My name is Catherine, and I will be your conference facilitator this afternoon. I would like to welcome everyone to Fortive Corporation's First Quarter 2020 Earnings Results Conference Call. I would now like to turn the call over to Mr. Griffin Whitney, Vice President of Investor Relations. Mr. Whitney, you may begin your conference.

Thank you, Catherine. Good afternoon, everyone, and thank you for joining us on the call. With us today are Jim Lico, our President and Chief Executive Officer; and Chuck McLaughlin, our Senior Vice President and Chief Financial Officer. We present certain non-GAAP financial measures on today's call. Information required by SEC Regulation G relating to these non-GAAP financial measures are available on the Investors section of our website, www.fortive.com, under the heading Financial Information. We completed the divestiture of the automation and specialty business on October 1, 2018, and accordingly, have included the results of the A&S business as discontinued operations for historical periods. The results presented on this call are based on continuing operations. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. All references to period-to-period increases or decreases in financial metrics are year-over-year on a continuing operations basis. During the call, we will make forward-looking statements within the meaning of the federal securities laws 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 uncertainties and actual results might differ materially from any forward-looking statements that we make today. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings including our annual report on Form 10-K for the year ended December 31, 2019, and subsequent quarterly reports on Form 10-Q. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements. With that, I'd like to turn the call over to Jim.

Thanks, Griffin, and good afternoon, everyone. Today we reported our financial results for the first quarter of 2020, reflecting solid performance in an operating environment that changed dramatically over the course of the quarter. Despite the unexpected headwind that impacted our topline performance, we delivered 150 basis points of core operating margin expansion, driving adjusted earnings per share to the height of our guide as well as strong free cash flow. Coming on the first quarter we're confident in the resilience of our portfolio as well as our ability to execute the playbook required to sustain strong free cash flow, protect long-term competitive advantage and overcome the macroeconomic challenges that lie ahead. When we provided our first quarter guidance back in February 06, we built in expectations for the potential impact from COVID-19 disruption on our operations in China and some potential challenges through our supply chain. Since then the scale and scope of the global public health crisis and the subsequent macroeconomic impact from efforts required to combat the spread of the virus have expanded significantly. Even as lockdown orders were put in place throughout Europe and much of the United States, we continued to operate our essential facilities and fulfill commitments to our customers across a broad range of critical industries. Along the way, our emphasis is focused squarely on our highest priority ensuring the health and safety of our teams around the globe as they continue to provide the essential technologies upon which our customers depend. I cannot be more proud of how the Fortive team has responded to the challenges we've faced over the past few months. In early March, we quickly shifted two-thirds of our total personnel to working from home as part of our broader effort to help ensure that our production facilities comply with enhanced safety guidelines. We also rolled out a range of new collaboration tools and technologies, most notably from the Fortive Business System office to sustain our commitment to continuous improvement. The nimble adoption of FBS to the challenges of work-from-home restrictions has enabled us to assure business continuity and transition key FBS processes such as problem-solving and product development to virtual formats. Perhaps more importantly, leadership teams across our operating companies have continued to drive innovation to help support their customers and the communities in which they operate in the fight against the COVID-19 crisis. Advanced sterilization products recently received an Emergency Use Authorization from the US Food and Drug Administration for the use of its sterrad system to decontaminate compatible N95 respirators, which will help alleviate critical PPE shortages in the near-term. Fluke has temporarily reconstituted a portion of its manufacturing capacity in Everett, Washington, to produce protective facial masks which have been provided free of charge to healthcare workers on the front lines of the fight against COVID-19. Fluke Health Solutions and Gem Sensors are also actively working with ventilator equipment manufacturers to expedite additional ventilator supply to hospitals around the country. Turning to Vontier, given the lack of favorable conditions for an IPO due to the uncertain global economic and market conditions, we have decided to reevaluate the timing and structure of the separation. As a result, we submitted a request to the SEC to withdraw the Vontier registration statement. We strongly believe that separating Fortive and Vontier is the right strategic decision that will enable both companies to take full advantage of their respective growth opportunities and capital allocation priorities. Mark Morelli, Dave Naemura and the rest of the Vontier team will continue to run the business within Fortive, and we remain prepared to move forward with the separation when market conditions improve. With that, let's turn to the details of the quarter. Adjusted net earnings were $264.3 million, up 7.1% over the prior year, and adjusted diluted net earnings per share were $0.74, meeting the high-end of our guidance. Sales grew 7.6% to $1.7 billion as growth from acquisitions more than offset the 3.8% decline in core revenue. Mid-single-digit core growth at GVR and low double-digit growth in Gordian were more than offset by declines across various other operating companies due to slowing related to COVID-19. Unfavorable foreign currency exchange rates also reduced growth by 160 basis points. Despite the topline headwinds, core operating margin increased 150 basis points, resulting in adjusted operating margin of 20.4%. This performance reflected in part the structural cost actions taken in late 2019, which gave us a running start as we turned the corner into 2020. That lower cost structure, along with a full flow-through of prior tariff mitigation efforts, continued strong pricing discipline and cost and supply chain management, helped us weather the topline deterioration across our portfolio due to COVID-19 headwinds throughout the back half of the quarter. During the first quarter, we generated $158 million of free cash flow, representing an increase of 15% year-over-year. The free cash flow performance in the first quarter reflected the underlying resilience of our free cash flow generation as well as proactive shifts by our operating companies to manage cash expenditures and maximize free cash flow generation as the macroeconomic outlook deteriorated in the back half of the quarter. Turning to our segments, Professional Instrumentation posted sales growth of 13% despite a 7.2% core revenue decline. Acquisitions contributed 2,130 basis points while unfavorable foreign exchange rates reduced growth by 110 basis points. Core operating margin increased 130 basis points, resulting in segment level adjusted operating margin of 23.2%. Industrial Technologies posted a sales decline of 1% as core revenue growth of 1.6% was more than offset by an unfavorable foreign currency exchange rate of 230 basis points. Core operating margin increased 190 basis points resulting in segment level adjusted operating margin of 19.3%. Switching to a view of our performance across the major geographies in Q1, all regions were affected by the spread of the COVID-19 pandemic to some extent during the quarter. Looking at Asia, core revenue declined over 20% in Q1. This was driven by declines across all major countries in the region. China was down more than 20% in the quarter. As expected, we lost a week due to the extended lunar new year holiday as mandated by the Chinese government at the beginning of February. Our plants began to reopen the following week and continued to ramp up capacity utilization steadily throughout the balance of the quarter, albeit more slowly than in prior years based on the extended holiday period and national virus containment measures. By the end of the quarter, each of our sites was operating at over 80% of total capacity. Customers began to come back online in February and March with order volumes picking up into the start of the second quarter. At the same time, we saw a significant negative impact from COVID-19 on demand across the rest of Asia, including Japan and India, where customer investment slowed significantly later in the quarter as lockdown measures went into effect. Western Europe core revenue declined high single-digits in Q1. Western Europe was our most challenging geography coming into the year prior to any COVID-19 impact with many of our operating companies also seeing a significant impact on demand and customer activity in the wake of the pandemic as countries enforce broad economic lockdown to slow the spread of the virus. ASP delivered mid-single-digit growth based in part on the decontamination of respirators across the Netherlands, Germany, and Belgium in March. At this point, we're starting to see early steps being taken to reopen certain economies including countries such as Germany, which have fared better than some others, but it's too early to tell how these steps will affect demand dynamics, which we saw deteriorate over the course of March. North America core revenue grew by low single-digits in Q1. In the United States, with the exception of a few businesses including GVR, Gordian, and Qualitrol, we saw a significant negative impact on demand trends as well as our ability to access customers and customer sites across much of the portfolio. This was particularly the case late in the quarter and into the first half of April, with potential plans for reopening on a state-by-state or regional basis still very much in the early stages, making it difficult at this point to have a definitive view on how conditions will respond to any such reopening efforts during the second quarter. Finally, we saw a mid-teens decline in the Middle East and a high single-digit increase in Latin America. The slowing in the Middle East was due to a combination of order delays and supply chain issues associated with COVID-19. We expect to see persistent headwinds as we look ahead. Strength in Latin America was driven by growth of more than 30% in Mexico. Latin America was slower than other regions in terms of the emergence of COVID-19 and it is difficult at this point to gauge the full potential effect from the pandemic on the region as we look forward. Given the unprecedented public health crisis posed by the COVID-19 pandemic, as well as the broad economic restrictions imposed globally, forecasting the balance of the year has become more challenging. As part of the circumstances, we are withdrawing our previously issued full-year 2020 guidance and will not be providing guidance for the second quarter. In an effort to give you a sense for the next few quarters, we've analyzed our portfolio to better frame expectations for the relative impact of the COVID-19 pandemic across and within the various operating companies given the unprecedented global conditions we expect to face. If you turn to slide 11 in the Earnings Presentation, you will see that we've broken out operating companies as well as key portions of some operating companies into four groups based on their relative sensitivity to COVID-19-related disruption and potential deterioration in end-market demand. Group one, which represents approximately 15% of total Fortive revenue, includes those companies or key product lines that we expect may continue to grow throughout the coming quarters or we believe should show substantially resilient topline performance through the balance of the year. Notably, this group includes several of our recent acquisitions, including software-focused businesses such as eMaint, Gordian, Intelex, Sensus, and the SaaS portion of Accruent, many of which we expect to benefit from a high share of recurring revenue and a focus on providing mission-critical workflow solutions to their customers. Group two, representing approximately 50% of total Fortive revenue, includes a range of businesses where we expect to see a potentially significant topline impact in the near-term from lockdown measures and stay-at-home restrictions, from which we believe should bounce back relatively soon after those measures are lifted. The biggest businesses in this group are GVR and ASP. In the case of GVR, EMV-related demand in North America, in particular, stayed strong through the end of the first quarter before moderating in April. Our customer site access issues and other COVID-related disruptions will impact revenue in the near-term, but we expect GVR to perform better as economies around the globe begin to open up. At ASP, we saw a significant drop in surgical procedure volume in China during Q1, upwards of 85% at the height of the COVID-19 response, but volume began to rebound by the end of March and continued into April. We expect the same pattern to play out in other geographies and we've seen elective procedures get delayed. We likewise expect volumes to begin to normalize as soon as hospitals can address the pent-up demand for these procedures. Group three, representing 10% to 15% of total Fortive revenue, includes businesses where we expect to see a potentially significant topline impact from the lockdown measures and stay-at-home restrictions in the near-term and expect to see a more gradual improvement in performance after those measures are lifted. This group includes our sensing technologies portfolio, which has short cycle sensitivity, and we expect to see pressure across a number of its core industrial end markets as capital-related projects pause. There are, however, a number of potential offsets across healthcare, life sciences, and food and beverage applications, including Setra's room pressure indicator product line, which monitors air quality in ICUs and other critical healthcare environments. Group four, representing 20% to 25% of total Fortive revenue, includes the businesses where we expect the most significant revenue decline in the short-term and the most sensitivity to both the depth and duration of the recession expected in the aftermath of the COVID-19 crisis. Notably, this includes portions of the Fluke industrial business and Invetech instruments business where we've historically witnessed the most short cycle sensitivity, including over the course of 2019. It also includes the instruments and rental businesses that have significant exposure to the oil and gas end market and could be affected by persistent dislocations in oil and gas demand. While we're not in a position to forecast the rest of the year with sufficient level of visibility, using this framework, we expect to see a substantial revenue decline in the second quarter. To be more specific, we believe that our total revenue will decrease by 20% to 25% on a year-over-year basis in the quarter; while the fall-through on a decline of that magnitude can be challenging in the short term, we expect to manage the business to decrementals of approximately 35% to 40%. We will continue to benefit from the cost actions that were taken at the end of 2019, which significantly helped our margin realization in Q1, particularly within Professional Instrumentation. Over the course of the year, we expect to continue to manage decrementals to that 35% to 40% range as additional cost actions are executed across the portfolio. We also expect to deliver free cash flow conversion of greater than 100% of adjusted net income for the full year. As you would expect, we have taken immediate and decisive steps to reduce our cost base in response to the dramatic shift in macroeconomic outlook during the first quarter. These more recent cost reductions add to the significant cost actions that we took toward the end of 2019 in anticipation of continued short cycle headwinds throughout the first half of this year. Across the portfolio, we've executed aggressive adjustments to direct labor expenses, primarily through the use of furloughs to match our expectations for the near-term demand deterioration. We've likewise instituted reductions in salary compensation costs and a wide range of discretionary spending items. At the same time, we've initiated aggressive cost reductions through our supply chain, including both direct and indirect spending while also reducing our facilities expenses through temporary closures. In total, we intend to deliver incremental savings for the balance of the year of at least $300 million across these various cost actions. We know that liquidity is critical during challenging macroeconomic conditions. We entered the first quarter with a cash balance of over $1 billion, and we've continued to proactively manage our balance sheet and enhance our strong liquidity position. We recently extended the maturity of our $1 billion term loan due this August to May 2021, and in an abundance of caution, renegotiated our net leverage covenant to provide additional headroom through the first quarter of 2022. While we expect to use our free cash flow generation to continue to deleverage over the course of this year, these steps provide us with additional near-term flexibility. Over the past two months, we've also reduced our reliance on the commercial paper market, paying down our outstanding commercial paper exposure with a new term loan and repatriating cash. We expect to temporarily exit our commercial paper exposure entirely in the coming months, giving us full access to our $2 million revolving credit facility, which remains otherwise undrawn at present. Before I close, and as you turn to slide 14 in the deck, I want to underline for the Fortive team and our investors that, as challenging as things appear now, this too shall pass. While we navigate the choppy waters that lie ahead in the short term, we will also move our businesses forward and position them for even stronger performance in the long term. That means continuing to invest in innovation, winning in the market through product and service differentiation, enhancing the level of talent throughout the company, and maintaining the disciplined market work that drives our M&A process. Over the past few months, I've been extremely proud of the agility and resilience I've seen throughout the organization as we adapted on-the-fly to the reality of the current global public health crisis. With the underlying strength of our portfolio, our culture and our commitment to our shared purpose, we remain well-positioned to realize the substantial long-term value creation opportunities ahead of us. With that, I'd like to turn it back over to Griffin.

Thanks, Jim. That concludes our formal comments. Catherine, we're now ready for questions.

And your first question comes from Julian Mitchell with Barclays.

Maybe just the first question around the sales guidance. You talked about the 20% to 25% total sales estimate for the near term; could you help us understand any nuances across the two divisions with that guide and provide any color on how April trended for PI and IT in terms of orders or sales please?

For the 20% to 25% estimate at this point, I think it's best to just consider it about the same across the two segments, but keep in mind there's a lot of moving pieces here and while we could end up with that same 20% to 25% in total, it could end up differently. But right now we see it actually pretty similar across the two segments. I would like to provide a bit of color around the businesses. What we tried to show on slide 11 is some of that as well. We saw China begin to come back at the end of March, but we didn't see it come back to pre-COVID levels, and we don't really expect that to occur much in the second quarter. To give a regional view first, Europe was down in the high-single digits, and we think it will be worse in the second quarter. North America held up fairly well, particularly due to strong performance from Gilbarco. However, we're starting to see significant negative impacts on demand trends and our ability to access customers across much of the portfolio. This was particularly true late in the quarter and into early April – so we felt that our April order trends aligned with our expectations at 20% to 25%.

Thanks. My second question is around the incremental margins and the cost savings. To confirm, is the $300 million in cost savings included in the 35% to 40% incremental margin aspiration? And I'm curious why the incremental margin wouldn't become less severe later in the year as presumably saving gets booked and sales declines could become less intense?

Julian, you’ve understood it correctly regarding the $300 million in cost savings. We see that as coming out pretty ratably at this point. A lot of decisions have been made and actions taken that we expect will be seen in Q2, which would align us with that 35% to 40% range. As we progress through the year, we’ll learn more, and there are choices that we can make in the back half of the year, but for right now, we feel that maintaining the 35% to 40% range is still the right approach given the uncertainty.

I apologize if I missed it, but I believe pricing in IT turned negative in Q1. Could you provide more color on that and discuss Fortive's pricing power in this environment?

Regarding pricing, for Q1, we did not see it being negative. In fact, it remained positive but likely less compared to a year ago due to tariff mitigations. While we haven't identified any priced pressure at this point, there’s a slight reluctance to increase prices further in this environment while we focus on managing volumes.

Along those lines, have you considered the long-term impact on Fortive's cost structure given the operational lessons learned during this crisis?

While it is too early to determine exactly, what we do see is a potential for greater employee flexibility, as well as an opportunity to significantly reduce travel costs over time. Although we will aim for a return to customer visits and in-person collaborations, the productive adaptations we've made during this crisis have revealed opportunities for future improvements.

Could you characterize what you're observing today versus what was experienced in '08 and '09 during the last major downturn?

While past downturns witnessed significant declines in our instrument businesses, our current portfolio is structurally more resilient. We have developed new revenue streams that are less sensitive to macro trends, thereby providing a buffer against traditional cyclicality.

There were considerable liquidity moves recently; do you anticipate any significant increases in interest expense as a result?

The cost associated with these changes is minimal, roughly less than a penny a year. The renegotiations have improved our position relative to LIBOR, positioning us well going forward.

Can you remind us of ASP's mix between consumables and equipment?

The mix is roughly 75% consumables and 25% equipment. However, we have recently observed difficulties, particularly with consumables, due to the pandemic slowing elective procedures. The decontamination of N95 masks has contributed temporarily to our consumables volume but is not projected to significantly change overall revenue in the long term. Our portfolio is positioned to recover with the right conditions as elective procedures are likely to experience pent-up demand, and we're actively working to navigate this uncertain landscape as effectively as possible. We appreciate the commitment and effort from everyone involved today amidst this unprecedented time. We remain confident in our ability to manage through this and look forward to continuing our dialogue with you all moving forward.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.