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Fortive (FTV)

Participants
Elena Rosman VP of IR
James Lico President and CEO
Charles McLaughlin SVP and CFO
Julian Mitchell Barclays
Steve Tusa JPMorgan
Andrew Obin Bank of America
Nigel Coe Wolfe Research
Deane Dray RBC Capital Markets
Scott Davis Melius Research
Jeff Sprague Vertical Research Partners
Andy Kaplowitz Citigroup
John Walsh Credit Suisse
Call transcript
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Operator

Hello. My name is Josh, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation's Fourth Quarter 2021 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. now turn would to call I Ms. Instructions] like the to over [Operator President Investor Rosman, of Elena Vice Relations. Ms. may you Rosman, begin your conference.

Elena Rosman

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

increases Our statements decreases on comparisons year-over-year on continuing period-to-period or basis. refer to operations a

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

James Lico

customers out ongoing performance we very environment. everyone, as in the Hello, strong you Thanks, Elena. for closing on challenging delivered joining and thank a an delivering focused in We for fourth quarter, us. solid year

ability quarter in impact expectations million supply below constraints orders as roughly Omicron our expansion While to the across we margin $XX deliver growth on saw robust the finished and the our hindered and backlog. portfolio, chain surge continuing revenue from sequential the and

challenges, earnings generating points in the despite well of adjusted XX% XXX quarter. growth margin expansion Our and businesses basis performed these core

and lighter on saw we expectations in flat however, expected quarter. were conversion X%, lower end. lower a year-on-year basis flow and was year inventory than customer receipts tax at customer our as the than demand into cash coming Our rate support at to invested Free

portfolio For of and year-over-year by XXX in Strong These of and the demand margins disciplined adjusted strategic are quarter. points, driving this that adjusted higher innovation expanded of revenue operating value a the the constructed growth for X.X% the application and all core deliver With we through delivered long-term higher-margin fourth Business year, and basis growth yielded software M&A. for testament to workflows rigorous System, Fortive growth, creation growth team's sustainable XXXX our in our stakeholders. we and XX% resilient, results are earnings. organic to we double-digit more have portfolio well-positioned software-enabled

businesses. our Slide X, core see to points and contributed can expansion As a suppressed of number of on fourth you our margin chain operating growth COVID-related challenges Supply quarter over within well supplier core all both solid results, constraints including our as our across as networks logistics each. segments basis XXX in

the Starting more the XXXX ahead. supply their growth revenue product imaging growth the demand the well in were Industrial highly XXXX. and the year, on with single-digits focused Digital high-teens team portfolio for offset market backlog platform, Orders X.X% growth fourth Western upselling. America also line. end ARR and analyzer, North its quarter dollar pipeline. bookings remains in in Systems slightly single-digit -plus quality market-leading with challenges, They the offset product offering. fourth its rental The of throughput net iNet performed in representing retention posted the continued retention past in than continued revenue up XX% its offering execution partially the in new Scientific customer year revenue quarter, with high fourth introduced China, on acoustic by backlog in were QX. decline continued power logistics momentum greater we're and low the to for high demand up strength constraining tools for eMaint business to funnel customer strongest declined This detail. record the mid-single-digits, network increased we've recovery quarter. management logistics SaaS for in improving segments factory Strong Intelligent and by seen and improved the deliver continued more strong management, growth the two mid-teens by Fluke grew supported application seeing product led supplier Solutions service revenue quality the XX% Europe. core as growth in its with single-digit order deliver Fluke, across of Series XX% and at included fourth by Looking years. in in reduced see Operating in total helped and than X.X%. up EHS, core and innovation within a year capped to Intelex in of with Fluke year a churn power the significant growth its net quarter, contributing In by

connecting continue addition, EHS management In Intelex. from and with their real-time see award-winning field Intelex data ISC Hazard success software solution to IQ with

to also on on the for another quarter and full dollar bookings SaaS continued SaaS strong base. mid-single-digit. up quarter. sequentially basis, on a Accruent line days drove the in product despite bookings almost capitalize have to due solutions, and continues quarter SaaS record On deliver continued would of less net and second posted demand higher across in retention deploy to Accruent return its fourth customer declined for its as improvement its it rate mid-single-digit the was quarter highest for anticipated, to on-time EMS been for As sales momentum tools greater with to Accruent growing renewal their same-days workplace although year. XX% billing than FBS up XX% up a

mid-single-digit, Dallas customers, quarter in are secured company expected County expanding on is low Gordian Nevada its fourth start, substantially in Independent the generating a and August. is with growth. the leveraging strong capture the implementing new increasing position education and FBS and in in a another Both following in the also in Revenue driven year-on-year the Gordian ServiceChannel acquisition Clark notable two bookings additional this including notable in revenue and higher the wins wins is procurement. expect to leading in growth We the see off some new of SaaS in including by result Accruent ServiceChannel lean quarter, XXXX. pipeline XXXX. District. and more to in and for state of U.K. innovation to grew with health beauty begin basis. good than tools School half management second local fourth to a fourth some the successfully SaaS logo in quarter quarter, its retailer and double-digits doubling portfolio increased

for segment semiconductor, mainstream digits across single a mid-teens the low Europe from end reduce X.X in Technologies resulting which of are despite levels bookings persisted. to high across The continued including chain new growth driving Similarly, Precision to Technologies Pacific growth of growth as double-digit fourth strong invest Sensing HVAC in aircraft in Orders introductions increase increased continued in product see all-time supply scopes by the strong improve space, decline a year. backlog while the X.X% partially markets. price a highs, This in of FBS, customer for and revenues EMC continues across book-to-bill mid-teens, end America. challenges. in North quarter, brought quarter, Slide the resulting medical further benefit risk book-to-bill major regions, its core chain customers good Tektronix the middle capabilities chain range those supply in in growth China, growth markets Tek in and momentum continue and demand, to business. driving the revenue helped to fourth was while with despite single-digit as Scientific a a X. in of quarter. constraints up industrial of to slightly, grew its Western and supply declined PacSci in Moving realization new order to backlog markets, X.XX core offset posted with X.X%. total included of low single-digits

X.X%, of quarter. Starting single-digit with increased in revenue Moving in single This high growth North right Total Western declined X.X%. X. to core included Advanced decline Europe. America side ASP, performance of Healthcare flat Solutions low in revenue on China, Slide fourth a despite decline the and the revenue in mid-XX% a digit

Omicron While U.S. we to especially regions shortages by skilled have the challenges primarily double at impacted while consumables U.S. in revenue These centers. surgical be grew the to high-growth and continue surged lower grown variant procedure digits. existing the impacted in in ambulatory adding elective the December, as staffing hospitals our installed rates, base,

digits, its with CensiTrac FBS the of quarter the Censis expansion We by highlighted business. are in increased the revenues evolution range. core offering, pleased also operating in with progress strong of mid-single margin growth increased low in XX% in which continued another SaaS significant

in declined made throughout digit lapped biomedical the COVID-related And new cross-selling continued margins growth existing adding in and included Fluke that Health customers. digits as low its a prior XXXX. good quarters, momentum, in saw it year, as and driving increased upselling test tough benefited CensiTrac strong Solutions single As improved customers investments comparison revenue strong and equipment revenues to year business. to see prior double-digit Invetech from growth mid-single

important one example for of in FBS Our differentiator to XXXX strong an Fortive. performance just how margin be is continues

in revenue, shown of on portfolio their mounting of newest in CensiTrac at tool, significantly Slide management, drive expansion Tektronix chain through the chain is daily the just part the revenue innovation capabilities significant offering. expense our skills basis Tektronix XXX the the our Series MSO and our on businesses FBS headwinds, supply quarter. the Obeya to Fluke, complexity reduction growth uncertainty deployment with profitable in and ASP to achievement As of X our include shortages. and tackle across X, enabling effectively recent supply Examples associated and by to in use points improve and build generation launched sustainable drive FBS inflation Through lean products, and freight reduced quarter contributing plants, business. and operations of new next including the leaders manage in its innovation portfolio overdrove ISC, to over management margin risk

which net growth net the making at in our improvements retention EMA, deliver finished dollar also and year us profitable XXX% to more accelerated in businesses, dollar are in allowing meaningful We retention, the Despite over the COVID, all support while continued on-time also kaizen rate have in development leadership activities. our renewal to XX points of we beginning from Accruent increased monthly year. of software

As of we're our of to by rigorous the continuous our teams, dedication improvement. culture benefit continuing a application and result from

facilities to workflow segment margins. strategy to serve and offering deliver solutions proprietary portfolio Provation secular Slide our accelerate high relationships, are and markets to IOS drivers. customer strategy greater upon a executing significant $XXX significantly We software-enabled attractive ServiceChannel established Through Turning cash SaaS enhance evolve our progress we've critical a in broader sustainable opportunities, than and revenue assets our $X.XX to XXXX combined, AHS incremental data higher our our X. XXXX our progress in will asset we that software long-term build in M&A to made earnings best-of-breed leveraging also ASCs and we XXXX done high-growth profile productivity Together, to growth needs. growth acquisitions continue continue of positions more going strengthening software million Both, of adding in across as well-positioned platforms, opportunities. expanded acquisitions our networks, flow presence customers' address our significant in businesses see ServiceChannel's with of to with market of forward. These the and with are and more multi-specialty future. Provation, And management GI we expansion proud data positions than generate work capture these accretion expect free hospitals I'm to we building and our lifecycle up-sell and incredibly businesses. towards cross-sell opportunities leading and in and with

recent can Slide hours of the fifth the forward of been today Leading Board it starts to since XXX,XXX with for and that than in XX to commitment which see countries advancing ran volunteer time, shared values, in targets to top you company the each of XXX pillars. team We diverse more and As talent our with And translated our diversity. over actionable Caring time across a leadership is purpose on Day our sustainability hires employee have across employees X, and our into world. our communities recently have our became and help time public. aspirational dedicated

We analysis and achieving management emission are TCFD way opportunities. targets our recently completed our to risks change-related reduction on our and to reporting of well climate carbon our governance strengthen GAAP and

to the purpose sustainability sustainable our for that quarter to financials, to to full XXXX and year I'll will make first challenges. need signatory who sustainable practices responsible innovative take seriously years that, Global in and products engaged our flow the our actively also forward biggest over pushes sourcing a supply free and are journey sustainability In we Chuck, us rights we fourth both some became named continuing chain. trying progress our America's the the the to to to understand future our more human in cash XXXX, create customers color the and to With We shared world's it UN pass embedding initiatives, labor across a and consecutive of our Companies company's our come. provide operations. and our commitment guidance. look strategy, on further daily one the on to Newsle also we for Compact, our and of year. Responsible It's in by were third And culture quarter Most solve We services

Charles McLaughlin

our in expansion operating operating approached XX%, of businesses and basis points XX.X%, guidance. Thanks, backlog XX% Jim, and and ServiceChannel in quarter, core Slide basis hello, of from quick margin realization. total growth margins points generated recap our I'll year-over-year over respectively. the FX points begin Acquisitions the contributed X.X% growth modest of high-end while price of of quarter, a XXX were our XXX on primarily was everyone. of gross revenue over core performance. the orders headwind. near X a grew hardware Year-over-year reflected growth X%. with in quarter fourth with X This margins Adjusted XX% and We of with

well segment flat, constraints demand and some where across in to saw compare our of roughly to portfolio, offset declines chain from good the at right earlier provide this as Tektronix benefiting lower end rates difficult growth and the across a consumables highlights by are I reflecting That Europe including impacting the side on and at multiple Turning as Jim Western year-over-year better, Invetech. covered regions. ASP, of North growth slide. ASP. color wanted had consumables supply base. procedure revenues the much markets, have up held Fluke, further strong we installed at were COVID-related said, recent America elective

the high-growth regions quarter, mid-teens our by the revenues with China as well as Asia performance in driven strong growth grew across double digits portfolio. in

than use quarter support our enhance as in Staying capital lower to revenue of funnel our over Working And of free the segments and XXXX. deployed representing plan net that to in saw three conversion change with to cash to part billion through in flow robust million estimate segment inventory the our Turning for with and proposition net we to we hardware fourth year of $XXX with Slide disciplined, of M&A each receipts billion customer We also cash, X. times. we our a and investments positions had in expected. with XXXX both We quarter adjusted leverage generated in of cash, leading receivables value customers. the of we $X.X XX% income. ended assets trend significantly fourth made capacity increase M&A was and X.X We opportunities. approximately $X portfolio add looking the the software next full our the across remain years, of a remains

growth segments, year differentiated to each we tailwinds, demand year now assumptions, the strength that balanced strong look first persist at half. the will supported in ahead, our set including with of will heading through Slide as the least that of in chain The XXXX the and of supply much backdrop the orders backlog be another XX, continued XXXX a secular based in Turning and robust through expansion expect guide year. continued is on on we a strategic likelihood outlook margin into by of constraints

we of lastly, total, levels are And flat inflation course ramping million. to We strong and XXXX, in for health our realization the to double-digit and procedures growth of year cost software year. benefit price expect care, over than revenues to strategy more of total starting lower taking XXXX elective another generate software to the in offset $XXX to continued remain software in planning the

to next Turning slide. the

margins growth for We with of an for growth, range to the in year. revenue are XX% expansion free portfolio to of Adjusted approximately the operating of XX%, to a to the X.X% taken normalized XX%. capable of will XXXX flow growth more for additional income, expected to contribute our the $X.XX, a conversion to earnings $X.X summary, in rate diluted billion, of yield profit earnings year. XX% with converting unfavorable range EPS net to cash billion $X.X cash while approximately to we've net XX% FX, of growth core guidance show year with Free X.X% of tax to introducing more flow up XX% more tax the margin. acquisitions, points X.X build net XXX% an XX.X% margin actions would be in X% cash. which would continues Adjusting to EPS In segment. to the of be company full resilient of benefits Adjusted guidance effective each $X representing revenue is and

quarter the Slide XX and to Turning first guidance.

receipts X% second it of remarks. that, slightly back revenue the similar conversion With Adjusted of as We in quarter. partial of X.X% XX% of quarter; up I'll growth cash to of seasonal reflecting XXXX FX. share that core closing slipped pass revenue XX%, higher the range to flow Adjusting year-over-year. approximately to net external rate $X.XX slightly X.X% revenue and our a operating at with than QX per for of fourth Jim profit to of $X.XX free assuming XX% of at a $X.XX, in the the acquisitions, trend, the expect net with earnings recovery midpoint, environment billion growth some out unfavorable XX% and margin the diluted half from approximately of midpoint, tax

James Lico

Thanks, Chuck.

Fortive many company the pursued public a we have that thesis fifth you celebrated Slide in as XX, investment continue we XXXX. anniversary As see XXXX. on And validate know, its to since of you can as

to doubled core software meaningfully from revenue doubled has higher-growth, recurring we growth than low of Our through-cycle portfolio. mid-single-digit to single-digit and businesses our added higher-margin base as have more our

to per margins and about well. back points. XX improved have And margin started gross basis expansion. gross off we basis points in basis XXX We've talking as operating profit Our margins points increased over XXXX, year operating XX

talking average through points cycle. the we're on per about basis Now year XX

As result, cash flow over free also and a time. earnings is meaningfully up this

track a We XXXX, in values, and are expectations cash margin unprecedented in Extraordinary up members we team delivering and exceptional how purpose before and to it. thank to results I'd even supply our of delivering on each customers, our on teams in to we further core to face do up approximately we results and XX% into their our XX% and in differentiating and financial chain ahead again Slide prolonged Fortive. XXXX, free year. other COVID underpin flow coming our questions, from headwinds, committed for Wrapping to for the initial extraordinary constraints move well do shared XX, which commitment teams our focused our like shareholders, XXXX, of delivering remain the everything

we to key continues do. to improve businesses our is more metrics, of know each there evolve While across and

to conference. on taking targets such, us set the one in back XXXX expect closer we growth investor year profitability step multiyear delivering May at differentiated XXXX, and As our another of

choice confident to that, our yields to turn long-term it for operating our to Fortive back have long term. you the competitive we to and We're do I'll advantages segments companies Elena. create know for with us best-in-class strategic time be for come. sustainable With work and we a you a for returns want we the Finally, sustainable long

Elena Rosman

are ready concludes Thanks, our to Jim. Josh, formal That we comments. take questions. now

Operator

And your Barclays. from Instructions] first Mitchell [Operator Julian of comes question the line with

Your line open. is

Julian Mitchell

sales I guidance just to sort organic wanted follow-up year. on of the the for

of high That's fully what bit particularly in a a core it moving of orders hardware, for short-cycle starting the little in suppose, that supply conversely, find you the PT, low chain year, kind out where on gives you're to of And may year I you mid lot to we make So in I But there IOS for the through to with single-digit as whole. confidence that QX. a and growth slow orders. conditions go down. you understand that execute acceleration? is easier as

you IOS wondered in just And sort what half and in of or second half back core so, that confidence I that gives PT. acceleration

James Lico

Good to hear and our afternoon, time Morning zone from Julian. guess. you, here, I

look fourth said we good when quarter year, year think at some in a I the We at see and we all, through Fluke had as Sensing. of improvement Tek. very full the First you

confidence think good supply but Sensing, So the chain constraints been I there. have have in we

as as at backlog don't out, the quite think reduction year. both we the the we backlog at and any I you in start really Tek, you backlog look record very backlog anticipate first Fluke frankly, when situation pointed minimal reduction full half year. businesses And strong, and in the in

XX% talked So, we Fluke remarks, XXXX. see prepared we an perspective, that side the from order of up for as in orders example, an this demand about in the

we're I and the we've we of secular to some that - talked those definitely drivers out. continuing drivers So, think, play about, seeing

business, front in of still the been first strength whether whether it's demand to the So very in differentiate we've the some the particular good see half. doing in things we that it's the markets innovation,

go So slower XXXX frankly, perspective. to an the We very still very XXXX into certainly, rate deliver see well. a environment of growth strong good bit we a there'll be think demand from from And we'll maybe as orders the quite little year.

Julian Mitchell

years It's much. one of my on three second the the Advanced And or period, and COVID then very lingering TSAs Solutions. been Thanks aftermath. for tough and with then a just sort quick obviously, two Healthcare

the been you would I business, share how And guide the XXXX holding own? particularly tough do conservative for AHS? assess period, it's losing of there that you the its fairly position Just think in wondered after that that's is looking you of three-year say sort competitive you're or that suppose, when at piece, ASP now? do

James Lico

Yes. Thanks.

at strategy them look said States of think that high-growth fourth those we in We into it's quarter. we When said, of about saw think the we the you And indicative we would see really growth brought things of out. is outside really take you when United from the onset regions of playing we the our one and And that States. as the First I could all, quarter, markets growth deliver of business, that grown installed base had few United mid-single-digit good the in the in around we years. over focused a we the success. world. we've as last outside more the capital the double-digit And

So we about perspective side. a we on the good feel share because see equipment that

on a the is I margin at think of and addition segment the had another We've even margin expansion the in we the see that And segment. broadly, looking a the in a margin on positioned through what as in we QX, with better even quarter, that at out As - electives little the electives More out, happened think year, tougher bit fourth today, feel a appropriate I well on anticipating side stand but see lower we year we've to great That's and thing maybe add than in very certainly into great relatively at a Provation, in Omicron. nice been not strategy and you fourth the well. going the think first conservative the not ASP predict. point tough anticipated. maybe bit the terms we to of as you'll as the much. we're getting job We gross little we done playing But ASP. operating the health in

the So, And I look appropriate think I to you XXXX. year at for the ASP. think when been full rate it's core growth relative predicting in

see expansion. to year And through You margin growth see broadly. our accelerate quite as you that frankly, strong continue and, playing we strategy the out certainly deliver more

Operator

comes from of the question next line Tusa JPMorgan. with Your Steve

is line open. Your

Steve Tusa

just we the it core build as to quarter? little Like of kind growth third organic the in perspective? I the So, trajectory Should cutting year year. bit you XQ? on way, move guess a kind from a do we step-up of how the Is maybe a different nice color a more expect through just growth expect

Charles McLaughlin

We're Steve, be of gradually this we is to - some from going But expect through is move the with X% not will that Chuck. we that time, constrained probably we're surprise. now talking to up going year. What we chain. supply mean, single right up about high as I accelerate. expect for X% a

not what's all So at just there's is that I that built think happens. doesn't it guide. step of the into QX this function a happen gradually end - It

Steve Tusa

Right. - But I beyond guess, that, I talking high to where high the that's starting to get I averages about something to how mean, work. the get you're end, the you're just obviously,

mean, at year rate organic? you exiting the like going double-digit be I So on to are a

Charles McLaughlin

it chain strong Yes, we would shipments, talked have We supply - coming about, expect momentum sure position. we - strong a allow will don't got, really year. expect to. we this think we've us that backlog that to into and as order that while Jim We increase our we're not

chain the exiting and to get quarter better year expect very strong. So each we we would supply through incrementally us as year do go have

Steve Tusa

impact in missed to there? on I extent I Okay. that in just from there flat? Right. an million of trend Is or are to you then ASP. change seems any one guys' That electives you And be $XX Because an kind makes kind a seen mean, you like forecasting that be conservative. one that mean, quarter, to really worried? have last Why I basis, trajectory really kind like you X% of out quarterly the on just lessen quarter whatever looking mean, that. a given of this that that's on of

don't you're I on others there aren't is front? something that know, seeing So that

Charles McLaughlin

going forward. No. It's really that predict been what to we haven't able realized we it

show this hey, is, want where we it right what is to now. So is

good been the And there. get expect that don't we'd that. have growth it's has what if say all that here. acknowledging can't happens We if expansion actually better. predict anything, a us margin go have we see upside long, this if to then can basic don't You year would is And maybe, electives we and up,

James Lico

variant add staffing that. is Maybe States. also the and of that to Maybe the the typically remarks are it's We real that this Omicron there quick we to some just add in specialty in this said prepared just think the United combination. on the variants, that, as new to challenges

States, bring a installed as back. And strength we've two really, on showing the frankly, quite we strategy for our we outside the the to growth think of that think little had come the play so really base to building the combinations longer out. it takes strength momentum and United said, But of I the those

margin of conservative and some I business a I and think yes, the certainly, for creating year. the the through side. out think things momentum more But playing on mentioned, we've So elective just been what the expansion I with bit strategy seeing the little the we're

Operator

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

Your line is open.

Andrew Obin

of the tariffs, some Just footprint. made you for a to manufacturing a question you. question, I adjustments think guys chain your sort supply After

particularly Fluke how As thoughts about supply your the make you. constraints, we Thank sort going resilient forward? of supply are are to the chain experiencing Tech, chain more hitting and what

James Lico

perspective, logistics. Yes. we other one, in around chain as supplier from about Andrew, would the it categories: I think a number typically, think freight and one, said, and I constraints, two supply

let's the side. supplier take So

COVID. that into world relative right. we were the locations some that put A of certainly to hit the around by certainly That's and You're been countermeasures number had harder part the challenge. us Asia of our tariffs

source it designed ASIC on is, we've margins about better technology us FPGAs, of given about and think The differentiated technology, where the sole perspective. are product part really components, better think differentiated around ASICs, second about a think microcontrollers, historically from we side, we which we when has those particularly when when

big tend to the products. products in mostly Fluke why off-the-shelf more use that And commercial see have that's Sensing and as relative this at an they didn't Tech. higher-end at impact to because You

continues those the platform suppliers, first architectures changed to we're quarter. to fourth what you things said, some at and where, of little out out of growth new Fluke And better the we're improve qualifying bit we're where as in supply in locations it - played getting And a both then actions through question we're first we're of getting the will and higher-risk So source places. world. Tech in all the in you moving - redesigning the play different doing, core in maybe moving out around those some year. COVID the quarter. ability the That's see some base the We're

supply through big benefit of So a in really is countermeasures we're shift seeing the the side What relative year. necessarily change our to the not year. building we're the in anticipating

we that's about So think it. how

the rates Asia freight in you lane clearly States. And freight that Asia it's side, U.S. challenges Asia from growth On the in to see some the the United and of between

into the have has as shipping of we into just we the when we're to Asia Some fact that ship by U.S. that are far don't impacted product product than

year. broad, We're now while of the throughout see a broad that we'll those that's build takes it improvement. And improvement place, to a but seeing in it swath that little the things that taking. get actions we're So see we'll of some all and

Andrew Obin

for out XXXX That answered a you. total of software looking the And actually Thank I'm you revenue XXXX. XX. you've if but sort minutes, makes lot of sense. apologize I and first brought it, so of couple missed I And Slide

whatever a quarter, what sense was see because also SaaS, forward? As want big to I fourth Thank what's And zeroing on strategy revenue you part going happening you. just - could to if the growth? there specifically, us growth metric the software that's the a highlight, think you or total in ARR, of give about how

James Lico

that was benefit in year, of the growth certainly software has so ServiceChannel. double-digits and Total in QX full low the

growth core in our the think mid-single-digit I fourth. revenue was

was So quarter single-digits. saw we fourth good. our think high really And really in I that the growth ARR what was good was

of good a growth ServiceChannel of double see you're be that targets the a saw benefit QX. referencing. certainly to slide and out strategies in gets and in we from XXXX both That number core our digit We'll think addition the that highlighted we Provation. I So the with playing

certainly first we're had we So seeing, what what year. a the impact takes think, the of ServiceChannel and on early saw seeing good good But we're - the some Feel in we I I to it full quarter. really said, businesses, about days the benefits. good core relative where It Provation. to SaaS side we're see as in revenue that but at both for we'll little also

Operator

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

Your line open. is

Nigel Coe

morning Thanks. And you its because good where - say I’ll is are. it morning,

products. How more the play the and out? want sellout into the to did to versus Tektronix. dig sell-in channel channel assuming just wants So that I'm Because Fluke

are curious, And would big where I'm the So distribution inventories any between just helpful. on disconnect color if now a there's channels? be right the sell-through,

James Lico

Yes, we said what third out relative thanks. I think at see maybe we when side. about have understand or distributors so we also - got we see we're the on building to big that we on also this the I hand going inventory And we make And we but in Nigel, backlog, substantial to look demand now, we've and sure their that think, relative versus I call, quarter about inventory think build. on about, think sales a given don't inventory order, good inventory that regard, true think to on

think seeing a and demand both Fluke Tech. I we're to by good environment the it relative availability. somewhat And impacted So is

we say, be if it's rates the at even delivery even So we is in - could high better delivering were typically hey, would we the that probably it XXs. on-time do, which

of think, front. sort partners' in our we're - said good to think of seeing some question the as general, So demand we're Julian's channel demand I in we're as on And comments. seeing external that I I starting well,

businesses global sales on good feel bit we we good have the in maybe a delivering sales in. where Where and saw we out better demand So we're environment saw little basis. about better a Asia, distribution we

and have with also will highlighted at level we which customers. both going the and Fluke we innovation got on feel the quarter, innovation, So the activity as accelerated remarks in We've lot Tek, of we a in think good in that's I think of a impact. XXXX have we nice confident really about prepared

Nigel Coe

rather than The inventory channel I probably really about is... of the is Yes. light, if buildup. think is really And question which it more depletion

James Lico

it Yes, was.

Nigel Coe

we acceleration, Accruent seems there - this do Accruent. to SaaS which revenue get follow-up will XQ. think was was on in when from you back that focused is Yes, And on. again down It My on to people Where what be question transition? are are growth?

James Lico

Yes.

I think did that number as quarter. numbers on one, We we called have it in out, and well. less I'm answered the sure days software the probably

low higher between two digits mid- digits. the to now, the basis we double That's have of Accruent think where of at we - see for Gordian, of about a said single at some we and in the little of full guides, as Gordian. less you bit impact probably to the businesses a But think little have moved on sort in combination that, year So when XXXX. We a Accruent right high we we've think, days. some we staff, we see relative would

in So the we growth ARR quarter. had fourth good

can little So doing, have of are logos very work like on we're we a if growth installed SaaS, the of base to more in some than headwind many the large bit we're combination because new relying converting we new transition a we'll logo still be a SaaS cases, that at were and maintenance Provation.

grew of in and opportunities. logo combination things in EMS prepared a the that invest about doing, an year. continuing those high-growth XX% which remarks, Accruent product new it's we're it at growth We example, our as but planning So workspace also talked line, just the – to in

starting time, story, not being XXXX a we'll takes at see That's growth a line. out play biggest XXXX So combination. over in that the our But it's Accruent. and and at rate, part product bigger of that to inevitably growth it over

Operator

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

is line open. Your

Deane Dray

I it supply didn’t million to maybe you might product Elena, that's Just through biorhythms any were. it readiness? chain, I catch-all more to throw but Jim's for call thank you morning to the related miss take everyone. for us really what customer a give Is line? but actual specifics, become either the slot. appreciate semiconductor-related resins, blockages Can revenue Much by happen all, $XX right upfront, concerned and Welcome reverting be. you, sized was in to appreciated, although the off,

James Lico

Yes.

do say given a the better Coast East excited you. fact on and add got years, the to time time been talk but listen. we've I've this that been first, easier first And all fine So for for – for change, about at XX Elena's great would and the that's a zone frame is sure, a we're we really of of part I that

chain. about think about million I $XX is one, we think number that would supply XX%

being a electives So of related, of our that kind December lower bit like piece think service some little getting and is challenge than just chunk on of of some remaining things site. and that a as that that of we being the probably of in had of businesses anticipated that COVID of

the a as how little lines. really bit. a to pretty So of are a about of the some I is majority are I technologies down application supply to - countermeasure it's what described and bit EMC. is described and is on much things portion and much would Tek, our it before, little the work do, that question, Fluke XX% very of that doing And is at components Those around that chain, Fluke that. do product Andrew's dedicated electronic we let's we ICs. The in big really break And I that of specific the say, and Tektronix

government part of shortfalls specific go have pretty so to end on So that say validate in - customer have people we EMC the you some get I supplier to of is the that thing detail into at well specific before it's But won't in side, on also bit and contracts other - that some more might that as as the seen saw saw EMC, just activity commercial on another has military come did. COVID. customers already and is side the - we year, given a shipped. little challenges it the since have products they this I And what less at where of government we would to

at supply the it. bucket, Fluke of issues biggest we highest chain the really and swath described But the bar a Tek. is that's So

Deane Dray

would And translated semiconductor be the with into backlog. capacity the helpful. also you demand record out to backlog. think have Can differentiate there'd higher how Tektronix But that able much might you but related, also then you follow-up the a all parse That's that is between question on, just of two? on really chain coming some are supply that there

James Lico

prices. been ahead little a would bit, I almost customer or Maybe Yes. would because driven is of – raising an of say say we've that amount no inventory Deane, buy I kind standpoint. backlog from

able I do weeks in price So in customers to to increase. of I'd we ability little for of bit a there's terms say, call would of backlog limit what the be But that supply.

innovation demand some we more semiconductor lot. book-to-bill prepared good we've we're a of about. products the the designate not side. also in customer and products. so some power strategies in It's categories, the some really those on strong. the growth the certainly seeing we We're side. seeing remarks, the the series, great on is mentioned Keithley. our was there's markets, interest – it that industrial some of new broadly some seeing Hence, on was but Series. at new of But different So of the it, really It in talked maybe two probe for We're We're seeing X

also some going So of strong as I is you XXXX just we be as this, demand frankly, to as – certainly those in provided. really I with much can think what XXXX. well, signs quite the on in for you get color early we described Tek cycle dynamics, and the think given And strong

Operator

question next with Your Davis Melius Research. line comes the of from Scott

Your line open. is

Scott Davis

– it? of picture you your today not. you installed Are here, Has picture, bought one at – Jim? bigger bigger that ASP, boxes higher is are down. couple than total I suppose. kind base units your consumables today just all, base I got grown of is than of when But but a things higher

James Lico

we we've compounded base said, had Yes. the think, We last in installed over several years. – said growth single-digit I low

sterilization capital I the think actually – terminal is cap in digit mid-single up year.

growth since additional boxes So bought installed is in base seen ASP, we your we've in terminology. which

Scott Davis

PacSci half first is that's Is then when that year? Did something clarification. the you And clear a in out? say that to backlog also Okay. going of that

James Lico

it PacSci or see sorry, frankly, We completing year. – Scott. side, quite We at don't backlog don't the at Deane this all anticipate

at backlog strong really really, a have Pacific now. Scientific right We

Scott Davis

what just lean that Okay. portfolio I recall quickly, And don't is then term hearing last, before. management?

James Lico

years, historically, bit a how to terms it focused really tool. sort development. one in accelerated thing as a businesses. really – things that from of a portfolio maybe accelerates tool to really really better being we've And early-stage over set next more tools is been it's manages it we innovation product do. and It's the the every generation innovation and of on slight opposed product It's to the of It's in a Yes. maybe – It's we're of our hardware. maybe new deploying of new both development, software an the applies little look at that

new generation it but incremental around managing brings full on in base the secular growth drive the bringing concepts next drivers. things focused things, things think on some I we've also do of not new really only to new got that some

So from built on over investments those core and see time, growth accelerated we as our see returns investment, should should we better well. R&D

Operator

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

open. line is Your

Jeff Sprague

everybody. day Good

loose here, ends lot covered of Just a few already. a ground

the Just on the that year? XXXX And embedded in X% isn't or price, number, - QX you was guide? your guided can us is tell price much how

Charles McLaughlin

guide QX for our we're normally for in is in a year. was thinking, overall XXXX. get in what QX, That's we a normal as X% embedded twice what's what That would And the about X% Yes. XXXX.

Jeff Sprague

to on recent it tax, in here future rate's process And in low level? expect the move tax higher we the increase? the driving to higher in years? And of been we side some actually the normalizing certainly are should past. The What's on

Charles McLaughlin

around Well, Danaher some to We came predict. came are down don't is that bigger from thinking we What us, into really it forward. hard the for drives year XXXX split that even that's the any pretty going items the as I see the usually good. think XX% right think transactions, in and of discrete those with I baseline through some of

revert tax back don't we is rate what we a to minimum tax in anything a What rate are countries do going international up U.S. about up. that's here normal, there's have in tax But the some changes. and or we is that global reform XX%. we - So have going

actually guidance. rate we end a versus XXXX, - in embedded So our and is headwind XX%. that's probably in The up $X.XX with

Jeff Sprague

on whatever, the the of credit a points coming extended if or renewed, Is that couple tax rate. gets down we're R&D basis tax likely right? hundred much So

Charles McLaughlin

No.

changing. internationally renewed, anticipate really what's tax going we that's to get It's think on I so not – in rates. that about the

Jeff Sprague

to at Is one revenue Accruent? as on mutual sorry, any Accruent. know, two? just of we're I'm quick back any going in, don't where that pressure Is dissynergy one comes I one. part isn't any, the disruption seeing Just there. equaling plus ServiceChannel or maybe just customers Jim, there color

James Lico

quarter. Not in the

I of value the I embedded visibility we the be sense between from line in of and propositions those have things that a may see I workspace we're growth no are there time And this say point is particularly, forth resides we though customers, businesses. I could dramatic That's think think an Jeff. strategy. a drivers, We good that's at what the nothing what's right independent of really those some better we're seeing some into great in is selling seeing particularly some like think getting but about management, place. moving really And - with each at anticipated - anticipated, product value we're And over very I mean, nothing conflict size. There's back now. like whatsoever. strategy of situations challenge and would Accruent.

with in the to better a we do we I customers. help value of to And do going what position at combination those in is the great. with and they some Gordian Accruent have the So levers for opportunity Accruent that broader the I continue us and think overlap proposition think to we've of only pull business. some ServiceChannel around And things obviously, is got really good build

Operator

comes Your question from Citigroup. of next with Andy the line Kaplowitz

is Your line open.

Andy Kaplowitz

what's the you but than headwinds a just as be like as your it Europe up going your regions bit outlook for sales to more the some of little geographies on two trends for on been in terms gave other Can well you And supply worse why in chain you you peers XXXX? you. - talk to seems so worse about for holding Chuck, can was in And elaborate Europe. to in key significantly your regions, color in some QX? seems have of then China for curious

JamesLico

Yes.

in in really a that I'll Invetech - one, really take quarter the growth Invetech. on really Europe think have do and in we Last Europe. was dramatic had year, customer the a comp I it. issue fourth Number side,

good Chuck situation review other are market markets the it So high-growth doing in And as Europe around continue we've We're work the quite of we a around we kind continued I think see, in think and strong world We Andy. that as year. China, did that really a anticipate going very really in year. all businesses comp very of When - high-growth bit growth China what growth China had We firing the had, would quarter. the for very strong world, the so good all as little markets that relates be said, day. the the typically all in a growth and growth of just high-growth to we globe to frankly, our with China the we you about hitting relative we're cylinders we're on to - good. had

plays that say would I So out.

Asia base supply of time in many some and of get little quarter. the logistics as that slowed into of components think, a in some the We chain we a headwind uncongested because Western Europe into lanes little businesses Europe see cases, But simply out outside than more to the Asia a have bit - these simply hardware of comment, U.S. is of software U.S. freight time. and That our supply little factories, our is bit getting in over the our a in of fourth over in This comment Asia the have both most do and obviously. improves, because I was for a impact, electronics.

a outside you I had of would that obviously, broad America improve. really also of mostly that with the North also United have in say strong America, the in impact States little gives was that So ASP and see A North to swath. ASP. fact impact that elective do bit we'll elective

would globally, in all we I relative those, developed really some bringing and activities I more U.S. probably particularly that And than in as and that chain, what mentioned to relative predominantly So of we're in here. the chain Europe, Europe anywhere supply engaged back, and else. they'll the forward improvements us supply to impact improving as call go U.S. markets the our obviously help that

Andy Kaplowitz

then you're to conversion And mentioned bit working for you Chuck, a in I counter normal capital in And improvement think I XXX% Jim. think that XXXX. seasonal for for of guiding Thanks QX. little relatively Fortive,

not confidence through us your normalize peaking is give credit then that of basically could generation start extended. you the you if So talk now the and go could maybe as excess tax year. you to the about R&D And is impact will inventory maybe cash

Charles McLaughlin

surprising tax back but that probably I'd you it's That guess not have put if R&D on be time credit to until come to I - the every it's renewed, on extended. potentially we'd there. would

a there timing But that way. we about So add inventory will I'll the let are won't payments more rolls in either quarter here We're normally, that I primarily half. out that seeing talking of some expect what will QX, our there. or with working through but think From X% start ahead and that ratio things and It our on - a bit or and year follow-up come number little XX% expect related conversion. second we're turns we'll to the to puts the improvement There that for X% sales happen QX always chain about conversion off has the probably There's talked last is the And here until as on going go years. takes the as what COVID, go tax into me call, in supply out, over we you. XX% that capital, our improve. come it can of get That get start also second accelerates couple that with we'd in probably in in in it we of can that down. XXX% receivables first things half. will

Elena Rosman

we're up can our two if short know final on I Josh. question, coming we the so So minutes hour, take

Operator

Thank you.

from the line Walsh with Your Suisse. question John of last Credit comes

is line Your open.

John Walsh

multiples the public of maybe two couple your like Or a think in talk pipeline. multiples of terms about kind free I here? I something you does the in look of of in cleanups. breaking seeing don't some Maybe what that like the One, heard Are private resetting markets? just seeing you're we're

James Lico

to funnel always market. see John. pretty We of what The go all Yes, lag and remain quarters the the here that's that. that, of say like We busy. through would the couple very I market public tends good true. say from private denial in cycles a and is things you They

look then disciplined as we a into that account as last So to little that what ServiceChannel be look while for look at, we it really and we've things, that year. about two we'll say to we good with the continue occur. at we end done we at Provation feel we of I few closing things takes I about as the deals suspect would the and And take months knowing the potentially over will at -

really So great take and to We've lots those to businesses. two do to businesses great help - We've with those opportunity businesses continue businesses. bought they're got great there.

But these it of remain I they the themselves market. watch we see will making couple think Fortive. and a valuations a on start quarters those spending great private we'll transactions. do we're before become to in private disciplined they start time So hit And sure be in - get

John Walsh

just the follow-on to on components supply least healthier actually Great. through And needs How year? chain to suppliers we year? go need the maybe commitments that of Do kind from already your sales ramp much this the get to paper, through versus have supply that question. how microcontroller then of you you, a you as at chain have access much those

James Lico

going I of - a Well, of as things on. said, lots bit think I a it's there's

down have often then on those. have - and fall from we suppliers they very We letters

those a we requalifying relative put of we've own lock backlog redesigning, things we're with guide it So of a more anticipate stand things. got. the commitments. our strong we little go as and what every confidence to people, have, in And on of But level is make I to the we've with forward here what of the where going is kinds combat happens day on hand-to-hand bit they

challenges industry because the just the more challenges electronic component it's semiconductor capacity semiconductor. the documented not well that some been it's exist just of and and the think within broadly, I industry

So continue to prevail. we'll

gets certainly, look that countermeasures to about of Thanks, when the things actions the probability But get belief is think see average as we've maybe benefit a that higher actions continue continues as to on really Elena? improve have it our better. been the we you And we a at it John. I we work. we think dramatically through batting we actions, year. really those What these through taking, it the as of expect taking getting year. don't better, place

Elena Rosman

that have final our Jim, you Yes, concludes do any call. comments?

James Lico

Yes.

frame. time. the an season. of the in appreciate I thanks, Obviously, with for know you. busy well time a time Hopefully, us. we're energy time for We calls. into some works spending you day you're So and busy everyone, available works incredibly the time this put your this for time process for better that And follow-up and

in demonstrate. you think continue playing I And over for software, that of 'XX, of we and X.X% of of that walk hopefully, the lot fourth playing we our a years. core our as the we've a the we out year, great health growth in flow back the a the out terms actions what a care, businesses, quite a come put on basis, of and there quarter. were that think couple particularly to Tek And we two-year strategy we're strong a frankly, of described. number into lot strategy of Fluke at things over see We you free our had in expansion the taking year, take and I advantage in got sense innovation the hardware a to I lot the of challenges of within some certainly, to cash Sensing. margin had

take a challenges. the is in. with without next year. we're fortunate the Thanks, we in to chance the of think you, we We its months. in incredibly forward We here move and we're as are So follow-up be few advantage a certainly world see we'll and have look in sometime the The position day. not well to conversations person to positioned and hopefully, continued to those get through great

Operator

This for you participation. your Thank concludes call. conference today's

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