Fortive Corp (FTV) — Q4 2024 Earnings Call Transcript

My name is Daryl, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation's Fourth Quarter 2024 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. On the keypad, if you would like to withdraw your question, press star then the number two. I would now like to turn the call over to Ms. Elena Rosman, Vice President of Investor Relations. Ms. Rosman, you may begin your conference.

Thank you, Daryl, and thank you everyone for joining us on today's call. With us today are James Lico, our President and Chief Executive Officer, and Charles McLaughlin, our Senior Vice President and Chief Financial Officer. To present certain non-GAAP financial measures on today's call, information required by Regulation G is available in the Investors section of our website at fortive.com. Our statements on period-to-period increases or decreases refer to year-over-year comparisons unless otherwise specified. During the call, we will make forward-looking statements, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks, and actual results might differ materially from any forward-looking statements that we make today. Information regarding the risk factors is available in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2023, and the quarterly report on Form 10-Q for the quarter ended September 27, 2024. With these forward-looking statements, they speak only as of the date they are made, and we do not assume any obligation to update. With that, I'd like to turn the call over to Jim.

Thanks, Elena. Hello, everyone, and thank you for joining us. I'll begin on slide three. Fortive delivered better-than-expected performance in the fourth quarter, including higher core growth, earnings, and free cash flow. These results capped a strong year for Fortive, including another year of record margins with gross margins of 60% and adjusted operating margins nearing 27% while continuing to fund future growth. In addition, we compounded adjusted earnings and free cash flow by 13%, contributing to our strong multi-year track record of differentiated financial performance. Our accelerated pace of innovation in 2024 helped us sustain top-line momentum given the mixed demand environment, further enhancing our outlook for 2025. Turning to the year ahead, Fortive is poised for improving core sales growth and continued strong operating performance. We've taken a prudent and balanced approach to planning the year, reflecting momentum in our bookings and durable revenue growth in industrial operating solutions and advanced healthcare, and stabilizing trends in precision technologies driving a gradual recovery through the year. Lastly, we are progressing well on the actions we announced last year to further accelerate our strategy and enhance value creation. Our teams have made meaningful progress towards the separation of the newly named Precision Technologies company called Ralliant. We now expect the transaction to close early in the third quarter. We also executed on our plan to prioritize the return of capital to shareholders, utilizing our record free cash flow to repurchase shares. In summary, these actions reflect our commitment to unlocking long-term value for all our stakeholders. Turn to slide four. 2024 was another year of consistent compounding, including the achievement of several record financial metrics. Since our inception, we have evolved our portfolio and leveraged the Fortive Business System to accelerate growth and innovation, expand market share and profitability, and forge the leadership skills we need for the future. The exceptional value created for customers and shareholders is reflected in our sustained multi-year performance, including an acceleration to mid-single-digit core growth on average over the last five years, over 600 basis points of adjusted operating margin expansion, and 350 basis points of adjusted gross margin expansion amidst unprecedented inflation. Our accretive capital deployment has contributed to higher growth and higher returns. As a result, we grew free cash flow an average of 18% per year over this time, underpinned by industry-leading net working capital performance. In summary, what is unique and truly differentiated about Fortive is the breadth of results that are compounding over time relative to peers. The reason for this five-year track record of success is our commitment to FBS and the strategic evolution of our portfolio. Turning to slide five, our evolution of the Fortive Business System and continuous improvement mindset driven acceleration in MPI velocity, helping to sustain our top-line momentum. Within FBS, we have built over time a proven innovation toolset to identify unmet customer needs, develop new products, and bring them to market faster, which ensures greater returns on our R&D investment. Just several examples of how our increased innovation velocity is contributing to growth across the enterprise. Starting with iOS, Fluke launched a record 20 major new products in the last two years, extending their leadership position in solar and energy storage tools and contributing 200 basis points to growth in 2024. Facility and asset lifecycle revitalized their innovation efforts for the last three years, launching its strongest slate of new products and enhancements, while also expanding margins 800 basis points. Revenues from these new offerings are expected to more than double in 2025 versus last year. ASP launched a record of six new products in 2024 with 510(k) approval, expected to contribute over $10 million of revenue in 2025. Probation added to their leading GI position with their next phase of Apex Insight, a proprietary data analytics tool that boosts provider productivity, contributing to a 67% increase in Apex SaaS sites in 2024. PT is also leveraging FBS innovation tools to advance the world's technology. Tektronix launched four new products.

Their best-in-class electronic test and measurement offering, serving their fastest-growing markets. Sensing Technologies is launching sensors for monitoring the liquid and air cooling systems within data centers, and Qualitrol continues its double-digit pace of growth with new electric grid monitoring energy storage solutions to support the expansion of global power infrastructure. They're also leveraging our investments in the form of developing advanced software, data analytics, and AI capabilities, and we expect to launch new AI-based product sets in 2025 and 2026. Moving to the fourth quarter and full-year results on slide six, we ended the year with strong operating performance, generating adjusted earnings growth approximately three times revenue growth. Core revenue growth of 2% in the quarter reflected an acceleration at iOS, partially offset by the anticipated decline in Precision Technologies. China headwinds continue to mute the recovery we are seeing in certain markets. Acquisitions net of divestitures were offset by unfavorable FX as the dollar strengthened in the quarter. Further highlights of our fourth-quarter performance include 100 basis points of adjusted operating margin expansion, adjusted earnings per share of $1.17 reflecting a $0.05 beat at the midpoint, with earnings up 19% year-over-year, and record Q4 free cash flow of $465 million, up 13% year-over-year. For the year, core revenue growth was 1%, reflecting the mixed demand environment and core decline in PT. Adjusted operating profit grew 7% and margins expanded 100 basis points, representing over 60% incrementals. We delivered earnings and cash flow above our initial guidance coming into the year, with adjusted EPS of $3.89, up 13%, and record free cash flow of $1.4 billion, representing 23% free cash flow margins for the year. Turning to slide seven, I'll provide more detail on our segment performance for the quarter and the full year, starting with iOS and AHS. On a combined basis, quarter revenues grew 4% with adjusted operating margins up 140 basis points to over 33%. This represents 12 consecutive quarters of consistent mid-single-digit core growth on a combined basis, reflecting the durability and resilience of these businesses. For the full year, combined iOS and AHS delivered 4% core revenue growth and 120 basis points of adjusted operating margin expansion, with over 60% incrementals. Moving to the right, Intelligent Operating Solutions expanded operating margins 190 basis points on 4% revenue growth in the fourth quarter, with M&A contributions partially offset by FX headwinds. Stable industrial products demand overall and NPI momentum drove mid-single-digit revenue growth at Fluke. Shipments outpaced our expectations exiting the fourth quarter. As a result, we expect a slower start to the year in Q1 before returning to more normalized growth the rest of the year. Growth in facilities and asset lifecycle accelerated to high single digits in the fourth quarter, enabled by stronger take-rate revenue across our government and multi-site retail product offerings. As you can see on the far right of the page, advanced healthcare solutions grew core revenue 5% in the quarter, with FX headwinds approximately 150 basis points total growth. Consumables normalized mid-single-digit growth as expected, and probation accelerated growth having lapped the license headwinds earlier in the year. AHS expanded adjusted operating margins by approximately 40 basis points in the quarter and 200 basis points for the year, driven by high margins consumable growth partially offset by unfavorable FX. Turning to Precision Technologies on slide eight, revenue was approximately flat in the quarter with a core decline of 3%. Acquisitions net of divestitures contributed approximately three points of growth in the quarter. This represents the second consecutive quarter of sequential core growth improvement, enhanced by double-digit growth in utility and aerospace and defense markets. Adjusted operating margins contracted 200 basis points on lower core volumes, partially offset by productivity benefits and accretive M&A. Core revenues at Tektronix were down low double-digit in the quarter as expected. However, orders were up high single-digit for the second consecutive quarter. We continue to see investments supporting power, compute, and communications for data center expansion and demand for defense applications driving Tektronix orders growth. While China and EV mobility remain weak, we had another quarter of double-digit growth at Qualitrol and PacSci, as our teams continue to ramp production capacity to keep up with strong demand. Moving to the right side of the page, you can see the Precision Technologies revenue and adjusted operating performance for the past four years. Since 2021, PT has grown core revenue at 4% CAGR, with adjusted operating profit growing twice that rate at an 8% CAGR over the period. Core revenues declined 4% in 2024. Improved portfolio positioning and focused innovation efforts have dramatically improved the through-cycle performance. Leveraging FBS tools, we've expanded our addressable market and added complementary solutions aligned to favorable secular trends, including next-gen power applications for new markets and new sources of energy around the world. As a result, PT is a much more durable business today with a stable margin and free cash flow.

Profile.

Poised for recovery in 2025. With that, I'll turn it over to Chuck to discuss our 2025 outlook. Thank you, Jim, and hello everyone. Turning to slide nine, let me set the stage for how we're thinking about the year. We continue to be encouraged by stabilizing demand trends overall, which gives us confidence in an acceleration in revenue growth from 2024 to 2025. While we are providing full-year guidance for total Fortive, I thought it would be helpful to frame the key drivers of the respective new companies. Starting with New Fortive on the left, comprising our iOS and AHS segments, we expect revenues of approximately $4.1 billion, supported by demand for our leading safety and productivity technologies and market share gains from new product introductions. We expect stable underlying industrial demand at Fluke with positive point of sale in North America and Western Europe. China is expected to slow both from a GDP and industrial production perspective, and we have reflected that into our outlook. We expect sustained momentum in our software and recurring revenue businesses, including double-digit ARR growth in SAL and stable consumables growth in healthcare. This yields low single-digit plus to mid-single-digit core growth for New Fortive in 2025. Regarding phase, we expect growth in the second half to outpace the first, primarily due to timing and days impact in Q1. Turning to the PT company, we anticipate revenues of roughly $2.2 billion in 2025, with core growth up slightly for the year. Our businesses aligned with power infrastructure, compute and communications invest, coupled with aerospace and defense systems, comprise approximately 35% of revenue and are expected to grow double digits again in 2025. Coupled with stabilizing trends in broader semiconductor and sensor markets, we anticipate a return to core revenue growth in the second half of the year. On slide ten, we provide further details on Q1 and 2025 guidance. Starting with the full year, we expect core revenues up 1.5% to 3.5%, FX is expected to be an approximate $90 million headwind for the year or roughly 150 basis points of impact to total growth. Adjusted operating profit is expected to increase 2% to 5%, and adjusted diluted EPS guidance is $4.00 to $4.12, up 3% to 6% for the year. Our adjusted EPS guidance includes a $0.20 to $0.25 headwind from a higher effective tax rate and FX. This is offset by lower share count and a slightly lower interest expense. Adjusted free cash flow is expected to be approximately $1.5 billion, which excludes the impact of separation-related cash costs of roughly $185 million. The conversion rate on adjusted net income is approximately 100% excluding these items. For the first quarter, we anticipate core revenues to be roughly flat. FX is expected to be an approximate $30 million revenue headwind. iOS and AHS will start the year slower due to Fluke's stronger finish in Q4 and fewer days in Q1 impacting consumables and service utilization. PT is expected to be down mid-single digits, representing our toughest year-over-year comp. Adjusted operating profit is expected to be roughly flat, and EPS is expected in the range of $0.83 to $0.86, including a $0.05 headwind from unfavorable FX and higher tax.

With that, I'll turn it back over to Jim to conclude. Thank you, Chuck. I'll continue on slide eleven. We've made considerable progress on the actions we announced last September to accelerate our strategy and enhance value creation. Starting on the left, we utilized our record second-half free cash flow to repurchase approximately 10 million shares, representing 80% of our free cash flow, slightly more than we committed to when we announced the separation. We remain committed to deploying free cash flow for incremental share repurchase. The balance sheet remains in great shape. We exited 2024 with net leverage of approximately 1.6 times, and we continue to expect that each company will sustain investment-grade balance sheets after the spin. Moving to the right, we expect the separation to close early in the third quarter. Following the progress our team has made to date, including confidentially filing a draft registration statement with the SEC in December, we are processing initial comments. We expect a Form 10 filing in the spring. Our efforts to hire top talent are well underway, ensuring we assemble a world-class corporate team to drive future success. Earlier this week, we announced that PT Newco has an exciting new name, Ralliant Corporation, and we appointed Ganesh Murthy as the board chair.

We also announced that Alan Spoon, who is retiring from the Fortive board, and Kate Mitchell will both join the Ralliant board. Together with Tammy, these board designees reflect Fortive's commitment to the new company's success and sustained value creation for all stakeholders. We will continue to provide additional updates as they become available. I'll wrap up now on slide twelve. Last week, we were excited to announce that Char Dube was appointed Fortive's new board chair, succeeding Alan Spoon. On behalf of the board and management team, I want to thank Alan for his leadership and all he's done to shepherd Fortive to become a more durable growth company. As we enter this new chapter, I and the rest of the board are confident Char is the right person to serve as the next chair. She's been providing valuable contributions to our board since 2020, and her deep insights into our business, culture, and strategy, combined with her extensive operational and leadership expertise, prepare her well to steward the execution of our long-term strategy for the more focused and resilient portfolio. This next chapter is a manifestation of the strategy we laid out at our inception: profitably evolve our portfolio, deliver in any environment. That was the case in 2024. Our enhanced portfolio positions, innovative new products, and dedication to the Fortive Business System have allowed us to deliver consistent compounding performance over the last five years. We are well-positioned to continue this track record in 2025 and beyond as we progress through the separation. We could not have reached this milestone in Fortive's journey without our unique culture and the passion of our 18,000 teammates around the world. Together, we show up with a mindset that we can do and be better. I know I speak for the entire Fortive team, including Elizabeth and Tammy, when I say I could not be more excited for the future as both companies are strategically well-positioned for enduring success. With that, I'll turn it to Elena.

Thanks, Jim. That concludes our formal comments. Daryl, we are now ready for questions.

Thank you. We will now be conducting a question and answer session. You may press star two to remove your question from the queue. Our first question is from the line of Robert Mason with Baird. Please proceed with your questions.

Yes. Hey, Rob. Hi, and happy Friday. Thanks. Usually not saying that on a Fortive conference call. So just maybe to start, Jim, could you dig into the product side of the business and thinking this is more around, you know, I'll say iOS and AHS, New Fortive. When you framed out 2025 or made some initial comments back in October, just curious around the product. Has anything changed, evolved? Has as you've tightened up the plans? You made a comment around China being softer. But just some perspective there around the product side. Yeah. And maybe take away around for the absent first of all, first of all, on New Fortive, as you mentioned, iOS and AHS, I would say, you know, really the aspects of the business in software and healthcare are really performing well. We had a little bit stronger end of year at Fluke. Some of that would we should get into that later, but I think, you know, just continuing to demonstrate in Fluke the resiliency and durability, particularly around product innovation, much of which we highlighted in the prepared remarks. I would say what's changed may or maybe what's well, going into 2025, Rob, a lot of the past is similar. We've got a little bit of headwind on the days and the consumables businesses. And the service parts of our software businesses, which have a little bit of headwind just in the quarter. But really good performance in Q1 across the portfolio and what I'll call New Fortive. On the PT front, I would say, a lot of the orders were good at, you know, we talked about the order growth in a couple quarters in a row now. We'll see order growth in the second half as well in PT. And I would say, you know, China but again, there, China weak. And, you know, we're not getting out of the gate here. If you really as we anticipated, but we're certainly not seeing any dramatic increases in China as we start the year out. Understood. And maybe just as a follow-up, you know, specifically, and maybe this touches on some of PT because you do have more government exposure there. Are you seeing anything post-election, you know, around the flow of funds, that you're trying to account for in the planning. You know, just within your various government exposures? We have not. In fact, you know, I think we've said this in a couple places. Parts of the portfolio where we have exposure to government, Gordian is a good example, although less more state local, less federal. But, you know, but our productivity solutions really, I think, are gonna resonate and really drive cost reduction. So to some extent, we think an opportunity where we're more where maybe there's more fiscal responsibility actually plays to our plays in our favor. On the product side of the businesses, we've actually seen strength. We you we actually in, you know, we've gotten some nice large orders from some of the primes across the portfolio. So I would say at this point, nothing would indicate that customers are changing their mindset around where they're where they're seeing our business here at least over the, you know, over the past few months. Great. Thanks much. Thanks, Rob.

Thank you. Our next question's come from the line Julian Mitchell with Barclays. Please proceed with your questions.

Hi, Julian. Hey. Good afternoon, Chuck. Maybe just the first question on the Precision Tech organic sales guide. So just there's a bunch of moving pieces, but just trying to understand that improvement in year-on-year organic sales from the first quarter to the balance of the year. Maybe help us understand how much of that is a function just of selling days, versus, you know, easier comp versus some end market improvement that you've embedded maybe in China or somewhere else. And also, I suppose, the orders conversion into sales, you've had six months of decent orders. Sounds like that will persist. Are we seeing those orders converting to sales already and it's just the mismatch is just a function of different comps or are these somehow kind of longer-dated activities in the order book that will come into revenue later than normal?

Yeah. A lot to unpack here, Julian, but let me let me let me start with the I think what you were talking about the cadence. I would certainly say the cadence through the year for PT will be, you know, really down mid-single-digit in the first quarter. Probably a little bit better in the second quarter and then some growth in the second half. I think that gets to them to be about up slightly for the year. Some of that's gonna be comps, particularly in China, where we see a lot more of the dramatic tougher comp in the first quarter and in the first half. We've always said that we thought some market improvement would occur in the back half of the year. That's embedded, but it's not a dramatic improvement in any way, shape, or form, but we do think some markets would start to come back, and we've actually seen a number of things where customers were actually seeing that. The other aspect is we're getting to really high really high volume numbers in places where we're seeing dramatic growth, principally in Qualitrol and in EMC. We've got some investments to improve capacity, which will also help us in the second half. I think the combination of, you know, comp in China, some market improvement, but nothing dramatic. And the combination of our ability to get more out here is really what changes first half to second half. And then, you know, I think as I think about really what with when we look at the business more broadly, it's also the innovation case. We mentioned this in the prepared remarks, but a number of the innovations, particularly in Tektronix, really starts to take hold in the second half. None of it but we really don't have a lot of that embedded at this point.

That's helpful. Thank you. And and then just my follow-up would be around the, you know, tariff potential there and any way in which you could size perhaps, you know, share of purchases or cogs or something like that from some of the countries that may be affected in terms of US tariffs.

I would say number one, the Canada, Mexico, even though they were postponed really doesn't have impact to us. So so in that sense, really no impact. China the China tariffs as you know, we've had a strong playbook since 2018. We really just pulled pulled out that playbook. We talked about the, you know, number of scenarios that we created several months ago when when we started hearing about what the potential could be. We've already enacted those measures and and that's embedded in our guide. So we, you know, the ten percent tariffs in China have been countermeasured, and we'll move through what we have I think to some extent how we thought about the year from a macro perspective in China does have some of the economic impact of some of the tariffs. I'm not sure we could point to any of those with true specificity, but I think the the way we plan China gonna be down here, you know, mid single digit for the year in China. For Fortive, think it bets the fact that, you know, there's gonna be some uncertainty amongst customers and, in China and, you know, ultimately, that'll impact our revenue. So we've we've tried to be prudent about that as we look into the into the year.

Great. Thank you.

Thank you. Thank you. Our next question has come from the line of Nigel Coe with Wolfe Research. Please proceed with your questions.

Hi, Nigel. Oh, good afternoon. Hi. Good morning. Good afternoon. Chuck, I think this is might be your last earnings call. I'm sure you're gonna miss this. This whole process, but thanks for the help over the years, and good luck with your retirement. So thank you. Couple quick ones. Couple quick ones here. Just the the days headwind in one Q, we've we've heard this from some other companies. Is this just the, you know, leap year in the prior, you know, year quarter or was there something on Chinese New Year? Any any more color there And and then just, you know, FX has sometimes had an impact on margin conversion. I think mainly within AHS. So any sort of peculiar sort of things to to kind of flag with this, you know, dollar strengthening?

I think that there are a couple of things there. It may you were asking about days, I think there's Nothing it it's just a simple day's catch. I don't think we have, you know, when you look at the whole year, I don't think there's a big difference in there. So they'll come back but that's that's the main thing there. Think when you talk about health margins, they get hit with a little bit more impacts. Impact to the margins. Think that's what you're seeing there.

There's a bit of a bigger day's impact to health care. We think about how much of that data is impacted with consumables. For example, that's about two hundred basis points of headwind in the first quarter.

So they're gross. Okay. Yeah. Two hundred basis points. Yeah. That's that's what I was thinking as well.

And then just follow on with the spin. So wondering if there's any more visibility on public company costs and stranded costs from spin.

Yeah. And I think we we sized them roughly around fifty million dollars sixty million dollars I think. Some of that we'll get after between now and spin.

And offset is about half of that, and the other half would probably take maybe twelve to eighteen months to work down. And work out. But we we expect to to get get all. Normalized.

And, Nigel, on the on the separation cost, I think we, you know, in the slide, showed a hundred and eighty five million. Yeah. That's mostly one that's all one time cost. That's mostly professional services. Taxes, lawyers, the banker fees to do some of that work. So we we we've outlined that on the slide as well. So as Chuck said, we'll get after the separate, you know, we'll get after the stranded costs. Making good progress on building the teams here. So we feel as I mentioned in the prepared remarks, we feel really good about ability to get get teams ready for and hence our ability to speed up the timeline.

Okay. Thanks, Jim.

Thank you.

Thank you. Our next question comes from the line of Steve Tusa with JPMorgan. Please proceed with your questions.

Hi, guys. How's it going? Good. Chuck, thanks thanks for all the help over the years, and best of luck.

Thank you. So it.

just on the product businesses, back to the tariff question. Did you guys see any kind of preordering ahead of the change in administration and potential tariffs, and I'm just curious as to how the, you know, quarter played out sequentially by month kind of adjusting for seasonality.

No way.

If you could.

Yeah. So I I wouldn't say we identified any additional revenue relative to relative to people pre buying Steve. You know, what we saw in the in the fourth was pretty good cadence through. Point of sale was positive in North America. As an example, it flew. So and that cadence was, you know, relatively consistent throughout quarter. That's probably our best benchmark. But, you know, we identified roughly about ten million of revenue at Fluke that we think came out of the first quarter, but that was really more both mostly US distribution and European distribution. People were starting to get close to incentives as the year played out and so that, you know, there was a little bit of additional buying to get into incentive plans and things like that. So it's really that that we identified. So it really wasn't around tariffs. It's near as we can tell.

Got it. And then just last one on the as a follow-up on the Tektronix, the t and m side of PT. Which verticals are you are you seeing the best order rates in? Which ones are kinda picking up here the most?

Got it. Okay. Thanks a lot. Have a great weekend.

Thanks, Steve.

Thank you. Our next question comes from the line of Jeff Sprague with Vertical Research Partners. Please proceed with your questions.

Hi, Jeff. Good day, everyone. Hey. How are you doing? Good to catch up. Had a couple loose ends here. Just on the days, we just have the number? Like, how many days are we talking about here? Sounds like it's two ish.

Two days. Yes. Two days, and it was about eight million dollars.

Yeah.

And you think it'd you know, you think it affects what, sixty or seventy percent of your business? Is that the right ballpark?

It's really it's no. It would be consumable. It's are about half of healthcare. And then the remaining, call it, three or four million is in services and places like Gordian to take great business.

Yeah. So it doesn't have to be services most so you think about daily service like we would do in the service organizations Yeah. For Fluke and Tack. As well as the services that we have in software.

Okay. I think it might impact things in distribution, but maybe not. If the people want it, they'll catch it up. Okay. That's helpful. Thank you. And then just on China, think you said down mid single digit. I think that was a twenty twenty five estimate. Can you just kind of level set us on how much China what China did in twenty twenty four for the year and in the quarter? Yeah. So I think for the High single digit. Yeah. Down high single digit for twenty four. Down mid single digits for twenty five, with probably q one being down, you know, high single digit to low double digit. In in the quarter. Mhmm. But that's more broadly. And you know what's interesting? Jeff is. Our high growth markets ex China have actually been continuing to grow really well. And so know, that's I think the offset there is gonna be we continue to see good growth in some of the other higher high growth markets.

And then just maybe finally for me on sort of the flat AOP for Q1. I take it that's still some margin pressure in PT. And then some upward trajectory in the other two segments, but any anything you'd say there to kinda get us in the right ballpark?

Yeah. I mean, I would I would say but on flattish growth, we're typically gonna you know, that's that's that's kind of the overall overall affordive. You know, we had good margin expansion in last year, so a hundred and ten basis points twenty four. Q one. So when you kinda look at where we're at on a two year stack, still good despite kind of that low single digit growth that we would have had in on a on a on a comparable basis. But it's exactly right. New Fortive or iOS and health health will be will have good margin expansion and, you know, with being down the way we are in PT, we'll doing a nice job of offsetting when I think about how we've done in PT over the last Your Given the fact that our, you know, tech being down, our highest gross margin business, it's been really good operational performance to offset a number of those things. And obviously, our margin expansion for the year was good in twenty four and part because of iOS and AHS doing a great job, but also the the countermeasure work that PT did as well.

Great. Thanks a lot.

Thank you. There are no further questions at this time. I would now like to hand the call back over to Jim Lico for any closing comments.

Well, thanks, Gerald, and thanks everyone. Incredibly thoughtful set of questions. We appreciate all that. Obviously, Elaine and team will be available for any other questions. Just want to thank everyone. A lot of comments around Chuck. I just want to make sure everybody knows he's he's not going anywhere. He's gonna continue to support the Fortive team here through the spin. So you you you may have an opportunity to hear from him a little bit. But he's done obviously, done a great job for us over the years and and we're we're excited for what he will do next. But but that's not just that's not tomorrow. He still got some work to do near as I can tell. So anyway, as you can hear, exciting times for us. We couldn't be more excited. Good finish to the year. Yeah. I think in many respects, we we pointed out some of the five year numbers that I that we're really proud of. When you look at several records set in two thousand twenty four, around a number of things despite some of the mixed macro environment, we were able to do a number of things on the margin and free cash flow front. I think are just synonymous with FBS and really have an opportunity to to really set us up for two thousand twenty five. But the probably the most important thing is how FBS has really driven innovation. And and really when you see that across the board, I think you'll hear more of that as we progress through the year. We're excited about twenty five. We're excited with the fact that we can bring to you the the idea that the spin is gonna happen faster. It really speaks, I think, as well to the power of FBS and the quality of our team. So we'll look forward to the follow-up questions. We'll see many of you out on the road here soon. A lot to do here between now and in the spin. Excited about it. We look forward to continue to talk about all the exciting things going on in Fortive. Thanks. Have a great day and have a great weekend.

Great.

Thank you. This does now conclude today's teleconference. We appreciate your participation. May disconnect your lines at this time. Enjoy the rest of your day.