Operator: [Operator Instructions] And your next question comes from Scott Davis of Melius Research.
Scott Davis: I’m not very good at the Star 1 thing. It’s a skill, I guess. But anyways, the, a lot of questions have been answered but I’m kind of curious on ServiceChannel and proVation. If you combine those deals, combined, they’re pretty darn important to the kind of long-term growth story. But pretty dilutive the first year and change. But where do you think you’ll be in 2024 versus a deal model and those things combined, will you be back in the positive on those things? And I would imagine the compound, right? I mean the growth is so — it should be high enough, the margin is high enough that the returns on capital kind of go through kind of hockey stick at some point. Are we there yet when you think about 2024?
Charles McLaughlin: Scott, a number of things. First of all, from a top line standpoint and really the bottom line, we think we’re on track to running ahead. So but I think when you’re talking about dilutive as the ROICs come from low single digits, they’re in mid-single-digit territory and accelerate going forward. So we think those two are right on. But accretive now that the, to the top line growth, so let me stop there and see if I understood that part of the question.
Scott Davis: Kind of I guess kind of my point and perhaps you can do this after is that when you announced those deals, it was, I think that the language Jim used at the time is you’ll be really happy we own these assets someday just given the growth rates. So I’m just kind of curious if you feel the same way?
James Lico: Maybe just to give you a little bit. I think we were, we anticipated, if I remember correctly in the first year, $0.10 of accretion we ended up with $0.12 of accretion. So in the first year, we delivered on the accretion side. As Chuck mentioned, we’re incredibly happy with these businesses, maybe just to take your point. You could see and that’s why we really put them on the chart. When you look at the growth rates in the businesses, they’re very strong. proVation was already a very high-margin business. One of the highest in Fortive already. ServiceChannel, obviously, was a breakeven business. So there were some concern, could we get that business into the sort of accretive margin rate that we see that’s so strong and in Fortive and obviously in IOS and we’re obviously there on the Fortive side and they’re approaching the IOS side.
So we feel really good in that regard. And the other part of it, we’re trying to really make a point in that — in the prepared remarks, Scott. I know you understand this but it’s really how FBS has really made a difference here. You see the net dollar retention, where that’s at, now, the ARR growth. The really FBS has really made it both teams, really embraced FBS on the growth and innovation front. They’ve done a nice job in that in a short period of time. And that’s where, that’s how you see the net dollar retention numbers which are obviously extremely good and the business is well positioned for the future. And to your point, also, they don’t stop at 10% rights, right? They’re going to continue. And if you’ve got 110% to a 112% plus net dollar retention margins in the structure and growing at this rate?
Obviously, the [indiscernible] are going to go above 10% in the out years.
Scott Davis: Yes, that makes a lot of sense. Just real quick guys. Does Invetech get worse before it gets better? Just partially just given Sprague’s question on kind of the wind down or the sale of the design business but put these things you’re selling into some pretty tough markets. But does that end up getting a little bit worse before it gets better in ’24? Are we already there?
Charles McLaughlin: I think we’re going to run into some easier comparison in the second half and so it will stop being a tough compare for us. And I think that we need some of the dynamics of those markets to recover. Keep in mind, this is a business that’s less than $100 million in total. And so it’s not it’s not quite as impactful as bringing some of these other movers like EA and ASP right now.
James Lico: I would say, Scott, embedded in the PT core growth outlook for Q1, there’s about a 1% headwind to core growth in PT due to Invetech.
Scott Davis: It’s a statement that you’ve had a good quarter when we have to pick on a $100 million business, right? So, good job.
Operator: And your next question comes from the line of Rob Mason from Baird.
Robert Mason: I may have missed this, Jim. But how do you think about your overall software growth in ’24 relative to the 2% to 4% core growth? How does that roll up?
James Lico: Yes. We feel really good about it, Rob. I think when you look at not only maybe starting with ’23, we had really good growth in ’23. We’ll have high single-digit software growth in ’24. So when we look at the ARR numbers, they’re good. Obviously, we’re just talking about ServiceChannel and proVation in the previous question. But I think across the board, [indiscernible] going to have high single-digit growth. So we feel good about where it’s at. I think it’s a testament to the strength of how FBS is really adding value and it’s a testament to those businesses. and the work they’re doing. We didn’t talk a lot about AI but we’ll start to see as we get into late ’24 and ’25, so some of our Data Analytics and AI solutions are also going to help the growth rates there.
