Fortive at J.P. Morgan Industrials Conference: Strategic Readiness Amid Uncertainty

On Thursday, 13 March 2025, Fortive Corp (NYSE: FTV) presented at the J.P. Morgan Industrials Conference 2025, offering a comprehensive overview of its current performance and strategic plans. The discussion, led by CEO Jim Liko and CFO Alumida Sorority, highlighted both challenges and opportunities, emphasizing Fortive’s readiness to navigate market uncertainties through its Florida Business System (FBS). The company is preparing for an upcoming spin-off and is focused on growth and innovation.

Key Takeaways

• Fortive is preparing for a spin-off in the early third quarter, with a new CFO and structured board in place.
• The company maintains a strong focus on organic growth, margin expansion, and bolt-on acquisitions.
• Fluke and Advanced Healthcare Solutions (AHS) sectors show consistent growth and stability.
• Fortive is integrating AI into operations to enhance customer value and drive growth.
• Tariff exposures are managed through supply chain globalization and pricing strategies.

Financial Results

• Gross Margins: 65% reported for 2024
• Adjusted Operating Profit Margins: 31% with 120 basis points of margin expansion year-over-year
• Operating Profit Growth: 12% compound annual growth rate over the last three years
• Software Revenue: $1 billion, accounting for approximately 25% of total company revenue

Operational Updates

• Geographic Performance:

- US: Expected to be the strongest market

- Europe: Mixed performance, with healthcare leading

- China: Expected to decline mid-single digits

• Tariff Exposure: Approximately $25 million, primarily related to China
• Spin-Off: On track for early third quarter, with Form 10 filing planned for May
• Fluke Growth: 20 new products added in the prior year, contributing to growth

Future Outlook

• Organic Growth: Targeting mid-single-digit growth rate
• Capital Allocation: Balanced approach between share repurchases and bolt-on acquisitions
• M&A Strategy: Focus on software, consumables, and Fluke segments
• Margin Expansion: Continued through margin-accretive top-line growth and productivity improvements

Q&A Highlights

• Customer IT Budgets: Minimal impact on software businesses
• AI Integration: Enhancing innovation, operating efficiency, and customer service
• PT Growth Drivers: Utility infrastructure, defense, and high-performance computing

Fortive’s presentation at the conference underscored its strategic readiness and resilience in the face of market uncertainties. Readers are encouraged to refer to the full transcript for detailed insights.

Full transcript - J.P. Morgan Industrials Conference 2025:

Steve, Analyst: Day three here, our last fireside chat. We have the guys from Fortive, Alumida Sorority as well as Jim Liko. And 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.

So guys, thanks for joining us here today and congrats on 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. Yes, yes, nine years, nine years. Time flies. So we always just like to start off with a bit of an update on what you guys are seeing and a bit of commentary on just the near term trends in the business.

Jim Liko, Fortive: Yes. Well, I we have obviously a longstanding never comment necessarily specifically about inter quarter. But 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 is 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 places like Germany, you’re probably going to see a little bit more uncertainty. And then high growth market’s good, but with the exception of China. We said China would be a market where we would certainly be in a position to we said down mid single digit for the year in China, but the first quarter would be our toughest quarter.

So certainly as we see things, that’s certainly how we certainly going to 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 is going to be a year of uncertainty, customers, customer uncertainty, those kinds of things. Some places we’re going to plow right through that. Other parts would be strong and would or some parts will be continued strong and some would maybe have to deal with some of the customer uncertainty or in some cases our customers’ customers’ uncertainty.

Steve, Analyst: And are you seeing in your I guess, on the short cycle businesses, the ones that are the hardware businesses, some of them go through distribution. What are you seeing from an orders to sales conversion perspective? We had a couple of companies here this week who talked about orders being okay, but a bit of an elongation of the sales cycle. So are you seeing anything on that?

Jim Liko, Fortive: Maybe a little bit of a tale of two cities when you think about it. What we said on our earnings call was we had strong orders on the PT side or the Rallyant side. We have a new name. So that and those orders were good in the second half, but a lot of those orders were really for the second half of twenty twenty of this year. So maybe that speaks a little bit to maybe a little bit more customers being confident, but also saying that it’s more later in the year.

But on the as an example on the Fluke side, U. S. POS is good, point of sale is good. So 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 in some 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 things, but they maybe want it a little bit later in the year.

Steve, Analyst: And on that PT side, which verticals would that be in? Would that be in semiconductor verticals, EV verticals? What types of verticals?

Jim Liko, Fortive: Certainly, I would say, if we look at PT, what’s been strong is 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. And so I would say that’s sort of a characterization of the semi market. So high performance compute is really strong, but it’s not the biggest part of the semiconductor market. And so and I would say defense has been mixed.

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. But on the other hand, when we look at maybe and we saw this in ’twenty four, the sort of technology investments that we might see from Tektronix as an example, those might be a little bit more delayed.

Steve, Analyst: As far as Fluke is concerned, you said the POS is pretty good. How about the order your orders and kind of how the channel is positioning itself?

Jim Liko, Fortive: Yes. I mean, Lumidea probably talked 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.

Steve, Analyst: So just as a you’ve been around for a while. Obviously, you’re not going to 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 dusting off restructuring or a recession playbook?

Or are you kind of powering through what you need to do given, look, you don’t really know in the first place, right? So how do you react and handle this situation?

Jim Liko, Fortive: Well, I would say, first and foremost, when we think about uncertainty and we think about the Florida business system, the Florida business system is really met really is meant for those kinds of times even more. It’s a time when we can distinguish ourselves better competitively. It’s a time where we can distinguish ourselves better financially. Free cash flows and examples is one example of that. And so I would say we came into the year with uncertainty.

So we did some restructuring at the beginning of the year with the idea that some of these things would handle would be happening. And certainly, that was certainly our base case. So I wouldn’t say you’re always going to 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. And I think the ambiguity or uncertainty that’s in there is out there today has been anticipated. And so our conversations with the board and our conversations internally have been, let’s not roll out a new action plan, but roll out the action plan we said at the beginning of the year and execute against that action plan.

Steve, Analyst: Well, maybe delve back into the businesses a little bit, but want to get the tariff question out of the way. Can you just give us a bit of color around your remind us of what your cross border exposure is and where that would be most acute? And then what do you see here when it comes to Mexico and China and maybe Canada as well? Yes. And Europe.

Jim Liko, Fortive: Yes.

Steve, Analyst: And Asia?

Jim Liko, Fortive: Those are tariffs from yesterday or

Steve, Analyst: the day before. I don’t know. I’ve lost that.

Jim Liko, Fortive: Or the morning or the afternoon. I would say, we could roughly size our tariff exposure here about $25,000,000 or something like that. Most of that’s China related. We don’t have a lot of exposure relative to the Canada Mexico situation. So we’ve countermeasured those.

Some of that is countermeasured things we decided to do at the beginning of the year in anticipation of some things. And there’ll be some other things that we’re reacting to now and we’ll countermeasure appropriately through a combination of it’s the playbook we started in 2018, which was when the tariffs first came out, which was supply globalizing our supply chain, globalizing our manufacturing, been doing that for several years. And so it’s that part of the playbook that has really been executed over a several year period as well as pricing and things like that to

Steve, Analyst: be able to where appropriate. Nothing in Mexico?

Jim Liko, Fortive: Very little.

Steve, Analyst: Okay. So there really isn’t much to say for you guys from a tariff perspective. China tariffs really

Jim Liko, Fortive: is where our exposure is.

Steve, Analyst: Right. But is there anything incremental? No incremental risk that you see from what we know today? I think

Jim Liko, Fortive: it’s where we stand today, we’ve got those things countermeasured.

Steve, Analyst: Yes. Okay. Great. When it comes to the separation, maybe just give us an update, any updates on timing, structure, just maybe a walk through what you’re thinking is on that front?

Jim Liko, Fortive: Well, I think number one, we announced we’ve got a new CFO, Mark Orkstrom, Lumide 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 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. And we’re continuing to hire. So to build the team and that’s on track and then we will 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.

So we feel really good about where the spin is today. And Illuminate and Tammy are we don’t have new CEOs here, so they’re running the businesses the way they’ve run them. And we’re in a really good place to execute the spin here.

Steve, Analyst: And Illumina, I guess, looking ahead and thinking about strategy a bit, what are some of the different ways you may tack to approach portfolio management, investing in the business? What’s top of your mind as far as where you take this new company and how you manage it?

Alumida Sorority, Fortive: Yes. No, thanks. And it is a new company, I guess, as a starting point. So once we’re done with the spin, Fortive is going to be just entirely focused on innovation essential technologies to keep the world safe and productive. And everything we do will be about that.

In iOS, we’ll do that in industrial. And 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 like a manufacturing plant. So 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.

And I mean essentially they have really advantaged positions in all the markets and a lot of growth headroom ahead of them. So we feel excited about that. Only three of our operating brands will make up 80% of the company. So from a forecast point of view and knowing exactly what you’re underwriting, it’s just a dramatically simpler company. And our value creation algorithm is very clear too and that will drive our strategy.

The first piece of it is 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 twelve quarters straight. We’ve been at least mid single digit growth in the company the way it’s going to be configured. So that’s the first piece. So 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 AND principle.

So we’re at 65% gross margins and 31% adjusted operating profit margins in the business coming out of 2024. And 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. So we have just an amazing free cash flow generation engine that will continue as well. So in many ways, the portfolio strategy is a lot more focused. We’re going to 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 would be a lot more balanced between share repurchase and the M and 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. So I just look at it as going forward, we’re set up to be a really high quality kind of accelerating growth componder for Fortive, consistent with frankly the performance record we have XPT.

Steve, Analyst: PT. Maybe just, I guess, on those bolt ons, should we think about those as still a lot of the activity has been focused on software? You guys have said you’re open to doing hardware as well. Where particular work streams that you’re focused on? Are there any that are real hard targets?

Alumida Sorority, Fortive: Yes. No, I mean, again, it goes back to the simplification of the portfolio. So the fact that we’ll now have a company that’s 25% software, $1,000,000,000 or so revenues, incredible businesses, 25% consumables, incredible businesses and 50% in kind of industrial short cycle, but it’s fluke that’s incredibly durable. And we’ve had 15 of other growth the last seventeen quarters since 2021 with all the PMI. So these are really high quality and those three areas make up 80% of the company.

So from a bolt on point of view, we’ll be bolting on to those three areas of strength in a very focused way. And 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. But the key is they’re bolt on. So they’re much smaller deployments, they’re not mega deployments.

So you’re able to really manage the portfolio. So in the end, it looks like before we did in the second half of twenty twenty three, which those are double digit ROICs, not even the second year yet. So 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 going to help us really be focused.

Steve, Analyst: Any pruning to do in your portfolio? I know a lot of the companies now are kind of doing a little bit of a version of eightytwenty where they’re walking away from some lower margin, lower growth products. You guys obviously have really high margin. So I can’t imagine there are that many lower margin products and the way you guys run the business, It’s not like you leave nickels around the factory. So any pruning that you’re looking to do?

Alumida Sorority, Fortive: Nothing major. I mean, but like you said, it’s a continuous process for us. So 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. So 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, because we’ve done a lot of that.

And 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 the rallyant.

Steve, Analyst: So 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? And is that just like as far as the eye can see, this thing is going to be an outperform a relative to the economy? What is what’s been the GDP plus type of what’s been the plus driver of the plus Fluke, do you think over the last several years or the last decade really?

Alumida Sorority, Fortive: Yes. So I mean, I think a couple of things. First, starting from the fact that it’s just an incredible brand, seven, six year old brand, iconic inventor brand in the industry. And it stands for the highest quality, durability and it’s essentially 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 the alpha from my point of view, Steve, one is the NPI velocity we’ve been speeding up very gradually. So last year, we had 20 new products at Fluke that added 200 business points to our growth. And we expect at least as much this year and we’re still ramping that. That wasn’t the case at Fluke ten years ago. And then we’ve also been gradually building a recurring piece of Fluke.

So now 10% of Fluke is in recurring models. And it’s a range of things from software add ons to some of our products in calibration and on the IG side. But also its service plans for some of our high end products where customers want kind of a subscription to make sure we can help them keep those things functional and active. And 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. So 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 enables, that gives you that alpha on top of a really strong foundation.

Steve, Analyst: So when we think about a new Fluke product and putting aside entering a new vertical like utility or solar or whatever you guys did a couple of years ago, which is obviously a winner, that’s more probably applying like what you have to a new vertical. But what is the key to like a really good new product at Fluke? Like I go to these conventions and it’s a yellow handheld with some like 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 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 them chugging like this?

Alumida Sorority, Fortive: Yes. 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. 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.

So there’s one stream of our innovation that’s just taking our portfolio and creating the next version of them that are much more like the interface you expect in your consumer devices. And that’s driving a refresh cycle on this millions of deployed tools out there, because then you have new technicians, you want to have the new stuff. So that’s a on the platform we have, that’s a big installed 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.

And so that’s going from kind of discrete tools to integrated decision engines for customers. And that’s a big trend that is I mean, 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. And being able to put that in a single small tool that is safer to carry and you don’t have to handwrite the results, but it’s captured, that’s a powerful value prop for this customer. So that’s a big swim lane of innovation. And then the third one is kind of end market forecast.

So there’s things we’re doing in that solar you mentioned, EVSE infrastructure you mentioned, data centers, right? And it’s really kind of installed base management in data centers. And regional to globe in terms of Fluke, it’s one of our most global businesses. So we’re adapting to for different markets. And those are the three main swim lanes, kind of refresh our installed 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.

And I’m just impressed with the work the team is doing.

Steve, Analyst: Yes, we’ve been impressed over the years. I mean, it’s a part of the portfolio. You’d think it’d be more cyclical than it actually is.

Jim Liko, Fortive: Yes, I think a decade ago, maybe a little bit longer, you could correlate Fluke pretty closely with industrial production. But 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, Net Fluke’s continued performance just speaks to the capability that Illuminated just described.

Steve, Analyst: Now how about the other businesses, the on the software side, just seem to be pretty steady state. Anything there that you’re seeing that’s interesting? And is there any risk that as more niche vertical software businesses that AI can come in and disrupt some of this?

Alumida Sorority, Fortive: Yes. No, we love the businesses under trends. It’s about $1,000,000,000 of software revenues and as you describe them, we’ve picked very focused markets and frankly built number one in the market businesses in those markets. And they’re all doing well, partly because they have deep proprietary data and networks that provide a moat around those businesses. And what we’re doing is because we started the AI journey six years ago with Afford, 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 provision on the healthcare software side. We grew our sites in Apex, which is our SaaS version of the product, 6% to 7% last year. Over the last few years, we’ve more than quadrupled the kind of site count we have in our business. And that’s because we’re adding insights to that workflow, leveraging the data we have in the system installations we have for customers. So that’s a great business.

We’re using AI already there. Another one’s kind of service channel that’s back in Teams growth at this point. Now that we’ve locked the kind of pass through revenue that we’re trying to migrate out a couple of years ago. But 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.

So you can’t replace that. So what we’re doing again is deploying AI to give customers more value and we’re capturing the share of that in pricing and upsell, which is driving NDR in that business. I think you go again to Gordian, great business, it’s got a software piece, it’s got a pass through piece to it. And we had a couple of years of 20 plus percent 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.

So across and the tail of it is occurrence, which we’ve talked about quite a bit. And 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 it’s the tail end of our software and we expect it to be tracking to mid single digit growth.

Steve, Analyst: What are you seeing in terms of customer IT budgets? And 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 have been more niche 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.

Alumida Sorority, Fortive: Yes, not very much, partly because of where you started. Our software businesses are very focused on specific kind of markets that are mission critical. So for example, probation, you kind of need to run GI procedures and capture the case documentation. So you’re not going to not do that because you’re trying to AI. If anything, the best way for you to get the value from AI is put it on top of a workflow, software workflow.

So in many ways, it’s actually beneficial to us. Same thing in service channel, right. You’re going to need you’re going to need to actually have a workflow to infuse that AI insight into. Right. So we’re not seeing that affect us that much in terms of IT budget decisions.

And again, like I mentioned, a lot of our customers, whether it’s in healthcare and industrial, they’re looking for help with how to get value from AI and get returns from it. And one of the things we bring to them is, hey, we’re deployed at scale in the operations already. So any AI we put on, you can your time to value is so fast on it. And so if anything, it’s pulling spend towards us right now.

Steve, Analyst: And then just lastly on AHS, I guess, all right, I’m not sure who to ask on this one yet, but it’s you. Okay. Yes. Okay. Maybe you’re not out the door yet.

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?

Jim Liko, Fortive: No, we’re really excited about the year they had last year. Obviously, they grew 6% last year. They’ll come back to maybe more closer to mid single digit right in the mid single digit range. But no, really good execution. Olivier talked about probation and the strength of probation.

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. Yes. We’re in a really good place in the business. And I think the channel transition that we talked about is very much in place and the business is executing. So we feel really good.

And I think if you step back and think about the sort of in a time of uncertainty, this is a set of businesses that quite frankly is really, really stable. And I think now with the continued margin expansion and the good work that we’ve done from an FBS perspective, it’s just going to be a super really great important part of the portfolio going forward.

Steve, Analyst: Yes. As long as there’s no pandemic, which we don’t need.

Jim Liko, Fortive: Yes. We don’t have a pandemic case.

Steve, Analyst: Well, you never know what can happen here these days. So just on the margin front, you guys have put out longer term margin targets at the Investor Day. Is that are those your targets as well, kind of the next leg of the multiyear targets? Or are you will you take an opportunity to put your own stamp on things when you guys come out? Or when the split happens?

Alumida Sorority, Fortive: Yes. The good news is we have our Investor Day set for June 10. So you can be sure that I’ll have a point of view laid out at that session. But 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. So we think that’s going to 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. So we’re excited about our margin journey.

We’re going to come out with new 40, but last year with 31% adjusted OP margins and we got 120 basis point of margin expansion. OP has grown 12% CAGR the last three years. So 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 and ways to help margins and free cash flow as well. We’ll continue and accelerate that, Johnny.

But we’ll have that laid out in a few months.

Steve, Analyst: Okay. Looking forward to that. And then just on the PT side, any updates there on the positioning of App business? Is that also going to have a new kind of margin target? And what do the story with Tektronix and the trends there and strategically kind of how you guys are approaching that business for the second quarter?

Yes.

Jim Liko, Fortive: I mean, I think the way to think about it going forward and again, we’ll wait till June 10 to get a lot of specifics out of from Tammy and the team. But Steve, I think past this prologue and the fact that these businesses have deep rooted FPS skills and so the margin ability and free cash flow. As you know, while the cyclical 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 probably doubling, if we think about a growth rate, probably the OP growth, 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 going to 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 attack, 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 will really drive the business. And then we would anticipate the market starting to come back a little bit. They’re going to do a lot on the self help front, but we would anticipate some of these markets coming back towards the tail end of the year.

Steve, Analyst: 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 AI into FBS?

Alumida Sorority, Fortive: Yes. No, it’s a great question. I mean, we have a journey on AI that started six years ago with the creation of Fort. And that team’s been think about it as our center of excellence and armory for kind of AI best practices. And we’ve been deploying that across all of our companies and have 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 in the last six years, but something that’s really deeply rooted in the fabric of the company. So we are beginning to connect those teams, our Ford team and our FPS team and building it into FPS. And 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 co pilots and the work they do. So we’re very much making that connection right now to use FPS to scale.

Steve, Analyst: And then just one more question for me. Are you guys are you reaffirming guidance today or is that like implicit in your commentary that things are on track?

Jim Liko, Fortive: We’ve never affirmed in the quarter mid quarter commentary. So I think what we try to do is give color that’s pretty consistent with what we’ve 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.

Steve, Analyst: Okay. Anything else? Jim, thank you so much for coming and congrats on a great run.

Jim Liko, Fortive: We’re in a great place. And 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. But I think at the end of the day, as I mentioned, our culture and our organization is built for uncertainty. And I think going forward, as you heard from Illuminate and certainly we’ll hear continue to hear from Tammy.

And certainly on June 10, when we had the Investor Day, I think what you’re going to hear is two really great businesses with two really great growth stories that are going to be incredibly exciting for investors.

Steve, Analyst: When do you officially leave the building? What’s the

Jim Liko, Fortive: Well, I’ve got work through the year. So I’ll hand the reins at the time spend, but Illuminate has asked and Tammy have asked me to do a couple of things for him and I’ll continue to do a few things for him.

Alumida Sorority, Fortive: All right. No, Jim is going to be a part of this story as we develop it here. And I know we mentioned Mark Okerstrom earlier joined as CFO. And I look forward, Steve and team having you meet him as well. As you know, that was an important hire for me.

And we invested a lot of time in the tourist search and we’re excited about his record of shareholder value creation and over 200% TSR in his six years as a public company CFO. So we’re excited to have him have his coming out party at the Investor Day.

Steve, Analyst: Well, and congrats to you and best of luck on this new endeavor.

Alumida Sorority, Fortive: Thank you.

Jim Liko, Fortive: Thanks, Keith. Thanks, everyone.

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