Thank you Jim and good morning everyone. My comments today will include highlights related to our second quarter results and cash flow, plus a few remarks about our outlook for the third quarter and targeted earnings for the full year.
As Jim just mentioned, we had a very strong second quarter, growing revenue by 14% in total or 9% on an organic basis, and we delivered earnings growth in excess of 20%, providing evidence that our growth strategies are resonating with customers and our longer term target to grow earnings at twice the rate of organic revenue growth is achievable.
Relative to the estimates we've provided in June, second quarter revenue of $998 million was slightly higher than the top end of our guidance and the $0.50 of earnings per share exceeded our estimated range by $0.05.
For revenue, our 14% growth included the impact of acquisitions and other inorganic items, plus 9% organic growth, which benefited from a strong beginning backlog of customer orders.
Our estimated range of revenue for the second quarter took into consideration the ongoing uncertainties related to tariffs, slowing global economic growth, and Brexit, but their impact on our quarterly revenue was not as significant as it might have been, and the results of our growth strategies more than offset any direct consequence.
As a result, we were able to report revenue higher than the top end of our guidance for the quarter.
The Americas organic revenue growth of 9% was broad-based across geographic regions, vertical markets, and product categories, and included an improving mix of revenue from customers with whom we have continuing agreements. The quarter included seasonal strength at Smith System, which we believe could represent approximately two-thirds of their annual revenue again this year. Similar to the first quarter, orders in the Americas included customer requests for extended shipment dates, which remained higher than historical averages but were largely consistent with what was assumed in our revenue estimates.
EMEA posted organic revenue growth of 5%, despite a challenging environment in the UK. The revenue growth was better than expected, and our opportunity pipelines continued to reflect growth for the second half of the year.
The other category had a very strong quarter with the organic revenue growth of 20% being driven by a record level of quarterly revenue from Asia Pacific and strong growth from Designtex. Across the Asia Pacific region, India revenue growth was very strong, but all other markets also posted year-over-year growth.
With the inclusion of a full quarter of revenue from Smith System, our second quarter seasonality has increased. Historically, the sequential increase between the first and second quarters approximated a mid-single-digit percentage, and this year the increase approximated 21%.
First quarter order patterns and the resulting high level of backlog at the start of the second quarter also contributed to the sequential revenue increase, but Smith system and other seasonality in our business were the primary drivers of the sequential increase this year.
Compared to the prior year, the 9% organic growth stacks on top of 8% organic growth in the second quarter of fiscal 2019.
Over the balance of the year, our prior year comparisons become even more difficult as we posted organic revenue growth of 13% and 15% in the third and fourth quarters of fiscal 2019 respectively.
For earnings, we exceeded the top end of our range by $0.5 due to favorable gross margins and operating expenses, both of which reflected year-over-year improvements as a percentage of revenue and helped improve our operating margin by 70 basis points to 8.5% in the quarter. Better than expected price yield, commodity costs and business mix drove the favorability to our estimates. Lower than expected operating expenses also played a role in our favorable performance in the quarter, as our employees continue to drive fitness improvements across the business, plus some project spending didn't materialize as quickly as we estimated.
Across the segments, the Americas and other category were the largest contributors to our better than expected performance. But EMEA results and our corporate costs were also better than expected.
As you can see, we had a lot of things working in our favor this quarter, which contributed to our earnings exceeding the top end of our estimates by $0.05.
Diving a little deeper into the year-over-year comparisons, we grew revenue by $122 million, or 14% in the quarter, with $83 million coming from broad-based organic growth of 9% and $39 million, representing net inorganic benefits, which included $47 million of revenue at Smith System and Orangebox before we acquired them in the prior year, net of a small divestiture, and $8 million of unfavorable currency translation effect.
For earnings, this $0.50 in the quarter compares to $0.41 in the prior year, which included some unusual items, including a property gain that had the effect of increasing earnings per share by approximately $0.03 after consideration of related variable compensation expense. The prior year also included lower warranty, product liability and workers’ compensation costs, and the initial purchase accounting effects related to Smith System, but these items largely offset.
Our operating income improved by $17 million over the prior year or approximately $22 million adjusted for the effects of the unusual items in the prior year. A few million dollars of the improvement can be attributed to the acquired revenue after consideration of purchase accounting impacts. And the balance represents the operating leverage or contribution margin related to the organic revenue growth, which exceeded 20% in the quarter.
Beyond the absorption benefits related to our fixed cost, the strong operating leverage also included improved pricing, lower commodity costs and benefits from cost reduction and fitness initiatives, partially offset by unfavorable business mix and investments to support growth initiatives. After facing significant inflation for much of last year, which pushed us to take multiple pricing actions, commodity cost pressures are beginning to abate.
While at the same time, the benefits of our pricing actions are kicking in more fully.
We expect net pricing benefits for the balance of the year, but at lower levels as we are beginning to lap initial benefits in the prior year. And on cost reduction and fitness, we supported increased investments in sales, marketing, product development and a few other areas of our business, while delivering an improvement in our operating expense leverage in the quarter, demonstrating the significance of our fitness efforts.
As it relates to orders in the quarter, the 3% order growth compares to a strong prior year, which posted 12% order growth compared to fiscal 2018. Across the segments, the Americas grew 3% on top of 9% growth in the prior year. EMEA declined 1% after 22% growth in the prior year. And the other category posted 9% growth on top of 15% growth in the prior year.
As a reminder, at the beginning of the year, we indicated that our organic revenue target for fiscal 2020 anticipated higher growth rates in the first half of the year compared to the second half, based on how our order patterns and organic revenue growth accelerated during fiscal 2019. And thus far in the current year, our order and revenue patterns as well as our revenue estimate for the third quarter are consistent with those expectations.
Moving to cash flow and the balance sheet, free cash flow generation was strong in the second quarter, nearly reaching $100 million and exceeding the prior year by more than $40 million. The year-over-year improvement was driven by the strong earnings growth in the quarter. But we also benefited from lower consumption of working capital and timing related to capital expenditures and estimated income tax payments.
Capital expenditures were $18 million in the quarter, bringing year-to-date spending to $33 million.
We expect higher levels of spending in the second half of the year primarily related to manufacturing investments. But we now expect the full year to total approximately $80 million to $90 million.
We returned approximately $19 million to shareholders in the second quarter through the payment of a cash dividend of $0.145 per share, plus a modest level of share repurchases. And yesterday we announced the same level of dividend for the third quarter which will be paid in October.
For the third quarter, we are projecting revenue in the range of $920 million to $945 million, or growth between 2% and 5%. Because we estimated unfavorable currency translation effects of approximately $9 million are offsetting the remaining $7 million acquisition impact related to Orangebox, the projected organic growth range is also 2% to 5%. And again, this growth estimate compares to a strong prior year, which grew by 13% on an organic basis compared to fiscal 2018.
From an earnings perspective, we expect to report $0.33 to $0.37 per share, which compares to $0.31 of earnings in the prior year, or $0.36 of adjusted earnings after excluding the impact of a pension charge.
As you update your models for the third quarter, recall the prior year also included favorable adjustments to accrued promotions, a favorable tax adjustment and lower interest costs in advance of our debt issuance in the fourth quarter, as these items in total impact the year-over-year comparison by approximately $0.04 per share.
Taking into consideration our year-to-date performance and outlook for the third quarter, we are now targeting to finish the full year at the higher end of our EPS target range, which takes the following factors into consideration:
Furniture industry growth through July of calendar 2019 in the Americas, as reported by BIFMA, appears to be stronger than the slowing growth of capital spending over the same period, whether derived from macroeconomic data or from looking at capital expenditures across the S&P 500 or Fortune 800. This suggested our industry share of capital spending maybe gaining resiliency, as organizations continue to invest in their workspaces to help drive productivity and compete in the war for talent.
Our backlog of customer orders at the beginning of the third quarter is up approximately 3% compared to the prior year.
Our opportunity pipelines for the next six months continue to reflect growth for the Americas, EMEA and Asia Pacific. Overall sentiment from our sales leaders and dealers remains positive which we believe should support normal end of year -- end of calendar year seasonality across our customer base. We're pleased with our win rates in most regions around the world and believe our research and innovation is resonating with business leaders contemplating investments in their work environments.
I shared those points because many of our individual investor conversations center around the economic uncertainties. And it's important to note that recent industry growth and our performance has been quite good at the same time.
From there, we'll turn it back to the operator for questions.