But I think at the end of the day, we’re in a very good place relative to those targets and I think this reflects it. So, there’s obviously the macro is always a geopolitical situation. It’s probably always one of those things you think about but that’s why we said in the prepared remarks, that we’ve got some scenarios to continue to be agile and dynamic based on what the economic situation looks like it’s the best way to say it. So Software and Healthcare is going to continue to compound at higher rates of growth and higher rates of margin expansion and that’s going to continue to mix up the portfolio, particularly if you take a longer period of time, like in 2018. So I would say those are the dynamics. You’ve got to see continue to see those businesses continue to get better, like they will this year, like they’ve been doing and then continue to do the things that we’ve been doing relative to productivity and innovation that will continue to help us work through the various markets, secular drivers that we’ve attached ourselves to broaden the workflow.
And I think the last thing I’d say Andrew, is the 5 deals that we did over the last 30 or 3 months or so, they all have an opportunity to continue to accelerate our compounding. They’re all attached to good growth drivers. They’re additive growth year and, from a margin perspective, from a bolt-on standpoint, they’re all making their associated businesses better over time. And when you take a few years out, they’re going to become a bigger part of that. So some of them are small. But if you take a 2-year or 3-year out period, you’re in a, they’ll be additive as well. So and then as I said, the M&A environment is still, looks like it continues to get better here and we’re excited about that.
Andrew Obin: And if I could just squeeze in one more. Should we start to think about Fortive as increasing dividends annually and some framework around share buybacks, maybe offsetting share issuance as long as we’re there?
Charles McLaughlin: Well, in terms of the dividends, what we’ve tried to signal is that as our free cash flow and earnings per share increase, our, you’ll see our dividends increase on the same trajectory. With share buybacks, what we did is we restock to where we had, over the last 2 years, we’ve been opportunistic on buying some shares back. And we just went back to the level we had 2 years ago. M&A is still the priority.
Operator: Your next question comes from the line of Joe Giordano from TD Cowen.
Joseph Giordano: Just a couple on the M&A side and capital deployment kind of piggybacking on what Scott was talking about. So I mean, you highlighted proVation and you highlighted ServiceChannel. And I think it’s pretty clear as to how companies like that can lever up growth and they can accrete to EPS and what they can do to margins. I’m just curious on like the ROIC of these things. Because I think like on proVation, the math was something like it needed to grow 15% a year and have margins expand to like almost to mid-50s from the mid-30s or something like that to hit like a 7.5% return in year 5, like, it looks like at least that slide suggests it’s under those targets. So like how do you evaluate where you are in ROIC on deals like that?
Charles McLaughlin: First of all, we look at our ROICs and go back to looking at where the revenue needs to be. Margins start to upgrade on probation as talked about and we’re running ahead of where we thought we’d be on the top line. So maybe talk off-line exactly what the original assumptions were. But that’s where we know we’re at for both of those deals. And so we’re on track or ahead of where we thought we’d be a couple of years in. I think the, so I think that’s as simple as I can put it.
James Lico: Joe, I would just maybe just add on is the reason why we highlighted these two companies two years out is because when we bought the companies, there were some skeptics, quite frankly, people didn’t think we could get ServiceChannel margins into the 20s as quickly as we did. People didn’t think that proVation would grow during COVID the way it did. So yes, I wouldn’t necessarily say [indiscernible] these were slammed up because there were some doubters out there. And I think what we tried to do in, with two years in, it suggests, or to demonstrate that that, hey, we’re exactly where we thought we were in case we’re ahead of the game. We were ahead of the game first year out, as I mentioned in the previous call relative to EPS.
So these businesses are in good shape. And as we highlighted back in May, these are, this is consistent with a number of the other deals and that’s really what you see in ’24 is the portfolio durability based on the success of those deals. So I would just add that into the broader the broader view of M&A and how it’s continuing to add ROIC continue to get better and it’s adding more durability and capability of the organization.
Charles McLaughlin: And just to clarify, this came up earlier but the combined ROIC and certainly for proVation is already in the mid-single digit for ’24-range.
Joseph Giordano: Maybe to piggyback on that, like, you’ve done deals now across like SaaS type deals and you’ve done hardware-centric deals as you kind of run FBS through these businesses, I mean, it flexes different muscles that you need to use depending on these. Are you finding like one type of deal somewhat easier to accomplish the goals that you set up at the outset?
James Lico: Well, I would say, certainly, hardware deals is something we’ve been doing for 20 years in there’s, to use your muscle framework. There’s a lot of muscle around that. You saw that in, even with some of the COVID challenges in ASP, our continued ability to do things like really improve the free cash returns on the business because of working capital. So I would certainly say that that’s, those are things that we’ve done for a long time. But I think and this is really one of the reasons why we put it on the slide, is that we’ve really built tremendous capability around software, FBS for Software. And we didn’t talk about it but we’ve now got an FBS suite of AI tools which are really helping drive innovation drive commercial activities for the Software broadly but also for the Software businesses.
So we’ve really, I’m really proud. I said it in the prepared remarks around how the FBS in and of itself is getting better. And that really means more broadly. It’s really, it is, I think what we’re really proud of is the fact that if you look at the Fortive’s portfolio today, FBS needs as much to a Software business or a Healthcare business or a Traditional Industrial business. FBS may mean different tools. It may mean different applications but the rigor and discipline is exactly the same.
