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Fortive (FTV)

Participants
Elena Rosman Vice President-Investor Relations
Jim Lico President and Chief Executive Officer
Chuck McLaughlin Senior Vice President and Chief Financial Officer
Steve Tusa JPMorgan
Julian Mitchell Barclays
Andrew Obin Bank of America
Nigel Coe Wolfe Research
Deane Dray RBC
Scott Davis Melius Research
Jeff Sprague Vertical Research
Andy Kaplowitz Citigroup
Josh Pokrzywinski Morgan Stanley
John Walsh Credit Suisse
Call transcript
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Operator

My name is Emma, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to the Fortive Corporation’s First Quarter 2022 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] I would now like to turn the call over to Ms. of President Vice Rosman, Investor Relations. Elena Ms. may you begin your conference. Rosman,

Elena Rosman

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

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

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

Jim Lico

better begin have challenging than I’m with on and Thanks, Elena. come X. I’ll continued an navigate Hello our everyone, to flow. the earnings deliver revenues, environment outstanding Slide us. you and proud cash joining together of thank expected extremely and for quarter how teams

our focus each both saw while businesses, approximately growth reflecting supply driven we to obstacles. these driving workflow facing revenue other quarter. shareholders, Through grew for continue leading the software-enabled the SaaS we the continued orders mid-teens deliver across streams. purpose with of our to customers, connected of executing XX% rigorous system, solutions. culture in backlog. our businesses across our on And Our challenges our business million grew insurance application of in for businesses, demand supported Hardware adding growth and and improvement unpredictable Despite our $XXX orders double-digit license several record of relentless visibility greater strong code and

Our cash year gross basis higher teams growth and in to foundation and across the also strong worked our overcome growth quarter. in which respectively, year inflation, EPS sets reinforces our XXXX flow in of confidence our hard in three expansion, a margin points a basis XX% resulted for momentum ahead XX% all free the of operating Overall, and the XX XX first and quarter segments the outlook. full points

wanted provide remainder a we to left XXXX. on an the Turning the strong the XX% and orders geographies to and Slide Starting to backlog leverage I over hardware what favorable share in secular update seeing, environment, in expect an growth what yielding are increase all the in current we was driven by X. spanning end gains markets accelerated in quarter. innovation, drivers continued on of

us continuity is more supply [ph] of Obeyas conversion in product by and driven than planned. allowing to Our improving, initially management daily QX ship

million Tianjin impacted restarting, shipments intermittent job primarily we to Tektronix. did March lockdowns at approximately of in face bottleneck Shanghai With supply mandated the the chains. sub great quarter, end Our in the government starting region, China the operations at a teams in across COVID lockdown in by mitigating $XX expect January.

revamp to be relentless and will teams quickly. our work However,

year of tailwind margin which demand and with again us we performance, pricing another flow and side strong growth. record gives right slide, earnings the Combined hand strong a Moving for core sustained expect of of double-digit normal we and seasonality, continued expect to the growth in by operational backlog, growth the driven XXXX. cash expansion in customer

Chuck the our low updating start raising outlook cover reflect to end we the the in to strong are year. shortly, for year, the As will of detail more our guidance

next underpins to our to strategy our we approximately capacity first back our thesis, software investment estimate full pipeline $XX $X of X our buy took each hardware three we ability more in approximately businesses, shares cash, our totaling the accelerate of M&A to to and million our million. over M&A and reinvest and across Lastly, billion us the with quarter, segments opportunity remains and allows The returns In the convert years. earnings enhance shareholders. to opportunities

X. to Moving Slide

impact like product facilities workflow across and connected facilitate transformation fields Our management, healthcare. workplace development, safety, solutions high leading

more healthcare powerful. to across challenging serve and strategies quality provide in technicians to safely ranging efficiently. product from facilities We better Our professionals these and more environments and engineers, who analytics empower sensors, developers technologies work Fortive higher software, segments customers data where jobs real incredibly all their to instrumentation, and superior do time managers is them

X.X%. This North XX% growth in growth and quarter. mid-teens assurance, all the with benefit approximately margins. orders, to see, decline environmental with than single-digit and America, well in in profitability planning Europe, more facility of favorable secular health business customer to vision beginning Operating Solutions Intelligent growth revenue segments offsetting some IOS revenue of models included strategy As contributed I’ll a industry-leading start low a for with terrific underpin Total Slide stronger a is durable solutions uptime demand of had and in XX% on from was core flow provide three Western growth cash core segment And collection and year, you now the free and as businesses strong to growth X. each double-digit maintenance, details on safety each high positioned build that China. and can and our up tailwinds the to

of the better supply to countermeasures in and the FBS growth are mitigating effects making COVID Our improve lockdowns the driving assurance core quarter. of progress,

more the the incurred also And from our additional to price further ship enabled benefit which and year. of product, logistics expenses. counter We quarter while elevated the we perform remainder solid costs see second measures continue realization, expect freight we us to to and

dollar positive core the IOS were acquisition. ServiceChannel a the result impact adjusted basis. flat operating down dilutive operating of to a cost year-over-year, basis despite As margins due margins XXX price were points on XX.X% being

As IOS margins ServiceChannel’s ramping in are reminder, on and are over stack margins expectations core basis XXX points up a with nicely line two-year basis. a

out a Industrial where the Some and other of core solid include, double-digit bookings with lifecycle and continues and in growth record record mid Accruent highlights generated point strong Fluke of grew revenue by of on where make half. in quarter asset of saw progress is quarter Gordian digit its sales track the the point growth particularly diversifying second mid-teens. supported to sale, businesses sales Scientific strong in of start facilities U.S. for for acceleration the management outside with with pace. XX a the customers and is single in solutions of the and to customers gas. booked data their new oil win the Army with grow at SaaS double-digit large of to likewise, of nine continue we grow continuing also Intelex QX facilities Further strong largest a record And U.S. a healthy bookings maintenance strong Engineers. demand it deals seeing quarter growth ServiceChannel in had secured work. revenue outsource as Corps and had double-digit

defense, order Technologies. at markets, grew single-digit PT related record aerospace driving of Slide automotive by demand, major Turning Western X.X% North end We end semiconductors. growth Europe by in in in with growth now customer America of was in the set revenues Precision vehicles of lockdowns HVAC, double-digit offset revenue X double-digit low saw and quarter. and including core and across COVID a geographies growth to X.X%. decline High electric Shanghai broad partially the and and driven a China,

points, PT a $XX of million their impacted the expansion, XXX The operates investments which of That reflecting shutdown margin basis said to Shanghai, was quarter. expanded of which approximately a performance As margins over in offset reminder facility basis PT major revenues gross development. Tektronix in last impact points growth, partially the continued week also operating points in March. manufacturing or new basis XX margin product by XX

key at product of Some highlights include plan. first solid of which margin Tektronix, above new inflation. the solidly of strong quarter tracking the is series over refresh operating the had the five low-double-digit it including of Sensing ahead quarter, also and order well saw across gains the staying top-line XXX points successful share basis growth, in launches, expansion in incredibly a growth reflecting driving markets quarter

probation China the in a by America to North in Slide and to of hospitals initiatives, in largely in FBS the Advanced AHS the of decline Revenue ASP, accretive in core acquisition in with offset offset highlights a low-single-digit now decline high-single-digit margins a and first expansion continues America the ASCs. expected. in With Invetech. core Solutions. driving ASP X.X%. operating at for Mid-single-digit in expectations the quarter. include margin superior from X.X% the due growth by workflow were revenue North Moving Europe increased in to clinically multi-year procedures elective first digitization on quarter X benefit and roughly restrictions productivity profit recovery as well benefited healthcare. in growth quarter is From AHS Healthcare was positioned accelerate impact lower in partially COVID with of line volumes Western well in and solutions, as enabled AHS as custom innovation

Execution including for Censis wins in several one year. we in how for to differentiator its an example the average for solution. anesthesia XX% track hospital the challenging environment network to important secured probation XX% approximately of As offering orders in FBS improve We eye uncertain of continues And at pre-COVID continue an competitive is four in orders quarter, an approximate electives first and subscription the procedures an doubling otherwise the significant be a reminder, to win GI growth XX levels in Fortive. SaaS large Censis expect saw quarter. of

our Slide deliver supply FBS drive and growth profitable portfolio our businesses to commitments in use execution unit As our driven the growth acceleration include, Accruent reduction the consumable allowing [Technical in Value tools, chain in price offsetting skills improvement of solving visual Tektronix them Examples capital driving renewals, product and XX% in growth X, leakage Fluke capabilities innovation in more leaders customers procurement examples output in China. pricing on improvement expansion incremental at at progress chain Gordian our our and an realization build quarters. on pricing time shown drove of in across at at launches Difficulty] problem for several than including broad coming management, in margin uplift of management resilience, in software revenue the probation. from And of at enabled working portfolio Daily The to lean lower Fortive and to first the quarter. improved and the from new a to cost an businesses, in Sensing effectively the an opportunities volumes at enhance outperform and strong risk on terms realization quarter. Substantial management ASP Tech. reduction daily at at customer improvement driving several supply through quarter. and

me before, of done, XX. Slide heard progress towards I’m continuing can you As incredibly you sustainable say as we’ve the proud future as our building see a more work

and enhance of sustainable to TCFD-aligned statement Compact in for data disclosure new and disclosure X Scope and framework plans transparency, progress on Adding commitment the initial since our to a to will aspirational in XXXX, our XXXX, invested we UN first climate Scope our find in fifth performance provide GRI climate reporting sustainability June, status investors our levels Global Fortive’s emissions commitments submissions significant and disclosure and CDP energy, XXXX. establish to started targets first consistency program in made related offer we create have our of that actionable our the reporting timeline the trying to biggest completing to reflects and to market our solve our we When and talent also purpose our change the customers driven adherence sustainability standard subsequently climate It and sustainability will services we day early to evolution including pushes one. SASB disclosure. of for world’s and and of products report, X publish XXXX. and In based change challenges. developed progressing reflecting time, and shared some This us program. is CDP innovative

solutions leading sustainability and Intelex software example, For XXX companies across for multiple managers serves leading EHS industries. Fortune

color over on renewable to Includes GHG driving with our to fact, second year with customers. solutions continue health Who’ll more forward range EHS manage Chuck. In that are Consistent application we and and XXXX and it progress for the our our sustainability incremental the in protocol. With come. that our provide advance well provide emissions energy outlook. sustainability, continuous in accounting as years and improvements greenhouse improvement of our accordance we and safety of our to pass in teams financials and drive to of culture, first diverse I’ll look as the installations Intelex products workplace quarter full gas optimization use quarter

Chuck McLaughlin

XX core growth. growth net Jim, everyone. of recap performance. first hello begin quick I We will as growth revenue Thanks quarter total our X.X% points of with year-over-year, with contributing generated and of total on were expected Slide FX to X.X%. Acquisitions, of four a

despite right I said the some earlier, segment had ASP solutions and more digit, year-over-year additional and related driven offset in in at revenues high a the grew lower than of Partially capital and compare covered growth advanced revenue to Invetech, North we America healthcare as services. that the highlights ASP. to side up by Turning the Western Europe provide slide. the region. software COVID-related growth color teens single delays mid-single-digit good in volumes wanted on regions. consumable at was difficult offsetting including low installed declines Jim by at

Asia, low-double-digit China. growth have We in of outside

the While for quarter, gross the by performance backlog quarter. outlook driven the points were of basis to the double-digit earnings price on more with year. growth Adjusted impact XXX share over a teens operating while XX.X% in remainder low basis XX% the yielding operating China two of of growth to We XX, Slide basis core in thus order points for first high show the declined our XXX continued line offsetting lockdowns. first our XX in to with Adjusted that than increasing guidance. we XX reinforcing margins China revenues and margin inflation, highlights by operating On build revenue increased increased stack. we XX% the expansion year for points points in realized of year-over-year, teens margins Note, basis adjusted quarter $X.XX. COVID-related per

an million in conversion fourth While cash performance flow represented representing net flow adjusted generation we quarter. receivables timing of $XXX improvement of of the saw normal in the a of free the first normalization than included cash free collections stronger the a in income strong, The trends quarter.

now Turning quarter. the with starting XX Slide and second guidance to the

COVID-related to cash we low a the Adjusted mid $XX are profit subside revenue million margins expected expect of from which to government core approximately in which be headwind to in operating single-digit growth, includes expect mid-May. shutdowns We Shanghai, up to Adjusted year-over-year. the earnings quarter XX% per XXX%. is a points $X.XX tax expected to of adjusted basis income XX share $X.XX in of increase net to assumes least a conversion at free flow rate approximately and

guidance we XXXX, revenue raising of the year full the are to For low end reflect $XX million start year. by strong the our our to

to to up a year. profit year conversion margins basis the XXX% the free points. EPS to for to up cash in the $X.X range Adjusted is of full continue adjusted a over full expect operating approximately $X.XX and XXX be XX% XX% We of now for flow

approximately a to robust second expecting done are up in favorable we to we’ve represents of and half, portfolio. supported price by split million higher and half across which $XXX XX, half half, position Slide step to second a XX-XX revenue to the mitigate constraints first to our addition includes volumes FX, work supply backlog a revenue chain and of Moving first of

volume contributing pass to are We back also shifting the build of remarks. the flow revenue With closing expected on demand a to in taken China attractive lost recover summary to recurring company margin half second the more lockdowns to it Incremental a through result as performance expect the with in mandated that, for high half. Jim to margins in at of In second I’ll sequential mitigating volumes of a profile, the a government half. the to levels, we first more, continues portfolio some durable the to second actions the slowing benefits half. our risk show revenue growth have strong

Jim Lico

now start XX. Slide I’ll up Chuck. Thanks, on wrap to

the outperforming Over today most articulated and well strategy the of of how build portfolio last years, a even business times. less Fortive of we resilient, a is capable have The cyclical that executed of playbook. portfolio reflection six difficult we’ve more to a

as which have through approximately in the from core low-double-digits doubled expected versus XXXX. revenue XXXX, of this of in spin-off we’ve $X.X to acquisitions doing cycle is the Fortive company added And year. to the of Danaher time so, of billion Our the grow growth

enhance We competitive revenue approximately doubled to of have revenue solutions, a advantage. total also our which continues XX% of recurring built of more our term as than is a $X and portfolio enabled approaching workflow percentage to and revenue billion long software

businesses basis we gross short today and more profitable to since margin is in added In have driven higher there’s cash Fortive growth. have flow. Fortive that contributor than XXXX expansion to shows than the been In nowhere of XXXX. delivering free our more addition, that more the an points this up have And of we important

strong XX discipline Slide our on nearly and faster investment XXXX cash growth to doubled start. that us capital revenue XXXX, and deployment. be is since Lastly flow, to earnings compound a free which of than to great accelerate off is continues through allowing and returns thesis, compounding a hallmark

outperformance the focus profitability are? who of and will how expect We set on sustained amongst deliver and leveraging growth execution the part power track we of on peers. our with multi-year year our industry FBS, the And double-digit cash do? always on last do? in As targets another differentiated What to reinforces be earnings we free a year of QX growth growth which we and

strategic time best-in-class for we Fortive that, As With our long-term advantages I’ll it a long to companies, for do sustainable operating the Elena. turn for result, back the come. yield segments work to returns we’re create competitive confident, to we

Elena Rosman

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

Operator

[Operator Instructions] you. Thank

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

open line now Your is

Steve Tusa

afternoon over is or here. of it morning It’s Yes. whatever here. over – kind good Hey,

to kind are of your exposed and but there ground look outside Not are the businesses economy? what dynamic, you China, like of is backlog kind necessarily shutdowns in there? most the, that seeing So just over the the the kind what are of like what you shutdown pace seeing and of order level within

Jim Lico

Yes, Steve its Jim.

activities. we in a sale business that still of were cities beginning see didn’t quarter. Point good think the various relative was to the orders a of commercial First quarter, I impact double-digit And think of the at the all, commercially, the started quarter. had up shutdowns really despite in the of throughout good very our it we lot a quarter

So as home, when pivoted that work had we did folks a like an so to commercial XXXX, we’ve easy from was have in example, process. perspective, from we an that

the was well. real and fact described just just factory, activity, really So was the of factory, industrial to the really impact in we down to really a manufacturing were commercial in a the providers that, Shanghai not as our the really facility shut as logistics relative remarks scientific Tek shut issue prepared commercial function well were and as factory that our down and that our

Steve Tusa

guys, And talk into the of what there’s think around you would if I if be lot I obviously guess what you what recession think of you mean earnings? any, have Right. out you went a for there. can we kind do, would concern algorithm kind your analysis guys around I defend core recession, would how global mild a about, maybe of you done

in leverage what You some pull talk to any the kind you of in reason. kind guys inherent the of industrial cyclicality get you bucketed that’s could about business. cycle Maybe mitigate camp short this would for

Jim Lico

weather the an we an I we without think shape of the sort slowdown, our storm guide. than one, saw just this as XXXX, short would number in the we with in position, would well of we in into run, very that issue. businesses anticipate good backlog We give saw Yes, in more backlog some kind if a example, would the be dip that backlog

an So going of in you sense, the we’ve more that as got insurance broadly, second into much more policy half remember.

in our QX even we gross flow, can we cash outstanding it, our, with XXXX, think the see flex protected well. free in more like pretty well extremely gross number, we dramatic, of And we medium expenses something term, margin had which demonstrated we had a then high XXXX. when I obviously we in margins did

like to those recurring think think, be we’ve sure we’d are in or we’d the shape XX% a in then in the be the of recession it’s we’ll a handle bit don’t I we’re I I healthcare the form, resilient And lean six years here, of way, certainly So the to And the levers. of some And more revenue business, on built like which, more so just of the relative I’m thing be, last going impacted. not model or COVID. that going things to far healthcare able happen. little economically portfolio last but with side the It’s anticipation be five our we’ve think in the business talk because resurgence I that really really all described. going want that. And think be for any to about, something to inevitably be to a might which situation we would

Steve Tusa

Right. Great. lot. Thanks a

Jim Lico

Thanks, Steve.

Operator

Barclays. question comes of Mitchell with from next line Your Julian the

now is line Your open.

Julian Mitchell

good into just drill adjusted margin. Hey trying Hi, question, the afternoon. operating to first the maybe

So or guess revenues getting sequentially, were pickup in you QX, dip had with sequentially in a at flat-ish big assuming looking year-on-year. sequentially even headwind a the it you worse China QX, I looking margin

that even year-on-year acceleration for looking Again, than headwind. QX. with QX in a China bigger You’re

So on came you in line for I maybe particularly with confidence guide the margins, QX. of the, help me initial think as understand only the sort

Chuck McLaughlin

but flat the a really sorry, probation, Julian didn’t channel brought there so look couple I revenues things service have first, same at when of was, mean Yes, that but QX, you QX. QX on if from to were QX into to we mix, well, that I’m

things basis XX through prior and through incremental those over we more like I get little the things in, are QX. probably increase coming consumables. in go not around year, revenue And through XX% and bit really year the margins year become even there’s and as as come through service think the more also will and the move incrementals XX% then and volume showing that having a QXs probably we that on see the margins come we it plus points margins up step but channel merits up

towards to pretty, points. consumables these QX on, XX feel half; And profit operating that feel we very more where have environment, in is up XX% start that, that expansion. we said build all to good for margin the Having expect We margins things a in tough second about went given the the everything line basis year.

Julian Mitchell

you. sort wanted then you’re orders to current about quarter. And in discuss Thank of just, thinking how your the

XX hardware I think out called you orders in or up XX% there. even QX overall Jim, at including strength China in

wondered intake for So, in you’re the resilience thinking whether the and how anything about seen quarter, in that current terms demand of order yet. European you’ve example, change of

Jim Lico

the What’s and pretty out. orders, were things the continued think in so obviously close interesting, as would to say improvement look our good. growth like were with or to or the Julian was and in POS we is around POS order I U.S. like sales European that I orders stick I look order as fact I’ll orders when world that line or at those we Tek Fluke an example, numbers question

this advanced year basis on little progression we The are half, like So, saw about of that. in think the at But things remains at look a blue ahead strength increase. buying for the as some very price a think of I and second we stack bit point. two of that pattern at you the there, I numbers of good the order simply of because slow durability the simply a feel real

inherent said, we And there’s that’s million built, in you of think our a XXX that I but know, all guide. bit in backlog. as So we little we

what good. really So at I you is the durability is think look

the are in second of order that Some the We was half. ordering saw orders real strength customers the for large is the sensing put second half. for some advanced

sense bit typically we what good of of demand little within be looking think at the ordering anything time have elevation, alarmed, of are we that really that channel good be in would not things certainly inventories what’s of we’re a against they And real what’s pretty but at. advanced that demand. number a I base So, and we shape,

balance, So, things suggest the I down look like might for slow out or certainly think at we’re in hardware when we of anything businesses, signs looking that that. to

that far situations I our of deliver sort to the we’re and see about that yet we’ve on in good think backlog thus ability feel that. to

So just in as said, rate in dip the the is would I not planning go were into do current order the the half, guide were rate an to like we’re then order which to the go Steve’s second example, down on much backlog, question, if to if we down of.

Julian Mitchell

Great. Thank you.

Jim Lico

you. Thank

Operator

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

Your line is now open.

Andrew Obin

morning. Yes. Hi. Good

Jim Lico

Hi Andrew.

Andrew Obin

the the hardware, and Hey volume, from embedding could this, steps to in Slide is allowing that a that actually you to more looking supply measures more shipping higher more to enables seem to just to be looking little at just the just taking, you throughput as is tangible about clearing can the in dig this, sort progress the at system. Thank out of talk you. XX, just some you QX you QX, on achieve or what chain share counter volume that finally are of you maybe get bit but just you

Jim Lico

Yes.

Andrew. So thanks,

number is, of getting of a the constraints one some examples the I’ve countermeasures. impact few to the what the would we XXXX, our never quarter really supply much and away anticipated saw will here. what see that the with the obviously months, be think anticipated continue relative quarter issues is we’ve a what I number in we to think go and we saw I were after of in of said quarters chain for chain some what described, last nice And things to the nine pretty for supply just we in consistent what

as Tektronix, line at for outstanding, of quarter, the top would’ve as more been the which line their with saw Tech one the at bottom that example Sensing in was it in if example, another growth shutdown so, week. hadn’t good Shanghai And that. in And quite that on you frankly, we rate, certainly performance the Fluke of both last seen and

So a number quarter those of relative in examples challenges. to the of progress

year So challenges, countermeasure of progresses. to of power but as will FBS see the to challenges lack just the not continue from those that a

the normal of mentioned, what out things provide kind go that second seasonality. more in half, that some the little you a in tend that’ll, is As things of just of half. some We just normal, volume the bit second see to

is that quarter. of U.S. Some government the buying in third

Some of stuff. it is year-end

continue better, then of our consumables elective improve some get to inherent We’ll in I we’re described, to continue see that So in ACV better. we’ll and which part software And I see the some businesses. to Fluke of and sequentially at procedures XXXX. its improvement get the growth we And as Tech going through remaining into year first the Sensing in continued quarter. see at think we’ll Tech, demonstrated demonstrate the

Andrew Obin

our then and just it’s and has but follow conjecture, most conjecture a again up situation. in we that the advanced the supply Tek chips chain a would’ve thought toughest probably part, but question perhaps And once

So, shifted confidence up what volume the the able million to a lot. that on catch was second half. gives into you’ll Thanks of first out XX be you the of half

Jim Lico

Yes, sure.

I think supply number for we of think you’re large had, components. shipped the million, that chain, but right. into with the performance key And scale if got week partnerships shutdown manufacturers is some we’re A we like unanticipated quarter, number $XX who of rate of number you’re just progress facility last a Tek. a reality for in quarter, We’ve a supply of but semiconductor of China I making, had volume hadn’t represents sophisticated that, good roughly if tax growth sure. good that manufacturing a the an look the at one we in is never you say to if the

third to that things occur some quarter. the are redesigning in We’re and second going

and we’ve So, the look confidence in think in that I those, progress are place, that progress going tangible far, made in the forward. that actions we the thus at

doing This not is is those really would and literally that a the few out conversion and we the of was weeks down guess is are operating than sense where and comes [ph] talked that it team that a know, more year. of the pressure is through us level. And ago, and as of factories, confidence some seeing the literally month. like confidence I in degree any comes really Beaverton Chuck kind every the we and I actions management of walk daily obeyas what actions, now. that’s through So that we really, part we a from. This were progress under what this with about obeyas theoretical the do you of and walking testing the FBS. and those And visual into a at Tek higher and review or team’s having the

Andrew Obin

Thanks much. Fabulous. so

Jim Lico

Andrew. Thanks,

Operator

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

now line Your is open.

Nigel Coe

Thanks. well slides. morning. as format easier love way, Yes. how – new much How much the more of Good a I It’s read, to by formative. the things the

quarter double performance, Gordian mid and in this in first I Accruent the to I I growth think about sure mid-single-digits thinking teens some I is and digits, the heard which there, just of Accruent maybe want XQ make So think grew way time.

that look number back about transition growth so that’s that to from detail got into maybe a And one, growth XQ. you Accruent, and talk Gordian and just mid-single-digit then the from XQ Accruent

Just wondering what you see there. in Thanks.

Jim Lico

businesses. both good had a – Yes, we of first have I quarters all, in think we a

the see I think we to in about, with we’re, the quarter we happening the call mentioned were that we Accruent. and of countermeasures fourth some actions starting were traction in

a we to really is we team our think from just seen, see call. continue in those things. what progress. great him consistent really, I I with and job last It’s Olumide in we doing think making the message a said

starting the And their quarter. XX%, I quarter up efforts. many and improvement, but you we’re think. a see Gordian many, a over had the was ways their And green that’s shoots so that in fabulous Solution across obviously to continued see multi JOC quarter

So a, just performing as really some business businesses we’ve we’ve right is businesses. just line. product you seen those of think of and I strength across just that time. well know, their combination really product for two now, some a that moved between a And the very good quarter continued That’s lines

common So we it’ll slow Gordian little of business base some that and the contracting second in finishing last two some seeing year last with a had businesses a performance job comp a quarter in kind we’re where that second they in QX bit on for a, sure. because of of upside but in to year a of the sequentially QX quarter contracts order year, was that had those the good stack, the

Nigel Coe

your off between that expectations called Jim. quarter. expect first price, out and the full think price what you on the shakes And queue us, half? just that in are the just as I remind how the then Thanks. you X.X% Great. Can for the second Thanks, year

Jim Lico

Well, points I remember good I in quarter, XXX was, that it million in number the in I remember I saw basis to we probably about probably board. first think if we I it I second had the price of We’ll part see bridge. half think if half. the right. of across think a had And you price $XX the There’s of, more obviously bridge price think

the going a So in you’re little bridge. price to seeing, more bit see you’re

a well. So, on good balance price balance, and as see to I continue between and with think price good we’re traction volume

getting price price So, cost. in I certainly we’re think

I price companies high testament demonstrate gross on us price the margins and don’t quality maintain also and do ability realization in still idea this basis our get to I gross that but think grow customers. work, continuing we grew and XX the to grew is environment mentioned the to margins gross quarter, know value lot in to to the that quite real points that deliver we quarter, ability of we by a think to frankly, I our for the slide, price, margins really, kaizen work the in just the a

Nigel Coe

Thanks, Great. Jim.

Jim Lico

second Nigel. Thanks, answer question. I didn’t And your

$XX would the we we is So think second those believe the would million have demonstrates, in. half, second in as to I part there’s, relative I question, of improve, success continued just the that that that that will said, that which kaizen

maybe the or to inflation So, either year. even those of do on assuming the to we’re get that We ahead proactive want go Not Emma, the continue stay part of through does the remaining events lot of game worse. to ahead. the and anything, a be but game. same going price

Operator

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

open. line now Your is

Deane Dray

Hey good everyone. day,

Jim Lico

Hey Deane.

Deane Dray

on just is log front question, it up or expectation that percent discussions that top kind clarify is the the – be customer on impact and you swag million expecting? bottom down analysis that of of the a business a of first you’d land you how $XX China, Hey or a do a from to so forth,

Chuck McLaughlin

it at a not all. Deane, issue customer is So really

and it’s function backlog. done being job material the improving in particularly days And available of having rock the we’ve chains, able about, a down. but rolling getting supply to and As locked how to impact we That’s strong calculating of how in the need produce, it’s lockdowns we’re downs in that those just end. many really we mentioned, great factory block and It’s Shanghai, we’ve open got

Jim Lico

to in detail, just question this orders cases, hand on is not, sitting books, this at around Deane, orders out. specific customer in are the And factory the some go to your is already that are looking really on that need products

Deane Dray

second be potential Understood. any of product the other, can’t Is that about there quantified it not is sales shortages, China. regions realized either either that think China? lines be in if you’ve just Are sales you there, you component due could or that, or quarter past ship will areas, all

Jim Lico

they might that into Well, talked that, a of that them. way think necessarily where China In the getting our certainly about want is the it’s to story be always we the that in is about but I we cases distribution, very that means inventory. of the products distributor going customers in backlog, we XX, have timeframe the backlog some inherent are talked robust story the course, continue certainly

it I think it much stat an time our, on of if us delivery. look time first at customer aren’t on that the time to fill requested So, I time to on and those order that the after is at how think, then an that, getting the to for amount look fill meaning better? time thing we time numbers at we look perspective, to does case fill is the take in we look the that at we’re from is missing what we

get So starting better. to those numbers are

customer in in situations. all the time conversations We’re

around So help across opportunities a cases. have throughout about, I see backlog, share be with customers conversations is we’re number seen think we gain them in good successful? the more think what’s share how we those to I portfolio those been of And conversation having that do and gain about continue

of I challenges. those that think suggests we’re managing a So, nice that job doing

Deane Dray

both deal And inning bias Fortive pivot the That’s years two? ago, you’ve couple up said think you then commentary candidates got there. in, capacity has what or as back what at on it have from gross you there terms you’re the it’s is there’ll you between when about higher follow more recurring a stabilization If the and of bias – of higher at just had point. changed helpful. software And context be I today? there’d think that a we of on a software. And of portfolio know a because businesses been started inning tweaking you a set as a in but that dramatically margin, terms lastly, be would size? Is see a you hardware, what XXXX, that helpful. the journey, Do M&A, and there, landing think do maybe just think point in be in you would a you some continuous a revenues,

Jim Lico

Yes. Great question.

bias in available, act dependent deal our It’s to number we relative the been hard sense or available. of working think we’ve think balance the don’t, becomes that is kind say I versus comes to what what hardware we’re I what one, and be thing. a to towards balancing and funnel what going think, with of software

So, think in out. of to any balance you of like say I look see a time, period point a it’s over coming have I longer time, bias, at kind would going we but that

because to I’ll asset So, that committing very from is stay of dependent. it away balance some much

think I I bolt-on probably are biased now, right towards kinds we would deals more say. of

to a about, slight probably and opportunity relative well. power in a it’s two at of here, this this the at breadth the the talked bolt-on where certainly and doing funnel. look XX in I the of remarks, sort you interesting, think think with, if near kinds structure. I of prepared and given service segments that see gate I you it, or of there’s probation least look at structure look term, months depth into delivered both that we the on they’re the the transformation, quarter. And what we deals at the deal, met and have you you segment and Chuck the an out channel, towards number two have But think do segment think of today, to great bias have as we’re when if of about really a And we out lot I into just did the only

say, so great transformation could that look across because serve $XX with and billion you innings must is a be is worth we and the only of the at board so final the the strong performance in final, market. opportunity of think I it,

strategic the we but stand why right board we where to think never feel every good regular at say about and we’re very I it’s never. sit That’s you where on spring. basis about we we now, a performance, do with plans why So talk down year. That’s

but three performance, margin of all your are going expansion great about So at we’re think think portfolio I cash the strong full the stacks always I with feel the at the strong year, good remaining optimistic as And and as look end you start you part see the of guide supported. for to really day, baseball how flow fans, strong right now. to I segment-to-segment we growth, up the contributors segments the mean, free be

Deane Dray

helpful. you. really Thank That’s

Jim Lico

Deane. Thanks

Operator

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

now Your line open. is

Scott Davis

model Good the whatever the be was, pretty guys. we but deal on in There line were or expecting getting ahead interested deal in of rates. good probation. model update an helpful. it mean, morning, was update? just big it, mean, versus rates, I you growth where Are of you I is growth would afternoon, are I behind kind

Jim Lico

GI as the well we of as but still with at. Yes, a solution. their early, the, business out is and and the degree of well the It’s where in year. actually they orders day prepared remarks team see of the have the the feel ahead. business the of the in not They’re about work the really one mentioned XXX excited number that more of gate wins we they about opportunities. and good where the anesthesia history largest We’ll been with up week did of growth company certainly extension, end their did, We the could the quality plan last about

those So we’re additional strategies. seeing

really We superiority. clinical the of strength the for feel the business seeing ability that and good We’re about to grow. business, the

run, in execute. starting team to strategic with strength going but plan, out the to just and strategies I think just of the the even in we maybe run, long the short given And go the like We’ve number, slides. the thought like chances think have. PowerPoint I better we I’m our are

Scott Davis

double says And in years. next M&A does five You a quote context that Okay. years done on double year or then, mean? that And you the Is to there just that? what Slide X, in little next five deals that? done there nearly returns a there’s the mean Double What’s last on eight the or XX on in four color last to or, put can five? six? from little three five to the

Jim Lico

talk five to X% we’re it mean that. more we’re about. way progress, we very think doubling, but the think with like to think to with So doesn’t That Scott, out we’re ROI deals feel we’re I seeing pleased getting start XX% our we’re years, that’s inflecting the deals X%. talking of in here a years, returns probably would good about be It’s and last to we trying from are and going for to that these say about most what coming and couple and ROI the

Scott Davis

Okay.

Jim Lico

what maybe here. on think and we what just in you’ll spot on see, I add quarter it the saw and Chuck

IFC and doing early, did right the legacy outstanding. Landauer ones I we think, deals, the eMate and

SP strong of and around and off changes. to helped for strong a trajectory, in you’re with margins see, medium improve care continuing come it I just as mentioned consumables ready Some Intelex Gordian’s really that your, back, Accruent, had to quarter. take the to starting term, question

two we’ve So, described. last the certainly and as deals done I

it. we’re great of hard And I place a relative I inflection a excited we’re So, into about, obviously lot it in to this returns. is put think think work

have well issue several in I think to as inflections happen those think what two, good started doesn’t seen we’re as won’t in businesses. last the in an mean place we I the we’ve certainly quarters, to have relative these but a or really

Scott Davis

Well, you. guys. good Thank luck

Jim Lico

Thanks, Scott.

Operator

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

Your open. line now is

Jeff Sprague

everyone. me. Two day, good Hey, from

basis. was for in IOS margins if friction also that on on back price Would And Jim, – improve segments? on did the first put that noted price was in cost, negative true gross noted on positive a you price maybe Just you could context a dollar spite it that margins, cost, you on the Was cost nicely. of as of right. other

and be margins You the negative kind still question. of positive can on dollars essence the on of

Chuck McLaughlin

Chuck. Jeff So, its

points. up operating basis XX core QX, margin our For expansion is

we margin a as percentage dollars about basis, real certainly the saw talked up. being So we’ve expansion. But

as accelerate We through go year. see that continue we the to

true about and at so true but slide is – we in the AHS a for the little points, was basis It’s deck. down And on it bit which I down that were PT, in – everyone? XX think

Jeff Sprague

then And Okay. on AHS.

the think was year. the of I QX? actually in gave QX? the it you’re improvement procedures us for recovery And magnitude What you what’s expecting in XX% on

Chuck McLaughlin

QX better was QX, excuse correctly obviously – me. through quarter. XX So And got have the I

So quarter. half the XX in I second approach And year. of think we’re the probably probably couple basis in a starts better then second we through points as to the obviously get

improvement. that are early, seeing some see the So now U.S. XXXX gradual now February, still was green really to over to January Omicron in we’re shoots, starting an hospitals a But and see the we And XXX% we’re some particularly to expect from influence levels. in

networks overall are we’re competence and to where hospital understand, gets better through getting of kind on combination numbers also shape but much the detail of a the those sort progress through quarter. in number, And what at. they it’s see of to starting where, as some So, built hospitals of the looking they’re

Jeff Sprague

the Thanks great. Okay, color. for

Chuck McLaughlin

Thanks, Jeff.

Operator

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

open. now is line Your

Andy Kaplowitz

morning, everyone. Good

Jim Lico

Hi, Andy.

Andy Kaplowitz

series a for Tek refresh, some and time mentioned about five think Fluke in you Tektronix, talking new and significant product the in Jim, you’ve been I now.

maybe this reduction new think that in I said last cycle Fluke And growth give product might you new us had? how case? So XXXX? and minimal year. can in to the previous the little product help Is quarter should for you backlog much then you that more you’ve compared perspective, Tek you’ve a How cycles expect still

Jim Lico

Yeah.

talk So, about, let’s break up. let’s them

the five that their to, want coming series. we’ll lines. to they’re coming third start I of here, announcements refresh couple a see has some and their, a certainly don’t don’t in things out mentioned with. product around the second to Tek but want I quarter, think We announcements ruin in I

to So product probably see What’s of inherent step we – new first product? that we’ll Tektronix, hard the is some at what’s second good half I but put the to reduction? say – it’s up I sort will product mean, of those, from the in introductions of sort half backlog in refresh. new sort in

to Some make component we some so chips of that doing with well. some things improvements refreshing quite frankly, changes, comes product to relative changes in as as the were and some to decided

at and going see I the – very kind world has We to Tek said, saying reduction good, independent overall through as don’t consistent growth of China was product Shanghai nice. line. before. – year. situation always of the in So, and We in we’ve we’re said, shape. situation the was the continue to anticipate very And, with to to year rest much going by think what is just relative bit broad at Relative the a I an much to backlog Tek but think good way business should pretty we be Fluke’s very of a been of Fluke. little the a improve

Tek on broader can of there’s clamps So they is half. going to like that necessarily a are moves of category acoustic that that one have unlike line terms in new that But through where more – do one things takes at no difference it be nature a they have some really back But will coming imaging, needle. probably typically business. product and the product product the that make Fluke, some are just – that’ll they the things

But of do, for a year, backlog position we in Fluke will get at reduction a we little but they’ll year well this I as suspect. So, again, bit the XXXX. end good

against the their be the in success demonstrated continued think quarter. those inherent what about relative in continued showed, countermeasures for will the impact business. to to countermeasures the have year – And continue challenges businesses we both will So,

Andy Kaplowitz

more maybe you obviously of the that. for then market, talking about capacity. a Jim, have a And M&A little just bit Thanks ton

mentioned Have and lower the bit You or mark volatility opportunities. the pipeline sellers buyers the some page ask some in the down given come you the think others time given big of here, take to do same evaluations, get might markets? it on yet

Jim Lico

longer. would I story, its say has but deal typically takes it every Well,

transactions would would things things Our that recently a in changed suggest would and that, much. probably I still say situations conversations here of watched we’ve as are couple occur that suggest haven’t

XXXX would real So, of I a that’s second more half early, impact. anticipate

day, Some and some just it’s, deals will of some some of But that of uncertainties think seen end of macro, of know of sort about at be rates that interest the say, kind have dependent. being be the natural we more different I about situational to be bit certainly broadly find think what still the situations – maybe how we’ve things, those things. little one recently might their the I direction of them we’re waiting the until more in a would the way probably of

Andy Kaplowitz

Jim. Appreciated,

Jim Lico

Andy. Thanks,

Operator

from Morgan Pokrzywinski Stanley. Your question with Josh comes next

Your line open. now is

Josh Pokrzywinski

guys. Hi, good morning

Jim Lico

Josh. Hi

Josh Pokrzywinski

a like do what to backlog, my like does Is been like doesn’t think Like has around? like trying mean double cancellations? happening world, really mentioned a backlog bit Just something Cosco call Jim, quick of to a I ordering what talking happens you a see [ph] orders shorter environment? or like, several of soften, if really kind you in if it, like sound anything’s Just the there historical the environment on question backlog, for this this get context context Any the backlog change? cycle any this does arms in point, dynamic, for industrial times for channel and today? look what incoming

Jim Lico

in we few the time Yes, of of seeing into I double our say obviously get what places it ordering. kind wanting first think, thing. a And break another a just to what with spend are like the lot Presidents build for sense of topic real you a we That’s being want million every Sensing like a deliveries of and in that. shipments Tech our And I I’d quarter, backlog, on for Josh, businesses, like we orders operating say, looks for it’s Hey, would it we’re the with not Fortive. something somebody things reviews, within obviously CFOs, November That’s like. placed a did conversation XXX in month have to is, some we queue that I seeing and when

ordering, people so day, see the And in We with to that we’re case of sense I the flow Tech, get at it a end some pricing, backlog out around confident good of trying the bit of double of think little and backlog. will we flow have will don’t but Sensing in the and that.

side, a their feel profusely their What on very those XX% and much very about order? Fluke’s that. and channel little, a inventory do positions to little sale are perspective those, revenue. from the sort the look inventory Tektronix we of we where On of we that is what see range. going? or business of close needs and use see today trends we good those looking then test bit see The cases that’s like? getting tested methodology can an that. in direct and calculation and at data. And That’s don’t Tek than use about, XX% into out have Where less analytical we do we’ve customers they point revenue half we have What that is of get pretty and of anything and to a And XX%

things at place. good, and some U.S. better – in that’s bit Europe And And with a analytics significantly natural demand so data And natural on are you consistently. say remain we the remains get that’s doesn’t things we The rest back the and little watch time go test the what we And the to what’s sale that of in order that inventory And where would we tell a those around that in their it how does play I natural world, all patterns there’s of substantive more We’d are numbers. any step sort do portfolio. increases and no inventory point get we that, say, if And the inventories quickly. not the increase good. We haywire soon. of good think levels refined of what you? watch. you relative but when

gives I the the second about near makes confidence, the term. what feel that’s good pretty say, backlog. with And good start would guide. So us half our It that informs we’ll us

so of might of might those And seen some haven’t saw if a historically, cancellation, see lot in and we changes a that. you see I some little demand patterns, a say would – you we although,

Josh Pokrzywinski

ago to helpful. a more And guess months or, well, work like that behavior the bad? anything just six Got expected organization facilities in that’s on model some seems would’ve the more kind software it. some those remote permeated a folks alongside hybrid That’s it’s changes of and then of than or tracks through of I platforms and facing maybe that customer side, order good of on, even return

Jim Lico

the collaboration offices, kinds time facilities Well, ServiceChannel of doing and things to combination extent, in they time I and supports occur are do as time. full support not what to but, that is lifecycle work to be some time, into And it from it’s going a asset Accruent. really, they’re of in of hybrid the Gordian think people management and facilities come and great the the back because want to to from kinds supports people we’re software to perspective, over changes

those for going be in that It’s documented out and early transformations. think secular, years. the I of to very we’re trend in that well driver’s So, there innings

think, I balance many we’re are customers back on hospitals. cases back, so our in And back, we’re at

of example, and when times little But – take service revenue to value. help start as service compress we a site starting customers whether to get customer We’re the mentioned to an a in we’re it get from as a on those see places, on longer. to a in couple opportunity be time there’s our can we things trying up site timelines the hardware, business to when come to software bit

into down the at back to the see work, So, we’re into come office, come those to come back come the back people starting facilities.

So, things I trajectory to of conduct think balance we of we how inherent sort business these being on how and business. of is happening, our the some natural helpful in

Josh Pokrzywinski

guys. luck. of the Appreciate Best call

Jim Lico

Thanks, Josh.

Operator

John the today Your comes Credit from line final Walsh of question Suisse. a with

now line open. is Your

Jim Lico

John. Hey

John Walsh

more have get my side on between hardware granularity to now, for businesses seeing subscribers, day seeing as what absolute talk you me the in. could Thank kind Hey was maybe software you. pricing, the there, you’re for net Kind ads. churn, around good the anything of as, lines just a if if ad and versus just are thanks or squeezing side? And curious software along relates in to I’ll to the terms do follow you different of and it right then the following of price those on the ability you

Jim Lico

Yes. Great questions.

of we anesthesia had our largest, largest in tried procedures quite places, ISC, – think a I the I think frankly, new of I largest, where we one on occurring. the deals our I one order procedures, to at number the basis, had prepared remarks, lot think at [ph] I announced, highlight a logos And iNet we we of are the we history our had largest think of of probation. company we had think

places where new of logos. number a So

low-double-digit We’re in software good teens when you team’s in And to our growth up. in was, and our and SaaS to our think that’s place software, quarter. stand relative at growth a I growth look I growth the new going low-double-digit where in logo think

a to that stand today, I about on to improve dollar software at helpful looked a reduction. of to and going think of feel players churn retention continues in backs the good against also double-digit even where number’s net lot reported our really relative folks because others. few that up That’s

And net in continue so to to improve a place think retention. dollar really good I we’re

and – are a some FBS more I difference getting bit making also of there. And Our is think that think price. that little efforts I a

the about hardware price XX% more an growth, propositions. probably balance. the is of good still I good the of didn’t talk is demonstrates a So, the businesses our price, we but value volume XX% outstanding think think to in to think business in we’re that balance, our strength place And this, of we’re hardware It our really I of that. about getting strength question, brands, your in relative balance in our we second part John,

documented, to customers that’s that’s year of play also we’re is this getting and driving with value obviously we’re that we inflationary volumes. tremendous challenges and inherent going out the So some the ultimately we’ve price but think that driving our

anyway, it Thanks So I today. call great there. for think, end I everybody I’ll

the proud think incredibly had. I we’re quarter we of

about incredibly a We’ve and excited said did show me I this just think XXXX. year, we was We’re that.

soon So, you up your we’ll questions. you on Thanks. follow see to the look We’ll forward talk and we’ll road. to

Operator

Thank our conference for attending. today’s concludes call. This you

now may You disconnect.