Fortive Corporation (NYSE:FTV) Q4 2024 Earnings Call Transcript

Fortive Corporation (NYSE:FTV) Q4 2024 Earnings Call Transcript February 7, 2025

Fortive Corporation beats earnings expectations. Reported EPS is $1.17, expectations were $1.12.

Daryl: My name is Daryl, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation’s Fourth Quarter 2024 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. On keypad, if you would like to withdraw your question, press star then the number two. I would now like to turn the call over to Ms. Elena Rosman, Vice President of Investor Relations. Ms. Rosman, you may begin your conference.

Elena Rosman: Thank you, Daryl, and thank you everyone for joining us on today’s call. With us today are James Lico, our President and Chief Executive Officer, and Charles McLaughlin, our Senior Vice President and Chief Financial Officer. To present certain non-GAAP financial measures on today’s call, information required by Regulation G is available in the Investors section of our website at fortive.com. Our statements on period-to-period increases or decreases refer to year-over-year comparisons unless otherwise specified. During the call, we will make forward-looking statements, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks, and actual results might differ materially from any forward-looking statements that we make today.

Information regarding the risk factors is available in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2023, and the quarterly report on Form 10-Q for the quarter ended September 27, 2024. With these forward-looking statements, they speak only as of the date they are made, and we do not assume any obligation to update. With that, I’d like to turn the call over to Jim.

James Lico: Thanks, Elena. Hello, everyone, and thank you for joining us. I’ll begin on slide three. Fortive delivered better-than-expected performance in the fourth quarter, including higher core growth, earnings, and free cash flow. These results capped a strong year for Fortive, including another year of record margins with gross margins of 60% and adjusted operating margins nearing 27% while continuing to fund future growth. In addition, we compounded adjusted earnings and free cash flow by 13%, contributing to our strong multi-year track record of differentiated financial performance. Our accelerated pace of innovation in 2024 helped us sustain top-line momentum given the mixed demand environment, further enhancing our outlook for 2025.

Turning to the year ahead, Fortive is poised for improving core sales growth and continued strong operating performance. We’ve taken a prudent and balanced approach to planning the year, reflecting momentum in our bookings and durable revenue growth in industrial operating solutions and advanced healthcare, and stabilizing trends in precision technologies driving a gradual recovery through the year. Lastly, we are progressing well on the actions we announced last year to further accelerate our strategy and enhance value creation. Our teams have made meaningful progress towards the separation of the newly named Precision Technologies company called Ralliant. We now expect the transaction to close early in the third quarter. We also executed on our plan to prioritize the return of capital to shareholders, utilizing our record free cash flow to repurchase shares.

Q&A Session

In summary, these actions reflect our commitment to unlocking long-term value for all our stakeholders. Turn to slide four. 2024 was another year of consistent compounding, including the achievement of several record financial metrics. Since our inception, we have evolved our portfolio and leveraged the Fortive Business System to accelerate growth and innovation, expand market share and profitability, and forge the leadership skills we need for the future. The exceptional value created for customers and shareholders is reflected in our sustained multi-year performance, including an acceleration to mid-single-digit core growth on average over the last five years, over 600 basis points of adjusted operating margin expansion, and 350 basis points of adjusted gross margin expansion amidst unprecedented inflation.

Our accretive capital deployment has contributed to higher growth and higher returns. As a result, we grew free cash flow an average of 18% per year over this time, underpinned by industry-leading net working capital performance. In summary, what is unique and truly differentiated about Fortive is the breadth of results that are compounding over time relative to peers. The reason for this five-year track record of success is our commitment to FBS and the strategic evolution of our portfolio. Turning to slide five, our evolution of the Fortive Business System and continuous improvement mindset driven acceleration in MPI velocity, helping to sustain our top-line momentum. Within FBS, we have built over time a proven innovation toolset to identify unmet customer needs, develop new products, and bring them to market faster, which ensures greater returns on our R&D investment.

Just several examples of how our increased innovation velocity is contributing to growth across the enterprise. Starting with iOS, Fluke launched a record 20 major new products in the last two years, extending their leadership position in solar and energy storage tools and contributing 200 basis points to growth in 2024. Facility and asset lifecycle revitalized their innovation efforts for the last three years, launching its strongest slate of new products and enhancements, while also expanding margins 800 basis points. Revenues from these new offerings are expected to more than double in 2025 versus last year. ASP launched a record of six new products in 2024 with 510(k) approval, expected to contribute over $10 million of revenue in 2025.

Probation added to their leading GI position with their next phase of Apex Insight, a proprietary data analytics tool that boosts provider productivity, contributing to a 67% increase in Apex SaaS sites in 2024. PT is also leveraging FBS innovation tools to advance the world’s technology. Tektronix launched four new products.

Charles McLaughlin: Their best-in-class electronic test and measurement offering, serving their fastest-growing markets. Sensing Technologies is launching sensors for monitoring the liquid and air cooling system within data centers, and Qualitrol continues its double-digit pace of growth with new electric grid monitoring energy storage solutions to support the expansion of global power infrastructure. They’re also leveraging our investments in the form of developing advanced software, data analytics, and AI capabilities, and we expect to launch new AI-based product sets in 2025 and 2026. Moving to the fourth quarter and full-year results on slide six, we ended the year with strong operating performance, generating an adjusted earnings growth approximately three times revenue growth.

Core revenue growth of 2% in the quarter reflected an acceleration at iOS, partially offset by the anticipated decline in Precision Technologies. China headwinds continue to mute the recovery we are seeing in certain markets. Acquisitions net of divestitures were offset by unfavorable FX as the dollar strengthened in the quarter. Further highlights of our fourth-quarter performance include 100 basis points of adjusted operating margin expansion, adjusted earnings per share of $1.17 reflecting a $0.05 beat at the midpoint, with earnings up 19% year-over-year, and record Q4 free cash flow of $465 million, up 13% year-over-year. For the year, core revenue growth was 1%, reflecting the mixed demand environment and core decline in PT. Adjusted operating profit grew 7% and margins expanded 100 basis points, representing over 60% incrementals.

We delivered earnings and cash flow above our initial guidance coming into the year, with adjusted EPS of $3.89, up 13%, and record free cash flow of $1.4 billion, representing 23% free cash flow margins for the year. Turning to slide seven, I’ll provide more detail on our segment performance for the quarter and the full year, starting with iOS and AHS. On a combined basis, quarter revenues grew 4% with adjusted operating margins up 140 basis points to over 33%. This represents 12 consecutive quarters of consistent mid-single-digit core growth on a combined basis, reflecting the durability and resilience of these businesses. For the full year, combined iOS and AHS delivered 4% core revenue growth and 120 basis points of adjusted operating margin expansion, with over 60% incrementals.

Moving to the right, Intelligent Operating Solutions expanded operating margins 190 basis points on 4% revenue growth in the fourth quarter, with M&A contributions partially offset by FX headwinds. Stable industrial products demand overall and NPI momentum drove mid-single-digit revenue growth at Fluke. Shipments outpaced our expectations exiting the fourth quarter. As a result, we expect a slower start to the year in Q1 before returning to more normalized growth the rest of the year. Growth in facilities and asset lifecycle accelerated to high single digits in the fourth quarter, enabled by stronger take-rate revenue across our government and multi-site retail product offerings. As you can see on the far right of the page, advanced healthcare solutions grew core revenue 5% in the quarter, with FX headwinds approximately 150 basis points total growth.

Consumables normalized mid-single-digit growth as expected, and probation accelerated growth having lapped the license headwinds earlier in the year. AHS expanded adjusted operating margins by approximately 40 basis points in the quarter and 200 basis points for the year, driven by high margins consumable growth partially offset by unfavorable FX. Turning to Precision Technologies on slide eight, revenue was approximately flat in the quarter with a core decline of 3%. Acquisitions net of divestitures contributed approximately three points of growth in the quarter. This represents the second consecutive quarter of sequential core growth improvement, enhanced by double-digit growth in utility and aerospace and defense markets. Adjusted operating margins contracted 200 basis points on lower core volumes, partially offset by productivity benefits and accretive M&A.

Core revenues at Tektronix were down low double-digit in the quarter as expected. However, orders were up high single-digit for the second consecutive quarter. We continue to see investments supporting power, compute, and communications for data center expansion and demand for defense applications driving Tektronix orders growth. While China and EV mobility remain weak, we had another quarter of double-digit growth at Qualitrol and PacSci, as our teams continue to ramp production capacity to keep up with strong demand. Moving to the right side of the page, you can see the Precision Technologies revenue and adjusted operating performance for the past four years. Since 2021, PT has grown core revenue at 4% CAGR, with adjusted operating profit growing twice that rate at an 8% CAGR over the period.

Core revenues declined 4% in 2024. Improved portfolio positioning and focused innovation efforts have dramatically improved the through-cycle performance. Leveraging FBS tools, we’ve expanded our addressable market and added complementary solutions aligned to favorable secular trends, including next-gen power applications for new markets and new sources of energy around the world. As a result, PT is a much more durable business today with a stable margin and free cash flow.

James Lico: Profile.

Charles McLaughlin: Poised for recovery in 2025. With that, I’ll turn it over to Chuck to discuss our 2025 outlook. Thank you, Jim, and hello everyone. Turning to slide nine, let me set the stage for how we’re thinking about the year. We continue to be encouraged by stabilizing demand trends overall, which gives us confidence in an acceleration in revenue growth from 2024 to 2025. While we are providing full-year guidance for total Fortive, I thought it would be helpful to frame the key drivers of the respective new companies. Starting with New Fortive on the left, comprising our iOS and AHS segments, we expect revenues of approximately $4.1 billion, supported by demand for our leading safety and productivity technologies and market share gains from new product introductions.

We expect stable underlying industrial demand at Fluke with positive point of sale in North America and Western Europe. China is expected to slow both from a GDP and industrial production perspective, and we have reflected that into our outlook. We expect sustained momentum in our software and recurring revenue businesses, including double-digit ARR growth in SAL and stable consumables growth in healthcare. This yields low single-digit plus to mid-single-digit core growth for New Fortive in 2025. Regarding phase, we expect growth in the second half to outpace the first, primarily due to timing and days impact in Q1. Turning to the PT company, we anticipate revenues of roughly $2.2 billion in 2025, with core growth up slightly for the year. Our businesses aligned with power infrastructure, compute and communications invest, coupled with aerospace and defense systems, comprise approximately 35% of revenue and are expected to grow double digits again in 2025.

Coupled with stabilizing trends in broader semiconductor and sensor markets, we anticipate a return to core revenue growth in the second half of the year. On slide ten, we provide further details on Q1 and 2025 guidance. Starting with the full year, we expect core revenues up 1.5% to 3.5%, FX is expected to be an approximate $90 million headwind for the year or roughly 150 basis points of impact to total growth. Adjusted operating profit is expected to increase 2% to 5%, and adjusted diluted EPS guidance is $4.00 to $4.12, up 3% to 6% for the year. Our adjusted EPS guidance includes a $0.20 to $0.25 headwind from a higher effective tax rate and FX. This is offset by lower share count and a slightly lower interest expense. Adjusted free cash flow is expected to be approximately $1.5 billion, which excludes the impact of separation-related cash costs of roughly $185 million.

The conversion rate on adjusted net income is approximately 100% excluding these items. For the first quarter, we anticipate core revenues to be roughly flat. FX is expected to be an approximate $30 million revenue headwind. iOS and AHS will start the year slower due to Fluke’s stronger finish in Q4 and fewer days in Q1 impacting consumables and service utilization. PT is expected to be down mid-single digits, representing our toughest year-over-year comp. Adjusted operating profit is expected to be roughly flat, and EPS is expected in the range of $0.83 to $0.86, including a $0.05 headwind from unfavorable FX and higher tax. With that, I’ll turn it back over to Jim to conclude. Thank you, Chuck. I’ll continue on slide eleven. We’ve made considerable progress on the actions we announced last September to accelerate our strategy and enhance value creation.

Starting on the left, we utilized our record second-half free cash flow to repurchase approximately 10 million shares, representing 80% of our free cash flow, slightly more than we committed to when we announced the separation. We remain committed to deploying free cash flow for incremental share repurchase. The balance sheet remains in great shape. We exited 2024 with net leverage of approximately 1.6 times, and we continue to expect that each company will sustain investment-grade balance sheets after the spin. Moving to the right, we expect the separation to close early in the third quarter. Following the progress our team has made to date, including confidentially filing a draft registration statement with the SEC in December, we are processing initial comments.

We expect a Form 10 filing in the spring. Our efforts to hire top talent are well underway, ensuring we assemble a world-class corporate team to drive future success. Earlier this week, we announced that PT Newco has an exciting new name, Ralliant Corporation, and we appointed Ganesh Murthy as the board chair.

James Lico: We also announced that Alan Spoon, who is retiring from the Fortive board,

Charles McLaughlin: and Kate Mitchell will both join the Ralliant board. Together with Tammy, these board designees reflect Fortive’s commitment to the new company’s success and sustained value creation for all stakeholders. We will continue to provide additional updates as they become available. I’ll wrap up now on slide twelve. Last week, we were excited to announce that Char Dube was appointed Fortive’s new board chair, succeeding Alan Spoon. On behalf of the board and management team, I want to thank Alan for his leadership and all he’s done to shepherd Fortive to become a more durable growth company. As we enter this new chapter, I and the rest of the board are confident Char is the right person to serve as the next chair.

She’s been providing valuable contributions to our board since 2020, and her deep insights into our business, culture, and strategy, combined with her extensive operational and leadership expertise, prepare her well to steward the execution of our long-term strategy for the more focused and resilient portfolio. This next chapter is a manifestation of the strategy we laid out at our inception: profitably evolve our portfolio, deliver in any environment. That was the case in 2024. Our enhanced portfolio positions, innovative new products, and dedication to the Fortive Business System have allowed us to deliver consistent compounding performance over the last five years. We are well-positioned to continue this track record in 2025 and beyond as we progress through the separation.

We could not have reached this milestone in Fortive’s journey without our unique culture and the passion of our 18,000 teammates around the world. Together, we show up with a mindset that we can do and be better. I know I speak for the entire Fortive team, including Elizabeth and Tammy, when I say I could not be more excited for the future as both companies are strategically well-positioned for enduring success. With that, I’ll turn it to Elena.

Elena Rosman: Thanks, Jim. That concludes our formal comments. Daryl, we are now ready for questions.

Daryl: Thank you. We will now be conducting a question and answer session. You may press star two to remove your question from the queue. Our first question is from the line of Robert Mason with Baird. Please proceed with your questions.

Robert Mason: Yes. Hey, Rob. Hi, and happy Friday. Thanks. Usually not saying that on a Fortive conference call. So just maybe to start, Jim, could you dig into the product side of the business and thinking this is more around, you know, I’ll say iOS and AHS, New Fortive. When you framed out 2025 or made some initial comments back in October, just curious around the product. Has anything changed, evolved? Has as you’ve tightened up the plans? You made a comment around China being softer. But just some perspective there around the product side. Yeah. And maybe take away around for the absent first of all, first of all, on New Fortive, as you mentioned, iOS and AHS, I would say, you know, really the aspects of the business in software and healthcare are really performing well.

We had a little bit stronger end of year at Fluke. Some of that would we should get into that later, but I think, you know, just continuing to demonstrate in Fluke the resiliency and durability, particularly around product innovation, much of which we highlighted in the prepared remarks. I would say what’s changed may or maybe what’s well, going into 2025, Rob, a lot of the past is similar. We’ve got a little bit of headwind on the days and the consumables businesses. And the service parts of our software businesses, which have a little bit of headwind just in the quarter. But really good performance in Q1 across the portfolio and what I’ll call New Fortive. On the PT front, I would say, a lot of the orders were good at, you know, we talked about the order growth in a couple quarters in a row now.

We’ll see order growth in the second half as well in PT. And I would say, you know, China but again, there, China weak. And, you know, we’re not getting out of the gate here. If you really as we anticipated, but we’re certainly not seeing any dramatic increases in China as we start the year out. Understood. And maybe just as a follow-up, you know, specifically, and maybe this touches on some of PT because you do have more government exposure there. Are you seeing anything post-election,

Robert Mason: that

Robert Mason: you know, around the flow of funds, that you’re trying to account for in the planning. You know, just within your various government exposures? We have not. In fact, you know, I think we’ve said this in a couple places. Parts of the portfolio where we have exposure to government, Gordian is a good example, although less more state local, less federal. But, you know, but our productivity solutions really, I think, are gonna resonate and really drive cost reduction. So to some extent, we think an opportunity where we’re more where maybe there’s more fiscal responsibility actually plays to our plays in our favor

Robert Mason: On the product side of the businesses, we’ve actually seen strength. We you

Robert Mason: we actually in you know, we’ve gotten some nice large orders from some of the primes across the portfolio. So I would say at this point, nothing would indicate that customers are changing their mindset around where they’re where they’re seeing our business here at least over the, you know, over the over the past few months. Great. Thanks much. Thanks, Rob.

Daryl: Thank you. Our next question’s come from the line Julian Mitchell with Barclays. Please proceed with your questions. Hi, Julian. Hey. Good afternoon, Chuck.

Julian Mitchell: Maybe just the first question on the Precision Tech organic sales guide. So just there’s a bunch of moving pieces, but just trying to understand that improvement in year-on-year organic sales from the first quarter to the balance of the year. Maybe help us understand how much of that is a function just of selling days, versus, you know, easier comp versus some end market improvement that you’ve embedded maybe in China or somewhere else. And also, I suppose, the orders conversion into sales, you’ve had six months of decent orders. Sounds like that will persist. Are we seeing those orders converting to sales already and it’s just the mismatch is just a function of different comps or are these somehow kind of longer-dated activities in the order book that will come into revenue later than normal.

Charles McLaughlin: Yeah. A lot to unpack here, Julian, but let me let me let me start with the I think what you were talking about the cadence. I would certainly say the cadence through the year for PT will be, you know, really down mid-single-digit in the first quarter. Probably a little bit better in the second quarter and then some growth in the second half. I think that gets to them to be about up slightly for the year. Some of that’s gonna be comps, particularly in China, where we see a lot more of the dramatic tougher comp in the first quarter and in the first half. We’ve always said that we thought some market improvement would occur in the back half of the year. That’s embedded, but it’s not a dramatic improvement in any way, shape, or form, but we do think some markets would start to come back, and we’ve actually seen a number of things where customers were actually seeing that.

The other aspect is we’re getting to really high really high volume numbers in places where we’re seeing dramatic growth, principally in Qualitrol and in EMC. We’ve got some investments to improve capacity, which will also help us in the second half. I think the combination of, you know, comp in China, some market improvement, but nothing dramatic. And the combination of our ability to get more out here is really what changes first half to second half. And then, you know, I think as I think about really what with when we look at the business more broadly, it’s also the innovation case. We mentioned this in the prepared remarks, but a number of the innovations, particularly in Tektronix, really starts to take hold in the second half. None of it but we really don’t have a lot of that embedded at this point.

Julian Mitchell: That’s helpful. Thank you. And and then just my follow-up would be around The, you know, tariff potential there and any way in which you could size perhaps, you know, share of purchases or cogs or something like that from some of the countries that may be affected in terms of US.

Charles McLaughlin: Tariffs.

Daryl: Yeah.

Charles McLaughlin: I would say number one, the Canada, Mexico, even though they were they were postponed really doesn’t have impact to us. So so in that sense, really no impact. China the China tariffs as you know, we’ve had a strong playbook since 2018. We really just pulled pulled out that play playbook. We talked about the, you know, number of scenarios that we we created several months ago when when when we started hearing about what the potential could be. We’ve already enacted those measures and and that’s embedded in our guide. So we you know, the ten percent tariffs in China have been countermeasured, and we’ll we’ll move through what we have I think to some extent how we thought about the year from a macro perspective in China does have some of the the economic impact of some of the tariffs.

I’m not sure we could point to any of those with true specificity, but I think the the way we plan China gonna be down here, you know, mid single digit for the year in China. For Fortive. Think it betts the fact that, you know, there’s gonna be some uncertainty amongst customers and, in China and, you know, ultimately, that’ll impact our revenue. So we’ve we’ve tried to be prudent about that as we as we look into the into the year.

Julian Mitchell: Great. Thank you.

Daryl: Thank you. Thank you. Our next question has come from the line of Nigel Coe with Wolfe Research. Please proceed with your questions. Hi, Nigel. Oh, good afternoon. Hi. Good morning. Good afternoon.

Nigel Coe: Chuck, I think this is might be your last earnings call. I’m sure you’re gonna miss this. This whole process, but thanks for the help over the years, and good luck with your retirement. So Thank you. Couple quick ones. Couple quick ones here. Just the the the days headwind in one Q, we’ve we’ve heard this from some other companies. Is this just the you know, leap year in the in the prior you know, year quarter or was there something on Chinese New Year? Any any more color there And and then just, you know, FX has sometimes had an impact on margin conversion. I think mainly within AHS. So any any sort of peculiar sort of things to to to kind of flag with this, you know, dollar strengthening?

Charles McLaughlin: I think that there are a couple of things there. It may

Nigel Coe: you were asking about days, I think there’s

Charles McLaughlin: Nothing It it’s just a simple day’s catch. I don’t think we have you know, when you look at the whole year, I don’t think there’s a big difference in there. So they’ll come back but that’s that’s the main thing there. Think when you talk about health margins, they get hit with a little bit more impacts. Impact to the margins. Think that’s what you’re seeing there.

Elena Rosman: There’s a bit of a bigger day’s impact to health care. We think about you know, how much of that data is impacted with consumables. For example, that’s about two hundred basis points of headwind in the first quarter.

Daryl: So they’re gross. Okay. Yeah. Two hundred basis points. Yeah. That’s that’s what I was thinking as well.

Nigel Coe: And then just follow on with the spin. So wondering if there’s any more visibility on public company costs and and stranded costs from spin. Yeah. And I think we we sized them roughly around fifty million dollars sixty million dollars I think. Some of that

Charles McLaughlin: we’ll get after between now and spin.

Elena Rosman: And offset is about half of that, and the other half would probably take maybe twelve to eighteen months to work down. And work out. But we we expect to to get Get all. Normalized.

Charles McLaughlin: And, Nigel, on the on the separation cost, I think we you know, in the slide, showed a hundred and eighty five million. Yeah. That’s mostly one that’s all one time cost. That’s mostly professional services. Taxes, lawyers, the banker fees to do some of that work. So we we we’ve outlined that on the slide as well. So as Chuck said, we’ll we’ll get after the separate you know, we’ll get after the stranded costs Making good progress on building the teams here. So we feel as I as I mentioned in the prepared remarks, we feel really good about ability to get get teams ready for and hence our ability to speed up The timeline

Nigel Coe: Okay. Thanks, Jim.

Elena Rosman: Thank you.

Daryl: Thank you. Our next question comes from the line of Steve Tusa with JPMorgan. Please proceed with your questions.

Steve Tusa: Hi, guys. How’s it going? Good. Chuck, thanks thanks for all the help over the years, and best of luck.

Elena Rosman: Thank you. So it

Steve Tusa: just on the on the product businesses, back to the the tariff question. Did you guys see any kind of preordering ahead of the change in administration and potential tariffs, and I’m just curious as to how the, you know, quarter played out sequentially by month kind of adjusting for seasonality. No way.

Elena Rosman: If you if you could

Steve Tusa: Yeah. So I I wouldn’t say we identified any additional revenue relative to relative to people pre buying Steve. You know, what we saw in the in the fourth was pretty good cadence through. Point of sale was positive in North America. As an example, it flew So and that cadence was, you know, relatively consistent throughout quarter. That’s probably our best benchmark. But, you know, we identified roughly about ten million of revenue at Flume that we think came out of the first quarter, but that was really more both mostly US distribution and European distribution. People were starting to get close to incentives as the year played out and so that, you know, there was a little bit of additional buying to get into incentive plans and things like that.

So it’s really that that we identified. So it really wasn’t around tariffs. It’s near as we can tell. Got it. And then just last one on the as a follow-up on the Tektronix, the the t and m side of PT. Which verticals are you are you seeing the best order rates in? Which ones are

Daryl: kinda picking up here the most?

Steve Tusa: I mean, we’ve had it we’ve had really strong anything tied to, you know, defense has been strong. For several quarters. I would say, the the high end what I’ll call, for lack of a better term, the high end of of of semiconductor, high and high speed compute, hyperscalers, those kinds of biz yeah. Quantum computing, all of those have been really good. So design efforts investments that are going into those those opportunities have been really strong. You know, broadly, industrial hasn’t has been pretty good too. You know, particularly in North America, Where we’ve seen the the weaknesses as we mentioned in the prepared remarks is really Western Europe. And and in China and that really part part of that is EV mobility And the other part of that is just broadly China and and most of that is really export control customers that we can no longer no longer do business with.

Daryl: Got it. Okay. Thanks a lot. Have a great weekend.

Steve Tusa: Thanks, Steve.

Nigel Coe: Yep. You too.

Daryl: Thank you. Our next question’s come from the line of Jeff Sprague with Vertical Research Partners. Please proceed with your questions.

Jeff Sprague: Hi, Jeff. Good day, everyone. Hey. How are you doing? Good to catch up. Had a couple loose ends here. Just on the days,

Charles McLaughlin: we just have the number? Like, how many days are we talking about here? Sounds like it’s two ish.

Elena Rosman: Two days. Yes. Two days, and it was about eight million dollars.

Nigel Coe: Yeah.

Jeff Sprague: And you think it’d you know, you think it affects what, sixty or seventy percent of your business? Is that the right ballpark?

Elena Rosman: It’s really it’s no. It would be consumable. It’s are about half of healthcare. And then the remaining, call it, three or four million is in in services and places like Gordian to take great business.

Jeff Sprague: Yeah. So it doesn’t have to be services most so you think about daily service

Charles McLaughlin: like we would do in the service organizations Yeah. For Fluke and Tack. As well as the services that we have in software.

Jeff Sprague: Okay. I think it might impact things in distribution, but maybe not. If the people want it, they’ll catch it up Okay. That’s helpful. Thank you. And then just on China, think you said down mid single digit. I think that was a twenty twenty five estimate. Can you just kind of level set us on how much China what China did in twenty twenty four for the year and in the quarter? Yeah. So I think for for the High single digit. Yeah. Down high single digit for twenty four.

Charles McLaughlin: Down mid single digits for twenty five, with probably q one being down, you know, high single digit to low double digit. In in the quarter. Mhmm. But that’s more broadly. And you know what’s interesting?

Jeff Sprague: Jeff is.

Charles McLaughlin: Our high growth our high growth markets ex China have actually been continuing to grow really well. And so know, that’s I think the offset there is gonna be we continue to see good growth in some of the other higher high high growth markets.

Jeff Sprague: And then just maybe finally for me on sort of the flat AOP for Q1. I I take it that’s still some margin pressure in PT. And then some upward trajectory in the other two segments, but any anything you’d say there to kinda get us in the right ballpark?

Charles McLaughlin: Yeah. I mean, I would I would say but on flattish growth, we’re typically gonna you know, that’s that’s that’s kind of the overall overall affordive You know, we had good margin expansion in last year, so a hundred and ten basis points twenty four. Q one. So when you kinda look at where we’re at on a two year stack, still good despite kind of that low single digit growth that we would have had in on a on a on a comparable basis But it’s exactly right. New Fortive or iOS and health health will be will have good margin expansion and, you know, with being down the way we are in PT, we’ll doing a nice job of offsetting when I think about how we’ve done in PT over the last Your Given the fact that our, you know, tech being down, our highest gross margin business, it’s been really good operational performance to offset a number of those things.

And obviously, our margin expansion for the year was good in twenty four and part because of iOS and AHS doing a great job, but also the the countermeasure work that PT did as well.

Jeff Sprague: Great. Thanks a lot. Thank you, Jeff.

Daryl: Thank you. Our next question come from the line of Scott Davis with Melius Research. Please proceed with your questions.

Scott Davis: Hey, Scott. Hey, guys. You know, it’s good morning out there still. But

Charles McLaughlin: hey, I don’t think you addressed it on prepared remarks, but maybe you did, but this is this

Daryl: for Chuck. The tax rate is seem to be pretty volatile for the size of the the company. Is there

Charles McLaughlin: a particular reason why that’s been hard to to pin down?

Nigel Coe: Well,

Scott Davis: the tax rate came down in Q4. Due to discrete items. That’s typically where most of those things land and they be somewhat unpredictable and we don’t forecast them. And so I think that’s that’s what you’re seeing there. And when you take out discrete items, it’s actually holding into that fourteen percent range. A don’t have. Okay. Sounds

Daryl: I get it.

Julian Mitchell: Alright. So

Daryl: if we wanted to mark if we if you wanted to mark to market kind of where we are with probation and and ASP. Let’s just take those two businesses. What do you guys think

Scott Davis: So

Daryl: the the new realistic kinda long term growth rate are. I mean, we know what what you thought they were when you did the deals, but it’s been a few years now. So If we just mark the market now and you said, okay, over the next five years, what or even longer, what would you expect to be kind of the entitlement potential growth rate to those two assets now?

Charles McLaughlin: Yeah. I would say ASP mid single digit. That’s a combination of additional elective procedures, plus some price plus some, you know, volume share gain, and then as we mentioned in the prepared remarks, we’re really starting to see the innovation flywheel start. So we feel good that, you know, as as as we’ve talked over the years, Scott, that it you know, we had six five ten k approvals here and, you know, it takes a while to get the innovation cycle moving in in health care because of the regulatory environment. But we’ve we’re really starting to see that. So we feel really good about that mid single digit growth rate going on You know, it’s a little bit impacted how we just talked about the days. That’s know, our biggest day’s impact is that ASP.

But when we look really at the entitled growth rate, it’s mid single digit. Probation, probably high single, low double. You know, when we look at the SaaS conversion, it’ll it’ll move around a little bit depending on how that conversion goes. That’s a combination of really just the continued work, great work we’re doing haven’t talked about it in a long time, you know, in some time, but you know, they’re doing a great job. I mentioned the the dramatic improvement increase in SaaS sites that we had, and, that’s really the great work we’re doing. We’ve really got a sales motion going And as we also mentioned, we’ve got Apex Insights, which is their AI offering. Which is now starting to get some traction as well with customers. So so call it you know, high single to low double, and that’s that’s really what we thought we would underwrite when we when we bought the business.

Daryl: Yeah. Consistent. Okay. I’ll pass that. Thank you, guys. Best of luck this year. Bye, Chuck.

Nigel Coe: See.

Daryl: Thanks, Scott. Thank you. Our next question is come from the line of Andrew Obin with Bank of America. Please proceed with your questions. Yes. Good morning, Eric.

Andrew Obin: Hi. How are you? Just the first question, maybe talk about your your software assets, you know, Gordon, Accruent, Service Channel, Where are we in those growth rates and what do the those look like exiting the year and

Daryl: going to twenty five?

Charles McLaughlin: Yeah. We had our growth of high single digits for both the quarter and the year, Andrew.

Daryl: Our software revenue grew overall high yeah. In in q one, it’s gonna grow

Charles McLaughlin: high single, and that’s with some headwinds on the service front. So think that high single is good. We’re seeing you know, we we have those dramatic growth rates at Guardian for for a number of years. So the Gordian rate’s moderating a little bit down into the into the you know, double digit range. Low low double digit But we’re seeing in purpose at a current and service channel, so good growth good growth there. I just mentioned about probation good growth there. So intellects, we’ve we’ve we’re starting to improve the growth rate there. We’ve had we had a little bit of a challenge there in twenty four, but we’ve done some nice work. To continue to improve that. So, you know, overall software in very good shape.

Know, we we mentioned it a number of places where we’ve got some innovation going on as well. In foul in the prepared remarks. So x, the team’s executing well. Innovation, flywheel is starting to starting to take take take have some real impact I would think those businesses and I think as you look at around it, I know you you do this a lot, I think those numbers are gonna hold up pretty well. So we feel we feel good about where our software businesses are. And and we’ve also dramatically improved the profitability. We talked about this. Eight hundred basis points in the prepared remarks. In in FAL. We’re

Andrew Obin: we’re

Charles McLaughlin: we’ve we’ve got a lot we’re really demonstrating how FBS can really accelerate it. Software business, and I think you’ll you’ll continue to hear that as we as we progress through the year.

Daryl: And can we just talk about sort of utilities and power vertical It seems, structurally, things are changing there over the long term. How is the conversation changing with the customers? Do you need to capacity? Do you have the right exposure? If you could expand on that because that’s a big topic. You.

Charles McLaughlin: Yeah. It is. And so it really comes in two ways. In in the smaller way, it comes from what we do with EA and Tektronix where we are really playing in a lot of the technologies and R and D investments that are going into the next generation of utilities and and as as the grid gets get the grid gets improved and technologies are going into that, obviously, r and d organizations around the world are designing those components and designing those those chipsets and we’re very involved with tech and e a there. The bigger number as you point out is the Qualitrol. And and that’s been very strong. That’s both on the grid monitoring side, but also on the transformer side. We’ve got a number of new sensors that we’re launching with those businesses.

We’ve had double digit growth. In in that business for several years. And as I mentioned on a previous question, we’re ramping capacity because some of we’re really up against our own capacity here. And we we look out that’s a longer cycle businesses. We look out the next twelve to eighteen months. We continue to see customers making dramatic investments in those markets. So we that’s gonna be a good growth driver as we’ve talked about for for for what I’ll call, Reliant. We have a new name now for And that’ll be a good growth driver for rallying going forward.

Andrew Obin: Thank you.

Daryl: Thank you. Thank you. Our next question has come from the line of Joe Giordano with TD Cowen. Please proceed with your questions.

Joe Giordano: Hi, Joe. Hey, guys. Thanks for taking my questions.

Daryl: When I benchmark tech versus your peer peer group,

Charles McLaughlin: do you think you guys have just more structural exposure to things like EB in China than some of your competitors do? Well, I think the the counts are tough because you know, you don’t you have a perfect perfect view, but

Daryl: would say

Charles McLaughlin: with with EA, we might have a little bit more EV exposure as a percent of the business, but but I think I think those numbers are relatively in line. And when we cap them against over multi years, we we see pretty similar performance.

Daryl: Okay.

Charles McLaughlin: Then just on PT margins in the quarter, like, I think they were expected to ramp pretty considerably, and they were down sequentially on higher revenues. Just curious any color on that. In in q four or q one?

Nigel Coe: Q four. So the PT margins in q four.

Elena Rosman: Yes. They they were down relative to the the volume decline.

Charles McLaughlin: Avenue.

Elena Rosman: Two hundred and twenty basis points.

Scott Davis: But you’ve been successful with Yeah. We have a little bit less revenue there and a little bit less revenue in

Charles McLaughlin: Places where? You know, they’re in some of our higher profitable businesses. Some of that is that production capacity point I made. Some of it’s a tech. So a little bit of that a little bit of that is is is a little bit of volume and then a little bit of mix too. K. Thanks, guys.

Scott Davis: Thanks, Joe.

Daryl: Thank you. Our next question’s come from the line of Andy Kaplowitz. With Citi. Please proceed with Hey. Good morning, everyone.

Andy Kaplowitz: Andy. Chuck, thanks for all your help. Chuck and Jim, maybe you can update us on how you’re thinking about price for cost in twenty five? There’s obviously some tariff related uncertainty, but I would imagine that the material cost inflation has been relatively benign. So what’s embedded in your expectations for Twenty five.

Charles McLaughlin: We’ve got about two hundred little over two hundred basis points price

Daryl: in across the enterprise.

Charles McLaughlin: And that that’s pretty consistent. Look, maybe two hundred and twenty five basis points up. That’s pretty consistent in in across segments. So in that in that sense, we’ll continue to to you know, we always go after more price. So that’s usually a a a testament to our our team. We’ll see you know, that’ll that’ll mean some we’ll start to see volume on on the in on the iOS front here. But, you know, we won’t have volume in PT most likely. So given given given the outlook that we’ve got around flattish. So so for the full year.

Andy Kaplowitz: Helpful. And then in AHS, I I think in

Elena Rosman: q three, you had double digit consumables growth. It was mid single digits in q four. I know you talked about the difference in days in q four, q one. That’s probably the big reason. But do you see anything in AHS that actually slowed? Or was it really just the days there a difference, a bigger difference in growth between US and, for instance, Europe? And China in AHS?

Daryl: Yeah. Health is in a really good place

Charles McLaughlin: You know, q four had didn’t have the benefit of the year before comp that q two and q three did. So we really saw good underlying performance A little bit of impact on this Ivy bag situation which will we’ll see in a couple of months in q one, but but but, you know, broadly, really good performance at at in health, particularly really across the board in all the businesses. I would say Europe was good. So in that sense, China a little a little challenge. So I would say if you’re anywhere in health where we’re we’re watching is is in China,

Daryl: But

Charles McLaughlin: more broadly across the across the world, Japan, Middle East, you know, we’re really seeing good performance across our health businesses. Now our most global business is ASP. So when we think around around the world, it really is, you know, ASP is really the one One visit. Sells everywhere in the world.

Elena Rosman: Appreciate the color.

Nigel Coe: Thanks, Andy.

Daryl: Thank you. Our next question’s come from the line of Chris Snyder with Morgan Stanley. Please proceed with your question.

Chris Snyder: Hi, Chris. Yeah. I wanna

Daryl: How’s it going, guys? Appreciate the question.

Chris Snyder: I wanted to ask on PT orders. You know, great to see that double digit positive for the second quarter in a row. Are orders going higher in absolute terms? Because I know, you know, the the comps are negative. And then, you know, with that, anything you could share on on how Precision Tech’s the book to bill is trending in q four? Thank you.

Elena Rosman: Yes. So it’s a book to bill for for PT and and certainly for tech and sensing on a combined basis. Is one for the year. It’s a little below just just below one. It’s point nine six. For the fourth quarter, but that’s typical for us in the fourth quarter given the the seasonality of the shipments that we have in the fourth

Charles McLaughlin: Yeah. I would say dollars I think were up q four from q three. And and we’ll grow we’ll grow orders in the first half. MPT, Little bit of pressure in the first quarter because of some of the comp issues I was mentioning around China, but we we still see continued growth in orders here in the first half. So and and Steve’s question around, you know, how does some of the timing I think it was Steve’s around six months or nine months, we’ll start to see some of that shipment impact We did see some of those orders more back end loaded Some of it is because there’s semiconductor related and there’s semiconductor investments in the second half. But we also saw some of our sensing companies that typically get blanket orders some of those orders we’ve got normally, we get for a full twelve months.

We’ve only got for a few months. So we we we see a little bit of that order rate coming into shipments more little bit more back end loaded than than typical. The the but we we feel very comfortable with with that sort of seasonality relative to years past. Thank you for that. We really appreciate it.

Chris Snyder: And then maybe just following up. You know, I was surprised to see Precision Tech organic growth worse or lower in q four, I think down mid single versus the q four down three just because we we are seeing that, you know, positive order momentum. Doesn’t seem like the day’s impact is all that material for for Precision Tech based on some of the the the prior commentary? So I guess

Charles McLaughlin: is is this is the is the is q one is that endowment single reflecting

Chris Snyder: EA Electro now coming into organic? And you know, with that, what is the expectation for EA Electro in twenty five? Thank you.

Daryl: Yeah. So I would say a couple things on the first quarter.

Charles McLaughlin: One is China China a little bit a little bit more challenge than we anticipated, so I would say that’s part of that. Second of all, you’re right. EA going into core and EA’s best quarter last year was was the first quarter because of the backlog coming in. So that’s part of it as well. We think, you know, some good the good thing about EA, we certainly and we mentioned in the prepared remarks that just a put a ball around it, Much of that e a much of that e b mobility challenge we saw principally in Western Europe and in China is the a. So that is that is certainly we think EA will grow mid single digits this year. And with the power of FBS and some of the things we’ve done operationally, we’re gonna get that mark their mark rate.

Back to where they were when we bought the company. So so the margin rate is now in really good shape. We’re gonna put it in we’ll be the business will be back into growth mode as we move through the year. Tektronix sales synergies are ahead of plan in the really, really working well particularly in North America. As we find new new point parts of growth in different markets and we’ve started to started to get some of those orders So I think those that that those are some of the things that are going well. But, again, the well, we’ve talked about this through twenty four. The large order EV business that that was a big part of their business back in twenty two and twenty three, We we have not seen that come back nor we plan for it to come back in twenty five.

Elena Rosman: I just added the the EA headwind is about ten million dollars. On a per basis. That’s it’s ten million of the core decline. For, you know, year over year for q one.

Daryl: Thank you for that. Really appreciate it. Thank you. Our next question is come from the line of Deane Dray with RBC Capital Markets. Please proceed with your questions.

Deane Dray: Thank you. Good day, everyone. Also, I wanna wish Chuck all the best. Thanks. Thanks, Dean. Hey, Chuck. Before you ride off into the sunset, I wanna put the spotlight on networking capital and at six percent, that puts Fortive in among the elite.

Daryl: And so

Deane Dray: I was hoping you could just parse out How that looks, New Fortive versus Ralliant. Did I say that right, Ralliant? So Yes. You did. How does that break out? I would imagine

Scott Davis: the more software part of new Fortive

Deane Dray: skews that lower, but just directionally, can you help us there?

Scott Davis: Yeah. I think that I’m not sure. I haven’t really looked at it that detailed in terms of with Ralliant, but we have looked at it excluding the software, which would have it around nine percent. That’s what I would expect Ralliant at And that’s But which is also really good. Yeah. Well, both have a really good working capital.

Deane Dray: So

Charles McLaughlin: similar question for the two. I was not expecting Ralliant to be that low on the net working capital, which is a positive, obviously, but just what does that mean for Ralliant’s free cash flow for both companies? Kind of free cash flow cadence for on an annual basis,

Scott Davis: based upon that. It’s got to be both

Charles McLaughlin: very comfortably above one hundred percent

Elena Rosman: Conversion?

Charles McLaughlin: No. I think

Scott Davis: I’m not above one hundred percent, but pushing and I say that ninety five percent to one hundred The two things that really drive you over a hundred would would be whether you have software. Some software companies have maybe working capital and or doing m and a. And be able to do improvement. But I I I expected to be ninety five.

Charles McLaughlin: Yeah. We’ll certainly get more clarity as we get to investor day, but you know, Dean, you point out free cash flow of both businesses is gonna be really strong.

Scott Davis: Great. And just to clarify, on your software business,

Charles McLaughlin: collectively, are you at

Scott Davis: the negative working capital level? Collectively, I don’t no. Because not all software companies do that, but some some do. I I I think we’re we’re pretty flat. Yeah. I think we’re we’re still working through service channels probably the

Charles McLaughlin: the the big change there.

Scott Davis: Dean,

Charles McLaughlin: they weren’t typically that way. And so, you know, contractually, we’re working through that over time. Accurant’s probably the biggest negative working capital software business we have.

Scott Davis: Great.

Daryl: Thank you for the all that color.

Scott Davis: Thanks, team.

Daryl: Thank you. Our next question is come from the line of Jamie Cook with Truist Securities. Please proceed with your questions.

Elena Rosman: Hi.

Jamie Cook: Just two quick follow ups. One, within PT, I think last quarter you noted some improvement in semi. Can you just talk about what you saw specifically in the fourth quarter and your expectations for twenty twenty five? And then my other question or, you know, congrats on on the spin happening earlier. Just because we get questions, and I I assume you know, the the probability of any anything happening on PTA, an inbound offer, we can just assume that sort of put to bed and and and not not on the table. Thank you.

Scott Davis: Yes. I I take the second one. I think that’s probably a pretty that’s a that’s a fair assumption that we’re we’re going forward with the with the spend. And we’ve evaluate all in inbound offers. And then, remind me of the first question that that you had.

Charles McLaughlin: Oh, this is Ruben and Sammy. Yeah. I I Hey. Maybe it’s Jim. I would I would say a couple of things. One is where we’re kind of a little bit getting back to the prepared remarks. The high speed compute aspects of of semiconductor been good. You know, NVIDIA is a customer Some some of the large hyperscalers are customer set. I would say that’s the good part. I would say that pretty typical to what you’re seeing in some other places. The the weaker aspects of semi are more the discreet you know, sort of discrete consumer products, that kind of stuff. And we don’t anticipate a return on that. We’re starting to see some green shoots there. But, without a doubt, and that some of that’s in the order rate, but we we’re we’re sort of expecting some improvement in that by the end of the year. But we haven’t anticipated any big dramatic improvement through in the end by the in the end of the year.

Jamie Cook: Thank you.

Elena Rosman: Thank you.

Daryl: Thank you. Our next question’s come from the line of Joe O’Dea with Wells Fargo. Please proceed with

Charles McLaughlin: Hi. Hey, Joe. Thanks for taking my questions. Hey.

Scott Davis: Fair amount of focus on on China, but, you know, just if you could talk a little bit about regional expectations specific to to Fluke, really, and and how you think about the

Charles McLaughlin: growth opportunity within the guide. We think about it from North America, Europe,

Elena Rosman: China kind of perspective. What what type of growth do you think you can do in Fluke?

Charles McLaughlin: Yeah. I think we think about we did I think we did know, sort of low single digit plus. It’s Luke at twenty four. We anticipate the same thing being in twenty five. So pretty similar expectations He’s done a nice job. As we mentioned, you know, making a lot of their own luck with with this acceleration of innovation cycle. North America will be the will be the winner in the clubhouse most likely. Regionally? We did but we expect some growth in in Western Europe. And we expect good growth outside of China in the high growth markets. We do expect probably China to be down a little bit. In the full year with most of that being in the First half? Just because of comps mostly comp challenge. So we don’t have a big anticipation of any big big improvement in in in the market. As I mentioned, point of sale is a little mixed. Our our sort of day to day run rate point of sale at Fluke in

Nigel Coe: China?

Charles McLaughlin: Is actually down down but our sort of project based point of sale is actually up. So so we are still seeing some and I think that’s really a function of the innovation We’re finding places where that innovation can work. Sort of the day to day run rate business is still hasn’t come back yet. And and we’ll probably we’ll we’ll continue to stay you know, prudent around that as well. So, you know, Fluke’s Fluke’s in a really good position as we start the year off and after after a strong finish. Some of the know, maybe a little bit of that weakness in the first quarter is what we mentioned, which is some of the revenue coming out of the first quarter.

Scott Davis: We saw that in the fourth.

Charles McLaughlin: And and then on the sensing side,

Nigel Coe: just any color on what kind of growth you expect out of Qualitrol, trying to get a little bit of perspective on whether those capacity constraints and what kind of an impact they have on on growth constraints. And then also within sensing, just anything on Hanksler and Demand trends in in Europe. You know, whether there’s there’s anything encouraging there.

Charles McLaughlin: Well, I would say number one, Qualtrul, multiyear double digit growth and we would expect that again this year. So and and that’s a little bit of the capacity constraints, not just the volume this year, it’s the sum total of the continued volume growth that we we’ve got. So we’ll have a little bit of capacity increase there that to to deal with the long term demand trends that are that are very strong. Sensing in general, we saw order growth in the second half. I think double digit order growth in sensing in the second half. So we but some of the blanket orders that we would normally see at the end of the year to cover the entire year we did not see and I would say that’s part of that is Hensler as as you point out.

And I you know, I think where your question is going is exactly right. You know, they’re their exposure to European automation is is a higher percentage of of anywhere else in sensing and and that’s really where their business is the most week. And also China’s been

Scott Davis: And we

Charles McLaughlin: we have some automation customers there as well. So and that would principally be in discrete automation which is probably consistent with a lot of what you heard from others

Scott Davis: you know, over the last few weeks.

Nigel Coe: Indeed, it is. A lot.

Scott Davis: Thank you.

Daryl: Thank you. Our last questions will come from the line of Scott Graham with Seaport Research. Please proceed with your questions.

Scott Graham: Hey, Adam. Good afternoon. Good morning for you. And

Daryl: thank you for taking the question. And, Chuck, good luck and be happy.

Scott Davis: Thank you. A couple of questions.

Daryl: Around first of all, on my questions are actually all around the margin. So in the quarter, you know, was price cost your, you know, your typical spread fifteen hundred basis points. Is that fair?

Elena Rosman: The price was three percent in the quarter. It’s And when you look at gross margins, we expanded gross margins ten basis points from the quarter.

Scott Davis: So

Elena Rosman: relative to that, you know, sort of spread, it’s probably on par with what it’s been over the course of the year.

Daryl: Okay. And then could you remind us what the restructuring savings will be what’s what’s the plan there and how they layer into earnings in as the quarters progress

Elena Rosman: We we funded twenty million dollars of restructuring in the fourth assume that that rolls in and and get gradually we see the the benefits of that over the course of the year. Not much Maybe a couple million dollars of benefit, call it a penny, in the first quarter.

Daryl: Go ahead. Thanks a lot.

Nigel Coe: Alright. Thanks, Scott.

Daryl: Thank you. There are no further questions at this time. I would now like to hand the call back over to Jim Lico for any closing comments.

Scott Davis: Well, thanks, Gerald, and thanks everyone

Charles McLaughlin: incredibly incredibly thoughtful set of questions. We appreciate all that. Obviously, Elaine and team will be available for any other questions. Just want to thank everyone A lot of comments around Chuck. I just wanna make sure everybody knows he’s he’s not going anywhere. He’s gonna continue to support the Fortive team here.

Scott Davis: In

Charles McLaughlin: through the spin. So you you you may have an opportunity to hear from him a little bit. But he’s done obviously, done a great job for us over the years and and we’re we’re excited for what he will do next. But but that’s not just that’s not tomorrow. He still got some work to do near as I can tell. So

Daryl: Anyway,

Charles McLaughlin: as you as you can hear, exciting times for us. We couldn’t be more excited. Good finish to the year. Yeah. I think in many respects, we we pointed out some of the five year numbers that I that we’re really proud of. When you look at several records set in two thousand twenty four, around a number of things despite some of the mixed macro environment, we were able to do a number of things on the margin and free cash flow front I think are just synonymous with FBS and really have an opportunity to to really set us up for two thousand twenty five. But the probably the most important thing is how FBS has really driven innovation. And and really when you see that across the board, I think you’ll hear more of that as we progress through the year.

We’re excited about twenty five. We’re excited with fact that we can bring to you the the idea that the spin is gonna happen faster it really speaks, I think, as well to the power of FBS and the quality of our team. So we’ll we’ll look forward to the follow-up questions. We’ll see many of you out on the road here soon. A lot to do here between now and in the spin. Excited about it. We look forward to continue to talk. About all the exciting things going on in Fortive. Thanks. Have a great day and have a great weekend.

Elena Rosman: Great.

Daryl: Thank you. This does now conclude today’s teleconference. We appreciate your participation. May disconnect your lines at this time. Enjoy the rest of your day.