James A. Lico
President & Chief Executive Officer at Fortive
Thanks, Elena. Hello, everyone, and thank you for joining us.
I'll begin on Slide 3. Our second quarter results showcase strong execution across our businesses, allowing us to deliver earnings and free cash flow at the high end of our guidance with 90 basis points of adjusted operating margin expansion and 9% adjusted earnings growth despite revenue at the low end of our guidance. Our performance continues to reflect our ability to adapt to the low growth environment and deliver differentiated financial results, enabled by FBS-led innovation and productivity actions.
Our leadership positions across durable growth markets are reflected in upside performance in Advanced Healthcare Solutions and continued momentum in Intelligent Operating Solutions, positioning Fortive well for the future. As we look ahead, we are excited to see the acceleration of our innovation and new product launches, delivering more value for customers and sustained growth for Fortive. We are confident in our updated outlook for the year, reflecting strong growth in our recurring revenue businesses and continuing our track record of mid-single digit through-cycle core growth and compounding earnings and free cash flow by double digits in 2024.
Turning to Slide 4, I'll provide an overview of our second quarter and year-to-date results as well as what we're seeing as we look ahead. Second quarter revenues were up 2% with flat core growth. Acquisitions contributed 3 points to growth, partially offset by a foreign exchange headwind. Strong operational execution contributed to record second quarter adjusted gross and operating margins and earnings per share of $0.93. Year-to-date, we achieved 100 basis points of adjusted operating margin expansion and double-digit earnings and free cash flow growth on 3% revenue growth.
Turning to what we are seeing across our businesses. Intelligent Operating Solutions and Advanced Healthcare Solutions continue their momentum, benefiting from durable and recurring revenue as well as new product introductions aligned to secular growth drivers. This demonstrates the success of our capital deployment strategy in these segments, where we continue to focus our bolt-on efforts to further enhance growth. Across Fortive, our recurring revenue is now 42% of our portfolio, growing low double digit year-to-date. We expect that pace of growth to continue in the second half.
Government spending delays broadly contributed to revenue coming in at the low end of our second quarter guide, primarily driven by delayed military and government R&D projects impacting Tektronix as funding continues to be prioritized to production-related programs and slower job order contracting growth at Gordian as they lap government stimulus funding in 2022 and '23. Orders at Precision Technologies were down in the quarter as expected and book-to-bill was stable at 1.0. Consistent with our prior outlook, we expect orders to return to low single-digit growth in the third quarter.
However, our updated 2024 revenue outlook does reflect a slower-than-expected recovery in certain end markets in PT in the second half of the year. We are offsetting lower revenue with new productivity actions and have reflected the delay in global minimum tax implementation in our tax rate guidance for the year. Chuck will cover the outlook for the rest of the year in more detail shortly. Lastly, our free cash flow performance continues to differentiate, with industry-leading free cash flow margins allowing us to repurchase 2 million shares in the second quarter and continue to outpace the remainder of the year.
Turning to Slide 5. I will provide more detail on second quarter segment performance as well as our expectations for the full year. Intelligent Operating Solutions total revenue growth was 4% with core up 3%. Acquisitions were favorable, partially offset by an FX headwind. Adjusted operating margins were down slightly versus the prior year, although up approximately 400 basis points on a 2-year stack with strong price realization and volume growth more than offset by growth investments. Additional highlights include: Fluke revenues were up low single digit-plus, including mid-single-digit industrial products and double-digit ARR growth in the quarter, strong proof point of our efforts to make the business more resilient.
Fluke's bolt-on acquisitions, Solmetric and Azima DLI continue to outperform, contributing to Fluke's growth in the quarter. AHS grew low single digit, paced by recurring revenue contributions, including strong SaaS and iNet growth, partially offset by slower product sales at ISC. FAL grew mid-single digits or mid-teens on a 2-year stack with continued normalizing growth at Gordian and lapping the wind-down of pass-through revenue at ServiceChannel. FAL maintained its pace of high single-digit SaaS growth, and we expect to see that reflected in accelerated core growth in the second half. For the full year, we expect the IOS to deliver mid-single-digit core growth with approximately 100 basis points of adjusted operating margin expansion. Precision Technologies was down 1.5% in the quarter with core decline of 6.6%. Acquisitions, net of divestitures, contributed 6 points to growth, partially offset by FX.
Adjusted operating margins were down slightly year-over-year with lower core volumes almost fully offset by productivity benefits, favorable price, and M&A. Additional highlights include: Tektronix core revenues was down mid-teens as revenues normalized to bookings. We saw pushouts of large mil/gov projects in the Americas and slower recovery in China, partially offset by mid-single-digit services growth. EA has seen large EV mobility and battery expansion projects push out, reducing its revenue outlook for the year to approximately $130 million. While sales cycles are longer for these large projects, EA has seen a doubling of the sales funnel on smaller run rate projects across industries, validating the go-to-market synergies with Tektronix and positioning the business well for 2025 and beyond. Sensing was down mid-single digit in the quarter with continued strength in utility grid, food and beverage, and health care end markets, more than fully offset by weaker industrial and factory automation demand.
And lastly, Pacific Scientific delivered another quarter of mid-teens core revenue growth, driven by robust demand. We finished Q2 with a stable 1:1 book-to-bill and are expecting revenue to return to growth in the second half. For the full year, we now expect PT growth down low single digit with adjusted operating margins approximately flat. Advanced Healthcare Solutions revenue growth was 3% with core growth of 5%, partially offset by unfavorable FX of approximately 2%. Adjusted operating margins expanded 260 basis points with strong volume, price realization, and productivity benefits more than offsetting growth investments.
Additional highlights include: ASP Censis grew mid-single digit, driven by double-digit consumables growth enabled by the successful North American channel transition at ASP and new doors and cross-sell expansion at Censis. Fluke Health Solutions was up low single digits with double-digit dosimetry services growth. Provation grew low single digits, lapping a large prior year licensing win, while SaaS revenue is up nearly 50% in the quarter. Given the strong first half performance, we now expect AHS full year core growth to be at the high end of mid-single digit with over 150 basis points of adjusted OMX for the year.
Moving to Slide 6. Several short-cycle industrial markets served by our Precision Technologies segment faced headwinds in the second quarter. We saw continued customer caution, weighing election and macro uncertainty contributing to OEM and channel weakness and further capex-related project delays. North American revenues were up slightly, benefiting from mid-single-digit growth at IOS driven by strong industrial and software growth, mid-teens growth in health care consumables, and continued strength of, partially offset by lower Tektronix revenues. In Europe, we saw revenues normalize to bookings with a mid-teens decline at PT, partially offset by low single-digit growth in IOS and low double-digit growth in health care.
Core revenue in Asia was down low single digit, driven by slower government spending and distributor destocking in China. Japan was up mid-single digit or better in all segments. And in India, we saw slower growth, given election uncertainty impacting project timing at Tektronix. Core growth for the quarter largely centered on our high-growth markets, excluding China. These regions have now eclipsed China in size and account for approximately 14% of sales. Looking ahead, we expect improvement in core growth in the back half of the year, driven by favorable order rates as well as continued strength in AHS and software.
With that, I'll turn it over to Chuck to talk through our updated third quarter and full year guidance.
