Good afternoon, everyone, and welcome to the 2019 Fortive Investor Day. I'm Griffin Whitney, Vice President of Investor Relations here at Fortive. Thanks very much for all of you who have joined us here in New York today, and thank you as well to those of you who are joining us on the webcast. Turning to the forward-looking statements, during today's presentation, we may make forward-looking statements. Actual results may differ materially from those statements. For those of you watching on the webcast, please refer to slide number two in the presentation for more information. Looking at today's agenda, in between opening and closing remarks from Jim, we will provide updates on our platforms from their respective Senior Vice Presidents, as well as a presentation from Barbara Hulit on the continued evolution of the Fortive Business System.
Please note that we will also have two Q&A sessions during the day, one at the conclusion of the platform presentations and another one after Jim's closing remarks. With that, I'd like to turn it over to Jim Lico, President and CEO of Fortive.
Thanks, Griffin. Good afternoon, everybody. Thanks for coming, spending a few hours with us today. We're incredibly excited for everybody to be here, as well as the folks who've joined us on the web. I think today you're going to get a lot out of really our digital strategy. Our hope here is that you get a sense for a lot of the transformation that's been going on at Fortive. You get a real sense of that. As a real important part of the Fortive Business System, we've used the word Gemba. It's a Japanese term for the real place or where the work gets done. When we are on the shop floor or with a customer, we often talk about Gemba evidence. It's that evidence that helps us understand the problem that's key to whatever we're working on.
I think today you're going to see a lot of Gemba evidence around our digital strategy. Our intention here is really to help you understand, to bring to life the opportunities that are in front of us relative to digital. Hopefully, you had an opportunity, for those of you in the room, to see that live in the trade show. A number of great examples of innovation and disruptive technology, not only that we brought in through acquisition, but also a number of organic, disruptive technologies that we've developed that will provide great growth into the future. You heard in the video our shared purpose, essential technology for the people who accelerate progress. The shared purpose is what binds Fortive and the various operating companies and platforms together. What we do every day is about harnessing the technologies and innovations in our company to help make our customers successful.
You'll see our core values, today you'll see all of those exemplified in a great way. On the talent side, you're going to see the broad sense of our leadership team and the capability that exists in our leaders throughout the business who are running our global businesses every day. The innovation and disruptive technologies you'll see that we're generating certainly are really focused on delivering customer success. A critical part of our core value is not only to develop great technology and innovation, but to make sure that that ultimately makes customers successful. That's where differentiated business models occur. That's where long-term financial returns happen. Kaizen is our way of life, is certainly in Barbara's presentation as well as throughout the operating platform presentations.
You'll see how FBS is evolving and bringing to life a number of new parts of FBS that are helping our new businesses be successful and drive value in our entire portfolio. Ultimately, we know that you all have a choice every day in how you invest your money and how you select companies that will give you the best long-term return. I'm confident at the end of the day you'll see a number of things that are really helping us be. While we've had a great three years, ultimately, I really hope what you see today is how the next three, five years are even better. We won't talk a lot about 2018, but we're incredibly proud of the year. Clearly, in a number of ways, our free cash flow is probably the one that stands out to me.
20% growth in our free cash, really the currency that really provides the opportunities and strategic degrees of freedom that we have to really continue to change the portfolio and build the business. The foundational parts of business characteristics of the business remain the same. Our leading brands and market positions are the permission that we get with customers to ultimately bring to life this connected workflow set of solutions that you're going to see throughout the day. Our growth focus here continues to be around making sure that we can deliver technologies to customers, where we get great returns, and where we ultimately build a better company over a long period of time, both strategically and financially.
Our global view of the world today is still North American-centric at almost 60%, but as many of you know, our high-growth markets have been growing at high single digit to double digit since the inception of the company. Really a foundational improvement that has really been helpful to our growth over time. You can see how our platforms break out as well. We're really excited about what we can do with these platforms, and certainly you'll see that throughout the day in each platform presentation, how we're both organically and inorganically changing the portfolio for the better. Really where we stand today is with a breadth of end markets, roughly about $7.5 billion on a pro forma basis in 2018, really centered around these wonderful global growth trends. Software-enabled workflowsConnected devices.
You're going to see that throughout the day, you're going to see how those solutions today are bringing more productivity and safety and security and quality to our customers. You'll see in the platforms how they're harnessing these trends to continue to change and evolve our own portfolio today. With a focus on making sure that we're exposed to better growth trends, better secular drivers, ultimately reducing cyclicality, and fundamentally continuing to increase recurring revenue, which gives us that resiliency that we're looking for over the long term. We've talked over time at some of the key growth drivers in the business. I won't get into the digital IoT successes for the year because certainly, that's what today is all about. A little bit of update in a couple of the other areas where we spend a little bit less time today.
One on the EMV front, this is our opportunity in North America for Gilbarco Veeder-Root. We're continuing to build that as an opportunity. As you know, we had a very good start of the year with Gilbarco, we're very excited about the year they can have. We really think we ended the year around 40%-45% penetrated on an EMV standpoint. We'll probably get to 50-55 by the end of the year. We know that the market will inevitably never get to the deadline at 100%. We think that's about 80%-85%. Certainly, Martin will give you some deeper understanding of how he's building a global GVR and a global platform to take advantage of the technologies and innovative opportunities that are in his end markets. Our high-growth market story continues to be very strong.
As I mentioned a few minutes ago, we've built a great business in India through the combination of organic and inorganic efforts at GVR. We acquired Orpak about a year and a half ago. We acquired Midco at the end of the year. We've really built a really strong business in India, which is really going to give us a really strong position in India in a high-growth market. We've had great success at Fluke and Tektronix in China, we continue to see our recent acquisitions as opportunities because most of them are under-penetrated in these markets. Real opportunity to continue to drive the high-growth markets. Then certainly our portfolio transformation, a number of things we did. We'll certainly talk about the success of the acquisitions and the excitement that we have about some of the more recent acquisitions.
Obviously, we did the divestiture at the end of the year, really changed the portfolio in a number of ways that we'll see as we go through the presentation. I'm really excited for you to hear Barbara Hulit's presentation on what we call The Fort. This is really our Fortive innovation center that gives us both an incredible capability to deliver disruptive technology and create breakthrough innovation within the company. We're just very early days in that effort, but really excited about what that can do for the company over the long term. The segments today look a little bit different because of the adds and the subtraction of A&S last year. You can see still six strategic platforms. You can see now we'll be centered around a health platform with ASP as the foundational business in there.
Two great segments with very strong financial profile and really the opportunity to build all those six platforms, all opportunities to continue to build out our portfolio. That portfolio transformation is really important to us, both from an organic and inorganic standpoint. We talk a lot about, and you see a lot of the inorganic efforts. The acquisitions tend to get a lot of notoriety, but what I hope you'll also take from today is the organic efforts that are also happening in the company, which ultimately the combination of those things really are going to help us build a better growth portfolio over time. You know our tried and true M&A process around site, really being focused on market work, proactively cultivating targets, and ultimately creating a funnel of opportunity that gives us an incredible opportunity to add businesses to Fortive.
On the organic side, you can see FBS really is our foundational capability around accelerating innovation and building out, in many cases, not only new technologies, but also new business models supported by R&D investments. We can buy great companies, we also have the organic capability within FBS to continue to make and accelerate those businesses over time. Certainly, a number of examples you'll hear today where that's happening with some acquisitions that occurred a few years ago. Ultimately, we get to better top-line growth. We get to lower cyclicality. We get that resiliency. We get the compounding effect of improved free cash flow, and obviously, that results in higher returns. A lot of change in less than three years. Significant transformation through M&A, for sure.
You can see the brands on the page, you're going to hear a lot about this today. Excited about getting deeper into these businesses and the quality work that our leaders are doing to make these businesses even better as a part of Fortive. We acquired about $1.7 billion worth of revenue since inception of Fortive, roughly almost three years ago. That revenue has high single-digit growth and 70% recurring revenue. The compounding effect of those businesses over time in and of itself makes a nice, strong change in our financial profile over a number of years. We're positioned in larger, more attractive markets. We've added good served market, where we also have M&A runway for future opportunities to bring businesses in to Fortive. What you're going to hear today a lot about our digital strategy.
I'm sure you hear a lot about that with a lot of peer companies. Here's how we think about it, here's where we think we differentiate ourselves relative to our strategy. One is it's connected. It's a connected workflow set of solutions where we have strong brands and strong market positions. We build off a position of strength, that position of strength comes from those wonderful positions in instrumentation and sensors and equipment that we have today. Whether that's a business like Fluke that we've had for over 20 years, or it's a business like ASP that we've had for a little bit more than 20 days, we have that wonderful foundation of a position of having hardware and solutions for customers that we can ultimately connect through technology, through software, through data analytics, to build stickier, better business models over time.
That really addressing customer pain points. That's where the workflow, we do our market work now around workflows. We leverage our large installed base, and ultimately, we can differentiate those solutions and build a higher market share, but more importantly, a stickier business over time with a differentiated business model. That ultimately gives us long-term competitive advantage. You're going to see that today, both on the acquisition side and with the continued organic growth in the software businesses that have been a part of us for a while, and whether that's eMaint, which we bought two and a half years ago, or it's the organic efforts that we've done at places like Fluke Digital and Insight 360. You're going to see a number of examples where we're doing this both organically and how we're leveraging our free cash flow to bring great businesses into the portfolio.
It's not just about our inorganic capability. We brought over from Danaher that M&A process that's been tried and true for us for a long period of time, and we're obviously incredibly excited about the $1.7 billion of revenue that we brought in and the team that's become part of Fortive. No question, a great addition to what we do. We're also making sure that it doesn't end there, that we build those businesses over time with the kind of innovation capability that will allow for us to continue to expand into new markets and change business models. You'll hear some of these examples today, but there's a few. Certainly, the success, Pat Byrne will talk a little bit about the great work that him and his team have done around our new platform and oscilloscopes and the work that's happening there.
Incredibly, that's really a market share play within our current market. We're also looking to make sure that we can expand technologies into new markets. You saw a little bit today of the Fluke digital systems. You saw some of the vibration sensors that are linked as a digital IoT solution. In the trade show, hopefully, you had a chance to see that incredible set of solutions which give us remote condition monitoring and allow for us to expand our capability into some new markets. Then get deeper into the current customer process. There are no better example than our iNet business within Industrial Scientific, whereas our Safety-as-a-Service platform is really disrupting the current business model with a service model that's very unique and allows for us to build a very unique capability over time.
We're taking that learning that we've got from the ISC team and apply that to different businesses within Fortive. The continued portfolio transformation, we will continue to transform the portfolio, not only from an M&A front, but also how we leverage our innovation capability on the organic side. You'll hear about The Fort, as I mentioned before. Barb will give you a deep view into this. We think this is very early days, as I mentioned, but this really is, in its sense, it's really a couple things. It's really about making sure that we have the kind of organic innovation capability that we will need in the years to come. This is not something we're doing for a year or two. This is something that we'll do over a long period of time.
It's building out a growth and startup capability within our businesses, so our businesses have the ability to bring startup technologies into the market, sort of internal venture capital view of the world. We fund those through our growth breakthrough process, which is a rigorous process around making sure that we can fund those things and make sure the teams have the kind of funding they can do to build long-term innovation. Finally, we've built out an AI and data analytics capability in order to make sure that we can serve all of our solutions with the kind of capability, the kind of talent that you need in order to build these solutions out, which takes advantage of this incredible instrumentation sensor and equipment data capability, right? We're creating a ton of data.
The Fort is a place where our team members can come to monetize those solutions, to monetize that data, to bring deeper solutions to our customers, and ultimately build out business models that are stickier and have greater resiliency. That really has resulted in the financial profile changing. You can see that today. An increase in recurring revenue, now at over 30%. As many of you know, when we started, we had a 30% target that we had for five years. We've hit that number early into our third year, and we continue to believe that building out this recurring revenue, not for recurring revenue's sake, but really building resiliency and deeper into the customer workflow ultimately gives us greater competitive advantage.
We'll continue to make this a big part of our strategic plan and our strategic efforts, and you're going to see a lot of those examples through the course of the day. I mentioned the word resiliency several times, I think this slide really demonstrates what we really have done, both organically and inorganically, to build more resiliency into the portfolio. We would in no way, shape, or form be trying to articulate a downturn in any way, shape, or form, but we thought we'd give you a view of what our pro forma look would be in a 2009-like scenario, which I don't think anyone suggests is occurring.
Through the addition of software as a service into our portfolio, as an addition to a number of services in our portfolio, and through the advent of consumables, principally with the ASP acquisition, we've really increased that recurring revenue and hence the resiliency. I think the thing which really gives us great confidence is not only that we've made the revenue profile more resilient, we've made the cash flow profile even more resilient. The ability to continue to generate free cash flow during a scenario like this, which gives us the currency during those times to maintain the ability to do M&A, in many situations, some of the more unique opportunities sometimes sit during those tough economic times.
We're built for speed today, we've also built the company to be able to take advantage of opportunities that might happen in any type of economic scenario. In less than three years, we've made some good progress on our financial evolution, I would say that this constitutes a good start. Our pre-spin growth rate, sort of GDP-ish, maybe a little bit higher than that, now we think is solidly in the GDP plus range. We've added over 100 basis points of core growth to the portfolio in less than three years. Our gross margins have expanded substantively in that time period as well, and obviously, the recurring revenue, as I mentioned, is also changed. We're really proud of really getting from almost a cold start on software revenue, we're now at 10% of our revenue that's really true business model software revenue.
This isn't revenue that's connected to a piece of hardware, rather, these are software business models that we're getting revenue today at really very high gross margins and very high growth rates, which are compounding our business over time. We're really excited about that. Part of the reason why our free cash flow is where it is today is in part that business model shift that we're in the very early days of. You've seen the Fortive formula that we've talked about since our inception. We think that the flywheel that we talked about starting in 2016 is gaining momentum and is in no way at its terminal velocity at this point. Lots of opportunity to continue to accelerate it.
That's a GDP plus-like growth rate with margin expansion on top of that growth rate, continuing to use our free cash flow to accelerate through M&A, and ultimately give us the ability to maintain our credit rating, while at the same time, really accelerating our bringing great businesses into the portfolio and using FBS to make those businesses even better. The momentum of that flywheel over time is the compounding effect that ultimately continues to help our portfolio evolve to a growthier, better margin portfolio. A quick jaunt through what you're going to see today and some of the progress we've made. I think we're in a very good position. We're in the best position we've ever been, sitting here today in May of 2019.
We've done, I think, demonstrated our ability to do strategic M&A that really changes the portfolio at a pace, I think that is really representative of the way we think about change at Fortive, the way we think about talent, and the way we think about execution. That speed also we're taking to the innovation front to try to drive higher organic growth. Ultimately, what you see today is a clear progress around advancing our digital strategy, which again, is still early days, and we'll have great opportunities here in the future. Finally, FBS is evolving.
We all know the tremendous value that FBS has delivered into our businesses over a long period of time, demonstrated the wonderful financial profile that we have from since inception. Ultimately now with FBS evolving, it continues to be the business system that will deliver value in our company with the change of our portfolio. As I always like to say, our continuous improvement system continues to improve. That's an incredible and important part of how we deliver value over a long period of time. We're really excited. We'll kick off with Field Solutions, Wes Pringle, who's really led our effort around transformation. You see incredible changes that's gone on in the portfolio.
Looking forward to his presentation. I think you could really get a sense of how we've really made some great changes and how a number of acquisitions have really done a great job in that platform. Wes, come on up.
All right. Thanks very much, Jim. Okay, thanks, Jim. I'm very excited to talk about the Field Solutions platform, the work we've had underway, and where we see the platform going in the years ahead. First, let me just briefly describe what is the Field Solutions platform. You can see here just a little bit over $2 billion worth of revenue in 2018, representing essentially the five different operating companies you see with their logos at the bottom: Fluke, Qualitrol, Industrial Scientific, Gordian, and Accruent. If there's one way to think about all these businesses together, I would say it this way.
For any person who is managing a physical asset or trying to optimize a physical asset, whether that be a building, a manufacturing asset, or whatnot, these businesses collectively, through hardware and software, are helping that manager, helping that department, manage those assets reliably and as safely as possible. That essentially is the common denominator between all these various businesses. You can see on the pie chart that we have about just a little over half of our business in North America. The right way of interpreting that observation is that we have significant runway for international expansion on most of these businesses. We're going to speak about what that looks like as we go through the presentation today. First, let me talk about how we're trying to build out each of these platforms or each of these businesses, I should say, one by one.
In general, what we're looking to do is to take very differentiated leading brands, and with those brands, build integrated hardware and software solutions that truly are core to the customer's workflow and really transform what's possible for them in terms of how they do their work. On the right-hand side of the slide, you can see essentially the roadmap that we've pursued in order to build that strategy or build those businesses over time. I'll start at the bottom. In many cases, not every case, but in many cases, we start with leading hardware. That was certainly the case at Fluke or Industrial Scientific. A strong hardware position with all the domain knowledge that you would expect would come with it. We have to get those bits of hardware connected so we can start dealing not just with the hardware itself, but with the data.
In each case, there's very much been a focus to get these online so we can get the data into the cloud or into whatever mechanism is most useful for further analysis. Bring on board data and analytics. Either organically or inorganically get a strong position in the core workflow software that these customers are using for their various applications, integrate all of it, round out the functionality, so we've got a more comprehensive integrated solution than our competitors. You can see here that this is many of the acquisitions that we've done, we've got many of them represented as you go up through the chain, are either establishing a new toehold in an entirely new vertical or a new workflow, or they're moving us along on this roadmap as we seek to establish a very powerful position in each of these businesses.
Of course, as we've done that, there's been a significant portfolio transformation. Three years ago, right around the time when we first spun off, you can see here the Field Solutions platform was Fluke and Qualitrol. Two leading businesses, outstanding brand equity, reliable growers, global in nature, highly sought after and relied upon by their various customers. You can see here, very strong performance in terms of growth margin. Excellent businesses in their own right. As we pursued the roadmap that I've described, we brought on a lot of other businesses, acquisitions, as well as organic efforts. Through that exercise, we've accelerated the rate of growth of the portfolio. We've brought recurring revenue up to about a quarter of the total revenue in the platform. We've taken what was already a high gross margin up even higher, into the mid and high 60s.
It's worth pointing out that gross margin expansion, yes, certainly the acquisitions have played a role in that for sure, but there's also been gross margin expansion in our core businesses. For example, Fluke, throughout this entire time period, has continued to experience growth margin expansion as a result of our continuous improvement FBS mindset. Strategically, what we're looking to do is to figure out what parts of our customers' workflow we want to participate in and we believe represents the best opportunity for us to build the strongest business possible and establish the most rapid growth with the best returns and so on. You can see at the center of this pie chart, it's just a very high level, general workflow that in broad terms applies to so many different verticals and so on.
Anyone managing a physical asset, they operate it, they maintain it, they plan for different things they might do to it. They buy those upgrades and so on. In each case, on each business, we figured out what the customer's problem is, how they want their work to flow, and based on that, where we can bring differentiated advantage and where we should play. Every business within Field Solutions participates in some form on this workflow, and you can see that represented in the chart. Let's look at what this looks like specifically by getting into the individual businesses. I'll start with the Fluke Industrial business and the Fluke connected strategy for the Fluke Industrial business. Now, I think many of you know, years ago, we got going with what we called Fluke Connect.
If you think about my roadmap, we wanted to get our tools wirelessly enabled so we could get data out of the tools into the cloud so customers could store that data, organize that data, share that data with whoever they liked. Once we did that, we wanted to accelerate the usefulness of that data for our customers. One of the steps we did a few years ago is to buy eMaint. Just for reference, eMaint is a leading SaaS-based CMMS software provider. CMMS standing for computerized maintenance management software. This is the software that maintenance teams use to deploy work orders and basically organize all of their work. Now, we love this business on its own merits. Generally speaking, that's how we like to look at these markets as we build out these mini platforms.
You can see the performance of eMaint since we bought it. 30% growth CAGR, exceptional high customer loyalty, 120% net retention. Just on the eMaint business in isolation, we're not done. We continue to invest in that platform, add additional functionality. As we do, we expect great things just from the eMaint business alone. In addition, we've been busy connecting all of our tools into eMaint seamlessly, connecting wireless deployable sensors into eMaint seamlessly. What that means is that one of our customers, either with a deployed sensor or with a handheld test tool, they can get a measurement. If it's out of range or if there's something wrong, it can immediately trigger an alert, a work order the parts if necessary. The work gets done.
When the worker completes the work, they can test it to make sure that it's correct with a Fluke tool, that automatically closes the work order. Simplifies the entire process, better documentation, more reliability. This isn't just theoretical. This is something that is happening right now with real, live, happy customers. You can see the framework at the top here, the connected tools and sensors, the software, the functionality, all getting to a single solution for our customers. The example I have here is Martinrea. They're a customer that has been an eMaint customer for many years. They started using connected tools. They've deployed thousands of our sensors, and they're very proud of the fact that they believe that this total solution for them is saving them thousands of dollars per facility because it's just given them advanced insight on challenges that they otherwise would have missed.
We very much believe in the space. We very much believe that we understand what it takes to be the right kind of leading long-term player in this space, and it's something that they're obviously quite serious about leading in. I'm going to move to a different business within Fluke, and that is the Fluke Health business. We've built that mini platform, if you will, over the years. Historically, the Fluke Biomedical business was the leading provider of medical certification equipment. If you have to certify or calibrate, maybe in a different industry, you might say, baby incubators, patient simulators, things of that sort. A few years ago, we added RaySafe, which is leader in radiation calibration equipment or certification equipment.
Before you get an X-ray or a CAT scan or something, those machines need to be tested to make sure that someone's getting exposed to exactly the right amount of radiation, they're reading the right way, and so on. This is the leader in that space. Of course, we purchased Landauer, which is the leader in radiation dosimetry or tracking people's exposure to radiation. With these three businesses, we became a health and safety or a safety and maintenance leader in hospitals throughout this integration of this platform. What's important is, in this case, we're not just running these as independent businesses. When we bought Landauer, we brought all of these together into a single business, pulling leadership from Landauer, many leaders from Fortive into a combined, very powerful team.
Of course, we do all this not just for its strategic merits, we do it to get a strong return. You can see here, many of you know who might have followed Landauer through the years, they struggled to grow. We grew by mid-single digits last year. We're certainly on track to grow Landauer specifically, by mid-single digits this year, and the funnel on that business continues to expand. That's really just the deployment of great talent from all of these original businesses, as well as the deployment of the FBS tools. I want to talk for a moment about Industrial Scientific and specifically talk about one of their major lines within Industrial Scientific that's called iNet. It's worth knowing that iNet is directly or indirectly responsible for about half of Industrial Scientific's revenue. This is not a small undertaking. iNet is a completely unique, SaaS-based approach.
We use the term safety as a service to gas detection, portable gas detection. Customers of iNet, instead of buying a portable gas detector through a distributor and managing the whole process and the calibration and the calibration gas and all that kind of stuff on their own, Industrial Scientific with the iNet platform, comes with a monthly fee. The hardware, the service, the gas, the calibration equipment, all of it, is all part of the monthly fee. Everything that's true about a SaaS business with the increased stickiness, recurring revenue, and so on, is true in this particular case.
We've added and invested to a cloud architecture supporting this, which not only does all the stuff we've just described, but now starts to track where workers are, what the status of those workers are, so that a facility manager can make sure that they can track machinery or people and make sure that all is well as they do so. Stopping right there, that's already a winning formula. We're gaining market share with this platform, and you can see there's about a 10% three-year CAGR. Frankly, we're not even close to being done in terms of what we imagine for this platform. We view iNet as being a very unique proprietary customer channel upon which we can expand much further, and that's very much how we're thinking about it. Two of the ways we're looking to expand includes international expansion.
We've made investments to accelerate the rate of growth of iNet internationally. We believe we're significantly under-penetrated, for example, in Europe and in EMEA, and we've been successful at accelerating that rate of growth into about a 20% CAGR, but additionally, into bringing more and more functionality into the basket, into the channel. We've made investments into Lone Worker Protection , so making sure that a worker that's off on their own can be tracked and monitored and their well-being is, the facility owner knows that their well-being is in good shape. There's some functionality out there right now on lone worker protection. You're going to see more and more functionality come over the course of the next three to four quarters. Additionally, within Industrial Scientific, we have a small analytics business called Predictive Solutions, which brings analytical insights to the iNet customers.
You're going to see the functionality around that expand as time goes on. Finally, entire new feature sets, for example, automating regulatory workflows. We're very excited about what Industrial Scientific and iNet can represent for us in the years ahead, and that just gives you a flavor for how we're thinking about where we go next. Very similar too, with Accruent. Accruent, as I'm sure you know, a SaaS-based facilities management software leader. It grew up over time, by aggregating some best-in-class or a large number of best-in-class point solution assets. There's a lot of different types of solutions that are available to a facility manager with a facility management software, from lease administration, space utilization, capital planning, lease management, and so on, maintenance management, so on and so on. Lots of different types of software products that help the person do their job.
The industry historically grew up with those being individual products. What makes Accruent so unique is that they've aggregated the right types of products together so that instead of dealing with six different screens or six different logons and six different datasets, now, as we pull these products together into a single integrated offering, a facility manager can work with Accruent to get their work done across their workflow. Now, the infrastructure, technical infrastructure that they do that with, we call it Fabric within Accruent. It started before we acquired Accruent, and we're accelerating that process with various investments we're making on the business. Additionally, we see terrific opportunities for international expansion with Accruent. We've made investments there to beef things up, particularly in Europe. You can see we've accelerated growth there to about a 20% growth CAGR. Finally, I want to talk about Gordian.
Gordian, their lead product, which represents more than half of their revenue, is something called Job Order Contracting. Job Order Contracting targets state and local governments, educational departments, the federal government to a certain extent. What it does is, if you're a facility manager in those verticals and you need to go up for bidding, especially for a smaller construction project or maybe some maintenance projects, with Job Order Contracting, it pulls together a very robust and proprietary set of construction cost data and software that pulls it all together. Means you can make various trade-offs in real time as you're assessing what kind of features you want to build into your bid, and whether or not, how much it'll cost, what it'll bring into your final product. A unique data set that Gordian has, which really allows for that.
In addition, the software allows the customer to scale that up or scale that down and still have a valid bid, even if the bid has been accepted by a contractor. That's kind of how it works. If you bid out retrofitting lighting at 40 different schools and you find out you need to go to 35, or you need to go to more, or whatever the case may be, the software will allow for all those changes and still have a valid bid at the end of the process. You may ask yourself, "Why is that such a big deal?" Not only does it save a lot of time for this facility manager, and there's a lot of work involved with individual bids on a smaller basis, it also saves them money.
Now they can aggregate these comparatively smaller jobs into a bigger job that's more competitive and ultimately more attractive for contractors, as a result, get more competitive bids in the end. It's an entirely unique product, as you can see here, we believe it's got substantial penetration runway. Today, it's about less than 10% penetrated to its full potential in the U.S. Not everything that we do is about transforming business models or building out entirely new companies, obviously. We also use FBS and our study of customer workflows in order to make sure that we are coming out with individual product innovations that are also successful. That's part of how we make sure that our organic growth continues to outperform our competitors.
Hopefully, you had a chance in the roadshow outside to have a look at, for example, the ii900 product from Fluke, which is on display. In this particular product's case, we looked at manufacturing facilities that use compressed air. In a compressed air facility where they can have miles of compressed airlines running various parts of the facility, having a leak can be a real problem. In a noisy environment, finding that leak can be extremely difficult and can take a tremendous long period of time. With this product, someone can find the problem in minutes or sometimes even seconds. It completely transforms how that particular problem is troubleshot. The key point here is not so much about the product itself, although we're excited about it.
The key point is with the FBS tools, studying customer workflows, really becoming intimate with their problems, marrying that with technology, so we can come at the problem in an entirely different way. Finally, of course, FBS is certainly about growth, but it's not entirely about growth. It's also about productivity. Just talking about how productivity has expanded with some of these businesses. At Industrial Scientific, I mentioned that we've made incremental investments in connected worker applications so we can bring that functionality to our customers. Also, we've made incremental investments in international expansion. Yet, in spite of that, we've delivered just under 400 basis points of operating margin expansion while doing so. Similar story at Landauer. We've accelerated the rate of growth of Landauer into the mid-single-digit range. I'm talking Landauer specifically, not the whole health business.
While doing that and raising colleague morale or colleague engagement in our language, we've also expanded operating margins by about 600 basis points. Yet that's just the power of continuous improvement, FBS, and Kaizen, which we employ religiously when these businesses join the family. Finally, we're expanding our positions in powerful platforms upon which we can expand. We're looking to, in particular, build those platforms in places where we see significant penetration runway, where we can build a strong competitive advantage for ourselves. Once we do that, we're looking to build up the feature sets and the functionality so we've got a truly powerful and defensible position. Underneath all of it, of course, is FBS, which helps us not only in terms of innovation, but also in terms of productivity so we can reinvest in the business and accelerate our growth. Thank you very much.
Thanks, Pat.
Good job.
Wonderful. When we talk about the combination of inorganic and organic activities to transform the portfolio, I think what we've done in Field Solutions is really exemplary and a lot of great examples. The ii900 is an incredibly cool product. As somebody who used to run facilities for a long period of time early in my life, trying to find those air leaks around a factory was a big problem. If you go into a large factory, you never find them. You're literally leaking away thousands of dollars every week. The opportunity to come in and very quickly find those solutions is just a great example of how we follow the customer around to really understand their challenges and pain points and bring a product that's completely unique to the marketplace. Pat Byrne's going to pitch a double header here. We're going to have him do both Product Realization.
We'll have him dive into that in our health platform. Without ado, Pat.
Good afternoon, and I'm delighted to give you an update on the Product Realization platform, really focused on how we're accelerating growth through innovation and specifically the power of FBS in the business, and also how we focus more on high growth market opportunities in these three businesses that make up the platform. Let me introduce the Product Realization platform. $1.2 billion made up of these three businesses, Tektronix, Pacific Scientific, and Invetech, with really strong secular drivers. The Tektronix business is a business that delivers digital test tools and workflow solutions to really the transformation of many markets through digital technologies. It's a global business with a lot of growth opportunities around really the democratization of digital transformation as it's touching many industries. Everything from big data centers to IoT applications. In the Pacific Scientific business, energetic materials technologies, really a precision engineering business.
Increasingly, that business is now being combined with electronics to provide really complete control systems. I'll outline one of those in what we call new space, where commercial space applications, where we've taken a really leading position. The Invetech business is a design services business that focuses primarily on diagnostic therapy development. For example, cell therapy, which is really the future of a lot of cancer research and detection and how to address that. Invetech is a leader in intellectual property in that area. This is a global business. The very significant part of this platform is in high growth markets. Tektronix has a leading position in China. I'm going to talk about our China opportunities, really exciting overall global opportunities.
Really what binds Product Realization together is we're combining intellectual property, engineering expertise, and deep customer engagement to use advanced technologies to transform how products are developed. That's why it's called Product Realization. Each of these businesses, deep intellectual property, significant customer engagement, focused on high growth market opportunities, engaging with customers to drive growth. Each of them are really shifting into high gear in terms of growth opportunities. At Tektronix, it's more and more about these key target markets and how to provide solutions into those target markets, adding more software and services and solutions into the business. At Pacific Scientific, it's leveraging this great energetic materials precision engineering business, but targeting adjacent commercial opportunities. Pacific Scientific is a significant backlog business. We have a large amount of backlog that gets shipped over time. We like that business.
A lot of FBS gets applied here to continually improve the margins. A very nice growth opportunity. It's in the double-digit range this year at Pacific Scientific. Invetech, as I mentioned, opportunities in cell therapy and other markets. We're really looking at how to accelerate growth using FBS with each of these businesses. I wanted to spend a few minutes on Tektronix, which is the largest part of this portfolio, and what we've accomplished at Tektronix, what we're excited about going forward. The work we've done has really shifted the Tektronix portfolio, really since Fortive spun three years ago, to targeting high growth market opportunities. Those are mentioned here, data center, automotive, power, mil gov. These are places where digital transformation is a significant part of the way the market works. In each of these, digital technologies are really changing the customer.
We are engaged helping those customers take digital technologies, bring them to market at the right cost, the right performance, the right time. We're engaged with leading customers in each of these markets. Besides focusing on these four core markets, we're also adding more software and services value added. I'm going to speak some about our software strategy going forward. A large part of our engineering team is software engineers focused on enabling our customers' workflow with new software offerings. New product vitality. I'm going to highlight one of the key new products we've developed with a platform approach over the last few years and created breakthrough results. 35% of our revenue at Tektronix comes from products introduced in the last three years. Really an intensive focus on new product vitality.
Our differentiation in a large part comes from focusing on our customers and using FBS for product innovation. This is the highlight of the Tektronix story is the power of FBS, focused externally with customers and focused internally, leveraging the capability to accelerate innovation. Moving forward now, three headlines for Tektronix and where we're focused. The platform that we introduced a couple of years ago, I wanted to give you an update on where we are on what I outlined our goals would be last year. We've accelerated leveraging this platform across many price points, converging five or six platforms into one integrated oscilloscope platform.
We are the market leader in oscilloscopes on a global basis, a large product category in the marketplace, and we're out there with customers working to understand where to take that business through this differentiated technology platform. More software, as I mentioned, where can we add value in software with a powerful software strategy we're deploying now? China has been a successful double-digit grower for Tektronix for years, and we think the opportunities in China are very significant for digital transformation among our customers. Now just a deep dive into each of these for a moment. We're really proud of the work that we did here. In 2017, two years ago, we introduced the 5 Series oscilloscope. It was a brand-new platform, years in development, and what we said is we would have $250 million from the platform in the next 3-4 years.
We're well on the track to accomplishing that. We're a couple of years into it now. We've already introduced the 6 Series right after it, targeting the automotive and power market, a highly differentiated product. The level of noise performance on this product, the fact that the channel count, the ability to do the kind of analytics that are needed for the automotive electronics industry, one of the fastest-growing places for digital transformation. We're introducing this year the 3 Series and 4 Series, targeting IoT users as well as many embedded users. This is a place where we have a $50 million-$100 million opportunity with the 3 Series and 4 Series, and that'll be introduced this year. What we've been able to do is to take a successful platform and then leverage it across many segments and accelerate development.
Normally, those four products would have taken five or six years, and we'll accomplish them right around two years since we started this program. That rate of innovation is consistent with the way our customers are looking for technologies that can help them accelerate digital transformation or realize new products. This has all been possible through the power of FBS. In every single step, this product development transformation at Tektronix, which is best in class in the marketplace, has been transformed by FBS. The level of customer intimacy, the rapid experimentation, the deep customer immersion, the software development, the application of agile product development, not only to software but to hardware, these are all the hallmarks of FBS. It's really been the engine that has allowed this team to be so successful in the rate at which they are innovating in the marketplace.
The next thing we're doing now is having built out that platform and built the capabilities to have a consistent architecture, we're now leveraging that into cloud-based analytics and software analysis. Our customers are distributed teams, sharing data, collaborating with data, securing data, automating data. Our customers are looking for more and more of that, Data visualization to analytics, we believe as an element of this platform, will enable to go even to more applications and more value added in customers' workflow. In our emerging software strategy, our customers buy software and use software in three principal different ways. In the box, as an automation platform in order to automate distributed work and repetitive work. More and more digital technologies are now being used between industries.
For example, if you look at the next generation of automotive electronics, it's actually going to be using computer networking technology, not embedded automotive technology. Well, that's going to be very high speed, work at the speed of the marketplace. The ability to actually automate those kind of measurements so that you can leverage technologies between industries and those technologies can be syndicated by customers to accelerate innovation is where digital technologies are going. We believe we have a front row seat at engaging with customers to accelerate that rate of innovation. We're working across this workflow, in order to enable our customers and their teams to accelerate innovation through expanding our offering in our software in the box, our software in automation, and our software in the cloud going forward. We're very excited about this as the next place we can take this platform.
Having filled out all the price points, all the marketplaces, obviously, we can still go up and down in price points around these products that we already have, but we really have a great spot in order to add more value in software going forward. I wanted to now just double-click into one of the most important things we've done is leveraging FBS to transform how we develop software. We have the largest software team inside Fortive is inside Tektronix. Large development in the U.S., large development in India. Hundreds of software engineers really leveraging every aspect of FBS. Growth Accelerators is something Barb is going to talk about, it's about how do you engage with customers around deep customer immersion and rapid experimentation.
Daily and visual management and Kaizen is how you actually engage with the team in order to accelerate progress and find problems quickly and address them. Leveraging the entire Fortive software system, which allows you to quickly identify defects through an agile process development and do continuous improvement. The results have really been outstanding. These are best practices of the company, we believe this gives us a meaningful, sustainable competitive advantage as a result of being this good in software. By the way, as Jim said, what we continuously improve, where we have continuous improvement, we will continuously improve. We have high ambitions to get even better, even more powerful, even more scalable in software on these platforms. Finally, on Tektronix, our China strategy. We believe that China represents a substantial long-term secular positive growth rate.
The semiconductor industry, about half the global semiconductor industry volume is consumed in China, but China only manufactures 10%-15% of global semiconductors. The Chinese are going to be building a semiconductor industry, but they're going to be enabling digital transformation of the China industrial marketplaces. This is going to be a very substantial long-term growth opportunity, not only to enable and serve the emerging Chinese semiconductor industry, but to enable and serve the transformed industries, Industry 4.0 and all the industry technologies that'll happen as a result of digital transformation. What we want to do is be very close to the China customers. We call this initiative In China for China, where we're engaged with Chinese customers, where the innovation never leaves China. It's working with our Chinese team, working with Chinese customers, speaking Chinese, addressing Chinese problems with China-based innovations.
We think we can leverage our global footprint in order to get there and accelerate. We have an outstanding team in China that is working on this, and we are very excited about the opportunities. You will see some of the growth opportunities. These are places where there will be China-based optimizations and China-based innovations happening in these growth markets. We have a great global position in oscilloscope. We have a great position in oscilloscopes in China, and we believe we can extend that with these new products we just introduced. That is really where I want to wrap up Tektronix. I am very proud of the work that has been done at Tektronix as we have really rebuilt the innovation engine, as we are accelerating growth, as we have been able to generate this platform that has given us scale and leverage, as we have engaged with our customers and the opportunities going forward.
I wanted to just spend a minute now on Pacific Scientific. Pacific Scientific is an energetic materials business, a very successful, very profitable, double-digit grower. What we have been able to do is to take their energetic materials capability and combine it with electronics and build a whole new architecture for new space initiation events. What we are doing is build basically an ordnance control system, a networked ordnance control system. The sequencing of those events is now controlled more by a computer bus than by just initiation events. We believe this will significantly lower the power and the cost and the footprint and improve the reliability of new space initiation technologies. It is a $100 million opportunity. We are market leaders. We are engaged with top customers. We believe this will be a meaningful grower for what is already a very nice business going forward.
I wanted to just do a quick summary of Pacific Scientific, does not get much visibility, but some great results and a real runway here. In summary, with Product Realization, as I mentioned at the beginning, this is all about leveraging FBS to accelerate innovation, engaging with customers. We have been already able to improve the quality of the portfolio and the quality of the businesses, and we believe that as we pursue these high growth segments that have strong long-term secular drivers, we are going to continue to be able to do that as we execute these growth initiatives. As I had mentioned, great results through FBS, and we are very optimistic about the opportunities going forward. That is where I am going to wrap up the Product Realization business and move now on to the health platform. I am really delighted to be able to introduce the ASP business to you.
Just by my own personal involvement, during the period of time of diligence, I spent many, many, many days in hospitals and sterilization departments and with healthcare delivery networks to understand this business. This is a beautiful business. It is very good. The long-term secular drivers are powerful and persistent, and the business model is simple, elegant, and has really meaningful runway in order to generate profitable growth in the future. I am just delighted to be able to introduce the business. Really proud of the work that has been done. Where we are now is we have accomplished a significant milestone of April 1st on schedule. We were able to get the business carved out of J&J and stood up as an operating company on April 1st.
We are now operating the business as this is the first quarter we're operating it, and we believe it's a great team, it's a great foundation, and there's plenty of opportunity. Out at the booth out there, you would have met a couple of our leaders, Jeremy Yarwood and Amy Smith, a couple of our leaders from Johnson & Johnson. They've joined the team. They're part of the leadership team. Super excited about where they can go in the business. These are experts in this business, and there's many, many experts, outstanding people that came with the business. Over 1,300 people joined us from Johnson & Johnson, and we think this will be a powerful business going forward. Let me introduce what is in ASP, $800 million business. It's in a market that is $5 billion, mid-single digit growing. Really great long-term secular drivers.
Some of them are noted here. Aging population, which means procedure growth. Most hospitals make most of their money on surgeries. Surgical volumes are growing. Surgeries are getting more complex. Medical devices are getting more complex. There's more lifestyle surgery going on. As the medical devices get more complex, they have more moving parts. Low temperature terminal sterilization using hydrogen peroxide, where we're the market leader, is the only sterilization technology that can be used for sophisticated medical devices like robots, and that's because there's rubber parts and plastic parts and valves. A scalpel is sterilized through steam. You just steam it. These sophisticated medical devices require low temperature terminal sterilization using hydrogen peroxide, and ASP is the market leader in that. There's also high growth market opportunities. As the compliance environment moves into high growth markets, those represent significant opportunities.
Finally, with hospital-acquired infection detection as a key priority for every hospital CEO, and if you talk to any hospital CEO, they'll say it's one of their top priorities. Infection prevention detection and prevention infection, especially in surgical procedures, is a top priority. The regulatory pressures get more, the audit trails get more important, the tracking of the workflow gets more important. We believe these are strong long-term drivers for this business. There's meaningful runway as well to add to this platform as we go forward. The customers here, I mentioned, are hospital sterilization departments and ambulatory surgical centers. It's in the basement of the hospital that these technologies, again, behind the scenes, making sure that surgery is safe. It is a global business, and a significant opportunity. Over 11,000 hospitals in 50 countries is what the footprint of this business looks like.
Fortive's presence here in healthcare, Wes already talked about this. On the right-hand side, the Fluke Health Solutions, biomedical engineers keeping patients safe, processes efficient, the patient dose optimization work that they're doing, these are very similar workflows selling to very similar economic buyers inside hospitals. We know about that through really years and years of great customer work that's been done inside Fluke. Now we're adding the ASP business, and these two combined really look very similar. They look like full solutions players in the critical hospital workflows. As the tagline at the bottom says, "Protecting patients and staff by ensuring medical devices are operating safely and effectively." That's what these businesses are about. When you care about hospital-acquired infections, you care about your patients, and you care about your workforce. These are priorities for hospital administrators.
Now let me give you a peek under the hood of what ASP is. Again, an $800 million business. About 70%-80% of it is terminal sterilization. The products, the consumables, and the service that go with it. This is this hydrogen peroxide, low temperature terminal sterilization. There's also a business called high-level disinfection. High-level disinfection is used for products like an endoscope. When you have an endoscopy, it's disinfected, not sterilized. ASP has a leading position in both of these, capital consumables, software, and services. 80% of the business is recurring revenue. It's either consumables or it's service. You'll see some of this if you're at the desk out there. You'll see some of these consumables.
These are millions and millions of units of consumables per year, between the hydrogen peroxide cassettes, which are proprietarily locked to the hardware, or it's the biological indicator that tracks the efficacy of the sterilization, or it's the biocide that gets used in the high-level disinfecting process. These are consumables that have high margin recurring revenue streams for us and with our customers. Really a beautiful business that way. The growth drivers, this is really the foundation of the business that we got and we're building on. Great growth drivers on the left. I've already mentioned the hospital-acquired infections, aging population, more procedures, more sophisticated technologies. On the right-hand side, what you see here is really the competitive advantage. Let me just march around this just for a second.
H2O2, that's hydrogen peroxide, the technology, this team invented that and commercialized it and made it safe and made it so it didn't destroy medical devices. There's core intellectual property and knowledge. There's more validated devices. We have 3 times more medical devices validated with our sterilization technology than the competition. When you bring out a medical device, it has to be FDA certified and validated. We have 3 times more than the competition does. This is important because a hospital has many, many doctors, many, many different kind of medical devices, lots of devices coming into the marketplace. Branded and proprietary consumables. Our consumables lock to the hardware in most cases, and creates a recurring revenue stream with a great brand equity. Then a global footprint, 50 countries, 11,000 hospitals.
Leveraging the Fortive global footprint, we think, this will add to our global footprint, there's real opportunities here. I wanted to now talk about the digital strategy and what's really driving the digital strategy. If you were out of the booth there, you would've seen the access technology. This allows you to take a biological indicator, which you put in the sterilizer, and after the sterilization cycle, you take it out, you put it in a reader, and it tells you whether the sterilization cycle worked or not. It's a requirement. You have to do that. You must use biological indicators. It's required by regulations. We make those biological indicators, but we now have an access technology that keeps all that data connected.
For compliance reasons, to improve the workflow and productivity, to give you an audit trail of medical device sterilization, having a connected device strategy is essential. Again, with the business, we got this, and we think there's lots of runway here. As you look at tracking devices, as you look for opportunities for improving the workflow, we think that there's really ways we could take this technology and move it forward. It really is all about improving the processing outcomes. These are high-velocity organizations. Sterilization departments work 24 hours a day. They have dozens of people working in them. The operating theaters are operating all the time. It's a real process you've got to optimize, and getting the outcomes right while being highly efficient is important. These technologies allow us to be able to do it.
We think there's lots of runway in cloud-based analytics and moving forward those workflows to help our customers be compliant, auditable, and highly productive. Now ASP moving forward. As I said, we own the business, started operating it on April 1st. How are we going to go forward? It is about creating competitive advantage through FBS. I wanted to just highlight three areas. The first one is around commercial execution. We believe we can accelerate growth in this business. We can accelerate it using our funnel management and our digital marketing tools in FBS. Really understanding what's in the funnel, how do we convert the funnel, how much consumables attached do we have, how do we optimize that, how do we improve coverage in sales, how do we drive demand digitally?
We think the first thing that we can do is accelerate growth with FBS. We believe we can also accelerate growth in high-growth markets. I'll go to the bottom one here, high-growth market opportunities. We have a great footprint. We know how to grow businesses in high-growth markets. Finally, accelerating innovation. I talked about some of this with the Product Realization platform, but the FBS tool set and the power of FBS to accelerate innovation is very substantial, and we think we can use this with deep customer immersion, rapid experimentation. We have a great new product coming out in high-level disinfecting called an automatic endoscope reprocessor. It's that box there, brand-new product, going through FDA approval and launch as we speak, and we can move this forward with both this hardware as well as digital technologies. This is the integration update.
Just to work through this, April 1st, we closed the transition. We have a strong cross-functional team in place, an operating company president operating the business, and a complete team operating all the different functions. A significant effort went into making sure that we get the corporate structure right in support of this business. As it's outlined here, 40% of the $70 million targeted synergy is in lowering the corporate overhead associated with operating this business. The next set of synergies that we can go get are associated with cost savings, leveraging FBS around reducing cost of materials, improving logistics costs, and other places in the cost structure where we can reduce costs and improve synergies. We're confident of that $70 million and execution of that. To wrap up, as I said at the very beginning, this is a great business, really great.
It's got great secular drivers. The business model is elegant and powerful. We have a great brand position to build upon. We're focused now on the company having joined, and standing it up, and continuing to work through the rest of the integration tasks that are ahead of us, and accelerating growth and leveraging FBS to really make this the beginning of a great health platform. Thanks very much.
Quite the two sides of our portfolio. Tech that's been with us for several years, yet you still see the power of FBS in years eight and nine, where we're doing some wonderful things and demonstrating the power of FBS, the development of software. The innovation capability that we've accelerated through this new platform is exceptional. We're really excited about the launch of the 3 Series and 4 Series that's out here very shortly. Hopefully, you also take from Pat his energy around ASP. While a complicated transaction, we're incredibly excited to have that team join Fortive. We think there's wonderful opportunity for the business. The business today is already a great business, as Pat pointed out.
While we still have some work to do on some TSAs and things like that, really excited about that business to be part of Fortive and what we can do not only with the power of FBS, but also seeing ahead with those great secular drivers. I think it's a great example of the kind of market work that we do at Fortive when we think about M&A, particularly when we think about new businesses and new markets, where we do that market work to really understand the foundational aspects of the market, the secular drivers that'll drive that market for a very long period of time.
Then find an opportunity like that where we can be creative and we can create real value through what is a very complicated transaction with the power of our experience that has done a lot of these kinds of transactions over the last several years. We're going to transition here. Martin's also going to pitch a double header here. We're going to talk about Transportation Tech as well as Franchise Distribution. I think great examples of big business. This is really all of industrial technologies today. Really excited for you to hear a lot of the things we're doing in that platform. Those platforms. Martin?
Thanks, chairman. Good afternoon, everyone. I'm excited to have the chance to talk to you about the Transportation Technologies platform, then I'll follow on and talk about the Franchise Distribution businesses. The businesses in the Transportation Technologies are providing transportation services to fleet and transit operators, municipalities and cities, as well as a range of fueling solutions and systems, principally to gas stations, but also to other fueling facilities. It's a $2 billion platform, finished up 2018 at that range, in a market which is growing at mid-single digits. If you look at the chart on the right-hand side, you'll see that over 50% of the business is in the U.S., but this is actually a little bit misleading. We've got what is the most global business within Fortive over here, and the U.S. is somewhat overweight because of the strong EMV market that we're experiencing in the U.S.
We have incredible penetration and incredible opportunities in high growth markets, particularly India and China, and we'll talk quite a lot about particularly India as we go forward over here. There are a lot of opportunities in those high growth markets, with wonderful positions, with local teams in place and strong products and service capability in those markets. The market is, in many places, driven by regulations. Not just the fueling market, but if you look at the market for transit solutions or truck drivers, and increasingly stringent regulatory environments covering safety of those aspects of the business. Overall, we've got a suite of businesses over here that we're very excited about. I think a tremendously long runway of what we can do with these businesses.
Not just, as I say, in the fueling space, but we're looking at adjacent markets, particularly where those markets intersect the growing trend of urbanization and congestion in cities, the challenges that bring to movement of traffic and the safety of traffic. Those are all areas that we think we can continue to build on, in addition to what we have already in this business. I'm going to talk about the strategy of your business for a moment. While EMV, and I'm going to give an EMV update in a page or so, while EMV remains a very strong near-term opportunity for the business, this business is about so much more than EMV. EMV is a U.S.-only opportunity. This is a very global business looking at opportunities well beyond EMV. Firstly, the legacy fueling business still has tremendous runway.
We'll talk more about that again on subsequent slides, but we still have tremendous runway in this business, particularly when we look at high growth markets. Just to give you some idea of the scale of those opportunities still, the government in India has committed to building somewhere between 40,000 and 60,000 new gas stations, 40,000 to 60,000 new gas stations over the next five years. That is not atypical. Little bit larger scale than many other places, but that type of growth is not atypical still in high growth markets where the car population's evolving rapidly and road and transportation infrastructure is still being built out. Within those markets, we are especially focused on the automation end of our solution set, connecting the gas stations, helping the management of those gas stations run those networks. We've achieved a very strong position in that automation set.
In high growth markets, automation covers the C-store part of the market, we still see a lot of growth runway in that automation as well. Secondly, hopefully you had a chance to look at the display out there where we showed you some of our solutions in the fuel supply chain, we have a range of connected solutions that we're building on top of our hardware platforms that exist in gas stations. We have an incredibly strong install base in multiple markets, and we're building out connected solutions for the forecourt, for the C-store, and increasingly for the fuel supply chain and distribution end of the fuel supply business. Thirdly, as I'm sure you're all aware, the mobility infrastructure is changing rapidly. Electric vehicles are coming, that creates a set of opportunities, also some threats, I will cover this in a little bit more detail.
Principally, we see a lot of opportunities on top of a very long runway still for the traditional fueling infrastructure. Finally, there are these future vectors for our business. Smart cities, this build-out of urbanization, the congestion, the opportunity to work with municipalities and transit authorities on relieving and managing that congestion via smart cities, and also the opportunities as we look at our telematics business to participate more broadly in a supply chain outside of telematics. All of these are future runways that we find very attractive and give us a long, I think a very healthy future for this business. EMV continues to be a very strong near-term growth driver for us. We continue to be on track with what we've predicted. 40%-45% of the market currently has EMV-capable solutions installed. We see that increasing to just over 50% by the year-end.
Very much on track with what we've been predicting. The regulations are supposed to be complied with by September, October of 2020, we don't think that's going to happen. We think that firstly, only around 80%-85% of stations in total will ever get into compliance, there will be a tail of them that continue past 2020, well into 2021. We are very excited about our market position in EMV. I think we continue to outperform the market. We have a strong solution set, and a strong position connecting the forecourt into the C-store inside, and this is helping us really, as I say, outpace the market. We spoke about advancing our automation strategy, I'm going to spend a minute just talking in a little bit more detail on what we're doing over here, both in high growth markets and in emerging markets.
The need for increasing automation is being created by increasing size of networks in high growth markets. We're seeing consolidation happening, we're seeing rapid growth happening, most of it's happening not with single site operators, but with people operating larger and larger, frequently cross-regional businesses. That complexity really needs better systems in the station. Those markets also have some challenges in them in terms of maintaining control over fuel, maintaining control over cash. A lot of opportunities to build out systems to help run these operations, both locally on site and remotely back in head office locations. We have an outstanding opportunity on top of the Fortive acquisition we made. They had a very strong high growth market platform for these products. We've been able to add tremendous footprint that Gilbarco had in these markets and use that to continue growing at north of 20% in these markets.
We have an install base of over 35,000 sites, with just a lot of headroom to continue expanding that. In developed markets, there's actually an equally exciting opportunity. We have an install base of over 70,000 gas stations with our systems in the convenience stores. That opportunity is growing at high single digits, and we really think we can continue that growth for a period of time. The technologies that retailers in general, not just in C-stores, but the retailers in general, are using to get closer to their customers, to interact in a more personalized way with their customers, and also to improve productivity, are coming into the C-store, which is driving technology refreshes, and we are exceptionally well positioned to continue capitalizing on this. We're very excited about a new product that we've recently launched, a tablet-based SaaS offering, and we're getting very good traction.
It's targeted at single site and small retailers. We're getting very good traction with that product as we combine it with our EMV offerings into that market. Some specifics on India. I mentioned the wonderful opportunity over here with 60,000 odd new stations due to be built over the next three to five years. We have built up a position over there where we today have over 50% market share in that market. Unique opportunity to be able to reach all 65,000, and we'll have the opportunity or the ability to reach the 100,000 stations when it reaches that position. We've built up our business. At the end of this year, we should be north of $100 million in India, and we've done that through a mix of inorganic acquisitions, as well as a lot of investment around our organic growth in the marketplace.
This is one of the most challenging markets that we operate in, I'm very, very proud of what we've been able to achieve in this market, and the opportunity that it's got for us in the long term. Staying with the theme of India for a moment, I want to talk about FBS over here and how we've used FBS in this very high growth environment to continue improving our QDC, our quality, delivery, and cost in this business. While we have grown the business, as I said on the previous slide, to over $100 million, or will be at over $100 million, and while we've increased our productivity in dispensers by over 25% measured on daily production, we've at the same time been able to reduce our inventory by almost 60%. While we've done that, we've reduced our lead times by over 50%.
Just I think a tremendous example of how we've taken FBS tools, taken them into a market, really had a local team just become such proponents and zealots around FBS, one of our strongest FBS teams, and it's just highlighted in this type of result that we've been able to achieve. The world of mobility is changing. I think we all hear about it, we all read it, we all see it. This creates both opportunities and threats for the business. The threats, though, are very much a long-term threat. Even the most optimistic forecast for electric vehicle penetration sees EVs being at somewhere around 20% of the total number of vehicles on the road by 2040. 2040, still looking at somewhere around 20% of total vehicle population.
That means that the runway for traditional internal combustion engines and everything to do with traditional internal combustion engines still has a significant time to run. I think that's the first point I'd like to make over here. Turning to the opportunity side of it, we're very excited about the investment we made in a company called Tritium about six months ago. Tritium are market leaders in high speed DC, direct current, high speed DC charging, to be used in public places. They've achieved a very strong position in this market from their base in Australia, operating in over 26 countries, but the majority of what they're doing is in Europe, where we see the market evolving more rapidly, certainly than North America.
Infrastructure in Europe is being built out well ahead of the car population, they've been able to achieve a very strong position in that marketplace. If you look at that picture on the bottom right-hand side, it is a photograph from an actual Tritium installation at a charging network called IONITY. IONITY is a joint venture between a number of major automotive OEMs, BMW, Daimler, VW, and Ford, who've put money in to create an EV infrastructure to facilitate their selling electric vehicles in Europe. We are one of only two suppliers to that network, and supplying to them as well as a number of other customers in Europe has put us into the leading market share position in Europe. Very excited about this opportunity. GVR is taking the product range and bringing that product range into gas stations.
Gas stations won't be the only venue for high-speed charging, they certainly will be a very important venue for high-speed charging. We bring unique capability to bring it into there, integrate it into the rest of the gas station equipment and solution, and really help gas station retailers continue to attract fueling customers irrespective of what type of vehicle that they're driving. Very excited about this. I think there are multiple opportunities for the build-out of this mobility infrastructure that go well beyond just the charging devices themselves, we look forward to continuing to participate in this in the long term. I spoke up front about the trend of increasing globalization, increasing urbanization and increasing population moving into cities. It's creating a lot of challenges around congestion in cities.
In fact, ride sharing, while you might think it's actually relieving congestion, it's actually adding to the congestion. The transportation network companies, Lyft and Uber, have added a tremendous number of vehicles now into the cities, and congestion is actually increasing. I think all of the urban areas are struggling with how to deal with this. A lot of them are turning to investing more in mass transportation. Increasing safety, helping control that congestion is something that we think is a long-term opportunity for our business. We made an investment a couple of years ago in a company called Global Traffic Technologies, GTT. A small first step, but an important first step for us.
It enabled us to put our toes in the water, get a good understanding of the dynamics of this market, and really use it, we believe, as a springboard, hopefully, to expand over here in the future. What GTT does is it provides prioritization for emergency vehicles. Improving response times for ambulances and fire engines through urban areas, both large and small urban areas. It has a leading market share position in the U.S., with 3,100 customers and represented in 41 of the 50 largest cities in the world. That 41 of the 50 Sorry, in the U.S. That 41 of the 50 largest cities is a really important position to have because it gives us a springboard to continue working with those municipalities with other solutions, either organically or, again, inorganically.
We have, in fact, taken the emergency vehicle solution and already expanded the product set, where we're using that roughly the same solution. We've built additional capability around it to help improve on-time delivery of buses. Really speeding buses through the city centers to make them more attractive to consumers by sticking more closely to the schedules. We've already had success with that solution in a number of major metropolitan areas, San Francisco, New York City, Montreal. Some truly major metropolitan areas we've been able to take the solution. Again, I think it's a great springboard for us to continue developing and evolving this part of our business. Teletrac Navman, our telematics business focused on solutions for driver productivity, driver safety, monitoring of fuel consumption. That business is again, a global business. It is based in the U.S., Latin America, U.K., and Australasia.
As we've communicated previously, we've had some difficulty with that business in the U.S., and a lot of our focus is on stabilizing that U.S. business. We've seen good sequential improvement in churn through the first quarter, and we are quite confident that we'll have this business stabilized and turned around by the end of 2019. We're leveraging FBS to help us do that. We're making, as I say, good progress in that. While we're doing that, the business remains very attractive in other parts of the world, particularly if we look at our Australasia business. We've had 10% growth CAGR in that business over the last three years. We've seen average selling prices per unit increase by 15% over that same period. This is a business where across the industry, typically those prices are falling. We've also seen industry-leading churn statistics for this type of business.
I think this just excites us a lot when we see what we can actually do with this business, how we can grow the business, grow the solution set in the transit industry, and integrate that with the broader set of solutions we have across our transportation technologies business. To summarize, EMV continues to be a good opportunity for us, but I'd remind you that it is just a U.S. opportunity, and the business is about so much more than this. Gilbarco Veeder-Root is over 150 years old.
It's reinvented itself a number of times. I think we've got a very good opportunity and set of opportunities to continue doing this as we pursue new mobility opportunities in EV, as we continue to pursue opportunities in smart cities, and getting deeper and deeper into the workflows of the gas stations that we currently serve that, as I said, still have a very long runway. I'm going to move seamlessly from talking about fueling vehicles to talking about servicing of vehicles within our Franchise Distribution platform. The two businesses in Franchise Distribution, Matco and Hennessy, both provide solutions for the automotive aftermarket. Hennessy particularly focused on tires and wheels, equipment to service and maintain those, as well as maintenance services to keep that equipment up and running.
Matco is a distributor of high-end tools to the automotive aftermarket, also a distributor and seller of diagnostic solutions to the same market. We use a network of about 800 highly engaged, highly committed, independent franchisees to reach that market. The business in total is about $600 million, and it's in a low single-digit market, almost exclusively U.S.-focused, as you can see from the chart on the right. One of the strongest growth drivers for this business is the increasing complexity of vehicles. The cars we all buy today have an array of sensors, millions of lines of software code, and the tools that are needed to service those vehicles, and the skills that are needed to service those vehicles, are completely different to what it used to be 10, 15, 20 years ago.
This really creates, I think, an ongoing opportunity for Matco to not only build on their very strong traditional tools businesses, but to build a connected diagnostics and information business to help automotive repair shops take care of their customers. The strategy of the business is very much focused on adding software and services to get us more deeply into those workflows in the repair shop. Not only is there this vehicle complexity that I've spoken about, but we have a unique set of channel strength over here that allows us to access those markets. The automotive repair aftermarket has a tremendous trust in the Matco brand and the Matco channel, which is really going to allow us to build on the solutions that we're bringing for diagnostics and help us accelerate growth with our digital and connected offerings.
If we look at some of the dynamics within this automotive aftermarket, I've spoken about the complexity of vehicles, but I really can't emphasize enough how complex this is. If you happen to be an independent repair shop looking at multiple different brands of vehicles, you potentially need a whole array of different tools dedicated to each OEM. We think we can bring solutions that help solve that problem in a cost-effective and highly productive way for these shops. There's also another dynamic that's very important over here, that there is actually a shortage and an increasing shortage of qualified technicians. Very few people are entering the market, or they're entering at much more reduced rates than historically. As the existing population of mechanics age out and retire, we're finding fewer and fewer new people entering the market.
This, together with the fact that the vehicles are more complex and therefore take longer to repair, is creating real productivity pressure within those shops. Again, I think this creates an opportunity for us to bring a set of tools, diagnostic equipment, and connected solutions to help solve this productivity problem and overcome the challenges of too few trained technicians. We are, though, not only innovating in the diagnostic area. I want to make sure that we don't forget the tremendous job that Matco has in innovating within our traditional tools. There are four examples on this page of new tools that Matco's bringing to market, each of them innovative in its own way and unique to Matco, and helping mechanics do their jobs more efficiently. I want to highlight one example over here on the top left-hand side, the ball joint press that we've just launched.
Not only is it a unique Matco advantage that's patented or unique Matco tool that is patented and is going to drive significantly greater productivity through its ease of use for doing that job. Also, just to give you some idea about the excitement that the Matco brand creates in the market, we launched that product at our expo earlier this year. In the three or four months since the product was announced, we've had four and a half million hits on our website looking at this product, waiting for its launch. Just to give you some idea of the overall power that this brand have and how many people we've got that are interested and looking to buy the tools. The Maximus family is the diagnostic family that I was talking about that we're bringing to market.
I want to talk for a moment about how we've used FBS to evolve and develop that platform. We undertook an intensive effort over a 90-day period to really focus on diagnostics, look at how mechanics were servicing the vehicles, what challenges they were having, gather that VOC, and then rapidly cycle through product prototypes to bring back to the market to see that they would work. We now have a suite of five products focused on diagnostics and diagnostic repair. We were able to launch those five products in about five months. This typically would have taken us a number of years to do, but through harnessing FBS, we were able to rapidly innovate and bring those products to market, and we have a very excited distribution channel and customer base who are looking to these products to solve real problems for them.
I saved perhaps the most exciting aspect of our diagnostics business for last. Not only do we have the hardware products that we're going to sell through our channel to the mechanics in the shop, but we've created a digital marketplace where the automotive technician can connect directly back to Matco and use the hardware that we've sold them in a software-as-a-service model, either through a monthly subscription or a single-use charge type environment. Matco will now be benefiting directly from each time a car is serviced. When a mechanic is presented with a car, they'll connect their tool to it, connect that tool to our shop. We'll know what tool it is, and we will run the diagnostics for the mechanic on that tool.
This gets past the problem of the mechanics needing multiple different tools for different OEM brands, because we can do it with one piece of hardware and multiple sets of software back in the business. We have a range of tools, whereas previously we only had one. I think this evolution of this marketplace and the evolution of our ability to deliver a services-based business on top of the hardware we're supplying, will help ensure a very exciting growth future for Matco as we go forward. In summary, the vehicle complexity and the shortage of technicians really is creating an opportunity for us to create a connected tools business. The growing line of diagnostics, which we can connect into shop workflow, is really going to help us continue this wonderful business and this wonderful franchise that we have in Matco.
We absolutely shouldn't forget the traditional tools business that we have. That still, again, has a lot of room for innovation and a lot of room for growth for us for many years to come. Thank you very much.
Thanks, Martin. I think in Transportation Technologies, we're really excited about the breadth of opportunity. You see that obviously we focus a lot on EMV. It gets a lot of press. I think it's always important to note, to come back to Martin's points around Gilbarco's an incredibly global business. It's really our most global business in the sense of capability in every country around the world. The ability to continue to leverage that, I mentioned in my remarks around what we've done in India. Still a global footprint to build out, but yet also leveraging some of these new technologies and mobility to really continue to transform the business as the mobility infrastructure transforms.
You see that in Spades, whether it's the investment in Tritium or what we're doing here with our acquisition of GTT, which is small business, but really helping us better understand the smart city platform and the go-to-market that's required to be successful in that market. Matco continues to hum along. The innovation is incredible. Has always been a strong business for us, a great profit generator for us. Hopefully you saw at the trade show the opportunity that we have with Maximus and that platform, which is still very early days. Still a small part of what Matco does today, but a high growth part of Matco. I think it just gives you a sense of how our innovation process can continue to transform even businesses where we might not think those opportunities exist.
Our longest standing part of the business, I think, or one of the longest standing parts of our business is our sensing platform and what we have going on there. I think this is a great bow around the digital day, is to see what Pat Murphy and his team are doing in sensing to really transform their businesses, the product lines there, and building deeper solutions with our customers. Pat's presentation will really give you a sense of that. Pat, come on up.
Thank you, Jim. Well, good afternoon. I'm very excited to have the opportunity to talk to you today about our Sensing Technologies business. This is a business with about $400 million of revenue. As you can see, we serve a very broad set of customers through a very broad set of channels and into quite a few different vertical markets. I'm going to talk about a few of the specific growth markets for us and what some of those drivers are. If you look at hygienic requirements that are impacting our food and beverage markets, and especially impacting our business at Anderson-Negele, a significant driver for us there. Regulatory focus that's happening in patient safety is a significant driver, both for our critical environments business at Setra, and also with our medical and life sciences businesses at Gems.
Of course, all of our businesses are being impacted by connected sensors, and by the evolution of IoT solutions. I'd also like to point out, if you look at the revenue by geography for our business, in Sensing tech, we believe we have a significant opportunity to continue to grow our business outside of North America. From a strategic perspective, when we think about Sensing Technologies, and when we think about the market in general, we think about this value continuum that I have on this page. As you move from left to right on this page, we believe the opportunity for greater differentiation, greater margins, and greater growth rates exists. Today, about 90% of our revenue sits in the space I've identified here as our core market position. Package precision sensors and instruments that are sensor based. We have instruments that measure flow, analytical sensors, pressure.
Right now, in that segment, we do a tremendous amount of our activity of new product is associated with the analytical segment of that business. The analytical piece is actually growing at probably 2x-3x the market average. In our core business, that's where we have a lot of investment happening. If you move to the right on the continuum in both the subsystem and the systems area, about 10% of our revenue today is in that segment. A couple of examples that I have shown here, the Setra FLEX is a monitor and control system that's used in critical environment spaces. These would be operating rooms or isolation rooms in hospitals. The other image I have there is actually a fluid management system from Gems Sensors. This system is used to do very precise dosage in IVD drug therapies.
If you go to the far right, you'll see IoT, straight IoT systems and solutions. I mentioned a great opportunity for our business, we have quite a bit of our investment happening in this space. I'd like to walk through about, I think, three examples today to give you an example of what we have going on in this space. The first example is the AcuBin bulk inventory management system. This system was launched earlier this year by Venture Measurement, which is part of our specialty products business. What we mean by bulk inventory is we're talking about physical material. Not liquid, not gas, but physical product. In agriculture, that could mean grain in a grain silo. In poultry farming, that means feed for chickens, also in a silo environment.
It could also mean plastic pellets that are being loaded into a plastic molding operation as well. I have pictured here a dashboard of one of our customers, which happens to be a plastic molding operation. In this operation, they have nine different silos that keep plastic pellets and keep their operations running. This system gives them continuous information about the amount of materials they have in their incoming bins. It gives them information about their consumption usage rates, as a result, gives them a very specific information about when they will run dry of material. The system will provide inputs directly to their material organizations in the facility that need to replenish that material, it also sends notifications to their external suppliers, letting them know that they need to replenish that material as well.
Another aspect of this, which wasn't immediately apparent to us, is the safety aspect of this. Today, it's a very physical process to go out and look in a silo, for instance, in an agricultural application. Sometimes people get up on ladders. It can be a very dangerous situation. A lot of our customers, the primary reason that they're choosing to select our system is from a safety enhancement perspective as well. We launched this in 2019. As I said, we believe that the market opportunity here is around $250 million in opportunity. The second example I want to talk about is lubricant analysis at Gems Sensors. A typical facility we'd be talking about here is an industrial facility, especially useful in facilities that do a lot of machining.
If you've ever seen machining operations happening in an industrial plant, oil is used both as a lubricant and a coolant in those applications. If you have a facility that does a tremendous amount of manufacturing, they use a lot of oil over time. The breakthrough here is the proprietary technology that we're bringing to this, to be able to give continuous visibility into lubricant condition. Today, the way this works is that people use time-based. They say the manufacturer of this equipment suggests that after 30 days of use, you replace this lubricant. They go and do a sampling where they have to stop the production, they go and take a sample of this lubricant into a lab, sometimes an external lab. Maybe they have internal capability to do it.
Nonetheless, it takes the productivity of the line down while they check whether the lubricant is actually still good. The breakthrough there, again, is being able to give continuous information about the remaining life of that. It keeps more uptime in the facility. For facilities that use a lot of oil, being able to know exactly when it's starting to break down and only changing it when that happens. We have customers that we're talking to that believe they probably will use about 30% less oil under this system. Really exciting for us. The third example is around our critical environments monitoring system at Setra. I mentioned a moment ago that the Setra business has the Setra FLEX, which is a monitor and control system that's used in an operating room. It's available there for the nurses and the doctors who operate there.
What we found through our VOC is that there is a lot of demand for this information for other personas in the hospital environment. You talk about facilities management, in terms of having that availability for maintenance activities. Probably most importantly, and the place where we found a lot of desire to have this information available in a broader sense, is through the infection control experts. Every hospital today has a significant effort going on there. This solution is about taking information that we already are bringing into the Setra FLEX and making it available to a broader set of users in that environment. We're actually working in conjunction with Accruent. Accruent is also in this space. They actually monitor assets, physical assets in this space. Also, we're very excited about the addition of ASP.
If you saw the ASP presentation outside, you know that ASP has a lot of expertise in this market as well. Just in summary, we have a business here that's very, very strong in its core position. Again, leadership positions there. We are focused on growing the portfolio, as I mentioned, especially in the analytical spaces. We have very specific verticals that we're focusing on that we think will help accelerate our growth, and we have significant opportunity to continue to expand our business in high-growth markets. Everything that we do, whether we're talking about internal investments or external investments, is based upon our ability to move up that value continuum that I talked about.
Finally, FBS tools, whether we're talking about the growth initiatives that I talked about or whether we're talking about continuing to expand margins, everything that we do revolves around the use of our FBS tool set. We believe that tool set will be what allows us to make sure we take advantage of the opportunities that I'm talking about today. That's it. I think with that, I'm going to invite up my colleagues to join me for a little Q&A for everybody. All right. Griffin and Ross have microphones, I believe, so we'll pass them around. Scott, looks like you got the first one.
Good afternoon, guys. I think this question is for Pat, Jim, if you want to chime in, feel free. How critical is it for you to build critical mass around ASP? Can you expand geographically and have any hope at all, given the prior owner really had a pretty big footprint? I will just start with that, and I think there will be a follow-up to that.
Okay. You want to go?
Yeah, I will take that. I think we have critical mass. This is the market leader in terminal sterilization. I think this was a small part of a very big company, and now it is a standalone operating company. All the power that you get from clear line of sight, focus and execution, application of FBS, and these strong secular drivers, I think that will be really a meaningful driver for continued or for accelerated growth, as I outlined how we are going to apply FBS, really deploying FBS that way. There is also runway from the point of view of expanding around the workflow, that as we stand up this business, as we do more deeper market work, we are looking for those opportunities.
Maybe just to add on the Johnson & Johnson question. Those individual brands are really important to the business, too. While we think of J&J, most of the business was transacted directly through the business unit, and those individual product brands when you go to the central sterilization lab, they think about it in terms of the product brands as well. We think we can leverage that and build off that. Obviously, Johnson & Johnson's a great brand, I think the offset of that is really the every single person in the organization caring 100% about the end users that we are focused on, I think makes up for that.
Just as a natural follow-up, when you go down into the basement of the hospital, are there a lot of M&A opportunities that you see when you look across and say there's plenty of other things you can bolt onto this type of an asset?
Yeah. When you're in this environment, what you see is really a workflow that has not been optimized. It's a crowded space. There's a lot of people, there's a lot of materials, there's a lot going on there. Critical requirements in terms of compliance and regulatory, what hospital administrators call never events. That's a never event. That means it can never happen. A lot of focus on that environment, but plenty of workflow optimization solutions, as well as other product categories that sort of travel with this product category in either central sterilization departments or ambulatory surgical centers, which is a different deployment environment.
I forgot the mic.
Oh, here.
Thanks. Stick with Patrick Byrne, if we could. Just really interested in the new product vitality numbers out of Tektronix. What struck me is that there's such brand loyalty among engineers as to what brand scope they use. When you launched 5 Series and 6 Series, did you get people to switch from brand X to you guys? I was interested in did that increase your market.
Yep.
Second part of the question for Tektronix is, am I correct in thinking that Tektronix has the highest R&D as a % of revenues in Fortive today? Just give us a sense of where that stands and how that's allocated.
Yeah, sure. The short answer is yes, we did gain share in oscilloscopes. We tracked this, as you can imagine, pretty carefully. Our growth rates, it really has accelerated Tektronix results, and we believe that that product vitality has driven those results. The R&D sits about 15% of revenue, which is around industry standards. That R&D is spread across a number of different product lines. A substantial part of it is on this new product vitality and these platforms. As I said, a significant part of it is in software.
Just as a-
Got one more?
One more.
Just as a follow-up, it was really interesting, and maybe Pat Murphy's example of the hospital sensing was picked to show that there is overlap and there are synergies with Accruent, with ASP, that really did come through. Maybe just from the biological indicator, that technology of a sensor fits so nicely with some of the core competency with Fluke Biomedical. Have you looked at that technology, and are there applications, and where might that go?
Yeah. We're just now owning the business, right? We're running it. It is very special technology and biological indicators. It's a deep competency of the team, and there's a lot of intellectual property in how that works. I think we'll be looking at opportunities to leverage that across other markets, I think, going forward. Jim?
I think if you think of the broader, what we're really doing is enabling healthcare here in many respects, right? We're helping surgical centers and more broadly, the hospitals deliver healthcare, whether it's the solutions we have at ASP, what we're doing at Fluke Health, or even with Pat's innovation efforts at our Setra business. How those businesses come together over time, who knows? One of the things I think what's been really strong about us historically, is that we don't let organizational structures or operating company structures be a boundary line to how we collaborate together. It's a core part of our culture. We're certainly, as Pat said, we've owned ASP for a little bit of time, but certainly a number of our professionals who are interested in those solutions are coming together already to start to think about what they might be able to do.
Hey, Jim. Jim, I've got the mic here.
You got it. All right.
Two questions. One on GVR. Hate to ask the GVR question, here we go. You said 50% or so by year-end. We've got the liability kicks in in October. We don't see a big pickup. We're going to be at, say, 55%, 60% by end of 2020. Are we preparing for a big 2020? What are you hearing from customers? The second question is on Pacific Scientific. We got Bezos and Musk plans to go to the moon, colonize Mars, et cetera. A lot of commercial firms. Is this going to remain a sort of a fairly niche business, good growth, et cetera, but fairly niche, or could it really take off? No pun intended.
Good pun, though. I'll start. On the GVR answer, I think there is going to be a long tail. This is one of many compliance-type regulations. Underground storage tanks. There was payment card regulations before the EMV regulations. There was PCI 1, 2, and 3 before EMV. Each of those, we saw a pretty substantial drag on past the due date. We are expecting some pickup in 2020 because there will be some acceleration. That acceleration is quite difficult to predict. We're getting more and more into the smaller network retailers who are out of compliance. The big chains are getting into compliance earlier, and we're getting to the smaller end of the tail. I think that's what's going to cause it to drag out past that date. On Pacific Scientific, the way I would describe it is, there are two growth factors there.
One is just the sheer growth rate associated with commercial space execution. I think that's a meaningful growth. The second one is, this is a networked ordinance control system. This is more than energetics. I think it really does put us in a strong position to own more than the energetics footprint. We believe this is going to be a strong-- this is already a very good growth business, Pacific Scientific EMC, and it will just accelerate growth over the next three to five years and beyond.
Just over here.
Julian.
One question maybe for Jim, maybe Wes, and Pat Murphy. Jim, you delineated on slide 13 the kind of instruments versus software. I guess if I think about the instrument side of things at Sensing and Fluke, for example, they typically sit on a lot of industrial type sites. On the software side, you did deals like Gordian and Accruent, who are more on kind of general, I guess, commercial buildings, for want of a better term, where maybe your instrument exposure is not that high. I was curious, why wouldn't you buy Gordian, Accruent type assets that fit more for the industrial plant floor, and hence can sit on top of the instrument base that things like Sensing or Fluke give you? I mean, are there those assets?
Yeah
do those assets exist? If so, why did you go for Gordian, Accruent instead of them?
Well, we never obviously comment on what else we might do, I think you'd see something like eMaint, which really transcends not only, Wes and I can tag team on this a little bit, manufacturing and real commercial sites. Fluke has a big position in commercial buildings. To suggest that we haven't been in those commercial buildings for a while. Gordian and Accruent are sort of software enabled, and they're a little bit hardware agnostic in some respects. I think there is opportunities to link those solutions. I think how we've thought about separately is we've really seen that opportunity broadly around condition monitoring and the kinds of value propositions that you see in maintenance managers and in facilities managers. A lot of that is overlap in some facilities.
That led us to do the market work in both of those places. I don't know, did I miss anything there?
Yeah, maybe the only thing I would add is that as Jim mentioned, Fluke is very much present in construction, very much present in facility management. It plays in a wide variety of different verticals and markets. Having said that, with both Accruent and with Gordian, there was also some aspect of flag planting into a new workflow from which we can expand further. We build funnel on all the various workflows we're attached to and are anxious to build out all of those platforms.
just a quick follow-up for Martin. Do we think about telematics as kind of nursing that business along, or do you think it's an asset that could get more M&A capital at some point?
I think the space
I think the space around telematics is very attractive. We see telematics as occupying a portion of the supply chain, really, when the goods are in transit. That whole supply chain, I think, is a rapidly evolving area that has a number of attractive dynamics to it. Yes, we would like to build on telematics and grow it. Clearly, we've got a job to finish turning around the work that's underway at the moment, we do see it as a space that we're very excited about and is very attractive.
Martin. Looks like you got the mic.
Thank you. In the last 24 hours, there's been a sharp escalation in the tech war between the U.S. and China. As a manufacturer of electronics test equipment with a substantial exposure to China, recognizing that some of the comms systems exposure's gone out with the divestitures, what is Fortive's remaining exposure to 5G and how should we think about it?
Obviously, we have a good business in China. We've seen to date limited disruption. Huawei is a customer, but as you pointed out, not in any way the kind of scale that might be if we were playing in a 5G network and the 5G expansion. We have some exposure there, and we're still learning, less than, I don't know, 24 hours to understand everything that's going on. I suspect we'll have a little bit of business slowdown because Huawei's a customer, but ultimately not a Fortive impact-like situation at all. Andrew? You got a Or Andy?
You want it first.
Sure.
Just another question on GVR. What would it take for Transportation Technologies to be up in 2021? If you could just highlight key levers. I assume, you did say it's a long tail. Our numbers suggest that there is in fact long tail. If you could just elaborate beyond 2020, what does it take for this business? Because we get a lot of questions about this cliff in 2021.
Do you want me to take it?
Yeah, I think if we thought there was a more rapid expansion, first and foremost, I think we're planning on a sort of 80%-85%-ish kind of penetration. If that number were to go to 90%, say, you probably start to see 2021 being a little bit better than it is. I would say the other part of it is the high growth markets are coordinated in their continued growth would be a nice offset as well. Those probably two things in concert strongly would probably be helpful.
I would just add to that. I think really a lot of the growth potential is coming from high growth markets, we're really seeing just very good traction. At the moment, we're growing almost double digits in virtually every high growth market that we're operating in. We've got some really good traction happening. We see that continuing. I think that's going to take a lot of the focus of the 2021 growth. Then hopefully we can move into some of these adjacent areas we're talking about as well. That will help.
I think Martin and I, we did a European visit with customers and market players, we saw a lot of opportunities around mobility infrastructure where we can play today with current technologies and where there's opportunities. We're working really hard to find those other parts of Transportation Technologies within the platform, both organically and inorganically, that ultimately could negate any sort of impact. I think we never say never, but we're certainly working. Ultimately, we're also looking to minimize the impact on the margin side. Even if the U.S., North America problem gives us a little bit of headwind, we obviously will work really hard to minimize the impact both in the business and the platform. Certainly, we feel pretty strongly at Fortive we'll be able to mitigate that as well.
Jim, I have it over here.
I wanted to follow up with Martin or maybe with Jim on the telematics business in the sense that this is a digital day, right? What kind of lessons have you learned from the issues that you've had in the telematics business that you can apply to all of these software businesses that you've bought sort of moving forward?
There's no question we've learned some lessons. We've spoken about this. Put some technology out there that didn't work as well as it should've done. I should have started by saying, I think the problems we've experienced there and the lessons we've experienced are not unique to technology businesses. I think they'd be very much the same in any of the other businesses. I think we've learned some hard lessons on make sure that the new products you launch really work exceptionally well before you launch them, and make sure that you've got the basic blocking and tackling and service support to look after your customer base. We didn't do that as well as we should have done, and now we are taking care of that and fixing that.
Again, I would just say that we see so much that we like about the business, and if I look in other parts of the world where we've executed better than we did, these are basic execution problems where we've executed better than we did in North America. We see a fantastic business that's increasing market share, growing rapidly, increasing margins, and getting deeper and deeper into that workflow, which creates multiple opportunities for us.
Pat, just your perspective on the pricing in Tektronix, obviously, was one of the pressure points in the quarter. You're introducing all these new products, right? It seems like pricing should be getting better, not worse. I know some of it is tariff related, but maybe you can sort of talk about that.
Yeah. We're seeing good price realization on our new products. That's the answer is that we expect it. We've seen it over the last couple of years. There are some offsetting factors that created some pricing pressure, we really believe that our products and our innovation have been able to drive differentiation and being able to generate the kind of realization. One quarter doesn't make the whole story. We realized a lot of meaningful gross margin expansion over the last several years, every year after we introduced the new products. One quarter doesn't make a whole story, and we believe that the products that we just introduced, or we're about to introduce, will continue that trend of delivering gross margin expansion.
All right. We have time for one more. Jeff?
Thank you. Maybe two on ASP, if I could, please. First on the revenue outlook, it sounded like you had a pretty strong or solid first quarter, 5%-ish type growth, I think. As you bed that down, do you expect any kind of lull in the growth rate for some period of time as you digest the business, or do you see that type of growth trajectory likely here throughout 2019 and onward?
You're talking about ASP?
Yes.
Yeah. I think what we think, last year was mid-single digit growth for ASP. We feel good about that. We think it's probably, though, given the structure we're going to be managing the business in, where we don't run the entire business because of TSAs, we think it's probably closer to low single digit for the next year or so. As we take full ownership of the business, and again, once we get more than 30 days out of being able to run the business and see that, I think we'll progressively be improving the business through the cycle. I think for this year, we'd be looking at probably more low single digit growth.
I was just curious on the synergies, too. A business that's a carve-out that you're folding in, that you're not in synergies of almost 10% of sales sounds like a high number. Some of it, obviously, I think is the wind down of these TSAs and the like, but can you give us a little bit more granularity or comfort on what the synergy opportunity really is? Is it just kind of good old-fashioned Fortive blocking and tackling on supply chain, or is there actually a visible synergy opportunity somewhere in your organization?
I think the synergies form two things. One of them is in the carve-out and the setup of an operating company. We have very specific ways of setting up these operating companies, that each of the functions, for example, the G&A functions, the logistics functions, are set up in highly efficient ways based upon what we know. I think there's a dividend that comes from how you set it up. The second one is, as we apply all the Fortive material systems, which is a whole FBS machine into this business for value engineering, for reducing the cost of parts, for reducing the footprint of indirect spending through FBS. Think about that as the consumables make up most of this business. There's applying FBS into what that looks like in terms of inventory management.
That's a significant part of that, and the logistics associated with that, how many stocking points there are. Those are all places for synergy to occur as we set up the business with everything we know about how to set up businesses using FBS.
I think, Jeff, the nice thing about that, and particularly as we showed that 40/60, with the 40% kind of being the sort of G&A part of what Pat was describing, is we're doing that with no restructuring costs. Typically, when you may buy a business and you would take that kind of cost out, you'd have a restructuring cost depending on when you're doing it. If you're doing it in the U.S. or Europe, you'd have a pretty significant restructuring cost. In this case, it's just setting it up. The cost of setting up is there, but that's a much lower cost than if we were to try to restructure that kind of amount. From a cash flow perspective, we'll be doing this with less cash. We feel very confident. We've spent a lot of time on this.
Pat obviously is very involved in it. Chuck and I spend pretty frequent opportunity to get into what's happening on the transition, and we feel very good about the opportunity to deliver on those synergies. The $70 million's all cost. It's all cost synergies. Any revenue synergies that we would have would be upside to that number. We're cutting it off. I guess our time's up, so good. Guys, thanks. We'll have an opportunity for a few more questions here after Barbara's presentation and our close here. We're moving fast. Thanks for the questions. We clearly have some more opportunities to answer questions after this. As I mentioned, you've got a sense of a lot of the things, a lot of examples of FBS in the businesses through all the operating platform presentations.
Really, the power of FBS really comes out in the evolution of it. Barbara's going to come up and really give you a broader sense of what FBS looks like, and how that's going to really create continued value in the businesses, not only in our current businesses, but the new businesses as well in the portfolio. Barbara, come on up.
Good afternoon. Everybody good? I think I have the best spot in the day because you could tell from the stories my colleagues told how ingrained FBS is in everything that we do. Jim mentioned that part of what I'm here to do today is help you understand how this change has occurred over time and will continue into the future. I know that you understand that FBS is a series of tools, and we've had that for forever and forever. It's really much, much more than that. We think about FBS as the underpinnings of our values that you see here. Maybe even more importantly, it's this mentality that we have around today needs to be better tomorrow, and it needs to be better the next day.
Even when things are going well, we always seem to think that there are ways that we can do things better. If you subscribe to that, and the core of that is within the FBS system itself, of course, FBS has to continue to evolve. We've been at this for a long time. We started practicing lean principles back in the 1980s. With that, if you can remember back to what the portfolio looked like, the vast majority of our costs sat in the factory. When you think about what we needed to be good at the time, we had to be really great at taking costs out of the factory. As the portfolio has evolved, we've started to augment the skill set.
For the last 10, 15 years, we've been adding to our growth tool set, and that really happened at a time when the portfolio changed. You can think about when we started to get higher gross margin businesses into the portfolio, when R&D spend, sales and marketing spend started to become a bigger part of the P&L. Of course, we needed to apply those same principles of continuous improvement there. You started to see the adoption of things like voice of the customer or funnel management or digital marketing, and as you get into more recent history, of course, you get the optimization of SaaS and subscription, more broadly defined models.
On top of that, the leadership side, because we know that our ability to grow into the future and create the kind of business that we want to create over the long term is highly dependent on having the talent developed to be able to continue to drive improvements into those businesses. We've really been at this evolution thing for a long time. We talk a lot now about how the Fortive portfolio has evolved over the last two and a half, three, coming up on three years. In truth, we've been practicing continuous improvement of continuous improvement for decades. You see that when we look at the tools, and I hope you got a sense today from my colleague's description, in particular, about how the tools are being applied in our software businesses. We can think about that in two different ways.
There are some tools that we have that apply equally across the businesses that we have, and you might think of that as a horizontal look. I mentioned some of the ones before, if it's voice of the customer or funnel management or what have you, those tools are pretty important for our businesses, whether you're talking about Sensing Technologies or Fluke or Tektronix, or talking about some of the newer additions like Accruent and Gordian. We also think about the vertical, and these tools are specific to software. In some cases, the companies that we've acquired have brought expertise and knowledge base with them. In some cases, we've developed this on our own, and we usually try to see where we can put those together. Pat Byrne mentioned before, Tektronix is the operating company that has the greatest number of software engineers.
They're doing phenomenal things today that you saw Pat describe around bringing lean software development tools into Tektronix, and we're seeing that in the new acquisitions as well, with some pretty astonishing results when you consider we're getting to market, in some cases, twice as fast with far fewer defects. If you think about where we want to take that over time, we're blessed with this great portfolio of market leading positions, fantastic brands. As we look at those and making sure that they will serve us well into the future, we have to think about the environment we're in. The pace of change is much, much faster than it was five, 10 years ago. Technology disruptors are everywhere that we look. New competition coming in from the sidelines. All these are important.
We think as we continue to grow Fortive for the future, that we've got to learn how to get into this newer area of what we might call disruption. Places we're applying new technologies into new markets. In some ways, what we want to do is bring a startup mentality into Fortive. If you can imagine for a second, taking the goodness of FBS that you've seen over so many years around an execution capability and infusing that with a startup mentality so that we can have more of an ambidextrous feeling to us as we continue to develop this company. One of the tools that we're doing that with today, we've called Growth Accelerator. You've seen that sprinkled in the slides that you saw before.
I want to explain what this is a little bit, because this comes into how can we be more agile? How can we be faster? How can we learn to manage and take on more risks? How can we be more inventive? What we basically start with here is a broad view out in the marketplace with customers and non-customers. When we talk about immersive VOC, let me give you just a quick sense. We have been in the hospitals watching people get scoped to see how equipment gets sterilized and cleaned. We even watched somebody remove a kidney stone, if you can believe that. We've been in consumers in their cars when they go and fill up their gas tanks with gas. We've climbed to the top of windmills to see what it's like to maintain clean energy.
Our teams are out there, they're listening, they're questioning, they're observing. They're bringing together a lot of different data points to really understand those workflows and understand the problems we're solving. They're digging deep, not only into the functional requirements, which is how you might typically think an engineering type firm could describe this, but also into the emotional and the social sides of our customers' needs. From that, what we're starting to do is develop a solution set. In the old days, we might come up with an idea and take it out to the marketplace and try to commercialize it. Today, what we do is we take a portfolio of solutions out in the marketplace with prototypes, and we get fast feedback. We've literally taken drawings that have stick figures out to the marketplace.
Funny how customers are willing to throw up on stuff that has stick figures on it, because it's not quite as baked. We've done A/B testing, we've built foam models, we've done 3D printing. We've taken all kinds of stimulus out in the marketplace so that they can give us feedback on whether or not we're solving those problems. Once we do, we start to have great confidence that what we ultimately bring out into the marketplace is going to have great traction and allow us to grow faster with less risk. We've gone through a process that we call Journey with about 20 teams so far. In this scenario, we take a team of five or six people, these two pizza teams, out of their jobs for about a quarter, and they go off to do this work.
If you think about what we're trying to do here and results to date, out of these 20 teams, we have 14 of them that are ongoing with work, and nine of the 14 have actually gotten revenue, meaning real customers have paid them real money for real products or solutions. One of the keys here also is to kill the zombies. You hear about that sometimes. Too many zombies walking around, and we know if we can get better at killing things, we can double down then on those ideas that have more merit. We've killed about 20% of the ideas that have come out of this process. When I think about having nine teams getting to revenue about 50% faster, chasing about $1 billion of addressable market, that's pretty exciting.
We're taking these principles and these tools and deploying them across Fortive as well. Not everything has to be a full-time team for 13 weeks, but we're learning how to do this when we're doing new product launches. We're learning how to do this in other places where there are uncertainties. Early days, we like what we're seeing. We just kicked off an additional six teams this week, and we'll continue to learn about how to put these programs together for great results. I want to share with you one example of what that looks like in practice. You heard some before from my colleagues. Pat Murphy just shared a couple with you, but I wanted to tell you the story about a team called Rust Busters. Rust Busters was a team that Veeder-Root put together.
One of the things that's happening in the world these days is with some of the new fuels comes greater aging and corrosion into the underground storage tanks. If you go out into the marketplace, customers are very concerned about this. You can see from the pictures behind me what clean looks like versus dirty fuel. When you have a tank that's corroded with rust, you tend to get dirty fuel and this aqueous sludge that sits at the bottom of the tank. We're good problem solvers. We like taking care of things for our customers. We can put sensors on that. We can let our customers know when there's corrosion building up in the tank so that they can take care of it. We were pretty excited about that. We came up with what we believed was about a $20 million opportunity.
We cued the Growth Accelerator process. We said, "Let's go back and think more broadly. Let's define the problem from a larger vantage point. Let's go look at what it takes to get clean fuel delivered to customers at a gas station." The team dove in. They went on site. They spent time questioning, they spent time listening, they spent time observing. Cleaning a tank is hard. The headaches are significant. When they dug into this process, this workflow with their customers, over 200 observations, they found that there, of course, was the functional need of making sure that there was no corrosion in the tank.
There was also this emotional need around, "I need to keep people safe because once I have to clean the tank, there are all kinds of other bad things that could happen." By the way, another emotional need, which is, when my tank's dirty like this, I'm not delivering clean and efficient fuel out into the marketplace, I need help. The team went through the process I just described, came up with a whole slew of ideas, that took those foam models out, took concept tests out. They validated, in fact, the value proposition was there. The biggest uncertainty was technology. Could we do it? Because the other thing the team learned is that the market doesn't just want the thing alarmed, it wants it fixed. I need the thing that's causing the corrosion in my tank taken care of.
They started to build prototypes. You can see an early version here. They iterated through 25 prototypes. Ultimately, had a big win when they went to NACS, which is one of their bigger trade shows, did a big demonstration of a prototype there to show the customers what was in fact possible. The response was overwhelming. You can see it here. We had 80% acceptance of beta tests. The team right now today is in the process of installing this equipment in well over 10 sites so that we can refine this model before we scale it. If you step back for a second and say, what are we trying to do to get to that disruptive quadrant? How are we trying to infuse startup methodologies into what we're doing? This is what it looks like. This is faster.
We've taken out some of the risk, and it's much more agile. That's not it, because at the end of the day, if we had stayed with our $20 million sensing opportunities, we would have undercut what we believe is out there by a factor of 40. The team, early days yet, we still have more testing and proof to do, but the team believes that this could be quite a significant opportunity over the next 10 years. We're not only learning how to create these kinds of opportunities. The opportunities in and of themselves would be great, but we're also learning a methodology that through the FBS organization, we can deploy across all of our operating companies. These kind of activities sit in what we call the Fort. Jim mentioned that before.
Part of the Fort is for us to accelerate our innovation capacity. In particular, we're going to do things in the Fort that are really hard for our operating companies to do on their own. If you think about a growth board, we can invite external voices in to make sure that we don't have blind spots. On the skill development side, we don't need every operating company learning new skills from scratch. We can learn things like web analytics and data analytics and make sure that we're sharing across the operating companies. Jim mentioned before growth breakthrough funding. Last year, we had 14 teams that received awards, and they're chasing over $400 million in opportunity. These are things that we're trying to encourage for the teams to go out and experiment, take a little risk, go see if we can find the 40x opportunity there.
Growth Accelerator projects we talked about. Incubation won't be important in all cases, but there are some ideas that our teams are coming up with that are so different and so revolutionary that they need some protection, and we've got one such team right now that we're incubating to give it the space to go learn and breathe without having to worry about all the antibodies that might have different ideas. Lastly, when we think about the outside world around us, I love the video that we started with and even Jim's description today, because we see that there's all this technology coming in. We know that we don't have to be the creators of all that, but we do need to know where it is. We need to know what's going on in research institutes.
We need to know what's going up on in the startup land so that we can harness some of that and bring it back. This is what the Fort will do around trying to accelerate progress. One area that's really important is around data analytics. We've got these great positions, tremendous install base, positions of trust, and the creator of scores and scores and scores of data. Our customers are hungry for us to turn that data into something usable that helps them with their workflows. This is what we'll be able to do from a data analytics perspective. Let me give you one example. We opened up early this year, the Artificial Intelligence Data Analytics Center in Pittsburgh.
We have a small team of very, very experienced professionals that are there that are going to help pave the path for operating companies around data science, data analytics. From earlier this year, we already have output. This is one great example, which is when you think about a gas station, you know and I know that if you're driving down the road to get gas and there's a long line, you don't stop because you go and find another gas station because you got someplace to go. One of the things that the station operators have to deal with is when to replace filters. Do it too soon, spending a lot of excess money on filters. Do it too late, too slow, you've got lower flow rates and therefore lower throughput, and I'm probably driving down the street.
Through using the data that's coming out of our own instruments, we were able to build a model that predicts when the filter needs to be changed. It seems like a small thing, right? Just by this one act alone, we can increase throughput in a gas station by 7%. For our largest customers, when we do that, we can increase monthly transactions by about 3 million. Once that happens, there's an additional $20 million of revenue for our customers. Early days, but there are countless, countless opportunities for data science around us. In summary, I hope what you get a sense of today is we've had a long history of evolving the toolkit of FBS.
The culture has remained the same, the culture around continuous improvement, what we deploy and how we deploy it continues to evolve as the business needs evolve, and we'll continue to do that as well. We'll see it with new tools around innovation. We'll see it with new tools around software. We'll see it with new tools around SaaS. This works both ways. We have learned a great deal from those companies that have joined us through M&A, and we've joined those with what we've known organically and what's good out in the world to try to create tools that help us perform at the level my colleagues talked about before.
Obviously, early days with some of the innovation tools in The Fort in particular, we sure are excited about we're seeing in early days, we look forward to sharing more of that with you in the future. Thank you.
Thanks, Barb. I'm sure it's difficult for all of you to see so many companies and hear about business systems and think that all these business systems are the same. I think what you see with Barbara's presentation is core to our culture relative to the Business System that is incredibly unique to Fortive and our prior friends at Danaher. It is incredibly unique, and that is the idea, having the culture to listen and change your Business System so that you can create new and unique value as your portfolio transforms. It comes from, as Barbara mentioned, the listening to our new companies as they come in, not that we have all the answers, but we listen to them, and we make the Business System better because of their own experiences.
We're out in the marketplace, we're out benchmarking different companies who are best in class in different things, and we're applying those aspects to the Business System in order to make sure that we're contemporary in our tools and our thinking. We're foundational from a leadership perspective to train our leaders and team members to make sure that they understand how to use those tools. That's really our culture in a sense that is so special to Fortive. It isn't created overnight. In our case, 20 plus years of experience of being able to do this as we transform the portfolio, as I mentioned, our continuous improvement system continually improves. It's foundational to how we add value over time.
Hopefully today you saw a number of examples of how the portfolio's transformed and how the $7 billion of spend for acquisitions since 2016 is not only adding financial strength to our business, but also strategically positioning us for the future. We're building a portfolio of higher growth, and we're building a capability around innovation to perpetuate that growth over time. Our digital strategy, which is so important to that, is in the very early days. While we're incredibly excited about the impact that it can have, we know that those, in many respects, are still small parts of our businesses, and it will take some time in some of our businesses for that to compound. Ultimately, it will build and build over time.
Finally, as I just mentioned, that the cornerstone to our culture and how we add value, the Fortive Business System, is really accelerating in skills and in tools in order to meet the needs of a changing Fortive. That puts us in an incredibly strong position for the future. Our progress over the last three years in transforming the portfolio after a blueprint that we, quite frankly, wrote with the board three years ago when we gave them our first ever 10-year strategic plan. We've made good progress against that plan. We've accelerated that plan, and we're incredibly excited about the work that we've done to bring the software-connected workflows, utilize those great positions that we have today to enhance our core growth, and to build a more resilient growth portfolio over time. You can see our future performance.
We believe over time, we become a mid-single-digit grower from that GDP+ to the resiliency of the recurring revenue, the better secular drivers that you heard so much about today, ultimately become a mid-single-digit grower in the future with 40+% recurring revenue. That will include more software revenue and ultimately give us a real strength of gross margin increases that ultimately get us to over 60%. The combination of just deploying all of those improvements to our portfolio, as well as continuing to add around our free cash flow, gives us the opportunity to deliver double-digit growth in both earnings and free cash flow. It's still early days, but hopefully what you saw today was examples of how the higher gross margins, that better free cash flow, and the acceleration of the compounding ultimately builds a wonderful company into the future.
Hopefully, just as important, is you saw the quality of the talent today that's going to make that happen. We'll reaffirm our 2019 guidance here around what we said a few weeks ago, and we continue to believe that the flywheel can be up and running, and we feel very strongly about our ability to deliver another year of double-digit earnings and free cash flow growth. Hopefully the themes of the conference you heard today around the differentiation that we have with a set of industrial technology solutions that really are embedded in the mission-critical challenges that our customers have and deliver better productivity, safety, and quality needs that they're looking for, and so many of those examples today.
The financial model really continues to deliver strong free cash flow and allows for us to not only deploy that capital into M&A, but also to continue to accelerate our organic capability. The application of the Fortive Business System is both broad and deep, alive and well in our culture, and is positioned extremely well for the challenges and opportunities that Fortive will have in the future. We'll continue to utilize the strength of our brands to build those long-term sustainable customer relationships with differentiated technology that gives us long-term competitive advantage and gives us the financial returns that come from those kinds of strategies. We think we're incredibly well-positioned. I hope today you saw that in all the presentations and in the Q&A.
We're incredibly excited about where we stand today, less than three years from our anniversary, yet we can't wait for that fourth and fifth year and sixth year and seventh year because we know our best days are to come. With that, we'll take some questions. We're going to have microphones go around. Steve, looks like you got the mic first.
How far would you stretch the balance sheet? What's the kind of furthest you'd go for a period of time for a given deal?
We'll let Chuck answer a few questions here too.
Steve, we could stretch up to three and a half times if you're talking about debt financing for a period of time. We'd have to make a commitment to delever for the next year or so. It'd probably get us quiet for using debt financing as the source.
Somewhat like Danaher, are you comfortable doing something like that and then issuing equity to kind of pay it down, that kind of thing?
I think we're committed to shareholder value. As you'd know, when great opportunities come about, you have to look and see what the best way to create that. You never say never. Obviously, we've been a little bit more on the debt so far, but bigger deals mean you have to look at it maybe a little bit differently.
My next question was going to be, are you committed to shareholder value? I'll skip that one.
We're going to pry the mic away from you.
My last question is, what business of size do you. It seems like everything's great, with the exception of maybe Huawei or something like that.
Yeah.
What business of size do you worry about the most from a visibility perspective here over the next six to nine months? Is there a business that you worry could decelerate substantially given just all the macro cross currents out there?
Well, you never want to play doomsday scenarios, right? Predicting the future in that regard is challenging. Certainly, as we've said, we do have a good business in China. Certainly if something were to go haywire in China, we have a substantive business in China. There've been some challenges in China over the last couple of years, and we've done exceptionally well despite those challenges. They maybe have been more in other markets, in other parts. I wouldn't be predicting that necessarily, but we're certainly watching China closely to understand what could happen there. I've mentioned Europe a little bit. If you look at the business size, I would say the one thing is clearly we saw a little bit of a slowdown in Matco.
That's a business of size. While we're incredibly excited about the innovation that they've had in the marketplace, we've been public about the fact that some of those challenges in that, I think, have been in the market. We've seen other peer companies as well. We're watching that. We're exceptionally excited about the work they're doing to make the best of any situation. I'm not calling anything there, but Matco's been historically a mid-single-digit grower. They're executing well in the market. Maybe we'd like that market to be a little bit better. We're slowing. Where are you going there, Ross? Rick? Okay.
Yeah. Thanks, Jim. Just a quick question around how we're kind of managing the Fortive Health assets. Now, realizing we just closed ASP, but if you think about where you are in the hospital setting around this kind of never event type of safety products, is there some sales synergy here longer term to manage those businesses under one platform, a health platform, in terms of the customers, where you are in the hospital? That's question 1.
Yeah. I think the quick answer is right now, we don't see anything that would be radical around one sales force or anything like that. There's some expertise sharing that can happen. It's possible that some technology sharing could occur. I think as we get closer to the end of the year, we'll have a better perspective of what the platform might look like in terms of what's in there. At this point, we think those are independent businesses and what we're doing. Just as we want Fluke Health to go after its market, and certainly Pat Murphy and the effort that we have, et cetera, in the critical monitoring is an individual effort. We think those are independent efforts, but as I mentioned, maybe in the prior Q&A, I think what we've been able to do historically pretty well is collaborate.
We don't really let structural impediments deter us from collaboration when there's appropriate opportunities.
Just a-
Follow up?
Yeah, a second question. Around the sensing platform, when you look at the financial metrics of that business, it's $400 million, it's low single digit growth, gross margins are 50%. Just is there technology in that piece of the business, the sensing piece of the business, that you would prefer to keep in-house?
Yeah, I would say by and large, we're open to various avenues. The technology itself, we have today, and it's captive in the sense of part of what we're doing. Scott, maybe Scott, just I think we didn't call him from the last session.
Thank you. Jim, I've never heard of anybody having a 10-year plan, and calls into question of what year you're really in. Are you year five, six on that 10-year plan, or do you need to create a new 10-year plan?
Yeah. No, I think what we have today, we're ahead of the 10-year plan, but that's not something we would endeavor to do every year. I think we're ahead of where we thought we would be. A good example is the recurring revenue number we thought would take a little longer. That's a financial metric, but strategically, we like where we're at. We're sort of updating some of the critical pieces of that every year with our board. I haven't mentioned, for those of you who know us, we're incredibly fortunate to have a board of directors who is really nimble strategically and also has the technology background to really help us understand places where, and add incredible value to some of the selection of some of the things we've done strategically here.
We're at active conversations around different pieces of that plan over time, but I think that the broad sense of that plan still remains pretty vital to what we're doing.
There's a big theme today around connected workflow, I think, at least based on displays out there and such. How important or critical is that in your M&A process now to see a pathway to being able to express that kind of outcome?
I think it's very critical. I think that might lead someone to say we're only going to buy software businesses, and I think that would be a mistake. I think what we like is the connected workflow, and obviously Accruent and Gordian are great examples of that, eMaint maybe in the past. Also ASP is really an example. While it's mostly a hardware and consumable business today, you can see, and Pat I think did a great job of talking about the workflow that exists there, and the ability to use connected IoT and other solutions over time to build more value. We're not going to be exclusively looking at software companies. We're going to see where that connected opportunities are, and it's hardware or software. We're not really moving in a direction of all software.
We're really moving in a direction of customer value around connected workflows. Thanks.
I guess the question I have, just follow up on software. I think you talked about growing recurring revenue as part of the business model. I think you did refer to the fact that you would like to take software up. How do you think about the valuations in the software space? Because it does seem that you guys, companies like Roper, have sort of reset the valuation in the entire market. The fact that you want to accelerate the growth probably doesn't have the valuations there either.
I think, number 1 on valuation around these businesses, I think part of it is where the world is going, and that ultimately you're just seeing more businesses looking for software because our customers are looking to understand their data better. They're looking for better productivity solutions. There's more opportunities out there, if you will. The best companies certainly have valuations that have been different maybe than what we saw in other kinds of companies that we bought over the last 20 years. I think the most important thing is around value and return. I think when you look at the combination of things we've been able to do, the returns have been there from what we've typically said in the sort of 5-year, 10% ROIC.
We sort of look at Accruent was a little bit longer out there, but Gordian was better, and when you look at those two in tandem, you're well within where we typically would see things. I think the other important thing that gets missed is that unlike a lot of deals that kind of get to a 5-year and maybe sort of, I won't say don't continue to improve, the SaaS compounding model means that years 5 through 10 are exceptionally better than a lot of traditional deals that we've done. When you think long term and you think about what we're trying to do and build with customers over a long period of time, that compounding effect has real impact. A SaaS-based business, that model may look similar to other deals in the first 5 years, but in years 5 through 10, it looks better.
We don't want to lose sight of something just because we have a steadfast rule around 5 years when we know ultimately we're looking to build these businesses over a much longer period of time.
Just a simple definitional question. You said that acquisitions represent $1.7 billion of revenues, and they have plus HSD, high single-digit growth. Is it as simple as just take whatever you've done in acquisitions in 2018, those businesses collectively on average grew in high single digits? Is it pro forma? What's included? I'm just trying to understand.
I think if you took the $1.7 on a pro forma basis and including ASP now, we've used that number without ASP closed, but now that ASP is closed, your $1.7 and your high single digit, and while we won't have that full value of that revenue in the 2019 year because ASP is only three quarters. Ultimately, you're going to get to that model in 2020 and 2021.
Basically, the acquired business are in fact growing in high single digits.
They are, absolutely.
Hi there. I guess just a question around what you're seeing with your customer inventories and also maybe for the businesses that go through distribution, kind of what you're seeing in the channel. You did talk a little bit about that on the quarter.
Yeah. A few weeks ago, we talked about at the beginning of the year, we'd seen some channel inventory build. I'm going to look back to the guys too, just I think on balance, as we said in the earnings call, we saw those things get better through the end of the quarter, and I think that's continuing to be true, I think is what we've seen thus far.
I guess a follow-up, thinking about that 40% target for recurring revenue is history on how long it took for you to get the last 10%, the right roadmap, or could we actually get there quicker?
It will be somewhat M&A dependent. I think we've got, that can't always be planned down to the particular year. The way I think about that is the strategic plan is a 3- to 5-year kind of time horizon of what we look at when we think about those things. That timeframe is probably a good timeframe to use.
Jim, you keep mentioning in ASP these TSAs, and how they phase out. Are they relatively normal, as you get into the business and the visibility around these, and it's kind of why you have the accretion ramping up pretty considerably in the ASP?
Yeah. They're essentially, we're partnered with them to deliver revenue in the sense of they're doing supply chain stuff, and some of our salespeople that will eventually come over to us are still with Johnson & Johnson. Those sort of agreements mostly phase through the year. They'll also move into 2020 as well, early parts of 2020 as well. We'll see those. They'll start to phase out after about the third quarter, we'll start to phase some of those out. That's why you see the accretion sort of improve through the year.
I just wanted to ask you about the chart you put up around sort of in 2009, if you went back, you would only have 10% decline in revenue and 5% decline in free cash. Is it taking the recurring businesses that you have now, the 30%, going back and assuming that those businesses are up or flat or something? Maybe give us more color around how you came up with that chart.
We try to pro forma going as far back as we can. I would say the granularity around that is much better on the businesses that we've owned since then versus the new businesses. Gordian is acquired, didn't even exist in its current form. It's a little harder to do. It is in fact trying to go back to 2009 and try to replicate that kind of comparison on a pro forma basis. That is the effort. Some of that is the organic efforts that we've done. As an example, we didn't have a big service business at Tektronix during that time. We now do. We've gotten out of some cyclical parts of the business at Tech from those days that we don't have. Some of it is the organic work we've done. That's pretty easy to model.
The acquisition's a little slightly more difficult. We're confident in the math for sure. Oh, yeah.
Just on ASP, I think the international opportunity is very easy to conceptualize, and the emerging opportunity on robotic surgery and things like that. Can you talk a little bit about, these are very long cycle decisions hospitals are making. The equipment lasts for a long time. Under J&J, were those businesses in the U.S., were they underperforming the market a little bit? If so, how long does poor performance before you guys own them kind of linger, and there's not much you can do because that business isn't up for grabs again?
Yeah. One of the things that we saw at J&J, and one of the things we thought the timing of buying the company was good, was that they had had an FDA problem several years ago that had hindered some of their R&D investment in innovation. We saw some of that coming back before it was starting to hit the business, and we started to see the business improve a little bit in 2018, as an example. I think the timing's been pretty good. As Pat pointed out in his presentation, we really do think that just taking the core team and bringing them together and using sort of the traditional sales tools that exist are going to help us get back into position for high growth. Generally, we're well-positioned in the U.S., I would say, mostly.
The opportunity is really to do that more in high-growth markets, because the structure was much more matrixed outside of the United States than it was inside the United States.
Even if you guys came up with the absolute best possible solution there was next year, some of that business is effectively just not available for a while, right?
Yeah. The innovation cycle's a little longer because of FDA approval.
Okay.
Even if we got into the innovation cycle pretty quickly, which Pat will do with the team, fundamentally, it takes a good 18-24 months to get those things approved and then get them out into the marketplace.
Okay.
Mark.
Jim?
Yep.
Fortive is, in many ways, a new company, and via the acquisitions, a lot of people are now coming into the company. What is the philosophy around utilizing a broad and deep employee ownership as a unifying and motivating force? As well as, are there aspirations to get the employee ownership up to a certain level?
There's no target. That's certainly a topic that the comp committee talks about fairly regularly. I think when you look at the ownership, we really think about the total compensation package, and we want to get people to be able to be successful in their own operating company, where they can deliver true value and have real impact. Obviously, benefit in many ways. We have a rich 401(k) program, as an example, that allows for everybody, at least in the U.S., to participate. We're always looking for new ideas around what that would look like. We have, amongst a fairly broad organization, we have fairly broad ownership. Not completely, we continue to look at, see what options are out there to do other things as well.
Would you happen to have numbers off the top of your head?
We can get it to you. I wouldn't have the number off the top of my head.
Yeah. Good. I'm talking about deep employee
Yeah, no, I understand
ownership, not just the senior leadership
Yep
who I presume gets plenty of stock.
Yeah. I won't even comment on that. Dean?
Yeah. Thanks. Jim, I'd like to touch on the topic of potential divestitures. Just if you could share with us the thinking about how you would look at businesses that might not fit the portfolio in that 10-year strategic plan. What are the metrics of either growth or market share? Maybe that addition by subtraction-
you'd get to that gross margin faster. You've shown some creativity in being able to divest A&S through the RMT structure, very elegant, you jettisoned the niche business of Tektronix. Where do divestitures fit in the strategic plan?
Well, I think one of the reasons why I thought today was so exceptional is you get a chance to see sort of the digital strategy in every one of our platforms in some way, shape, or form. I think that's very consistent. The work we've done to benchmark others, to bring in talent who's got experiences to augment our current capability is all part of the business model transformation that every one of our businesses, quite frankly, is taking on. The innovation challenge that exists in terms of being more innovative and bringing different, stickier solutions to our customers is all part, really a theme that's in all of our business strategic plans, Dean.
To the extent that our businesses execute against that strategy and their markets don't change, I think what we have today is certainly something that we like because all of those strategies do increase growth and increase margins and give us a stickier business. That said, as we know, we are not immune to evaluating things in a timely basis when things become available. I like where we are right now, and I think our teams understand that the velocity of the innovation that they're trying to bring to market is an important part of their long-term future.
I just want to come back. In that answer, I didn't hear anything about how you look at a business where it may not potentially fit the portfolio in that 10-year strategic plan.
Well, a great example would be what we did-
Is it the lack of software acceptance in the mix? Is it a lack of innovation? You're very careful on the aspects of an acquisition and the hurdles that it meets. When does a business not fit Fortive's portfolio?
Well, I think A&S would be a great example. We really didn't see any software opportunity because it's really, I think, fundamental to the decision we made. We love the business. They were good at FBS. They were taking market share, but ultimately, we didn't see the business model transformation opportunity that we see in the rest of the businesses. That's a key part of the decision. All of those things you named, the ability to innovate, the ability to do those things, but ultimately, the business model, in the case of A&S, was really sort of a lack of ability, just given they had so much of their business was OEM, and the OEMs are trying to do a lot of those things. Business model is an important part of our long-term future.
As I think you heard today, all of our businesses have a strategy to get there.
Just back to ASP, not that you've got enough questions on that today. If you could just talk about. You talked about these synergies, $70 million over the course of 3 years. Looking at past transactions, you would think that would be maybe a little bit low. This business is operating at a corporate average, roughly, margin. Where did you come up with that number? Is that just a placeholder until you get in there and see what else you can do? Then thirdly, you said it was going to be more of a low single-digit grower this year?
Yeah
Was that anticipated?
I'll take the last one first. It was anticipated. We thought that the challenge of bringing the business on in TSAs, we wanted to make sure that we were somewhat conservative in our approach to what we needed to do from a return standpoint. To the point around the $70 million, it's roughly 10% of the sales of the year we bought it. That's a pretty good number. I think that number would stand in as a good synergy number relative to that. It's not just a placeholder in any stretch of the imagination. We have a very deliberate plan. What we call our Obeya room is in Everett, has just a set of things on the wall around every one of those synergies, who's responsible for it, when they deliver it, what are the actions to get there. We're very deliberate in getting there.
We did a lot of due diligence to understand it. There's always a question about do you have upside to that? The quick answer to that is, it's very early days. We're working really hard to get after it. We feel confident in the number, but it's early days and certainly as we progress through the year and get into 2020, we'll obviously have a much more defined conversation about where we're at on those numbers. From a standpoint of our clarity around it, we had pretty good clarity in the due diligence process.
We got time for one more.
It's red.
Okay.
Timer's red.
All right. That's it. Thanks everybody for the time. We really appreciate your energy and your enthusiasm around Fortive. We can't wait to get through the year and continue to demonstrate to all of you the strategies that you saw today. Take care and obviously, Chuck and Griffin and Ross are around for any questions or anything we can do to follow up. Have a great day, and we'll see you soon. Thanks.