Fortive (FTV) 28 Oct 202020 Q3 Earnings call transcript

My name is Erica and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation's third quarter 2020 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.

these measures us G Lico, Thank measures non-GAAP you Officer and us required With Chief completed operations joining section the periods. Information The thank and on under operations. included on XXXX you are for are relating Erica. Good historical Specialty Senior SEC of our non-GAAP We by afternoon today's this the heading, on first, on the on discontinued continuing everyone Chuck McLaughlin, have Financial financial available Investors the of results and call. website, Vice Chief Officer. President of financial Financial the and our and to Automation October our presented for today based Regulation Executive accordingly www.fortive.com, Jim Information. President results are call. the the on certain We A&S Business and present call as divestiture Business

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

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

good afternoon Griffin and everyone. Thanks

third share. return We pleased initial strong in topline to delivered as growth our that profit with better our as the quarter was execution year-over-year results well are and a across significantly a as guidance adjusted earnings performance than per adjusted operating portfolio

earnings of the an For quarter, net reported X% diluted adjusted $X.XX, per share year-over-year. we increase

across of ability execute the to challenges obvious and our is pandemic a despite resilience and maintain by the power presented QX, industrial free about am Fortive year the I the in global of continued we cash By separation the flow the points I spin-off near am we While XXX another both companies. our future leveraging up portfolio of The basis leading to generated effort extremely October drive navigate focus excited operating by the testament our increased growth focused our this the margins headwinds. the complex and mobility successful challenging readiness that to transaction the environment FBS. while to strong successfully of by On operating and COVID-XX for completed the term of gains. shown the we very company the to technology remained X, prioritizing share a team Business proud Corporation, quarter ahead System, Vontier on and lie opportunities continued adaptability investments and infrastructure. throughout people core

Fortive to companies, both separate against strategic to value priorities their and stakeholders. all are for As execute increasing Vontier generate well-positioned our

technologies as attractive a end-markets. range for Fortive provider of solutions complete, Vontier workflow of of across spin-off the connected well-positioned essential With is a

increase to term secular with strong have long positions brands that leading We have drivers opportunities benefit revenue. from recurring established and growth

M&A long a and the organic record portfolio. substantial Fortive Business significant and of track for have opportunities cash System, enduring our strategic Vontier the importantly, an was and free capacity the both capital commitment the today competitive of investment flow disciplined have sheet We across culture improvement. our businesses. Fortive third that balance and Vontier Since financial Most that continuous underpins allocation, we source to advantage part the the throughout of include we will results discuss cornerstone quarter, of

our rates increased increased XX.X% points points. third in increasing significant were year-over-year. on Acquisitions Adjusted and XX billion, turn adjusted businesses Thursday, the margins were quarter. the quarter. growth the However, of of basis net gross today's continuing because third results of focus XXX our earnings Gross quarter the reporting basis diluted prior improvement earnings we basis X.X% XX to to software will let's core million, with details remain guidance their only. Fortive's $X.X exchange be contributed margin currency X.X% growing be essentially Fortive. $X.XX. disciplined by $XXX.X today provide per we the Also, that with sales and flat, foreign on points net the Total With XX businesses were revenue the execution. from higher on Vontier reflecting from the will that of will chain benefited up from for operations call, that, year growth favorable contribution margins sequential prior share and Adjusted commentary price, quarter, points supply basis

in basis the XXX generated points for XX.X% adjusted margin also of profit core operating quarter. of margin We an operating expansion, resulting

by OMX reflected the drive Our of execution ability the core our solid pandemic the despite the to posed challenges significant of FBS. and ongoing application teams strong disciplined

well and this through to manage investing cost us position future. the needed our also development effectively to actions for innovation continue flexing We strategic in business priorities as while product uncertain environment, the

million free cash $XXX quarter, to took of working use and our few companies our past inventory capital turns year-over-year. in to increasing from improving over challenging and representing XXX% limiting effectively year-to-date sequentially the XX% environment flow, This the term, the the operating representing short $X.X During net of their billion, increase up free XX%. we of third quarters, continue approximately of the topline. increase headwinds an generated of conversion cash year-over-year manage flow to earnings approximately adjusted a performance Despite a FBS

by increase Turning instrumentation favorable at total in the exchange the to that both increased margin based, the digit basis a at low led Core slide includes in China. XX.X%. digits single basis digit strong Industrial of of resulting single ASP Gilbarco greater third XX% year-over-year QX, in Vontier said, growth solution, show segments. Professional XXX the Strength reported quarter driven region-by-region while by a core in double the declined in businesses businesses XX shown Sensing. company a adjusted by X.X% than Veeder-Root Western That in in reflect Matco. Meridian, operating operating resulting our in presentation, growth contributed rates adjusted X.X%, was margin sterilization which in businesses. mid declined Fortive breakdown results solid On broad In highlighted points, revenue. despite including performed engineering we of information digit the segment-level with the core in digits of Total operating focus basis will low growth despite revenue thus today's that revenue particular growth growth highlighted American company segment-level revenue quarter QX, growth quarter. in mid increased Fluke, increased posted color XXX Europe margin QX consolidated ASP. the by Asia, at points, North Core revenue. decline momentum Europe nine of increased Fortive. also XX.X%. has far, operating each technologies single in on sales growth core core X.X% X.X%, slide well the mid-teens a of year-over-year operating the revenue the region. rates remain our China advanced foreign Note points, points. built execution. and Western XXXX growth, management products increase Accruent of we driven Acquisitions by double primarily for basis by on growth delivered has XX reflecting and in margin its

North strong also the in both North negative QX, a to for core businesses software throughout grew growth the QX. versus well quarter teens Vontier of improvement America number low Scientific's remained a Tektronix, was Qualitrol across Industrial broad-based quarter led mid continued showing Fluke in trend and digits with and by single business point-of-sale Fortive, Censis. point-of-sale businesses. revenue and the Growth America businesses for increased sequential revenue versus quarter. performed well. While prior and eMaint at At these the improved perform new Intelex, the iNet

of organized businesses Western for out Fluke trends, the As saw we into recent On sensitivity analyzing emphasis show still XX portfolio. quarters, corner though and into In new groups laid end-market QX. point-of-sale as deterioration on in turn based an framework improving on a Fortive negative the pandemic-driven portfolio Europe, with today's presentation, our disruption Tektronix to with portfolio the relative have in demand. the we we resulting and of groupings slide

out and digit As XX% strong with growth in quarter, slightly show shown the increased single company's expansion digit quarter. revenue group's approximately Europe. in largely growth from some on The the is solid which a digit is Elsewhere, to of and of underpinned expected growth resilience, into decline. posted the tester ASP America of a which procedures. continued iNet performance significant by of COVID and by Fluke played mid-teens due which these churn customer as delays. of the successful supply saw single had a approximately continued decline Fortive COVID-related as SaaS retention. Group improving on and to high of level and I, a ISC's SaaS groups which the pressure reported state digit its from Japan, digit although XX, flow, North driven a net model. governments single represented a in slide ventilator mid QX, posted business, Group the began low while imaging represented demand relative low recurring elective in new XX% at the decline revenue the in initial recurring North benefiting resilience digit registered single II, its associated tailwinds off. mid single decline continued and growth, robust business industrial of and showed low also EMC posting among order higher single in contribution single the work project again America Landauer's Gordian from annual Fluke support resurgence businesses, customers, in a its quarter. in offerings. issues QX, single strong an slowing despite Censis by reflected Fortive Meanwhile, saw local growth low to certain execution Health recorded a growth COVID-related high mid another decline momentum Western revenue leading for benefited revenue reduction from moderated in business performance new seeing to growth. high software single growth, Solutions digit due to education digit subscription Intelex, highlighted Accruent some quarter based which in cases and continued the chain of increased digit

very XX% a the this to are were of decline elective QX, pleased high Fortive growth III, to procedures Western both by both quarter. in Group saw that back China Europe levels approximately and estimate XX% XX% in approximately we are represented digit of which see back and in in now However, new in to and Europe. single China offset approximately partially quarter. We pre-COVID strong the U.S. the in

ongoing sequential Fortive registered represented impact orders saw by single Accruent's by professional the declined ahead new mid digits portfolio in benefited licenses performed in oscilloscope. bright negative growth. mid Keithley, channel of Industrial digits, business for in be an represented of Semiconductors broad-based IV, Sensing, improved Group recorded X-series versus Fluke which QX Instruments low continued quarter also a medical accessing decreased and the revenue, III, The also Industrial by tailwinds Fluke Sensing by the electronics continued saw delays the business our XX% and high single Group from in highlighted forecast. spot but the second eight year-over-year single customer mid which Tektronix order which activity services the the and to end-markets. new digits, initial versions lines The this Elsewhere declined from the and sites. quarter. for While single improvement by improvement saw business was single a approximately of Calibration, digit saw sequential as quarter of six including performance business improvement. Tek digit growth. and paced Instruments sequential meaningful which Both Fluke COVID-related progressed,

a have the Fluke the Instruments at growth trends toward both to we free now Vontier our XXXX. from the approximately Industrial saw billion work business are cash from encouraged with Including proceeds debt to quarter, is strong end received the third both to reduce year-over-year businesses. Vontier, at in what $X.X our and quarter, we macro While debt we second of way our the at the our key the the $X.X and over by we net Tektronix watchful return of from end continued we as continue remain net Since down billion, separation. recent of flow proceeds

we net ahead, debt continue which flow, look to solid cash our enable As us expect generate to we will further. to free reduce

to conditions. remaining in Vontier XX.X% also our We with subject monetize a to market in expect timing manner, stake tax-efficient

continued In of watchful the revenue pandemic. as against on conditions While a economic of will zero X% basis. we year-over-year QX spring, saw the to fight a that the lockdowns light started increase continuation in expect the back QX, better the of in remain operating lifted COVID-XX we macro performance the total

incremental of also expect approximately XX%. We to deliver margins

Finally, we in execute executed our strategic early permanent $XX temporary that we of would turn prior the year corner we million are expectation the of actions line the into some initiatives as in end planning made the be before productivity with year, XXXX. approximately of to the

new into Fortive Censis operating includes segment than for follows. includes total to available efficiencies frame the workflow prevent Vontier of and development range across on a The the highlights accelerate Gordian a assembled includes available also Technologies Qualitrol will the represent end products infections, approximately a Solutions total and market and spin-off revenue. for approximately businesses, about of addresses the operating and see Intelligent field billion. users attractive healthcare greater available addresses our which we also segment Tektronix, connected Details end-markets. total that billion. essential enable from Products, the of our greater of than we XX how well will forward. segment addresses of Sterilization technologies Precision revenue. accelerate The Health perspective helps The that and view represents Advanced going of provide market mission-critical to organized total Scientific, strong safety, and on new segment innovation Scientific than $XX portfolio reliability and think Advanced of include productivity Now and as segment $X Solutions, $XX solutions technologies presentation, we greater three financial that to will now This revenue. inorganic provide Sensing the Accruent is solutions have resegmentation Pacific Healthcare This portfolio the solutions slide provides as patient range complete, solutions Operating and a provides innovative of of basis market Industrial total represents system have deliver to to the EMC organic we Fluke, which segment of segments and position hospital our reporting segments of approximately This a enhance opportunities. Invetech XX% as both are new XX% the that facility and customers total This provides accelerate and Fortive Intelex, safety, intelligence Fluke and and XX% Solutions billion. Fortive you

the coming the quarter this issue Importantly, to can so we rebase the portfolio fourth view models. financial supplemental basis resegmented information will you weeks this on and report with aligns in your onward plan from that that of

highlighted again I the year, execution rise for to undoubtedly effort once has third performance but Vontier my the Before to team been our XXXX. our teams in an we extremely Fortive their challenge. continued appreciation continues wrap quickly how in quarter and difficult and to up, meet want strong the express and This

we for the strong the preparations strong managed navigating quarter of the support With spin-off deliver Vontier complete of and to environment topline improved flow. FBS, macro cash to our of performance also final another free challenging while

and term, to With near flow, would capitalize With we years. the benefit cash that, opportunities in last turn to like to resilient continue our free are uncertain environment the over that portfolio strong M&A ahead organic an While the transform on through many we to we Griffin. over the portfolio I consistent it efforts have expanding set established will four face continue to well-positioned the increasingly we from us. innovation capabilities, of our pipeline an of to

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

[Operator Instructions].

Your first Research. is Vertical from question Jeff Sprague with

Thank you.

Good evening Jeff.

[indiscernible].

we a time Jeff hearing tough you. having

That any better?

Yes.

for really anything triangulate cash or help grow off other Kind would what hinder that just or you that Can free of to that. there's base? working flow not year RemainCo? full our capital And items unusual kind base about Sorry on ability of starting is? on Fortive whether our us

Jeff. Thanks

you think think is The free if cash no, been it's they split going I about both it's trailing But bit strong another probably split for it's simple here think I there's going I or of you I company's QX are that's will combined up I year-to-date both noted, pretty I don't a forward. anything the going us probably for As proxy XX%. Fortive. companies, quarter good forward, think a that the XX-XX It's trailing and Year-to-date, think and about strong. flow, know it, answer XX, Vontier think of in hinder forward.

So saw roughly of year-to-date, can we what to attribute RemainCo? XX% we the

deal is the but answer improving are Yes. am Obviously, cost separation some throughout headwinds and cost. with Yes trying offsetting is I will be there's the say. year, the some the associated they to that things of

good pretty that's So number a to use.

make to permanent the Are restructuring restructuring of per actually earlier some have the move more And just you kind productivity charges year? se? taken some in actions. this is a the Or costs actions on those then just against and operational of

as be restructuring QX. These when we out separate called report a will

would think to done as I of the, two buckets. those year we of transformation, incredible a number in digital One an think would have done what things. this I us really on be we is, Jeff, And do allowing have job

taking our sure So is reconfiguration of protecting sort of, will where not footprint cost real want places faster come a of then that around it estate what year. part next are of the of And actions that back for may say, the world. the and around a necessarily be we to or things leases make I investments sort we in we our we think where portfolio sort of would rest are

Thanks. Great. I pass will it on.

Jeff. Thanks

Thanks Jeff.

next Stanley. Josh Pokrzywinski Your is from in with queue Morgan question

guys. Good Hi. evening

Josh. Hi

guess term questions. couple buckets here. So pressure four pace Obviously, just first, some just a the I and on of three of still near activity. are under

on have as We here sequentially. short-cycle the calendar things thinking what of of versus lot some industrial trying seen a improve amount of well. important today? terms these start is are we positions? Obviously, markets a budgets of or But how to think back in about inventory to where the Just kind that just map resetting of kind gets flipping decent about

one I Well, that will made. take maybe Yes. first you note

standpoint I places about good big ASP. probably think Fluke, we that's We and the three feel, inventories channel and have from extent, where would some channel in feel where of we at. inventory are those to Tektronix be a and

So into we necessarily the year. part be to and growing of to hindrance next relative the channel that issues through any see don't will think year in could the we a inventory remaining

So that's small part it. really a of

and sequentially in you see as into I Josh. cycle, PMI, be production maybe globally. the They next here through are to some bucket. short really a continue improvements broad-based really year to think bit pointed look little Certainly, out, more three drive things year, improvements certainly this fall those the business continuing and to to industrial some at into at we

procedures. Secondly, elective

to I numbers to particularly prepared belief world, We a continue But When that, the that we QX right don't I have necessarily to we necessarily in run. watching QX. see from kinds short it to improve? seen our the change businesses I now, the how those are much think we remarks would that much do how in does that some too be third say the we quoted some what have nice of around improvement return certainly on those to that how of service is doing impact of go. really thing get sites those on has shutdowns customer software occur, then to And some where whether on things, businesses are things, work, on-site.

Some of slowed. that has been

has Some of slowed. the decision-making customer been

some start those of I we are to to those So think if to things see looking improve.

three we inflection eye We an inflection to the So probably business happened big really I think think to keep think big are sequentially continue things I improve. the the QX. those QX are on. will But from the point to continuing point,

Got on thinking more The key the priorities? helpful. to parts, piece the about And I through seems start some the continue shore a shifting end-to-end or mean future looks to come M&A in that can just kind where to I good other solutions out the that some not new as segment already on solution much maybe that in the should we terms then building whole pieces up you now various Precision of it. business the two of Technologies. in you two, How piece. that about with pro Would behind, momentum guess separations strategically balance forma sticks workflow have think Vontier M&A reloaded going? with it in that segmentation. of of that be more I portfolio think the sheet. in just other That's basis like a

in obviously, highlighted. so we have as the intention every that the created you Well, we like two, of maintaining momentum, Yes. momentum

in I number around workflow and opportunities. we see and development and about Precision do think innovation a they of think Tektronix see a as and really what we certainly product Technologies, we vectors

team really those think their year some highlighting strategic I job a did opportunities. this the of plan, wonderful in

that whether can be work. where bit sensors, the do like part Anderson-Negele in a of little broad workflow, but So with digital workflow, recorder we maybe not are that the of differently really huge and be of necessarily solution, way. more it it we then really view verification about the bigger a can we certainly think maybe in a play looking whether really have we And Sensing we a in now IoT-enabled have

Sensing seeing a then and bigger in certainly play be. solution I play obviously, does workflow So Tech will where that's we the pretty a can we think in that's And in, that opportunities I Tek are well-defined. slightly think

I space, us So on, of just you in to for think we of opportunities continue terms numbers quite upon work also inorganically available where frankly, that and we really really heard to out we the obviously at them, there's we total expand number when today look think believe and the market places organically. are both but a

Thanks color. Perfect. the for

Thanks Josh.

Scott next Davis is Your question with Melius from Research.

guys. evening Good

evening Good Scott.

Scott. Hi

seem to into You Jim. have want to actually know you crossing in do snapped Fluke back if chance work the a to XQ? has at you there. pretty positive see. quickly. take nice territory a Good stab It's But of I don't But this, Industrial think

a be it, we so a I got is way We part QX. announced nature We are EAU few we on, bit like But clinical trends. get certainly, have that thermometer product now that. there. think there Well, which have to that of to of the to a going has launches little a

We have got new a imager out.

U.S. at when just like in is the pretty I that of to that we we and in had markets an would where China, the example, of taking have continue we market to Fluke advantage the would think a better say Industrial, places I good So I done job like quarter market. look as see great improve a

a be Fluke think U.S. a mixed. little little bit be has the I in more Europe mixed. And a markets shot may may bit good Industrial high-growth more

continue think improve. overall, going is to Fluke I So Industrial to

will U.S. Scott. good, the look think I

some some markets going the maybe the around macro some of non-China, the the I other the of in there's year. is world, between about now and what I of questions like of those to look think parts still the end world think

Do to sense, and one we has the another Or you world a whether the for contribute of and recovery And at are to step-up? of take still sense. on Jim, we rest another the so there back accelerating? kind of a us makes China. did plateau That the have topic is snap now really

a Fortive quarter. a Yes. new very We had had good really.

almost Sensing growth I obviously, digit said, Fluke, double XX%, we and ASP digits. think, was As double in

part of still a growth pretty growth that's healthcare we whether suspect, think come, So what the industrial that the little are snapback the But see next that of from level to that OEM. a first I broad-based economy. to bit they maybe in I the year. from was world, happened And obviously there. stimulating Scott, of

obviously, catch economies, still I that continuing is, to we think of up. what the the stimulates are think of year. other some maybe leads But probably remaining impetus here the I pack part if their the part to provides China watch world through

Thanks. Really helpful. Okay. Good luck guys.

Thanks Yes. Scott.

question Mitchell next is Julian Your with Barclays. from

Hi. Good evening.

evening Good Julian.

question Maybe outlook. first on the a margin

on your for XX% So incremental. slide guide that XX

reversals the puts takes the next or is if out that's on temporary could some You you Vontier cost-out a wondered if QX. big major looking Just good sort a placeholder with and beyond wondered fourth reduction year. for cost fixed quarter? frame large of any I simpler measures are in doing cost-out cost how opportunity without portfolio And today?

think think it of So we I way. Julian, this would

the we business. to are trying the a from QX. all, way is which are of is, What to the we long are First is we in run XX% topline, biggest margins how number the going incremental here guiding signal

this think, we headwinds be our you some have will to margins. move are will of reinvestment the to. initiatives back back manage XX% than temporary that But the know come equation positive is we we will have will the trying number And these we what on The snap the we we back of what into gives the business year, got pacing next better depending that at we put scenarios assuming to XX% course, like piece does, it latitude to incremental a territory the be, in place, cost productivity us topline business. of last lets Of the manage margins. the XX% because that under in as into well. But

M&A then today. just Thanks. maybe And appetite the on a follow-up

of you billion called leverage. out I real-time as think that sort $X.X

So us on acquisitions? XX% maybe that's want stake. to monetizing understand help extent And the contingent get you to Vontier to the which quickly clarify how work on just

Yes. Julian, it's Jim.

really down tried have we to really, not think our ever slow I effort.

disciplined. We busy bolt-on remain said anything at kind we I be announced of the have we a the of, beginning that through year. year. pre-COVID, a would have year obviously tried be of been to just think we think mostly bolt-on I kind but We probably the

We things. have looked at a number of

I think in that regard. disciplined we have remained

appetite do. our continue trying is always M&A we the think businesses are accelerate to to I to through something

we the think we comfortable I very created. have are funnels that with

us I in one that new of think segment interested structure each think vision is a maybe for companies for helps those really the that I selling articulate really exciting and are will segments themselves. understand

in relative a where an place very in the give So strategically And from standpoint of to are are we opportunities. obviously good sheet these the at, not shape And the I where in M&A think only remarks, continued well. continued flow will we as shape with is we us much in Vontier stake at to obviously, readiness. order but we in cash prepared better as free be we with balance mentioned are with the terms given in the execution good opportunity

now fourth into we look into I a So we quarter the position right XXXX. in as M&A good think very and are for

Great. Thank you.

Tusa with next JPMorgan. Your question from is Steve

Hi Steve.

guys. going? it How's Hi

Good.

well you how are of standalone of you a what now? trending? big how have A, of kind Those retention us of a just And those on things? could Just as give software an your and rate software kind two then idea look bookings kind businesses businesses, were do into, is those as

is about software now revenue teens. low So

know, a that little But retention probably don't And so number. number number. good would is it's to have quarter. through going But range mid and I of me, we Steve. it bookings XXX%. digits And low vary in the if pretty of front teens best was don't probably think So bit right were the I had the way a number think quarter-to-quarter. single net over quarter. the retention in probably. of they We I year net bookings, say in our SaaS about of the in the

take So cross-selling, about in environment, about today, retention. this little COVID It's net good environment. net of think components and in you retention. a upselling harder a the like we Things a little feel longer if

So a bit longer. renewals take little

of these the out move seeing are some we things funnel. So in

But so retention close. taking why that think keep I more. some number it's is such The net So good on a eye to will move bit important bookings because us. that's to funnel around little we longer a

the having So how we a the certainly the ago environment. are year ago Business testament to think, Fortive and make even continue year better business sure year number a is in best we a a really, to have around just, various challenging a than of business a the of that obviously, and System software components used that's the better to driving from I in

revenue of growth what then total And that for revenue? was bucket

flattish. think all SaaS businesses, we And we all digit. software the for were we roughly mid roughly, I businesses, the are were single up,

That's fair. Okay.

business are So What's the now mid is, professional single of of situation digits. services, to the That's just the that's some services. challenging it's what of, And happens parts a just is right SaaS get do to the part part harder it. on-site the that's more lagging. on-site

do to We remote are need the because longer And in a we of just significantly in we QX turn better be to have site number customers. some that continue we with able were then order taking that. it's to But of on. to than do developed remote work

you revenue what split the the recurring that of what's like, consider to be of would transactional? between kind and And more

it's Steve, think roughly. two-thirds, I one-third

Right. SaaS. Two-thirds

Right.

and to the kind the mid that's recurring down, environment? singles So up the not of stuff low two-thirds given then

the Yes. we mean, in I business-to-business. obviously, from some of vary businesses,

we push less. able of to are the As have we that that through of called some prepared remarks, got kind support on-site businesses amount their out is because in

we little a an service some other businesses, maybe than than of services more So of a as example. and we do that professional faster, Accruent have the turn and on thing. where software bit services managed is kind business we

more the on Is it. some one Or through the margin? higher what the margin? am last the stuff, recurring kind is of one. impact these stuff trying transactional those Got is software read to episodic margin? of on On reports? of higher And kind stuff I

higher without exception, SaaS the Almost Yes. are margin. businesses

Okay. you. Great. Thank

Thank you Steve.

from of next Your is question with Andrew Bank America. Obin

Hi. Good Yes. afternoon.

Good evening Andrew.

Okay.

sort October you maybe elective these color about the about Just COVID that we in COVID just some in for your flow commentary can sort of kind of trends Thank you on have visibility sort businesses And into give question. and What about, more the have? of do getting software. quarter? us surgery a also given question, are fourth a thinking you developing seeing How A, both? news of site rising access you. And it's cases

Yes.

what highlighted the in surgeries, So numbers remarks saw on the prepared about October. we in elective we are

much don't I numbers we those planning for think not So are difference. quite frankly, And to improve.

we are whereas maintain the So to I order in this, better large customers, in U.S. improvement the as think an have all now particularly things. for need in they hospitals, weren't as chains, COVID beginning don't necessarily And to to much prepared. at do of they prepared talked I obviously major relative think procedures, hospital we

increase quarter. the than much today cases I in the So they do the to in COVID to second is hospital prepared elective think procedures continue with network were more

pretty we kind predict So good the we number pandemic Obviously, the it's of and have. impossible feel to that about thing.

think since customers, I going in middle to for expecting improve the get any we that think for we pretty understand other we are really, forward was of much have to I that. Relative for to We a necessarily year. feel into to not that mode But we customer going position. not with remaining on-sites. we And assumed we deal of have is scenario are getting the to going that trying the on-site the our to are we take certainly I not But Really, summer just that what part like of scenarios. continue think have set our is more longer.

organization We that. try had So do to our to to digital-oriented. our to more offerings more move on-site do and continue had remote we to be support services

normal. love in that's needing remain. back uncertainty some But now think things end to people to fulfill are And at. suspect that see to people no anytime have the get we are But continues to we the work getting of that maybe soon into necessarily would to where between sort we year. of order as expectation things and back the that We don't of

good hear hear. you. Well, seeing to hear color question regards are Tektronix. But it's it's some semis? Thank you to to Tektronix, a good and follow-up vertical Could federal, you give What to in it's in on not good your there? just by guidance. guys And

we auto. semi. We Mil/Gov. had We good quarter, had good the In good Yes. had

good. Mil/Govs pretty saw pretty consumer I electronics what we continued was And we would be well. to think good call as

industrial where by was were good. comment at it pretty Keithley. certainly, driven of semi. really, and remarks in was we the good. semiconductor prepared we would Keithley general really say saw probably sectors really the maybe place So I driven sort made was But The those things as not

that were say the saw would segments in growth I and semiconductor the Mil/Gov we auto, three positive So quarter.

Good so Thank to you hear. much.

Thanks.

Your Andy next from Kaplowitz question is with Citigroup.

guys. Hi. Good afternoon

Andy. Hi

Hi Andy.

the you think, growth of next that local around how Jim, And and issues digit state see Group least much you versus talked cited about that quarters? for temporary you slowdown few at do talked is the about pressure that forward stay access governments? Gordian, saw I the would expect to the at low you moving from that single that you you

job has chain done Yes. great have driven of by backlog and has business, couple really of new our There's we which challenges a EMC noted, as tremendous some One a helped drivers supply a would just I. that Group COVID. is, has had business, securing

approve challenge. in terms they having come And things to a on-site have been acceptance some customers of has issues customer

will, that to had you one-third kind and of I a education basis we two-third, if relative I issue of it's local two-thirds group if situation. even would one-third points, government, that points. continue challenged, state percentage of boosted think So to to they couple a couple Gordian, it budget normal quarter, think on-site probably think probably, a have probably had Relative

know, really operations part or This this. I are the cases, facilities in the many of new new kind as those building But think is play obviously, part construction the you we don't and budgets management. challenged. aspects in Andy, of of renovation

some, as to to things get feel that's we start of that need get to facilities some continue So still these we going done.

will pressure sure. in be for some there that So

do So not contracting on-site we that's suggesting really But job are order but assessment. perfect. we an business that generally start our with

up, So see in really our where quarter. probably the we couple RSMeans I I high pandemic Online goes. the of We think, that's pleased challenges with quarters were single was business, of digits a think which to continue

but perspective, customer contracting part a outlook We got order pressure So is from business think quarter to it's do well our engagement job of a some here. or two biggest the the at least the continues business for for piece.

That's And Josh you Sensing about sort helpful to of then Tech Jim. opportunities. mentioned

of you products COVID general what I always get more could big about for go asked the it and as and for Are seeing because itself the topics and automation software more drive in transformation your of digital for can companies. around into is of you conversations XXXX One that mean of need some sort that growth of sort evidence beyond?

Yes.

playing users, of think They the bigger growth our accelerator for a mentioned a you digital Anderson-Negele digital the Sensing and will, lot transformation digital we Tech have on in done has about if process have what has projects. I or in all the been workflow their been actually role a customers. one number then is innovation of side. around innovation I world a of participants validation That great in recorder.

They helps these they that with And workflow, a been are or able put all monitor, air pressure to play you they in will situations. COVID. so of digitally infection that's where an COVID airborne it Setra understand have their But around rooms at. a had example. good negative monitor if into isolation have

of a Still over a bit couple And say So that's I starting couple a sensor be our not have that's of they that of a think sensor, we broadening the work accelerate. numbers to years. the through of they but work years done do, businesses, small efforts to would the had more have though. a for want I little solution, just

the trajectory teams think those have what have last at the with scale, it's of XX traction start I teams look think those in to numbers and were the like, would benefit months. probably, I we probably see XXXX. not like the if been been look we some really that that we those But really to getting until

Appreciate Jim. it,

Thanks Andy.

Richard next question with Eastman from is Baird. Your

down Can replacements quarter the equipment this back to an big to the consumables Yes. business? afternoon. composition mid into when to down And procedure could machine how you Jim, you have starting Thanks they at and speak for fourth business when a what was single Good up? does replacements for digits, ASP look up or number it it Was at start question. quarter, of factor the minute? that ramp just performed And and that? patient ASP? in their

Yes.

So there's around story definitely a world. the

of as think Europe Western Europe regions, growth had in procedures back look said, capital elective strong China, and has had the China or none we a major I we the Western yet had Europe. I at, U.S., XXX%. opportunity. And when Western good to

during a capital same when has but seen they So for story. not growing consumables of China, time bit maybe it. little up the made a more placements capital much, have were actually as

as of in seen that We U.S. haven't the much

a we we that so the regard. is maybe behind farther good. bit good that see U.S. feel in year. And full had But little We naturally I think a

was sizable. the they Our placements a piece. nice very I we think of biological we think, But going can the and business the business to American consumables. Obviously, We continue, bigger more be good terminal recently. services around North world. part seen a return. of sterilization point, is biggest have some is have here their fairly really, business that's this That's indicator And part at it's

the of we need we of I impact to here those back. necessarily think in I of the have year. we will improvement to recently. things, But sort see not come that that predicting that think start XXXX, that placements some am some I of see this still So and seen some of

feel business. we the about good So

business number a point. it's on know. have things this done trajectory a on to of the And think track, well get good We as you at I

any to the that around equipment? is in Is And the might you channel, and that around that channel channel you referenced is ASP Fluke the when the and consumables? around Or be spoke Tektronix. inventory

XX%, of aspect I not Fluke around That's But is it's like know, distribution. of Fluke we and Tek, It's referenced is It's in that why and channel Tek. inventory. big as XX% a number there revenue is not it. XX%, some And number. consumables.

consumable equipment bigger third instrument overall how recurring And placements or about did or Fortive to that in of picture, equipment services, the or placement that's instrument maybe just look placements maybe you the quarter the well. When relative number as the XX% NewCo think number? and versus recurring

Yes.

think So I total going new approaching be recurring revenues. to one almost XX% is Fortive in is,

have this it's you of at shy point. so that number, just just So XX%

the think handy. capital. of total So I two-thirds I is we of I revenue the consumables. quarter the services that that a and Probably, XX% versus And don't of is a business But to moves part would tend say of recurring XX% little think general, numbers about every have XX% within bit. in is third. maybe

Okay.

And quarter-to-quarter. change doesn't the number radically

And customer. really basis, year-to-date it it does, of that think particular anyway. of think I is if a on So sort one it's better sort about always to

if manage? on I to just the that could one of structure SVP And top Is Okay. lay in, sneak more new are the the you segmentation? plan to going

Yes. would. We Yes.

view So could an we are obviously of that continue organization. well. But going the to think as some as you to rollout organizational color around

well. about as you that it think as you can organizational view an think as So about structure,

good. Thanks you. Very Okay. again. Thank

Thanks Rick.

Your is next with Credit question Suisse. John Walsh from

John. Hi

afternoon. just on fourth I come differently. quarter the incrementals wanted revisit and to little question a Hi the at bit there. Good

in what the of of I you But where a quarters. step anything out-kicked product two be reinvest XX% terms have a Just think or were been any is incrementals. would lines? there perspective guiding to year have last from you guys this need the mix from you in because in there a down

on conservative if are topline trying we to bit Just a understand just there's item a or specific little trajectory.

seeing than into a And are up bit better. are better the I would the it come incrementals about would that's you the say, uncertainty, and topline We the cost why had we little third in what what end built quarter did coming structure where around.

dollars as talking are success in possible come businesses. spur our we trying growth are some into relatively QX, in I the to and to think seeing and expenses terms that future our invest customers XX% continuing But will of also much margin course, we we and base to balance QX, of of topline to what for to those magnitude. deliver compared expense as are back our But recovers. as smaller the

just the mechanical monetization No, of that a I Got Vontier. guess then makes And remaining sense. you. question here around

do if as kind that? triggered tax think will monetize be kind am that, there's of you when a you announcements dollar And think not about as you you split of, stock sure position? off maybe, how then to remaining I if as you we in or kind about As need do the have there of basis cost that XX%. any we it's anything monetize implications the monetize the

months tax-free there. next it Well, up sets with up tax-free any XX the in implications set now, as we spin base don't transaction. in remaining really It's do or our tax a sooner, case have or assuming right as we XX%, it the

the or We the these need the and And probably to guess, is, is, right timing to file we be to to least. that. are market we upfront past the the get these to next in election do month, want I the let to we calls, dictate will going what it, is. about have I at probably of need spin think needed it would what that done Qs. dynamics timing company. we like sooner. earning But to I then other hope need side we of We to get get to election, year another But get get would first well the half

care. Take you. Thank Okay.

Thanks John.

Dray from with Deane RBC is next Capital question Markets. Your

Thank evening you. Good everyone.

Deane. evening Good

had RemainCo. this. did $XX you with that, repositioning stranded start out some missed could might footprint of taking million costs. if I some was it like just hoping But sound sound where you I like you which at could addressing clarify please. stand that costs But have reductions stranded on

Yes. Deane, per se. are really that I stranded wouldn't addressing say they cost

some split. a that and the has run there are It's transformation. to the revenue are at more, related for to we operations about see not and But exiting a think digital some we empty next on, buildings have smaller and calling we it's are with I these more it streamlining year. opportunities of our this the how up sure. given different due do leases more what seeing do also time. But businesses Jim talked transformation to to it's are for in us setting buildings there the for digital we point way We

any in Vontier And if so, how for long? that existence? with services are it. shared will Got there And be

around before tax most get this, from just say, completed Most this few. But two notably Danaher, the a from end have period There few, were would can't we next separated months. of them as There's very beyond the agreements of year. to for that long until where from time. of file taxes minimal a away there I we the when

I think building a job and has Mark Dave organization. done tremendous their

Excellent.

Just last one.

I some or anything quarter when Just issues? systemic product the off a company-specific? were of did was issue, shortage hear PacSci dynamics, there rattling that? were like there Was you EMC, supplier some any that Or

Yes. we chain supply think had No, have we issues. I dealt, some

a of people in about QX, talked think Deane. I lot that

to We as know, revenue a in job. quarter. chain the The and guide continue team quarter. have through mitigated proud is great the did of really work did up Particularly, supply the really you they we

to And delivery metrics backlog. in So the see on-time revenue good, our we due coming through continue our we past as quarter. higher yet move were

approval who couple of in had suppliers a just sort will, really to a before with own of on-site customers of tougher specific customer very on-site the that's communicate a you ship said, work, factories to need customer. which is and and business with, you in bunch if issue their COVID challenges to an really as it's So with where you coordinate, I a

Got it. you. Thank appreciated. Much

a Thanks Deane. great night. Have

too. You

next Haskett. with is from Gordon question Inch Your John

Yes. Thanks very much. Hi everyone.

John. Hi

guys. Hi question tax. quick a So on

one benefit. when the plans. I have guys shareholder the of tax you lowest you rates multi-companies. bought for you ASP, proposed preliminary wondering the tax I did am reorganization some on have believe favorably thoughts And amongst structure if tax any You Democrat

to past. prospectively, for everybody. well. want that there as favorable clearly they talked kind they obviously GILTI they corporate keep curious just of have could of this levers, you in aspects going pull other think other taxes raise are as to I about think as I I if have and am been taxes after But the things

see we able are think And I watching things. or Well, we happening going rest to But a offset countermeasures. the the what we are that of are are may before scenarios that be start need things remember, they is. exactly to timing taxes with about, different of not we potential and will world. then overlay that change can thinking John. number And may there and in it they what's do to any the happen, Thanks what

taxes not changing of too. are have income We their outside and quite there. got half revenue our And they

all will opinion actually So that next It what we see really it year there able how to will we into plays. have be to about well will be before have do. an

found my that or And fair. become And healthcare so healthcare Danaher, this today's Okay. question it's opportunities bigger is, expand something pretty plan even a being do right? see just these No, clearly today? the has to was that's platform, a Industrial it, market opportunities, when not segment even actually than I to envisioned of in Chuck. healthcare quick see even now able platform envision much we it valuations high? perhaps of, wasn't call ironic, as you Fortive which Do with Jim, you Thanks that's follow-up. interesting, reporting become spun then out sort

But now ASP healthcare. good we very value. your you a as part billion a in question is, guess also the I at end day, think of $X the you And And quite the said, boy, got built platform Yes. of position. I have I have at think we

and drive the position deal I innovative, with a about think many patient are workflow helping there's is more safety. of in really, help efficiencies, really hospital them enablement. It's respects, Our be hospitals opportunities. we about really And number is talking

wonderful around think We have a today we do amount have opportunities. current And we we that the of have have number a We done we of think that opportunities. workflow. work have businesses got

a has would I I acquisition, see, again, we which think most recent last a for think Censis us. our good add And we to bought deal been value. year. very good It's continue

John. capital opportunities. some I it's three years scalable in find think have maybe platform, what opportunity, are I think you returns do them get some generally platform build have to necessarily we with value mix than cases ago, So faster really now. which have billion and so term able now And didn't that of opportunities, more been And you because years we have which a can bolt-on longer $X now to now I years we opportunities. two ever, returns allocation think on, can And the about be we creation that And ago, of four a buying, right? with ago, on you mix can

the and pushing ASP on in to a said we think it we family be into we have So which got excited we I are are launch there. are work build excited would that the really now have a done And off But we get lot about through there. work of. timeframe pad the that I we think to of

clearly I your need So, the help, Jim, Yes. And to appreciate again. it. point, hospitals right? thanks

isn't Yes. going away. challenge That

Your next question with Cowen. Giordano is from Joe

in. Thanks me guys. Hi squeezing for

Sure Joe. Joe. Thanks

can to in side, where the were versus And thinking how France about becomes Jim, that? with that comments healthcare now that like lockdowns like rising now it deal hospitals are about above how I far do we we patient level, again. when on And down? guys and how Like that earlier get cases XX-day to issue? appreciate things the things business think now talking with better you than before are an Just load started shut last prepared time. terms you of far, are European

Yes.

I we North are work QX, in to you the think from. am I would were point. good never not sort number today, America, think So load probably where think first, That's necessarily, a we I of low in And its at in sure XX%-ish I we at know.

just financial in comments. I of certainly believe months hospitals of much the in ambiguity prepared that because our are few for that every obviously, the elective we these procedures with in mechanism work last to there's getting So procedures. caseloads But a up. could situation what And better tremendous funding going a rid the for own are of on-site one happen which hospitals. potentially elective ramification think There's financial

would we part the see like to huge the difference. next of think be. numbers of what where U.S., is start feel to see. Western a that's then for predict quoted let's wouldn't that think I look going on to line XXXX. think the to trend I that sort numbers what like for broad-based. year let's the And begin today, make I of we So We times remaining in XX%-ish the pretty those few need country the call will rest we a the not Europe, looks would year. that One see range

procedures Let's goes. that see lot good lot again, a go elective there of not are thing elective on still There's The this of And that where continue. are about I part of procedures. think as a is business. that the sterilizations that

A happen. still surgeries have are of happen emergency-related. because So lot to procedures they

goes. that So I see think said, as I where let's

variety prepared scenarios. we for are sure, For of a

Thanks guys.

thank we are to get conversations been thank for I finished. know Ross including to Griffin the I want It's to if for to this call. Certainly, all didn't I or quarters are follow-up didn't year really on have think for We everyone, everyone. we hard and I am or is you a appreciate going get months you. that I is we it's tough want if three now everyone everyone. obviously anything it to apologize there. call XX believe needed. support. XXXX available We to that

about where are excited we incredibly at. We are

And Vontier have know an going our everything we phone They we outstanding they going Thanks of great have great. for a I is job. to with the a in voices do Dave evening. We Hopefully, segmentation. friends Fortive. are be excitement luck to our on and to be do the on new are will as team we job. Best Have over that new see move great the Thursday. as going, And Mark going are we to them well there. to know you the excited that forward everybody.

you to talk soon. will We

you this call. conference participating. concludes for Ladies Thank and today's gentlemen,

You disconnect. may now