My name is Julianne, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation's 4th quarter 2022 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. 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. Thank you, Julianne, 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. We present certain non-GAAP financial measures on today's call. Information required by Regulation G are available on the investor section of our website at fortive.com. Our statements on period-to-period increases or decreases refer to year-over-year comparisons on a continuing operations basis. 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 these risk factors is available in our SEC filings, including our annual report on Form 10-K for the year ended December 31st, 2021. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements. With that, I'd like to turn the call over to Jim. Thanks, Elena. Hello, everyone, thank you for joining us. I'll begin on slide 3. Fortive had another quarter of outstanding operating performance in Q4, delivering 14% core revenue growth, 50 and 110 basis points of adjusted gross and operating margin expansion, respectively, 11% adjusted earnings per share growth, 62% free cash flow growth, all ahead of the guidance we gave in October. Our strong purpose-driven culture is supported by our relentless focus on executing for customers and shareholders in 2022. The continued evolution of our portfolio within the markets we play is characterized by strong secular drivers which powered 9% ARR growth in our software businesses and backlog expansion in our hardware products businesses, contributing to record core revenue growth for the year. Our performance would not have been possible without the dedication of our 18,000 team members around the world. Team overcame continued supply chain and inflationary challenges, which will likely linger into 2023. We believe the power of the Fortive Business System is a key differentiator, contributing to more profitable growth, record gross margins, and free cash flow generation. As we look forward, we're excited to update you on the progress we've made on our multi-year targets and strategies that are driving outperformance at our upcoming Investor Day in May. Turning to slide four. Even against the backdrop of a difficult macro in 2022, Fortive continued to validate the investment thesis that we have pursued since 2016, delivering core growth of 10% and 20% on a two-year stack basis, accelerating over the last few years. Our portfolio transformation has also driven approximately 1,000 basis points of gross margin expansion since 2016, which has translated into higher operating margins and provides further opportunity to improve margins in the years to come. We also delivered free cash flow growth of $1.2 billion, with margins approaching 21%, underscoring our ability to compound cash flow off a higher base, a key Fortive differentiator and value creation driver. In summary, we had said that 2022 would be a show me year, and we delivered strong results across all of our segments, which I will highlight in more detail on the next few slides, starting with Intelligent Operating Solutions on slide 5. IOS grew core revenue by 13%, representing its third consecutive quarter of double-digit core revenue growth. We had good growth in all regions, with low double-digit growth in North America, mid-teens growth in Western Europe, and high 20s growth in China. Double-digit core growth in every workflow, combined with our rigorous application of FBS, drove 330 basis points of core operating margin expansion, more than offsetting inflation and FX headwinds. Looking at our performance drivers by workflow. In Connected Reliability, Fluke kept low teens growth, supported by a strong backlog position and continued success with their new solar and calibration products serving the energy, renewables, and electric vehicle markets. POS remains strong in every region. However, we expect to see some slowing as supply chains continue to normalize. Strong end market demand drove double-digit eMaint SaaS revenue growth in the quarter for the record net dollar retention of approximately 106%. In EHS, revenue grew by high teens, with strong contributions from both Industrial Scientific and Intelex. Industrial Scientific revenue grew approximately 20% as strong demand was supplemented by record iNet expansion and higher instrument shipments following the resolution of key supply chain issues at the end of the third quarter. Meanwhile, Intelex posted another quarter of low double-digit SaaS growth. They have successfully deployed FBS initiatives to accelerate software implementations and create upsell opportunities to customers. Moving to Facilities and Asset Lifecycle, we had low double-digit growth in Q4. ORion revenues once again increased double digits as customer labor shortages and deferred facility maintenance continued to drive higher volume through the company's job order contracting platform. Accruent's SaaS revenue grew by mid-single digit despite a sizable headwind from end-of-life products. Accruent continues to see good success from its recent go-to-market focus in asset management and workplace solutions to enable mid-single-digit revenue growth in 2023. ServiceChannel saw another quarter of double-digit revenue growth, taking their full year growth rate to just under 50%. As a reminder, we are transitioning from a largely pass-through revenue base to a better long-term business model that includes more recurring SaaS revenue. This change will create a short-term revenue headwind in the first quarter. However, we expect ServiceChannel to remain a strong double-digit growth business in 2023, with above 20% adjusted operating margins. Turning now to slide 6. Precision Technologies delivered another strong quarter of double-digit revenue growth in every business. Core revenues increased 20%, driven by high teens growth in North America and greater than 20% growth in both Western Europe and China. PT also delivered 240 basis points of adjusted operating margin expansion, with higher volume, price realization, and productivity more than offsetting inflation in FX. Some highlights of the quarter include: record quarterly revenues and operating profit at Tektronix, which continue to benefit robust backlog driven by new product launches and share gains and new entry in mainstream oscilloscopes. We saw orders slow in Q4 as expected as demand normalizes following the 40% growth we've seen over the last two years. Sensing Technologies had another quarter of mid-teens growth, driven by strong price realization across all businesses and continued demand in Qualitrol's utility and power business, offsetting industrial and semiconductor demand softening. A combination of Gems and Setra in 2022 also drove approximately 200 basis points of margin expansion and four working capital turns improvement. Pacific Scientific EMC saw high 20s growth in the quarter, facilitated by capacity expansion and improved materials availability. Moving now to slide 7 in Advanced Healthcare Solutions. As expected, core revenues increased 5% in the quarter, driven by broad improvement across all healthcare operating companies. By major region, mid-single-digit growth in North America reflected the benefit of our higher installed base and some improvement in hospitals, partially offset by low single-digit decline in Western Europe and a high single-digit decline in China. The exit rate on China elective procedures was the lowest we have seen post-COVID, at roughly 30% of normalized levels. January 2023 volumes were roughly half of prior year levels, which was reflected in our Q1 outlook for the segment. In the fourth quarter, AHS segment margins were down 260 basis points, driven primarily by higher inflation, partially offset by favorable M&A. Notably, margins were up approximately 400 basis points versus Q3. Versus our fourth quarter guidance, margins were unfavorably impacted by additional transactional effects and lower margins at Fluke Health Solutions. As we look ahead, the team is starting to see traction on their pricing and productivity initiatives, which we expect will deliver margin recovery in 2023. Some other highlights of the quarter include: ASP finished the year with core revenue growth of 5% as capital share gains and consumable volumes more than offset COVID headwinds in China. Even with inflationary pressures, ASP ended Q4 with the strongest margins of the year and continued to deliver strong working capital improvements. While hospital profitability remains pressured due to labor and inflationary challenges, Censis continues to drive robust growth in its CensiTrac SaaS offering in Q4 and for the year, with mid-teens net new ACV and record cross-sell opportunities. Provation is ahead on its return expectations, having contributed $0.10 to earnings in 2022. Customers continue to standardize on Provation across their health systems, we are seeing accelerated SaaS growth, setting them up for a strong 2023. Turning to slide 8. The Fortive Business System is a powerful mindset that makes continuous improvement a way of life at Fortive. We drive deep engagement across our teams and hold them accountable for delivering on high expectations. A reminder, in October, we brought together over 400 team members at our CEO Kaizen event. Our most senior Fortive leaders, including our segment leaders and a number of our operating company presidents, collaborated to drive significant improvements in growth, margin, free cash flow, and breakthrough innovations across four operating companies, Fluke, ISC, Tektronix, and Censis. We're proud of the success our teams are having sustaining results directly attributed to this event, including at Fluke, we reduced mold changeover times by over 50%, eliminating stock outs on critical plastic components and reducing pass-through backlog. At ISC, we applied lean conversion in the Fortive material system to improve quality, output, and turnaround time for iNet and rental customers, dramatically reducing the cost of repairs and product redesign. At Tektronix, we applied lean conversion to circuit board repair, increasing on-time delivery to 98% by altering material flow, installing 5S part management, and building standard work and documentation on procedures. At Censis, we applied value stream mapping and transactional process improvement to identify the inefficiencies and waste, resulting in a 50% reduction in time to onboard new customers. Kaizen activity accelerated in 2023. We expect significant results across Fortive in the year ahead. I'm incredibly proud of the work we have done in 2022 to deliver powerful results and continue our progress towards building a more sustainable future, as you can see on slide 9. We believe in taking a holistic approach to creating value that includes setting aspirational and actionable targets across each of our sustainability pillars, as shown on the page. Leading Fortive today is a diverse board and leadership team with recent hires and promotions advancing our commitment to top talent and diversity. Strong and inclusive culture is core to Fortive's mission with inclusion and diversity a critical component of FBS. Last year, we published clear goals to increase our diverse supplier spend, gender representation, BIPOC representation, and senior leader diversity by 2025. We believe this has resulted in part to an increase in our employee engagement scores, up 5 points from pre-pandemic levels. Our progress also extends to how we protect the planet. It includes the early achievement of our 2025 greenhouse gas goal and the adoption of our new ambitious goal of 50% emissions reduction by 2029. It's our shared purpose that also pushes us to create innovative and sustainable products and services. Today, approximately 60% of our revenue is derived from products and services that enable more sustainable outcomes aligned to the United Nations Sustainable Development Goals, and we have award-winning products that promote sustainability for our customers. Lastly, the commitment to drive meaningful and sustainable outcomes that matter most to our stakeholders is reflected in our recognition by Newsweek for the fourth consecutive year as one of America's most responsible companies. With that, I'll pass it over to Chuck who will provide more color on our fourth quarter financials and our 2023 outlook. Thanks, Jim. Hello, everyone. I will begin on slide 10 with a quick recap of our fourth quarter performance. We generated year-over-year core revenue growth of 14%. Acquisitions net of divestitures contributed one and a half points of growth. FX headwinds were approximately 4 points. Turning to the geographies, we saw another quarter of double-digit core revenue growth in each of our major regions. North America revenue was up low double digit with broad-based strength across our businesses. Western Europe revenue grew mid-teens with volume contributions in hardware products and favorable pricing, partially offset by a decline in healthcare. In the fourth quarter, bookings growth slowed in North America and Western Europe as expected. Asia revenue increased high teens with low 20% in China, driven by robust growth in Intelligent Operating Solutions and Precision Technologies, more than offsetting a dramatic drop in elective procedures in China impacting Advanced Healthcare Solutions. Lastly, we saw a broad-based performance in our high-growth markets with mid-teens core growth. Turning to slide 11, we show operating performance highlights for the fourth quarter. Adjusted gross margins increased by 50 basis points to 58.3% as volume and strong price realization continued to demonstrate the value proposition of our products and solutions more than offsetting higher inflation. Adjusted operating profit margins expanded 110 basis points to 25.5%, up 230 basis points on a two-year stack basis. Adjusted earnings per share increased 11% to $0.88, reflecting a strong fall through on higher volumes and productivity, partially offset by higher interest and tax expense. Normalized for tax, earnings in the quarter were up 16%. Free cash flow was another standout. Strong year-end cash collections and the benefits of our FBS-driven working capital initiatives yielded $428 million of free cash flow in the quarter, taking the full year to $1.2 billion. Before turning to the guide, I wanted to provide some context on our 2023 outlook on slide 12. We expect that 2023 will be another year of growth and margin expansion in each of our strategic segments, supported by secular tailwinds, driving market expansion and new customer innovations. Our recurring revenue businesses at roughly 40% of sales are expected to benefit from the work we did in 2022 to increase demand generation and strengthen our go-to-market efforts, driving double-digit SaaS and license revenue growth. Elevated backlog in our hardware products businesses, particularly at Tektronix, is expected to de-risk moderating demand as order rates normalize in 2023. Further, the benefit of 2022 pricing actions is expected to carry over into 2023, driving another year of above-trend pricing realization, along with increased sourcing and value engineering savings contributing to gross margin expansion. We also expect our productivity initiatives to yield strong incremental operating margins, including actions in the first half of the year to countermeasure the slowing macro environment. Budget paybacks related to these initiatives are expected to average 1 year. We have included these benefits in our margins and earnings outlooks for the second half, with carryover benefits into 2024. In summary, we believe our 2023 outlook reflects a more resilient revenue and earnings profile as we expect to weather the evolving macro environment. Turning now to the guide on slide 13, we are introducing 2023 guidance. Starting with the full year, we expect core revenue growth in the range of 3%-5.5%. Our outlook reflects a year-over-year foreign exchange headwind of just under 1% on revenue. Adjusted operating profit is expected to increase 5%-10% with margins in the range of 25%-25.5%. Adjusted diluted net EPS guidance of $3.25-$3.40, up 3%-8%, which includes higher interest and tax expense. Free cash flow is expected to be approximately $1.25 billion, representing conversion in the range of 100%-100% of adjusted net income and a 21% free cash flow margin. For the first quarter, we anticipate core revenue growth of 5%-6.5% with an FX headwind of 2.5%. Adjusted operating profit is expected to increase 4%-9% with margins in the range of 23.5%-24%. Adjusted diluted net EPS guidance of $0.71-$0.74, up 1%-5%, which includes higher year-over-year interest and tax. Free cash flow of approximately $170 million, reflecting the stronger cash collections that pulled forward into Q4, as well as our normal seasonal variations. Turning now to slide 14. We are expecting a 48/52 split of revenue first half to second half, which reflects a step-up approximately of $120 million of core revenue growth, which when you compare to last year, is less than half of the increase we saw in the second half of 2022. The step-up in 2023 is largely driven by acceleration in new products, a ramp in the growth rate of Advanced Healthcare as we lap China COVID lockdowns, and an increase in software and other recurring revenue streams. FX and interest account for abnormal earnings seasonality as FX becomes a tailwind in the second half of the year, and interest expense is expected to decline as we pay down debt with available free cash flow as the year progresses, giving us a bigger than usual step-up in EPS first half to second half. In summary, our revenue outlook reflects a similar linearity profile to 2022. While core growth decelerates first half to second half, it accelerates on a two-year stack basis. With that, I'll pass it back to Jim to provide some closing remarks. Thanks, Chuck. I'll now wrap up on slide 16. In summary, I'm incredibly proud of the contributions of our 18,000 team members to make 2022 a record year for Fortive and further differentiate our more resilient financial profile. We turn the page on 2022, that resiliency will be on display again in 2023, as our outlook reflects an expectation for slowing growth as customer demand normalizes after two years of robust double-digit hardware product orders. It also reflects the benefits of the investments we have made to accelerate strategy, strengthen our market positions, scale our software revenues, and develop new innovations that are solving our customers' toughest safety, quality, and productivity challenges. As you've also heard today, we are seeing the benefits of our continuous improvement culture, unleashing the power of the Fortive Business System to deliver more profitable growth and strong free cash flow again in 2023, allowing us to compound returns through disciplined capital deployment. Taken together, this creates a powerful formula for value creation with a high-quality portfolio of desirable brands favorably leveraged to sustainable secular trends, industry-leading margins and free cash flow generation, and best-in-class execution, enabling Fortive to outperform in almost any environment. With that, I'll turn it back to Elena. Thanks, Jim. That concludes our formal comments. Julianne, we will now take questions. As a reminder to ask a question, please press star followed by one on your telephone keypad. To withdraw your question, please press star one again. Our first question comes from Steve Tusa from JPMorgan Chase. Please go ahead. Your line is open. Hey, good afternoon. Hi, Steve. Can you just talk about for IOS, you know, the margin expansion kinda sequentially from the first quarter through the full year, you know, the kind of key building blocks for that? Yeah. Hey, Steve, it's Jim. A couple things. One, obviously, growth plays a role in that. As we continue to progress, we'll see that. As we, as we noted, Facilities and Asset Lifecycle, a little bit lower growth in the first quarter, we can talk about that, but then those margins will expand. That's the revenue coming back, certainly in the software businesses there, as well as just continued progression of a lot of the actions that we've got. Price will continue to be a helpful piece of this driving gross margin expansion along with our productivity initiatives. I don't think we've got anything dramatic from the first half to the second half in terms of anything that you wouldn't normally see seasonally, you know, in terms of, you know, growth, price realization. Productivity initiatives get more traction as you go through the year. Those are probably the big drivers outside of just normal revenue. Should we assume this excess $350 million backlog, that all obviously gets kind of washed out this year? What's kind of the pace of that being washed through? Steve, this is Chuck. actually in our modeling, no. we wouldn't expect that all gets washed out based on... of course, it depends on the order rate, which is one of the reasons why we think that we've got a pretty resilient forecast here. if the order rates moderate beyond where we think they're gonna be, we could still do that. It's really still we've got Supply chain is getting better. It's just, it's not resolved, so it's not like we can just flip a switch and get it all out. We'd probably cut it in half. Okay, great. Thanks a lot. Thanks, Steve Tusa. Our next question comes from Julian Mitchell from Barclays. Please go ahead, your line is open. Hi, good afternoon. I just wanted to start with some more detail on the product hardware orders. I think those were up mid-single digit Q3. It sounds like they're up maybe low single Q4. You've got this, you know, slowdown commentary. Also on slide 14, you talk about orders improving through the year. Is the way to think about that you're trying to say that, you know, orders, I don't know, ended last year down up low single, maybe they're down in the first half, grow in the second half, and then that's what informs the PT organic sales guide? 'Cause if I look at that on slide 17, you know, you're starting the year up double digit, the year as a whole is up low to mid. You're sort of implying the organic sales end the year flat or down. Is that just kind of the orders flowing through with a six-month lag? Is that how we're thinking about it? I think first, you know, we would think of the second half of 2022 as basically flattish for orders for those businesses. You know, a little bit down in the fourth relative to. Right along where we thought. If you remember from the third quarter call, we said, yeah, we also saw some orders that came in in the first half for the second half. That's kind of the backdrop of what we just described. Backlog in and around where we thought it would be from an ending year. The backlog obviously, as Chuck just described, you know, that obviously helps with some of the order down slowing that we saw. We expect orders to kind of be around the same in the first half, relative to those product businesses, Julian. You know, you think about probably the second quarter, first quarter and second quarter being, you know, probably negative in those businesses. The backlog obviously mitigates a number of those things, and then starts to pick up a little bit. Some of that pickup is an easier comp obviously because, you know, because of what I just described in the second half of 2022. There's a little bit. Sensing probably stays flattish through the year. There's probably not a big improvement through the year in Sensing, but, you know, a little bit of improvement in Tech and, we think Fluke will come back as well. It typically comes back a little faster. Yeah. Julian, the only thing I'd just remind you is we have an easier comp in PT in Q1. When you look at it at a dollar standpoint, it's not as dramatic as you move through the year. In fact, I think, from a dollar standpoint, we'd expect that there would be an upward trajectory in PT each quarter sequentially. Thanks. When we look maybe within PT at Tektronix, you know, maybe flesh out a little bit more what you're expecting. You've got that high teens growth, first quarter. The year's up mid-single. I guess if I look at a lot of what's happened in, say, electronics, it feels like people are in kind of the teeth of the destocking right now and have been for three or even six months. I understand maybe you're protected a bit by the backlog in Tektronix. That means you have a sort of gradual descent through the year. Maybe just help us understand kind of where you see, you know, channel inventories in that business. Again, on Tektronix it looks like the guide implies, you know, down revenue in the back half. Just wanted to kind of confirm a couple of things there. Well, number one, I think on the back of, as we said in the prepared remarks, 40% order growth over the last couple of years is obviously a little bit higher growth rate than what we'd normally expect for tech. What you start to see in the full year is a moderation or a normalization back to that mid-single digit growth. I would say when you think about customers very much playing out the way we anticipated in terms of moving the business, you know, the business just doesn't have as much of influence from consumer electronics anymore, where you're seeing a lot of that distortion. The things we've talked about in terms of power, data centers, industrial IoT, all of those drivers are really driving the business much more today than ever before, making it more resilient. I think those are all the things we've described that I think really continue to have the business. It does detail a little bit, but it moderates off of really, really large numbers. I think mid-single digit growth for the year is what we're calling out here. Could be a little bit better. We'll still end the year with a decent backlog, as Chuck was just describing a couple of questions ago. I think, you know, when we look at the business for the year, very healthy. Channels have almost no inventory. We continue to see good point of sale strength. And some of that is just fulfilling, you know, past due to some extent. There really isn't a channel inventory situation whatsoever. And so I think we're in a good place. Orders will slow a little bit, but some of that's just, you know, the big heavy comps that we've sort of had over the last couple of years. We think we're in a good place, and we think we'll exit 2023 in a good place as well. That's great. Thank you. Thank you. Our next question comes from Scott Davis from Melius Research. Please go ahead, your line is open. Hey, Jim and Chuck and Elena. I hope you guys are well. If I look back at my notes, I think you said the ServiceChannel and Provation would be like $0.12 accretive in 2022. It sounds like maybe that came in a couple pennies better. Does that accretion step up meaningfully in 2023? I would think just given the growth rates of those businesses, that would be a nice tailwind for you. I know you did make some comments on the SaaS adjustment on ServiceChannel, though, as an offset. Yeah. Scott, you got it right. We came in at, I think, $0.14, you know, in 2022, I would expect that would grow as you expected. You know, we'd build on that $0.14 in 2023. Faster growth rates there, also more profitability in the first half in ServiceChannel and things. All that are going to give us a nice tailwind. Scott, just to maybe add on to the first quarter ServiceChannel thing as we talked about in the prepared remarks. This is really the SaaS revenue has continued to be incredibly strong in the business. We did have a little bit more passthrough revenue in the year than we anticipated. You know, that's why we grew the business almost 50% on a full year basis. Really strong growth this past year. We'll move to a better business model, which is a little bit less pass-through revenue and the strength of the SaaS business has been there all along. We've now got a data analytics platform that we're offering as well. We really got to kind of get through that in the first quarter and a little bit in the first half. The profitability really does raise considerably as well. We got what we needed in 2022 in that regard. We'll be in an even better place in 2023 simply because the business model transformation that we intended to do is really starting to hit the full head of the P&L through the year. All right. That's helpful. I think it was Jim, you mentioned in your remarks that the discretionary procedures in China, finished the year at like a 30% number, which, 30% of normal, I think I'm reading it as. Which just sounds crazy. Is that? Are you still seeing that in January? I would imagine that the reopening, just the timing of the reopening, that stuff would pick back up here in 1Q pretty aggressively. Heck, I don't know. Yeah Are you still seeing that kind of steep thing in January? Yeah. I mean, you got it exactly right. December, in particular, was really low. I think that speaks to the strength of AHS, quite frankly, and the revenue line is we were able to weather that storm because of the strength of other regions of the world. We talked about the 5% growth that we had in the second. We think we're about probably 50% in January, so about half of where we were a year ago. You're right, it's going to ramp. We're seeing some of that improvement a couple of weeks ago, we think was the low point. It's not picking up to, you know, 70 in a week. We should see continued improvement. We get on the other side of the Chinese New Year holiday, and we'll get a better view of things as we always do. We anticipate, you know, that this will continue to improve throughout the year, as China just kind of gets back to normal. We certainly started to see that. Okay. Well, best of luck. Thank you. I'll pass it on. All right. Thanks, Scott. Our next question comes from Jeff Sprague from Vertical Research. Please go ahead. Your line is open. Hey, Jeff. Hey, thanks. Good, good day, everybody. Hello. Hey, Jim, as you're well aware, right, you know, there's a process going on out there for National Instruments and, you know, a lot of speculation out there about your interest. I'm sure you're fairly limited on what you might want to say, but any color you could give us on your appetite for, you know, any deal at large or, you know, you've expressed interest in the past in hardware related deals. Anything there make any sense for you? Yeah. I think number one, we obviously know the company and have read the news. You're exactly right. We wouldn't comment on any process of that we'd be involved in or not involved in, particularly a public one. I would say this, I mean, we've known NI for a long time. I can remember meeting Dr. T 15 years ago or so. We know, we know them well. We partner with them at Tektronix and have for a long time. You know, I think what we've said strategically about all of our funnel was there was a balance of large, small deals, hardware and software. You know, the balance sheet is in an incredible place right now, as you, as you know. We're in a great place to do lot, you know, do things. We're going to be disciplined. We're gonna make sure that every situation we approach, we approach it, you know, strategically, how well it accelerates what we want to do. You know, I'll leave it at that. I think more broadly around M&A, we're in a very good place relative to our opportunities ahead of us. We'll, we certainly are playing offense in that regard. Great. Thanks for that. Just totally shifting gears, just back to kind of the inflationary pressures in AHS. At this point, do you have the cost and other actions in place, you know, to be neutral or better as we move through 2023? Maybe just put a little finer point on how you see kind of price cost and kind of the margin impact playing out over the balance of the year. Yeah. I think more specifically around AHS, we, you know, we called out a couple of kind of one-time headwinds in the quarter. We, I think there's a number of things that are working in our favor relative to the 23 year. Number 1 is North America. We have good growth in North America and anticipate that will continue. We're not necessarily calling everything getting perfect in North America, but we do believe it will get better. We saw that in the fourth quarter, that's a good thing for our margin structure. Number 2, to your point, we're seeing a little bit more price realization in the fourth and into this year. Things are starting to get a little traction. We've talked about that on the call, that it just takes longer, and we're starting to see that. Finally, productivity. The team is that leadership team has really adopted FBS, and they've really embraced a number of things to really drive productivity. We don't, we don't see it the additional inflation either as well. The combination of we don't see incremental inflation at this point, and we have those actions getting deeper and deeper into the margin structure, if you will, through the year. We, we feel like we're in a much better place starting here in 2023, both from a market and, obviously the kind of actions that we need to continue to make the business better. I would just kind of... You didn't ask it, you know, we have grown gross margins in AHS, or operating margins about 130 basis points over the last two years. Despite those challenges, we're in a good place. I call that the launchpad from where we are today. Great. I'll leave it there. Thank you. Thank you. Thanks, Jeff. Our next question comes from Nigel Coe from Wolfe Research. Please go ahead. Your line is open. Hi, Nigel. Thanks. Good morning, everyone. Hey, guys. How are you? By the way, Dobes is gonna be very happy that you put him in the comparative basket. Just wanna follow up on Jeff's question. How obviously the National Instruments news is out there. You know, where do you stand philosophically on issuing equity for a deal? Because, you know, based on the math that we're doing, you know, your leverage will get to very high levels. Just wondering, you know, what is the leverage ceiling you'd be prepared to go to for the right opportunity? Philosophically, you know, would you issue equity for the right opportunity? You know, Nigel, it's Chuck. You know, we've always felt that we wanna maintain an investment-grade rating. You know, we wouldn't do anything that on any type of deal that would jeopardize that. I'd point out in the past, we've done equity instruments, you know, like a mandatory convert. We've always said that, you know, in situations where we wanna do something, equity's never been off the table. It's just hasn't been needed at this point. Okay. That's helpful. Just going back to the FY 2022 plan, how much of that $350 service backlog are you sort of planning to eat into, unpin your plan? Maybe just touch on this ServiceChannel SaaS transition. Seems like it's a very sort of discreet sort of inter-quarter, maybe 1Q first half event. These SaaS transitions tend to be kind of drawn out when we look, you know, at other companies. Just curious, you know, why that would be so short term. Nigel, I'll take the first part. We would expect to take of the excess backlog that we're talking about, probably up to half of it is included in the assumptions for this year and this guide. You know, to be clear, this is what we consider excess, and that's still. We'd get more out if, you know, supply chains get better. You know, there's a little more there, but it's still constrained by supply chain throughout this year. Getting better. Nigel, on the ServiceChannel question, I wouldn't think of it as a SaaS transition. The SaaS revenue has continued to be good. We grew the business, you know, well over 70% Q1 of 2022, with a large amount of this just pass-through revenue. If you think about it, we have a customer, some of our contracts have, we're passing through a number amount of the facility maintenance costs that they have, paying plumbers or electricians. We're just doing less of that. It's really not a SaaS transition in the traditional sense. In fact, we're replacing that solution though, with some other added benefits. That's, that's why it's a short-term transition. It's really kind of going from you know, losing some of this one-time pass-through revenue that quite frankly, we didn't make any money on. I would see it as that, and that's why it's short term as opposed to sort of a conversion of what you'd see traditional license revenue to SaaS revenue. We're not gonna see that. This is ServiceChannel is a 100% SaaS revenue company. Right. Okay. Thanks, Jim. Thank you. Thanks. Our next question comes from Andy Kaplowitz from Citigroup. Please go ahead. Your line is open. Good afternoon, guys. Hi, Andy. Jim, you and Chuck mentioned increased productivity initiatives planned in all segments that primarily benefits the second half of 2023. I think you already mentioned FBS within AHS, could you give us a little more color around what some of the bigger initiatives are and maybe size these initiatives for us? You know, if there's any sort of cost to undertake these initiatives. Andy Kaplowitz, the first half, you know, we'd expect, you know, to put up $20 million, $25 million to $30 million of cost to get after some of these structural things. Some of them are rooftops, a few of those. But you know, there'll likely be some, you know, outside of the U.S., maybe there's some regions that we want to convert to a dealer, you know, approach rather than a direct approach. I'm thinking here in our Advanced Healthcare Solutions margins. We've always thought that there was costs that we needed to improve and improve our go-to-market there, and we're just getting after that. Got it. Then Jim, can you give us more color into what you're seeing by region? It looks like Western Europe has continued to be strong for you. We've talked about China and AHS, but outside of AHS is strong. What are you thinking for 2023? You talked about orders slowing in Western Europe and North America, but is that more a function of supply chains normalizing, or are more of your customers a little cautious to sart 2023? Yeah, it's interesting. You know, I think we've always thought for the last several months. You know, customers would inevitably start 2023 out a little more conservative just given, you know, we've seen some of the tech layoffs and some of those things, the PMI and where it is. That's number one. That's kind of our planning assumption from an order perspective. Knowing, also knowing that we're starting the year with a good backlog situation. I would say if you think about it regionally, Andy, obviously North America is gonna be pretty good and pretty resilient given the fact that we have most of our software businesses have the predominance of their revenue streams in North America. I mentioned the healthcare, particularly ASP North American story. North America is gonna be pretty resilient. You know, I would say that Western Europe and Europe more broadly probably our weaker area for the year, just given a number of things. Some of that is supply chains normalizing a little bit back to normal. Some of it is just a little bit of weakness as well. China's gonna be good all year. Healthcare will be weak in China in the first quarter because of electives, but should continue to get better through the year. That's kind of the regional play, and that's sort of our planning assumptions going forward. You know, I think still early days, obviously, we still have a lot of the year to play out here, that's sort of, you know, fundamental to our planning assumptions. Appreciate it, Jim. Thank you. Our next question comes from Josh Pokrzywinski from Morgan Stanley. Please go ahead. Your line is open. Hi. Good. Hi, Josh. We do this every quarter. Morning, afternoon, sort of depends. Yeah, I hope everybody's well. Not to beat a dead horse on this hardware backlog conversion and sort of what's in the guide, but I just wanna be clear here, you know, Chuck, on that comment that you only have about half of the excess backlog getting worked down. I don't know how fungible that backlog is, you know, even within something like tech where it's a little bit more weighted. Am I to understand then that like orders on a volume basis could be down close to double digits, and you guys are basically still hitting the guide if you can work down that backlog fully this year, providing there's no, like, other governor in the way? Is that... That's sort of a fair way to think about how that's calibrated? Yeah, I mean, yeah, that's not, you know, what we're seeing here in there. What we are seeing is reason we can't get the backlog down more is it's more supply chain constrained. You know, we've got so much material. It's the way I'm thinking of it. If orders go down, you know, $10 million more, that doesn't necessarily change our revenue guide. If that's what you're saying, I would agree with that. Got it. Yeah. That's where I was going. Yeah, I was just gonna add that, you know, it's also, as you said, it depends on the business. We have, as you pointed out, a little bit more backlog attack. You know, it does matter where the orders go down relative to how we can make it up. That certainly is part of it. We ought to think of that extra, you know, the half that isn't planned to go out as an insurance policy against some additional decline. Got it. That's helpful. I guess sort of related to, I think it was Jeff Sprague's question on price cost, maybe taking a step back and just thinking about, you know, kinda total bullwhip effect on supply chain. I would imagine there were some frictional costs last year that probably get better, but, you know, maybe you're also kinda working down some inventory. You know, is there some sort of like offsetting absorption hit to the absence of those frictional costs? How would you sorta balance those two as, you know, a net headwind versus tailwind for this year? Well, I would think of it this way. There are some spot buy costs that probably go away from 2022 for sure. There are some embedded costs into standards that are gonna be with us here for a little while. I think the real thought is we're gonna be ahead of price cost like we have been. We'll grow gross margins more in 2023 than we did in 2022. You know, in that sense, I think we're gonna be, as we've shown over the last several quarters, we're gonna be ahead. We're not too worried from a factory absorption perspective if you're going in that direction. We won't worry about that. Where we'll really be focused on is making sure a number of commodities are down, or will be lower, things like metals, plastics. The majority of our buy is electronic components, and that will take a little bit longer, to sort of wean ourselves from some of that inflation that we saw this year. You know, we plan to... Yeah, Yeah, I think we're super aggressive in that regard. We'll get after everything. We have great supply chain teams, but it'll take a little while. I think you're gonna see that throughout the year as the gross margins continue to look good. Got it. Super helpful. Best of luck, guys. Thanks. Our next question comes from Deane Dray from RBC Capital Markets. Please go ahead. Your line is open. Thank you. Hey, Deane. Good day, everybody. Hey, can we put the spotlight on free cash flow, here? It looks like Fortive is the only company we've seen that has over-delivered in the fourth quarter, significantly above your 4Q average. Chuck, you mentioned some working capital initiatives. You could take us through that, but also there was a reference about collections pulled into the fourth quarter from the first quarter. Yeah, what was the dynamic there? Yeah. A couple of things. We always have, you know, a lot of work, as you know, looking at our working capital across all of our operating companies is the focus that we've had all year long. It's been, you know, it's been a challenge. It always is, but we've really done a great job. ASP actually is a standout there. I think that's really what we were talking about there. They weren't the only ones. We had a couple of really good places. I wouldn't say pull in so much as really thinking about it as just some time. You know, we did have a really strong guide. We came in a little stronger than that. Sometimes you just get year-end receipts. Sometimes they come in a little light, and they show up in Q1. This time, I probably think, you know, maybe $20 million came in, you know, a little early. You really can't do much about that. It's just whether they, sometimes when they cut the check before New Year's or after New Year's. That's. We were very pleased with our free cash flow performance, all year long. Yep. It came in at $1.07, so that's right in the sweet spot for you all. A follow-up question on cross-selling. Jim, you mentioned Sensing, having some success in cross-selling. Just kind of take us through what's going on there. How much is that encouraged? How do you track cross-selling, and what are the opportunities? Yeah. You know, Deane, I think number 1 is, as you know, when, you know, in a couple places we've seen new logo. You know, when things get a little slow, particularly starting the year out, new logos may be a little bit harder to grab onto as people maybe take a month or so to maybe an extra 30 days to close business. Cross-selling and upselling is something you can do every day. Our presidents are very much tuned in, you know, times like this where maybe things are still a little bit more ambiguity out there as to how the year's gonna play out. The teams are really conditioned to really move the sales motion to more cross-selling, and that really drives our net dollar retention. We talked about it in a couple of individual places. We've got, you know, a number of businesses that are well over 105 now. We're at about 102. The metric we really use to drive that is net dollar retention. You know, what we're really pushing on early in the year is get those renewals, drive gross retention up, and then drive the cross-selling and upselling as well. I think we're well from a process perspective. FBS has a number of tools that support those efforts with customer success organizations. That's a big focus for us here at the start of the year. That's real helpful. Thank you. Thank you. Our next question comes from Joe O'Dea from Wells Fargo. Please go ahead. Your line is open. Hey. Joe, thanks for taking my questions. Hi. I wanted to start just more macro, and I think, you know, what you're talking about on the orders front is more just kinda backlog normalization as supply chain corrects. As you go through that, I mean, how do you think about coming out on the other side, and how do you think that it's sort of soft landing type of environment when we see sort of industrial production, and we see PMI? Just in general, what you're seeing on kinda structural growth or outgrowth and kinda confidence that backlogs normalize, and then the growth is there on the other side. Joe, I think it really goes back. We'll have an opportunity to really give a lot of this detail on our investor day in May. I think what we really think about this is really how we move the growth rate, our long-term through the cycle growth rate to mid-single digit. You know, we've had two really strong years of growth, 10% average the last two years. That's on the backs of a number of things we've done from a portfolio perspective, and just demand has been better than historically. As we get into 2024, and we normalize around, you know, the kinds of things that we would see, we certainly would continue to see that mid-single digit as a number on the backs of continued stabilization of the macro for some of our product businesses. Obviously, continued improvement in our healthcare businesses and just the strength of success that we've had in software. Those sort of combination pillars are gonna be what really drives that mid-single digit growth rate, as we said, as things normalize here, you know, hopefully sooner rather than later. Got it. I think in the prepared comments you mentioned some actions to counter some of the slowing. You're not sure what might be happening on the cost front, but anything that you could expand on there? Well, I think. Yeah. I think as Chuck described, you know, it's really kind of across the segments. It really deals with a number of things. You know, certainly looking at certain product lines that maybe are a little slower than over the next few years. We closed a couple of rooftops, continue to do some things on the lease front as we continue to consolidate our real estate footprint. A number of those things are really what we're talking about. It's an accelerated rate given kind of after a couple of years of 10% growth. You know, we've maybe more focused on the growth, maybe a little bit more focused on supply chain. Now as things start to normalize here, we're back to getting after some things. In a traditional sense, we wanna be ahead of those things. That's really what we were talking about. Great. Thank you. Thank you. Thank you. Our last question will come from Joe Giordano from Cowen. Please go ahead. Your line is open. Hi, Joe. Hey, guys. Hey, how are you doing? I just wanna follow up a couple of things on the, on the orders here. Particularly, let's strip out, like, the AHS and look more on the hardware stuff and PT and Fluke and Tech. What, what gives you confidence that orders in the second half of the year start to get better? Because, like, just the revenue guide, you know, suggested you exit at kind of the lowest point of the year. You know, you said Tech orders were up, like, 40% over a period of time here. Like, is just going from plus 40 to normal levels, is that, like, reasonable, or, like, could you see declines in orders because of the magnitude at which they expanded over relatively short time? Well, as we said, I think in the first half we're gonna see some of those declines as we described. You know, Mike, now point of sale is still really strong. At Fluke and Tek, you know, we normally get that scenario in a coal mine question around Fluke and, you know, quite frankly, Fluke's point of sale has stayed strong. So we think that will moderate as some of the macro impact certainly moves that number down. But, you know, you're working off such high comps relative to the last few years, is that any moderation whatsoever could make it look negative, but really, quite frankly, is not a significant issue relative to both the backlog and kind of where we're at relative to historical perspective. Yeah, we'll... Some of that improvement in the second half is comps, for sure, but some of it, we think Sensing probably as an example, probably stays a little rough through the year. We get, you know, we know what the OEMs are doing right now. We mentioned in the prepared remarks, you know, some places in industrial, like industrial automation and some parts of the world like China. On balance, when we look at the sum total of Sensing, Fluke and Tektronix, we still think there'll be a little bit of improvement in the second half. We don't need a big improvement necessarily, to really deliver what we described. As we've talked on a couple of the questions, we've got some backlog as an insurance policy against those things maybe declining a little bit more than we anticipated. Okay, so you're saying it's more of a dollar thing. I mean, more of a comp math thing than dollars, I guess. Yeah. That's right. That's right. I mean, we're really looking at some pretty significant growth rates, you know, over the last couple of years in orders, that were much bigger than our revenue numbers because of the supply chain issues and the creation of a bigger backlog, and quite frankly, a bigger passive backlog, which we've started to burn, you know, burn down as we've talked about throughout the day. Okay. Just last from me, you know, you talked about, you know, I guess theoretical M&A on the call so far. If in a theoretical situation where equity was a component of a purchase, like how do you think about what your, our return hurdles would be in scenarios like that where equity is part of it? Well, first of all, I think it's clear, you know, we're trying to convey here is discipline will continue to be the word of the day relative to M&A. I think our return hurdles are gonna be what our return hurdles are. You know, we've talked about 10% ROIC for the various kinds of deals, and we'll continue to think about that. I think what we've been trying to describe is situations in which we'll be disciplined. I think what you've seen in 2022 is the strong returns of that. Certainly the most recent M&A that we've done, Provation and ServiceChannel, beating their first year numbers is an example of that. Also the deals that we did five, six years ago that are just performing outstanding, like Gordian and eMaint and Landauer. I think we're in a great place from a balance sheet perspective to deploy capital. I would be much more focused on our discipline around returns and our discipline around accelerating strategy in places where we can really do that. Thanks, guys. Thank you. We are all out of time for questions today. I would like to turn the call back over to James Lico for closing remarks. Thanks, Julianne. Thanks everyone for spending the time with us today. We really appreciate, we know you're busy this week with a number of things. I think what you heard from us today is a real sense of pride of what we did in 2022. We said 2022 was gonna be a show me year, and, I think what you saw through the quarters and certainly in the full year numbers, the real power of the Fortive Business System and the ability for us to use the FBS tool to accelerate. We tried to convey the fact that getting back into in-person Kaizans is something that's really important to us from a cultural perspective and from an ability to deliver in any sort of economic times. That acceleration of in-person events, we tried to demonstrate and show you some examples of that, and we're back to work in that regard as we get into 2023. We'll look forward to continuing to share our strategies in May with you. I think what you'll see this year and what you're seeing in our guide is the continued improvement in our portfolio and the strength of our culture and our Business System. Special thanks to our 18,000 teammates around the world who made that happen and make it happen every day. Thanks, everybody. Have a great day. We'll look forward to the follow-up calls, and we'll see you soon. Take care. This concludes today's conference call. Thank you for your participation. You may now disconnect.