My name is Rob, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Fortive Corporation's second quarter 2022 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, again press the star one. I would now like to turn the call over to Ms. Elena Rosman, Vice President of Investor Relations. Ms. Rosman, you may begin your conference. Thank you, Rob, and thank you everyone for joining us on today's earnings call. With us today are Jim Lico, our President and Chief Executive Officer, and Chuck McLaughlin, our Senior Vice President and Chief Financial Officer. We present certain non-GAAP financial measures on today's call. Information required by Regulation G are available on the investor section of our website at fortive.com. Our statements on period-to-period increases or decreases refer to year-over-year comparisons on a continuing operations basis. During the call, we will make forward-looking statements, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks, and actual results might differ materially from any forward-looking statements that we make today. Information regarding these factors is available in our SEC filings, including our annual report on Form 10-K for the year ended December 31st, 2021. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update. With that, I'd like to turn the call over to Jim. Thanks, Elena. Hello, everyone, and thank you for joining us. I'll begin on slide three. We had an excellent second quarter with strong broad-based execution across the portfolio, contributing to revenue, margins, and earnings all above the high end of our guidance, resulting in our raised outlook for the year. Despite the effects of COVID-related shutdowns in Shanghai, significant FX headwinds, and ongoing supply chain constraints, our team was able to achieve 9% core revenue growth, 190 basis points adjusted operating margin expansion, 18% adjusted earnings per share growth, and outstanding free cash flow generation in the second quarter. Consistent with the first quarter, demand for our leading workflow solutions remained robust. Year-to-date, hardware orders and software ARR both increased low double digits, reflecting our more resilient and diversified product portfolio. At the same time, our rigorous application of the Fortive Business System allowed us to deliver for customers in a challenging external environment and improve our profitability despite higher inflation and rising FX headwinds. Turning to slide four. I want to provide an update on what we're seeing and what we expect in the second half of the year. Starting on the left with the current environment, demand and orders remained strong in the second quarter, driven by accelerated innovation, continued share gains, and leverage to favorable secular drivers. Hardware orders increased 9% in the second quarter, yielding a hardware backlog that ended the quarter 21% higher than year-end 2021. Our supply chain measures continue to gain traction, while we expect that component constraints will persist for the rest of 2022 and into 2023. While ongoing COVID lockdowns in China remain a risk, we substantially mitigated the headwind from the lockdowns that commenced in late March in Shanghai and continued through most of May, shipping most of the $60 million of risk we previously highlighted in the first half. This is an excellent example of our team's ability to utilize FBS tools to navigate unprecedented obstacles, keep our employees safe, and deliver for customers and shareholders. Moving to the right side of the slide, we expect higher core growth for the remainder of the year as our more resilient product portfolio positions us to benefit from continued customer demand. We also continue to build momentum in our software businesses with upsell and cross-sell bookings, new logo generation, and lower churn all contributing to double-digit ARR growth for the full year. Given the strength of our first half performance, we are raising the outlook for the year. Our revised outlook also includes a foreign exchange headwind of approximately $100 million on revenue and $0.08 on EPS that was not previously contemplated. Lastly, our ability to convert more earnings to cash underpins our investment thesis and allows us to reinvest in our businesses to accelerate our strategy and enhance our returns to shareholders. Turning to slide five. The work we have done over the last six years to build a stronger collection of businesses has resulted in a more diversified end market mix and durable recurring revenue profile as demonstrated by the shading in all the end markets we serve today. For example, in 2016, a sizable percentage of our revenue came from the retail fueling and vehicle repair markets. Today, our largest end market by revenue is healthcare, which has very durable revenue characteristics. As you can see further in the slide, there are recurring revenue opportunities across a range of end markets. We have more than doubled the percentage of our total company revenue, which is recurring. This includes the software and consumables business model additions we have made to the portfolio and the services revenue that we have expanded at businesses like Tektronix. When you look at our footprint today and the end markets to which we participate, we have several opportunities to globalize our leading brands and take advantage of the secular drivers which are driving sustainable growth in these markets. I'll now provide some more details on each of the three segments, beginning with Intelligent Operating Solutions on slide six. IOS continued its strong momentum with revenues up 16% and core revenue growth of 12% in the second quarter, with strong double-digit growth in North America and Western Europe, and high single-digit growth in China. The work the businesses have done to improve availability of supply and offset inflation is contributing to better than expected core growth with sequential improvements in shipments and stronger price realization, driving 205 basis points of core operating margin expansion, more than offsetting incremental FX headwinds. Some other highlights in the quarter include Fluke's product innovation and new service offerings, including the recently launched Fluke Solar Solutions, in addition to rigorous daily supply chain management drove mid-teens core growth. While their orders forecast has continued to move up throughout the year. Industrial Scientific saw strong bookings for iNet, up 55% year-over-year because of continued progress diversifying and globalizing the customer base. Intelex SaaS revenues continued to double-digit pace on track to 10%+ ARR growth for the year. Moving to Facilities and Asset Lifecycle Management. Gordian revenues were up double digits as several customers, including the New York City Department of Education and the Pennsylvania Department of General Services, leveraged Gordian's procurement platform to manage large infrastructure projects with city and state customers. Accruent continued to build a strong foundation for second half growth, with software bookings up more than 20% and an expectation of accelerated second half bookings. Their commercialization success is a reflection of the significant progress they have made building FBS capabilities across their sales organization. Finally, ServiceChannel had another quarter of double-digit revenue growth. ServiceChannel is continuing to see strong customer demand for managed solutions, with customers increasingly outsourcing their facilities maintenance work. Turning now to slide seven in Precision Technologies. Total revenue increased 6% with core revenue growth of 9%. Demand remained strong with robust core revenue growth and another quarter of double-digit orders growth across major geographies and end markets, particularly industrial, semi, medical, power, and energy, raising backlogs to new record levels. China revenues grew over 20% as Tektronix mitigated the Shanghai lockdowns and continued strength in sensing technologies. PT continues to benefit from a number of secular drivers, including the expansion of power and precision devices going into the electronics innovation space and the expanded use of semiconductors broadly. We achieved 90 basis points of adjusted operating margin expansion driven by favorable pricing and disciplined cost management, partially offset by higher component costs and FX. Some highlights in the quarter include mid-20% bookings growth at Tektronix with new product launches, including the 2 Series MSO, which continues to be strong globally and represents an example of another next-generation platform that provides innovative and differentiated technology for customers. Mid-teens growth at Sensing, driven by pricing, FBS countermeasures, and continued growth in core end markets in the second quarter. Innovation and vertical market strategies are gaining traction at Gems and Setra, contributing to 20%+ growth in those businesses. Moving now to slide eight in the Advanced Healthcare Solutions. Total revenue increased 9% in the second quarter, with core revenue growth of 3%. Low single-digit growth in North America and low double-digit growth in Western Europe was partially offset by high single-digit decline in China related to the COVID lockdowns, which reduced the number of elective surgeries in China. COVID pressures, associated staffing challenges, along with supply chain constraints within capital equipment persisted as expected, limiting revenue growth across the segment in the second quarter. Elective procedures improved in North America, contributing to mid-single-digit growth in ASP consumables. The team continues to implement FBS tools, driving productivity savings, which in addition to the accretive benefits of the Provation acquisition, contributed to 300 basis points of adjusted operating margin expansion in the second quarter, including 150 basis points of core OMX. Some other highlights in the quarter include. Censis had another quarter of very strong performance from its CensiTrac SaaS offering, which was more than offset by a difficult prior comp in marking hardware. On a two-year stack basis, Censis revenues grew 17.5%. Provation's GI business grew revenues and orders double digits. They had several competitive wins, including a 16-site standardization order from Essentia Health, where half the sites are SaaS migrations and the other half are new Apex wins. Turning to slide nine. The Fortive Business System continues to be a differentiator for us, enabling our businesses to enhance supply chain resilience, drive innovation and profitable growth, and build capabilities in our leaders to effectively deliver on our commitments and distinguish our performance in an otherwise very challenging environment. Examples in the quarter include using Kaizens to utilize closed loop production and operations in our Shanghai facilities, accelerating the restart of production, ensuring availability of supply, and creating new demand opportunities, effectively mitigating the impact of COVID-related lockdowns in the region in the first half. Utilizing lean portfolio management at Fluke to align new products to strategic growth areas. Similar to what we're doing at Tektronix, this has meaningfully improved our product vitality, doubling the three-year revenue potential for new products. Provation is utilizing Obeya rooms to significantly accelerate SaaS migration bookings. Daily visual management implementation at Accruent is driving a significant improvement in net working capital. As you can see by all these examples and our performance in the quarter, we had tremendous success applying FBS. With that, I'll pass it over to Chuck, who will provide more color on the second quarter financials and our second half 2022 outlook. Thanks, Jim, and hello, everyone. I will begin on slide 10 with a quick recap of our second quarter performance. We generated year-over-year total revenue growth of 11% with core growth of 9%. Acquisitions contributed five points to total growth, partially offset by FX, which reduced total growth by three points in the quarter. Turning to the major regions on the right-hand side of the slide. North America core revenues were up high single-digit, with contributions from each segment and strong double-digit growth in software and services. Western Europe revenues grew mid-teens, again with favorable contributions from each segment, including a return to growth at Invetech. We had low double-digit growth in Asia outside of China, while China revenues increased to mid-teens as we mitigated the Shanghai lockdowns that Jim highlighted earlier. We also continued to build backlog in China with approximately 20% order growth in the quarter as customers look to replenish inventories and assure access to supply heading into the second half of 2023. Lastly, we had strong double-digit revenue growth across our high-growth markets. On slide 11, we show operating performance highlights in the second quarter. Adjusted gross margins were down 30 basis points, while adjusted operating margins expanded 190 basis points to 24.1%. Gross margin expansion and operating margin expansion were both negatively impacted by 70 basis points of transactional FX headwind in the quarter, which was more than offset by over 500 basis points of price in the quarter, demonstrating the excellent job our teams are doing implementing price increases to offset higher input costs. Adjusted earnings per share increased 18% to $0.78, reflecting strong flow-through on higher volumes as well as lower share count, partially offset by higher interest and tax expense. Free cash flow is another standout at $276 million, which reflects 98% free cash flow conversion in the quarter. Turning now to the guidance on slide 12 and the outlook for the remainder of the year. We expect core revenue growth of high single-digit to low double-digit, with adjusted operating profit margins anticipated to be up at least 100 basis points year-over-year in both the third and the fourth quarters. Adjusted earnings per share expected to be in the range of $0.74-$0.77 in Q3, up 12%-16%, and in the range of $0.85-$0.88 in Q4, up 8%-11%. For the full year 2022, we are narrowing the total revenue range to reflect incremental FX headwinds, while raising core revenue growth to 8%-9.5%, with higher core growth in every segment. Adjusted operating margins are still expected to be up over 100 basis points for the year, and we are raising the midpoint of adjusted earnings per share outlook to $3.07-$3.13, reflecting better operational performance in addition to lower taxes, more than offsetting $0.08 of incremental FX headwinds and $0.02 of higher interest versus our prior guide. We expect free cash flow conversion to be seasonally strong in the second half and average approximately 105% for the full year. Moving to slide 13 and the updated revenue walk for the year, starting on the left. First half revenues reflect our outperformance in Q2, more than offsetting incremental FX headwinds with stronger than expected performance in iOS and the shift in Shanghai-related revenues back to the first half as lockdown countermeasures allowed us to recover volumes that were previously expected to get pushed to the third quarter. Looking at the right-hand side of the chart, we've updated the first half to second half revenue bridge we showed you last quarter. It now reflects a lower step-up of approximately $110 million in volume, supported by our robust backlog position and continued pace of recurring revenue growth across our portfolio. We also continue to embed favorable price in the second half versus the first. On a net basis, the second half core growth average is 10% at the midpoint and is roughly 16% on a two-year stack. Incremental margins on sequential volume are expected to fall through at attractive levels, contributing to strengthening margin performance in the second half. In summary, our portfolio continues to show the benefit of the actions we've taken to build a more durable growth company with high recurring revenue profile, mitigating the risk of slowing demand in the second half. Turning to slide 14. As Jim highlighted, the Fortive of today is delivering higher, more profitable growth, and there's nowhere that this shows up more than our free cash flow. That strong free cash flow, which has nearly doubled since 2019, continues to be a hallmark of our investment thesis, compounding faster than revenue and earnings. Over the last few years, we've taken proactive steps to strengthen our balance sheet, which combined with higher free cash flow generation, yields ample capacity to invest for growth and compound returns through disciplined and accretive capital deployment. As a reminder, we deployed $2.6 billion towards M&A in the second half of 2021 and continue to prioritize M&A as the primary driver of capital deployment. In addition, we opportunistically bought back shares in the second quarter, totaling 4 million shares year to date. At the current share price, we continue to see compelling returns consistent with the return criteria of all of our investments. As we exit the year with relatively low leverage of approximately 1.5x net debt to EBITDA, giving us substantial M&A firepower to continue to invest in our businesses, accelerate strategy, and enhance total shareholder returns. With that, I'll pass it back to Jim for some closing remarks. Thanks, Chuck. We're now on slide 15. Before we move to questions, I want to spend a few minutes highlighting the positive impact we are having for customers, employees, suppliers, and the communities as we advance our sustainability mission. As many of you know, we published our 2022 sustainability report in June, and I'm incredibly proud of what we've accomplished, the aspirational targets we continue to set, and the robustness of our reporting initiatives, such as alignment with key ESG reporting frameworks, including GRI, SASB, TCFD, and the UN Global Compact as a signatory. This report serves as our communication of progress toward the principles and the UN Sustainable Development Goals. We also made significant progress across each of our sustainability strategic pillars, including achievement of our 50% greenhouse gas emissions intensity goal early, reducing scope one and scope two GHG emissions intensity by 51% between 2017 and 2021. As a result of achieving that target early and in keeping with our continuous improvement culture, we have set a new and more aggressive target to reduce absolute scope one and two GHG emissions 50% by 2029 from 2019 levels, a goal which is aligned with the Science Based Targets initiative guidance. We improved on each of our inclusion and diversity leadership goals, including gender inclusion and senior leader diversity. Lastly, we exceeded our performance on our supplier diversity spend target in 2021 and completed 100% of our supplier audits as planned despite COVID. There is much more on the report, including examples of our innovative and sustainable products and services, and we encourage you to check it out on our website. Lastly, on slide 16, we are demonstrating successful execution of the Fortive Formula even in the most difficult of times to drive more resilient growth, double-digit earnings, and free cash flow growth. We said that 2022 is a show me year. We are on track to meet or exceed our commitments, including mid-single-digit annual core growth on a three-year stack basis. More than 300 basis points of operating margin expansion, 50% growth in earnings, and 90% growth in free cash flow, all while navigating unprecedented and prolonged headwinds. This differentiated growth and profitability among our industry peers is a testament to FBS, driving innovation, demand generation, and profitable growth in 2022 and beyond, and it's helping to generate 50% more cash per dollar of revenue recognized. As Chuck highlighted, that creates more opportunities to deploy that cash to accelerate growth and compound returns through disciplined capital deployment. As you've seen with our first half performance, we're incredibly proud of the contributions from our Fortive team around the world. This July, we celebrated our sixth year as a public company. Since our inception, we have endeavored to build a truly special company, one that yields best-in-class performance. As you can see, in 2022, we have made considerable progress against this goal with strong growth through the strength of our highly desirable brands and technology, outstanding margin performance through the quality of our portfolio, and exceptional free cash flow through the power of our business system. I look forward to your questions. With that, I'll turn it back to Elena Rosman. Thanks, Jim. That concludes our formal comments. Rob, we are now ready to take questions. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Your first question comes from the line of Julian Mitchell from Barclays. Your line is open. Hi, good afternoon. Maybe Jim and Chuck, just the first question around the AHS segment. You know, that's the one where sort of pricing seems to have been, you know, stuck a little bit at 1% in the first half versus, you know, 760 points higher at the other two divisions. The overall core growth, you know, sort of 4% this year. How are you thinking about that, you know, the main headwinds on the pricing and the volumes aside from the China impact in Q2? When we're thinking about, say, the out year 2023, you know, there are some factors that could keep that growth rate a little bit higher. Yeah, Julian, how are you? I think number one, you know, we if we really think about AHS in the second quarter, it really came in from a core growth perspective as we anticipated. A little bit of puts and takes with elective procedures, a little bit better in North America versus. Then obviously China a little obviously much worse in China. We would anticipate for electives, it's still gonna come in the way we thought for the year. I would say, you know, we feel good about the acceleration of core growth at AHS in the segment itself in the first quarter to the second quarter, and we think it'll continue to accelerate into the second half. We did see some supply chain issues with equipment that was in our guide. We anticipated that. We'll see those things get better. In fact, we started to see the kind of equipment production that we need to see in June. We're already seeing that, what we need for the second half. We think the step up in core growth will be there. Relative to price, you know, we'll continue to get a little bit more price in the second half than we did in the second quarter. You know, it's just a little bit more difficult to get price in this environment. We're ahead of price cost. I think in that sense, you know, really, we were in a great place with margins in the second quarter in AHS. In fact, if it hadn't been for, you know, some currency of FX, we would have been right on the guide. I think, you know, where we stand with the segment is in a very good place. We'll get a little bit more price. We'll continue to work on price into next year. But I think relative to price cost, we're fine. We haven't seen as much inflation on the input side in health as we have in some other places. We're good in that segment, but it's gonna take a little longer negotiating some of those longer term contracts to get more price in the segment itself, particularly at ASP. That's helpful. Thank you. Maybe one on capital deployment. Not going to ask you about the M&A pipeline, but if we look at, say, you know, the buybacks that did step up in the second quarter. Chuck had talked about a 1.5x leverage ending the year. Trying to figure out at current share prices, what kind of buyback spend are you planning on, I think given the comment of sort of compelling returns right now, and there are matters of guidance numbers in the deck which makes our lives a lot easier. Share count was maybe one that I missed. Just wondered what you're dialing in for the year on share count, you know, vis-a-vis that, the buyback discussion. Well, Julian, you know, as you know, M&A remains our priority here. What we're saying there is where our leverage will finish the year without any capital deployment. We're not forecasting. We don't forecast share buybacks as it's not really a program. It's just being opportunistic. As you know, in the first half, we did buy 4 million in the first half or the first two quarters, and we'll continue to be opportunistic as we move forward. Just Julian, this is Elena. We ended the quarter with 358 million shares outstanding. That would be the appropriate assumption going into the second half. Great. Thanks very much. Thanks, Julian. Thank you. Your next question comes from the line of Andrew Obin from Bank of America. Your line is open. Yes, good morning, I guess. Good afternoon now. Sorry, I've been here for a while. Hi, Andrew. Hi, how are you? I actually will follow up on the sort of M&A pipeline and more so, you know, there's a lot of talk about interest rates changing, environment changing. Are you seeing fundamentally any change, you know, maybe private equity exiting, maybe more strategic buyers, reset of buyers' or sellers' expectations, or is it just too early to tell? Yeah, it's a complex question, but obviously, you know, private equity is a buyer and a seller, so they're obviously seeing it on both sides. I would say what we've seen really here at this point, Andrew, is really one where I don't think we've really seen reality set in in a number of places. There have been some things transacted at still higher prices here in the last 90 days. I don't think that's reality going forward. I think it takes a little while. We've seen things take longer for sure. We will continue to remain busy, but we're gonna be disciplined here in this kind of time horizon. I think that's where it's at right now. I said it a couple of quarters ago, it was a 12- 18-month kind of time horizon. We're obviously six months into that kind of time frame. I suspect maybe, you know, we'll start to see some things here, maybe later in the fall, start to look what I'll call more normalized. Yeah. That's another question for you. This earnings season, one of the surprises I think sort of across the board, just Western Europe, just on the margin just looks okay. You know, even for you it's, you know, mid-teens core. Why is Europe so good and why we're not seeing more of a headwind from, you know, what's actually happening there? Thank you. Yeah, I think, you know, Western Europe's been a good story for us. Certainly true, as you said. If we look, it kind of normalizes. It's a little bit more in the quarter, but it sort of normalizes compared to North America if you look at the first half. Orders are actually a little bit better in North America. You know, I would say what we're seeing probably is a function in the quarter a little bit more just of getting more backlog out. We probably have a little bit more backlog in Western Europe just because of the location of our factories, many of them in the U.S. It's a little bit that. In health, it was really the Invetech that we called out in the prepared remarks. We are seeing good business right now in Western Europe. If you look at the entire European theater, including high growth market, Eastern Europe, Russia, then you start to see a slightly different story. You start to obviously see the slowing because of some of the Russia impacts. It's really a good story in Western Europe. If you step back and look more broadly, it does tell a little bit slightly different story, and that might fit a little bit more some of the headlines we're seeing. I think as we look through the year, we're still gonna do pretty well in Western Europe. Terrific. Thanks a lot. Thank you. Your next question comes from the line of Steve Tusa from J.P. Morgan. Your line is open. Hey, guys. Good day. Hi, Steve. What are you guys seeing in China, and, you know, in particular, I guess, outside of the healthcare stuff, just the more industrial type of stuff? Yeah, I think one of the highlights of obviously the quarter was obviously how China's come back. I think one data point that Chuck and I look at, Steve, at Fluke is our point of sale, which was high single digits in our shop channel, which is a broader view of the economy, was actually double-digit in the quarter. I think from that standpoint, we had a good business in Sensing. We had good business, as you said, other than really our health businesses, China was good in the quarter. Obviously a little slower in the first quarter. When we look at the first half, still decent in those businesses, and I suspect we would plan and assume that that's gonna continue here in the second half. It's pretty broad-based. It's with our OEMs on the sensing side have been pretty good. Again, as I said, you know, a number of places at Fluke and Tek where we're seeing good business. We think healthcare probably does continue to be a little challenged here for at least another quarter relative to what we're seeing in hospitals, but the remaining part of the business is in a good place. One last one. Gordian and Accruent, I think you have up low double-digit% in the quarter, I think it was. I saw on the slides. You know, I think that's better than you guys had been expecting. What's going on at those businesses? And how are you you know accelerating the growth there? I recall there being some question marks around the growth at I think it was Accruent over time. Yeah. I mean, you know, as we increasingly think about the business, we're gonna increasingly think about that as a combination of those businesses and probably ServiceChannel. We've traded some product lines and between businesses, and obviously we're going after some things, you know, with common sales channels and stuff. But as you said, Gordian's very strong on the backs of good state and local spend. We think that continues. Certainly, some of the things that we're seeing out of Washington are gonna be helpful to that business as well. We mentioned some of the good wins that we have with contract or increases in business that we have with some really strong customers like the City of New York. I think we're just seeing good dynamics. I think we've seen that we're starting to see the turnaround in Accruent that we've been talking about. Olumide's done a nice job there with the team. You know, bookings are gonna continue to get better through the year. You know, I think in general, a lot of our countermeasures put a lot of effort and energy into really sort of optimizing Gordian and really helping that team. They're a great user of FBS. Accruent, I think, as we've said, has been a fix-it story, starting to see some of the results of some of that work, and that'll continue to play out through the year. Great. Thanks a lot. Your next question comes from the line of Nigel Coe from Wolfe Research. Your line is open. Thanks. Hello. I think we'll get away from this good morning, good afternoon thing. Just to get into the guide for ASP margins. We've got flat margins in 3Q, and then we've got 100 basis points of expansion in 4Q year-over-year. Just wondering what sort of the underlying assumption there is, you know, you know, in terms of what needs to happen to drive that improved operating leverage at ASP. Oh, sorry, AHS. You know, Nigel, I'll take that. In the second half, really, it's not much other than normal sequentially growing, you know, particularly in the fourth quarter, for us to achieve that. Nothing superhuman there. Given the levels of that we're seeing, they're, you know, they're shrugging off pretty well and showing that good margin expansion despite FX. We're really pleased about that. We saw a little bit of that in Q2 as well. I actually saw quite nice core margin expansion in Q2 of this year. When you look at Q3 and Q4, you don't need some big step-up. It's just normal fall throughs based on where we sit right now. Okay. Pretty decent hit on one-time FX in the quarter, in the second quarter for AHS, or margins would have been even better. I think when you take that into account, Nigel, this is really kind of a normalization of what we see. Okay. As we said, a great margin story in that segment. Great. I mean, so it sounds like the transactional FX is hitting AHS more than the other segments. I wonder if you maybe clarify why that is because I'm not sure I understand why. On the free cash flow conversion, I did want to touch on free cash in my follow-up. You're obviously very impressive, especially compared to some of your peers. Are you absorbing the R&D tax credit headwinds this year within that number? Because if you are, that's even more impressive. Just wondering. How that's impacting things. Yeah. Nigel, thanks for the question. Yes, we are. We anticipated that when we put out our guide for this year. You know, we've got about $20 million in the first half of this year, and probably looking at another $40 million next in the second half. But again, that's already contemplated. You know, in the guide. To the question on the transactional FX, it's actually hitting all of our segments. You know, what you're seeing there in terms of different from what we guided is at AHS, their revenue's coming in really basically where we thought they would in Q2, and the other two are coming in a little stronger. So it's hiding what is actually hitting all three of them. All right. Thank you very much. Your next question comes from the line of Jeffrey Sprague from Vertical Research. Your line is open. Hello, everyone. Hey. Hey. Hello. Hey, just wondering if we can get a little more color on Tektronix, both kind of what's driving the order strength and just looking at the book-to-bill at that level. I would assume there's still some issue getting stuff, you know, out the door kind of, and tapping the backlog and book-to-bill. Can you give us a little color on both sides of that equation? Yeah, sure. I think we're really excited about the work that the team has done over the last several quarters from an orders perspective. A lot of innovation that we've really launched, Jeff. We talked a little bit about it in the prepared remarks. Their book-to-bill, I think in the second quarter was like 1.3, almost 1.3. They continue to see good orders even on the backs of mid-single digit growth. They're gonna continue to do well. It's really an innovation story. You know, they're taking advantage of. We launched the 2 Series, which we mentioned in the prepared remarks, which you know is obviously very good. We've also had an enhanced 5 Series launch and some follow-on scopes, probes and things like that to go with those products. So it's an innovation technology story. Obviously, the market's good. We've talked about not only getting some benefit from some of the semiconductor investments that folks, but we're really getting the benefit of how just more digital technology being in everything from, you know, the power challenges of EV batteries to the power challenges that are in a small IoT sensor. Really everywhere where we've got now, you know, more digital transformation going on, we've got more R&D needed and more investment needed in order to deal with some of those challenges, particularly around the power side. They're taking advantage of those strategically that they've really, you know, had in their strategic plan over the last few years, and that strategy is playing out well. They'll continue to see good order growth. They're now starting to get caught up in on some of those orders. As we said, with mid-single digit growth in the quarter, that obviously means they're starting to get things. You know, we have very low inventory with channel partners, so pretty much we're really hand-to-mouth on everything, mostly in our channels. The opportunity now to really, I think, continue to build the business here is just, you know, really strong in the second half as well. Interesting. I think the last time we talked, you had mentioned some of the activity that you were seeing in tech, you know, sort of showed a kind of reshoring element as people were kind of pivoting where they were investing or where they were maybe preparing to capitalize, you know, production. Could you maybe elaborate on that a little bit more? Is that still going on in the business? Yeah. We don't play a lot in the production side of semiconductors, but obviously, as onshoring occurs relative to semis, certainly what's been announced here out of Washington, we'll benefit from that because those are gonna be many times new generation of designs or are going to be certainly gonna be required from a Keithley perspective. We do have some semiconductor opportunities there. So they will benefit from that kind of investment. More broadly, because there's if we think about the bill that's out there now, also has a you know, billions of dollars invested in technology investment to really bring all industries within the United States up from a technology perspective. Anything that goes into innovation and into any investment that goes into R&D budgets, particularly around hardware, is gonna benefit Tektronix. you know, as we said, we talked to you a little bit about the secular. There are some secular drivers around here, and we certainly think, even the latest headlines would suggest, you know, things might be even slightly better. Great. Thanks for the color. Thanks, Jeff. Your next question comes from the line of Scott Davis from Melius Research. Your line is open. Hey. Hi, Scott. Hey, Jim. Chuck, Elena, thanks for the color here. The order book up 12%, it's a big number, but sometimes these things lack some context. I mean, is the price in that order book consistent with the price that you are posting today, kind of in that 5% ballpark, or is it a little bit higher? No, it's about the same, Scott. At around, you know, 5% of what we saw in the third or the second quarter. We'd expect that in the second half as well. Okay. It's strong. Just to get in a little minutia here, ServiceChannel, if you can help us kind of understand the sales cycle a little bit better. I mean, it's pretty big growth numbers this quarter. Are there any kind of variations in that sales? You know, if there's kind of, I should say, you know, updates or whatever that may cause people to buy ahead of them, or price increases if people buy ahead of them, or new product launches that people pile on. Is there kind of any lumpiness to that business that we should be aware of? Yeah, there's a little bit of bumpiness in the sense of they do have some portion of managed service that they run procurement of services through, and that can get, you know, it can be a slightly heavier at certain points in time. They did benefit from a little bit of that. But when we look at the SaaS part of the business and the AI part of the business, it's very strong. In fact, you know, it's a 20%+ kinda growth. We feel very good about where they're stationed from a growth perspective. You know, we don't really see the buy-in ahead or anything like that. It's a pure SaaS model, so we don't really have a license aspect to it. The sales cycle, you know, with a big retailer or big user, somebody who has a number of facilities, you know, that's a fairly long sales cycle. We won't see anything dramatically move up or down from the standpoint of that. You know, we've secured a whole bunch of customers in 30 days or something like that. The funnel looks good for the second half. We feel good about it. The team's done an excellent job of, I think, you know, we're gonna get into core here at the tail end of the third quarter, and we feel really good about where the business is positioned today. We're making some changes around the innovation aspects and offerings that we'll start to see in 2023 that we're excited about. We just think in general the business is off to a very good start. That's helpful color. Big numbers. Thanks, Jim, and good luck to you guys. Thanks, Scott. Your next question comes from the line of Andy Kaplowitz from Citigroup. Your line is open. Hey, good morning, guys. Hi, Andy. Jim, you mentioned the higher recurring footprint that FLIR has along with the record backlog that you have continued to add to, and you did also mention that your backlog should help you in 2023 in the presentation. How much confidence do those metrics give you as you potentially enter a slower growth environment? How likely is it that you could grow even if the world does moderately slow? Well, you know, we certainly, you know, as we sit here with the first half, it's knowing we would get some 2023 questions, you know, I would say a couple things around what we think. Obviously, every slowdown, if there is one, has a slightly different aspect to it, so no one is perfectly predictable. I would say a couple of things that we know to be true. We're probably gonna end the year with twice as much backlog as we started 2021, January of 2021. We'll have twice as much backlog starting the year as we did. We're gonna start with, as you said, a high recurring revenue and aspects of the business, both on the software side and on the healthcare side with strong consumables. We think that's obviously a really good thing. We're gonna go into the start of the year as well with a number of efforts that have been multiyear around our organic efforts to attach all of our businesses to better secular drivers, whether that's the service strategy that we've had at Tektronix or some of the things you're seeing play out in some of the environmental work that we're doing within Sensing. All of those things are gonna be less dependent on what the macro looks like. We think that those three factors from a framework perspective, Andy, are gonna set us up well. I think, you know, depending on the scenario, we certainly think there is growth to be had for sure in 2023. You know, obviously, we'll get through the remaining part of the year and see what happens. Those three factors are gonna really be strong things going in. We're building scenarios around what could happen and understand what that is. I just remind everyone that in 2020, when we had, you know, some pretty significant COVID challenges, we still grew earnings and free cash flow. Our ability to apply FBS to these scenarios in a very difficult environment. We certainly have a track record of that, but we set the portfolio up to be more resilient and, you know, we'll see how things play out, but we're pretty confident we're gonna be much more durable and resilient than we've ever been before. Jim, I just wanna follow up on something you said earlier on this conversation. I think you said last quarter that channel inventory was a little elevated at Fluke and Tek, but you're generally feeling good about it. I think, Jim, you just said that your channel on Tek actually was pretty lean. Am I hearing that right? Or maybe you could just clarify your channel commentary. Yeah, sure. I think in Tek it's pretty lean, and, you know, because demands continue to be good. I think we're gonna be. We're pretty hand-to-mouth in a number of regions around inventory, that's at Tektronix. On the Fluke side, what I said last time was when we look at both the inventory in the channel and what they have on order and in backlog. What we saw in the second quarter is some of that order and backlog moved into inventory. The number itself didn't change dramatically, but the makeup of it was a little bit less backlog, a little bit more inventory. We actually think that's a good thing, because we've had mid-single digit growth in POS here, and we think without really hardly any demand generation, we've held off on the demand generation standpoint at Fluke because, you know, we didn't wanna be out there with lots of demand generation if we couldn't fulfill those orders. We're gonna turn that spigot on. In fact, we've already turned it on. We're gonna go lean into the second half relative to demand generation investments now that we've got channel inventory in a better place where we can help our channel partners deliver on a more consistent basis. We actually think that's a little bit more inventory than what we're seeing right now will help us drive a little higher POS in the second half. You know, we think that overall is a good thing for us and our customers. Appreciate all the color. Thanks, Andy. Your next question comes from the line of Amit Daryanani from Evercore. Your line is open. Yep. Good afternoon, I guess, everyone. You know, I guess two questions for me as well. You know, first of all, the free cash flows, I was hoping you just talked about, you know, when I look at the free cash flow projection for the back half, there's a pretty big uptick in Q4 free cash flow, both dollars and conversion rate. Maybe just start with what is driving that dynamic for you, and then, you know, in aggregate, when you look at your working capital metrics, do you think those have sort of peaked? As you go into 2023, more importantly, does that become a source of free cash flow generation incrementally for you? Hey, Amit. It's Chuck. I'll take those two questions. You know, the second half is always seasonally stronger. In the first half, we pay out incentive comps, and so when you compare first half to second half, it's gonna be stronger. In Q4, there's a little bit more in shipments. Then when you look at Q1, there's a step down. Like what you see us doing is relieving some of our working capital, and that. Those are a couple of the dynamics that would drive the fourth quarter to be stronger. Keep in mind, we're very pleased with up 11% on our free cash flow in the first half, so feel really good about that. Keep in The biggest thing we were looking at is how back-end loaded Q2 was out of China with Shanghai being locked down in April and May. We think that we've got strengthening even from what we normally would do over cash flows. Feel super positive about that. The working capital trends, I do think that maybe with supply chains, we would expect particularly inventory is more at peak levels. As the supply chain continues to get better, it's still a very tough environment. You could theorize in 2023 that we would expect to reclaim some of that ground in inventory. Having said that, we've done a fantastic job with our working capital, and really been benefited from the working capital that you get with software business. Fair enough. You know, if I just follow up on Europe, I know you talked about it a bit earlier, but you know, the growth of mid-teen is really impressive given all the macro worries people have in Europe. I was wondering if you could talk about, and maybe if you have a sense, you know, if your customers in Europe, are they, when they get the products imported, are they deploying it in use cases, or are they holding it as inventory? I'm just thinking out loud on a scenario where given all the fears of energy shortages that could happen in the winter in Europe, could customers logically just be building up inventory to offset those issues that they seem to have? I wonder if you're seeing any of that or any shift in patterns from, you know, direct to the OEM versus channel? Just anything you can talk about? Yeah. I think number one is we've seen pretty broad-based success there, as I was mentioning a few minutes ago. I would say we've seen point of sale is good as well. I don't feel channel partners are stocking up or anything like that. For the most part, when we look at the businesses, you know, Fluke is one of our larger European businesses. We don't typically see people stock up Fluke products. They really take them to use them. From an end user perspective, Tek is pretty much very much the same way. I feel pretty good about a good chunk of our revenue base is really not stocking up, but they're really selling through the channel partners, and it's being utilized. We are seeing some of our software businesses, many of our software businesses that we've purchased didn't have big European footprints, and we've been expanding some of that. We're seeing some growth in software there, which has a little bit of impact here, and I don't anticipate that to be an issue. As we mentioned, you know, we think the overall environment has been. On the Sensing side, we might see a little bit of that. We have a pretty good sense of that, though. We know when the orders are out there, and we'll probably see a little bit possible, but I don't think it's meaningful in the. From a standpoint of three or four quarter outlook of Europe, I don't think that's a meaningful number. I think on balance, we feel good about Europe. I think we, like everyone on this call probably, looking at some of the macro factors, some of the things that might occur in the winter, certainly looking at it and keeping a real sharp eye on what might any trajectory changes that we might see over the next call, you know, between now and the end of the year. Perfect. Thanks a lot for the insight. Thank you. Thank you. Your next question comes from the line of Deane Dray from RBC Capital Markets. Your line is open. Hi, everyone. Hi, Deane. Hey, if we go back to page five, I really like that updated mix, revenue mix. How would you describe the target and the path for the 40% recurring revenue? Is there a timeline where that you can share today of where you think it begins to level out? Well, I think number one, you know, we're continuing from an organic perspective across the businesses to seek out new business models that even in our current businesses. As you know well, Dean, things like some of the things we're doing around our cloud offering at Tektronix, which is just very early today, but it's gonna have a recurring theme to it in the next several years. Organically, we're building on it. Then, of course, the software businesses are gonna grow inevitably. You know, obviously, they're growing well really well right now, along with our hardware businesses. The long-term growth rates of our software businesses are better, and that compounding is gonna continue to add to what we wanna try to do what we're trying to do relative to the business model. You'd see that number continue to tick up without any inorganic activity. Then, of course, no matter hardware or software, I think one of the things that's been consistent with our acquisition strategy over the last six years has been that almost exclusively our acquisitions have had a recurring theme to them. Sometimes they were consumables like ASP or Landauer. Sometimes they're software. But fundamentally, they've had a recurring theme to them. While I wouldn't say that'll be exclusive, it'll certainly be the majority of capital that we deploy over time, and so you'll see that 40% continue to go up over time, I suspect, with both organic and inorganic efforts. Back on page four, I just wanna make sure I have the mechanics of this right on the COVID lockdown being mitigated. Does that $55 million constitute a pull-in from what was expected to be in the second half? Was that in your second quarter guide? It was, Deane, if you remember when we talked about second quarter, we talked about revenue shifting out because of the lockdown in China into the second half. This is a return. I think of it as a return to the second quarter. We didn't have it in our. We didn't expect to get this in Q2. The team did a fantastic job, as we said, mitigating some of those things. It's just a return to where we originally had it forecast. Got it. Thanks for clarifying. Thanks, Dean. Your next- Your next question comes from the line of John Walsh from Credit Suisse. Your line is open. Hi, John. Hi. Hi, how's everyone doing? First question was just if you were to think about your SaaS software assets, you've had them for several quarters now, have you seen any discernible change in the pace of new logo adds or customer retention? Are you kind of accelerating? Has growth plateaued there? Just any color around that you can provide. Well, I think you know when we think about our growth in our ARR, we talked about kind of the bookings level where I think our trailing twelve-month number is around you know 9-ish% or almost 10%. It's gonna be double digit by the end of the full year, so by the end of the year. We really see SaaS accelerating. Customers continue to look for cost savings, and so many of our SaaS offerings are really cost savings driven. You know, we've always said we position the portfolio around safety, quality and productivity. You know, a number of these offerings allow them to continue to do the things they need to do. I would say the one place where we've seen a little bit of maybe the funnel moving out a little bit is in healthcare software, where we've heard, you know, we've started to see a little bit on the new logo side, where some staffing shortages and IT organizations and things like that have pushed a few things out a little bit. But on the other hand, when we've had the customer, we mentioned in our prepared remarks the Provation example, where we have a customer where it was a SaaS upgrade and new logo, new SaaS, we were able to close that relatively quickly. So the upselling and cross-selling is happening at the same pace. In healthcare, the new logos may be slightly longer a little bit. I think more broadly, we haven't seen much in the areas of real delays too much, more broadly across the portfolio. That's why, you know, we see SaaS continuing to accelerate in the portfolio through the year. Great. Maybe just a modeling question here. You provide a lot of detail there. If I look at IOS, just based on the ranges you provided, it looks like in Q4, that's the only one that might be down sequentially. I don't know if there's some mix there or it's just a wide range on, you know, what the greater than symbol means, on your guidance slide. Thank you. Well, I think number one, there's probably a little bit in the rounding there. IOS margins are gonna continue to be good. I don't think we have any discernible changes relative to that. We can get back to you on the specifics around modeling, but I think what you saw in the quarter in IOS, very strong margin expansion. We will continue to do, I think, a good job with probably a little bit on. There might be a little bit on the comp side, but I think where we stand today with margins, pretty much every business is getting better as we move through the year. You know, I think we're gonna continue to see strong margins as we progress through the year. Um- It's a bit more of a rounding, so we just went to a solid number, and we obviously did have the impact from FX, you know, and the one-time FX impact on the transactions component roll through into the full year. There's really nothing else. Great. Thank you. Thanks, John. Your final question comes from the line of Joe Giordano from Cowen. Your line is open. Hey, Joe. Thanks for squeezing me in. I think some of the pricing dynamics for many companies are kind of skewing the year-on-year comparisons a little bit. If I was to think about the orders from your more industrial businesses on a sequential basis from here, how do you kinda see them going? Are those going up consistently on a sequential basis still? Or are they more like kind of staying flattish at a high level? Well, first of all, price is a pretty good constant from the second quarter into the second half. You can kind of think about that as a constant. It sort of does depend on the business because of the amount of backlog. And also, we'll start to see orders in Sensing, as an example, probably look to, you know, we'll start to see 2023 dates on them 'cause we are seeing a little bit of Sensing tech customers, you know, a little bit of buy ahead. Still strong growth on a two-year stack, but that's how I'd think about it. That's number one. We'll see continued strength in orders at Tektronix through the year. Fluke will slow a little bit, but that's really a two-year. That's really more of a comp thing than it is anything. We really think when you look at both volume and price, we'll continue to see strength as we go through the year. Obviously, revenue's gonna get a little bit better on the core side, hence our upgrade or our increased core. I wouldn't say there's any real change in dynamics. I'm assuming the base of your question is there a big change in price versus volume in the second half? I don't suspect there is at this point. You know, we're gonna continue to really do things like the demand generation activities I talked about at Fluke, and we'll see how that plays out through the year. You know, I think we've been in a good place relative to price volume in the first half, and we like where that's at. I suspect we will in the second half as well. Just last thing for me. When you talk about Gordian and Accruent and maybe even ServiceChannel starting to combine a little bit, like, what does that actually mean for those companies? Does this ultimately become one single brand under Fortive? Or, like, what logistically needs to happen for those businesses to move that way? Well, I think what we try to do from an IR perspective is give you the perspective of the performance because of some moving pieces between them, and it just makes sense. You know, what we do strategically, branding, product lines, product portfolio, still to be determined. We certainly have a similar customer base in certain situations. We're managing that incredibly well while we're separate companies. You know, inevitably, we'll start to bring some things together, probably from an architecture perspective, if you were to take a longer term view, but still early days on all that. The team is still bringing all that together. I think the story, though, is continued acceleration of performance. Margin expansion's very strong. We've mentioned that one thing we didn't talk about is, you know, we're a little ahead, both when we combine ServiceChannel and Provation from an earnings perspective and EPS perspective, a little ahead on the first half. We're in a really good place, not only on a growth standpoint, but where we stand in margins in those businesses. We're gonna end up with the combination of those businesses with an over half a billion dollars revenue base with very strong margin capability, strong margins today and even stronger margins. Two of those businesses are, you know, rule of fifty businesses already, and so real opportunity or almost rule of fifty businesses. That entire segment ought to be able to be that way in the future. I just think we're really well-positioned strategically, no matter how we sort of put them together, don't put them together. We're gonna be in a good place. We are in a good place long term to really build that franchise, really well. Thanks, guys. Thank you, Joe. This brings us to the end of our question-and-answer period. I'll turn the call back over to you, Jim, for some closing remarks. Well, thanks, Rob, and thanks everyone today for joining us. As we said in the prepared remarks, hard to believe we just celebrated our sixth anniversary with a lot going on. We appreciate, truly appreciate the support that all of you on the call have had for us over the last six years. We said 2022 was a show me year. We think the first half really demonstrates that in so many ways across the portfolio. Both the breadth and depth of the quality of what's going on in the business is just something to be incredibly excited about. We're even more excited about the second half. We think there's even more opportunity to do a number of those things. We'll continue to obviously have an opportunity in the follow-up calls to give you a little bit more detail on that, but we're set up well. Obviously, a lot of uncertainty out there, but we've weathered a lot of the storm exceptionally well, and I'm highly confident we'll continue to weather the uncertainty and things that might be in the outlook no matter what the scenario, and we look forward to continuing to share that. If we don't talk to you between now and the end of the summer, have a great rest of the summer, and we'll look forward to seeing you in person, hopefully in the fall. Thanks, everyone. Have a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect.