My name is Angela, and I will be your conference facilitator this Thank you. I would now like to turn the call over to Mr. Griffin Whitney, Vice President of Investor Relations. Please go ahead, sir.
Thank you, Angela. 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 and S business as discontinued operations for current and historical periods. The results presented on this call are based on continuing operations. During the presentation, we will describe certain of the more significant events on a continuing operations basis, representing a 13.7% increase year over year with 2% core revenue growth and 30 basis points of core operating margin expansion. We delivered these results in the face of slow demand dynamics across our short cycle businesses throughout the second half of the year.
At the same time, we achieved significant progress with respect to the continued transformation of our portfolio, closing nearly $4,000,000,000 worth of high quality strategic acquisitions that accelerate our strategy around software enabled workflow solutions. As a key part of our portfolio transformation, we continue to make good progress with the integration of advanced sterilization products. We closed on China before the end of the 4th quarter, successfully integrating the largest of the Day 2 Countries and accomplishing a key milestone as we bring ASP's global operations under our full control. We remain keenly focused on closing the remaining Day 2 Countries and ensuring that the necessary infrastructure is in place to enable us to exit the majority of the TSAs as planned by the end of the Q2. At the same time, we are pleased with the significant progress that we've made toward the completion of the separation of Von Tir.
In December, we announced key members of Von Tir's senior management team, including Mark Morelli as President and Chief Executive Officer and Dave Nomura as Chief Financial Officer. And we are continuing to work toward an IPO split to affect the separation. While we have put ourselves in a position to be ready for the 1st step in the form of an IPO of up to 20% of Von Tir by the end of the Q1, we will continue to assess market conditions and maintain a variety of options for the eventual completion of the transaction, which is on track for the second half of this year as previously communicated. Given that I've been challenged with a cold for the last week, Chuck will provide the details of the quarter.
Thanks, Jim, and good afternoon, everyone. For Q4, adjusted net earnings were $368,000,000 up 13% over the prior year and adjusted diluted net earnings per share were $1.03 Sales grew 13.9 percent to $2,000,000,000 based on strong contribution from recent acquisitions and a slight increase in core revenue, which came largely and largely as expected. Core revenue growth was highlighted by mid single digit or better growth at Gilbarco Veeder Root, Gordian, Industrial Scientific and Mat Co, which was largely offset by declines across the short cycle businesses within professional instrumentation. Unfavorable foreign currency exchange rates reduced growth by 110 basis points. Geographically, core revenue in developed markets grew low single digits, reflecting the continued soft macro conditions in both North America and Western Europe.
Core revenue growth in North America was up low single digits, while Western Europe declined mid single digits. High Growth Markets core revenue decreased mid single digits due to slower performance at Fluke, Tektronix and JVR. China posted a high single digit decline as strong growth at Qualtril and Sensing Technologies was more than offset by the headwinds associated with the winding down of the double walled tank upgrade GVR and the Huawei impact at Tektronix. Adjusted profit margin was 23.3%, representing a year over year increase of 60 basis points. Core operating margin increased 150 basis points, driven by solid execution and strong operating margin expansion across the breadth of our portfolio.
More than half of our operating companies each generated greater than 100 basis points of operating margin expansion during the quarter. During the Q4, we generated $452,000,000 of free cash flow, representing an increase of 17% year over year. This strong performance resulted in free cash flow conversion ratio of 123% of adjusted net income for the quarter. Turning to our segments. Professional Instrumentation posted sales growth of 23.1 percent despite a low single digit decrease in core revenue.
The significant contribution of recent acquisitions continue to drive overall growth within Professional Instrumentation. Unfavorable foreign currency exchange rates reduced growth by 50 basis points. Segment level adjusted operating margins were 25.1%, including a core operating margin increase of 130 basis points, which was offset by 190 basis points of dilutive operating margins associated with acquisitions. Our core operating margin increase was driven by price, supply chain savings and business model execution. Field Solutions core revenue increased slightly, including a low single digit increase in developed markets as growth at ISC, Gordian and Qualitrol was partially offset by a decline at Fluke in North America.
High growth markets decreased slightly. Fluke improved sequentially in the 4th quarter, but still declined low single digit year over year, primarily as a result of continued softness at Fluke Industrial. In North America, Fluke declined low single digits, but saw some early signs of stabilization. In China, Fluke declined high single digits as we expected, reflecting negative points of sales trends. Fluke Health Solutions grew mid single digits led by Landauer, which saw strong orders from the U.
S. Army for its RadWatch radiation monitoring device. Fluke Digital Systems grew mid teens led by Emate, which posted another double digit increase in net new customers and greater than 20% increase in annual recurring revenue. Proof expectations and has greatly enhanced the broader Fluke reliability offering. Fluke continues to see excellent momentum from its revolutionary ii900 Sonic Imager, which generated $20,000,000 worth of revenue in 2019 following its launch at the end of April that year.
ISC delivered high single digit core growth, driven by strong growth across North America and Western Europe. ISC's subscription based Inet performed well, generating high single digit growth and strong new customer bookings. The momentum at Inet reflects the growing demand for ISC's expanding set of real time Wi Fi enabled connected worker solutions as more facilities adopt live monitoring capabilities to improve safety performance. Intellix grew double digits in the 4th quarter as strong bookings and share gains helped deliver a record year for customer wins with a 17% increase year over year in total new customers. The ISC and Intellect's teams also continue to make progress with the integration of the Intellect software offering with Inet in order to unlock the opportunity for future cross selling.
Qualtril's core revenue grew mid single digits, marking the 1st positive quarter for both core growth and bookings since 2017. Qualtril delivered strong growth in North America, China and Latin America, which was partially offset by continued challenges in Western Europe and the Middle East. Turning to our Facilities and Asset Management Businesses, Gordian and Imbatec was more than offset by continued weakness at Tektronix. EMC generated low single digit sales growth versus a tough compare from the prior year, led by defense electronics and commercial aerospace offerings, as we saw momentum with its commercial satellite customers as well. EMC continued to see broad based bookings momentum, allowing it to maintain strong backlog and excellent revenue visibility for the year ahead.
Tektronix registered double digit a low double digit decrease in core revenue. As expected in the quarter, Tektronix saw continued pressure from many of the same headwinds that emerged earlier in 2019, including slowing at Keithley, weak demand at North America and Western Europe and the loss of business from Huawei due to U. S. Trade restrictions. Tektronix saw a strong performance across its mid range oscilloscopes offering, which grew mid single digits.
The 3 and 4 series scopes, which were successfully introduced last June, continue to perform particularly well, generating high teens growth and significant share gains in the quarter. Core revenue for sensing technologies decreased low single digits as broad based growth in China was more than offset by continued weakness in Western Europe and flat performance in North America. GEMS benefited from improved conditions in the semiconductor end market, which returned to growth in the 4th quarter removing a key headwind that persisted through much of 2019. ASP grew low single digits led by growth in consumables as well as continued strong performance from its service business. Geographically, ASP saw strong performance in China and Mexico.
We continue to be encouraged by performance in Japan, which saw high single digit growth in the second half of the year after an extended period of weaker performance prior to our ownership. At the end of October, we closed China and we now have approximately 80% of ASP's global revenue under our direct control. The acquisition of Sensus closed early in the 4th quarter significantly enhanced our connected workflow offerings for central sterilization departments. TENSUS is off to a good start with 10% growth in the quarter, and we're excited about the cross selling opportunities with ASP as we provide more comprehensive solutions to our healthcare facilities. Moving to Industrial Technologies.
Revenue grew 1.9%, including core revenue growth of 3.6 percent, which was partially offset by unfavorable currency exchange rate of 180 basis points. Segment level adjusted operating margins was 23.8%, including core operating margin increase of 2 30 basis points. The strong growth in North America. GVR generated mid single digit core growth led by high single digit increase in developed markets. As expected, GVR delivered another quarter of strong performance in North America tied to sustained momentum from EMV related sales as the October liability deadline approaches.
GVR registered mid single digit decline across high growth markets as strong performance in Latin America was more than offset by a slower quarter in China and India. GVR continues to see good early momentum with its Insight 360 remote 4 court management solution, which enables customers to monitor and update fuel dispensers remotely. They also recently released a new fuel procurement and logistics solution on Insight 360 called Halo, which has been well received by the market. GVR recently received a large order for Tridium EV chargers from a major European oil company, the largest such order to date from a legacy GVR customer. This win and the potential for larger opportunities to support a broader EV charging rollout across the customers' network highlights the opportunity for GVR to leverage its distribution and service capabilities across its existing customer base of Tridium's in support of Tridium's continued growth.
TeletracNavman core revenue decreased mid single digits in the 4th quarter in line with expectations. Teletrac Nanman saw strong continued growth in Asia Pacific, which was more than offset by declines in North America and
slow short cycle demand that persisted throughout the quarter. In 2019, we faced a number of challenges head on from tariff related headwinds to short cycle SNIT to acknowledge the efforts of the broader Fortive team across the globe. 2019 was a truly transformational year for our team. And while it was not a year without challenges, I'm extremely proud of how our team performed and responded. It's the dedication of our people and their relentless commitment to continuous improvement to drive the Fortive's business system and enable us to deliver greater long term value for all of our stakeholders.
I look forward to the next decade ahead. 1st half and does that continue into Q3.
I see. But that $0.16 incorporates both the organic growth and the restructuring savings? That's correct. Thank you. And then my second question, just maybe help us understand the biggest moving pieces within the PI core margin.
It was down a bunch in Q3, up a lot in Q4. And then it looks like it's guided to drop again in Q1. So maybe just help us understand what's swinging that around in the context of sort of steady ish declines in organic sales?
Yes, Julien, it's Jim. First, you're right about Q4. If you sort of think about the second half and what we saw in PI in the second half, we're probably down 20 or so bps for the second half. So a number what we saw in Q4 was some really strong pricing. We saw we always get a bigger portion of our supply chain savings near the end of the year, and we certainly saw that.
So those 2 plus a little bit better mix is really what drove the stronger margin expansion in the quarter. As we go into you certainly have some headwinds of things like salaries and things like that, that come into the Q1. That will be part of the offset. But I think part of it is just we'll see the big businesses, Fluke and Tek, be about the same relative to their contribution. But I think you do see the coronavirus hit here and that's principally and that hit is going to be more in PI probably than anywhere
else. Great. Thank you.
And your next question comes from the line of Nigel Coe with Wolfe Research. Please go ahead, sir.
Thanks. Good afternoon. Good evening. Hi, Nigel.
Good afternoon. Hi, Nigel.
Great. So, Jim, I hope you're feeling better soon. So just want to start on cash, there's a couple of things here. So there's about $500,000,000 and change of M and A spend during the quarter. Was that all in this acquisition, this Sensus acquisition?
And then CapEx was a bit lower than we expected. Is that kind of better job on CapEx or was that a push out relative to your original guidance for 2019?
I think I would take the second one first. The CapEx, I think that I don't think that's appreciably lower or different than we normally than normally see. So, maybe I'd try to go back and figure out if we gave you that impression, we shouldn't have because I think we're pretty stable on that piece. And on the first piece, you're talking about how much of the are you talking about the deal cost?
Yes. Is that all offensive? Or was that 2 or 3 small deals in there as well? I'm just what I'm trying to figure out is, how big is this Census acquisition? What should we be we model for 2020?
I understand. Yes, no, that's the Census acquisition.
Okay. Any detail you
can give us on revenue contribution for 2020?
Relative to Census?
Yes.
So yes, that business yes, that business is I think roughly $50 ish million so figure double digit kind of growth. You're probably talking in the $10,000,000 range for the year. It's mostly a SaaS business though. I think some if we think about how that will grow, it will continue to grow and we think we'll probably put some additional investment in it in order to accelerate growth through the year as we work with the team there. As we mentioned in the prepared remarks, the combination of Sensus along with what we've got at ASP gives us a really strong offering in central sterilization department.
So some of our effort here to accelerate the growth going to be some investment in go to market in order to make sure that we can accelerate that growth through the year.
Okay. I I would say we're welcome here, but what kind of margin profile does Sensus have?
Pretty close, lower operating margins than what we would at the start, but high gross margins. So you're talking about gross margins in the 60s. They do have a service business. So the software obviously is in the high 80s 90s kind of range, but then there's a service and installation component to it that brings the margins down. We think we can continue to grow that margin profile over time.
And obviously, the operating margins will start to come up. I think they're in the roughly the 20s now and they'll probably be that in that range this year.
Okay. Thanks, Jim.
And your next question is from the line of Steve Tusa with JPMorgan. Please go ahead.
Hey guys, good afternoon. Hey Steve. Just on ASP, what are the organic revenue contributions from that business for 2020?
I think the it's going to be low single digit, but
Pays or something like that. Is that kind of the unwind of some of this TSA stuff that you talked about earlier in the year? Was that just organic performance? Anything kind of going on there that was kind of a big swinger year over year in the Q4? Yes.
I don't I think that there were some of those that those things were probably related to how J and J guide us the cash that, that business created in the Q4. But I don't think I would say that, that is what you should expect us to be able to do in the Q4, and that there wasn't an unusual bump there.
Okay. So it's not like anything was kind of of pulled out of 2020. That's kind of a clean base for 2020?
Yes. It's normal seasonality for to be really strong in the Q4 and lighter in Q1.
Okay, great. Thanks for the color. I appreciate it.
Thank you.
And your next question is from the line of Andrew Obin with Bank of America. Please go ahead.
Yes. Good evening. Hey, Andrew. Hey, I know how you feel. I had the last week, so.
I hear what's
happening. So last quarter you gave a view and that organic revenue declines will continue into Q1 and probably Q2, you sort of reiterated that I think today. Do you still see the likely return to growth happening in Q3? And more importantly, other than coronavirus, what are the one, two items that could swing that earlier or later?
So kind of low single digit, but we're seeing growth. So I think the upside story would be probably China accelerates, forget just beyond corona, but just accelerates to a little bit better and Western Europe comes back to growth maybe sooner. I think those are probably 2 of the embedded things. You could go OpCo by OpCo, but I think geography is probably the best way to think about it.
And your next question comes from the line of Josh Pokrzywinski with Morgan Stanley. Please go ahead.
Hi, good evening. Hi, Josh. Hi, there. So I guess just first question on the volunteer IPO. I guess, Jim, depending on which way I tilt my head here, it seems like you might come out of this whole thing pretty close to net debt free on the Fortive pieces.
Is that a fair way to think about it and a fair way to think about kind of
for sure. As we highlighted in the prepared remarks about our plan here, still a lot of things to do. I'll let Chuck specifically comment about how we're thinking about the debt structure here. Yes.
I don't think I think we're going to be improved
Versus let it fall to the bottom line. I guess maybe a different way of asking is, if growth is better, is it $0.16 plus what other growth does or should we expect some leakage from reinvestment that's currently being held
back? Well, I think we'd always look for opportunities to where we could accelerate growth. But I think the reason we did the restructuring is so that we could deliver growth. And if we see the back half accelerate, I think you'd at least see us deliver our normal VCM fall through of around 35% and maybe a little bit more. But we'll happily deal with that situation when we see it materializing.
Understood. Thanks, guys.
Thanks, Alex.
And your next question comes from the line of Andy Kaplowitz with
We really have seen more we've actually been most recently, we've seen some good news on some of our project rollouts. So the Q1 may be a little hit and miss, but I think as we get into the second quarter and in the back half of the year, you're going to see India be a contributor to growth for GVR as well as some of the other high growth markets. So as we mentioned in the prepared remarks, Latin America was a highlight for them as well in the quarter. And then maybe the bigger story is now that obviously, EMV is the big story, came in really the way we thought it should come in, in the quarter. That will continue to be helpful in 2020.
And I think what we saw, which was nice to see was the comments we made around starting to see some of the benefits with GVR customers in Europe with Tritium. So that's a starting point for growth as well. So a number of levers that we think can get them will be
Accruent, it was starting to slow last quarter. You had talked about the conversion in the SaaS. I think you mentioned high single digit declines in Q4 given the tough comp. You guys think this is more of a just transitional decline as you called it last quarter or is it more cyclical on what's your outlook for accruing here in 2020?
Yes, we if we've looked over if we sort of get away from the quarters and just look at our ownership of we've seen mid single digit growth at Accruent since our ownership. So I think what we've seen here recently is, 1st of all, like we said in the prepared remarks, we're seeing good growth in some of the SaaS offerings. We mentioned Connective, which is our healthcare offering, which did really well as an example, our EMS offering and our 360 facility offering, which are really parts of our CMMS offering and space management offering. So we saw some good SaaS bookings growth in those businesses. We do have parts of the legacy business that were down, as we mentioned last quarter, and were down more than we thought they were going to be.
Some of that is larger licensing deals that we had in the Q4 of a year ago, which made for a tough comp. But I think as we sit here in 2020, we look forward with the team. We certainly see our path back to that sort of mid single digit and better growth. With the SaaS business, it takes a little while for that to kick in, but we're still very excited about the business. And then we think more broadly about Gordian as well as what we've done with Fluke Digital and Emate as that sort of almost $500,000,000 of Facilities and Asset Management businesses, those businesses growing exceptionally good.
So the market dynamics are good. Like we said, we've got a little bit of work to do at Accruent. We talked about that. I think that's consistent with what we said before. But when we look in total what we're doing from an all fortive perspective, I think we like where we're at and we like the future opportunities as well.
Thanks for that, Jim.
Thank you. And your next question comes from the line of John Walsh with Credit Suisse. Please go ahead.
Hey, John. Hi, good afternoon. Maybe just following up to some of those earlier questions around the balance sheet. Can you talk a little bit about how the pipelines look like for each of the businesses as we go forward from a capital allocation standpoint and the ability to do M and A?
Yes. Well, I think we certainly are we completed census in the 4th quarter, as we mentioned. We did Intellect as well in the second half. So a couple of very good deals in the second half. In the summer, we had proof technic.
So we had good additions and the breadth was pretty good as well. Intellect's really being part of our ISC safety offering, Sensus being part of our healthcare offering, ProveTechNIC really in the core Fluke business. So as we look across those funnels, John, across all of our businesses, I think we're in a very good place with all of our funnels. We just reviewed our strategic plan for the next several years with our Board and highlighted the opportunities for some of our key platforms. And we really see across a number of platforms opportunities for capital deployment.
Obviously, we're pretty busy right now with some of the things we've got going and but we continue to be active and we're hopeful that we'll get some things done here in 2020 as well.
Great. And then as we think about volunteer, I don't think we've had a chance since you've announced the management team there to kind of get your perspective. Just wanted to get your thoughts on both the appointment of Mark and Dave there.
Yes. We're really excited. I think Mark is very much a person with who's got considerable continuous improvement experience. He's been a student of DBS and FBS for a long time, has applied it in his businesses. He certainly goes back to some United Technology days where they were implementing a number of lean principles.
So I think he brings public company experience, he brings business transformation experience, he's incredibly results oriented. So I think Mark is somebody who we're really excited about and Dave Nomura is really coming back, right. Dave was a group CFO for us before he went to Gates And Dave is a great financial leader. He's worked with Chuck and I for decades and I think we're really excited. And Dave knows these businesses.
He's coming into the organization knowing these businesses, having to have some financial responsibility for these businesses before he left. So I think the combination of both external experience, both having public company experience, but also their belief in continuous improvement, I really think sets up already with a great leadership team that we already have in those businesses. We think Frontier's future is very strong with the leaders that we now have in place.
Great. Thank you for the color.
Thanks, John. Thanks, John.
And your next question comes from the line of Deane Dray with RBC Capital Markets. Please go ahead.
Thank you. Good afternoon, everyone. Hi, Deane. Hey, really appreciate that you all were brave enough to take a stab at what the coronavirus impact would be in the Q1. We've seen really one other company go through that math.
Xylem did it today. So I'd be interested in hearing a bit more with any precision if you can. What's the how do you get that $0.02 Is it the plant shutdowns? Any assumption about the supply chain? Maybe we can start there.
Yes. Thanks, Dean. It's obviously, as we said, it's an evolving situation. And our first priority is the safety and security of our people over there. And obviously, a very difficult situation for the country of China, the health crisis that it is.
So I think 1st and foremost, we're focused on making sure that our teams are fine. And we're doing what we can from a business perspective to help in the situation. And we have some products, as an example, at Fluke that are helpful to diagnosing some things relative to some of our temperature management products as an example. So that's 1st and foremost. How we got to the $0.02 is really, I think, pretty straightforward.
It's really another week of being down. So that's inactivity of not only the factories, but also customers. And the fact that I think we ramp slower than normal. I've been pretty we've talked about China and how you come out of the new year for a number of times. I have a couple of decades of experience of leading our efforts over there.
And usually, you come up a little slower coming out of the New Year is and we just think that's going to be a little slower. So it's really the combination of the lost week and really not probably coming up as quickly as we typically would out of the New Year. Now I'll tell you, Dean, as you know, it's an evolving situation relative to next week. February 10 is really the starting point, which and we're really looking at 3 things. 1 is, how are our customers going to come back?
How is commercial transactions going to start up and occur? The second thing is our factories and our Tier 1 and Tier 2 and even Tier 3 supply chain and how quickly they come up. We're pretty confident about our own factories, but seeing the supply chain come up. And then I think the 3rd piece is just the freight lanes, what's going to happen. We do ship as an example on some commercial flights as an example.
So we'll just have to see how that happens. And really all that's going to sort of evolve next week and in the weeks to come as we start to see things. We've got we felt obligated with what we've known pretty much over the last maybe 2 or 3 days. We've really felt obligated to be very clear about what we think will happen thus far.
That's great color. We're all hoping for the best there. And then on ASP and Census, interesting you were citing the opportunities from some cross selling and that's kind of the whole strategy around bolt ons. Can you give any kind of examples of what cross selling might be? And are the sales force
This is a great combination for us to go forward with.
Good to hear. Thank you.
Thanks, Dean. Be well.
And your next question is from the line of Richard Eastman with Baird. Please go ahead.
Yes, good afternoon. Jim, could you touch a little bit circling around to Fluke Industrial? I think you kind of spoke to some seasonal growth there in the Q4 relative to the 3rd, so that would seem encouraging. How does the channel look to you at this point? And does that business start to cycle more favorably by mid year?
Or what's your general feeling on Fluke Industrial?
Yes. We've seen the growth in the market, maybe more dramatically just given the daily volume of business that goes on at Fluke. So we've got to watch that in China. We think the U. S.
Continues to sort of stay on track. We don't really see big inventory issues. And in Western Europe, we still think it's going to probably be flattish to down here at least in the first half. Yes.
I mean, I think the restrictions certainly went in, we heard about them right at the end of May. So there's still 5 months of tougher compares in the first half this year. There's a little bit in a normal year, a little bit more in the second half than the first half, but I don't think that's enough to worry about. But it's in the 1st 5 months of this year and not beyond that.
I think the more dramatic number at tech though really, Rick, is going to be just seeing that market come back in North America and in Europe. That's really that the Huawei thing is something and it's something
By the Q4, is there much difference between PI and IT as they relate to that low single digit corporate core?
Rick, this is Chuck. I think you roughly have PI correctly being negative, especially in the first half, running into easier comps but still being low single digit. I don't quite see it the same way with IT as it goes through the year. I think that they have a little bit of a tough compare here earlier in Q1 versus last year, but I expect them in that low mid single digit growth in from throughout the balance of the year. I don't think even though the liability shift is in October, I don't think that we'll see slowdown in this business, especially the I'm talking about the EMV wave there.
I think that will continue on beyond the end of 2020. So I don't think it slows down the back half of the year on anything I can see.
And a couple of things we said before, Rick, just put that in context, like we were talking about EMV, like we just talked about. As I also mentioned, India improves through the second half. So you start to see I think electric vehicles, the EV charging business probably ramps a little bit more. So you got a few things are going to start to accelerate through the year that are non EMV related as well.
Got you. Okay, great. Thank you. Thanks for your time.
Thank you. Thanks, Drew.
And your
next question is from the line of John Inch with Gordon Haskett. Please go ahead.
Good evening, everyone.
Hey, John.
Hi, guys. Just picking up on that IT discussion. So if IT is kind of low to mid single digit this year, the margins are in the Q1 and I think for the year are relatively flat. Yet we've got some of these EMV, I'm assuming those are pretty good profit contribution benefits throughout the year. Why is the OMX nod a little bit higher for IT based than your guide?
Well, one, I think IT is coming off of a pretty strong year, but I would think that IT would come through with I mean, if you're talking about a business that's growing 3% or 4%, 50 basis points is what you would expect to see. And I think that, that is that's what you're going to would see when with IT going through the year.
Okay. So I thought, Chuck, I thought IT was a little bit more flat in your guide in terms of the performance in the Q1 2020. But you're saying it's actually going to be up about 50 basis points or should be?
I thought you were talking about operating margin expansion. I'm sorry, but the I think that IT will be up in Q1, not taking into account the coronavirus would be about I think it's 3% and then accelerates slightly through the year.
Yes. No, I was talking about operating margins, Matt. Okay.
So we're
talking about the same thing.
But they just had a quarter where they did 200. So I think there's good momentum there, but then they're lapping some really tough compares. They had great margin expansion all last year.
That's fair. Just I wanted to switch to volunteer for a sec. You've announced the management. What about the Board? Like are the rails going to be on the Board?
You would presume they would be, but there hasn't been an announcement yet. What's the timing on that?
Well, we haven't yes, we haven't commented on the Board. I mean we've got a lot of degrees of freedom. I we've announced Karen as our Chair, and so we've got a Chair. We're building a Board, the construct. We never want to comment on who's going to join the Board or whatever based on, as you know, commitments and how many boards people are on.
I would say that our board recruiting has been incredibly positive. We've had a number of folks that have been interested, and we're in the process of interviewing those folks. We because of the structure we've talked about, we're in good shape for what we need to do for the IPO, and I think we're in very good shape to as we move forward with the separation the full separation, if you will, later in the year.
And Jim, what are the next milestones, if anything, from time line perspective?
Well, I think we're putting ourselves in position to be able to do an IPO by the end of Q1. But there is a lot of things going on, as we noted even on this call. So we're going to assess what the best market timing is for us, but we'll be in position by that point. But we're really pleased with our progress. And as you mentioned, the management team is in place.
We'll see what the market conditions look like.
You'd start to see some of the milestones that would be prepared for that, to be specific, John, things like our filing and those kinds of things. You'd start to see that here in the meetings and things like that in the coming weeks here. Yes,
And we have no further questions at this time. I would like to turn the call back to Griffin Whitney for closing remarks.
Remarks. Well, thanks everybody for taking the time. We and indulging me in my minor cold here. But we want to thank everyone for your support in 2019. Clearly, a transformational year as we talked about a number of things that we feel really good about as we enter into the year.
We talked about a number of those things this afternoon. It's a new decade for us and a new decade for Fortive, and we're incredibly excited about the position we put ourselves in for both Fortive and volunteer to make 2020 a strong year. We'll look forward to continued conversations around all that. And certainly, Griffin and team are available for follow-up over the next several days. So thanks, everybody, for your time today.
Have a great day, and we'll look forward to seeing you here soon on the
road. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.