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Fortive (FTV)

Participants
Lisa Curran Vice President of Investor Relations
Jim Lico President and Chief Executive Officer
Chuck McLaughlin Senior Vice President and Chief Financial Officer
Scott Davis Melius Research
Julian Mitchell Credit Suisse
Andrew Obin Bank of America Merrill Lynch
Nigel Coe Morgan Stanley
Richard Eastman Robert W. Baird
Jeff Sprague Vertical Research
Steve Tusa JPMorgan
Deane Dray RBC Capital Markets
Andrew Kaplowitz Citi
John Inch Deutsche Bank
Evelyn Chow Goldman Sachs
Joe Giordano Cowen
Patrick Newton Stifel
Call transcript
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Operator

My name is Kirsten, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation’s Third Quarter 2017 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Ms. of President Vice Curran, Investor Relations. Lisa Ms. may you begin your conference. Curan,

Lisa Curran

available A Lico, the Good and call. Thank today With thank Jim replay under Financial until Vice under Chief available President and be afternoon, non-GAAP XXXX our our call Information. measures you are Chuck G after later press Kirsten. Officer; section me President and call for Executive A for are non-GAAP conference these of this replay XX. and Events heading relating archived call. be quarter and Senior Friday, replay accessing today’s of We this heading the the quarterly Presentations archived everyone, Investors third on conclusion on next you, McLaughlin, and on earnings joining today Chief will our the Investors Information the website of call. will the will are until section our the Officer. the www.fortive.com, Financial our November financial Instructions release. required in present shortly website, to included financial certain on of remain by Regulation webcast measures of SEC us our

describe will During the more to that significant factors year-over-year of presentation, we performance. increases decreases certain year-over-year. in are the or impacted period-to-period references All financial metrics

obligation factors Information may December SEC differ materially results that to ended forward-looking and Annual to and assume including number that events for our Jim. to With occur statements risks statements. might developments are and within turn filings, do statements that, statements that we of regarding may update on the During our is or speak these Laws, uncertainties actual statements actual believe to subject will in the forward-looking Form statements we the forward-looking we results I’d any are to meaning they of any forward-looking these statements XXXX. the regarding year make only the differ the XX, over a These date will call, like These Federal XX-K Securities or Report not made, make today. cause as any future. available in from forward-looking including or we anticipate forward-looking from call of the materially

Jim Lico

Thanks, Lisa, afternoon, and everyone. good

pleased are market teams core and as markets. third substantial well performance the to portfolio the revenue deliver strong innovation flow our diversity financial The We global demonstrates growth adjusted cash very positions, with with share industry-leading quarter improving per our results this and earnings and quarter our of of continue our free generation. strength end growth execute amidst

enhanced We to strategically growth meaningful for Fortive steps also long-term M&A. position took through

in of will will Orpak, performance As that to discuss, including close superior product quarter, growth key technologies and and the contribute on we to strategic to acquisitions, continue in revenue of deliver strengthen we excited the and Landauer our believe were accelerate $X.X trajectory recurring the addition billion and Fortive additions portfolio ISC the System our will profile. Business returns. these We power financial strong

event, getting earnings held the CEO into year’s this this earlier briefly on I’ll kaizen which Before results, you update month. we

quarter. XXXX core teams more With focus As an opportunity market leaders as and platform improvement. share kaizen continuous and the recognize of our in provides turn that utilizing celebrate accelerated deliver This actions XX advanced than innovation our kaizen XXXX, values key top company culture spent a of beyond. across backdrop, will details let’s to year, that did CEO and the to our on we The to third the tools the together and initiatives. we across FBS in week growth to to brought our our

in over across of quarter, operating widespread basis Adjusted Geographically, Kollmorgen. We and driving in lower broad-based third X.X% Developed North markets was as $XXX.X XX.X% platforms. improved high-growth profit Western and posted of including core Revenue core platforms Latin strength The Asia markets earnings in favorable a last Our amortization. Fluke reflected America of from of consecutive Sales deployment was sales with rate markets. of This and in and growth net led XXX in an in core XX.X%, four all business diluted core price, mid-single Jacobs year, record grew per basis our favorable grew growth, strong the delivered Tektronix, continued product performance gross FBS wins accelerated the margin America. sales from the incrementals margin grew our markets the earnings six excluding tax $X.X digits core over points, of with for performance better. a the benefit impact acquisitions core end grew in an $X.XX improved strategic effective margin earnings Vehicle continued margin representing of points of five up improving X.X%. and or to and continued multiple operating was growth. businesses. grew at with in basis increase XX% six of prior basis growth Operating six business and core of success our North or to capital in performance points of year. by markets strategic were given quarter. high-growth billion, strength automation XX.X% growth substantially share revenue success The Mid-teens increase digits by XXX XX double-digit introductions, at were expansion performance application expansion million of XX Europe the double-digits Systems, America. points net driven grew Tektronix quarter industrial in adjusted of the low-single revenue China favorable – revenue

and we million flow ratio strong $XXX a During generated the XXX%. free of quarter, conversion of third cash delivered

mid-single basis margins XXX contributed and Solutions points, Instrumentation currency mid-single Solutions segments. with of was growth Qualitrol during core XX.X%. core which points. operating margins revenue Fluke quarter, Acquisitions Advanced X.X% our of revenue operating revenue XX to posted Field favorable strong the of reported XXX high-growth quarter Turning high-single-digit points Instrumentation & digits growth up growth. digits both basis growth revenue by in and expanded posting basis led core X.X%. the markets. Professional increased sales with core in Core

market. technology Fluke improving despite recurring and regions, Fluke’s As focused growth growth quarter of its core I in off equipment Scientific strategy. strength given start our across all mentioned medical to leading mid-single-digit the the previously, the services exposure high-growth device meaningful of growth end expected included was gas growth services, closed last detection we’re particularly and consecutive markets. very of This of solid adopt subscription-based radiation fifth Landauer, is Landauer, just sales accelerates create quarter challenging strong Systems, we quick led several together Industrial which is to by Networks a we Fluke was advancing and a and that excited are that reliability to closed culture. large a includes very our connected acquisition of Performance The week, and components ISC, Accelix customers. provider which announced FBS more portable the which great the pilots safety-as-a-service key comparisons. Accelix with footprint last Digital platform. have is bring the

vibration a real-time condition are healthcare deploy now full customer’s As their to data will and Fluke maintenance imaging Fortune technology. of platform, Accelix providing company to critical an facilities enterprise which This technicians, our solution, access asset mobile example, thermal the capable monitoring quality, includes XXX alerts utilizing tools. ultrasound allowing management power via

real are delivers that measurable value While the reliability all our comprehensive asset still in solution uptime. pilots is implementation demonstrating the and increased initial phase, through

position OEMs technicians of growth In innovation, saw in also and addition the market strong during funnel, launched to making Fluke innovation delivered these monitoring products further TX non-contact are ahead associations large-scale its two condition-based led contact. Fluke condition to penetration this for product sense the electrical and while and the voltage ongoing work digit Middle is benefit a as maintains instability political market revenue utilities. Investor Day. at safer plan. we makes the as to in third the The awards by growth testers by where industry approvals. received transmission, distinguished Chinese a by China well leading growth for with solutions and Fluke already East, Qualitrol monitoring high voltage of measure budget continues high-single East double-digit from pilots voltage Middle sales without delaying quarter. quarter, at offset eMaint technology family metal-to-metal Europe through we of field well previewed from This of enabling has investment

our quarter sales were mid-single double-digit markets growth up driven product for Tektronix the growth in new go-to-market performance plan Sales groundbreaking by Tektronix. and strong demand mixed-signal Mil/Gov markets core expectations. of digits tools, series core product high reflects revenue Moving has high-single growth executed oscilloscope realization. we with This by action accelerate end high-growth Tektronix’s five digits growth the be demand. continues Using semiconductor at led our against for to and Asia. exceeded revenues user FBS end in to performance the Platform Tektronix to introductions.

more previously encouraged the starting in platform a will As are new meaningful by have we impact we start. very this XXXX, noted, strong

in delivered the Our Technologies double-digit core high-growth platform Sensing high-single in markets. quarter digit led by growth growth revenue

stabilization North gains share win impacted semiconductor led in a upcycle in global key the market industrial worldwide and While growth, America. business growth

used rooms. the in including heating One biosafety Flex building which XXXX award category. conditions control just and innovation critical recently technologies Flex operating all rooms, pressurized environmental of labs and and ventilation is won Setra clean monitor, indoor efficient to types ensure of energy environmental safe air-conditioning, new is the in the Setra automation our refrigeration and spaces,

core Moving XXX XX acquisitions to with operating Core X.X% revenue XX.X%. and basis our of points. grew points of Industrial expanded from margin operating reported margin with segment. X.X% growth basis Revenue Technologies sales contributing

hinges. and were revenue slowed revenue as growth double fuel demand station prior-year continued automation the in came U.S. Orpak large comparisons. for pumps revenue India. is the a we Global reflecting by platform EMV EMV-related In for deploy announced single-digit third and IOCL, automatic up management grew previously markets in Orpak platform. as tank dispenser driven mid-single largest sales at the posted demand in XX,XXX low outperformance automation Low across the during growth double-digit quarter. market its very up will Europe the digits, the reflecting fuel named growth expected Our foresight to and August, Integral company our single-digit Transportation North issued High-growth core stations. was America the oil technology strong growth acquisition in winner Technologies closed strategy, dispensers, core quarter, sales in digits, to in versus Orpak core by high-growth submersible sales strong which of Gilbarco solid tender in Veeder-Root

across hurricanes happy with with our are Separately, U.S. those very family. Orpak’s are by Fortive the the of devastating the to pleased September that thoughts part performance and of as the have We are team many affected

was was of As increased gasoline growth supply by adoption able the prevent XXX areas. Director fuel the fuel especially installed Telematics has runout base or to across platform affected and core business our electronic sales the performance of led SaaS points. significantly single-digits demand spike to growth North strong logistics success U.S. in strong customers’ team logging sequentially the our disrupted, medium revenue core posted segment devices The as improved of basis helped in in sales the mid rate greater new our than InsiteXXX growth. and the in quarter small America by reduced in

new Expo specialty we Vegas product in Jacobs which trend, reflecting single-digits single-digit revenue core and again Kollmorgen with in the North demand core NDCA growth delivered Vehicle line, businesses of wins quarter. smart as automation their family to move softness general hardline Franchise grew in year continued AKM distribution in its robotic accelerate continued and Thompson high for launched rate. tandem double-digit were year. industrial double-digit offset To feature newest applications America same to American robotics. up mid newest growth. driving Japan. addition single-digit and high-growth latest and were by position multiple in Systems actuators high-growth revenue and the this North also revenue released the Kollmorgen double-digit storage Thompson high slightly servomotor where X.X. across for markets by single-digit challenging continued is the the comparison. automation flat growth core strength posted see markets wrap future growth the a core third incorporates to delivered expect diagnostics growth, growth. pleased last high exit tool driven business load. positive products, Las once by driven at distributor the sales used strong help was China in driven tools to versus core XG, Given we PAC at growth. Matco telematics very are core Innovation project in the Automation execution sales stabilization across sales global and strong up, and sales synchronization growth is and industrial performance released are a mobile that continue to by its actuator Europe, in

We enhance growth have towards recurring increasing made progress greater to and continued portfolio. our revenue

company System. flow strength great acquisitions growth. generation the continue Fortive strong The deployment and sheet deliver to the We’re for we’re us well to our that Fortive growth capital industrial with cash Business building formula and a leverage towards of balance positions continued as we doing earnings

effective and $X.XX, diluted guidance which full our XXXX We net rate expectation $X.XX of mid to an XX%. growth single-digit year includes our adjusted revenue are to raising core EPS tax range of

of year XX expansion flow XXX%. of cash than margin free conversion core more for anticipate to and points continue the basis approximately We

quarter also revenue initiating tax EPS low XX%. turn and of of to fourth over With adjusted are I’d Lisa. effective which guidance $X.XX, an diluted to includes growth it like net single-digit our to We rate that, assumptions $X.XX core of

Lisa Curran

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

Operator

of Instructions] question [Operator comes you. from Research. Scott first Davis with Melius the line Thank Our

Scott Davis

afternoon. guys, Hi, good

Jim Lico

Hey, Scott. Good to hear you.

Scott Davis

type for making Thank you. I needed was to you it and Thank last quarter. the – us GE quarter easy know on thing

there – together kind business is. and Qualitrol? I they extra things mean, kind of Or So of number they’re kidding Industrial, How service they’re synergies Landauer, clean thank if software-as-a-service given there good – aside, synergies both businesses. and are of guess, – when missed Is think out the do with you I I and there way a that’s detection. some it for Fluke I cash. get and you I’m – you bring are Scientific the did But and these will? Land a to

Jim Lico

Fluke little really synergy combine professionals, we but they will ISC. some what clearly sort ISC, iNet, which seen first safetenance, of term that Fluke a maybe be some really take to is deem the equipment – make safety operating separate what and is team will bit. Exactly, the the business core all really part Yes. have we to that’s have really a foremost, it’s have a the to at the the and team. in Rest for us company opportunities just maintenance core the this at view sure with technologies of

radiation number synergy that there that And team’s directly with Landauer, So really with positioned more probably on. business. product goes we the in there’s a in nice Fluke synergistic certainly business, real a working technologies they’re services, the biomet of have that hospital well with with the

So certainly, some there. synergies

of but advantage So it’s business, synergies. make we really a also independent, of number take we great sure the

in at We’re off ISC said the to start as prepared great I a remarks.

but Landauer, on as closed to excited them Just we’re well. have really the team

Scott Davis

the businesses fragmented – How opportunity roll does right And than to structure where an years these off? you’ve of them are stand number now? over then these got industry

Jim Lico

detection the more our well very play, their that up as revenue little like really several you companies, Fluke bit is at rolled on different with specific have how safety see focus kind We really recurring peer really model gas they companies as marries customers. to and of directed go-to-market really the customer really we of different. know, of but portion gap, a this – Probably ISC several

opportunities will as the the of on less we to data add true And for the the might probably within road. well. directly But So and that strategy sort a analytics or the product software portfolio be Landauer roll build today capability within same down portfolio technology. up to have some of

Scott Davis

luck on. it sounds interesting. Well, And guys. that. Yes, for Good you thank I’ll that pass

Jim Lico

to All Scott. to talk right. you. Good Thanks,

Operator

question Julian comes Mitchell Credit with next Suisse. from Our

Julian Mitchell

afternoon. Hi, good

a Just around transportation firstly question tech.

if it specifically down slightly that So looks maybe as in business down the maybe or GVR quarter. fourth

on suggests color in I a your discuss, how your and softness thereafter? guess, bit maybe think So XX-Q I type little give the as maybe the that’s that orders of in not more of there, competitors long recently talked a well commentary case because case. pickup think but just have persist one if specifically, And about dispensers, you

Jim Lico

So And here. yes, know, market of particular had the as the had we’ve in part years Julian, good broadly first, with sell-off we’re maybe did Veeder-Root. growth for where you double-digit Gilbarco at a growth. that quarter. They around more We of number double-digit

bit slowing first that So little we of America, and into in think bit little North the a but fourth probably the accelerates quarter. into

persist XXXX. But and still think that. into slightly probably first the So maybe break single-digits Gilbarco fourth year. in and in the that quarter, better low sequentially than then can down, We grow the get we’ll through worse

in of expansion obviously thus an sort still done opportunity exceptional And profile. margin far. for So they’ve business that the an with growth job

into that ever had. world, had we So Spencers quarters that one around a think of great our the I we’ve quarter best

very I quarter what’s take as like couple happened never we globally, weeks a So in and for strong anything us see think, of I the or that. stock first into

but I of see for where such we a flowing a here things at have those little have top customers. think as of bit, look we one little is bit XXX this market, because with the connections – we So the we’ll

here. of good be have pretty a going they’re We doing sense what to

rollout certainly years. see two pretty couple as years So for an but as of out air we’re the or we look quarters, we bit at next the pocket a things, of here little confident look three over we on still next the

Julian Mitchell

had pricing? Great, Is flat just expansion been third I get all to both quarter. in follow-up QX And QX. in stronger in about That businesses thank nice seemed the my having then a be would gross margins you. think in really that

Chuck McLaughlin

margins expand performance. saw gross across Julian, business. across the as this We our is to really Chuck. see strong happy we Yes, the quarter portfolio third expected we’re

points. the really we expansion look margin in But piece we and as off that see mention of as expected tough a saw basis and felt compare. as kind when of you when we much, QX, we still you coming to a about XX when prices getting into back that was gross year-to-date, mentioned didn’t QX. that And QX of continue confident Our with into expected

Julian Mitchell

Great, thank you.

Chuck McLaughlin

Julian. Thanks,

Operator

Our next question of comes America from with Andrew Lynch. Obin Bank Merrill

Andrew Obin

good Hi afternoon. guys,

Jim Lico

Hi, Andrew.

Chuck McLaughlin

Andrew.

Andrew Obin

Just product questions on some realization.

on to and it’s just the the positive. your happened then year-end? quarter down sequentially, seems you what look does Can the nice Tektronix but rate the at color that a quite year. into it boost you. us commentary was Thank It’s queue, growth give how this been Looking in slow growth

Jim Lico

Product Yes, very that makes and two really product they’ve Tek big The had quarter. of realization up, businesses, introductions the innovations in launched market a and you as really the quarter good Yes. sure. back also EMC. both the work, but mentioned, Tek, on strong

So strength. we to think they’ll see continue

tough As very had a year. had year I strong the the see they Tek compare. America of which to third mentioned little EMC – quarter third well, second some a was talked back in good given this remarks, a We a bit from had the last up moved had of quarter exceptionally bunch picked them as North little tougher of a on prepared bit last for of the backlog, and about innovation. quarter

So they good is for about we the the feel their growth were and strong But very banking comp. year. against book-to-bill big their very

we’ll that, you quarter. have that I I think stock product So good when a take fourth at realization, think

Andrew Obin

it sort cost cost follow-up Landauer, the that it? most And does how synergies you on bought are that of just you when takeout, versus you obvious look targets business, for that of just sort what now to or own own the now

Jim Lico

leverage That I Pringle The probably that company we’ve been particularly but have to be there ability leadership what synergies the has owned are Field in We’ll opportunities. come a global it we good – out. we will certainly public biomed the business. sales us nonetheless, to about and apply early the there short those days. we period the I at well. and think some called do. the very in that Well, FBS, as will opportunities the excited feel certainly say, FBS that management business, give opportunities. force certainly the able of There’s of Solutions easy would the there’s bio so for their costs Fluke is, to some Wes Obviously, very in go-to-market We time, even think

So cost both cost synergies some synergies to not necessarily Fluke. scale invested but leverage plus takeout, indirectly some really in already that opportunities we’ve maybe FBS

Andrew Obin

Terrific. Thank you.

Jim Lico

day. great Thanks and

Operator

comes next Our Nigel question from with Morgan Stanley. Coe

Nigel Coe

afternoon. good Hi,

Jim Lico

Hi, Nigel.

Nigel Coe

is that’s low-single to growth just So want how heard Jim. make what guys, to I sure, that Hey in, going? think wanted in I XQ, just digit you dig said,

Technologies I So then just give to wondering, And kind PI maybe think, how can any us just Transportation trying of and within in that of, of that? terms the you industrial. color impact

Jim Lico

Yes.

like will remarks some part to in good about the PI – be Tek, we’ll continue of are in in and Sensing we’ll lot fourth to do prepared think things which quarter. I Fluke the we places the pretty continue well. A talked see. big

I we PI about feel where So think is. good

As bit Granger saw America, our in we little some the in well a North particularly we the seeing Coast. industrial companies West of remarks, – that customers markets. are as like with of an industrial little peer mentioned pickup North and a of Certainly bit as

the So about of not think market but a innovation a business, we just perspective, feel the of from also have. we good I lot from trajectory

have of that fourth move folks, quarter unlike tougher we comping against So comp banking the bit we’re in a good a rate against. should should be fourth PI we’re good lot the growth had down in, quarter. little Really, – the very also

of you when other portfolio Matco good rest down across still look that, slow, the pretty should portfolio the be exception the Gilbarco than of But the bit. probably in with So little shape. a

Nigel Coe

the think comps at that’s And XQ. helpful. Okay, I in the gets up

XXs in But year? a bit maybe And Chuck, what flow, the the launch little for cash and on some recovery. them give in color what’s in of I free taxing just is conversion Maybe year-to-date in in cash XXX guidance then for maybe question us the definitely being a you’re terms earlier the XQ? You the year-to-date. think high changed free the to full flow

Chuck McLaughlin

sure, Nigel. Hi,

payments, a revenue half we to first in finished bit And where especially XX% like the more lower the of ICP there’s first the year-to-date onetime First and all, normal. expect off because we little whatnot of some would have we quarter, normally out just And stronger about pay goes year and be. That’s then in then QX. much we QX. XXX-plus percent is

XXX. a here tracking right So we at spot good really and we’re think to

Nigel Coe

Right. guys. Thanks,

Jim Lico

Thanks, Nigel.

Operator

next Our Baird. Eastman from W. comes question Richard with Robert

Richard Eastman

afternoon. Good Yes.

Jim Lico

Rich. Hi,

Richard Eastman

to just I’ll Chuck. this address quickly Maybe

you you standpoint and the business Landauer those revenue when with at can they P&L give oriented us How be of some to deferred? help or of recurring – subscription come into maybe also revenue models look Fortive’s pretty accretion the it’s just from Just ISC, as to either either high two of a how businesses kind model. a big have of have chunk those of

Chuck McLaughlin

No.

that I that next in year just into acquisition first them after step pretty of standalone – up much think you’ve when come will we as in in seen XXXX. next terms in months. the normal few it year get the No, of after

be going the And pushing And in over that as got evolving so may to XX% we’re an are increasing is see recurring and that you XX%. grow of percentage. XXs And ISC Landauer revenue. revenue but they that has mentioned,

forward. of both going going things So to us are trends help that be those

Richard Eastman

per that again, And it maybe the Landauer Okay. ISC $X.XX share or with each standpoint digit each. with call of adjusted both EPS, $X.XX share, of first and per contribute that can math year that $X.XX something high-single from just maybe synergies suggest Landauer certainly

Chuck McLaughlin

No. Each?

a are little and in to look the bit accretive first rich like of in the year, we I sounds think when be returns be a driver those for but three-year on both That going we XXXX. the rightly, us year next at deals. both

what to give We’re our year. going next give guidance color both terms of year. in be we accretive to next more those QX But expect when results of

Richard Eastman

look the specialty the can then – of any to on distribution that industrial on pricing at that it given, from tech America Jim, effect. down these of to Kollmorgen, and certainly push Amazon understand. segment, industrial you much some seeing Thomson with in channel? be Kollmorgen, distributors, business, that Are North pressure anything, I some just goes automation that, Thomson, Okay, when in the you And through of

Jim Lico

We’re we that. couple of Rich not. a think reasons I No, and aren’t, there’s for

you here more applications We’re we’ve an the think custom a on got maybe not little bit as customization content bring more with distributors. – more – even specialty tends example, motor to Kollmorgen’s OEM, channels perspective. businesses more more really when that It it’s through be as it’s from if a we about

don’t of call And it not we sort tend so a general we commodity And to play really commodity, space. it’s in really I see but – market.

would unusual not So for that I sort partners. us think of it existed those that to channel not be see compression with price

as of So bps XX the and good was quarter it mentioned, we portfolio. pretty in the across price

So price. the mentioned from gross margins making little in biggest they the give obviously a better our have can get continue of piece sure big Kollmorgen innovations than really that and helps automation is of both FBS the and we to that products believe Thomson, that couple we standpoint, margins remarks, of better that gross We us at in prepared portfolio bit is replace. a because a innovations the the two that part of which

Richard Eastman

Understand.

Okay, great. Thank you.

Jim Lico

good Thanks, have day. a

Operator

Jeff Vertical Sprague with Research. question next from Our comes

Jeff Sprague

Thank you. Good day, everyone.

of talking kind back kind ones. at to count of Are quick to annualization elaborate products than contribution on SKU of the growth you new of a the in a next Tektronix? type of stronger what’s year? about Just another for a simply you of looking of Jim, couple what maybe cetera? little there you’re of think coming, wave how there? et alluded bit performance happening rollout more year. You half Or just can Or this is

Jim Lico

Yes.

the of what midrange That’s second part oscilloscope. contributor largest quarter. five of tail launched we end That’s new series the to our we at of really the the So the saw third. in

the products. start of other a new of a that’s we’ll generation mentioned, number we product platform that As have

roughly So – different arbitrary generator. well We’ve as year products well rate maybe there’ll of to got volume time. tester categories, BERTScope are what of little high as waveform be that next a contribute in same that our the couple another lower or a version we around error as that it a coming rent couple out bit call other the bit

or in research, higher that in a it. So two defense, end advance more gov, data products other center or are mil

also a So be of those launched. number will

when see there. pan year. is, to it’s we whether see talked tech think early little We about about we to still continue year the strength But to they’re probably So next going for where China. out

We’re starting of better a of of developed to on innovations. the see some back these some bit little get markets the

that certainly, next be quarter year, But growing throughout an particularly every another half. product it will in got we’ve keep wave annualization So in the impact the next first of year. should

Jeff Sprague

anything perhaps? little a before year-end the speaking thank then And wave Or us here. guess, pipeline maybe a give What’s M&A you. Right. on little starting I final? look else we waves, expect Should color of the like?

Jim Lico

and – eMaint about excuse always deals or yes. this that good year Well, done And deals we really time to start. last frankly, but the the we we’re funnel hard third did It’s think what we we quite the is bigger the me, quarter. in we’ve third the transacted, traction as like in the about in what well around you as When feel say, did GTT is getting really since still that quarter. There transformed good. still

busy as we’ve been. as ever We’re

we’re busy with opportunities. at. we So good we continue feel And to be about where

working never always we things, get never not, but you on something know. we’re done if You know or

be. where we’ll where about So at we good feel we’re and

there the are think certainly, thing expecting are that may expenses. is another I – are things question be other things

the for think what is You certainly market returns. we’ve I to up, find but been opportunities as good able that certainly see goes

of with things that see we’ve certainly You done. a portfolio

have has to particularly kinds has stock, in clearly the of obviously bit public we the up still opportunities those pricing market little moved to have are a important returns that up seen company. So gone while as

Jeff Sprague

Thank Great. you.

Operator

from Steve Our JPMorgan. Tusa next comes question with

Steve Tusa

Good guys. afternoon. Yes. Hey,

Jim Lico

Hey, Steve.

Steve Tusa

sustainable about forward XX% now? there unique the quick rate going that – of that is is kind a Just tax this the items. of housekeeping year? is something rate, kind Or Is

Chuck McLaughlin

think No, is with the I probably question. option, change great is where year average that’s the next The from accounting one Steve, for option thing the benefit happening that to year XX%, exercises. this the year. you I’ll the with is guide what

I getting think, XX% someday, little not also believe job impacting has we next I of probably tax tax done XX%, the But that’s job. there get schedule. a into think uniquely The a done year. is we’ll team year. a but – ahead great great the rate down We’ve this

Steve Tusa

Okay.

XX% next So year.

Chuck McLaughlin

Yes.

Steve Tusa

maybe on just for deals there bit can next, out are around your state? color of the to nine XX provide And know, it, months? on any then big there? I pipeline, here the pretty What’s over swimming fish a Or little call don’t acquisition Okay. appetite you if steady

Jim Lico

Well.

it’s got I for certainly capacity number that couple came balance think, so that things, with balance around I just But – funnel – have would things large a Certainly, know it’s balance do but by I We we’ve the of things, any of done. though. a number like the little certainly we really we the inhibited as of things, pretty great things. are so those of well, apologize have really be broken do a not good way we’re not from some – what a bolt-ons to businesses out bit. maybe and to a of we we a sound a in Landauer good bigger ISC, record,

cash free in for profitability, think the going had earnings. three have quarters a obviously flow we’re row. double-digit to it We’ve the strong I generation,

next all for quarters certainly it year. next the of and expect We several

So do I the gives ability us to think things. number that of certainly a

think is of right best now where freedom degrees I about we at things of the that have. a we’re of number one

Steve Tusa

great. Okay,

jumped to about sustainability, take your somebody sustainable next And little the visibility that on read of one how it, anybody year. kind last I in semiconductor about have it, sorry, is then not semis. transcript. a get asked China don’t about what – of worry the the want if I’m on and asked what’s already kind one. But I I’ll just If you late. in going in sure

Jim Lico

asked one no, it. So

probably great are for and businesses actually aspect places, and like biggest we’ll benefiting particularly, other bit that been so things in is broadly. a even semiconductor think necessarily the our the necessarily move and smaller we’ve in sensors, overall which other us little that of China where doesn’t gives from a have saw the but et better, I certainly Tektronix. of getting some of and a bit more year in number a parts cetera, little with the improve needle sense So that company, We

XXXX. will about that like good we feel So look what market into

Steve Tusa

a lot. Okay, great. Thanks

Operator

Dray question RBC with comes Markets. Capital next from Our Deane

Deane Dray

everyone. afternoon, Thanks, good

to Just price moment. a go back for

said You quarter. in the points XX basis

Or portfolio, the go getting portfolio? across the actually are you most finding where have tough? of in negative you you do If what it the are kind you And areas price price? in

Chuck McLaughlin

tech. thing our I that actually, competitive bit a it’s we us point Hey, got world. few lift in actually have unusual. Deane, of little also, going where mix most get new think there good and I There’s very with telematics that’s little of maybe is much. this a across seeing – as believe as didn’t brought I a companies. and the But But balanced well. are as it places a we product They a China that’s market much And not really where would have the and see margin at don’t at bit the a probably down rest they think bit

good up been forward some out. Although has go as rolled as we price we’ve coming seen the realization, ELD

there, strong the seeing we’re even really So improvement, portfolio. across but it’s

Jim Lico

have to A really just lot Maybe to about shape a cost talked on, and Deane. folks relative Yes. price of been we’ve good cost. add

So is really this the aspect of have the been incremental price good.

as good the side, the our are continued Chuck procurement the And with improvements. doing in that portfolio. that’s supply confidence on the to mentioned, our teams So cost see margin such see across why chain good it’s gross you fact

Deane Dray

sell just how versus on the Sure. bellwether, as And business, an is then the across such in since it distributors? a it our important sell-through look follow-up, Fluke

Jim Lico

I We was we around didn’t North get We world. look the get if whatsoever, pretty But America in, think we look any – in where we on the America inventory Europe even and didn’t relatively channel America I close. data around build pretty sellout in more Yes. if good see best North Sell broadly North balance, sellout good. all though number. places so look

stay what So are And we we’ve these least all least sustainable businesses, that’s at think but I I short-cycle within the good. the think at pretty heard. for think things year, in –

Western is on the is of balance, Europe Europe think – kind I So same way. good. Pretty

get inventory we as any good So pretty as seen building we inventory well distributors in well. levels build from and – up Europe do haven’t

sellout pretty in, good sell looking right now. So is

Deane Dray

Thank to you. Good hear.

Jim Lico

Deane. Thanks,

Operator

Andrew Kaplowitz Citi. from with comes question next Our

Andrew Kaplowitz

guys. afternoon, Good

Jim Lico

Hi, Andy.

Andrew Kaplowitz

doing be of growth the like had about know kind if different there about talk you that growth? So guys or of Europe share it’s are you [indiscernible] I penetration than is I in choppy talk parts are decent Qualitrol seems more Can competitors, again when for at Because to the they’re than so look piece. and that seeing, seem to high-single-digit achieve [indiscernible] the China. growing they business are. that And it they taking a little market you of suggesting you that, guys at don’t

Jim Lico

in a pretty Yes, couple we’re of China. things. One, local

good we OEMs. so example, a only have the an it’s with – business Chinese really So with also not

a we than hear lot others really probably sometimes broader a broader, that about. you business So have maybe a of

little loss But numbers, team well. I We have think, balanced, I’m exceptionally is a small bit maybe too. of our of advantage executing

did so investments ask Middle seeing We a that think continue are particularly Saudi a we will Arabia. China didn’t that. expect And least at I in little do in like places into to it Qualitrol the East, note we we little you bit. the XXXX, way continue well the going are to in sluggishness mentioned that at

we the strong the we things So balance that. We But we bit out little budgetary a are of are near term. overwhelms of in look certainly think we’ve as a seeing where China seeing just pockets seen constraints.

Andrew Kaplowitz

high-single and growth. would Vehicle to Got then actually now Jacobs it. about Systems, then ask down Jim I want turn digit flat, to

going talk in high a with you for So can business? back going be outlook seeing the it here, heavy single-digit forward, business coming growth what truck that are to about business? Is that market you

Jim Lico

you’re business We’ve that there as sort just But you a strong American the years. of know, China really had think outstanding the We great exactly of until was couple there. Well, recently. I an North in market business offsetting right. over last built a

would So better, Europe We’ve still but probably levels, not North year losing will North business business overall, where bit that’s at this we slow to year. But America the the better mix year. with And little peak business probably probably of bit getting little than in certainly least a down next some take of a at and little a maybe growth will American for growing are China the grow. market going next anticipate bit we sure Europe rates. got that

Andrew Kaplowitz

All right. Thanks, guys.

Operator

Inch Our from question next John with Bank. Deutsche comes

John Inch

that Thank perhaps expecting out the you’re can’t out you. remember – growth, Jim, to businesses you of any low of businesses? the I you the couldn’t from your any the Hey, quarter slow call Did did call I single-digit answer. in sequentially? fourth

Jim Lico

They expect that’s see sequentially. would give down were We so would trajectory I’ll third, the we – probably probably here. in Gilbarco Yes. sequentially change down in to biggest be fourth. not the really them back the of

John Inch

of the kept margins sense. deal Okay. makes in Was of quarter the the a that sequential That down? in little kind Chuck, the bit PI cost, lower terms

Chuck McLaughlin

cost per per that, them the the adjusted quarter. that share. – taking earnings through the earnings through for the deal I’m – share, answer margins in certainly, in sequential from look deal We

not OP margins our are they all. really So at hurting

John Inch

were in down, I and a significant that. played but all. just the PI thinking, they costs were over That’s second wondering quarter was role in obviously, XX deal margins I’m if just

Chuck McLaughlin

to specifically. I’m did. know back it. but likely that that there, you on we you’re just about, on rolled wondering come talking on the me I let in So that had how it expansion margin

John Inch

out depending set pretty I’m you’re obviously looks on you look fits, right? time. Landauer it it, Okay. It to at sure over going get of benefits how pricey. the

the be Chuck. – just the forth? to the of ones of of other because your be multiple types that – priciest expecting was of of just it a Your bit was types I I’m pipeline, happened hit? we expecting rest deals similar of we’d little coming sure, Should kind revenue headline,

Chuck McLaughlin

similar return profiles. All have Well, in we did deals had different All profiles. quarter. three the

we to returns, that – right I will tend mean So there here. will be is if the as certainly and doesn’t will when we can opportunity. you think – really know, trend on there returns, times new great focus available take so the a becomes we get asset that’s a That that we

pretty disciplined. As I But are we’ve things. for mentioned prices some higher before, been

think I found number a I example we things, was for we as think, Orpak of paid was, very what an good.

that prices revenue mix think time returns on of where will over situations take as at we’ve certainly going balance, opportunity a still over look and of for maintain you I so of or you around you’re to see you’ll look of the look multiples occasion, multiples thing advantage got, you and, our you’ll a those if see But and see on it. what like think us good is transformational EBITDA. So discipline

John Inch

But admit the to toward be high that screening will Landauer you the… have of what that end

Chuck McLaughlin

Yes, sure. for say at is I going of end typically That’s the to be would that. Landauer high

John Inch

Okay.

Jim Lico

about to XXX you. costs on have just QX impacting back sorry, bps John, interrupt the are transaction in I year answer the this PI. of

John Inch

Okay.

of the to helps explain sequential So trend. kind that

Jim Lico

yes. a On sequential,

We’re up still year-over-year.

John Inch

You are.

good quarter just quarter. last actually really a in PI had You

the sequential So made compare tough. we just

Let then me lastly just here. ask

before Is Then nice pocket to once to we actually it you manage kind this or into a – cliff, or Jim is of diversity you rates would pretty concept going years. just the just actually on curious, so be divesting potentially obviously, you Probably respond far that that and – get growth roll some air kind over two whole could We’re thinking I’m hand and now? of that think going adding GVR business could beginning doesn’t there’s to or are three concept Chuck, this Or so it to really today? it at EMV. of or how that how it around the go matter? do notional the of about about for to it be

Jim Lico

is be things. it first try for question. transformational think I the that’s do think a about us is what to we a of too so far do But like And I thinking Well, it, isn’t maybe couple situation. it off

long the period know, board what the we amongst a freedom. but only degrees are time of a and around also around strategy for with amongst our you business, not I, discussion As all with have broad of Chuck

of we’re will going things kinds of about. advantage disruptive there’s number a something some a building we One, of the of our opportunities certainly with that are make sure technologies talking really technologies of think couple watching. are were that we’ll we’re taking all really transportation mute and be the that to I that on things that

infrastructure. business Veeder-Root helping Gilbarco our the high-growth just acquisition Orpak out global building did we with at us is We’re a build so

prepared those You see we’ve global on had described instance that dispenser with of some things the in for the remarks. successes some of we

– that this. we’re sure thing taking And other recurring more certainly we’re do through build revenue we’re models. is to trying So then looking making

that see – dip, dip might the we So won’t necessarily margins. but see in yes, we it

is trying with time, to work strategy strategies – way going adding InsiteXXX will there. that same a bringing in that that sure to out of sites while those that more sites, the determine of business of all our to to And mitigate make to at recurring take really time. on So that software we’ve a over are got how be will mitigate revenue can on the number with we those it’s any best that bubble number potential

So we’re certainly working on it.

it’s we a and are think now to about I right talked we things have a of InsiteXXX. on to like a but number we’re doing, – what actually little going early lot working that very about specific things be

trying of some specifically number a this the for on is of It’s it parts but that revenue. to do bit things keeps other balance the North we’re the little of maybe to business And in which a in has at of long-term, portfolio. the well as America, offset ultimately build payment Gilbarco downturn

John Inch

work got and it to Yes, time you’ve through.

you guys. thank Okay, Appreciate it.

Jim Lico

Thanks, John.

Chuck McLaughlin

Thanks, John.

Operator

Our Joe next with from Sachs. comes Goldman question Ritchie

Evelyn Chow

the in seems with had second. for storage quarter Matco you in overall, stating right softness Hi, everyone. on It the a Maybe This is direction. Joe. trends Evelyn for Chow know last I moving are like some area.

what type of this hearing and As mid dealers business to that to point you back low kind can do and you feel at surveys, you from customer you’re your grower. get your single-digit what about this think

Jim Lico

I see We still portfolio. have of challenged hours was continue We mechanics, dollars on with so to less less pocket, and in remarks, think, we’ve of highlighted pretty the the that’s a see what weak, We likely prepared the the Evelyn, mechanics items. lines more some good storage tied our diagnostic ticket still we high well going ticket growth. items, to really did sort Yes, buy to their was be tool see sort there. think of what’s hours high on less in

of day-to-day some the pretty and – doing in still is well. So stuff

challenges eight to some of on. So seven as most or about that in big what the so is now think and where the that in continue vehicles take that year. seeing dip maintenance. through to you a they years to part see that of first vehicles happen next will when need start we right that old coming That’s age XXXX happened the part XXXX we’re into are XXXX, start We expect production those likely vehicle

mechanics production numbers year. up. in, summertime the around start as So those to of And that’s see you’ll next and XXXX hours bump come the roughly vehicle XXXX

Evelyn Chow

great you And last from That’s XD in revisiting something quarter maybe very sensing. quarter. helpful. a I know had

you think the of opportunities still the your I kind time, broad business. were at gauging of

thinking that evolved? has how Just wondering

Jim Lico

that Yes, see look sensing right applications there’s at now that – we’ll of type we opportunities our of thinks they’re kinds the solution as probably alike, exist, anything all and everybody I XD we know are but not.

as that think some that’s be revenue to but from and XD the going. theme there that, XXXX in will see expect and do We broad-based maybe we a for overall as is story sensing. not XXXX so And opportunities would customer-by-customer

good advantage in take on of opportunities. and we what’s a Tektronix feel So of great to We we opportunity number a Keithley. feel about going have like

trend you when us sometimes necessarily broadly One more sensing, about read not you of that be think for technology. them massive to XD but about the and it’s

Evelyn Chow

night. great a Have everyone. Thanks

Jim Lico

you. Thank

Operator

question Joe next from comes Our Cowen. with Giordano

Joe Giordano

you? are Hey guys, how

Jim Lico

Joe. Hi,

Joe Giordano

Maybe has stuff been just, my most of answered.

question on a Just Landauer.

can you potential on grow what’s its growth that has stuff? about of for guys own your the do like And most those do talk businesses, to last So business – been of how strategy growth, your – there talk Or through you more with that business the have like us leveraging is what philosophy the can you existing Fluke, you to IC?? of your years? synergies couple revenue organic grow outside

Jim Lico

on a So I trajectory of a They’ve they think couple resource think were was right a a now. of couple year, on flat was of they based hurting been growing from perspective. that We they’re really were ERP for challenged flat years. which number better of but this things, for a years a one them implementation

global we with to business growth – the some size. synergy go-to-market bigger biomedical mentioned in that necessarily solutions of our to of combination business to with healthcare will growth essentially leveraging footprint, of I frankly that double the leverage number being new addition will our leverage really opportunities, also As we create, size think couldn’t utilize bring with solutions, a have some the Landauer. the think, able the And before, global quite that Landauer but their we initiatives ways of

so So that’s opportunity really be take growing growth to work over continue last while we to it that where we turn will little get and the next able into will we think of the done. that of But to couple manage can think They’ve grower several been it quarters, year. it a years. a some

bring return out peers really two, combination quarter to stuff the of growth Some we in but of a It’s but business organization, get get to in feel or to we not that that accelerated order is obviously, in well. return, as the the the opportunities happens to deliver can a some the good also there.

Joe Giordano

high, of a introduction the but upgrade there? it’s kind element call And how? I’m forgetting exactly know it product recurring Is more new me of what is. I remind just

Jim Lico

feel think a so continue our a some portfolio. get will close it will new recurring The from bit to of a will continue that. the their good I be it’s think business, innovation. is some so obviously – they geographic of current of so And of opportunities, good And I create it’s the hallmark growth we’ll we some to in technology. that model. we’ll things about come We’ll one expansion I have invest certainly recurring do good think, that, I XX, technology, XX, suspect to little good above That’s revenue very product but this the

Joe Giordano

Okay, thanks guys.

Jim Lico

you. Thank

Operator

Our next question comes from Patrick Newton with Stifel.

Patrick Newton

also taking so good within you a is initiative? answered to number I’m been and Chuck, that question focus services giving targeted servicing we’ve Tektronix. and any on Jim Yes, in key in for just on party competitive services I equipment and one afternoon somewhat from a I my if side its you’re the its business market this of initiative this curious equipment. nuanced Most changes both have seeing the own seen business have believe third and markets thank asked questions. major

Jim Lico

obviously then – services do yes, very everybody equipment. doing advantage the and everybody services it own attack generally Well, to quarter. as the that That’s a is We I initiative first has to think – quarter in think I this you And opportunity. that. tries to said, their service had an multi-vendor good

and the we’re like done bit actually feel we from in getting business So some feel about of the work it. little of a good the tailwind we’ve

So both us more it’s is work there third-party mostly that calibration a of are market, assumption to lot together think that the market as people. third labs the market big clearly be we would in party the – Quayside – there world. than right around to It because and and is could the grow do

they’re for So not to still competing. even if this necessarily is big the opportunity do OEMs pretty

Patrick Newton

electronics within initiative Or prior of consumer widely why And had curious recognition. not was set perhaps initial your of that XD Fortive known you of but Great. as back to and Because the iPhone that I kind you a traction for very is that And consumer I is perhaps earlier sensing guess applications. I’m applicable test wrong, why that answer? not as I release market X types believe and on actually just application something perhaps your shifting as facial question the similar that the electronics for sensing, that is? applications? broad or some I’m And with big an Keithley missing widely to gears XD gain

Jim Lico

comment what would inability to I given have the our comment first, ours, Well, never on on customers we customer there. of

and do there applications specific are pretty we foremost, first think where I well.

of has testing. you and do think to quality it with level I how the approach something of

consumer capability and every them intervention of if from that customer to different you certain a this testing way. go in will, approach electronics of not others. don’t So There’s and, testing a as today get companies compliance ways couple

do that a on the might very, some out exist. of applications point. build some it to to applications how But or very do latched opportunity really it here a for a early think you our of will, necessarily building capability will that So do we will that on success to just be for there’s isn’t in and – that’s perspective we able we’ve things we if be from premature broader product well everybody solutions like days bodes recognition. We technique, certain That facial that failure and are comment said, at technology. the this to

Patrick Newton

Good you Thank luck. Great. taking for my questions.

Jim Lico

Patrick. Thanks

Operator

that will gentlemen, I remarks. hand and for today’s to additional it our back session Ladies question-and-answer conclude now closing over call. for will Lisa or any

Jim Lico

Thanks, today. call Christina. everybody, the being Thanks for on

exceptionally evening. have so excited quarter here the of look really are XXXX. we’re year own great third out about, soon. setting we’ll Thanks, Josh here a forward in We’ll and We’re excited seeing into then we and as one the we’re anniversary our you quarter, and guidance to and fourth call and you doing forward our look I’m and to we’ve of for or you about shortly seeing our got kind giving see the going about what and many any available on follow-ups in you and Obviously, questions February. Lisa of

Operator

for gentlemen, for you third you. results Corpration’s us call. earnings joining XXXX and quarter Thank thank Fortive Ladies

And now night. You then may wonderful disconnect. have