The paragraph introduces a conference call hosted by Fortive Corporation for discussing their Fourth Quarter 2024 Earnings Results. Daryl, the facilitator, welcomes participants and introduces Elena Rosman, Vice President of Investor Relations. Elena outlines the participants on the call, including President and CEO James Lico and CFO Charles McLaughlin. She mentions that non-GAAP financial measures will be presented and refers to the importance of Regulation G information available on their website. Elena cautions that forward-looking statements will be made and notes the associated risks and disclaimers, referencing SEC filings for more details. She then hands the presentation over to James Lico.

Fortive reported strong fourth-quarter and annual performance, surpassing expectations with high core growth, earnings, and free cash flow. The company achieved record margins and compounded adjusted earnings and cash flow by 13%. In 2024, Fortive maintained momentum despite a mixed demand environment, forecasting improved sales growth and performance for 2025. They are progressing with the separation of their Precision Technologies segment, Ralliant, expected to complete early in Q3. Fortive also prioritized returning capital to shareholders and continued leveraging their business system to drive growth, innovation, and market leadership.

The paragraph highlights Fortive's exceptional value creation for customers and shareholders, driven by a steady performance over five years with mid-single-digit core growth, significant margin expansion, and increased free cash flow. This success is attributed to the Fortive Business System (FBS) and strategic portfolio evolution, emphasizing continuous improvement and accelerated innovation. It details how Fortive developed a toolkit within FBS to meet customer needs, expedite product launches, and ensure high R&D returns. Specific examples include Fluke's new products contributing to growth, facility and asset lifecycle innovation boosting margins, and ASP's new product launches projected to generate significant revenue.

The paragraph outlines a company's recent advancements and financial performance. The company has enhanced its position in GI with the Apex Insight data analytics tool, leading to a 67% increase in Apex SaaS sites in 2024. Innovations include new products by Tektronix, sensors for data centers by Sensing Technologies, and growth in Qualitrol's energy solutions. They are investing in software, data analytics, and AI, with new AI products expected in 2025-2026. Financially, they reported strong performance with adjusted earnings growth significantly outpacing revenue growth, a core revenue increase of 2% in Q4 despite challenges in China, improved operating margins, and a record free cash flow. Annual core revenue growth was 1% with improved operating profit and margins despite a decline in Precision Technologies.

The company reported earnings and cash flow exceeding initial guidance, with an adjusted EPS of $3.89 (up 13%) and a record free cash flow of $1.4 billion. The iOS and AHS segments saw a combined 4% revenue growth in the quarter, with operating margins improving by 140 basis points, marking 12 quarters of consistent growth. For the full year, these segments achieved 4% core revenue growth and a 120-point margin expansion. Intelligent Operating Solutions saw a 190-point margin increase on 4% revenue growth despite FX headwinds. Fluke experienced mid-single-digit growth driven by strong demand and shipments, although slower growth is expected in Q1. High single-digit growth in facilities and asset lifecycle was driven by government and retail products. Advanced healthcare solutions grew core revenue by 5%, with FX headwinds mitigating some growth.

In the reported quarter, AHS expanded its adjusted operating margins due to high-margin consumable growth, although offset by unfavorable foreign exchange. Precision Technologies saw flat revenue with a core decline but benefited from acquisitions. Adjusted operating margins decreased due to lower core volumes but were partially mitigated by productivity gains and mergers. Tektronix experienced a decline in core revenue but saw an increase in orders driven by investments in data centers and defense applications. Despite weaknesses in China and EV mobility, Qualitrol and PacSci achieved double-digit growth. Over the past four years, Precision Technologies has improved its revenue and profitability through strategic portfolio positioning and innovation, leveraging FBS tools to expand market opportunities in new energy sectors.

The paragraph discusses the 2025 financial outlook for New Fortive and PT, two segments of the Fortive Corporation. New Fortive, which includes the iOS and AHS segments, is projected to generate approximately $4.1 billion in revenue, driven by strong demand for safety and productivity technologies and growth in software and recurring revenue businesses. There is expected slow growth in China, but momentum in other regions is anticipated to yield low to mid-single-digit core growth. PT is expected to achieve around $2.2 billion in revenue, with modest core growth. Businesses related to power infrastructure, computing, communications, aerospace, and defense systems, making up 35% of PT's revenue, are expected to experience double-digit growth. Overall, growth in the second half of 2025 is expected to outpace the first due to timing and days impact.

The paragraph discusses the financial outlook and expectations for a company, highlighting expected core revenue growth of 1.5% to 3.5% for the year despite a $90 million foreign exchange headwind. Adjusted operating profit is projected to increase by 2% to 5%, while adjusted diluted EPS is estimated to be between $4.00 and $4.12. Adjusted free cash flow is anticipated to be around $1.5 billion. For the first quarter, core revenues are expected to remain flat with a $30 million FX impact. The first quarter will see challenges such as slower iOS and AHS performance and PT down mid-single digits. The company made significant progress in executing their strategy, utilizing record second-half free cash flow to repurchase about 10 million shares.

The paragraph outlines Fortive's strategic plans, including deploying free cash flow for share repurchases and maintaining a strong balance sheet post-spin-off. The separation is expected to complete early in the third quarter, with a Form 10 filing in the spring. Ralliant Corporation has been named as the new entity, with Ganesh Murthy as board chair, joined by new board members Kate Mitchell and Charles McLaughlin. It also announces Char Dube as Fortive's new board chair, succeeding Alan Spoon, and highlights her qualifications to lead the company's long-term strategy.

The paragraph discusses Fortive's strategic progress and success in evolving its portfolio profitably, emphasizing their ability to deliver consistent performance over the past five years, and their preparedness for future success in 2025 and beyond. The speaker credits Fortive's unique culture and the passion of its 18,000 employees worldwide for reaching this milestone. The speaker expresses excitement about the future, indicating that both companies are strategically positioned for lasting success. The paragraph concludes with a transition to a Q&A session, where Robert Mason from Baird asks about changes or evolutions in Fortive's product strategy, particularly in relation to iOS and AHS, and mentions a comment about China's market being softer.

The paragraph discusses the performance and outlook for New Fortive, particularly in its software and healthcare segments which are doing well. There is mention of strong performance at Fluke due to product innovation. Looking ahead to 2025, some challenges are noted in consumables and service parts, but overall Q1 showed good performance. In the precision technologies (PT) segment, order growth has been positive, although China remains weak without much improvement as anticipated. Additionally, there is a question regarding government exposure post-election affecting fund flow, to which Robert Mason responds that there has been no significant impact, noting Gordian's exposure is more state and local rather than federal.

The paragraph is part of a financial discussion involving Robert Mason, Daryl, Julian Mitchell, and Charles McLaughlin. Robert Mason mentions that their productivity solutions are expected to drive cost reduction and that they have seen strong product sales, with large orders from major clients. There has been no indication of changing customer mindsets. Julian Mitchell from Barclays asks about the organic sales improvement in the Precision Tech sector, whether the improvement is due to more selling days, easier comparisons, or end market improvements, like in China, and about the conversion of orders into sales. Charles McLaughlin responds, indicating the discussion is complex and mentioning that the Precision Tech sales are expected to decline mid-single-digit in the first quarter.

The paragraph discusses anticipated business growth, suggesting a slight improvement in the second quarter and more growth in the second half of the year, particularly due to challenging comparisons in China. The speaker mentions market improvements and high volume growth in specific areas like Qualitrol and EMC, supported by capacity investments. Innovations, especially from Tektronix, are expected to contribute positively in the latter part of the year. There's also a brief mention of tariffs, noting minimal impact from postponed tariffs related to Canada and Mexico.

The paragraph discusses the impact of China tariffs on the company's financial performance, focusing on strategies that have been in place since 2018. The company has enacted measures to counter the ten percent tariffs in China, which are reflected in their guidance. They anticipate some economic impact from the tariffs, expecting a mid-single-digit decline in their revenue from China due to customer uncertainty. The conversation then shifts to an earnings call, where Nigel Coe acknowledges Chuck's impending retirement and asks about the days headwind in the first quarter, questioning if it was influenced by a leap year or the Chinese New Year. Coe also inquires about the effects of foreign exchange (FX) on margin conversion within the company's AHS segment.

The paragraph involves a conversation among Charles McLaughlin, Nigel Coe, Elena Rosman, and Daryl about financial impacts related to currency fluctuations and company restructuring. They discuss the minor impact of the dollar strengthening on the overall year's performance and mention a specific 200 basis point headwind on healthcare margins in the first quarter. The conversation shifts to costs associated with a company spin-off, detailing anticipated public company and stranded costs estimated at around $50-$60 million, with half expected to be resolved within 12-18 months. They also outline a one-time separation cost of $185 million, primarily for professional services like taxes, legal, and banking fees, noting progress in addressing these financial changes and building relevant teams.

In the paragraph, Steve Tusa from JPMorgan asks about the impact of potential tariffs on product businesses and whether there was any preordering due to the change in administration. Elena Rosman responds that they didn't identify any significant additional revenue from preordering related to tariffs. Instead, the fourth quarter saw a consistent and positive cadence of sales in North America and other regions. They identified about ten million in revenue, mostly from U.S. and European distribution, due to people buying to meet incentive plans as the year progressed. It was not related to tariffs. Tusa also asks about which verticals are performing well in Tektronix's test and measurement (T&M) segment, but this part of the response is not provided in the excerpt.

In the paragraph, Steve Tusa discusses the strong performance of sectors related to defense, semiconductors, high-speed computing, hyperscalers, and quantum computing, emphasizing their robust investment and design efforts. He notes that the industrial sector, particularly in North America, is performing well. However, Western Europe and China face challenges, with weaknesses attributed partly to EV mobility issues and broader export control restrictions in China. The conversation then shifts to Daryl and Jeff Sprague, where they discuss a specific issue involving two days that impacted business areas such as healthcare and services, totaling about eight million dollars in losses, affecting around 60-70% of their business.

The paragraph is a conversation between Charles McLaughlin and Jeff Sprague regarding future service growth and market performance. They discuss potential impacts on distribution, particularly concerning China, where a decline is expected: high single-digit decreases for 2024 and mid-single digits for 2025, with the first quarter potentially seeing a high single-digit to low double-digit drop. Despite this, they note that high-growth markets outside China are performing well, possibly offsetting declines. Regarding financials, they mention flat Annual Operating Plan (AOP) for Q1, with some margin pressure in PT but upward trends in other segments, highlighting margin expansion from the previous year despite slow growth.

The paragraph is a transcript from a discussion involving multiple people, including Jeff Sprague, Daryl, Charles McLaughlin, Scott Davis, and Nigel Coe. The conversation focuses on Fortive's financial performance, discussing the company's margin expansion due to iOS and AHS, along with offsetting mechanisms in the PT segment, despite technology being down. Scott Davis raises a question about the volatility of the company's tax rate, which is clarified by Nigel Coe as being influenced by discrete items typically occurring in Q4. The conversation also touches on the long-term growth projections for specific business segments like probation and ASP, with an understanding that these projections may have evolved over time since the initial deals.

Charles McLaughlin discusses the potential growth rate of two assets over the next five years, projecting a mid-single-digit growth for ASP due to factors like additional elective procedures, price adjustments, and volume share gains. He mentions the positive impact of innovation, despite regulatory challenges, and notes the significant progress in SaaS conversion with high single to low double digits growth expected. McLaughlin highlights their AI offering, Apex Insights, gaining traction with customers and attributes their success to effective sales strategies and ongoing improvements. Daryl and Nigel Coe express their support and optimism for the year.

In the paragraph, Daryl, Charles McLaughlin, and others discuss the growth and performance of their software assets, particularly Gordian, Accruent, and Service Channel. They report high single-digit growth for both the quarter and the year, despite facing some headwinds in the service area. While Gordian's growth rate has moderated, it remains in the low double-digit range, and other platforms like Accruent and Service Channel are experiencing good growth. Although there were challenges with Intellects in 2024, improvements have been made. Overall, the software business is performing well, with innovations having a significant impact and profitability notably improved by 800 basis points, as mentioned in prior remarks.

The paragraph discusses the evolving landscape of the utilities and power sector, highlighting the role of technology and R&D investments. Charles McLaughlin talks about the involvement of EA and Tektronix in developing next-generation utilities technologies, including grid improvements and component design. He also emphasizes the strength of Qualitrol in grid monitoring and transformer sectors, mentioning new sensor launches and consistent double-digit growth. The company is ramping up capacity to meet demand and anticipates continued customer investments in the market, positioning "Reliant" as a significant growth driver in the coming 12 to 18 months.

The paragraph is a segment from an earnings call where Joe Giordano, an analyst from TD Cowen, asks questions about a company's exposure to the electric vehicle (EV) market in China and its profit margins. Daryl and Charles McLaughlin respond, suggesting that while they might have slightly more EV exposure compared to their competitors, their performance is similar over the long term. McLaughlin and Elena Rosman also address inquiries about a decline in PT margins in the fourth quarter, attributing it to volume decline, production capacity issues, and a mix of revenue sources. Scott Davis also mentions that the company has less revenue in some profitable areas. The discussion then shifts to Andy Kaplowitz from Citi, who asks about future pricing strategies for 2025.

The paragraph discusses the impact of tariff-related uncertainty and material cost inflation, which remains relatively benign. Charles McLaughlin mentions that the enterprise has incorporated about 200 to 225 basis points of price increases consistently across segments, and they continue to pursue higher pricing. This strategy may affect volume, especially in iOS, but not in PT, with expectations around flattish growth for the full year. Moreover, AHS saw double-digit consumables growth in Q3 and mid-single digits in Q4, largely due to differences in the number of days between quarters. Overall, AHS performed well, with strong results across businesses, despite some challenges in China and an Ivy bag situation that may impact Q1. Europe showed good performance in the health sector.

The paragraph involves a discussion among several individuals about the performance and orders of certain health-related businesses, particularly focusing on regions like China, Japan, and the Middle East. ASP is highlighted as the most global business with worldwide sales. Chris Snyder from Morgan Stanley inquires about PT (Precision Tech) orders, noting their double-digit increase for the second consecutive quarter. Elena Rosman responds by indicating the book-to-bill ratio is slightly below one, typical for the fourth quarter due to seasonal shipment patterns. Charles McLaughlin adds that while there might be some pressure due to comp issues in China, order growth is still expected in the first half of the year.

The paragraph discusses the impact of timing and order patterns on shipments, with a focus on semiconductor-related investments and sensing companies' orders being more back-end loaded than usual. Although there is comfort with this seasonality compared to previous years, there is concern about Precision Tech's lower organic growth in Q4, despite positive order momentum. The discussion also highlights challenges in China and the impact of EA Electro's performance on organic growth, noting EA Electro's strong first-quarter performance last year due to backlog.

The paragraph discusses the current state and future expectations for EA and the company's growth, specifically mentioning improvements and synergies. EA is projected to grow by mid-single digits this year. Improvements in operations and strategies, particularly with FBS, are expected to restore margins to levels seen when EA was acquired. Tektronix sales synergies are surpassing expectations, especially in North America, as new growth opportunities emerge in different markets. However, large orders in the EV business, which were significant in 2022 and 2023, have not returned and are not expected to return until 2025. Elena Rosman mentions a $10 million headwind affecting EA's core decline year-over-year for Q1. Deane Dray from RBC Capital Markets commends Fortive's networking capital at 6% and requests clarification on its status between New Fortive and Ralliant.

In this dialogue, Scott Davis, Charles McLaughlin, Deane Dray, and Elena Rosman discuss Fortive's working capital and free cash flow, specifically relating to the software-influenced segment of the company, Ralliant. They note Ralliant's low net working capital as positive and discuss expectations for free cash flow conversion, forecasting it to be between 95% and 100%. They also discuss how certain factors, such as software and mergers and acquisitions, can push this metric above 100%. Charles and Scott conclude by mentioning that they'll provide more clarity at the investor day and discuss whether their software business has negative working capital, concluding it is mostly flat.

The paragraph is part of a discussion during a conference call where Scott Davis and others respond to questions. They discuss the negative working capital associated with Accurant and detail improvements in the semiconductor sector, particularly in high-speed computing involving customers like NVIDIA and large hyperscalers. They note the weaker aspects in discrete consumer products and anticipate seeing some positive developments, or "green shoots," in this area. Additionally, it was confirmed that the company is moving forward with a planned spin-off, and any inbound offers related to this have been evaluated and are considered resolved.

The paragraph discusses the growth expectations for Fluke across different regions. While they anticipate low single-digit growth for Fluke in 2024 and 2025, North America is expected to see the most growth, with some expected in Western Europe and high growth markets outside China. However, they predict a decline in China, particularly in the first half of the year due to challenging comparisons. The point of sale in China is mixed, with day-to-day sales down but project-based sales up.

The paragraph discusses the current business climate for Fluke, mentioning that although the regular business operations haven't fully recovered, innovation is helping to maintain a strong position. Some revenue has shifted out of the first quarter, causing slight weakness, but there's a positive performance in the fourth quarter. Nigel Coe asks about growth expectations for Qualitrol and its capacity constraints, as well as demand trends in Europe, particularly with Hanksler. Charles McLaughlin responds with optimism, highlighting expected multiyear double-digit growth for Qualitrol, despite some capacity constraints. Sensing orders saw double-digit growth in the second half, although typical year-end blanket orders were missing, partly due to Hensler.

The paragraph is a dialogue between various individuals discussing a company's exposure to automation markets in Europe and China, highlighting discrete automation as a key area. Scott Graham from Seaport Research asks about the company's margins, specifically the price-cost spread and restructuring savings. Elena Rosman explains that prices increased by three percent, gross margins expanded by ten basis points, and twenty million dollars was allocated for restructuring, with gradual benefits expected throughout the year. The discussion concludes with no further questions.

In the paragraph, several key speakers express their gratitude and excitement about ongoing and future developments at their company. Charles McLaughlin thanks participants for their thoughtful questions and reassures them that Chuck will continue to support the team during the spin-off, despite ongoing work. The speakers highlight the strong end to the year, record achievements in 2024, and the role of the Fortive Business System (FBS) in driving innovation and setting the company up for success in 2025. They also note the potential for a faster-than-expected spin-off process and express enthusiasm for upcoming engagements with stakeholders.

The paragraph concludes a teleconference, with participants expressing gratitude and well-wishes. They look forward to future discussions about Fortive's activities. The teleconference ends with thanks and a reminder to disconnect, wishing everyone a good day and weekend.

This summary was generated with AI and may contain some inaccuracies.