Fortive Corp (FTV)

CIK: 0001659166. SIC: 3823 Industrial Instruments For Measurement, Display, and Control. Latest 10-K as of: 2026-02-25.

SIC breadcrumb: Manufacturing > SIC Major Group 38 > SIC 3823 Industrial Instruments For Measurement, Display, and Control

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1659166. Latest filing source: 0001659166-26-000007.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001659166.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

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Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-25. Report date: 2025-12-31.

ITEM 7. 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, 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.

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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. Our MD&A is divided into seven sections:

•Basis of Presentation

•Overview

•Results of Operations

•Financial Instruments and Risk Management

•Liquidity and Capital Resources

•Critical Accounting Estimates

•New Accounting Standards

OVERVIEW

General

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, 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. Given the broad range of products manufactured, software and services provided, and geographies served, we do not use any indices other than general economic trends to predict the overall outlook for the Company. Our individual businesses monitor key competitors and customers, including their sales, to the extent possible, to gauge relative performance and the outlook for the future.

As a result of our geographic and industry diversity, we face a variety of opportunities and challenges, including technological development in most of the markets we serve, the expansion and evolution of opportunities in growing markets, trends and costs associated with a global labor force, 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. We are making significant investments, organically and through acquisitions, to address technological change in the markets we serve and to improve our manufacturing, research and development, and customer-facing resources in order to be responsive to our customers throughout the world.

Non-GAAP Measures

In this report, references to sales from existing businesses (“core revenue”) refer to sales from operations calculated according to generally accepted accounting principles in the United States (“GAAP”) but excluding (1) the impact from acquired and divested businesses and (2) the impact of foreign currency translation. 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

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(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.

Management believes that reporting the non-GAAP financial measure of core revenue provides useful information to investors by helping identify underlying growth trends in our business and facilitating comparisons of our sales performance with our performance in prior and future periods and to our peers. We exclude the effect of acquisition and divestiture related items because the nature, size, and number of such transactions can vary dramatically from period to period and between us and our peers. We exclude the effect of currency translation from core revenue because the impact of currency translation is not under management’s control and is subject to volatility. 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 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

Components of Sales Growth

2025 vs. 2024

2024 vs. 2023

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)

1.7 

%

4.3 

%

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.

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Operating Profit Margins

2025 vs. 2024

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

2024 vs. 2023

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

Selected Financial Data

For the Year Ended December 31

($ in millions)

2025

2024

2023

Sales

$

2,856.3 

$

2,793.2 

$

2,684.5 

Operating profit

738.3 

708.0 

629.9 

Depreciation

49.3 

40.5 

33.9 

Amortization

187.1 

188.3 

185.5 

Operating profit as a % of sales

25.8 

%

25.3 

%

23.5 

%

Depreciation as a % of sales

1.7 

%

1.4 

%

1.3 

%

Amortization as a % of sales

6.6 

%

6.7 

%

6.9 

%

Components of Sales Growth

2025 vs. 2024

2024 vs. 2023

Total revenue growth (GAAP)

2.3 

%

4.1 

%

Excluding impact of:

Acquisitions and Divestitures

0.4 

%

(0.8)

%

Currency exchange rates

(0.6)

%

0.2 

%

Core revenue growth (Non-GAAP)

2.1 

%

3.5 

%

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.

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Operating Profit Margins

2025 vs. 2024

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

2024 vs. 2023

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

Advanced Healthcare Solutions Selected Financial Data

For the Year Ended December 31

($ in millions)

2025

2024

2023

Sales

$

1,302.8 

$

1,287.7 

$

1,229.4 

Operating profit

138.6 

138.5 

83.8 

Depreciation

19.5 

20.2 

21.2 

Amortization

180.3 

181.0 

181.4 

Operating profit as a % of sales

10.6 

%

10.8 

%

6.8 

%

Depreciation as a % of sales

1.5 

%

1.6 

%

1.7 

%

Amortization as a % of sales

13.8 

%

14.1 

%

14.8 

%

Components of Sales Growth

2025 vs. 2024

2024 vs. 2023

Total revenue growth (GAAP)

1.2 

%

4.7 

%

Excluding impact of:

Currency exchange rates

(0.4)

%

1.4 

%

Core revenue growth (Non-GAAP)

0.8 

%

6.1 

%

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.

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Operating Profit Margins

2025 vs. 2024

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

2024 vs. 2023

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

For the Year Ended December 31

($ in millions)

2025

2024

2023

Sales

$

4,159.1 

$

4,080.9 

$

3,913.9 

Cost of sales

(1,518.0)

(1,461.8)

(1,436.8)

Gross profit

2,641.1 

2,619.1 

2,477.1 

Gross profit margin

63.5 

%

64.2 

%

63.3 

%

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

For the Year Ended December 31

($ in millions)

2025

2024

2023

Sales

$

4,159.1 

$

4,080.9 

$

3,913.9 

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 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.

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NON-OPERATING INCOME (EXPENSE), NET

Interest costs

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

Other non-operating expense, net

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 TAXES

General

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. We record the tax effect of discrete items and items that are reported net of their tax effects in the period in which they occur.

Our effective tax rate can be affected by, among others, changes in the mix of earnings in countries with differing statutory tax rates (including as a result of business acquisitions and dispositions), changes in the valuation of deferred tax assets and liabilities, accruals related to contingent tax liabilities and period-to-period changes in such accruals, the results of audits and examinations of previously filed tax returns (as discussed below), the expiration of statutes of limitations, the implementation of tax planning strategies, tax rulings, court decisions, settlements with tax authorities, and changes in tax laws.

We are subject to income, transaction and other taxes in the United States and in multiple foreign jurisdictions. 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 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; and at the time of a change, the related expense or benefit recorded may be material to the quarter and year of change. Furthermore, certain tax laws are inherently ambiguous requiring subjective interpretation on the application thereof. Our interpretation and the corresponding amount of taxes we pay is, and may in the future continue to be, subject to audits by U.S. federal, state, and local tax authorities and by non-U.S. tax authorities. 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.

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, the Vontier separation on October 9, 2020, and the PT Separation on June 28, 2025. 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.

For a discussion of risks related to these and other tax matters, please refer to “Item 1A. Risk Factors.”

Effective Tax Rate

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

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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.

Repatriation

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 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

We are exposed to market risk from changes in interest rates, foreign currency exchange rates, credit risk and commodity prices, each of which could impact our financial statements. We generally address our exposure to these risks through our normal operating and financing activities. In addition, our broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on our operating profit as a whole.

Interest Rate Risk

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 (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 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

We face transactional exchange rate risk from transactions with customers in countries outside of the United States and from intercompany transactions between affiliates. Transactional exchange rate risk arises from the purchase and sale of goods and services in currencies other than our functional currency or the functional currency of an applicable subsidiary. We also face translational exchange rate risk related to the translation of financial statements of our foreign operations into 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 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.

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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. Both positive and negative movements in currency exchange rates against the U.S. dollar will therefore continue to affect the reported amount of sales, profit, and assets and liabilities in our consolidated financial statements.

Credit Risk

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. We place cash and cash equivalents with various high-quality financial institutions throughout the world and exposure is limited at any one institution. Although we typically do not obtain collateral or other security to secure these obligations, we regularly monitor the third party depository institutions that hold our cash and cash equivalents. We emphasize safety and liquidity of principal over yield on those funds. In addition, concentrations of credit risk arising from receivables from customers are limited due to the diversity of our customers. Our businesses perform credit evaluations of their customers’ financial conditions as appropriate and also obtain collateral or other security when appropriate.

Commodity Price Risk

For a discussion of risks relating to commodity prices, refer to “Item 1A. Risk Factors.”

LIQUIDITY AND CAPITAL RESOURCES

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, execute strategic separations, repurchase common stock, 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 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. 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.

Our ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of our credit rating and market conditions. 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

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

Overview of Cash Flows and Liquidity

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

Year Ended December 31,

2025

2024

2023

Total operating cash provided by continuing operations

$

1,035.7 

$

1,028.5 

$

833.4 

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 

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 

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

1,150.0 

— 

— 

All other financing activities

40.8 

71.1 

18.0 

Total financing cash provided by (used in) continuing operations

$

(1,226.3)

$

(792.7)

$

32.3 

Operating Activities

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.

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Investing Activities

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.

Financing Activities and Indebtedness

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:

•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.

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

Financing activities during 2023 reflected the following transactions:

•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.

•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.

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Cash and Cash Requirements

Cash

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. With respect to our cash requirements, we generally intend to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions and repayment of maturing debt, we may also borrow under our commercial paper programs or credit facilities or enter into new credit facilities and either borrow directly thereunder or use such credit facilities to backstop additional borrowing capacity under our commercial paper programs. We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.

Cash Requirements

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

Due later than one year from December 31, 2025

Debt and leases:

Long-term debt principal payments (a)

$

3,213.5 

$

1,191.3 

$

2,022.2 

Interest payments on long-term debt (b)

657.5 

105.1 

552.4 

Operating lease obligations (c)

106.7 

25.4 

81.3 

Other:

Purchase obligations (d)

211.6 

202.8 

8.8 

Other liabilities reflected on the balance sheet under GAAP (e)(f)

1,533.6 

883.7 

649.9 

Total

$

5,722.9 

$

2,408.3 

$

3,314.6 

(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.

(b) Interest payments on long-term debt are projected for future periods using the interest rates in effect as of December 31, 2025. Certain of these projected interest payments may differ in the future based on changes in market interest rates.

(c) Includes future lease payments for operating leases having initial noncancelable lease terms in excess of one year.

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

In addition to the obligations noted above, we have issued guarantees, consisting primarily of outstanding standby letters of credit, bank guarantees, and performance and bid bonds, in connection with certain arrangements with vendors, customers, financing counterparties, and governmental entities to secure our obligations and/or performance requirements related to specific transactions. 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.

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

CRITICAL ACCOUNTING ESTIMATES

Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. 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. Actual results may differ materially from these estimates and judgments.

We believe the following accounting estimates are most critical to an understanding of our financial statements. Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the estimate is made, and (2) material changes in the estimate are reasonably likely from period to period. For a detailed discussion on the application of these and other accounting estimates, refer to Note 2 to the consolidated financial statements.

Acquired Intangibles and Goodwill: 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.

In performing our goodwill impairment testing, we estimate the fair value of our reporting units primarily using a market based approach. We estimate fair value based on multiples of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) determined by current trading market multiples of earnings for companies operating in businesses similar to each of our reporting units, in addition to recent market available sale transactions of comparable businesses. In evaluating the estimates derived by the market based approach, we make judgments about the relevance and reliability of the multiples by considering factors unique to our reporting units, including operating results, business plans, economic projections, anticipated future cash flows, and transactions and marketplace data as well as judgments about the comparability of the market proxies selected. In certain circumstances we also evaluate other factors including results of the estimated fair value utilizing a discounted cash flow analysis (i.e., an income approach), market positions of the businesses, comparability of market sales transactions, and financial and operating performance in order to validate the results of the market approach. The discounted cash flow model requires judgmental assumptions about projected revenue growth, future operating margins, discount rates, and terminal values. There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment.

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

The excess of the estimated fair value over carrying value (expressed as a multiple of the carrying value for the respective reporting unit) for each of our reporting units as of the annual testing date ranged from approximately 1.5x to approximately 4.7x. In order to evaluate the sensitivity of the fair value calculations used in the goodwill impairment test, we applied a hypothetical 10% decrease to the fair values of each reporting unit and compared those hypothetical values to the reporting unit carrying values. Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a multiple of the carrying value for the respective reporting unit) for each of our reporting units ranged from approximately 1.3x to approximately 4.3x. We evaluated other factors relating to the fair value of the reporting units, including, as applicable, results of the estimated fair value using an income approach, market positions of the businesses, comparability of market sales transactions and financial and operating performance, and concluded no impairment charges were required.

We review identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment loss occurred for intangible assets with definite lives requires a comparison of the carrying amount to the sum of undiscounted cash flows expected to be generated by the asset. We also test intangible assets with indefinite lives at least annually for impairment. These analyses require management to make judgments and estimates about future revenues, expenses, market conditions, and discount rates related to these assets. We evaluated events or circumstances that may indicate the carrying value of our intangible assets may not be fully recoverable during the year ended December 31, 2025, and recorded no impairments.

If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings which would adversely affect our financial statements.

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Revenue Recognition: We derive revenue from the sale of products and services. Revenue is recognized when control over the promised products or services is transferred to the customer in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. In determining if control has transferred, we consider whether certain indicators of the transfer of control are present, such as the transfer of title, present right to payment, significant risks and rewards of ownership, and customer acceptance when acceptance is not a formality. To determine the consideration that the customer owes us, we make judgments regarding the amount of customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs. Refer to Note 2 to the consolidated financial statements for a description of our revenue recognition policies.

If our judgments regarding revenue recognition prove incorrect, our reported revenues in particular periods may be adversely affected. Historically, our estimates of revenue have been materially correct.

Income Taxes: For a description of our income tax accounting policies, refer to Note 2 and Note 11 to the consolidated financial statements.

In accordance with GAAP, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax return in future years for which the tax benefit has already been reflected in our Consolidated Statements of Earnings. Deferred tax liabilities generally represent items that have already been taken as a deduction on our tax return but have not yet been recognized as an expense in our Consolidated Statements of Earnings. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Our deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. We evaluate the realizability of deferred income tax assets for each of the jurisdictions in which we operate. If we experience cumulative pretax income in a particular jurisdiction in the three-year period including the current and prior two years, we normally conclude that the deferred income tax assets will more likely than not be realizable and no valuation allowance is recognized, unless known or planned operating developments would lead management to conclude otherwise. However, if we experience cumulative pretax losses in a particular jurisdiction in the three-year period including the current and prior two years, we then consider a series of factors in the determination of whether the deferred income tax assets can be realized. These factors include historical operating results, known or planned operating developments, the period of time over which certain temporary differences will reverse, consideration of the utilization of certain deferred income tax liabilities, tax law carryback capability in the particular country, and prudent and feasible tax planning strategies. After evaluation of these factors, if the deferred income tax assets are expected to be realized within the tax carryforward period allowed for that specific country, we would conclude that no valuation allowance would be required. To the extent that the deferred income tax assets exceed the amount that is expected to be realized within the tax carryforward period for a particular jurisdiction, we establish a valuation allowance.

We recognize tax benefits from uncertain tax positions only if, in our assessment, it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Judgment is required in evaluating tax positions and determining income tax provisions. We re-evaluate the technical merits of our tax positions and may recognize an uncertain tax benefit in certain circumstances, including when: (i) a tax audit is completed; (ii) applicable tax laws change, including a tax case ruling or legislative guidance; or (iii) the applicable statute of limitations expires. We recognize potential accrued interest and penalties with unrecognized tax positions in income tax expense.

In addition, we are routinely examined by various domestic and international taxing authorities. The amount of income taxes we pay is subject to audit by federal, state, and foreign tax authorities, which may result in proposed assessments (see “-Results of Operations - Income Taxes” and Note 11 to the consolidated financial statements). We review our global tax positions on a quarterly basis. Based on these reviews, 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.

An increase in our 2025 effective tax rate of 1.0% would have resulted in an additional income tax provision for the year ended December 31, 2025 of approximately $6 million.

NEW ACCOUNTING STANDARDS

For a discussion of new accounting standards relevant to our businesses, refer to Note 2 to the consolidated financial statements.

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