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Chairman and CEO Jennifer Parmentier attributed the order strength to increasing commercial transport and wide-body build rates, continued aftermarket growth from air traffic, and sustained demand from defense legacy programs. She explained that the conversion of long-cycle orders to sales is gated by customer build rates and capacity, making the 8% sales growth forecast consistent with visibility into customer plans, despite a large backlog.

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CFO Todd Leombruno confirmed that the company's longer-cycle mix implies a slightly longer translation from orders to revenue. CEO Jenny Parmentier estimated the off-highway challenges would persist through the calendar year. She then provided a detailed breakdown of Q2 aerospace growth: Commercial Aftermarket at +21% and Defense Aftermarket at +25%, driven by strong depot partnerships.

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CEO Jenny Parmentier stated that distributors are not citing the election as a factor; instead, they point to project delays, possibly related to interest rates. On defense MRO, she noted the exceptional 47% Q1 growth will face tougher comps, but the company has raised its segment guidance to low-double-digits, driven by success in public-private partnerships and leveraging the Meggitt portfolio.

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Executive Jennifer Parmentier noted that while broad-based softness in Europe is expected to continue, there is positive sentiment around future stimulus and defense spending. She highlighted Parker's global defense position, noting many U.S.-built aircraft are exported to allies. Regarding tariffs, she stated Parker is not adjusting CapEx and sees no need for major supply chain realignment due to its 'local-for-local' model, which provides global capacity and is supported by dual sourcing strategies.

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CEO Blake Moret affirmed a commitment to margin expansion regardless of top-line growth, noting they have factored in headwinds. He highlighted manufacturing efficiencies as a key future opportunity. CFO Christian Rothe added that the cost program progressed from faster SG&A cuts to longer-term initiatives like product redesigns and operational excellence, and that vigilance against cost creep is now critical.

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CEO Blake Moret affirmed Rockwell's commitment to margin expansion regardless of top-line performance, noting plans to mitigate tax headwinds. CFO Christian Roethe added that they expect margin expansion next year from price and ongoing cost programs. Regarding restructuring, Moret highlighted the program's breadth as key, with future opportunities in manufacturing efficiencies. Roethe detailed the program's progression from headcount reductions to operational excellence in factories.

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CEO Blake Moret explained that growth in e-commerce and warehouse automation is driven by multiple factors, including logistics improvements in consumer industries, new e-commerce fulfillment centers, and power distribution equipment for data centers. Regarding Lifecycle Services, Moret attributed the slowdown to customer delays in large CapEx projects, particularly in process industries, due to commodity price pressure and policy uncertainty. He noted competitiveness remains strong and some delayed projects were secured in April.

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Blake Moret, Chairman and CEO, explained that the order-to-shipment timeline varies from weeks for products to an average of 5-6 months for Lifecycle Services projects. He added that engagement with European machine builders is encouraging, and he expects Europe to be the second-best performing region in fiscal 2025 as destocking abates.

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President & CEO Lal Karsanbhai and COO Ram Krishnan stated they believe a high-teens growth rate for the power business is sustainable for the next two years, driven by strong investment in generation and transmission. Ram Krishnan added that they have seen no slowdown in customer decision-making for large projects in key markets like LNG, power, and life sciences.

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President and CEO Surendralal Karsanbhai explained that the Test & Measurement recovery is led by its broad-based portfolio business and aerospace and defense, while automotive-exposed businesses in China and Germany remain weak. He affirmed that the pharmaceutical spending is 'very real,' driven by reshoring trends and high demand for new drugs, and noted that Emerson is well-positioned and already seeing early projects enter its funnel.

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President and CEO Lal Karsanbhai explained that power generation, representing about 9% of revenue, is seeing accelerated mid-to-high single-digit order growth driven by data center demand, life extensions of existing facilities, and grid investment. COO Ram Krishnan added that nuclear represents about 20% of their power business, where Emerson has a leading global position in instrumentation, valves, and control systems.

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CEO Paulo Ruiz affirmed that Eaton is gaining market share, citing 50% growth in its data center business versus a market growing in the low 30s. He detailed a comprehensive data center strategy, highlighting partnerships with Siemens and NVIDIA and acquisitions like Fiberbond and Resilient Power to address power availability, construction speed, and power conversion from the utility grid down to the chip.

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President and COO Paulo Sternadt stated that Electrical Americas orders are expected to remain strong in dollar value, supported by record backlogs. He highlighted that the major project negotiation pipeline was up 18% sequentially from the prior quarter, with significant strength in data centers and industrial projects. On utilities, Sternadt noted very strong mid-teens global growth year-over-year, with high-teens growth in the Americas, driven by a differentiated, non-commoditized portfolio. CFO Olivier Leonetti added that the company expects a book-to-bill ratio over 1 for the segment.

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Craig Arnold, Chairman & CEO, stated that mega project-related business doubled to over $600 million in 2024, with the negotiation pipeline up 60%. He explained that Eaton incentivizes its supply chain by providing long-term visibility and multiyear agreements, rather than direct financial incentives, noting that strong U.S. demand is naturally attracting global capacity.

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Chairman and CEO Craig Arnold reported that the data center market is outperforming expectations, with sales up 35% in the quarter, orders up 55% on a rolling 12-month basis, and negotiations up 90%. Regarding the hurricane, Arnold confirmed it impacted several facilities and about 3,000 employees in the Carolinas. He stated the impact was a matter of timing, pushing revenue into backlog, and that all sites were now operational. He did not provide a specific dollar amount for the Q4 impact but noted it was embedded in the guidance.

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Chairman and CEO David Zapico stated he did not see a significant pull-forward in China, attributing project delays to funding uncertainty rather than a lack of demand. He confirmed that the destocking in MedTech and Automation has ended, with strong orders in those areas. While the Process business remains sluggish, he noted improved outlooks for the A&D and Power segments, suggesting a bottoming in key markets.

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CEO David Zapico stated that AMETEK's extensive U.S. manufacturing footprint creates opportunities to win share from competitors more exposed to supply chain disruptions. He confirmed the long-term strategy is to increase localization to mitigate tariff risks. Zapico also said they are not reducing CapEx, citing ongoing strategic investments in digital programs, AI, and e-commerce.

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Executive David Zapico clarified that Q1 guidance assumes flat organic sales, an acceleration from Q4's decline. He stated the guidance accounts for known tariff discussions, noting the company has a playbook from 2017-2018 to pass on costs and is ready to execute if needed. Executive Dalip Puri added that the company is not overly exposed to FX at the profit level due to natural offsets.

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President and CEO Neil Barua clarified that while it's not an 'all clear' signal, the level of uncertainty has been mitigated since the last call, giving customers more clarity on their operating guardrails. He noted that while challenges like higher input costs remain, the complex environment has elevated the importance of mission-critical digital transformation, positioning PTC as a more strategic partner for customers navigating these dynamics.

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CEO Neil Barua asserted that the fundamental customer need for PTC's technology to manage complexity and accelerate product development persists regardless of the political or macro climate. He described the current environment as a 'tectonic shift' that benefits PTC. He concluded that uncertainty is multifaceted and that the company is focused on execution and prepared for any scenario.

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CEO Giordano Albertazzi agreed, stating that the complexity of liquid cooling systems makes Vertiv's service strength a key differentiator for both deployment and lifecycle management. He affirmed his belief that liquid cooling will be a favorable driver for the growth of Vertiv's thermal services business.

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CEO Giordano Albertazzi confirmed this view, explaining that the technical complexity of liquid cooling systems and their integration with expensive IT racks makes Vertiv's service expertise a key differentiator. He stated a firm belief that the shift to liquid cooling will be favorable for the growth of Vertiv's thermal services business.

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CEO Giordano Albertazzi, without commenting on any specific customer, stated that overall demand remains robust and is increasingly spread across various segments, including hyperscale, colocation, sovereign AI, and enterprise. This diversification provides the flexibility to cover any potential gaps that may arise from a single customer rephasing a project.

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CEO Giordano Albertazzi clarified that the strength in the Americas was particularly pronounced in the colocation and cloud segments. He reiterated that the EMEA market is currently slower but that strong pipelines support an expected pickup during 2025. He also noted that the slower growth in distributed IT was expected and previously communicated.

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Chair & CEO Dave Regnery acknowledged the market's volatility but pointed to ACT forecasts for a strong rebound in 2026, stating Trane is investing through the downturn to be prepared. On M&A, EVP & CFO Chris Kuehn reiterated a disciplined approach, confirming that while they have the financial capacity for larger deals, their strategy remains focused on value-accretive bolt-on acquisitions of $1 billion or less.

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CEO Dave Regnery clarified that Trane's China business is not in commercial real estate but is focused on applied systems for industrial applications like semiconductors. He confirmed the weakness was from the industrial side, compounded by the company's tightened credit policies. CFO Chris Kuehn addressed pricing, stating the new A2L refrigerant products would be priced in the high single-digit range higher to cover increased costs, with a goal of being margin-neutral. He noted this would be a tailwind for 2025 revenue.

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CEO Joakim Weideminis stated that the data center vertical continues to be very healthy, representing about 10% of sales and growing nicely. He noted that the broader applied HVAC business is also performing well, while Fire & Security is growing at a lower, low-single-digit rate. The company is focusing its initial business system improvements on HVAC due to the larger near-term opportunity.

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CEO Joakim Weidemanis stated that growth is broad-based across most verticals, which are performing well. He noted that after reviewing leading industry indicators against internal data, he does not see any significant slowdowns in key areas, excluding the soon-to-be-divested residential and light commercial business.

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CFO Marc Vandiepenbeeck explained the productivity drag was a short-term result of investments in hiring new sales and technical staff to fuel growth. For Fire & Security, he attributed the EMEA/LA growth to a commercial organization pivot, which is sustainable, and noted the Global Products growth benefited from an easy year-over-year comparison due to a prior-year cyber incident.

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CFO Marc Vandiepenbeeck highlighted several verticals performing well alongside data centers. These include healthcare, particularly hospitals, as well as manufacturing and new energy projects benefiting from government incentives. He also noted that the repurposing of commercial office space is creating new project opportunities.

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Chairman & CEO David Gitlin noted that while North America Truck & Trailer (NATT) saw modest growth, the segment benefits from easy comps in the second half and strength in its container business. On the residential side, Gitlin explained that softer-than-expected sales movement in May and June led to higher channel inventory, prompting a more cautious volume forecast for the second half to allow inventories to rebalance.

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CFO Patrick Goris identified the Refrigeration segment and the Asia region, particularly China, as areas where pricing might be flatter than the company average. CEO David Gitlin reiterated that aftermarket remains a key focus with a mandate for perpetual double-digit growth. He cited positive momentum in KPIs like attachment rates approaching 50% and a long-term goal to grow aftermarket revenue from ~7% of sales to closer to 30%.

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David Gitlin, Chairman and CEO, agreed that more funding has been available for the K-12 segment than ever, contributing to its strength. He believes the strength will continue as pent-up local school budgets will be deployed as federal funding wanes. Patrick Goris, CFO, stated that at this point, he would not call out any significant one-time items for 2025 free cash flow and that the company would target 100% conversion of adjusted net income.

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President and CEO Richard Tobin confirmed the primary impact was project pushouts, particularly in the non-CO2 refrigeration and LNG cryogenic components businesses. In contrast, he highlighted strong momentum in data center-exposed markets, noting that thermal connector bookings grew 50% year-to-date and that the company is actively increasing capacity for both connectors and heat exchangers to meet demand.

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Executive Richard Tobin expressed confidence that the book-to-bill ratio would remain above 1.0 in Q2 based on current momentum. He clarified the guidance change was a "mechanical" adjustment, equivalent to removing $100 million in revenue at a 38% margin, rather than a detailed re-forecast based on specific decremental assumptions.

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Executive Richard Tobin attributed the positive inflection in the fueling businesses to the mix impact of a recovering below-ground market and significant restructuring benefits, rather than a major market turn. Regarding the liquid cooling business, he acknowledged that it could double, but emphasized that its short-cycle nature (45-day visibility) makes forecasting difficult.

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Chairman & CEO Vimal Kapur attributed the Q2 UOP strength to a large licensing agreement and pulled-forward catalyst sales. He noted that the H2 weakness stems from delayed energy project spending due to economic and regulatory uncertainty. He confirmed that the projects side of HPS is seeing similar pressure, while the services side remains strong. CFO Mike Stepniak added that the outlook remains prudent, especially regarding short-cycle orders.

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Chairman & CEO Vimal Kapur attributed the strong Q2 in UOP to a significant licensing agreement and pulled-forward catalyst sales. He noted the cautious second-half outlook stems from delayed energy project spending due to economic and regulatory uncertainty, which also affects the HPS business in Industrial Automation. SVP & CFO Mike Stepniak added that the company remains prudent regarding short-cycle orders in the second half.

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CEO Vimal Kapur attributed the Aero OE results to product mix and revenue recognition timing, noting manufacturing volumes are growing. Regarding trade tensions, Kapur clarified the primary risk is demand destruction, which is factored into the guidance, and that the company does not foresee any shortage of parts due to its localized footprint.

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CFO Ken Parks addressed both points. He attributed the gross margin shift to the revenue mix between equipment and services, stating it was not a concern and actually sets up future services growth. Regarding nuclear, he explained the revenue decline was simply due to the timing of fuel servicing contracts, which is the primary activity until the new Small Modular Reactor (SMR) business begins to ramp up.

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CFO Ken Parks explained that the gross margin movement was a result of revenue mix between equipment and services and was not a concern, as new equipment sales set up future service revenue. He attributed the nuclear revenue decline to the timing of fuel servicing contracts, which is the primary activity until new Small Modular Reactor (SMR) projects begin to contribute.

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CEO Scott Strazik stated that the directives are not currently changing customer behavior or spending plans. He commented that while there is industry collaboration on permitting reform, it is not a primary focus in the current political environment and is more likely to be a topic for 2026 than 2025.

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CEO Scott Strazik explained that higher utilization is driving demand for technology upgrades to increase megawatt output, even more so than efficiency at present. He stated this will lead to an increased scope per outage, as customers invest more in technology. This underpins the company's forecast for a 50% growth in its gas upgrades business by the end of the decade.

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CEO Scott Strazik explained that new customers will likely partner with traditional nuclear operators, who are GE Vernova's core clientele. He stressed that for both gas and nuclear, the commercial arrangements are still evolving. For SMRs, he highlighted the company's competitive advantage in its established BWRX technology and a clear time-to-market with the first unit targeted for 2029.

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CEO William Brown explained that while 3M doesn't specifically quantify the revenue impact of OTIF, improving it is critical for reducing customer churn and implicitly drives growth. CFO Anurag Maheshwari clarified that the second-half margin profile is primarily impacted by the timing of tariff headwinds and a step-up in stranded costs, which are guided to be $70 million in H2 versus $30 million in H1.

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CEO William Brown and CFO Anurag Maheshwari explained that while the weaker macro outlook is factored into guidance, they are not modeling specific demand destruction from their own actions, as pricing changes are being implemented surgically and in consultation with customers. Regarding buybacks, Maheshwari noted that recent option exercises were driven by timing. Brown added that the company increased its plan from $1.5B to $2B and retains the flexibility to be more opportunistic with its $7.5B authorization later in the year.

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CFO Anurag Maheshwari explained that while inventory reduction will provide a cash benefit, it will be offset by higher receivables from revenue growth, leading to the ~100% conversion guidance. CEO William Brown stated he expects the abrasives business to improve in 2025, aided by the new Cubitron 3 product platform, and believes both abrasives and industrial specialties will 'turn the corner' to growth during the year. He also noted that inventory in the industrial channel is normalized.

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CEO William Brown endorsed the previous decision to centralize factories and supply chains under a common leader, calling it "global coordination" and the right step to unlock value. On insurance, he reported that 3M recovered $54 million in Q3 and over $175 million year-to-date. He stated that recovery efforts are ramping up and that 3M expects its insurers to honor their obligations, while noting 3M's total liability is higher than its total insurance value.

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President and CEO James Lico clarified that overall Precision Technologies (PT) orders were positive, driven by Sensors and Systems, while Test and Measurement (which includes Tektronix) was down. He differentiated Tektronix by its focus on the R&D lab and less exposure to telco comms. Lico stated that 2025 CapEx is expected to remain flat, as the company utilizes a low-CapEx model.

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President and CEO James Lico reported that software revenue grew high-single-digits for the quarter and year and is expected to continue at that rate in Q1. He noted moderating growth at Gordian but improvements at Accruent and ServiceChannel, along with dramatically improved profitability. For the power vertical, Lico described strong, multi-year double-digit growth at Qualitrol, driven by grid monitoring and transformer demand, necessitating capacity expansion to meet long-term investment trends.

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President and CEO James Lico stated that Fortive's pricing power is sustainable and rooted in its high-value innovation. He explained that the Tektronix order growth was driven by a combination of easier comps and real demand from customers investing in data centers, batteries, and next-generation electrification, with particular strength seen in regions like Korea.

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W. Rush, Chairman, CEO, and President, confirmed that only a 'slight' sequential improvement is anticipated for both Class 8 sales and aftermarket revenues in Q2, stressing extreme market uncertainty. He stated that returning to 2020-era SG&A levels is not feasible due to inflation but that expenses are being tightly managed. Rush explained that market clarity depends on improvements in customers' businesses, certainty on tariffs, and finalized emissions regulations. He concluded that customer access to credit is not currently an issue for qualified buyers.

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W. Rush, an executive, projected a ramp-up throughout 2025, with a softer first half followed by a stronger second half for both truck sales and aftermarket services. He emphasized strong G&A expense management in 2024 and expressed confidence in leveraging technology to control costs more effectively in the next growth cycle, aiming to retain a significant portion of new gross profit.

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Executive W. Rush clarified that the "bottoming out" commentary referred to the freight market for their carrier customers, not the company's own business. He explained that a return to shorter, 60-90 day order lead times is driving recent order intake for Q4 builds. Rush anticipates a significant uptick in orders in the second half of 2025, driven by an eventual pre-buy ahead of 2027 EPA regulations. Regarding the broader economy, he noted that oil and gas is soft, but the construction sector remains strong due to infrastructure spending, highlighting the benefits of the company's diversified customer base.

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Executive W. Rush estimated that the vocational segment comprises about 45-50% of the company's Class 8 business, highlighting its importance for diversification. He anticipates that truck orders will remain down for the next couple of months with no significant uptick expected until late in the year. Regarding the economy, Rush sees significant uncertainty, particularly with the upcoming election, but does not foresee a recession, expecting conditions to 'bobble along'. He confirmed the vocational business is stable but noted that medium-duty demand has largely been met and will likely slow.

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President and CEO Robert Rowe responded that there was no material pre-buying activity from distributors, who remain focused on disciplined inventory management. Regarding capacity, Rowe stated that Flowserve does not need to add new facilities, as they have a large existing footprint. He explained that capacity can be expanded within current sites through process improvements, staffing, and operational excellence initiatives with minimal capital investment.

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CFO Amy Schwetz acknowledged FCD's margin expansion was modest due to mix but expects improvement from cost-out efforts, noting the segment's focus is on margin over growth. CEO Scott Rowe added that Flowserve benefits from coal plant life extensions in Europe and the U.S., as all forms of power are needed to meet rising demand.

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CEO John Stone stated that the positive non-residential momentum from late 2024 has continued, driven by a healthy aftermarket and resilient institutional demand. Regarding Europe, he noted Germany feels more optimistic than in Q4, and the team in Italy is performing well and gaining share through internal initiatives, though it is premature to change the overall outlook.

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CFO Michael Larsen confirmed the guidance is based on current demand and does not model a recovery, though he noted historical recoveries can see mid-to-high single-digit growth. CEO Christopher O'Herlihy explained the Food Equipment guidance is based on normalized sequential run rates, not just the strong Q4, and expressed overall optimism for the segment due to its recovering service business and innovation pipeline.

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CEO Luca Savi detailed pricing strategies, including commodity indexing in MT and strategic renegotiations in CCT, and noted a more analytical approach for 2025. CFO Emmanuel Caprais attributed short-cycle strength to share gains in valves and services, driven by reduced lead times. He stated there are no signs of destocking in IP, while in connectors, high inventory levels may be offset by rising point-of-sale data, suggesting a potential inventory rerating.

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