FTV - Earnings call 4 2023 | Fortive Corporation

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Operator

My name is Kristina, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation's Fourth Quarter and Full Year 2023 Earnings Results Conference Call.

[Operator Instructions]

I would now like to turn the call over to Ms. Elena Rosman, Vice President of Investor Relations. Ms. your begin may you conference. Rosman,

Elena Rosman

Officer; and Thank measures are website Chief us fortive.com. our Financial Investors everyone, our on Executive joining the Officer. G We non-GAAP call. you, today's you, President Vice call. financial at and Chief Lico, today's Kristina, Regulation on Jim With for are Information available our McLaughlin, by certain thank on us President Chuck of and represent section and Senior today required

or refer to increases comparisons period-to-period otherwise specified. year-over-year on unless statements Our decreases the

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

James Lico

us. for Elena. begin on I'll Thanks, X. you Slide everyone, joining and Hello, thank

proven creation. formula Fortive delivered value our again outstanding for through performance XXXX operating in

largest adjusted now reflected lead including productivity focused Kaizen's full CEO on of tremendous, ever teams Our these through-cycle operating a year and were events, in conversion XX%. Throughout XXXX by environment. Kaizen an despite our by unleashing Strong including XX% another time nearing FBS, record macro durable XX% and margins average margins transformed reflecting the growth margins The XX% drove portfolio core businesses approaching mid-single-digit company participation of delivering of consistent adjusted week. our in record results Kaizen of improvements. XXXX, with more power we performance gross of mixed with a execution

cash best year executing of funded all free capital strategy industry-leading accelerating deployment, across flow accretive X Our generation on acquisitions, growth our our bolt-on including segments. our

opportunistically core also expansion. built steps its last X% points into shareholder vision across our growth In dividend, expand the our operating of growth, of is Fortive XXX remain and operating consistency evident and markets, progress drive committed again returns. our strategy portfolio we summary, we increased performance and X is in cycles and our includes X we Reflecting enhancing back our in This commercial to maximize on to FBS investment We on date, years. over success our success are which the highlight adjusted XX as results, company. value. drive made of driving shares rule X. We margin Slide growth speed bought in our a basis averaging towards premier and transformation innovation significant drive to new of progress given I'll The reflected benefits evolution, XXXX returns our segments.

revenue our in positively on health and climate, are aligned U.S. to Many the impact these products and of increase goals. XX% of development attainment the XX% new a that saw to safety revenues product we XXXX, approximately in our new example, concerns For launches. sustainable contributing

to customers. to of in are than ability through software deliver companies value more development acceleration XX% use a our Gen AI, greater improving operating Our time seeing the

our critical component is culture engagement of scores, and Our sustained improvement industry-leading of gains continuous learning to our success. a in innovation, employee contributing

capital performance on and contributed underpinned capital. Lastly, our net our acquisition in performance returns invested record free by industry-leading cash year, to flow the accelerated working

digitization the to is technologies, power portfolio streamline our Every trends. day, automation workflows growth helping our how increasingly see you benefit harness we embrace and the are secular energy X, transition. Slide crucial strategically customers On positioned of and from emerging

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Slide X. to Turning

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starting With Slide provide over and X. on our more I'll fourth to it that, turn financials XXXX Chuck outlook, quarter our to on color

Charles McLaughlin

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we price AHS, margin and mid-single-digit productivity. XXX expansion growth, basis planning are driven realization In volume, of core over points with by operating

NPIs by in improved to and in acceleration software channel volumes drive at migrations We and healthcare. SaaS growth expect continued an their and expected position, logos procedure ASP new the are driven growth

for opening it pass back to up remarks. Jim for Before I'll questions, closing

James Lico

of Thanks, members start wrap-up on Chuck. proud Slide year of another to make the this XXXX team incredibly Fortive. contributions I'll I our am XX,XXX record XX. for

success the principles strong reflects more that our Over strategy unique executing couple and our resilient last years, of company enduring our build underpin and compelling culture. a foundation our to

We talked rigor across to our tools about of and growth the leverage and operating FBS segments. drive innovate

double substantial Compounding sales margins. on half, adjusted and predominantly nearly FBS a net margin of higher to driven performance a XXXX and and sustaining Slide track success market, how organically basis of for operating in X% XXXX is This free differentiated served current segment, percent capital the cut to XX a to are done drive deals have operating with we revenue more addition flow. billion delivering growth, working In multiyear by me and of consistent our target earnings billion every per and XXXX, creation record, core dollar and $X.X are gross are digits, of expansion X% cash revenue. and contributing growth brings we and including flow building portfolio basis in over This we $XX strong future cash cash transformation fueling outlook, our adjusted have we the year, have free and to compelling track a flow expansion per to in our testament higher we of performance $X.XX growth, of X% points to to total XXX growth points power XXX inorganically. value accelerate free as of shareholders. With again margin and we including XX% our earnings XXXX. Since runway our

should ability to performance and are our for believe shareholders to in We environment dramatically. agile outlook differ the balanced, deliver our confident appropriately is differentiate and our remaining customers

As to double Day the of we expect more billion over than the cash we and our earnings Investor per Fortive generate showed X at XXXX next roughly executing share by $X Formula, our free years. flow

compounder a a M&A value Our strong, turn as I'll to to Fortive you, and capital it cash growth Elena. demonstrated funnel acceleration that, company With in our premier positions higher employment of as exceptional remains flow back XXXX, further and delivering shareholders.

Elena Rosman

Jim. comments. for Thanks, concludes are That we Kristina, our ready now questions.

Operator

Instructions] [Operator

question Tusa first JPMorgan. Our comes from Steve the from line of

C. Stephen Tusa

Tek year an Just the stand, the you're businesses, Fluke, where year? how the maybe and on the kind out of how in quarter did this plays just then update next thinking shorter-cycle revenue how trend you about and book-to-bill,

James Lico

Jim. it's Steve, Yes,

number think, Tek differentiate I I one, and would here. Fluke

digit orders, -- Fluke we We growth at the I in think world. we saw sales quarter. saw certainly mid-single growth in saw in mid-single-digit the around of point the

done done things quite would was with also shape. So digits quarter, comp good the frankly, of work M&A an QX a number I we've the benefits XX% growth transformation and from in the I single real And in we've Tek some that think we're say the Tek, of of seeing off in 'XX. low perspective, but innovation

the is said prepared still some that quarter had well. And really there. performance saw year certainly, we remarks. Tektronix as year, We in So produced record good as the a good felt unprecedented, about they the

over been book-to-bill think, and quarter turns of So there more into Fluke. obviously, out would about playing activity bookings. really the fifth a QX. negative year, a we've positive probably it's, some we've And I of They're years, as that at of backlog that we talked seen next We've think the about off we go durability same I the lot working hell anticipate there. and And there, quarter. had a their resilience

feel we good. So

obviously, slowing was Tek's of Chuck's remarks. bit really that that of a bigger part But businesses our our within in America of saw talked where the total is for China Tektronix prepared a China. story growth good Tek, little in that of there. as North little we we China about Part bit one in

follow-up, I'll you've I'll there, any cover. certainly and So pause got

C. Stephen Tusa

do then for much And you the -- the in how just guide Yes. XXXX? assume for price

Charles McLaughlin

to We're thinking X% X%. about

Operator

of Your Research. line from question comes Nigel next the Wolfe of Coe

Nigel Coe

of to seems margins are relatively like like on it's business, X% X% Invetech maybe reclass it a the PT, Just small margin. to depressed,

benefiting here. basis this about went think some I a terms wondering, is through think, sort just talk that maybe of outlook like Chuck, Just the this kind for you AHS of to on maybe achieves ASP Just trying this reclass? AHS what the how Invetech like-to-like that logic AHS of because of the And importance in of about you about were rather just recovers? acceleration, assuming

Charles McLaughlin

the at Thanks probably basis, ended I'll up the business we've question XXX, really Invetech basis for if in XXX where take but generating margin the that's XXX points, you like-for-like business talking about margin of and what we question, but expansion XXX, and the a expanding guide. on Nigel. first. is got basis points, the that's We're look with we're

the rationale as really forward. not design event just think we it thought is it's to it I as isn't engineering the for but piece be, moving was and big not going switching

this is business And in the majority part that really fits the so now Sensing. of better

Elena Rosman

healthcare would seen. the throughout in but year-over-year continued That's range slide probably wouldn't called in X% tune reflected basis in we now was to that's probably to about Nigel, in the a in it has XXX the out how healthcare XXXX. expect headwind Invetech headwind But Yes. largest size PT. to continue, Invetech X% I still that of the that be to that quarter materials add, I of the just points. for the

Nigel Coe

ASP And That's helpful. the then on Okay. maybe transition consumables. just

from There's the sounds can think clear we But it see growth But that benefits margin like see a It that's that through drive behind there. distributor us. to as sort the potential we now impact coming maybe no connection, customer see confirmed do what capturing and talk of having about margin. is. you better benefits? fully direct maybe that Just I should lingering revenue opportunities for

James Lico

through I definitely fully would yes, Well, Nigel, number it. say, we're one,

you So of that. saw the benefit

I America are think said Consumables the consumables up we North X%. X%. about as remarks, about around prepared in were world up in the

after. with So had is we front, -- with guide team full for and We that actually operating highlighting think to the opportunity week. there, now We the them meeting we go We be the We were mid-single-digit the talked there. and level had we're the about just our year in an good certainly remarks. Board on of margin for and last a number, for sterilization going Asia good ASP had performance there the going team to are certified. have the consumables that new steam are around innovation. in review, of a prepared set I now which U.S.

Those So which obviously here a opportunities improve are obviously continue growth. in of number fall-through. have the all to higher to Consumables

held here about and real how the saying in expansion XXX strategy the mid-single-digit a It direct more launch certainly point. So great points ASP strategy of we North American durable certainly the just for like think things guide overall basis been certifies, a be growth. that's lot we've and broadly 'XX. grower a at margin We up I think around will Fortive in health the

Operator

And the comes your line Mitchell next question Julian of of from Barclays.

Julian Mitchell

in sort to the on margins first wanted quarter. the check just of I

step-down big sequential there a of decline you've but sort in QX, of or not got in it's I heavy sales, XXX% so realize sequential kind margins a drop-through. in So very

fourth? are in maybe just versus the QX? is how I'm in on out in the maybe businesses understand Precision, year something of margins mix the reflecting starting to that their any first trying the particular, in quarter So on

Charles McLaughlin

revenue that's normally from a Nigel, thing the just our dollars seasonal QX is the and up is XX a out you QX, biggest in what pointing seasonal QX gives step-down guide points. in margins, basis that to step-down there's

pretty a good So that's expansion there.

too. we're So think good expansion, across segments in the performance pretty seeing I margin

James Lico

represents in margins would operating Yes. quarter that say just And record for guide Fortive. the I first

the the things. look you when the There's at step will at some little the be we salaries of the just start up I -- have record at beginning bit end -- that of and if just think in But some you of a year, of those history for quarter back that. -- Fortive. obviously, of that first back, a day, expenses record do So

Julian Mitchell

when seemed guidance about And -- suppose, then be Slide and will aspiration. $XXX-ish got you've look X. typical, number at someone not it, maybe deployment now, I from a do would XX, just year for obviously, be excluding or giving a But asked for my you you but it's year have formal if capital it XXXX, medium-term end X $XXX whatever and follow-up million, medium-term give that then year that, I I guide you you gave guess, that a up

of ask given number to guess require it treat does fair months I should a So this of investors XX that kind is over amount now, how away $XXX I'm trying how, that seriously year. M&A period only million of

market So around M&A thoughts backdrop. any the

your it's were acquisitive peers little saying of maybe One now. bit better a looking

James Lico

Yes, a couple of things.

the in terms them out you free we cash not on when those and look presentation. at compounding to think, our $XXX million. there history think of that the to it's I why enormously in flow, a EPS and put we growth guide numbers reiterated That's ago get year and the double-digit I

away, So we about feel it. way happen, long can lot a good feel obviously good but we

closed think where did we relative January. basically the between we part a just the of including in to of market, closing deals kind quarter I X M&A early

a number from good different our workflows. of segment, breadth to it's of founder-led every the companies, across variety board equity private So in a private ownership, sources across

starting now, So it. progress starting in we just and And really to after where accretive only year, about going right think demonstrated feel M&A we I against that's be good really EA environment, environment. good the really the off well. M&A we're is the closing

there. really seen good we've So things

in 'XX, us we're -- say would work going that those of the the your proud deals well back work, be are comment that 'XX helpful for good I sure. about set other what EA done, really we've to So up to and

you we're right demonstrated also probably when now, that the always we've better. in Certainly, at us, want teams in front and incredibly to excited but always, that frankly, about continue Julian, look Fortive. a you know, about busy bit environment little we that, joined as as that the opportunities are excited to, we're the of we're have quite and we're And just

Operator

comes of line question Vertical Jeff next of the Research. Sprague from Your

Jeffrey Sprague

for couple a me. Just

Just back sounds in had of ASP XXXX? growth, some something that you on of fill as direct to for you kind and kind Consumables in I from Consumables healthy. the What pretty X% Is happen, growth looked expecting are don't know, -- there there's the abnormal the model about for number? channel U.S. distribution to direct, that

James Lico

We'll want I X% we be we to QX But strategy, build, we to I but as a for said, obviously, think, every And be validated predictor of in want mid-single-digit we to board. the QX a of digit there, the do. with it wouldn't quarter. in mid-single catch-up expect probably not across range. the There's them be inventory lot hint of would a from what

where mentioned, team and they year about I the in future today as years and the last stand As where the with incredibly well. they're week, optimistic for stand they

in place. good think I So we're a

Jeffrey Sprague

in again, in underlying what EA, then on you for QX? in any in obviously, just XXXX? but And little kind on more on can be a And to you how be own growth in XXXX, it color the just didn't of M&A, grew but it QX, business growth in the expect specific

James Lico

got closed up We've week we're [ plan January, scheduled. to our A all, we integration. with bay the XXX-day start. room of good first is of Yes. ] a first set We -- off

the are excited teams we work Our can really do together. about

annual to sell last Tektronix solutions. and We when we deal, force As of lot of couple kickoff said big the about our announced the excitement over you we'd remember, the Jeff, those take we our sales started A opportunity that. have weeks. sales

was Relative to your month business. for to, record specifically the a question, order December

us. year So situation. a in a of there amount got strong, backlog good the and they of They've growth opportunities there's tremendous front ended

grow. So won't and we in good our can be for revenue but feel until we feel about year what but good We the that good. about core, base it 'XX, the the growth. Obviously, feel

the is we original is a around in probably ROIC thesis 'XX, which up -- Relative to now this think from the mid-single-digit deal.

So will good. $XXX game. should probably we to $XXX be think business that's be it And range, we're is probably million in the for Growth million ahead already the the year. where of the

good a we're place in business. really with a good team. the So It's

going I obviously, question, think I the did, of X% big that's before, and is that, previous As deals growth why step look of when being we the and some other back but at for the year. about mentioned overall good it's the parts up, X% feel stands one -- you EA we to to as adding year acquisition the the well.

Jeffrey Sprague

And I'm just too. quick little housekeeping sorry, one, a --

Just are of it And just Invetech, piece you the is down? business? how divestible design winding a that is big that Or piece?

James Lico

It's revenue in the $XX million range of breakeven.

So it's -- we'll look at a options. number of

working there on for The sure. things. some -- there are think different got out we've team is I buyers

of other the part business Silver called that So is Motion.

Sensing it from an but in over of That industrial to, last has really imagine, years. helps -- more Automation but perspective. aspect it's it originally -- other can pretty it like business Science Life you frankly, and has customers, our an and businesses, quite as well was It's Sensing So few done really OEM businesses. the our

So but anticipate keeping part we'll to as we're of for other that the portfolio, time. the going options look on

Operator

comes line from Dray the RBC Capital Markets. of Your question next Deane from

Deane Dray

your is terms the sell-in, any in any there? Any didn't The channel, of word sell-through, there in inventory a which Fluke, prop issues in remarks, of up prepared color relief. destocking

James Lico

Yes.

Fluke in quarter. growth the to mid-single-digit POS of your around relative question, think part world the I the fourth second at

bit distributor think think to Single-digit China Tek the grow than evolves be, guide see millions, that's that that's bit say, the A solidly. there but on would it over the destocking of going that, So solid the to a in just that is some from -- that's that still, and Down part likely U.S. we I just, the say in take macro the more maybe now year a our China, sort channel good little Chinese double in probably Chinese But guidance. is growth. our But digit we've broadly. is in that partners would be seen again, conservativeness year. while. number pretty how we and of would not destocking I to at the embedded little I out less of in and some embedded of for

Deane Dray

So the that's the year flat China, just expectation? on to for clarify is

James Lico

Probably year. the for down low single

would couple So at be our there. A that things point. anticipation this of

starting we've thus customers Just -- as far mentioned. more a conservative, seen little I what is bit

talked this As Deane, the years. over you about we've know,

China to channel Chinese know the don't seen really in partners to year. the customers get this for after up to until are New You conservativeness and you Year, see going you point get the year. We've out, see March, more you unfold how

our anticipation the first but the had China great had low China. growth a sort year that China single is in about would the really digit. quarter we last year full quarter, So year in in that first We the progresses. in for comp be down probably tough We would of anticipate

Deane Dray

sales the and Great. for would improvement points be that year XXX What would points? for of And clarification And be at are there Is force XXX they margins? where the kind any were it margin basis just said this around believe force Did one improved the manufacturing selling. that sales come targeting EA. all? drivers you is Tek basis I of efficiencies? with a you that

Charles McLaughlin

growth that unpack and about is they is So margin, think to XXX it We growth I out. a... the go growth Tek, Tek. to then they Deane, just can from think Yes, And for at the there. EA I for expect that everyone there's super on volume basis the -- -- would what I surprising called them. give XX% incremental that force, think about sales got we come a impact wouldn't was core But be core we the XX% adds with couple things XX%? to that more points of for on Jim When do

James Lico

I Yes. they of Tektronix. we sales force XX about that mean came folks, if a with roughly with XXx

business the of to their to of really addition are that was through when thought have board. sell cross-selling the We strategies. said that across Europe ability we through we real The a deal solution the the the one announced things force. of the opportunity primarily working accelerate teams sales And the outside Tektronix we

had they're great already company. as even at great growth with size, a a profitable company, PT. had their they growth They so growth And to Chuck Tektronix yes, very good mentioned, and So a -- company. growth

not That'll Obviously, that's so about core in year. the really far, feel -- joining we we're for be about the we're But that excited So 'XX. opportunity. the really excited Fortive. business

Operator

of And of Kaplowitz line your Citigroup. question the Andy next from comes

Andrew Kaplowitz

causing there at margin Chuck, 'XX? Health, color you talk improvement about 'XX, you Are noise? hump is little AHS terms Could were some And maybe expected in here look your know, discontinuing in the which the in Are Fluke over lines hump ASP, just restructuring international product your you helping as know on building of I you the is a and in they over they 'XX. you infrastructure in supply 'XX? chain. and when you're much still out overall how progress more

James Lico

year, the a so range don't mid-single-digit in a the first probably or half. a and growth, quarter first for take be to half Health little more segment the in better, little bit the I little the in Why the pretty bit maybe and second first less close that? of Fluke bit will part Yes,

So well. you some things as -- of described the through that but are they

Charles McLaughlin

the in probably at the and driver to in margin expansion like distribution behind getting Health regards With top growth, America QX. they margin the and line at up just issue, the bigger through having that bigger expansion, ASP show North Consumables growth is the did

margins had XX% think score what's the there. that's of I probably to driving

Andrew Kaplowitz

color maybe Chuck, remains is the then today supply handling terms chain? global of price, peers versus chain. this little chain And handling the of how you But just I industrial It cost in cost 'XX. rocky point your Pricing elaborate price a predictability expectation a sticky. like quite global well. what obviously supply bit seems more Fortive report in rate price for supply of you're on would baking but of its in guys. you the said you at little and quite reported one could helpful, That's results and know versus

Charles McLaughlin

think things. Well, couple of I a there's

down In come putting and we're into you're price that terms the seeing we're of inflation that's the seeing, why the come down. seeing, we're market

we cause and continue big cost. expect better is ahead on down. right there. sight quarter, what it's we're we're we teams to with of that doesn't get that and we meeting the that are But see to as trending great, open always call exposures time pretty better think can mean is to every meaning hearing incrementally would inflation incrementally commodity not time. problems we way, every our OPCO rate But but seeing other we do the I and back good supply or a the that month, up companies To they're from to maybe we coming prop of some peers inflation, will chains, but stay to on Jim price what of that have line Remember, the normal can what --

James Lico

Yes. the points. would proof just And I add

expansion several has been gross the Our margin very years over last consistent.

to and think on side, continues the our that just ability noted, price the working as side, as get we cost our not I speaks sales. of capital on situation, to percent manage better but and the a to

in having So increases to we're capital. working not doing have significant that while

working getting In fact, our capital is better.

I year, this just on that is what to done teams see job. we'll a our have So nice add that Andy, to really think

were savings teams, well. job they're couple doing a on our with as and of all really nice just ago, design of a We weeks

in design, be, So the engineering for would effort. not on be deliver through our value, when will the plans value engineering call reductions negotiated value -- engineering a that we what cost record think our at our year. we savings value 'XX at And of now, right also I but a have only out our we'll on looking

price levels continue had been be that knowing to few of price those company. at years. a number things price we're we always last probably stay the of stay over that to wasn't a cost able good going We've ahead to So to doing

So we'll really is our as continue trying push side hard to get what the our cost do fair the on teams on opportunities also well. we're I share. But to think

Operator

Instructions] [Operator

question Research. next your of comes Davis And Scott Melius from

Scott Davis

but questions the of on curious kind have lot been I'm -- anyways, answered, of But a ServiceChannel and ProVation.

mean I deals, pretty should you growth kind enough, be enough about the And XXXX on of things? do story. high kind high so the when is combined, versus of in -- point. dilutive they're XXXX? yet If combined, be imagine go But and at you that we think through model deal first pretty some combine hockey the long-term it margin would back those the a to where right? and there Are you darn will in is be the the you'll growth you stick things important the I year change. compound, kind positive those those But think returns on of capital

Charles McLaughlin

Scott, of a number things.

First of line all, and track bottom think running we're top to on from the ahead. really standpoint a line, we

accelerate I mid-single-digit but when single and dilutive low think the about -- talking come ROICs in forward. digits, as So territory from they're you're going

So on. But so top accretive if let those now that we two are that the right think the and of understood part line -- growth, the me stop I question. see to there

Scott Davis

language just do of, you'll the guess, the was, growth that perhaps deals, is point, I it own announced Jim those assets that given you these used we Kind of the at and my kind be I happy this you can really rates. someday is time after when think

you feel curious same So if kind I'm way? the of just

James Lico

bit. little to give just you Maybe a

of I accretion. I think anticipated, -- $X.XX we first accretion, we the remember we of in ended year, correctly with were $X.XX if up

overdelivered first accretion in we the So year, the side. on

we're mentioned, with point. these incredibly just businesses, your Chuck happy maybe As to take

you on rates why very highest was high-margin already and the they're really Fortive businesses, When them one could at put the look of You in business, the strong. a the we already. very in growth that's see, ProVation chart.

ServiceChannel, business. a obviously, was breakeven

So margin they're into obviously Fortive we we're side. there were obviously side, that's so business and in could IOS, there IOS sort the Fortive see the approaching that accretive we and strong get and that of rate some and in concern, the on

good it, we're but regard. really feel this, I really you in other a to trying know part how remarks, difference of in the has here. a in the prepared that -- make made And we it's really really FBS So that Scott. understand point

retention dollar -- period a you've has structure ARR the in obviously rates, extremely margins obviously, in going growth good, at that And innovation You your retention the positioned at are the the And they short the now, is And in retention, at and nice see teams, the where net They're growth. if going go They've for XX% are you it on XXX% the see rates plus really and right? well to rate, done a made both dollar the which XXX% of future. to years. FBS and XX% FBS -- dollar above in how don't really a time. also, out to where the The stop this got job numbers, embraced that's point, that's that's front. continue. business to growing net net really

Scott Davis

Yes. makes a sense. That lot of

before question we wind already some things worse tough Just bit there? But real Are the partially selling kind better? that it a pretty or quick these markets. of but getting Just into down gets before the end little guys. Does worse you're Sprague's get of just it up does Invetech gets given on in design business, 'XX? sale the better

Charles McLaughlin

in recover. Keep some of a dynamics half, going that I the than for think markets stop run to will so second less those the to a need is us. business think being we total. of some easier $XXX compare and tough comparison we're this I mind, that's into million it in And in

it's impactful right of so some as bringing and quite other movers as not these And ASP EA now. like

Elena Rosman

a Scott, growth in would core core embedded in to QX, for I PT due say, about the to X% there's growth headwind PT outlook Invetech.

Scott Davis

job. a $XXX right? have that we quarter statement business, million a you've a good on So a It's had pick when good to

Operator

comes And the your Rob from Mason question line Baird. next of from

Robert Mason

your 'XX overall how But X% Jim. How core this, think missed you roll about do have does relative to software in that may X% to the growth I growth? up?

James Lico

Rob. Yes. really We feel about good it,

'XX. have software with only We'll we had in I starting high good 'XX. growth you at 'XX, single-digit maybe look not in think when growth really

the So numbers, just talking Obviously, we're going I good. high when they're ProVation about ServiceChannel we previous ARR question. think and FAL's board, single-digit have growth. to look in the But across the at

we at. it's feel where about So good

they're the is think those doing. it's Data but also as about talk of see the going and rates we'll some I are into late Analytics solutions 'XX, there. and it's to get to so how start really adding our a a work and 'XX AI, We we testament AI growth testament businesses to didn't strength FBS of a value, lot to and the help

So we're We kind on growth we Fortive saw the that good those 'XX, not have durable, only double-digit higher see strategy numbers playing more with in is but of think benefit would that EPS which in very the certainly our I front. is on show that the you in a margin ultimately, and the businesses that anticipated, absolutely side, 'XX. would way out rates, And place. growth we'll

Robert Mason

Very good.

are to expectations and mention Sensing. maybe defense, your for that do a how I about year. some cap around customers to that up didn't -- follow-up, better How -- assume in specific do this specifically beverage, market food thinking are market, that of equipment? aerospace, you you business a end turning tee you, certainly as starting semi 'XX. Just better that's you But semi-cap

James Lico

negative of Yes. Well, in order X Sensing, we're quarters about rates.

in see don't the half, over anticipate in starting second the probably book-to-bill sure, rate in second overall the and we to in to quarter. start So change for there probably X, around the sometime

to We but talk move. more maybe didn't start see number, broadly about things we Sensing. about So it,

we the in of with we saw OEMs, got things quarter the fourth blanket get One than orders. get XX-month blanket would was rather we X-month which orders typically

second will we the half. up orders probably in see that pick So those

the business maybe a of talking at bit this about the to bit We're customers are second earlier Setra, about world. that's and to index that that are shoots stages little semi KEITHLEY it's and of talk half starting a see we're in green Relative little to state businesses year. at, the where our Tektronix. see customers So orders the to our starting of the the of starting there,

But start half that anticipate at that. least not anticipating So the we to seeing FAL a we'll do I second some big the of We'll see let just -- overall, things. patterns We're would determine we that there. in of some step-up think year. turn would the

Operator

Your next from Bank of the line Andrew Obin America. comes from question of

Andrew Obin

Yes.

still Tek, orders, confirm, or were mid-teens. happening don't were the NATI, maybe of just you to referring rate you and to we what are Sensing, with of let's I look at sort peer exit Just at maybe kind talking have specifically it, when Sensing right? if, orders you -- Keysight, And what's Tek. book-to-bill? if call know you before But down, Tek Just

framework? feedback correctly, understand to the on be that that getting next right based thinking we're to comps, on low we're the will up revenues year, mid-single the digits So Is right?

James Lico

Tektronix, digits we about think single be year. will low For business for the

So the orders We'd to in first there. in turn turn. things just book-to-bill quarters X probably see negative to in from that starts a revenue We'll perspective, and we've around the of had quarter. see second The start there. quarter

kind to be And -- has we've just you sense. aerospace good. defense of that's been to it's like It good. that. had and things broadly electronics a and continues give So But mostly around

semiconductor as customers So well. some

a around KEITHLEY, we of comments made the is Sensing, the most in semiconductor. the which exposure the have made and -- about So also semi, I Tektronix I comment relative

at low year the fourth digits from So Obviously, the XX% business prior. comp place. good in is a against quarter single a a we think

the But probably dynamics a revenue a the and good absorbing, a -- from a is still described of good year X probably or but into perspective. market Tektronix business record continuing in place, some to place. rate in absorb So and here of we shape exit a quarter 'XX for in good

Andrew Obin

we And where are on book-to-bill, sorry?

James Lico

X quarter. below probably in probably, Well, always quarter, I fourth think fourth X.XX, we're in but the

Andrew Obin

to 'XX targets, There's you. back going year, at and growth here, also last just with this. XX.X%, right? think, target printed you a Julian's but broader 'XX weird Invetech sort well. because XX%. X% it's 'XX to longer-term X% and I XX.X% way. target Got I if This the think seems CAGR outlined certainly right? of the did just it's is 'XX of, We and your totally question, to out of right? look EPS And strange target, cushion you I a Analyst longer-term you targets, going is is is been year. outline be get at as sort Day, But And like it question

seen a biggest some macro standpoint, to change, M&A. lever do go to get From can to that Sorry EPS sort needs growth right, for this to going of needs just yes. of is what year? back sort probably guys you the we're sort question, And to that where year? sort guiding to what from perspective, change? of last We're an back of "normal" extensive Or But from normal we've what's accelerate but your M&A? all what

James Lico

is here, we're to what at average, I track our And Well, the history. prior about future them you do think not versus when about over different the look years, we're look too any when when the we you you right? talking and particular average, take they're out, years year one average talking X record not out because when at try

had think to little than single continue use our last what last will as know. a over Obviously, free bit year, look is higher years you cash forward, you pull-off number flow. we and interest we digit if sort the we EPS X passes growth a So to expense you relative I year the that had we've of here, delever through success the anticipated, was which fast at why

some in has day, that those I So I we're reflects of place as the good it. relative think targets, to a at end this improvements very and the think well. But

about, continue said we we've dynamic best way looks some the the but prepared you like, to scenarios is -- of in situation the geopolitical macro obviously it. be there's it's one always to based on the situation. and things agile that It's think always that's So to a got probably economic remarks, say those what why

and of take growth rates Healthcare higher particularly if higher 'XX. to period like of in going is and to margin that's rates up continue to of compound at you longer expansion, continue time, mix to going Software portfolio, So and a the

those So I would are dynamics. say the

markets, margin the is work innovation that various deals continue to Andrew, thing through to attached we ourselves last an growth and or so, our additive the to they opportunity X the compounding. say, secular better, will year and They're They're You've all to we've X see the continue that last doing attached been productivity the XX year, continue from drivers drivers. that all they've good over months to have accelerate or to did like I to growth do years out, you continue And I'd from a we've the perspective, -- they're those over their help a and then businesses relative like a they're part better they got time. will of become that. things all this us to when to workflow. And to bolt-on doing that making going take broaden businesses a to been see standpoint, get continue think few bigger associated

as So a some you of be or them are you're in small. But well. if they'll out take a additive period, X-year -- X-year

-- the environment and still here, about So that. as we're I get looks continues is better like to and M&A it -- then excited said,

Andrew Obin

share squeeze there? some if we as increasing as offsetting Should I annually just dividends as think share about maybe around more. could one buybacks, to we're start And and in framework Fortive issuance long

Charles McLaughlin

did years is And see we been the the you'll our on signal went dividends to -- as what Well, the earnings on back restock same free flow buybacks, ago. to X shares over priority. and of we terms increase years, is tried in is had, trajectory. we've cash the share buying dividends, back. the that where With what opportunistic per just last to M&A our we've increase, X we our had still we some level we share

Operator

next Joe line comes of from question Cowen. the Your TD from Giordano

Joseph Giordano

side on M&A of and deployment Scott what on was a Just capital talking about. piggybacking kind the couple

you ProVation and So highlighted you I ServiceChannel. mean, highlighted

that like as on things. do what grow think it something like ROIC accrete or almost like And have mid-XXs math XX% and just that year growth year can X.X% the on was to mid-XXs the those lever to can like, X, to something companies to they like I like slide pretty these curious and that can they up at I from the margins to it ProVation, needed under Because how looks it's to targets. like expand hit think clear suggests I'm it's like a EPS in margins. to a and like least of return

like you where on deals are that? do So you in evaluate ROIC like how

Charles McLaughlin

and at and upgrade ahead where running to of Margins line. look ROICs ProVation back thought looking to at the the talked of on revenue on we top First we be. all, go we're as about, be start we'd to where our needs

But what both know the original maybe for off-line we exactly assumptions of where So we're talk those were. that's at deals.

a where of track or we And ahead on thought of in. couple be we'd so we're years

as so I I I simple think -- that's can think put the as it.

James Lico

into there would didn't X way because companies think as just reason we Joe, bought the we is companies, quite we grow could that the during quickly some ServiceChannel the why I the highlighted out on years did. we were maybe just People didn't frankly, add margins as is people XXs when it think skeptics, COVID get these ProVation X would did.

the were that, case ahead wouldn't were demonstrate the we hey, mentioned some to in where the year yes, of game out -- because slammed So of up were necessarily suggests, X previous EPS. it I thought what we're as we're game. or do were in, there. with I first relative to doubters ahead We say in to exactly we we years tried these in And call out, I think there

with And consistent in that's deals. of see this you of the the deals, a number the portfolio is businesses based good and are these So we May, these those shape. in are other back is what durability -- highlighted success as 'XX on in really

-- it's organization. the how just into ROIC to add and would that continue better more get and M&A of broader to and I add it's continuing adding the durability view So of capability

Elena Rosman

and this And the is just for in but mid-single ROIC certainly for earlier, 'XX-range. came the up to ProVation already combined clarify, digit

Joseph Giordano

run kind one piggyback through somewhat and type goals accomplish deals outset? you've I you different to SaaS-type finding like flexes Are use on across hardware-centric now like, done the mean, up like deals, it of to to that done businesses, of at as you you depending you these the that FBS set you've deal need on muscles that, these. Maybe easier deals

James Lico

something that. Well, a say, around years hardware There's a your I we've -- whole is muscle doing lot use there's to been framework. XX certainly, of for and would deals muscle

free even of in, our business of the really working the COVID with things do because ASP, to ability You saw like that capital. cash returns continued some challenges on the improve in

the why certainly are really would that it really one done for time. those also businesses. activities we drive on around AI that it, this got the we've that broadly, talk about drive helping think, Software long reasons the I we tremendous say but FBS Software didn't commercial innovation, for and things software, And FBS but now is for are the But is suite capability really Software. So built for an which tools, I slide, put a of of we've we've

prepared itself So is same. a the fact at Fortive's look you but we've as exactly needs think and tools. proud. the business in really, or it if mean may what today, Industrial business. It FBS it or discipline I means rigor the more FBS much portfolio the a Healthcare the that different the really I'm Software a is we're FBS of Traditional different business applications, may mean in really And really that really, is is, proud of better. around broadly. I remarks how said getting and It's

Operator

do last comes this comes, will O'Dea the Again, And from one from we Joe line have last our question. The question Wells the day. time Fargo. of for question I'm be sorry,

Joseph O'Dea

question assumptions of where understand are volume the And volumes composition embedded the First 'XX? sort volume flat side the upside the up sit about year? as some just and that organic equation related embedded piece and to in there things over whether back you've getting kind just the of is anything of short-cycle volume the might for upside of kind price implying on trying thought on better that the and risk sideways and half year. of to within moving easier X% of course of there's more comps maybe to I'm if the can be how Or the risk

James Lico

at think the through and hardware you take big not inflection the point I'll the When I when look we a business -- go year. at you businesses, there's here. hardware look as

because inflection really expecting don't of we're probably say, here. the as would volume a big we we say, lot So I simply volume, secondly, don't of not would a I year need restocking we through big go a see that.

was probably And say second So half it not restocking probably volume upside say would would there's that. to some were counting I on more see But if a to we if I we're that. certainly dynamic.

Joseph O'Dea

you you in productivity 'XX from Okay. additional Makes the from sense. actions more about And just in then to on productivity 'XX contribution of kind anticipate can which and to XXXX? gains drive that's productivity talk the degree carryover margin front, the of actions or kind

Charles McLaughlin

Yes.

the about the probably productivity I are actions $X.XX or margins. takes normally, going that $X.XX expect seen, into we year, for puts if would some selling we've and There's think incremental And but XXXX. probably of to from into that those up end you XX%. at think seeing earlier we're XX% in that we're year coming

Joseph Giordano

into you've Meaning and that's so taken, already just 'XX. carrying actions

Charles McLaughlin

the the we're with any actions, coming more. taking benefits that done in, just not are We're productivity

Sorry about that.

Operator

And I'll over Lico the remarks. now turn floor for closing Jim back to

James Lico

you. and how Kristina, day -- 'XX both was everyone, work the the what all years, been several play and thanks, doing you Thanks, the to our taking for out. anticipate time 'XX of really a we've in for Hopefully, know today I benefits we busy it's heard for of today.

world, going Lots -- So stand we in know. as feel the very, of we comfortable where on you many we're today. with very

know 'XX. And team and see questions the the for probably We around that. this lot support a out your think last thank questions. everyone, to We built then we'll of is we available post-Vontier, expect look We're and road to for constructed we for is on you our year. years, We setup over a have I portfolio several want obviously, over the to the days. feel weeks. next over But the good follow-up next how for few and and several any certainly here for forward

great a earnings Have see thanks. we'll and the day. Have great season, you a So on road.

Operator

today's does this Thank call. you. conference conclude And

You may now disconnect.

Fortive (FTV) 31 Jan 242023 Q4 Earnings call transcript