Fortive (FTV) 28 Jul 222022 Q2 Earnings call transcript

My name is Rob, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation's Second Quarter 2022 Earnings Results Conference Call. [Operator Instructions]. I would now like to turn the call over to Ms. Elena Rosman, Vice President of Investor Relations. Ms. your begin may you conference. Rosman,

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

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

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

the broad-based Shanghai, guidance, adjusted on X% effects Thanks, able significant increased our the core year. supply for high quarter. and quarter, with team Elena. earnings and achieve growth, in generation the strong Hello, points was the XX% in to more per operating second We flow demand our of outstanding orders our reflecting solutions and raised end FX improved application Year-to-date, shutdowns across Business X. double resilient XXX revenue Slide begin At and chain remains in an in all outlook growth deliver ongoing joining thank sterile portfolio. had inflation our cash challenging robust. and profitability expansion, environment resulting second earnings the you to COVID-related constraints, leading ARR the FX higher Despite System digits, Consistent margin and a despite for for headwinds. I'll diversified hardware time, everyone, adjusted headwinds to the product our low basis and both of share customers the our revenue, with workflow execution and first portfolio, allowed Fortive us. above rising same us free excellent quarter software our for margins contributing rigorous of

Slide to gains leverage to and favorable that the what what of the the want continued an provide the half by current drivers. second the X% orders the innovation, yielding orders I in strong Starting remained quarter accelerated environment, driven on demand share than to with and increased higher Turning the in secular X. XXXX. update hardware in backlog we're ended we on and year. year-end left XX% second quarter, seeing Hardware expect second quarter, a

constraints will component continue for XXXX into traction persist and that XXXX. Our while we supply rest measures chain the gain expect to of

of and May, the tools lockdowns safe COVID employees continued we in obstacles, keep to we our is FBS utilize headwind unprecedented ability risk, commenced half. for highlighted customers navigate first $XX March example in late that previously risk of million This China in ongoing to and team's While most an the deliver Shanghai from excellent remain substantially shareholders. lockdowns mitigated our through the in of the most a and of shifting

the product remainder demand. as continued of us Moving core customer our we to the higher slide, resilient year more from to right side expect of positions for portfolio the benefit the growth

lower and contributing upsell and build for also to to with ARR momentum the full our double-digit in We logo software year. generation bookings, all businesses, churn continue new growth cross-sell

half Given for first of raising performance, the year. the strength outlook our are we the

includes revised of contemplated. million that a headwind Our also EPS foreign not approximately and exchange outlook was $XXX previously $X.XX on on revenue

our to accelerate and investment convert our more earnings underpins us our in to and to cash strategy reinvest thesis to our our returns shareholders. ability Lastly, businesses, enhance allows

resulted in end X. done revenue end to we work more stronger Slide durable serve Turning markets recurring mix the today. of The the last years businesses diversified profile a demonstrated have collection by to market all we X over the and build shading a has as in

For there health market revenue are characteristics. markets. end further in Today, sizable example, across which opportunities slide, from recurring markets. you range And repair revenue fueling the in very vehicle of revenue percentage our a has end as revenue can of and is care, a by XXXX, largest our came the durable retail see

better-than-expected our brands with advantage growth revenues North our participate, are take X. Solutions have Europe the in X at like revenue quarter, to single-digit businesses strong driving and Intelligent We company segments, America Slide growth expanded that model consumables growth Western in and XX% core markets. points high you second of some these of in have on today and I'll look business expansion, basis the end with more momentum, is more the includes we services and offsetting markets doubled with total than our China. The have IOS of leading and of several beginning XX% have improve price recurring. and its strong growth headwinds. at to XXX stronger core of in up double-digit continued than and and which in FX to globalize Operating to Tektronix. and that availability with secular each inflation to the incremental shipments made is work revenue realization businesses growth, footprint we more portfolio the opportunities done improvements percentage sustainable details sequential driving of supply software the the operating margin core offset contributing revenue, This When we have on which now additions the which provide we drivers

up quarter chain core continued mid-teens including innovation service in product highlights growth, new offerings, to Solutions, while Fluke's and move other their recently drove in rigorous include: the forecast Fluke orders has management launched Some daily Solar the to year-over-year addition SaaS year. the throughout because supply XX% for bookings diversifying pace, globalizing base. progress Intelex double-digit continued growth XX%-plus and for revenues strong of continued year. saw Scientific iNet, on Industrial customer the ARR the the to up track

Department they large projects asset customers, with Pennsylvania and and up half made facilities expectation several an software half management. leveraged up to Department the Education is city York strong were manage XX% platform bookings commercialization the of a and state of double accelerated and Gordian's organization. building as General continued Moving have infrastructure life the Gordian success revenues cycle second a including City to more New Accruent their capabilities Services, than across digits growth to with significant build for procurement of second FBS customers. of sales Their foundation reflection progress bookings.

revenue managed Finally, continuing solutions, maintenance customers another of quarter to with work. is ServiceChannel their had customer increasingly growth. facilities demand double-digit ServiceChannel outsourcing for see strong

energy, adjusted as partially markets, core drivers, Turning mitigated Tektronix of Slide the continues achieved to X margin PT in Technologies. secular new Sensing in particularly backlogs and revenues expansion, Precision Total X%. and going across robust lockdowns operating strength including devices number and major record and of the of FX. medical, end the precision of electronics component levels. costs power of to grew benefit to continued a offset semiconductors Shanghai basis into another innovation points management, revenue from pricing geographies with expanded quarter and XX growth use strong We now Technologies. China with double-digit cost and raising expansion higher by industrial, the favorable semi, orders power of and growth driven remained X% disciplined over growth revenue space XX% by and Demand revenue broadly. increased core

to vertical in traction pricing, Some continued strong for market X driven include: bookings the new growth provides product XX%-plus highlights customers; Series which another mid-teens countermeasures technology Gems, in second at innovative Sensing gaining growth example platform launches, an and the globally the are businesses. of strategies end FBS quarter differentiated MSO, continues contributing at with markets at represents that Tektronix, and to cetera, mid-XX% those and next-generation be and growth quarter; in in by including et growth innovation core

COVID now in to single-digit to implement North reduced surgeries Europe growth savings, points basis in mid-single-digit lockdowns, and in the the in driving operating Advanced capital basis Total was Solutions. quarter increased low quarter, revenue to second in tools, partially the growth team equipment of China staffing constraints single-digit improved Healthcare of in and of Slide associated procedures by across persisted in accretive Elective XXX challenges, Moving contributing elective decline X% of limiting pressures, Low expected, OMX. in growth consumables. to related a with second XXX quarter. continues ASP contributed benefits within core offset the North in supply adjusted points along second the to which America, core America including margin the productivity segment addition chain of COVID as high China. in revenue expansion X%. ProVation the growth X double-digit revenue the growth the acquisition, Western to FBS number with The which

half Provation's business from revenues half Censis hardware. They a of migrations in in XX-site SaaS Essentia grew revenues GI quarter several from X-year difficult where was Health, are sites more include: competitive a offering, standardization highlights Censis stack the SaaS have other XX.X%. its performance other grew the which including Apex order the digits. a double wins, strong On comp wins. CensiTrac basis, by quarter orders offset Some and and new marketing are another had very than prior of

facilities, Obeya areas. mitigating lockdowns has doing in portfolio impact the at utilizing the utilizing in supply Business creating supply at in implementation challenging and strategic performance migration Tektronix, in us, Slide working profitable businesses production, enabling Accruent commitments very System capabilities we're using to for lean to half; Turning is our an in closed-loop bookings products. driving and Rooms product potential what Fluke this in on and growth chain build The effectively accelerating distinguish otherwise new our new visual at utilize the significant and our differentiator be production to net the in the X-year vitality, resilience, demand doubling management operations Kaizen Shanghai Provation management of Fortive a growth COVID-related to leaders Similar improved include restart region of to drive daily align of SaaS effectively products our is capital. and opportunities, to meaningfully quarter ensuring accelerate continues a significantly to to deliver to Examples enhance our and X. for new innovation our first availability the improvement revenue environment.

FBS. applying And it As you that, can outlook. and the in performance provide and see color will I'll our by second all quarter, pass with who examples success Chuck, half more our financials had these to XXXX we quarter the over on second tremendous

Thanks, recap X points total will Jim, revenue which of by Slide and begin I contributed growth in partially by second X%. the our everyone. core total of quarter generated with a reduced with on Acquisitions year-over-year X points quick performance. XX XX% offset total We quarter. FX, growth of to growth, hello, growth

increased slide. Turning segments, this America digits, to mitigated contributions of revenues growth again to strong to double-digit in lockdowns each Jim in segment we while that these highlighted the Invetech. grew major from high with contributions single up outside Shanghai Western of revenues China, favorable software earlier. low Europe mid-teens, We regions in from double-digit the a on as growth and mid-teens core were return services. the and side Asia had right-hand China revenues growth North with including

quarter replenish backlog approximately as China and We build with access in second half also assure customers heading to to inventories in the order supply XX% looked the to continued XXXX. and growth into

the we by transactional over offset cash points volumes Lastly, impacted XX.X%. performance on markets. quarter, demonstrating were increased quarter, of Adjusted we On across the to XX earnings expense. reflecting as per to quarter. basis teams margins more in which tax share gross offset flow double-digit higher points another margin while in input share are strong higher XX% the FX count, higher increases XX, at was expansion cash margin the our points operating basis negatively both in XXX Free free price were of to Adjusted basis than well basis $XXX was growth show costs. lower standout second revenue and in down by Gross adjusted which headwind strong margins $X.XX, XX expansion as operating high-growth XXX Slide partially job million, had interest excellent conversion highlights offset expanded and by XX% reflects our operating doing the fall-through points, flow quarter. price implementing

the the the outlook Turning Slide on remainder of and XX year. for the now guidance to

single up core to XXX third double low growth earnings to of XX%, adjusted per the of expected X% XX%. revenue be $X.XX are $X.XX year-over-year high QX, profit expect digit, range and We in QX, in $X.XX operating at share the to Adjusted both be anticipated $X.XX in the to the least fourth points range up quarters. to digit in to XX% and up margins with basis of in to

be For lower the FX narrowing reflecting per $X.XX XXX in higher to FX headwinds performance over we higher growth to to adjusted interest operating are year of $X.XX, up for our points to every of prior revenue versus and basis the the headwinds margins range segment. core are more we X% to Adjusted $X.XX full X.X%, than incremental incremental while better revenue XXXX, share raising core total $X.XX expected and with reflect outlook still operational year, midpoint to addition the to taxes in offsetting guide. of raising are growth earnings

free average XXX% approximately We for be the to flow half the in cash year. second seasonally conversion and strong full expect

the and Moving the updated the on revenue year, Slide walk left. starting for to XX

than revenues revenues the to to quarter. and first performance to headwinds the stronger-than-expected QX, in were half previously that IOS shift pushed our reflect as Shanghai-related recover us more First third outperformance expected in get back incremental lockdown offsetting FX in allowed countermeasures to volumes half with the

pace to revenue half revenue growth we half bridge chart, It Looking in the million last of quarter. now step-up volume our we've and lower first backlog robust across right-hand updated side a continued reflects showed portfolio. you our of approximately of by second $XXX supported at the recurring the position

the stack. We Incremental On portfolio second half in the the risk contributing levels, also continue margins expected and a XX% the the mitigating attractive first. growth net second on actions on average of volume continues sequential versus roughly growth to at through taken half. to at it basis, to half. fall to high to profile, margin the more a is the core our company revenue embed X-year is summary, midpoint, in the build slowing recurring favorable second second in durable half performance with are strengthening price XX% a show of the In we've benefit demand

Slide Turning XX. to

there's delivering hallmark this flow, since our more Fortive that than As cash shows XXXX, continues higher, strong up free our and faster of highlighted, than Jim the A a be today earnings. free more which is and flow. investment thesis, profitable growth, nowhere of compounding doubled revenue cash has to nearly

last which accretive proactive taken cash our flow and through capacity to free and with the we've disciplined compound sheet, returns balance steps few ample to for higher invest yields years, combined capital Over deployment. strengthen growth generation,

As to in deployment. and reminder, of half a billion driver deployed as the primary M&A capital continue we of XXXX towards prioritize $X.X the second M&A

second returns the year-to-date. with the totaling we price, consistent of At continue compelling back investments. share of our current return to bought in X In all criteria opportunistically shares see addition, quarter, shares the we million

exit to low relatively debt to some our to we remarks. back that, us net accelerate invest continue closing to businesses, EBITDA, of giving approximately and year returns. total M&A pass As enhance shareholder Jim it strategy With substantial the leverage with X.Xx in for I'll firepower

on now We're Slide XX. Chuck. Thanks,

spend for positive highlighting to advance a communities customers, want I the questions, to mission. we move and we our impact as are we sustainability having Before few suppliers minutes employees,

and of I'm of the of accomplished, the targets June, we set XXXX aspirational initiatives, such our and published to report continue we've many As our incredibly sustainability proud reporting robustness know, and what we you GRI, in Compact SASB, Global signatory. TCFD a with as UN the our serves the reporting ESG key report This as Development progress toward frameworks, Goals. Sustainable of UN as communication principals the including alignment and

emissions Scope significant progress strategic sustainability emissions greenhouse made X goal achievement our between of Scope early; also X We pillars, XXXX. XX% and of reducing GHG our XX% XXXX each gas and across by intensity intensity including:

report, target Scope our and Based X is from each diversity. inclusion absolute website. lastly, COVID. leadership and reduce more examples in senior continuous our have guidance. initiative the planned Targets of services, encourage it aggressive new There's our the by keeping result goal Science with products our our goals, in including completed in and and target our to more that to check on X out inclusion on innovative audits XXX% spend improved we leader and gender diversity as XXXX culture, we achieving a And We emissions and a a our XX% levels, exceeded on early of GHG of despite performance we supplier much XXXX diversity with XXXX target which and As improvement you set including and and of sustainable aligned supplier

Fortive growth. more on times are even year. the earnings of most of XX, resilient show-me that difficult is a said in flow and the double-digit We execution successful demonstrating Lastly, we Slide drive cash XXXX free formula, to growth,

generate peers demand mid-single-digit exceed track commitments, that profitable X-year growth and earnings headwinds. generation differentiated XXXX expansion, prolonged basis. points on growth to margin and in flow, per basis operating annual growth in cash our in core of profitability dollar of driving innovation, testament to while recognized. all and XXX and unprecedented on amongst stack are meet XX% industry or free than is growth including XX% revenue FBS, more XX% and We our navigating is a a helping This growth cash to More beyond

deploy creates through disciplined highlighted, and deployment. capital that growth that returns to compound Chuck more opportunities accelerate As cash to

year July, This to seen special we're one have our of team best-in-class company. inception, we company, from Since yields that incredibly contributions sixth half performance, performance. around you've a public the we Fortive As endeavored celebrated proud a truly world. first as build our with our the our

see As your XXXX, goal, system. through to business strength quality free Elena. I this look questions, you strong highly I'll the the of to made brands growth cash the technology, that, and margin it outstanding power of with against our and have and considerable can of forward in performance through back our exceptional portfolio progress we flow desirable through with turn our

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

[Operator Instructions].

Your of from the from Barclays. line comes first Julian Mitchell question

How a a one X little core to and versus segment. other the at in you AHS X% headwinds sort this the X% that, main That's Chuck, seems at XXX first stuck have in that just factors higher. that question the bit thinking XXX, divisions. are are year a Jim of QX? And around year. bit rate about, from higher there Maybe, the and the kick points thinking been first volumes the we're And China on where about the the out pricing sort half could impact the of growth say, the pricing overall little when growth some 'XX, aside

Yes, Julian.

half. our get the some into first accelerate we A in a we number of to first core continue see at -- We'll versus anticipated think, really America in We quarter it's I about puts and thought the way little things year. will those going That in a with then one, the core itself little bit it really see supply -- was I in We the and good second anticipated. for it the about worse electives, would North come We still came feel if that. second AHS say half China of growth in better. obviously, equipment. -- little did quarter, as for quarter, issues think in with in better anticipate, procedures, and to AHS perspective guide. chain the growth we in to bit the second we China. think the much we would obviously elective segment acceleration a takes from

fact, started need the we the see that that see In equipment We're for second production seeing we've already need to in to kind of we half. June. what

it's in to environment, in continue price of we'll core bit get to will than second more be growth we but second little the little Relative price, we this did bit So quarter, a the price half there. just but to step-up the a in ahead difficult in more we're price/cost. get think

I AHS. we margins were quarter So really, in in that think second in a sense, the place in with great

on been In fact, hadn't it of have the guide. would we FX, current been right for if some --

better We'll continue the think I So is But with next work segment fine. year. price. we're little relative in I very a on We'll bit get think to price a we're we -- where stand place. more to price/cost, a into good in

seen other the inflation haven't We on much we input and as places. health some side have in as

to a little in we're at but it's the particularly more some segment So in itself, contracts of those that longer going longer-term ASP. segment, take to good get negotiating price

capital that ending year. to we the say, helpful. M&A talked look deployment. then second the one you at, But up X.Xx on maybe And ask Chuck the did That's quarter, if Not the step had leverage going about pipeline. about in buybacks

there So given figure the kind now? missed. planning a which of our of think, what trying to Share maybe count lives I guidance out that easier. of at share of on, you lot current And are in makes was deck, compelling X right matters returns spend sort I numbers the buyback are prices, comment

wondered what year count in share discussion. vis-à-vis you're buyback Just for on the the dialing

we million we're there forecast finish half, continue leverage just in opportunistic will We're saying know, as as and X capital Julian, over It's the our being share we you But -- first we'll program. where to as opportunistic. first here. really any What M&A the move deployment. not did priority X the a our the it's Well, forecasting is remains in we you not buy buybacks first as without forward. half know, quarters, don't year be

XXX million going outstanding, appropriate second half. that with be this the We the Julian, shares into Elena. assumption just, would ended And the is so quarter

America. from the comes Obin from question Bank Next line Andrew of of

Are equity follow buyers, more you fundamentally more sellers' change, or talk is there's strategic it actually And too buyers' of expectations of or the private expectation a environment changing. M&A tell? just to will -- I lot maybe sort pipeline. exiting, up early seeing So on about any interest maybe so, changing, rates

There what obviously, a they're it seen question. both would complex a is Andrew, one at say so a higher the reality in equity prices it's but seeing number in I seen on buyer this XX don't Yes, think But of in, think transacted. going is have point, set some a we've last here here been where I we've things I But private obviously days, seller, still really that's really It's and really reality forward. places. sides. don't

it So I while. things this We kind busy. We've sure. seen little horizon. of take longer a for think we're But in going takes would disciplined continue here to remain be time to

think it's maybe I We're suspect now. horizon. I call of of So we'll start here maybe into kind I'll XX-month to a was quarters said ago, where right look that's months normalized. see kind to things time maybe time obviously more at even of fall, I later to in what the a that couple frame. some XX-month X it start

the it's board, you. from of good? the Europe, season, for I why then is we're what's of a just okay. question margin, Why looks even surprises, earnings Western there? one This another core. just you, happening of not for seeing And more Got think the just mid-teens you. that's And sort And across actually Europe headwind so on

Yes.

it are look Orders at half. of sort North said. as in if first little compared actually been a Europe And a to Western if normalizes think a kind true we you of the for it's North America. normalized good has us. quarter -- it but better you I bit little look bit America, story in more -- the Certainly

Europe the the location more more in of what would We little probably I seeing our of quarter, of more we're probably Western So is little backlog backlog out. them a have a on a function, bit say because U.S. getting bit many in in just factories, just the

including right health, So little Europe, And business bit But prepared Russia, the we Invetech to theater, if Eastern are in the then it's see was out story. remarks. a market, you in entire European now that we at now Europe. slightly it seeing look the called that. you Western really start different high-growth a In good

because obviously some Russia of the impact. to You start see slowing the of

good it's So a Europe. in Western it's -- really story

bit and look step different it still But you little little pretty might fit look Western through a Europe. going story, If on to do the as in a we're some we more seeing. back the tell slightly headlines more well and year, I bit does that of broadly, think we're

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

seeing And guess, What in of are the of particular, you health stuff? guys the industrial just I type in China? outside stuff, more care

Yes.

obviously one the of think back. I has China the obviously, highlights quarter of, was come how

I actually Chuck point is broader -- our is digit Steve, the data in is of was that and at, think I sale, shop look Fluke channel, the one point our economy, more at which was double of digit our which view high single in a quarter.

than was Sensing. Obviously, the in slower really the first We from a So I little as China businesses, our good quarter. business, good said, other in health had good think you that standpoint, we business had quarter. a in

the we half. the that suspect So would look And we I those half, that's still And on at first again, businesses. decent as of pretty pretty Tek where in It's continue at OEMs going the our a number been good. to said, Fluke have assume I here seeing -- we're Sensing and with when It's broad-based. side good second in business. places and plan

quarter to for the another in Healthcare is think in we to at good business place. probably we're be but of part least the what here So hospitals, remaining a little a challenged relative does seeing continue

digit I was low Gordian one. have on one up think, I in and you I Accruent, last quarter, the And think saw the it then double slides.

some those how think I the are you time. growth was there? going being Accruent it think on accelerating that's better than recall I businesses there at you been guys and the expecting. What's marks I around had growth that over question

on increasingly the Certainly, and We're going we and the mentioned about But we're We with as Washington business, of I the that with state channels you common probably strong ServiceChannel. as customers to of the some to product businesses. think we're back good that to things strong some seeing combination traded as stuff. mean, like think and things New that said, that Yes. of We've the we're continues. spend. that increasingly we wins some -- going some have of in lines of are that out Gordian, be city think of the businesses well. sales as We increases with about after those obviously, very helpful good we between really -- business in going York. have local some business And current

just we're seeing think I dynamics. good So

we've about. nice -- talking Accruent we're -- seen better job And to through with starting to year. are see to continue I the Olumide think going there we've has that team. been get to going the be turnaround done the are in bookings a

think, to work, I to Accruent, story, fix-it a think of I starting in that said, lot that FBS. user will and and of a that some the general, Gordian and really countermeasures. see team. a great year. lot as We energy of a the we've optimizing They're some of of results into our helping effort been of really has out So sort put of through continue play

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

XQ we've of flat digging We year-over-year. XXX got margins. and into margins points basis just expansion So ASP the got in then in guide for XQ

drive the assumption there -- just sorry, that of terms leverage ASP So underlying in wondering what is to happen operating needs of to sort improved what AHS. at

I than shrugging achieve that, So QX nice so that little They're Nigel, that we're the the the growing, pleased given half, of in not showing margin QX us good for year. expansion particularly fourth to much margin levels But quarter, nothing as in off and seeing. second we're of this saw bit sequentially well about so there, despite take in really superhuman saw that. normal is pretty We really FX, other that that actually quite I'll a core in expansion well.

you step-up. and need big look So on when normal you QX, at flow-through QX now. don't some just based we sit right where It's

been in have quarter had think better. quarter second for hit on onetime we would the I pretty margins a even or and AHS decent FX the

into that Nigel, as that So we I we of normalization think what margin and story in this see, when a you kind really segment. a said, take of account, great is

is AHS FX the heading it more mean, other sounds than I transactional Great. segments. the like

maybe the Just because to wonder understand flow my did touch why is cash conversion, I why. follow-up. that you flow I if I But on I sure don't free cash just want could free clarify in on just

But obviously things. credit within the your You're it's tax this number? you some are, very headwinds impacting just you compared more Because are impressive, especially absorbing year if R&D of that impressive, how peers. to even that's wondering but

for again, what X looking thanks this you're our first so another in question. what hitting year. is out of it's the different our Yes, a put We about at half. is of this second in Nigel, that's other actually where got in million in all are half million question transactional little what we we've hiding really of actually in guided when But we in from segments. on AHS, the all FX, they already guide would the there for the it's and and seeing hitting are stronger the To coming of the them. at the basically probably anticipated that terms $XX next we are. year coming $XX there But And QX, Yes. we revenues guidance. X thought contemplated

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

color on of book-to-bill little strength. yourself you that both more of driving the getting the on there's I'm color I But give kind I sides impacting assume just could out would what's little if can issues looking give at kind door the and book-to-bill. that still us you some a wonder of equation? backlog both at order Tektronix, the a level.

Yes, sure.

over we're prepared about in think, an a orders think about lot we Jeff, bit remarks. it from talked Their really work the like the team excited several book-to-bill, a that little quarter launched, in quarters of innovation done perspective, X.X. we've second I last the really has almost the I X.X, that was the

and we in follow-on probes the which like enhanced those -- very we see products. launched backs -- So Series some taking go which they the even with going also the really They're to good and had to to -- orders follow-on things good. It's mid-single-digit that, They're scope story. prepared they're advantage growth. going mentioned X We've Series, of continue remarks, is innovation well. be of do X continue that on obviously launch, to an an

with more certainly Obviously, power batteries from of side. transformation the digital the of needed challenges we're challenges, some the we're R&D good. some to innovation got challenges market's really benefit everything only sensor, investment deal in more EV that getting getting power benefit a technology it's on, we've -- So digital some an particularly to really are investments. how about more small IoT now We getting those in just in But of technology order the power talked around we've of semiconductor from story. needed more everywhere where going and not being the the got

the advantage strategically years, really means get caught to continue the over have playing taking -- that in channel that very said, we some they're They'll see That out order last in inventory with with few well. their and get up they're is now They're -- good to partners. So starting starting on of orders, of get mid-single-digit things had growth. to as we strategic quarter. they've plan those strategy to starting growth obviously we're low those

we're pretty our in everything channels. really on much mostly So hand-to-mouth

So I strong second the well. continue really is the business to now just half really, here the as opportunity to think, in build

talked, that the think you time Tek I you elaborate as the business? maybe you're of had pivoting of that mentioned kind last production. sort more? where the the activity Could reshoring investing And bit were a in still to on little we preparing Interesting. or where maybe capitalize going kind were that were of in of Is they seeing on element people show a some they

onshoring are Washington, the or from certainly been relative be, in going opportunities of semiconductors. certainly, fleet of do out production lot be obviously, times, going new those to a to benefit side here generation key because some are required there. has But have that we'll as going play what designs many a to from don't occurs semiconductor perspective. We be We to announced of Yes. semis,

all if around dollars hardware, perspective. investment kind investment that's going of out -- billions they innovation and because of broadly, up in And any is budgets, bring really goes within there's that technology benefit a bill invested And that from more investment. now, will to goes that R&D So into Tektronix. United particularly to benefit from the anything into we also think industries has about there technology into the States

you think around So be bit as we might certainly slightly to are and we a suggest the about secular little headlines drivers even even and said things talked would latest here, the better. there secular some -- we

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

book are is order that context. the consistent kind number some XX%, a little -- you that it's it things but sometimes bit in these the is just big price was today, higher? up posting ballpark or I order I that in book mean, lack the of a X% price with

Scott, We same, that in third the about the as we do expect it's -- in what X% No, saw second of around well. the second at the quarter. half

so ahead kind numbers just any quarter. Okay, little sale? us or or to of kind business growth If a people product ServiceChannel, updates or kind ahead can increases aware them help that there little And of of people cause be any may in on. whatever mean, if of cycle should it's Is of, that I we people to launches Are them buy sales strong. I this that then bit you there's should lumpiness of? that pile a there to of price new say, that here, that understand of buy better. minutiae big get kind variations pretty the

some SaaS and of very run certain have a Well, they sense But fact, kind at it's service business, part of the heavier the that through. of AI bumpiness little And little managed they points from XX-plus bit procurement growth. it in at And get services yes, it's of strong. a -- that percent did there's they we business in bit slightly do the portion can of be part the benefit time. can And that. of look of when of in the

we about a perspective. good And from growth feel so where very they're stationed

have sales the It's SaaS buy-in it's ahead don't pretty model is a aspect or so anything the like license So a we pure cycle that. to really we -- it. -- itself don't see really

who a has -- but just we've with somebody number retailer fairly of a cycle. sales user, big sales cycle a facilities, or So that's a the big long

see -- dramatically the whole standpoint up we're done it. the XX good won't or good the days into think The The like funnel in of move that. excellent So We going I anything 'XX the offerings to or stationed down that. second end half. in team quarter. bunch very about. the at off see some is customers for innovation about something of around And looks core secure from a feel general, making good to that start an the third a we job feel to tail we has of We get excited we're start. that and We're about really where the business here good changes business We just today. in aspects is of think we'll

you color. luck helpful and Thanks, Jim, good numbers. to guys. That's Big

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

have continued presentation. in help recurring mentioned in to you higher that your the the should along backlog Fortive footprint you that Jim, that 'XX you also has, you record backlog add mention with the to. did And

slow even potentially you slow? you confidence that likely So it how world moderately is you could the if do much give growth as those enter a does grow metrics How environment?

to perfectly end as twice I backlog say with much as as know things be things it's one, the the slightly aspect couple -- we would XXXX, year slowdown, no to that of started of there it, we to is get certainly a only 'XX around probably true. we a predictable. we I couple We're one has half, not we Well, what is January some Obviously, of so a we questions. would think. here 'XX. first if But going sit different would with say every

the that's at drivers, of whether some the high you work of the the a We're with We better some have side had we'll obviously starting efforts to backlog So secular really around play on the strategy much you're of with, both number efforts organic of attach good year consumables. the all and businesses start that Tektronix Sensing. our well to start think service of multiyear a and as as environmental the business, a that We're with side recurring care the within or strong we're year health as on seeing go into thing. as twice to said, the have to did. going aspects going we've that of software our things doing out we that's revenue been and

like. those of going things the looks be what on less All are to macro dependent

be and think get So think to perspective, growth happens. remaining through for of think what challenges, in there what -- what factors going really we things we pretty X depending on sure factors, part even to we're And framework and going that I And set us to had earnings that But we grew is. significant from I'd strong year building could are when going the COVID a the And see those 'XX, free 'XX. the had Andy, that around in. and those cash happen we scenarios be scenario, we'll well. is up remind X everyone just And certainly obviously, are some flow. still and understand in

resilient, these in to and set how play FBS a much be to we've out, we'll apply up confident been to going portfolio durable things scenarios ability we than we But very we're pretty our a have we're more that. and resilient be see certainly of So the to but track record environment, ever difficult more before.

something on this follow conversation. want I to you up earlier Jim, said just in

Jim, I elevated you're generally it. good was little said actually channel in lean. think, And at Tek about I pretty feeling Tek, a that but your that and think last quarter inventory was you you Fluke said channel just

I maybe your clarify could hearing am commentary? or So just that you right channel

Yes, sure.

because Tek, it's be in demands think And lean. to pretty good. continue I

we're I at And of -- be That's number around regions hand-to-mouth inventory. a to pretty going Tektronix. we're so in think

what both that the second and Fluke quarter at we I at into said On what the inventory. last in looked was they And of channel we is when and moved on we look in what time side, inventory have saw the and some in -- backlog backlog. order the order

lots want be we held there And off a POS fulfill little so generation without was think demand growth because mid-single-digit And thing couldn't we've in bit inventory. of We at makeup less backlog, the standpoint good think the a more that's on demand a here. really hardly we number the demand those itself didn't of orders. to we little out because if didn't generation dramatically, we've but bit generation, change any actually it with Fluke had

to going we're turn on. that So spigot

In consistent into fact, deliver better the help basis. that got turned going investments, We're partners to a more we've already on we've half inventory it relative to in second channel channel where can go lean generation now on. our demand place a we

little So us we actually a think that's a more what that we're now drive will POS higher overall we customers. our help And little a think right and in thing is bit and inventory for the seeing us good second half.

comes the Daryanani question next from line Your of Amit from Evercore.

guess I well. two questions me as for

free more pretty talked dollars you half, rate. talk flow I flow that does those uptick cash the 'XX, there's a just Maybe you? hoping then when free peaked you importantly, when become projection both cash do we cash incrementally you metrics, source look as free look the QX go I you look First was capital dynamic a for back about is off, and flow, just as the big conversion and driving at flow, you? and working what on of for your have at free about, in think that of into sort generation And for cash

X those take I'll Amit, Chuck. this is questions.

so QX, stronger. it's then bit And half you look seasonally stronger. to first The a half, a we compare is -- step-down. second more second half, to be first half and in In going we shipments. paid when comps you is there little when In at out QX, the there's incentive always

a what our Keep locked April to we see being the biggest are capital keeping of half, so that us were relieving in drive pleased that out that very free really good at with China of I you And the QX those we're of the of -- in dynamics May. feel stronger. quarter in that. and looking And this cash and the back-end is working doing load about up was thing so flow first -- our couple down in with would some fourth a mind, is be XX%

we've positive would expect, we continues we that. flow, that what do with very think so got would about strengthening over as is at get we better, And tough so I capital from environment. chains, maybe levels. normally that the feel super working trends, it's inventory, think cash particularly a peak still more chain do to And even supply The supply

with some that, expect that in working we've from job inventory. theorize you reclaim to our that that a having done benefited working get with ground You XXXX business. could and fantastic software said capital But would the of really in capital we

the macro patterns this or OEM the worries you if I they talk you scenario from are up I where have as if issues on are shift about? And seem it any Europe. up on is could that could you enough. versus follow of to you people if those the any And about if customers inventory? Fair Europe, customers that happen and was they that to are all building channel, just Europe, you're mid-teens maybe have? the they energy if Europe, earlier, be given get in in anything could use wondering about given offset in in but out direct I'm inventory if of can I'm the bit your there's of a then all seeing -- the they it growth wondering I or they largely loud just products shortages have impressive, holding winter a know just thinking talk to sense imported, when a in deploying in really talked cases

Yes.

number say we've point a But I one we've well. pretty seen minutes ago. would think as seen is I was mentioning is as sale I success of good there broad-based few

like up don't They businesses. are use we typically most when products. or stocking feel We see look to Fluke of partners don't I up European that. them part, larger our And one channel people at is the the for anything Fluke So really businesses, stock take them.

an same the from very perspective, way. Tek much So pretty user end is

have the European -- not on stocking some of didn't and we have -- really and up, I base software software it. our we of say would been -- are that. it's businesses, our being it's expanding A of So I partners purchased of we've footprints, chunk seeing feel selling they're really many our that revenue the about utilized. big through but some businesses good is channel good pretty

So to has in as overall I and bit we're an anticipate the seeing a environment been. be of don't there, software think here, issue we growth little impact some but which mentioned, that we has

On the Sensing side, bit of we might see a little that.

out We good have that, a orders of pretty We when though. sense there. know the are

but possible, or And in that's little the so X-quarter standpoint a I a think think meaningful I we'll meaningful don't X- of outlook from Europe, of see -- number. don't probably it's a bit

the So think like probably, factors, feel call of we, over see we good a balance, at next, that on it the this the eye -- I some on might at of on think I looking might call certainly about what the in between that of we things Europe. everyone might But looking now macro keeping trajectory some winter, sharp any the the and real year. it, end changes occur and

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

you you for revenue really I today If think describe recurring back there we begins time it a mix. Is you where that the can share would XX% that to Page the to level how target updated like line out? And go X, revenue? path mix, and the

while models I business in in from our years. Tektronix, the new an a very to organic it's think of offering is as at to out some you but one, Well, early cloud that like things seek current continuing perspective our next just we're going the theme it businesses to doing several Dean, have around number things even businesses, we're know, across recurring today the which

we're -- right we're business going well And building continue to hardware grow do what long-term then, is inevitably. we're the getting relative growth Obviously, are of better, to software to rates well to to do want now, it. growing organically, with our to going model. our But trying are and what really to businesses. add -- compounding course, businesses So we along the of on software businesses to they're -- the try that

of tick exclusively, hardware without to inorganic been X consistent almost years a then, matter that software, strategy our of number had continue or things And acquisitions that's So has with I have to theme over the up one the them. recurring you'd that any our see think course, activity. acquisition no been last

ASP were they Sometimes like consumables or Landauer.

exclusive, of recurring Sometimes, be they've capital fundamentally, And to that while be -- they're we be will over will had software. say wouldn't a that it them. But the we'll time. at majority certainly deploy theme I

to continue both go inorganic with XX% time, that I both see you'll efforts. so suspect, organic organic up -- over And and

Okay. And have I I then back the right COVID being mitigated. on this Page just to make sure want mechanics the X, of on lockdown

So guide? that that million, second constitute what in your half? does quarter $XX from a in does the pull-in to expected was And be was that second

half. when So talked shifting revenue because if it the second Deane, we lockdown quarter, of out you would China about talked into the second about we -- remember in

this of the return it a And so to as second is quarter. think I --

But expect we fantastic we of things. have it forecast. didn't Team -- a And it about, get where return those a in to so we had job to it's mitigating QX. as said, some just we our didn't in did this originally

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

any First change in or logo Has the software them pace question Just for Have color you about were was that customer there? of quarters SaaS can plateaued provide. kind you new accelerating? several assets, seen if adds retention? you any had now. you discernible growth to of think Are around you've your just,

trailing think -- about number of kind when by talked X-ish double I year. XX%. full year of ARR, almost think bookings think the I by to percent we or of our digit the about in the our be the around is where going XX-month end end our growth It's Well, we the level,

see really we SaaS So accelerating.

really savings continue look the We We've savings-driven. and said think so quality SaaS safety, portfolio positioned I continue our many cost always of offerings for customers and to productivity. around cost are -- we

a new out SaaS a organizations things to a offerings of to we remarks staffing bit where do them Provation we've have a But We relatively And IT started bit. where health little say to have see out example, -- in customer care place our we've and the the is one on software, the number to bit we've prepared was the need to customer, little a funnel things SaaS. were and where would also logo and that continue few moving these where a a able on a so little where the we some it things like had bit they mentioned in hand, side pushed maybe we've of new little I quickly. close upgrade allow shortages logo, the do. other that when the new seen

So the new slightly logos is upselling health a longer little and the care. in will pace The be at happening cross-selling same bit.

much seen broadly the too I areas really across of think more haven't much the in broadly, we delays portfolio. more

year. SaaS So the why that's see the we continuing to through accelerate in portfolio

then a just And here. question maybe Great. modeling

provided, in look QX, one it the there if one mix the if that ranges on the greater I there's slide. IOS, symbol range at a lot or wide you on be there's it's what sequentially. there. You just than know a your like The some don't based looks of provide only just I on detail -- down might means guidance that's

have Well, can I good. on any bit rounding around get I little to expansion. specifics the in a wouldn't IOS, there's what you think IOS But discernible I the don't saw strong you margin We think in think relative to that. changes one, to in back we going modeling. to number are very -- quarter continue be I the there. probably margins

I there stand -- little I a margins, business better on the But think, to the be We on a every comp do, side. with we with probably job continue year. pretty little a as today bit is bit where think we through much good will might move getting

to So going the see we're year. margins to think strong progress continue we through I as

A bit more a of rounding.

component and really nothing a But have impact So did the FX else. went on the full from the transaction impact year. and roll there's we just into the one-time FX to we obviously solid number through

Cowen. from line from Giordano of your comes And question Joe final the

sequential still, your I they up basis the their on bit. a from of many more to comparisons think think was of little the skewing some for pricing industrial kind are orders on like businesses more dynamics are from a companies a about here, year-on-year I going how do of kind a you kind of staying or basis see them Are going? sequential at level? consistently flattish those high If

first growth can example. an It Still think because are on -- pretty look of because X-year we'll second a buy-ahead. second all, depend good to that as constant so constant. And of from a as the to Well, of kind a but Sensing we of a does you we'll into see business quarter Probably in XXXX Sensing/Tek half, a of prices also, that's on amount orders of the start the to little see how I stack sort customers, it. the of backlog. bit them little strong are seeing start on think bit about about dates

of So number bit anything. Fluke X-year through than a Tektronix but thing really a will little a the that's -- really at year. in strength comp more is continued see one. that's orders slow that's it We'll

we to out continue really little So better on price, think the strength revenue to if Obviously, bit go when as assuming going you question But real Hence, a a your the is and Fluke, I or our at volume But see upgrade change there activities at there's at do see core. base the change -- get in the this the that year. second there the we've year. is big that's through core we been we'll both half. generation things any suspect as of side. look well. where I'm half good really in increased to versus we'll place demand talked wouldn't the is say to good I point. in half? But a like We the the second -- suspect in price we first relative think plays like don't through how I in and about going to price I volume our the in dynamics is, will I continue volume at. we're

combine like thing businesses this for little under you bit, ServiceChannel way? like brand When starting for to Accruent what Or single needs about mean maybe what and talk And even and actually to does Does me. move a those that become those that just one Fortive? for companies? to logistically Gordian last ultimately happen

do perspective, together you certainly from take certain of bringing view. lines, we're makes the give we'll similar IR We an of branding, I think situations. it while portfolio, the we architecture What still we managing perspective is perspective just companies. all is We're sense. customer inevitably, things And longer-term bring start product that incredibly try what on a pieces from Well, still to them. performance to because between some But have do strategically, some all an determined. moving is to be separate a that you early team to base if well The that. days in probably were together. But still product

we're We I we strong. story one first talk of is an very a we think ahead EPS both little acceleration and and when that the thing though earnings Margin Provation continued perspective from combine is mentioned performance. ServiceChannel is of didn't little about the a half. on expansion ahead perspective,

stand in but in a growth only on a not those businesses. where place, we margins good standpoint So really we're in

So the up even those base margins $X.X businesses. so today of capability, to revenue strong and businesses very already, of with real those opportunity stronger Rule of of almost are businesses -- an going with margins. end businesses billion combination Two strong XX over XX margin we're and or with Rule a

able that way that So future. ought entire in to be be the segment to

in So to well put think I of matter going just don't a sort really place. positioned together, them them be good strategically, we together, no how we're put we're

We long that well. build really really term in are good franchise to place a

some turn question-and-answer of I'll remarks. us the our And this period. end back to closing over to Jim, brings the for call you,

sixth the we great that that. of look in might of end the We in in our anniversary truly person, share Thanks, what's a portfolio, the We something great that between Rob, scenario do the up well. -- continue to remarks, opportunity we're the for If a -- appreciate rest the We're couldn't have the a ways a think the be of forward was believe and hard the support you we things and to you but half XXXX be call seeing to excited And well. of lot and there's to both have to an in It's we've business. in breadth those exceptionally We'll of uncertainty celebrated we'll obviously fall. incredibly to be demonstrates detail but And appreciate summer, depth as little to in a going outlook about. a joining Obviously, just that We what set talk the last give the a of X about forward really many years. a so even year. no We storm lot look a everyone, and summer. think second over uncertainty to out highly opportunity the things. weathered of on. that, on all we the continue first of and there call we'll you in I'm thanks, for the more on on thanks, number said of day. just to everyone. We now Well, us. lot the quality have the the with us to the Have follow-up more going show-me we matter had more confident across continuing said you half. don't bit excited the even more lot today weather prepared hopefully

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

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