industrial technology conglomerate that provides essential technologies for connected workflow solutions across industrial and healthcare applications.
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About this model
This model provides a comprehensive equity valuation and scenario planning tool for Fortive Corporation, enabling analysts to forecast the company's recurring revenue growth, margin expansion, and capital allocation strategy following the mid-2025 spin-off of its Precision Technologies segment.
Fortive is a diversified industrial technology conglomerate that provides essential technologies for connected workflow solutions across industrial and healthcare applications. The company operates a highly profitable, asset-light business model characterised by high barriers to entry and sticky customer relationships, with approximately 50% of its revenue derived from recurring software subscriptions, consumables, and services.
Business segments include:
- Intelligent Operating Solutions (IOS) (approx. 69% of revenue): Provides advanced instrumentation, software, and services for facility management, predictive maintenance, and industrial safety (key brands include Fluke, Accruent, Gordian, and Industrial Scientific).
- Advanced Healthcare Solutions (AHS) (approx. 31% of revenue): Delivers hardware and software for hospital efficiency, infection prevention, and clinical workflows (key brands include Advanced Sterilization Products, Censis, and Provation).
Key geographies include the United States (56%), China (8%), and the rest of the world (36%). The company's competitive position is anchored by the Fortive Business System, a lean management philosophy inherited from its former parent company, Danaher, which drives continuous operational improvement and integration of acquired businesses. The most significant recent corporate event was the mid-2025 spin-off of its Precision Technologies segment into an independent publicly traded company named Ralliant, transforming Fortive into a simpler, higher-margin, and more software-centric enterprise.
The downloadable Fortive financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsFortive financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $5.25B | $5.83B | $3.91B | $4.08B | $4.16B |
| Gross profit | $3.01B | $3.36B | $2.48B | $2.62B | $2.64B |
| Operating income | $812.8M | $987.4M | $574.0M | $716.3M | $720.2M |
| Net income | $608.4M | $755.2M | $865.8M | $832.9M | $532.7M |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Fortive
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Intelligent Operating Solutions (IOS)
- Segment name: Intelligent Operating Solutions
- Revenue driver formula: (Installed Hardware Base x Replacement Rate x Average Selling Price) + (Active Software Licences x Annual Recurring Revenue per Licence)
- Historical growth rate: 3% to 5% core revenue CAGR.
- Key growth levers and headwinds: Growth is driven by the electrification trend, data centre build-outs, and the transition to SaaS-based facility management software. Headwinds include cyclical industrial capital expenditure slowdowns and foreign exchange volatility.
- Pricing dynamics: High pricing power due to mission-critical nature of testing and measurement tools; software pricing is largely contractual and subscription-based.
- Revenue recognition notes: Hardware is recognised at a point in time upon delivery. Software and SaaS revenues are recognised ratably over the contract term, creating a large deferred revenue balance.
- Seasonality: Q4 is typically the strongest quarter due to year-end budget flushes by industrial and enterprise customers.
Advanced Healthcare Solutions (AHS)
- Segment name: Advanced Healthcare Solutions
- Revenue driver formula: (New Equipment Placements x Equipment Price) + (Installed Base x Consumable/Service Attach Rate)
- Historical growth rate: 2% to 4% core revenue CAGR.
- Key growth levers and headwinds: Driven by hospital procedure volumes, stringent infection prevention regulations, and the digitisation of clinical workflows. Headwinds include hospital budget constraints and supply chain disruptions for medical hardware.
- Pricing dynamics: Razor-and-blade model where capital equipment is sold at competitive margins to secure highly profitable, long-term consumable and service contracts.
- Revenue recognition notes: Capital equipment recognised upfront. Consumables recognised upon shipment. Software and service contracts recognised over time.
- Seasonality: Modest seasonality, with Q4 slightly stronger due to hospital capital expenditure cycles.
Cost Structure
Variable Costs / COGS
- COGS primarily consists of direct materials, electronic components, manufacturing labour, and cloud hosting costs for SaaS products.
- Gross margin has historically ranged between 58% and 60%, trending upward due to the increasing mix of software and recurring services.
- Key input costs include electronic components, plastics, and logistics.
- COGS scales sub-linearly with revenue because the software and consumables mix provides significant operating leverage.
Operating Expenses
- R&D: Typically 6% to 7% of revenue. Fortive capitalises certain software development costs, but the majority of R&D is expensed as incurred to support continuous product innovation.
- SG&A: Typically 28% to 31% of revenue. This includes a heavy sales and marketing component to support direct sales forces, as well as corporate overhead.
- Depreciation & Amortisation: High amortisation burden (typically 5% to 7% of revenue) driven by the intangible assets acquired through Fortive's aggressive M&A strategy.
- Stock-Based Compensation: Runs at approximately 1.5% to 2.5% of revenue, which is lower than pure-play tech companies but material enough to require adjustment for cash flow analysis.
- Restructuring / one-time charges: Frequent but generally small, related to the integration of acquired companies and footprint consolidation under the Fortive Business System.
Margin Profile
- Gross margin: 58% to 60%.
- Adjusted EBITDA margin: 29% to 32% (expanding post-Ralliant spin-off).
- Operating margin (GAAP): 18% to 20%.
- Net margin: 12% to 14%.
- Margins are structurally expanding as the company sheds lower-margin hardware businesses and scales its software-enabled workflows.
Balance Sheet Structure
- Total assets are approximately $17 billion.
- Goodwill and intangible assets dominate the balance sheet, representing over 60% of total assets due to a history of serial acquisitions (such as ServiceChannel, Provation, and EA Elektro-Automatik).
- Working capital profile:
- Days Sales Outstanding (DSO): 55 to 65 days.
- Days Inventory Outstanding (DIO): 60 to 75 days (hardware businesses require inventory buffering).
- Days Payable Outstanding (DPO): 50 to 60 days.
- Net working capital as a percentage of revenue is typically low or slightly negative.
- The company benefits from a negative working capital dynamic in its software businesses due to upfront cash collection recorded as deferred revenue.
- PP&E is relatively small (asset-light model), consisting of light manufacturing facilities, testing labs, and office space.
- Right-of-use assets are material but not a dominant feature of the capital structure.
Capital Expenditure & Investment
- Capex as a percentage of revenue is very low, typically ranging from 2.0% to 3.0%.
- Maintenance capex accounts for roughly 40% of total capex, with the remaining 60% dedicated to growth initiatives and capitalised software development.
- The company is a serial, transformational acquirer. M&A is the primary use of capital, focusing on software and recurring-revenue businesses that fit the Fortive Business System.
- Typical acquisition multiples paid range from 15x to 20x EBITDA, reflecting the premium nature of the software and healthcare assets targeted.
Debt & Capital Structure
- Total debt is typically managed to maintain a strong investment-grade profile, with net debt fluctuating based on recent M&A activity.
- Target Debt/EBITDA ratio is generally 2.0x to 3.0x, though the company will temporarily exceed this for strategic acquisitions before rapidly deleveraging.
- Key debt instruments include Euro-denominated senior unsecured notes and a large revolving credit facility.
- Interest rate profile is predominantly fixed through long-term bonds, with a weighted average cost of debt around 3.5% to 4.5%.
- The share repurchase programme is highly active. In 2025, Fortive deployed $1.6 billion towards share repurchases, significantly reducing the share count.
- Dividend policy is conservative. The company pays a modest regular quarterly dividend with a yield typically below 0.5%, preferring to return capital via buybacks and M&A.
Cash Flow Characteristics
- Operating cash flow conversion is exceptional, typically running at 110% to 130% of net income.
- Free cash flow margin (FCF / Revenue) is consistently strong, ranging from 25% to 28%.
- Major non-cash items bridging net income to OCF include high amortisation of acquired intangibles and stock-based compensation.
- Working capital is a net source of cash during growth periods due to the expansion of deferred revenue balances from software subscriptions.
- Cash tax rates are generally lower than the statutory rate due to R&D tax credits and the amortisation of tax-deductible goodwill.
Sheet Structure
- Assumptions: Hardcoded inputs for macroeconomic drivers, segment growth rates, margin targets, working capital days, and capital allocation policies.
- Scenarios: Scenario toggles (Base, Bull, Bear) driving the Assumptions sheet.
- Income Statement: Consolidated P&L. Must include a specific line for "Income from Discontinued Operations" to handle the historical financials of the spun-off Precision Technologies segment.
- Revenue Build: Detailed build for IOS and AHS segments, splitting revenue into recurring (software/consumables) and non-recurring (hardware/equipment) streams.
- Cost Build: Schedule calculating COGS, R&D, and SG&A based on percentage of revenue assumptions, plus a detailed depreciation and amortisation waterfall.
- Balance Sheet: Standard asset, liability, and equity line items, with specific breakouts for Goodwill, Intangible Assets, and Deferred Revenue.
- Working Capital: Schedule calculating accounts receivable, inventory, accounts payable, and deferred revenue based on DSO, DIO, DPO, and deferred revenue days.
- Cash Flow Statement: Indirect method starting from Net Income from Continuing Operations, adjusting for non-cash items, and calculating Free Cash Flow.
- Debt Schedule: Tranche-by-tranche build of senior notes and revolving credit facility, calculating interest expense and tracking maturities.
- Shareholders Equity: Tracks retained earnings, accumulated other comprehensive income (FX translation), share repurchases, and dividends paid.
- EPS & Shares: Calculates basic and diluted share counts, factoring in the aggressive share repurchase programme.
- DCF Valuation: Unlevered free cash flow calculation, WACC assumptions, terminal value calculation, and implied share price.
- Comps: Trading multiples for peer group (e.g., Roper Technologies, AMETEK, Danaher).
Key Financial Relationships
- `IOS Revenue = IOS Prior Year Revenue * (1 + IOS Core Growth Rate) + IOS Acquired Revenue`
- `AHS Revenue = AHS Prior Year Revenue * (1 + AHS Core Growth Rate) + AHS Acquired Revenue`
- `Total Continuing Operations Revenue = IOS Revenue + AHS Revenue`
- `Consolidated Gross Profit = Total Continuing Operations Revenue * Consolidated Gross Margin %`
- `Segment Adjusted EBITDA = Segment Revenue * Segment Adjusted EBITDA Margin %`
- `Deferred Revenue Ending Balance = Deferred Revenue Beginning Balance + New Billings - Recognised Revenue`
- `Amortisation Expense = Prior Year Intangibles * Average Amortisation Rate`
- `Free Cash Flow = Operating Cash Flow - Capital Expenditures`
- `Shares Repurchased = Share Repurchase Budget / Average Share Price During Period`
- `Ending Diluted Shares = Beginning Diluted Shares - Shares Repurchased + Stock Based Compensation Dilution`
- `Interest Expense = Average Debt Balance * Weighted Average Interest Rate`
- `Net Income from Continuing Operations = Operating Profit - Interest Expense - Taxes`
Cross-Sheet Dependencies
- The Revenue Build feeds the top line of the Income Statement and drives the activity in the Working Capital schedule.
- The Working Capital schedule calculates the change in net working capital, which feeds directly into the Cash Flow Statement.
- The Cost Build calculates depreciation and amortisation, which feeds the Income Statement (operating expenses) and the Cash Flow Statement (non-cash add-backs), while reducing the PP&E and Intangibles balances on the Balance Sheet.
- The Cash Flow Statement determines the cash available for debt paydown or share repurchases, feeding the Debt Schedule and Shareholders Equity sheets.
- A circularity exists between the Debt Schedule (interest expense), the Income Statement (net income), and the Cash Flow Statement (cash available for debt paydown). The builder must implement a circuit breaker or iterative calculation toggle to manage this.
Sign Convention
- Income Statement: Revenue is positive. All expenses (COGS, SG&A, R&D, Interest, Taxes) are negative. Net Income is the sum of these items.
- Balance Sheet: Assets are positive. Liabilities and Equity are positive. Total Assets must equal Total Liabilities plus Total Equity.
- Cash Flow Statement: Net Income is positive. Non-cash add-backs (Depreciation) are positive. Increases in assets (use of cash) are negative. Increases in liabilities (source of cash) are positive. Capital expenditures and dividends paid are negative.
Things Most Likely to Go Wrong
- Failing to isolate the Precision Technologies (Ralliant) spin-off. Historical consolidated financials include this segment. The model must use "Continuing Operations" data for 2024 and prior to accurately forecast the remaining IOS and AHS segments.
- Mismodelling the deferred revenue balance. As Fortive shifts to software, deferred revenue is a massive source of operating cash flow. If working capital is modelled purely as a percentage of revenue without isolating deferred revenue, cash flow will be understated.
- Ignoring the impact of foreign currency translation. With 36% of revenue generated outside the US, FX swings can distort core growth rates. The model should forecast on a constant-currency basis.
- Underestimating the amortisation burden. Fortive's GAAP earnings are heavily depressed by intangible amortisation from M&A. The model must clearly bridge GAAP EPS to Adjusted EPS by adding back this non-cash charge.
- Overestimating capital expenditures. Fortive is an asset-light business. Applying standard industrial capex assumptions (e.g., 5% to 8%) will severely understate free cash flow.
- Failing to account for the aggressive share repurchase programme. Fortive retired a massive amount of stock in 2025 ($1.6 billion). Holding the share count flat will result in an inaccurate per-share valuation.
- Miscalculating the tax rate. The GAAP effective tax rate is often volatile due to discrete items and spin-off tax treatments. The model should use the adjusted cash tax rate for valuation purposes.
- Treating all segments with the same margin profile. IOS operates at a higher margin and faster growth rate than AHS. Segment-level margin assumptions are critical.
Validation Checks
- Gross margin must remain between 58% and 61%. Flag if the model projects margins outside this band.
- Adjusted EBITDA margin should be approximately 30% to 33% for the post-spin company.
- Free Cash Flow conversion (FCF / Adjusted Net Income) must be greater than 100%, reflecting the software-driven working capital dynamics.
- Capex as a percentage of revenue should not exceed 3.5%.
- The Balance Sheet must balance perfectly in every forecasted period (Total Assets = Total Liabilities + Equity).
- Debt/EBITDA should remain below 3.5x. Flag if the model projects leverage exceeding this threshold without a corresponding debt paydown assumption.
- The model must show a declining share count over time if the historical $1 billion+ annual share repurchase budget is maintained.
- Return on Invested Capital (ROIC) should be tracked and must exceed the WACC (typically >10%) to validate the company's M&A strategy.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| IOS Core Revenue Growth | 3.5 | % | Based on recent historical averages and data centre/electrification tailwinds. |
| AHS Core Revenue Growth | 2.5 | % | Based on historical hospital capital expenditure cycles and recurring consumable growth. |
| Consolidated Gross Margin | 60.0 | % | Reflects the post-spin mix of high-margin software and recurring services. |
| SG&A as % of Revenue | 30.0 | % | Consistent with recent historical continuing operations data. |
| R&D as % of Revenue | 6.5 | % | Required to maintain innovation in software and hardware products. |
| Adjusted EBITDA Margin | 31.5 | % | Aligns with Q4 2025 and FY 2025 reported adjusted margins. |
| Days Sales Outstanding (DSO) | 60 | Days | Calculated from recent historical accounts receivable and revenue. |
| Days Inventory Outstanding (DIO) | 65 | Days | Calculated from recent historical inventory and COGS. |
| Days Payable Outstanding (DPO) | 55 | Days | Calculated from recent historical accounts payable and COGS. |
| Capex as % of Revenue | 2.5 | % | Reflects the asset-light nature of the post-spin business model. |
| Effective Tax Rate | 18.0 | % | Adjusted tax rate excluding discrete spin-off related tax impacts. |
| Annual Share Repurchases | 1,000 | $ Millions | Conservative estimate based on the $1.6 billion deployed in FY 2025. |
| Dividend Yield | 0.4 | % | Based on the current regular quarterly dividend payout. |
| Weighted Average Cost of Debt | 4.0 | % | Reflects the blended rate of existing Euro-denominated notes and credit facilities. |
| WACC (Discount Rate) | 8.5 | % | Standard cost of capital for a large-cap, diversified industrial technology firm. |
| Terminal Growth Rate | 2.5 | % | Aligns with long-term global GDP growth and inflation expectations. |
Data Sources & Benchmarks
- Filings: SEC EDGAR (Fortive Corporation, Ticker: FTV). Use the 2024 10-K and 2025 8-K/10-Q filings for continuing operations data.
- Investor Relations: Fortive Investor Relations website (investors.fortive.com), specifically the 2025 Investor Day presentation and Q4 2025 earnings release.
- Key Peers for Benchmarking: Roper Technologies (ROP), AMETEK (AME), Danaher (DHR), and Keysight Technologies (KEYS).
- Industry Data Sources: Dodge Construction Network (for Gordian/Accruent end-market health), American Hospital Association data (for AHS capital expenditure trends).
- Consensus Estimates: Bloomberg or FactSet for forward-looking EPS and revenue consensus to validate base-case model outputs.
Sources
- Fortive Corporation Form 10-K for the fiscal year ended December 31, 2024.
- Fortive Corporation Q4 2025 Earnings Release (February 4, 2026).
- Fortive Corporation Q3 2025 Earnings Release (October 29, 2025).
- Fortive 2025 Investor Day Presentation (June 10, 2025).
- Fortive Corporation Website: Segment Overviews (Intelligent Operating Solutions and Advanced Healthcare Solutions).
Do more with the Fortive model
Frequently asked
What does Fortive Corporation do?+
Fortive is a diversified industrial technology conglomerate that provides essential technologies for connected workflow solutions across industrial and healthcare applications. The company operates an asset-light business model, with approximately 50% of its revenue derived from recurring software subscriptions, consumables, and services.
What are the main revenue drivers for Fortive?+
Fortive's revenue is primarily driven by recurring software subscriptions, consumables, and services, which account for about 50% of its total revenue. The company also generates revenue from its Intelligent Operating Solutions and Advanced Healthcare Solutions segments through advanced instrumentation, software, and hardware.
What is Fortive's capital expenditure strategy?+
Fortive maintains a very low capital expenditure as a percentage of revenue, typically ranging from 2.0% to 3.0%. Maintenance capex accounts for roughly 40% of this, with the remaining 60% dedicated to growth initiatives and capitalized software development. The company's primary use of capital is serial, transformational acquisitions, focusing on software and recurring-revenue businesses.
How does Fortive's business model impact its profitability and balance sheet structure?+
Fortive operates a highly profitable, asset-light business model characterized by high barriers to entry and sticky customer relationships. Its balance sheet is dominated by goodwill and intangible assets, representing over 60% of total assets due to a history of serial acquisitions. The company also benefits from a negative working capital dynamic in its software businesses due to upfront cash collection.
What is the forecast horizon for the Fortive financial model?+
The downloadable Excel model for Fortive provides a forecast horizon spanning from Fiscal Year 2026 through Fiscal Year 2030. This comprehensive model is designed to support equity valuation and scenario planning for the company.
Can I download an Excel financial model for Fortive?+
Yes, an Excel financial model for Fortive is available for download, offering a comprehensive equity valuation and scenario planning tool. This model enables analysts to forecast the company's recurring revenue growth, margin expansion, and capital allocation strategy following the mid-2025 spin-off of its Precision Technologies segment.
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