Day three here, our last fireside chat. We have the guys from Fortive, Olumide Soroye, as well as Jim Lico. I was just informed this is his last sell-side conference, as the company breaks up and you guys move on to bigger and better things. Guys, thanks for joining us here today and congrats on, you know, building the business over the last, I don't know, it seems like only a few years, but it's actually been about eight or nine. Yeah, yeah, nine years. Nine years. Time flies. We always just like to start off with a bit of an update on what you guys are seeing, and, you know, a bit of commentary on just the near-term trends in the business. Yeah. I, you know, we have, obviously, a longstanding, never comment necessarily specifically about interquarter, but, you know, I think, Steve, what we said coming into the year was from a geographic perspective, the U.S. would be our best market. Some of that has to do with, it certainly has to do with the fact that some of our businesses, some of the great trends that we have in the business have more exposure to the United States. Europe would be mixed, and I think that's playing out. Healthcare being the best. Closer you are to sort of the industrial environment, you're in, in places like Germany, you're probably gonna see a little bit more uncertainty. High-growth markets, good, with the exception of China. We said China would be a market where we would certainly be in a position to, you know, we said down mid-single digit for the year in China, but the first quarter would be our toughest quarter. Certainly, as we see things, that's certainly how we, you know, certainly gonna be a year of uncertainty. I don't think that was determined last week or this week. I think we came into the year thinking this was gonna be a year of uncertainty. Customers, customer uncertainty, those kinds of things. Some places were gonna plow right through that. Other parts would be strong and would, or some parts would be continued strong and some would maybe have to deal with some of the customer uncertainty or, in some cases, our customers' customers' uncertainty. Are you seeing in your, I guess in the short-cycle businesses, the ones that are, you know, the hardware businesses, some of them go through distribution. What are you seeing from an orders-to-sales conversion perspective? We had a couple companies here this week who talked about orders being okay, but a bit of an elongation of the sales cycle. Are you seeing anything on that? Maybe a little bit of a tale of two cities when you, when you think about it. What we said, you know, what we said on our earnings call was, you know, we had strong orders on the PT side or the Raliant side. We have a new name. So, you know, that, and those orders were good in the second half, but a lot of those orders were really for the second half of 2024, of this year. Maybe that speaks a little bit to maybe a little bit more customers being confident, but also saying, but it's more later in the year. As an example, on the Fluke side, U.S. POS is good. Point of sale is good. You know, it kind of, it's a little bit of a tale of two cities and really kind of matches up with the comment I made before, which is you in some, you know, you got some markets that are sort of moving through it and some that are dealing with this uncertainty. We're seeing some push-outs on the PT side where customers still want, still want things, but they maybe want it a little bit later in the year. On that PT side, which verticals would that be in? Would that be in semiconductor verticals, EV verticals? What types of verticals? Certainly, I would say if we look at PT, what's been strong is, you know, our, anything tied to our utility business, that's been really strong. High-performance compute has been strong, but the rest of semiconductor has been weaker. I would say that's sort of a characterization of the semi market. High-performance compute is really strong, but it's not the biggest part of the semiconductor market. Right. I would say, you know, defense has been mixed on the def, you know, our EMC business, which deals maybe more on the defense production side, has been very good. In fact, we've secured a number of large orders in the quarter, so that feels good. On the other hand, when we look at maybe, and we saw this in 2024, the sort of technology investments that we might see from a Tektronix as an example, those might be a little bit more delayed. As far as Fluke is concerned, you said the POS is pretty good. How about the order, your orders and, you know, kind of how the channel is positioning itself? Yeah, I mean, we, I'm limited, I probably talk about certainly some of these things as it relates to iOS, but I would just say from a high-level perspective, when we look at Fluke, U.S. being pretty good and some of the characterization I had about Europe is Europe's probably a place where it's a little bit more mixed even relative to Fluke. Just as a, you know, you've been around for a while, obviously you're not gonna be managing the business over the course of the next year, but how are you guys at Fortive reacting to all the headlines and what's the boardroom conversation like? Are you guys, you know, dusting off a restructuring or a, you know, recession playbook, or are you, you know, kind of powering through what you need to do given, look, you don't really know in the first place, right? Yeah. How do you react and handle this situation? I would say first and foremost, when we think about uncertainty, you know, and we think about the Fortive Business System, the Fortive Business System has really met, you know, really is meant for those kinds of times even more. It is a time when we can distinguish ourselves better competitively. It is a time where we can distinguish ourselves better financially. You know, free cash flow as an example, you know, is one example of that. I would say we came into the year with uncertainty. You know, we did some restructuring at the beginning of the year with the idea that some of these things would handle, you know, would be, would be happening. That was certainly our base case. I wouldn't say, you're, you know, you're always gonna see one thing that's maybe a little bit worse than you thought, but you also see some things that are better than you anticipated and we'll manage accordingly. I think the ambiguity or uncertainty that's in there, is out there today, has been anticipated. Our conversations with the board and our conversations internally have been, let's, you know, not roll out a new action plan, but roll out the action plan we set at the beginning of the year and execute against that action plan. We'll maybe delve back into the businesses a little bit, but want to, you know, get the, the tariff question out of the way. Can you just give us a bit of, of color around, you know, your, remind us of what your, you know, cross-border exposure is and where, where that would be most acute. You know, what, what do you see here when it comes to Mexico and China and, you know, maybe Canada as well? Europe. Yeah. And Asia. Those are tariffs from yesterday or the day before. I don't know. I've lost track. Or the morning or the afternoon. You know, I would say, you know, we've roughly sized our tariff exposure here about $25 million or something like that. Most of that's China-related. We don't have a lot of exposure relative to the Canada-Mexico situation. We have countermeasured those. Some of that is countermeasured things we decided to do at the beginning of the year in anticipation of some things. There will be some other things that we're reacting to now and we'll countermeasure appropriately through a combination of, you know, it's the playbook we started in 2018, which was when the tariffs first came out, which was globalizing our supply chain, globalizing our manufacturing, been doing that for several years. It's that part of the playbook that is really been being executed over a several-year period, as well as, you know, pricing and things like that to be able to, where appropriate. Nothing in Mexico? Very little. Okay, there really isn't much to say for you guys from a tariff perspective. I mean. It's China, it's China tariffs really is where our exposure is. Right. Is there anything incremental? No, no incremental risk that you see from, you know, what we know today? I think it's where we stand today, we've got those things countermeasured. Yeah. Okay. Great. When it comes to the separation, maybe just give us an update, any updates on timing, structure, you know, just maybe a walkthrough what your thinking is on that front. I think number one, we announced, you know, we've got a new CFO, Mark Okerstrom. Olumide can certainly elaborate on Mark. Excited to have him as our new CFO. He's a great talent and excited to have his contributions. The spin, as we said in the earnings call, we moved up the date to early third quarter. We've, you know, we've got a, we now have a chair. So we've got a number of board members. The board is really structured now today for what we need. We're continuing to hire to build the team, and that's on track. You know, we've, we'll file the Form 10 in May. We've, in a number of the other regulatory hurdles that we have to go through, are very much on track. We feel really good about where the spin is at today. You know, Olumide and Tami are, you know, we're, we do not have new CEOs here, so they are running the businesses the way they have run them. You know, we are in a really good place to execute the spin here. Olumide, I guess, you know, looking ahead and thinking about strategy a bit, what are, what are some of the, you know, different ways you may tack to, you know, approach portfolio management, you know, investing in the business? What, what, what's top of your mind as far as, you know, how you, where you take this new company and how you manage it? Yeah. No, thanks, Steve. It is a new company, I guess, as a starting point. Once we're done with the spin, Fortive's gonna be just entirely focused on innovating essential technologies to keep the world safe and productive. Everything we do will be about that. In iOS, we'll do that in industrial. In AHS, we'll do it in healthcare operations, which you could almost call it industrial healthcare. It's the part of the hospital that's most likely a manufacturing plant. There's a unity in what we do across the company. All of the brands we have will be market-leading brands like Fluke and Gordian and ASP. I mean, essentially, they're really advantage positions in all their markets, and a lot of growth headroom ahead of them. We feel excited about that. Only three of our operating brands will make up 80% of the company. From a forecast point of view and knowing exactly what you're underwriting, it's just a dramatically simpler company. Our value creation algorithm is very clear too, and that will drive our strategy. The first piece of it is our organic growth engine, which we talk about as mid-single-digit growth, and feel like we will deliver that consistently as we've done the last 12 quarters straight. We've been at least mid-single-digit growth in the company the way it's gonna be configured. That's the first piece. We'll invest in organic growth and continue to accelerate that, maybe a little bit more than we've done historically. At the same time, we embrace the, you know, the end principle. We're at 65% gross margins and 31% adjusted operating profit margins in the business coming out of 2024. We continue to expand those margins and we'll keep doing that, partly because we're growing in ways that are very accretive to margins in our consumables businesses, our software businesses, and even Fluke, the way we're growing. We have just an amazing free cash flow generation engine that will continue as well. In many ways, the portfolio strategy is a lot more forecast. We're gonna have, from an evolution point of view, more evolution than revolution in our portfolio going forward, partly because we've done the hard miles of creating what we now have. Going forward, our capture allocation will be a lot more balanced, between share repurchase and the M&A we do will be bolt-ons, and very low-risk, things we know exactly how to plug in and how to cross-sell and upsell. We've done that before. We know that recipe. I just look at it as going forward, we're set up to be a really high-quality kind of accelerating growth compounder, for Fortive, consistent with, frankly, the performance record we have, XPT. Maybe just, I guess on those bolt-ons, should we think about those as still, you know, a lot of it, a lot of the activity has been focused on software. You know, you guys have said you're open to doing hardware as well. Where are the, where are the particular work streams that you're focused on? Are there any that, you know, are real hard targets? Yeah. No, I mean, again, it goes back to the simplification of the portfolio. The fact that we'll now have a company that's 25% software, $1 billion or so revenues, incredible businesses, 25% consumables, incredible businesses, and 50% in, you know, kind of industrial short cycle, but it's Fluke that's incredibly durable. Right. We have had, you know, 15 quarters of order growth the last 17 quarters since 2021 with all the PMI. These are really high quality. Those three areas make up 80% of the company. From a bolt-on point of view, we will be bolting onto those three areas of strength in a very focused way. Some of those may be hardware deals that are incredibly durable and we can create a lot of value out of. Some of them will be software, some of them will be data. The key is they are bolt-on, so they are much smaller deployments, they are not mega deployments. You are able to really manage the portfolio. In the end, it looks like before we did, in the second half of 2023, which, you know, those are double-digit ROICs, not even the second year yet. We have the focus on the three platforms. We know exactly the kind of deals and the return profile we're looking for, and I think that's gonna, you know, help us really be focused. Any pruning to do in your portfolio? I know a lot of the companies now are, you know, kind of doing a little bit of a version of 80/20 where they're, you know, walking away from some lower margin, lower growth products. You guys obviously have really high margins. I can't imagine there are that many lower, lower margin products in the way you guys run the business. It's not like you, you know, you leave nickels around the factory. Any pruning that you're looking to do? Nothing, nothing major. I mean, like you said, it's a continuous process for us. Part of our innovation and the reason our NPI is sped up is in some cases we're shedding old legacy products and building new ones to add more value. We're always doing that and we'll keep doing that, but nothing at a big kind of portfolio kind of divestment point of view, 'cause we've done a lot of that. Part of the theory of the spin is things that are not consistent with the thesis of Fortive going forward. A lot of those will now be on their own and thriving as part of Raliant. Just digging into Fluke a little bit, you talked about the growth record there. I mean, it's really hard to like, put our finger on, sometimes what's so great about that business. What do you think has been the key to sustaining that growth? Is that just a, you know, like as far as the eye can see, this thing's gonna be an outperformer relative to the economy? What is, what's been the GDP plus type of, what's been the plus driver, the plus for Fluke, do you think over the last several years or the last decade really? Yeah. I mean, I think a couple of things. First, starting from the fact that it's just an incredible brand, you know, it's a 76-year-old brand, you know, iconic inventor brand in the industry. It stands for the highest quality, durability. It's essentially, you know, kind of the pricing leverage we have is enabled by that, so that it's just a great selling point. The things that have added to the offer from my point of view, Steve, one is the NPI velocity we've been speeding up very gradually. Last year we had 20 new products at Fluke that added 200 basis points to our growth. We expect at least as much this year. We're still ramping that. That wasn't the case at Fluke, you know, 10 years ago. We've also been gradually building a recurring piece of Fluke. Now 10% of Fluke is in recurring models. It's a range of things from software add-ons to some of our products in calibration and on the IG side, but also it's service plans for some of our end products where customers want kind of a subscription to make sure we can help them keep those things functional and active. The team has a really strong mindset of customer value and lifecycle that's driving innovation around those two topics, software services all the time. You take that NPI velocity, you take that service recurring component of it, and frankly, you take the quality of the brand and the price capture that that enables, that gives you that alpha, on top of a really strong foundation. When we think about a new Fluke product and putting aside entering a new vertical like utility or, you know, solar or whatever you guys did a couple years ago, which is obviously a winner that's more probably applying what you have to a new vertical, but what is the key to a really good new product at Fluke? Like I go to these conventions and it's, you know, it's a yellow handheld with some wires and a little clip at the end and some dials and things like that. Like, like what is the, you mentioned software. Like is it the, you know, user interface? Is it, you know, AI a part of this? Like what, what is the, what do you think is the, like the most exciting thing about these new products that keep, that keep 'em chugging like this? Yeah. I mean, I think thematically, Steve, there are three types of product innovation that we're doing at Fluke. There's one that is really thinking about the user experience of our products. You know, keep in mind there are millions of deployed kind of Fluke tools out there. And there's a next generation of technicians coming on board. There is one stream of our innovation that's just taking our portfolio and creating the next version of them that are much more like, you know, the interface you expect in your consumer devices. That's driving a refresh cycle on this millions of deployed tools out there. 'Cause then you have new technicians, you want to have the new stuff. That's a, on the platform we have, that's a big install base to do that on. The second mainstream is what you talked about, which is taking data and software and AI enablement on some of our tools that are connected and capturing data and beginning to give customers an experience where instead of taking 20 measurements on three different devices, you can do it with an integrated device that captures the data and helps you make decisions on it. That is going from kind of, you know, discrete tools to integrated decision engines for customers. That is a big trend that is. In some of the markets you mentioned, it's powerful because you have people going up 60 feet on solar kind of installations with six different tools. Being able to put that in a single small tool that is safer to carry and they don't have to handwrite the results, but it's captured, that's a powerful value prop for this customer. That's a big swim lane of innovation. The third one is kind of end market focus. There are things we're doing aimed at, you know, solar you mentioned, EVSE infrastructure you mentioned, you know, data centers, right? It's really kind of install-based management and data centers. You know, regional to global, you know, in terms of Fluke, it's one of our most global businesses. We're adapting to for different markets. Those are the three main swim lanes, you know, kind of refresh our install base with new UI/UX, add some of this data software components to go from discrete devices to solutions, and then go after some of these high growth markets. I, I'm just impressed with the work the team's doing. Yeah, we, we've been impressed over the years. I mean, it, it's a part of the portfolio. You'd think it'd be more cyclical than, than it actually is. Yeah, they, I think, a decade ago, maybe a little bit longer, you could correlate Fluke pretty closely with industrial production. Now I think if you look over the last three or four years with PMIs and industrial production, what that's been mixed around the world, Fluke's continued performance just speaks to the capability that Olumide just described. Now, how about the other businesses, the, the, on the software side, you know, just seems to be pretty steady state. Any, anything there that, that you're seeing that's interesting? And is there, you know, any risk that, as more niche, you know, vertical software businesses that, you know, AI can come in and disrupt some of this? Yeah, no, we love the businesses and the trends. It's about $1 billion of software revenues. They, as you describe them, we've picked very focused markets and frankly built number one in the market businesses in those markets. They're all doing well, partly because they have deep proprietary data and networks that provide a moat around those businesses. What we're doing is because we started the AI journey six years ago with a thought, we're actually getting ahead of the market in terms of incorporating that into our offerings. I'll just give you a few examples, in a Provation on the healthcare software side. We grew our sites in Apex, which is our SaaS version of the product, 6%-7% last year. Over the last few years, we've more than quadrupled the kind of site count we have in our business. That's because we're adding insights to that workflow, leveraging the data we have in the system installations we have for customers. That's a great business. We're using AI already there. Another one's kind of, you know, Service Channel that's, you know, back in teens growth at this point now that we've lapped the kind of pass-through revenue that we were trying to migrate out a couple of years ago. Again, the same idea, there's great data, there's a two-sided network where we have over 90,000 contractors that are connected to that network. You can't replace that. What we're doing again is deploying AI to give customers more value. We're capturing the share of that, in pricing and upsell, which is driving NDR in our business. You know, I think you go again to Guardian, you know, great business. It's got a software piece, it's got a pass-through piece to it. We had a couple of years of 20% + growth in 2022 and 2023. It's normalizing a little bit right now, but it's a great, great business that really drives efficiency in those workflows. Across, the tail of it is Accruent, which we've talked about quite a bit. That's also been a great story of just pruning, to your point, the pieces of it that were holding us back. We now have a company that's kind of ramping towards what we expect to be kind of the tail end of our software, and we expect it to be tracking to meet single-digit growth. What are you seeing in terms of customer IT budgets? You know, there's obviously a lot of focus on building out AI and maybe that's taking a bit of a chunk out of what would've been, you know, more niched vertical software applications. Are you seeing any of that? We've seen some of that in some of the other larger design software companies out there. Yeah, not, not very much, partly because of where you started. Our software businesses are very focused on, on specific kind of, you know, markets that, that are mission critical. For example, Provation, you know, you kind of need to run GI procedures and capture the case documentation. You are not gonna not do that because you are trying to do AI. If anything, the best way for you to get the value from AI is put it on top of a workflow, software workflow. In many ways, it is actually beneficial to us. Same thing in Service Channel, right? You are gonna need, you are gonna need to actually have a workflow to infuse that AI insight into. Right. We're not seeing that affect us, you know, that much in terms of IT, IT budget decisions. And again, like I mentioned, a lot of our customers, whether it's in healthcare or industrial, they're looking for help with how to get value from AI and get returns from it. One of the things we bring to them is, hey, we're deployed at scale in your operations already. So any AI we put on, your time to value is so fast on it. Right. If anything, it's pulling spend towards us right now. Lastly on AHS, I guess, all right, you know, I'm not sure who to ask on this one yet, but, it's you. Okay. Yeah. Okay. Maybe you're not out the door yet. Maybe, maybe I'll throw this one. You're right. What are you seeing in the trends there? Anything moving around in the distribution channel for consumables or pretty steady state? No, we, we're really excited about the year they had last year. Obviously, they grew 6% last year. They'll, they'll come back to maybe more closer to mid-single digit, right in the mid-single digit range. No, really good execution. Olumide talked about Provation and the strength of Provation. You know, we, we got a few less days in the first quarter, so that has a little bit of impact in the growth in the first quarter just on the consumables front. Yeah. You know, we're in a really good place in the business. You know, I think the channel transition that we talked about is very much in place and the business is executing. You know, we feel really good. I think if you step back and think about the sort of, in a time of uncertainty, this is a set, you know, this is a set of businesses that quite frankly is really, really, really stable. I think now, with the continued margin expansion and the good work that we've done from an FBS perspective, it's just gonna be a super, really great important part of the portfolio going forward. Yeah. As long as there's no pandemic, which we don't need. Yeah. Yeah, Yeah, we don't have a pandemic case. You never know what can happen here these days. Just on the margin front, you guys have put out longer-term margin targets at the investor day. Is that, you know, are those your targets as well? You know, kind of the next leg of the multi-year targets, or will you take an opportunity to, you know, put your own stamp on things when you guys come out? Yeah. Well. Or when the split happens? Yeah. The good news is we have our investor day set for June 10th, so you can be sure that I'll have a point of view laid out at that session. The thing I would say, Steve, though, is that we have a deeply rooted practice of driving kind of growth in margins over time, and that will continue. I think going forward, it starts with very margin accretive top line growth. We really think we can grow the company faster in businesses that are inherently kind of higher incremental margins. We think that's gonna contribute to our margin journey going forward in addition to the convention we already have of just productivity as a way of life. That's deeply rooted in our company. We are excited about our margin journey. We're gonna come out with new 40 that, you know, last year we were 31% adjusted OP margins and we got 120 basis points of margin expansion. OP has grown 12% CAGR the last three years. We're starting from a really strong trajectory, and so what you should expect to see is through a mix of really smart ways to grow in ways that help margins and free cash flow as well. We'll continue and accelerate that journey, but we'll have that laid out in a few months. Yeah. Okay. Looking forward to that. And then, just on the PT side, any updates there on, you know, the positioning of that business? Is that also gonna have a, you know, a new kind of margin target? And, Yeah. You know, what's, what are you, what's, you know, the story with, with Tektronix and the trends there and strategically kind of how you're, you guys are approaching that business for the spot? Yeah. I mean, I think the way to think about it going forward, and again, we'll wait till June 10th to get a lot of specifics outta Tammy and the team. But Steve, I think past is prologue and the fact that these businesses have deep-rooted FBS skills and so the margin ability and free cash flow, as you know, while the revenue has been cyclical, the free cash flow and margins have been very stable in the business. We've been able to continue to drive, these are some of our best businesses for working capital management as an example. So I think it comes with an incredible foundation. And so, you know, probably doubling if, if we think about a growth rate, probably the OP growth, you know, the annual OP growth is probably 2x that, and that's probably how we'll think about it. They'll have a good margin story as well. And then the growth is gonna come, as we've talked about, 30% of the, over a third of the business is in some really strong growth categories right now, whether it's utility infrastructure investment, whether it's some of the defense pieces that are really strong in our EMC business, or even at Tek, which has had some struggles in sort of the broader end markets. It's been really strong in high performance compute, particularly around the semiconductor and data center side of that. And so those will be the growth drivers that'll really drive the business. We would anticipate, you know, the market's starting to come back a little bit. You know, they're gonna do a lot on the self-help front. We would anticipate some of these markets coming back, you know, towards the tail end of the year. Okay. Any questions from the audience? None? Okay. How are you going to integrate AI into FBS? How do you, I know you guys have already been doing that, but going forward, what are you seeing as opportunities to integrate I and AI into FBS? Yeah. No, it's a great question. I mean, we have a journey on AI that started six years ago with the creation of Fort. That team's been, think about it as our center of excellence and armory for kind of AI best practices. We've been deploying that across all of our companies and have, you know, 50 plus different use cases. That's now developed enough that to your point, FBS is a great way to make it not just something we've done the last six years, but something that's really deeply rooted in the fabric of the company. We are beginning to connect those teams, our Fort team and our FBS team, and building it into FBS. That means it affects innovation for customers. It affects internal operating efficiency. It affects kind of customer service. It affects our development teams that are all now using Copilots and the work they do. We're very much making that connection right now to use FBS to scale. Just one more question for me. Are you guys, are you reaffirming guidance today or is that, you know, like implicit in your commentary that things are on track? We have never affirmed or, you know, in a quarter, mid-quarter commentary. I think what we try to do is give color that is pretty consistent with what we have talked about at our earnings call and try to give some color that sounds very consistent with what we talked about a few months, a month or so ago. Okay. Anything else? Jim, thank you so much for coming, and congrats on a great run. We're in a great place. You know, I think, where we stand today, I couldn't be more excited about where we're at right now. Obviously, uncertainty in the market, it's sort of easy to pick up the news every day and see what's going on. I think at the end of the day, as I mentioned, our culture and our organization is built for uncertainty. I think going forward, as you heard from Olumide and I, and certainly we'll continue to hear from Tammy, and certainly on June 10th when we have the investor day, I think what you're gonna hear is two really great businesses with two really great growth stories that are gonna be incredibly exciting for investors. When do you officially, you know, leave the building? What, what's the? I've got work through the year. You know, they'll, I'll, we'll hand the reins at the time spin. Olumide has asked me, and Tami have asked me to do a couple things for 'em and I'll, I'll continue to do a few things for 'em. All right. Yeah. No, Jim, Jim's gonna be a part of this story as we, as we develop it here. I, you know, I know we mentioned Mark Okerstrom earlier joining as CFO. Yeah. I look forward, Steve and team, to having you meet him as well. As you know, that was an important hire for me. We invested a lot of time in the tour search and we are excited about his record of shareholder value creation and over 200% TSR in his six years as a public company CFO. We are excited to have him, have his coming out party at the investor day. Congrats to you and best of luck on, you know, this new endeavor. Thank you. Thanks, Steve. Thanks. Thanks, everyone.