[Management View]
Fortive successfully completed the spin-off of Ralliant, focusing on Intelligent Operating Solutions (iOS) and Advanced Healthcare Solutions (AHS). Management emphasized resilience in earnings and free cash flow despite macroeconomic pressures, including tariffs and government spending constraints.

[Outlook]
Guidance for FY2025 adjusted EPS is set at $2.50 to $2.60, assuming continued market dynamics from Q2. Management does not anticipate material improvement in macro conditions, with tariff-related cost pressures expected to persist.

[Financial Performance]
Total revenue was slightly over $1 billion, down 0.4% YoY. Core revenue declined 0.7% YoY, with a late-quarter demand shortfall attributed to macro-driven customer deferrals. Adjusted EPS for continuing operations grew 4% YoY to $0.58.

[Q&A Highlights]
Question 1: Julian Mitchell of Barclays asked about the EPS trajectory between Q3 and Q4, noting potential tax rate impacts and seeking clarity on operating line improvements.

Answer: Mark Okerstrom explained that normal seasonality and tariff impacts would affect Q3, with improvements expected in Q4 due to fully implemented tariff countermeasures and FX tailwinds. Lower interest expenses and share repurchases will also support EPS growth.

Question 2: Nigel Coe of Wolfe Research inquired about organic sales growth consistency in Q3 compared to Q2 and the expected performance of iOS and AHS segments.

Answer: Mark Okerstrom clarified that dollar sales are expected to be roughly in line with Q2, with iOS showing improvement and AHS facing continued pressure due to healthcare reimbursement rates.

Question 3: Stephen Tusa of JPMorgan questioned the rationale behind not providing organic growth guidance and the approach to bolt-on M&A.

Answer: Mark Okerstrom emphasized simplification in investor communication, focusing on annual adjusted EPS guidance. Illuminae Charoye highlighted a disciplined approach to bolt-on M&A, with heightened scrutiny and proprietary deal cultivation.

Question 4: Jeff Sprague of Vertical Research Partners sought clarification on iOS sales patterns and implicit margin pressures in Q3.

Answer: Mark Okerstrom indicated iOS would follow Fortive's overall pattern, with core growth picking up in Q3. Margin pressures are expected due to tariffs, with a rebound anticipated in Q4.

Question 5: Scott Davis of Melius Research asked about the impact of the spin and management change on the organization.

Answer: Illuminae Charoye acknowledged the workload but emphasized the resilience and focus of Fortive's teams, driven by the Fortive business system.

Question 6: Andy Kaplowitz of Citigroup inquired about deferred spending at Fluke and macro uncertainties.

Answer: Illuminae Charoye explained that deferred orders were due to tariff uncertainties, with Fluke's fundamentals remaining strong. Prudence in guidance reflects ongoing macro challenges.

Question 7: Joe Giordano of TD Cowen asked about hospital spending trends and bolt-on M&A appetite.

Answer: Illuminae Charoye noted hospitals are likely to focus on profitable procedures, not single-use applications. M&A criteria remain consistent across asset types, with strategic and financial scrutiny.

Question 8: Deane Dray of RBC Capital Markets inquired about stranded costs and monthly revenue cadence.

Answer: Mark Okerstrom confirmed progress on stranded costs, with further efficiencies targeted. Illuminae Charoye detailed specific areas of deferred spending, expecting resolution over the coming quarters.

[Sentiment Analysis]
Analysts expressed cautious optimism, seeking clarity on guidance and strategic initiatives. Management maintained a confident tone, emphasizing resilience and strategic focus despite macroeconomic challenges.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 |
|--------|---------|---------|
| Total Revenue | $1 billion | $1.004 billion |
| Core Revenue Decline | 0.7% | - |
| Adjusted EPS | $0.58 | $0.56 |
| Free Cash Flow | $180 million | - |

[Risks and Concerns]
Tariff-related cost pressures and macroeconomic uncertainties, including government spending constraints and evolving healthcare policies, pose risks to revenue and margin performance. Management is implementing countermeasures but anticipates continued challenges.

[Final Takeaway]
Fortive's strategic spin-off of Ralliant marks a pivotal transition to a more focused entity, with resilience demonstrated in Q2 financial performance despite macroeconomic headwinds. Management's guidance reflects cautious optimism, with strategic initiatives aimed at accelerating growth and shareholder value. Analysts remain attentive to tariff impacts and the execution of bolt-on M&A, while management emphasizes disciplined capital allocation and long-term value creation.