Jim Lico
President & Chief Executive Officer at Fortive
Thanks, Elena. Hello everyone, and thank you for joining us. I'll begin on Slide 3. I'm extremely proud of how our teams have come together to navigate the continued challenging environment and deliver an outstanding quarter with better than expected revenues, earnings and cash flow.
Our strong purpose driven culture supported our relentless focus on executing for customers, shareholders, and each other while facing unpredictable obstacles. Despite these challenges we saw record orders growth across several of our businesses, reflecting continued demand for our leading connected workflow solutions. Hardware orders grew 14% adding approximately $130 million to backlog. And our software-enabled businesses grew mid-teens with double-digit growth in both our SaaS and license revenue streams.
Through the rigorous application of the code of business system, we continue to deliver improvement across our businesses, driving greater visibility and insurance of supply in the quarter. Our teams also worked hard to overcome higher inflation, which resulted in 60 basis points and 30 basis points of gross and operating margin expansion, respectively, a 11% EPS growth and 36% free cash flow growth in the quarter. Overall, the momentum across all three of our segments in the first quarter sets a strong foundation for the year ahead and reinforces our confidence in our full year 2022 outlook.
Turning to Slide 4. I wanted to provide an update on what we are seeing, and what we expect a over the remainder of 2022. Starting on the left in the current environment, strong orders growth was driven by accelerated innovation, continued share gains and leverage to favorable secular drivers spanning all geographies in end markets yielding an 18% increase in hardware backlog in the quarter.
Our continuity of supply is improving, driven by daily management and conversion Obeyas [Phonetic] allowing us to ship more product in Q1 than initially planned. Our China teams did a great job mitigating the intermittent government mandated COVID lockdowns across the region, starting in Tianjin in January. Shanghai lockdown at the end of March impacted shipments by approximately $20 million in the quarter, primarily at Tektronix. With operations restarting, we expect to face sub bottleneck in supply chains. However, our teams will be relentless and work to revamp quickly.
Moving to the right hand of the side of the slide, we expect sustained core growth driven by normal seasonality, continued strong customer demand and record backlog, which gives us a tailwind for growth again in 2023. Combined with pricing and operational performance, we expect strong margin expansion in another year of double-digit earnings and cash flow growth. As Chuck will cover in more detail shortly, we are updating our outlook to reflect the strong start to the year, raising the low end of our guidance for the year.
Lastly, our ability to convert more earnings to cash, underpins our investment thesis, and allows us to reinvest in our businesses, accelerate our strategy and enhance our returns to shareholders. In the first quarter, we took the opportunity to buy back approximately 1 million shares totaling $64 million. The M&A pipeline remains full with hardware and software opportunities across each of our segments and we estimate M&A capacity of approximately $5 billion over the next three years.
Moving to Slide 5. Our leading connected workflow solutions facilitate transformation across high impact fields like workplace safety, facilities management, product development, and healthcare. Our strategies across these segments is incredibly powerful. We serve customers ranging from technicians and facilities managers to engineers, product developers and healthcare professionals who all work in challenging environments where Fortive technologies provide higher quality instrumentation, better sensors, superior software, and real time data analytics to empower them to do their jobs more safely and more efficiently.
As you can see, each segment is well positioned to benefit from favorable secular tailwinds and durable business models that underpin our strategy and vision to build a stronger collection of businesses with industry-leading profitability and free cash flow margins.
And I'll now provide some details on each of the three segments beginning with Intelligent Operating Solutions on Slide 6. IOS had a terrific start to the year, as customer demand for maintenance, uptime assurance, environmental health and safety and facility planning solutions all contributed to double-digit orders, growth and strong revenue growth in the quarter.
Total revenue was up 15% with core growth of 8.7%. This included approximately mid-teens core growth in North America, and high single-digit growth in Western Europe, more than offsetting a low 20% decline in China. Our FBS countermeasures to improve assurance of supply are making progress, mitigating the effects of the COVID lockdowns and driving better core growth in the quarter. We continue to see solid price realization, which we expect further benefit perform to the second quarter and the remainder of the year. And while our counter measures enabled us to ship more product, we also incurred additional costs from elevated freight and logistics expenses. As a result core operating margins were flat year-over-year, despite price cost being positive on a dollar basis.
IOS adjusted operating margins were 27.2% down 145 basis points due to the dilutive impact of the ServiceChannel acquisition. As a reminder, ServiceChannel's margins are ramping nicely in line with expectations and IOS core margins are up over 200 basis points on a two-year stack basis.
Some other highlights of the quarter include, record revenue and bookings of Fluke supported by strong point of sale, particularly in the U.S. where point of sales grew of mid-teens. Industrial Scientific continues to make progress diversifying its businesses with nine out of the 10 largest Q1 deals booked with new customers outside of oil and gas. Intelex is also seeing strong demand for it SaaS solutions continuing to grow at a healthy double-digit pace. And likewise, we saw record core growth in facilities and asset lifecycle management in the quarter where Accruent had a solid start with mid-single digit growth and is on track for sales acceleration in the second half. Gordian generated strong double-digit growth and secured a large data win with the U.S. Army Corps of Engineers. Further ServiceChannel had a strong double-digit revenue grow and record bookings in the quarter as customers continue to outsource their facilities maintenance work.
Turning now to Slide 7 in Precision Technologies. We saw record customer demand, driving double-digit order growth across major geographies and a broad set of end markets, including HVAC, aerospace and defense, automotive and electric vehicles and semiconductors. PT revenues grew 3.4% with core revenue growth of 4.6%. High single-digit growth in North America and Western Europe was partially offset by a low double-digit decline in China, driven by COVID related lockdowns in Shanghai at the end of the quarter.
As a reminder Tektronix operates a major manufacturing facility in Shanghai, which shutdown the last week of March. The impact was approximately $15 million to PT revenues or 350 basis points of growth, which also impacted their margin performance in the quarter. That said PT operating margins expanded 30 basis points, reflecting over 50 basis points of gross margin expansion, partially offset by continued investments in new product development.
Some highlights of the quarter include successful new product launches, driving incredibly strong order growth at Tektronix, including the refresh of the five series in the first quarter, which is tracking solidly above plan. Sensing also saw low-double-digit top-line growth, reflecting solid share gains across it key markets and had over a 100 basis points of operating margin expansion in the quarter staying well ahead of inflation.
Moving now to Slide 8 in Advanced Healthcare Solutions. AHS continues to accelerate innovation and digitization in hospitals and ASCs. With custom and clinically superior workflow solutions, AHS is well positioned for a multi-year recovery in healthcare. Revenue increased 8.5% in the first quarter with core revenue growth of 0.6%. Mid-single-digit growth in North America was largely offset by a low-single-digit decline in China due to the impact of COVID restrictions on ASP and a high-single-digit decline in Western Europe as expected. AHS operating profit margins benefited from FBS enabled productivity initiatives, driving core margin expansion at ASP, as well as the accretive benefit of the probation acquisition partially offset by lower volumes in Invetech.
From highlights in the quarter include elective procedures in North America were roughly in line with expectations in the first quarter. As a reminder, we expect electives to continue to improve an average 88% of pre-COVID levels for the year. We saw approximately 20% growth in the Censis track SaaS offering at Censis an approximate doubling of subscription orders in the quarter. And probation secured several significant orders in the first quarter, including four competitive GI wins in large 20 hospital network win for its eye procedures anesthesia solution.
Execution in an otherwise challenging and uncertain environment is one example of how FBS continues to be an important differentiator for Fortive. As shown on Slide 9, FBS enabled our businesses to enhance supply chain resilience, drive innovation and profitable growth across the portfolio and build skills and capabilities in our leaders to effectively deliver on our commitments in the quarter. Examples include, an improvement in unit output and reduction in supply chain risk at Fluke through the use of daily visual management, allowing them to outperform in the quarter. The execution of lean portfolio management at Tektronix driving several new customer driven product launches in the coming quarters.
Value pricing and pricing leakage tools, driving strong price realization at Sensing Tech. Substantial margin expansion at ASP from broad cost reduction more than offsetting lower consumable volumes in the quarter. Daily management and problem solving drove an improvement in working capital terms at Fortive China. And several examples of our progress in our software businesses, including incremental growth realization at Accruent from improved uplift on renewals, a 20% improvement in time to first revenue for procurement customers at Gordian and an acceleration of growth opportunities at probation.
As you heard me say before, I'm incredibly proud of the work we've done, continuing our progress towards building a more sustainable future as you can see as Slide 10. Fortive's commitment to sustainability started on day one. When we developed aspirational and actionable targets and subsequently invested significant time, energy, and talent to establish a performance driven program. This timeline reflects the evolution of our program and commitments we have made since 2016. In early June, we will publish our fifth sustainability report, reflecting consistency and progressing levels of transparency, including adherence to the GRI reporting framework and completing our first CDP climate change disclosure in 2020.
Adding the SASB reporting standard to enhance our climate related disclosure to investors in 2021, and new in 2022, we will provide our first UN Global Compact statement of progress to find our status and plans for TCFD-aligned disclosure and offer initial Scope 3 emissions data and Scope 2 market based submissions in our CDP climate change disclosure. It is our shared purpose that also pushes us to create innovative and sustainable products and services for our customers trying to solve some of the world's biggest sustainability challenges. For example, Intelex leading software solutions for EHS and sustainability managers serves leading Fortune 500 companies across multiple industries.
In fact, our EHS and sustainability teams use the Intelex application to manage and drive continuous improvement of our greenhouse gas emissions accounting in accordance with the GHG protocol. Includes diverse range of products provide solutions that advance workplace health and safety as well as optimization of renewable energy installations for our customers. Consistent with our culture, we are driving incremental improvements in sustainability, and we look forward to continue progress in the years to come.
With that I'll pass it over to Chuck. Who'll provide more color on our first quarter financials and our second quarter and full year 2022 outlook.
