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Fortive (FTV)

Participants
Griffin Whitney IR Officer
James Lico President, CEO & Director
Charles McLaughlin CFO & SVP
Steve Tusa JP Morgan
Scott Davis Melius Research
Julian Mitchell Barclays
Deane Dray RBC Capital Markets
Andrew Obin Bank of America Merrill Lynch
Richard Eastman Robert W. Baird & Co.
Andrew Kaplowitz Citi
Jeffrey Sprague Vertical Research Partners
John Inch Gordon Haskett
Joshua Pokrzywinski Morgan Stanley
Scott Graham BMO Capital Markets
Nigel Coe Wolfe Research
John Walsh Credit Suisse
Joseph Giordano Cowen and Company
Call transcript
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Operator

My name is Erica, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporate First Quarter 2019 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions]. to call like to now would turn over the Mr. I Relations. Vice President Whitney, of Griffin Investor Mr. Whitney, your may you begin conference.

Griffin Whitney

Events quarterly and release. are XXXX. and will X, and discontinued presented us Investors Lico, conclusion Thank have We measures non-GAAP SEC you, Regulation Officer; & the the and of are us our operations. A are With Chief joining thank business and included next A&S on of on quarter you historical current are May G Erica. relating Good Senior of non-GAAP based XXXX, under these www.fortive.com, measures until heading periods. earnings archived call. conference XXXX included We the webcast afternoon, today's replay will Information. on results first everyone, by Chuck call to the until available Friday, available be McLaughlin, A Financial The the of financial the the on website operations call. Vice shortly & accordingly, this our archived under our Chief on Officer. required President business financial of for later section the and Financial completed our as the divestiture and continuing call will website, Specialty the our October our on for Automation today this Executive Information Jim President results on replay the the call. for heading accessing after call be section today of Presentations in remain certain this Investors Instructions press replay XX, of present

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

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

James Lico

reflected XXXX Thanks, quarter earnings that Griffin, everyone. first the afternoon, setting results year reported we to solid off good start to strong deliver double-digit growth. another us Today and of

quarter partially adjusted earnings Gilbarco expectations, Professional near-term Instrumentation. in as offset performance line first from Industrial by headwinds with Our of led Veeder-Root growth was Technologies, the by strong was per within share our

$X.X flow our represents Sterilization to-date under closed we on billion the that months. in in schedule strong cash position family. and Fortive that its acquisition The largest pursue out strategy. XX closed and We're business to pleased acquisition XX% provides our the Xst, quarter, carve & transaction with vitality in complex On the this of portfolio. we from the reflecting just Fortive base Advanced our With revenue accelerate a greater April high and and very earnings Fortive and will to medical Johnson businesses global welcoming ASP growth strong free sterilization generated We growth brand, recurring and potential attractive we significant brings the the business $X billion leading acquisitions market. installed mid-single-digit disinfection of Johnson employees a growth, Products invest of the to strong also innovation organic continue than in as the

led Fortive less when more Landauer the free our our growth adjusted top-line and operating is ASP performance markets’ and posted Asia past Industrial Sales Scientific. of China details and Investor With our flat early unfavorable cyclical a as continues the exchange most America from to was led the that, acquisitions to continued strength was gross North excited of quarter the offset Core turn as and margin were these profit at momentum, of Acquisitions, growth, go-to-market Middle including the growth reflecting was quarter Fluke XXX by margin at a Orpak Tektronix, points and Reported first Accruent North single-single-digits, by strong GVR points, at ISC, grew the points as well America and well years. growth, GVR Conference points was lower-than-expected have couple relatively at generating basis May. XXXX. and flow. XXX in GVR, core with reflecting led EMC and are costs. other a of billion, Geographically, were deal-related to we at $X.X the system net growth at revenue rates foreign in Accruent, dilution business posted exchange sharing core increase acquisition, XXX and cash company. growth continued volume margin down of reduced earnings core embrace Developed portfolio my markets’ of drive foreign was by are X.X%. Western Scientific another Adjusted as up Europe growth GVR and of the Tektronix. strong look rates over improvements basis and XX%, points XXX year over low weakness X.X% like -- Core revenue by to deliver While across forward diluted performing East. the XX businesses slower XXX higher Gordian of and per points. made profile. by we detail revenue about growth XX.X%, and of through by to progress about was share single-digit earnings closed net basis quarter. million, performance $X.XX. recent GVR, growth to mid-single-digits, and in Qualitrol X.X% the $XXX.X Likewise, prior execution, was basis dilution grew they In growth offset strong strong and by the progress growth basis the We we're stronger together EMC. including Tektronix Fluke Industrial basis the enhanced Gordian their high grew as evolution of mid-single-digits Fortive pricing. order contributed of innovation of highlighted revenue The revenue the high-growth Fluke I'd Core Tektronix. being in acquisitions toward margins while Japan. strong reflecting from unfavorable quarter, in first operating in

quarter, flow During of a conversion in increase generated strong free generated Free the ratio a XX%. million quarter the first we represented and cash $XXX of cash flow seasonally XX% year-over-year.

year, cash full we to XXX%. conversion greater of than flow the For expect free continue

as EMC the basis XX.X%, Scientific points, growth revenue exchange core contributed revenue single-digit and weaker-than-expected Sensing, decreased margins grew and led enhanced over High-growth XX%, unfavorable which strong strong Reported and of low Instrumentation in and at North posted improvement operating Tektronix slightly revenue. the China Fluke with points, of a segments. unfavorable in single-digits growth paced low new Field the the Fluke generated customers Fluke’s performance reflected was Fluke greater growth. strong strength than America revenue half points. by growth low China basis in XX% did rates impact our more foreign and operating grew of posted reflecting growth back growth, Fluke core with Industrial during increases as reduced margin recurring slower basis and X.X%. however of XX the than ISC. XXX continued grew Western including single-digits quarter tariffs We operating quarter at developed core the margin of Core first mid-single-digit XXXX. X.X%, and XXX Solutions Calibration. growth Solutions trends growth by by in core acquisitions with ended growth at of growth Professional lower to led XXX stronger strong markets in associated as of Advanced at healthy in the dilutive for quarter. single-digit position Acquisitions than United and quarter. while continued by the industrial eMaint by XXX by growth weakness it Instrumentation point-of-sale Fluke basis costs. see sales increase reflecting was competitive a annual Tektronix points with exchange. of momentum foreign point-of-sale performance another Qualitrol. deal-related growth revenue increased and in States offset impacted ISC markets offset Fluke's Digital Europe solid and its quarter. a was finish generated growth continued double-digit core largely Fluke the low point-of-sale by broad-based Systems greater in in added and Turning

to of quarter basis very two testing of during high-teens wins. first quarters. iNet strong revenue driven operational continuing low-double-digits a gotten in pursue ISC while rental coming in solutions continues the front, operating the that project several quarter the off with the our a iNet have quarter, quarter is the the growth declined FBS strong combine product team delivered than emerging the to company's large On line to which start. over America. about inspection ISC new ISC expectations. excited had points application of Fluke bundled Qualitrol's drive from saw core Networks rental opportunity North led consistent expansion margin revenue in the improvements. delivered by fiber growth launched XX% and as offering core The greater quarter with during XXX products another particularly by

EMC third along solutions base growth business market Flat continued see flat a signs quarter Tektronix high-teens we to conditions first the company the a with headwinds grew led by strong and quarter. the by in and of American during the conditions of mid-single-digits were markets in its result developed certain throughout product down employing by growth growth launches the markets Korea some offset growth Europe. drive XXXX. Series to has This as realization was benefiting offering to revenue of quarter started of from of the a challenge partially was than The continue Asia. which a soft was which declines continues across stable was momentum introduced growth in quarter. in MSO growth growth remain increased Tektronix. markets, in North by more high Western pyrotechnical during fully in oscilloscope Product Japan, satellites low-single-digits. the the offering moderated strong Developed with from expect a and the rest While the South High the from of networked core for to more progress contrasting quarter X at lead offset early performance China in was behind its XXXX. strong low-single-digits markets EMC commercial decrease Tektronix satellites saw

focus to portfolio, also ongoing and contribute business owner. agreement with equity the effort recently of reshape part As Telestream's monitoring company Telestream and Capital, an video test signed to the formed a and to Genstar private Tektronix's its the entity, new

and solid OEM markets, quarter. by environment trends product a China expect performed end America We the across year the drive of Sensing beginning low-single-digit medical Western in launches platform’s of third certain low-single-digits had parts well at while its semiconductor North in quarter. to end and electronics registering Sensing continue remained to in declines Core growth demand headwinds decreased new the The strong the start markets Technologies was recent including transaction platform Growth to the revenue critical defense applications. the experiencing from and growth platform in for and core close industrial slower Europe. offset slow high-single-digit customers. the across

strong XXX Moving revenue Industrial core points. basis quarter. basis points reduced reflected while associated the grew segment, acquisitions. basis unfavorable growth operating XX growth X% XX by margin dilutive of Acquisitions at the increased Technologies of margin revenue in GVR volume Reporting to driven basis our XX.X% XXX Core margin operating foreign by points, points of contributed rates operating X.X%. including exchange with

continued for point-of-sale to outdoor by Shell’s of results recent ready tender product the at included Veeder-Root tank GVR's release XX% a EDGE major core reached from EMV America of as growth Orpak and by than in quarter. agreement greater on the Technologies programs XX% its regulatory increase announced double-walled oil North service to continued Transportation monthly markets within greater high than company Gilbarco EMV and sales accelerating and of Shell innovation sales, by led solutions Passport high-single-digit significant India increase driven China the ERP lapping from upgrades. mid-teens EMV Gilbarco saw were capability, markets. recently high in growth by with strong driven markets. platform the growth of combination tailwind to generate also led issues offering XX of markets sites system. comprehensive grew reflecting by delivered the basis. capability low-double-digit implementation growth in affected than Our Developed that to ongoing point-of-sale first markets in growth the number a including core a dealer high-growth revenue EMV network GVR’s performance the partners. running XXXX. automation Passport highlighted offer large and led strong a quarter XX% developed Gilbarco markets wins growth growth, Phillips revenue in greater low-double-digits developed GVR during in subscription in

TeletracNavman expected, offset was the TeletracNavman in America. where headwind remains on eligible a despite cloud first across decline American as the all federal Asia the customer TeletracNavman its making FedRAMP North during high-level on authority the to in reliability security churn provisional single-digits that than awarded quarter XXXX a The a and based remains North declined agencies business more in recently focused stabilizing operate strong of growth As improvement product third-party by was as high by Pacific emerged Director some procurement a solution. its for team quarter.

quarter. and was has performance significant growth Matco been an and company's by the mobile inventory up customer the Annual AC launched distribution. equipment The franchise while At for Expo, reductions first Hennessy’s well Matco to declined uptime was single-digits by the quarter. impacted received service drove line shop low during Moving recycler slightly. Tool during platform the reliability exclusive optimized market

basis. video full representing guidance XXXX and on and free continuing Turning guide ASP greater to annual to and of rate XX a adjusted $X.XX the of of our cash Tektronix XX% growth, to the EPS X% the to guide. updating to year core for growth operations net reduction We're XX% revenue also core basis addition revised diluted effective guide due transaction. of year. flow XXX% $X.XX than $X.XX X% includes tax points of to year-over-year $X.XX, The XX% of a to assumes The for XX the OMX conversion

$X.XX first exchange. as at adjusted to and also tax the net initiating wrap We near-term rate headwinds are our results despite and diluted impacted came an quarter as representing assumptions of expected $X.XX foreign our year-over-year second includes effective high-end. of that XX% growth of To X% EPS This businesses of shorter cycle in well we from guidance to growth up, X% core our as XX%. the tariffs quarter revenue challenges

flow. greater delivered high mid-single-digit cash growth growth, For total growth than revenue we quarter, in free the single-digit revenue and core XX%

ongoing attractive portfolio, robust growth another transformation greatly to increasing tied high and revenue free in significant closing ASP exposure flow. the an also With quarter, of healthcare the of secular of of long-term to market, another adding the our beginning drivers forward recurring and took we at cash step source second consistently Fortive

to quartile well upcoming update portfolio where earnings as ahead resilient many another the insights as Fortive the Investor strategy look give you Looking transformation remained growth. of and contribution a in back digital of Day well that, on ASP, deeper May combination efforts. our Griffin. turn York portfolio, of it with top on seeing to addition will you core we foundation forward our at I'll System, XXth, and an deliver With into New Business of Fortive of of and to we've the the year Gordian positioned Accruent a of We growing

Griffin Whitney

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

Operator

your [Operator first Instructions]. from And question comes Steve Tusa.

Steve Tusa

I On think I segment is seasonality Gordian somewhat $XX was there like quarter, from and wrong? amount like that mean million the is pro on acquisitions I or revenue like contribution for that in to I rata Accruent, that, the the math I’m or acquisition the doing something basis contribution think million business guess a $XXX a

Charles McLaughlin

XX% math been There core think a where to maybe what doing not Yes. No, wrong. than is are Accruent, traditional bit we our seasonality a a Gordian it's year and of I that XX% you or different quarters little two half. like get first rate the has XX% it's and the to business we first and maybe in going have the think in to XX% second to half

Steve Tusa

relative are there that to around Okay. market any any on -- is expectations? moving there Gordian, And dynamics

James Lico

fact spend platform. of strength and solutions. That procurement construction order what good in part job the up call business the had We good No, we the quarter both, Jim. double-digits. Steve, we contracting the through a at That's in was business it’s saw

-- So the of business. and XX% that’s roughly

we well. at So, no, performance saw at Gordian Accruent good as we a performance saw good and

remarks getting very So of I said in the the team and drivers businesses. we're to as an about is outstanding in really are we things off a its the business we to prepared good best both in start secular we the addition think like one

Steve Tusa

Okay. And then for one you. last one

like on anything performance you, inconsistent out positive, of macro there in you opportunity on a in moving macro kind touch quarter of are sort some are there out It high in half? maybe the of you that that pre-buy to businesses of the the draw on and seeing was of in second here hand from say. worries you and relatively just for kind some macro what or negative, different a products an level the Just I’d your there? any any seems first fourth lot looking pull Is perspective, back, there quarter the around now

James Lico

Yes.

bit little of a of the context So geographies Steve. maybe sort in

of we but obviously drives Gilbarco our quarter they what growth lot had. because good North -- pretty in American overall of a that I the think saw was

the points read quarter much, news other as the was We What the the of much is a market you and growth is out we quarter think better are the pull there high somewhere a tariff February good of a know of basis number probably the we get see think of really we the saw world, in every clearly growth that don’t now get got think Gilbarco better that was you and markets, or think to the in definitely we in slow in around first. North closer now fourth thing but the is number remarks. sort definitely said so this we is those highlighted I what to an I through at through in specific high to point-of-sale part XX macro revenue start-out America lot if did of Matco to prepared Gilbarco, got the good is relative then quarter I thought a a in better I in that of March. pretty as then came of -- Fluke we performance that XXX chunk that's quarter, was saw question and example there places XXX a avoidance we

trends were Professional mostly we weak improving our see the did was in that Instrumentation through So Europe distribution say in some our weaker I businesses in point quarter, Europe. for clearly just distribution a and would

Operator

comes question from Davis. And your next Scott

Scott Davis

a or kind XXXX? I’ve are Just XXXX that business open around question on Technologies Sensing turn of at all. we But now ever business what asked for -- don't I does think

James Lico

it get a probably in but year that single-digit in half better was continue be but of bit of the little their as change, and -- low it’s part changed They little a always easier quarter, were view in bit get we low -- the second negative really a a well, the -- single-digit. that going the probably lower to No, well. and thought number point different as comps little to doesn't little a will

cash the quarter. business a One business did in about been in of very the they've obviously a protecting part they flow good the of good the things free is job profitable and

year. continue here and go move through growth they'll better as the they'll the contribute to of the to perspective earnings an the So, for rest from year they

Scott Davis

a your take it's on way just on companies buck look it revenues, a as I or bought it R&D. I percent very your a tough for if at look a but that that Slide the is you may they're if Jim what's own you’re businesses, that And different lot numbers lot scale on And any getting you to to productivity just early or and on your at because spend be R&D X, there efficiency to get just Okay. look spend, of bank of take any how you and know money R&D?

James Lico

Yes.

clearly software businesses think both owned are pretty bit like were of on going being Gordian being a One, couple equity. they Quite by a little and R&D I Accruent tight frankly, R&D. to the things. owned more require private --

R&D add probably opportunities and spend growth solutions. to their out their as to we We platform to build look to accelerate will forward of

the features As current to you time. delivers great businesses, additive know, over addition strong the of continued these which potential earnings really customers,

that. will many of the much example. So we're platform as looking other we'll we in for places, at productivity we’re all their standpoint, on But in not Tektronix new through move as always productivity -- as spend an some overall number for the do because Fortive look big that may

into growth we where places where dynamic the highest there clearly it we money what we're is really opportunities. moving resource So, allocation have call often

Operator

And your next Mitchell. question comes from Julian

Julian Mitchell

X, slides growth year $X.XX, you're and core of $X.XX Just parts about Maybe in the you’ve contribution at half. biggest expecting to moving the up to contribution did X $X.XX in through at just big in a first sort terms walk of that we up of half some or step to the look from please? guided first step if so half, that second looking the revenue EPS, you about at just about do

James Lico

Well.

up -- I the we fix volume as our go piece. see normally to revenues We QX, from the don't the to just are is that steps move going expenses think thing don't think quarter, our through sequentially. bigger our expenses QX I -- XX%. by up Obviously,

the the through second earnings normal We think the contributive quarter, the in XX up our in step being XX of quarter. XX So, and year. and EPS the growth, first in third that creates fourth a generally

that you this gives when -- you so And profile. do it that,

that think -- and the and particularly is so in And first $X.XX thing point then $X.XX I’d FX back the then QX, it $X.XX in in thing think most -- there's half. QX there's really of other that's QX half, or I last it’s it out or out the flattens in I

So of those dynamics giving of little a some that’s of of a ramp. it's through a are the most but the the revenue bit year, ramp backend

Julian Mitchell

Understood, thanks. And then my second question maybe around Professional Instruments specifically.

You assumptions talked you those there. from in color maybe in much in intake on QX? And whether order the distribution businesses and about facing how Any PI sensing the Fluke rest destocking the you're the accelerate Tektronix, the thought seeing you think you in on suffered in what of quickly year? maybe

James Lico

part in in Julian. direct up definitely some interesting think an was where pick places direct a either in but significantly the I and last Yes, had business down their both the mid-single had was in definitely certainly saw the and growth first destocking in businesses Tek quarter. first, at their more We I'll Fluke Tek business, US. some for we Europe would like business say dynamic distribution

occurred destocking, before, avoidance, in that mentioned avoidance kind answer few minutes really that which -- in a said tariff and of chunk I a of attribute that what as of ago. the fourth bit little So quarter, pricing we kind we to was of a

and had the in also the where play would the over X of improve and see dynamic a first that book-to-bill a quarter I year. we'll rest think second point out that out I through quarter. provides that the Tek So

point-of-sale some cases, as I starting both to as think so in well quarter. move we start certainly And -- performance. but improve to I feel did we're Fluke we're solid we the think see the seeing like through number

off working a inventory more Professional think core just at here we're and sort really of destocking not deliver. need think reflects certainly started kind I to reflects of current we Instrumentation rate thought. that. what than So being really just under the we deliver big play a that certainly kind slower we But macro of just to expecting that X% seeing little It's we flat Tek out. through improvement really growth Obviously,

Operator

next your Dray. And Deane question from comes

Deane Dray

the take Tektronix the what's economics, us through here? transaction, Could Hey. opportunity video you are what the

James Lico

you as strategically the well. Yes, -- Deane know

looking always So, for we've to put position businesses the been perspective portfolio success. our from best always a in

as combining came business We back companies that by our also think with help that increasingly, obviously. team operating was business, Tek And those And understanding with not combination the video do that to better. we Telestream think core I well. really as businesses at better to looking and the of this the do Tektronix what I

interest Genstar looking we'll businesses, the synergies benefit combine we'll in combined business we'll the have the over business So the the and minority with to success a what time. of in the entity really from do and is

synergies the So we think to are economics going over time we the think are be good strong. because

Deane Dray

that the and was does you XXX businesses, most did the on basis across points give-up? any price, where there of spread get then how the pricing And

Charles McLaughlin

it’s Hey, Deane, Chuck.

the on than of one Professional little starts the little side rather bit XX a for price it more were A two little IT -- points. and operating So all successful a bit the basis lighter in most where we got companies. with our across we company part at were -- we Instrumentation more

everywhere get bit was contractual happy we EMC we -- XX going successful coming basis specific we we're So very a they where have unrelated -- most in to really also were with are reasons. of little at about XX. at down were different points struggled known a but we’re or where we some and else, is We places and total, XXX XX I to what but think some things one -- not to for expecting -- but that regain mostly Tek work At points price basis in, that on were normally across which was places. they would we couple struggled

Deane Dray

the Tek And on give the distribution? on that direct side up or through just on was pricing,

Charles McLaughlin

more direct side on on the more are more Probably as business. those you the imagine case-by-case those can are -- decisions as

price it because of we A the quite X would about had into on quarter, we more January distribution, more sense the I we will the the makes price least side was in distribution if you so Deane. metric with fourth at more bit of increases this we think that say direct to in sort -- to and side. expected -- some but quarter from it if but pull little way, because first avoided of realized that of the And not price distribution sort

Operator

Andrew And next from Obin. comes our question

Andrew Obin

to Just back up? would a been of they what couple sort Professional it question margins, a for on of now, have quarters inflect the take for margins Instrumentation negative operationally

Charles McLaughlin

a is, is couple to both are big really tariffs they've for couple things. Tek. impact been of quarters. a Fluke and There struggling question. if Great One Remember a

so And hammered there Instrumentation well. that really Professional for pretty get's

lap QX. we will in the those majority them So in of are tariffs that

start need that So Also get on their a get that there. we and lift to their get distributors fall-through high on We and maybe some to Instrumentation volume avoidance has we of back -- or pull need so shipments Professional the just will door growth. went for. in that more out

again other in half second and start get start should And little the than when we one FX factor on bit more lap well. has really into moderate. to fall-through the us to as those hurt things those that hurt is so going and a we're we So that’ll us expected QX, we

there go those here we get FX -- in is should QX if most when than stays QX So there impact away. but is QX, to of some less

to back -- year. we in will expect second I this be normal that half margin would expansion So the of see we will

James Lico

margin the of had important Andrew, expansion keep first our points basis it’s best had margin in that of year. company we 'XX on eye first we is XXX to an maybe last thing just history the in quarter the in last other PI, the quarter on is

look the margin stack year. we we Obviously feel still But pretty So as a sort we some of in there, we the about I core think the when impact typically on that two business. about we good good through better as feel and core when get we year tariffs work look will expansion pretty that mentioned the Chuck there. the do, work have that at

Andrew Obin

we're quarter was in question X. a just think X QX so X.X I guiding to And growth follow-up growth, second on the core

year, For range is the to the future X. still X

core guys half take as So comps Thanks. hit organic get in you second it acceleration second tougher the the with year half? the what to for the the would in X% growth for particularly

Charles McLaughlin

Yes. No problem.

Western So be we in China to more mid-single-digit I said continue, high month quarter. probably We've think were to that get all, a during Europe while the years. first better, single-digit the to want the of was see we for likely for China now

also -- may if better, also got better some comps the in got Western in China Sensing be and think easier have there, like we'll the held at range. So little place some be we and Fluke. more of high-end a And I in Europe at

So if get of we to their well, end businesses opportunity. higher there's some as the

what around going business is earnings double-digit really the the and high-teens build the will and X% model deliver range to we're that growth we to deliver in through So growth we half, about growth good feel earnings we're first year. going

the we bit, up a ability substantial. flow be deliver. that the the free growth but quarter, I little like And going you cash So, revenue even XX% is pretty operational growth number of free cash flow to that’s of good the strong in a know to fact despite PI earnings that continue the by think the to testament range think I in missed was rates much our

Operator

is your Eastman. from And next question Richard

Richard Eastman

video contributing video business revenue be completed? that kind that And or to speak contributing the you’re -- it profits? have? to did what expect when just, you Chuck, Jim Tek’s are venture, What you of this just that to could do you

James Lico

I'll the take first. So second part

looking to to operating terms is of early expect $XX us for XX% XX% in it completed the at in is We the probably $XX around revenue, business million or we're size million and profit. in what quarter be third

Richard Eastman

Okay.

EPS then $X.XX And a I'm your kind I'm quarter. just to have XX%. little guide on I question for the decent. pretty So bit referencing thought so the of I would've curious, second a $X.XX

a a of So QX. nickel I I shouldn't sounds add this approximately out quarter? the acquisition business XX% think I guess would mean so It I $X.XX guess but like kind to video till of come Chuck, the sort that fits ASP with

EPS there second what's the So on the drag for the quarter?

Charles McLaughlin

there's ASP. only might think with I I nickel missing, be things the on Actually two you that agree

$X.XX. and Gordian that’s Accruent core get to If without look number and the XX% the a FX of benefit you quarter for ASP you our around business at

in ASP $X.XX Accruent. as of you Gordian buildup is $X.XX and there You've and noted for we've I got think

$X.XX in. tailwind FX. is $X.XX fits And thing still one on so that Probably there's to of

Richard Eastman

Thank good. Very Okay. you.

Charles McLaughlin

called I sure I just headwind. want to that make

Richard Eastman

understood. The yes, headwind, yes,

Charles McLaughlin

coming All up growth. XX% earnings per share

Operator

And your Andy question is from next Kaplowitz.

Andrew Kaplowitz

is For acquisition you’ve you not activity because had it’s and the expect a related quarter in down but it relatively and given Chuck, surprising, SG&A to seasonally up QX? of of it's now and was up simply lighter come XXX versus basis would sales, that high points over sales XX% just really

Charles McLaughlin

just costs. if up you're and the accounting there. purchase to and talking total also That's So the the bit the because main deal related it's a the actually up actually SG&A, step the of about quite deals amortization

Andrew Kaplowitz

Nothing other correct? than there increased activity, M&A on the unusual just

Charles McLaughlin

where talked above There's got XX% first average. of the is a so the gross and little about things really margins, Accruent and fleet bit But they've they're I high with Gordian two them.

Andrew Kaplowitz

mentioned just a you seeing that China, like China any slowdown in saw look then book you real some quarter Tek you're but in slowing focusing business. And for order last on doesn't Jim in that second,

So when GVR, rest in mentioned going actually mean of of that resilient little maybe a lot here what's mentioned Asia, China you you Tek resilient in on can you as the I outperformed in on creating up a because and it China, be looks weak? focus that then

James Lico

Yes.

a better little -- thought. saw bit saw we we we said, specifically, you Tek as than on China So

expected I full think that still year. it's in as said, that a -- of bit some high-single-digits moderate the the but mid-single to in probably I we quarter little

thing think And Tek is China was years good still good row either pretty was as and to for growth the relative saw going growth macro most relatively and after, to that's good, for market a would we shops, that of you pretty market China. the just segments high-single-digit most year I Fluke's Fluke's its resilient double-digit in the China said, point-of-sale I call pretty I a in think of be bellwether good. been I it's which as is four So in or well. And in think in other broad a customers based

certainly GVR’s there. of Relative of is our was great very and little it's think it’s going semiconductor related, South will and that Korea it it I mentioned -- I'm business but a in as you solid, probably not or wouldn't say to continued everything's it's but than field it I related And manufacturing to a performance, wane rest China sensing going bit -- you to -- and XD better in be regulatory the second to the I thought little Tek in we Korea. lot our was in Asia, if a that'll in is holding overall. turn we So more have think half. appending exposure wonderful, would process be

so big Asia we issue sight Asia. that while for other Fortive, a that's not of And does business we the as it and it parts and Korea in in saw impact so

year we comps. have in that a So, the one easier the was the of just through -- because probably quarter That the we sure. moderates little for saw headwinds that some at Tektronix bit

Operator

next question Sprague. Jeffrey Your comes from

Jeffrey Sprague

ASP. Maybe just for me on

so. period, empire? how or revenue business it What’s base the the the I enters Fortive curious out the as this revenues XXXX Just were during $XXX million here think performed carve

Charles McLaughlin

Probably somewhere about XXX million, XXX around there. million,

Jeffrey Sprague

so sounds a be X% bit like -- that? little And may more that that, are net or is you than growth so,

Charles McLaughlin

Mid-single-digit so. in 'XX

Jeffrey Sprague

organic here the growth going year that what's see for but to of for of you is continuing that obviously type implicit over And and or ‘XX? is balance basically that year the in you did be this the guide

Charles McLaughlin

low probably mid range the be in now. right We’d to

like, over years maybe last that growth to natural I a the business kind low of we in year X. the growing been that things mid-single-digit. would think can still the I of range, think rate couple X we’re market know is has that But one-time we be are a few of getting single-digit sense were what there say their last

Johnson announced So as deal I over a I a period we we ago of probably a think think like to going it's with revenue implicit some turn profile the business XX guide But the in a we Jeff months of be mid-single-digit a Johnson year the working when and could about time the grower. we that into said and more & for felt single-digit. through the signing it's or TSAs period, about good time low of

And aspect we've got ownership. our under every the of so

Jeffrey Sprague

I at kind acquisition pretty year ownership metrics you, gets some had the Is of in work accounting the think -- and on I think work lot price. also their accept that something? is is don’t there front carve-out to on And the that to of guide do the that in know was of looking structure But a prep heavy obviously or maybe in embedded something or capitalized still in management I after alike. you’re that

Charles McLaughlin

is No about to I the think and talking if the up run this. you're standing team -- the going

that. I that think done we've of quite bit a

quarters. to one to I think IT in And probably got TSAs of those. into accelerate we is that's of us under going basically will really profitably time go outside them your every the US platform going move for of we've and on bring four that thing we're off that's to front have our of as the these do we

James Lico

of that business done is thus the is we've Jeff everything that regard the that for structure seen led to think I far, work we the a bit cost play. returns in lot we've every this in

the feel a very of the XX a about announced XX think returns that. the And the return we So at the as the in tenants good we of much still core at We rate we so finally great rate ago. we deal look we opportunity interest -- much tenants when since and tax different there did well. margins so improved gross the at and months -- a -- has creation this improve -- the and believe the then -- to months of lot profile you ago deal lower a pretty cost value

Operator

John from Inch. And your question next is

John Inch

doing perhaps the the you've do penny to seems And things or I notes can to terms. pretty that with could is even I'm very there other of sheet favorable if by if done sure that was just that just two around to be the convertible talk thought tranche, balance you at process a you or well or you issued, senior Can incrementally been not given have. about balance in in? wondering process sort locked the are thought additive sheet general that have you

James Lico

thank we guide most know think in I came the when year, we’d out the -- had the in didn't set we as we of like convertible with you, original first terms while the this of deal Well, of terms that, notes. guide. factored exact But that the we

but sheet? like equity. the guide other it this we a as it's convertible there the mean note, treated debt isn’t things we It balance accretive So to deal just not did. is not around I the on Are that is because one

But consider balance is think it for And and we're a debt continuing sheet? that. things around the fit said don't what more best while gives us financing any There as and we'll the around look our what raising at optionality time we are see financing so other M&A -- I is the is for to for capital. and

John Inch

or a done digestion brings are And tied assuming opportunistic. ton years, but back of Is to wait? XXXX? up an today sort be a future how question, sort be probably sit over of terms couple it opportunities stage you April lot like read M&A. in about are of you going there But to to at obviously you in guys additional how to late about moves of you and of probably Jim, intend sounds are portfolio thinking no it’s thinking work want early the in I'm It you the this have these

James Lico

as I sits described anything. and Yes. waits would who someone rarely back on be

busy. feel certainly to in have So I opportunities. obligated as leaning pretty John, that we been to we're

we period. have time a busy we over think I been as been have as

to continue will opportunities. we So for look

we considerable acquisition certainly and the a and largest we make spending of history and of time are company, digesting you closed said, that sure the XX amount we to that ago that's As important. do so in days right just

that make is. have shape any more opportunity call of that and $XX in opportunity. ASP not first a it, we not because we bought, that's priority form and comes So, I Accruent also billion with to with served and way market don't suggest between and want want Gordian also sure But we almost it just

like have ability So, we be but will as we us, think -- well. Almost feel we soon. have here I now of again always pretty good anniversary about we in return certainly sun-setting we focus the and to three year been have front the opportunities disciplined our the

have know to deals and true. ebbed continue the you and I suspect As be will well, flowed that

Operator

And next Josh is your Pokrzywinski question from

Joshua Pokrzywinski

seems software add to So, everywhere. total When big software niches under software just Are Gordian like of your that about differentiated for competitive on landscape? think guys the you a the is with show while let you kind characterize the it a iNet, your of up? in one all are space, you more how exposure, make Accruent, some now are feel Do more me like them and about of coming kind in those had and think follow company seeing the up belt on how those I you you assets feel and but big software activity basket, out does for obviously obviously eMaint, everything out still including every protected you would doing well kind spaces? you’re putting and folks in there they're

James Lico

and private hasn't say major of several in up two it’s lot in we've lot but that months, hands the transactions. certainly deals last were in that showing these a would the in the changed Well, of years I the private a environment increasingly last competitive sense the for been few done equity equity

and to where where the view say of of now want we we're where additions with say have the -- have So play necessarily some we certainly where I synergy. I advantaged, wouldn't a business, we would proprietary

what adding That amount that businesses, do which And we're in and management of you of scale of so tremendous gives those facilities we also additional some space, understand builds build the at with you the things in the building win. I places on going to now, more the things. only have to our more really to play with view we're make But in eMaint part strategic And to point you -- competitive. where of sort maintenance where -- a or and whatever. we're that but likely And whether other it the things not almost $X.X a to the workflow -- billion. Gordian and a business to I And as scale. positions, alone with have think with Accruent, or brands strength Gilbarco to out can them business, of is first most facilities having make think we're I software Tektronix more workflow and then how on strategic be us think important do just a

would those seeing -- the the pricing, other in year do the two. to that don't I don't great things continuing differences for is be well. say question really thing maybe And think while I as or we're So, follow say we're would pricing over think we're I last up I assets, might

I think have the prices crummy decreased. maybe assets

everything you recurring And in that has when those the bottom so margin look or changed what good in differentiated moved positions, I end revenue, great really assets hasn't with really strong fundamentally, think up. year pricing with two. at But growth, market high the great profiles last

Joshua Pokrzywinski

orchestrating a the half, that you handoff to run market one, by handoff GVR you're i.e. to time quality and shifting the the into has just higher the smooth GVR of I more where focus. some thinking time today business today, then second are times businesses shuffling the And tougher some of maybe that some anticipate about of the it's beyond Jim. even that stuff half, point before the over getting of the going pretty helpful or itself long on some kind little between goes where second it or tough just at end headwinds ones bit, gears are the think comps? away too Do comps being PI That’s and a

James Lico

Yes.

in Chuck So I talk a little think can bit.

certainly Gilbarco within strategically think, within Fortive and transportation we're tech these within countermeasure things. looking I to

markets. launched last over think, product. high markets. dispenser growth for high positions. really great -- a done really to years, We've out So, positions we're high new Gilbarco, our a That's within almost growth building example, the market an several two as I growth in build our three acquisitions We just in India

one. non-EMV, positions where we're number -- that's that are build markets So out our in

things I we'll doing to think in some number is continue two vehicles, of Tritium is take do opportunities, advantage continue that. investment to certainly to like electric our and where

we're the going opportunities. if opportunities that do new then mentioned, for certainly the you Fortive So countermeasure, be And these breadth that's to And the shortfall, what we're you in also happen. within things, certainly, all looking for Gilbarco. EMV to of have throughout opportunities to will, us inevitably as doing platform, which are we will

pretty to don't that say I think not least quarter at for inevitably, specific quarters of time down a think, point probably I some but a over think in sense I be within at couple I that’s we couple somewhat predictable, a would a have good say been will well of for step we've consistent within there years that. certainly

Charles McLaughlin

some of $X.XX think worth a acquired we platform. step to in million billion part when Yes, think it beyond can XXXX, $XXX $X.XX is on Also high $XXX in that you growing looking assets Josh, GVR I those it, in and XXXX you period probably million over size mentioned start a also at probably add 'XX, if X.X if is single-digits terms I if to the earnings you and and about could power. about to year is which at $X.XX an noting is given want handle down of that of quarter XXXX of

Operator

your Graham. next is And Scott questing from

Scott Graham

it the hoping what impact from it this look a you that on like like give basis? could was looks on PI more XXX year color does acquisitions, I a on was a what little minus basis bit full us full-year quarter,

James Lico

the you on or talking the… Are about there SG&A on

Scott Graham

your margin X, bundle. I'm operating exhibit Page talking on about the on on

James Lico

think impact pitfall margins. be and we I because and on here prefer if is Gordian the that, it's operating with our expect $X.X full-year, ASP see. to with total that's ASP. what going to would got that's $X.X think likely its here It's similar that as Accruent what same think in have I the I see. But not on I saw in Gordian what but to for we look to the just to the billion billion and anyways and just to about coming on you about size I about Accruent spent amortization

Scott Graham

about when about you so the the earlier talking inflection are And upward the in margin were PI core? talking you just

James Lico

Yes, that's right, for sure.

Scott Graham

XX that to number OMX I lot about when talked you you not I on talked that a only down basis, plus come you that full XX about hoping XX a year mix, did also if plus to notice tell from OMX that was XX bit where what's a for that? more points on that is the little what both XX, with size us going maybe guidance us with the within of is could takedown, and basis mix happened XX, what

James Lico

guide all second really most complicated positive the more and mix so think we it's up order called and a half. Well had happened with QX will and for are on negative problem into quarter first it of those to XX sequential second and that go to half do I we’re we the quarter little what really normalize than continuing countermeasure very a And that half first the improvement year of tariffs see in of our flat, and didn’t make the probably the to is focused from back much not things. that. anymore FX big headwinds to bit normal because out the they first

we've a actions continued the have continued the businesses flow. of strength free of a lower see after in OMX Chuck to that's spent I amount strength that though go a that think got sure you think I see and and you time you and why cash that considerable little see the in even EPS bit the making in the I this So idea

you way and it's measure itself and continued the the we growth by is end So cash what flow high-teens that. don’t incredibly a at change the metric see conversion. little focus strong tariffs you the on influenced free of XXX% things like bit a the EPS But day

Operator

And from your question Coe. next comes Nigel

Nigel Coe

of lot core a want into to in they’d covered Gordian and to I back and Accruent ground. rolled do we But go XQ. So be

And performed they in in how is on out to kind So of on How by basis? in -- did stripping math working at environment? looks speak may part core margins, about like up EBITDA be just low just for do XQ is the then those the on came way to those that as It the Is companies? second the Gordian XX% XXs hold a like-for-like for to current additional the and we're Accruent. math margin great. XX% correct two the disclosure that with

Charles McLaughlin

Yes.

is EBITDA what for Accruent? This and you said? the You’re Gordian talking about

Nigel Coe

That's right.

James Lico

probably that through yes, much year. starts I think for it little ramps under but year, this a not the and

So correct. yes, that's

Nigel Coe

Okay. And then the growth like-for-like …

James Lico

Nigel, that? was around your think and Gordian of Accruent, durability is first question I

Nigel Coe

really in It's about more quarter, no. No, they the performed Jim. how

James Lico

stream it. may with quarter, more a years too the have say the may we business And and gives businesses time in point spend durable may not additional but us particular just which fact approved the through for to Got I accelerate to also it. in be to in had bunch much any already small it's of and out the just business sure a we Got we've would and necessary a some in investments come. the year but in choose caveat that revenue important to is invest pay the growth

you us, time-to-make know a make decisions percentage we know and you few could on how impact that from we will basis that do those by So, it. hundred points when and

Nigel Coe

was Okay. at Gordian the what And the growth check, growth Accruent? and

Charles McLaughlin

into what seeing we in single-digit growth. point QX it's to XX as expected, core we're comes that High QX year that we our and that's lift and probably expect what that's this

Nigel Coe

year? that first the back that contributing obviously then TSA's to the of accretion. alluded $X.XX, is are of we at looks saving roll Great. $X.XX in a for XQ, The Is accretion off in quickly XQ, months? like better to, $X.XX the XX like nickle still looking XQ. accretion, in the Okay. And half the to $X.XX the on you ASP And a

Charles McLaughlin

So, $X.XX, think the while And as goes those it’s are levers. many for most businesses $X.XX through But the I like it's it for stepping a first what first can major XX, the still not. seasonality, and range. and fourth part stronger be bit than the time, there that's quarters little is also yes, up

Operator

John And the Walsh. next from question comes your

John Walsh

A a lot ground of covered just one here. so quick

I at in a were the or I way clearly, channel just language about the mean, make headwinds else wanted to distribution looking release on anything language Just press sure that's the you understood really what around there talking that I your is to Professional that with Instrumentation, out to call alludes guess?

James Lico

No. It’s businesses some short -- that greater really it’s originally probably led than which avoidance. and tariff most we and we fourth Fluke will They’d kind to of probably call quarter of cycle expected, primarily in our Tek.

starting slower in So John. of part quarter little there is a as well of bit point-of-sale the too first the

of is year. of The things. the the the increase some two because destocking because point-of-sale, So, I it's they at some it's that think the those inventory had of it the in of of end also

John Walsh

performance just drives of actually there because what the even some and Europe, guess thought data your a really out I bit Okay, European call given at to it there, actually Maybe seen around concerns little as a you very your of modestly. the of great. lot Q macro And business broaden us guys understand Germany are a maybe there? sales the country. there's looking then Germany, the some been from Obviously, we've out help better I'm given macros was what down

James Lico

I still think Europe Yes, us. challenge still I'm -- I would -- as for is we I said, think, a

John. quarter was look was read secular, good That's were the Tek more project, in which in a Germany. broader a Qualitrol Europe, they GVR not but typically macro. than a one chunk Qualitrol normal. a GVR -- in -- When was you the weaker, weren't down comment, a and at, had So, Europe in was Europe was on down they of that and Fluke weaker

telltale the a maybe think I So those bit more are macro. of little sign of a

a have belief going we big so And that's to improve. that don't significantly

depends. company on stuff. lot For through get a We're peer watching. to a some comps, reading. other I we're the of the but macro like And easier rest Everyone's it same seems think a of read sunset the year looking filings we'll lot think I We're of the of it reading certainly kind that.

of good resilient. been have businesses pretty the news our like So, software is some

up example. I Europe high-single-digits think was an as in Accruent

model good places the the doing well. business So have within are resiliency pretty we where still

Operator

question last comes Joe from your Giordano. And

Joseph Giordano

legacy could number give growth specific you for like the and the Chuck So quarter? growth Fluke said did was Digital you think like in Fluke you the in the Fluke, the quarter I give

Charles McLaughlin

was don't believe did. Total I low-single-digits, I Fluke yes.

Joseph Giordano

this changes quarter? was And on there there okay. going Low-single-digit, a management

James Lico

Yes.

outside the inception. promoted So were Tremblay been -- a sort and Tektronix job many senior couple owner and Marc changes. and job. for Fluke was I while, did hired the of we the since but operators leaders into Newcombe put a -- think we of We in we we from our -- have introducing put into somebody him announced our of immersion Tami We've that in businesses

organizational ASP. announcements new been lot also about have has there strong with two a picked those two So been obviously really role positions the we're all the leaders and up excited in really Pat certainly and the out lead having acquisitions. [West] new in Pat

the two opportunity the out building time us of and of spend thing. them for the more platforms to gives kind So on that

Joseph Giordano

the what the to up I math just Gordian getting the want build -- am for here and Accruent, right. sure then And on make I if

in expectations. So quarter in it the I first four here? $X.XX with something think like Was it's the XQ

Charles McLaughlin

$X.XX. saying we're think I

Joseph Giordano

in that's so Okay. right? just we're third having And quarter, in incremental right, that the your on in top then, XQ of into from that the year, full core

Charles McLaughlin

fourth in It’s the Yes. core in quarter.

James Lico

time everyone it. interaction that’s Thanks, and to everybody, for day think appreciate the Obviously a I the taken busy for so us. today. with So time and be great a we you've

in proud of we really at to be quarter. we’re that, are sort affect. strong same going is I we but of some believe the We time Certainly ability But the to a the do what on focused mentioned things the did year. think very work as

seeing look start. good give to or will We’re forward Gordian detail we to May We and Accruent. you ASP, off on you on a New in more in all of York

to the are everybody. Have but of year, team we a certainly importantly time. this strategies next week. Chuck a questions to certainly care, Fortive will a Thanks on and perspective and tomorrow more utilizing tonight, our strategy around great growth for digital and better week. and drive give number outline build better a you We that and over are Griffin Take

Operator

does call. conclude today's This you. Thank conference

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