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Chairman and CEO Jennifer Parmentier stated there is no evidence of tariff-related pull-forward. She detailed the Q1 industrial organic growth forecast at -1.5% for North America and +0.5% for International, with a gradual recovery expected through the year. On margins, she noted the aerospace mix between OEM and aftermarket is expected to be steady throughout the year, implying no significant mix headwind to margins later in the year.

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CEO Jenny Parmentier confirmed the analyst's hypothesis that North America's weaker outlook is due to its greater weighting in challenged verticals like off-highway and transportation. CFO Todd Leombruno added that the international segment's downturn began earlier, affecting comps. Both executives clarified that the tough Q4 aerospace comp is broad-based and not specific to military.

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Executive Jennifer Parmentier explained that the company's portfolio transformation towards longer-cycle business, including aerospace, has extended the time between orders and shipments. She reported the industrial backlog was $3.7 billion and the aerospace backlog was $7.3 billion. For the Q4 aerospace outlook, she projected mid-single-digit growth for commercial OEM, low-single-digit for defense OEM, and high-teens growth for both commercial and defense MRO.

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CEO Louis Pinkham confirmed the affected plant is back up but not yet at full volume, with a full catch-up on shipments expected by Q4. He described medical inventory visibility as decent, expecting a balance by year-end. Pinkham highlighted growing momentum in automation, with backlog up 12% year-over-year. Regarding the order-to-revenue lag, he explained that Regal Rexnord is becoming more of a longer-cycle business, with growth in IPS and AMC tied to larger projects that take more time to convert to sales.

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CFO Robert Rehard explained that the second-half margin step-up is primarily driven by the AMC segment, citing favorable mix from the recovery in higher-margin discrete automation, along with volume growth and synergy benefits. Regarding tariffs, he noted costs will be capitalized, creating a lag, but the company remains confident in achieving EBITDA neutrality for the year. CEO Louis Pinkham addressed the PES outlook, stating that despite a strong Q1, the company remains cautious due to macroeconomic uncertainties like consumer confidence and housing weakness, leading to a more measured forecast for the second half.

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CFO Rob Rehard explained that PES sales in Q1 are impacted by the A2L transition and non-U.S. weakness, but should improve sequentially through the year. He noted that consolidated earnings will also improve sequentially, with a stronger second half driven by lower interest expense, accruing synergies, and significant margin improvement from a better sales mix in the AMC segment.

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CFO Rob Rehard confirmed an expected 200 basis point margin improvement from year-end 2024 to year-end 2025, driven by synergies and volume. CEO Louis Pinkham clarified that the 10% residential HVAC sales growth was a sequential increase from Q2, not year-over-year, and noted that this year's pre-buy could soften demand in 2025.

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CEO Blake Moret clarified that potential pull-forwards were on the product side, while delays affected the project business, resulting in a balanced demand picture. CFO Christian Rothe reaffirmed the 35% incremental margin target, explaining that current compensation levels are now normalized and the new investment plan's incremental spend is mostly CapEx, which is managed to not impede progress toward margin goals.

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CEO Blake Moret clarified that potential pull-forwards were concentrated on the product side, while project delays affected longer-cycle businesses. CFO Christian Roethe addressed margins, reaffirming the 35% incremental margin target and explaining that total compensation is now at a normalized level, which should not create a major headwind or tailwind next year. Moret added that the new investment spend is controllable and mostly CapEx, ensuring it won't impede progress toward margin targets.

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CFO Christian Rothe provided a ballpark Q3 EPS estimate of around $2.60, which would be slightly down year-over-year, but did not confirm a specific margin number. CEO Blake Moret stated that the Logix (PLC) business is performing well with more room to run, as shipment units have not yet returned to pre-COVID levels. On operating leverage, Rothe reiterated the company's 35% incremental margin target over the cycle, while Moret emphasized a prudent approach to cost management as growth returns.

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CEO Blake Moret noted there isn't a reliable historical correlation for Q1 orders but confirmed Q1 performance was better than expected. He explained that Intelligent Devices' performance was impacted by its broader SKU set and higher exposure to the challenged automotive market, while Logix (in Software & Control) benefited from machine builder inventory normalization. CFO Christian Rothe added that Intelligent Devices also has a seasonally low first quarter for its configure-to-order business.

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CEO Blake Moret stated that key investments in R&D and customer-facing resources were preserved, enabling a return to target growth without a sharp spending increase. CFO Christian Rothe confirmed the Q1 'low-to-mid-teens' margin outlook was at the segment level and acknowledged margins must ramp sequentially to hit the full-year target.

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Patrick Watson, VP & CFO, outlined a normal seasonal pattern for FY2026, with a 40/60 first-half/second-half EPS split, and noted that tariff impacts are expected to be covered after Q1, though with some margin compression. Sanjay Chowbey, President, CEO & Director, asserted his confidence that the current restructuring is sustainable because it involves structural changes to footprint, organization, and sourcing, though the benefits are currently masked by low volumes. Mr. Watson later clarified that reported operating margins would be modestly down but would be up after normalizing for FY2025 one-time items.

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CFO Pat Watson confirmed the EPS guide increase reflects the Q3 outperformance, FX benefits, and a net tariff impact, while noting April demand trends were normal. President and CEO Sanjay Chowbey stated that when sales recover, the company expects operating leverage in the mid-40s, supported by ongoing cost structure improvements.

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CEO Sanjay Chowbey acknowledged that order rates improved in late January but explained the lowered outlook was due to worsening conditions in Europe and softer-than-expected U.S. industrial production. Regarding the cost structure, Chowbey highlighted that the company is on track to achieve $65 million of its $100 million Investor Day cost-saving target and is using other measures like short work weeks. He stated they will continue to monitor market conditions and drive margin improvement through continuous improvement initiatives.

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CEO Sanjay Chowbey noted that while China's construction and mining sectors are pressured, other industrial markets are stable to improving, and India remains strong. CFO Pat Watson explained that the second-half margin increase is primarily driven by a seasonal volume uptick, with Q4 typically being the strongest quarter, supplemented by ongoing operational excellence initiatives.

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CFO Olivier Leonetti clarified that the midpoint of the EPS guide was raised by $0.07. He explained the guidance reflects a balance of tailwinds (FX, Fiberbond) and headwinds (strategic investments, underperformance in Vehicle/eMobility, and general prudence). CEO Paulo Ruiz and Leonetti both confirmed the view that the backlog is unlikely to decline, and will likely increase, given the strong order flow and an expected book-to-bill ratio above one.

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Craig Arnold, Chairman & CEO, clarified the data center growth figure includes the broader IT channel and is not solely a component of Electrical segment sales. He and Paulo Sternadt, President & COO, confirmed 2025 guidance assumes continued very strong data center growth. For Aerospace, Paulo Sternadt attributed the expected margin improvement to a dedicated focus on operational performance and efficiency gains.

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Chairman and CEO Craig Arnold acknowledged that lead times are still not ideal due to stronger-than-forecasted demand, particularly in Electrical Americas. He confirmed the $1.5 billion in investments is targeted at these constraints. Regarding the 2025 growth gap, Arnold noted it's too early for specific segment guidance but suggested the Americas would likely continue to see disproportionate growth due to its exposure to mega trends like data centers and reindustrialization, while Europe's short-cycle markets are just beginning to bottom out.

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CEO Beth Wozniak confirmed the backlog has grown since the start of the year, boosted by new acquisitions and data solutions orders, and that Systems Protection will grow faster than Electrical Connections. CFO Gary Corona added that the EC business will still grow healthily. He noted that margins are expected to improve in the second half as price and productivity offset tariff impacts, and that investments will continue to ramp to support accelerating growth.

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CEO Beth Wozniak attributed the confidence in H2 growth to strong orders and backlog in Data Solutions and Power Utilities, plus the Trachte acquisition turning organic. CFO Gary Corona added that H2 has easier year-over-year comps. He also explained that base business margins will be down in H1 due to tariff timing and investments but are expected to be positive in H2 as pricing and productivity actions take hold. The Avail EPG acquisition will be dilutive to reported margins for the year.

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CFO Sara Zawoyski attributed the modest Q1 margin decline to higher corporate costs post-divestiture, growth investments, and the timing of price/cost benefits. For the full year, margins are expected to be flat to up modestly, impacted by the Trachte acquisition's mix but supported by volume drop-through. CEO Beth Wozniak added that positive Q4 orders were seen in non-infrastructure verticals, and improving project funnels support the forecast for strengthening performance beyond just easier comps.

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CFO Sara Zawoyski attributed the sequential Q4 margin decline to normal seasonality in the EFS segment. She confirmed investments will continue into 2025, but ramp-up costs should diminish. Work is underway to reduce the $15 million in indirect costs throughout 2025. CEO Beth Wozniak added that while macro uncertainty remains, the outlook for industrial and commercial/resi verticals is more positive for 2025, supported by the company's portfolio repositioning towards infrastructure.

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CFO Vikram Kini confirmed that the second-half phasing is consistent with prior years, with Q4 expected to be the high watermark for margins. He guided for second-half organic volume to be down low-single digits, an improvement from the first half, with pricing around 3.5-4%. He anticipates slightly positive organic sales growth in Q3, improving further in Q4, with a similar trend across both segments.

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CFO Vik Kini detailed that organic growth is expected to be down 3-4% in the first half and up 3-4% in the second half as comps ease. He stated that full-year EBITDA margins are guided to be relatively flat, as one-for-one pricing actions to offset the $150 million tariff cost will be dilutive to the margin rate but neutral to margin dollars.

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CEO Vicente Reynal attributed the Q4 order softness primarily to the timing of large projects in China, noting that excluding China, organic orders were up. He expressed satisfaction with ILC Dover's performance, especially its double-digit growth in Life Sciences. CFO Vik Kini added that PST margins should return to the 30% range in 2025, with sequential improvement expected.

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Chairman and CEO Vicente Reynal stated that he does not see a broad negative inflection in other regions and that the guidance change is mainly due to shipment timing. CFO Vik Kini handled the margin question, expecting both segments to remain around a 30% EBITDA margin in Q4. He does not foresee a "give back" of margins in 2025 but rather a more normal margin expansion with continued investment.

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EVP & CFO David Jackola confirmed a consistent mid-single-digit organic growth outlook for Safety Services. President and CEO Russ Becker noted the elevator business is performing as expected and recent acquisitions are accretive, at or above the company's average margin profile. David Jackola added that M&A is expected to contribute over $200 million in revenue for the full year.

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CFO Anshooman Aga stated that the guide for Repair Solutions is down mid-to-high single digits for the second half, noting early signs of stabilization but no clear inflection point yet. He projected mid-single-digit growth for EFS for the full year. For Repair Solutions margins, Aga explained that improvement would depend on a better sales mix with higher-priced items and a reduction in bad debt and delinquencies over time. CEO Mark Morelli added that while the long-term backdrop for repair is positive, current consumer buying behavior remains choppy.

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CFO Anshooman Aga provided a detailed quarterly cadence, explaining the Matco Expo shift creates a Q1 headwind but strengthens Q2, with H1 revenue expected to be just over 48% of the full year. He stated that Q1 would be the low point for revenue. For pricing, Aga confirmed Vontier expects to remain price-cost positive in 2025, targeting about a 1% price increase for the year, consistent with its track record since the spin-off.

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CEO Mark Morelli described a positive setup for 2025, citing market stabilization and benefits from innovation and cost initiatives. CFO Anshooman Aga confirmed the 30-35% incremental margin target should apply in 2025 and noted a $30 million revenue shift from Q1 to Q2 2025 due to the Matco Expo timing. For Q4 margins, Aga expects EFS to be flat to slightly down year-over-year, with Repair Solutions sequentially flat to slightly up.

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SVP and CFO Anshooman Aga explained the Mobility Tech Q1 margin dip was due to a one-time settlement and that the company still expects approximately 100 basis points of margin expansion for the full year, starting in Q2. Aga also revised the Repair Solutions outlook to a mid-single-digit decline for the year, noting this weakness is offset by strength elsewhere. President and CEO Mark Morelli added that while the Repair segment has the most tariff exposure, the impact is manageable due to significant, proactive supply chain diversification away from China.

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CFO Mark Okerstrom confirmed the Q3-to-Q4 earnings ramp, citing seasonality, tariff countermeasures, and lower interest expense. CEO Olumide Soroye explained the Q2 shortfalls were temporary deferrals, not cancellations, due to government budget timing at Gordian and precautionary holds on hospital equipment spending ahead of policy changes.

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CFO Mark Okerstrom confirmed the directional EPS framework, attributing the Q4 uplift to normal seasonality, the full effect of tariff countermeasures, favorable foreign exchange rates, lower interest expenses, and the impact of share repurchases. CEO Olumide Soroye added that the Q2 end-market issues were temporary, describing the government spending pressure as a timing issue and the healthcare slowdown as a precautionary deferral of essential equipment purchases. He affirmed that the full-year guidance accounts for various recovery timelines in these areas.

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Executive Elena Rosman confirmed the Q2 outlook assumes low single-digit core growth for New Fortive and an improved but still declining mid-single-digit rate for Precision Technologies. She affirmed that margins would be sequentially diluted by tariffs, with an estimated $0.06 impact in Q2. Regarding Healthcare, Rosman and CEO James Lico explained the Q1 margin pressure was from temporary factors like transactional FX and fewer days, and they expect margins to ramp sequentially through the year.

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President and CEO James Lico explained the PT cadence would improve from a mid-single-digit decline in Q1 to growth in the second half, driven by easier comps in China, modest market improvement, increased production capacity, and new product introductions. Regarding tariffs, Lico stated that countermeasures for the 10% China tariff are already embedded in the guide and that the company's prudent plan for China's mid-single-digit decline for the year accounts for related economic uncertainty.

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President and CEO James Lico attributed the IOS slowdown to spending hesitation from government-related calibration customers and channel partner reluctance on new programs. SVP and CFO Charles McLaughlin projected a 2025 tax rate of 13-15% and noted that mid-single-digit growth should yield about 75 basis points of margin expansion. Lico added that all segments are expected to grow in 2025, with a gradual recovery in Precision Technologies.

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Senior VP & CFO Michael Larsen stated that the company is maintaining a cautious approach due to the uncertain and volatile macro environment, which is why the full FX tailwind is not flowing through to the EPS guidance. He noted the second half implies 2-3% organic growth and over 100 basis points of margin improvement, with a typical seasonal cadence augmented by tariff-related pricing actions kicking in during Q3 and Q4.

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President and CEO Christopher O'Herlihy expressed high confidence in Food Equipment, citing its differentiation, a large service business, a strong institutional customer base, and a robust innovation pipeline. CFO Michael Larsen addressed tariffs, stating that ITW is reacting faster than in 2017-18 and does not expect a significant quarterly lag between cost and price. He noted the impact is broad-based but less significant in Automotive, with the goal of being EPS-neutral or better by year-end.

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CFO Michael Larsen detailed the expected Q1 cadence, projecting a sequential revenue decline leading to Q1 EPS being about 22% of the full-year total due to seasonality and H1 headwinds. CEO Christopher O'Herlihy stated that the Specialty Products segment is expected to grow in 2025 despite some carryover PLS impact, with the long-term goal of making it a consistent 4%+ grower.

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CFO Michael Larsen stated that channel inventories have normalized and that ITW is focused on reducing its own inventory, targeting a return to pre-COVID levels of 2.5 months on hand from the current 3 months. This represents a $300-$400 million opportunity. CEO Chris O'Herlihy explained that driving CBI goes beyond spend; it involves leadership focus, capability building, and codifying best practices into a company-wide framework, similar to the successful 80/20 rollout.

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EVP & CFO Chris Kuehn provided a second-half outlook, projecting consistent low-double-digit growth for Americas Commercial HVAC, with Transport down more in Q3 and Residential also seeing a larger Q3 decline due to a $150 million revenue headwind. Chair & CEO Dave Regnery added that the cylinder issue is '90% or 95%' resolved but that inventory destocking will impact the second half. He noted it was a difficult quarter to assess repair-versus-replace trends due to the supply bottleneck.

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CEO David Regnery confirmed that Americas Commercial HVAC had a record-breaking quarter with broad-based strength across verticals like data centers, healthcare, and education, and a strong project pipeline. CFO Christopher Kuehn added that applied markets are expected to outperform unitary markets for the year. Regarding tariffs, Kuehn explained the company is implementing surgical price increases and surcharges to offset the estimated $250-$275 million in costs, leveraging their experience from prior inflationary periods. Regnery noted that while they didn't see a Q1 dip from the residential pre-buy, channel inventories are slightly elevated but expected to normalize.

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CFO Chris Kuehn explained that the steady Q1 guide of 6-7% organic growth reflects continued strength in Commercial HVAC, which is expected to offset headwinds from the residential prebuy and the transport market bottoming. He projected full-year 2025 pricing to contribute 1 to 1.5 points to growth, with the remainder coming from volume. Kuehn clarified that the high-single-digit price increase for the new A2L refrigerant products will be reported as volume, not price, per company policy.

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CFO Chris Kuehn stated that while specific 2025 guidance will come later, the company likes its long-term algorithm of 25% or better operating leverage and will target top-quartile financial performance. CEO Dave Regnery addressed residential HVAC, noting the upgrade from a 'plus or minus low single digits' outlook was due to EPA clarification on refrigerants, normalized channel inventory, and a warm cooling season. He expressed confidence in the team's execution and believes the business is returning to a 'GDP plus' growth framework in 2025.

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CFO Brooks Mallard confirmed that a high-30s to 40% leverage is accurate for the back half and a good assumption for 2026. CEO Ivo Jurek stated that end market performance is largely as expected, with On-Highway being weaker, but emphasized that the company is focused on self-help initiatives like personal mobility and data center liquid cooling to drive above-market growth.

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CEO Ivo Jurek provided a detailed end market breakdown, noting that while Q1 was slightly better than expected, the general demand environment is playing out as anticipated. He stated that the outlook for auto builds has weakened to down high single-digits, but this is offset by a robust auto replacement market driven by an aging car fleet and market share gains. Personal mobility's strong growth was a recovery from seven negative quarters, not a pre-buy. Regarding auto OE tariffs, Jurek explained it's not a major concern as OE customers often take possession of goods in Mexico, and most components are USMCA compliant, resulting in de minimis tariff exposure for that segment.

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CFO L. Mallard explained that a significant foreign exchange headwind, which is more pronounced in the first half of the year, is masking underlying margin improvement. He noted that material savings are linear throughout the year, while footprint optimization savings will be weighted toward the second half. CEO Ivo Jurek added that tariff exposure from China and Canada is minimal and that the company has the flexibility to manage potential Mexico-related tariffs through pricing and flexing its U.S. production assets.

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CEO Ivo Jurek stated the higher inventory is a strategic decision to both service a new customer win and to be better positioned to capture share during the next market upcycle. CFO L. Mallard noted that Q4 is seasonally strong for cash flow and they are on track to hit the 90% conversion target. For capital allocation, he mentioned debt paydown and buybacks remain priorities, though M&A becomes more attractive as the stock rerates. Jurek added that with the stock being 'cheap,' buybacks are currently a primary focus.

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CFO Marc Vandiepenbeeck cited tariff impacts and stranded costs from a divestiture as reasons for the muted margin expansion. CEO Joakim Weideminis addressed Fire & Security by acknowledging some product portfolio gaps compared to peers. While he sees opportunities to improve margins through operational excellence and service productization, he reiterated that the near-term growth and margin opportunity is higher in HVAC and Controls, and that a full portfolio review is ongoing.

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CFO Marc Vandiepenbeeck explained the flat margin rate is due to a strategy of passing through tariff costs dollar-for-dollar without adding margin, which dampens the rate but not long-term momentum. CEO Joakim Weidemanis stated that Fire & Security are strong franchises, but he is still assessing their growth potential as part of his broader strategy review.

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CFO Marc Vandiepenbeeck noted that the 'manufacture in region for region' strategy helps mitigate tariff impacts and that the company has successfully managed them in the past. He stated that while some restructuring benefits will appear in the second half of 2025, the majority of stranded cost reduction will materialize in fiscal 2026.

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CFO Marc Vandiepenbeeck explained that the timing of the restructuring program is linked to the closing of the residential and light commercial business divestiture. He clarified that costs will precede benefits, and that roughly half of the $400 million in expected costs are already factored into the fiscal 2025 free cash flow guidance.

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EVP & CFO Patrick D. Hallinan stated that the company expects year-over-year gross margin expansion in both Q3 and Q4 2025, targeting a 33-34% range for the full year. He affirmed the commitment to the 35%+ long-term goal, noting tariffs created a 9-12 month delay. The improvement is driven by tariff mitigation actions and pricing, not volume leverage, alongside the ongoing transformation program.

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An executive, likely EVP and CFO Pat Hallinan, explained that Q2 will face significant pressure from a heavy tariff expense burden due to LIFO accounting, resulting in only slightly positive pretax earnings. He noted that free cash flow will be heavily weighted to the second half, especially Q4, as pricing actions fully catch up to the cash impact of tariffs.

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EVP and CFO Pat Hallinan stated that while the 35% gross margin target for year-end 2025 remains the goal, its timing depends on macroeconomic headwinds. He anticipates a flat-to-down sales start to 2025, with first-half margin improvement dynamics similar to the prior year. President and CEO Don Allan reiterated the company's commitment to the transformation's objectives, including achieving over 35% gross margin and building a sustainable organic growth culture, noting more details would be shared at the upcoming Investor Day.

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Chairman & CEO David Gitlin stated that for U.S. Residential, while price and mix were as expected, Q2 volume was weaker. The second-half forecast now assumes volume down 20-25%, leading to a net sales decline of about 10%. SVP & CFO Patrick Goris explained that Q4 is expected to have the highest organic growth of the year, with easier comps in Europe and Asia, and will see more benefits from cost actions, contributing to the strong year-over-year EPS growth.

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CEO David Gitlin explained that residential sales were stronger than expected, leading to a guidance increase, while light commercial was weaker, prompting a guidance decrease. CFO Patrick Goris detailed the CSA margin cadence, expecting a Q2 peak near 25% before moderating due to tariff headwinds and lower residential volumes in the second half, targeting 22.5% for the full year.

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CFO Patrick Goris outlined a growth acceleration, from flat-to-low-single-digits in Q1 to high-single-digits in Q2 and Q3, before moderating in Q4. CEO David Gitlin addressed the light commercial market, forecasting low-to-mid-single-digit growth for the year, driven by the refrigerant transition mix-up. He noted that while ESR funding is ending, it is being replaced by state-level bond funding, and K-12 orders remained strong, up 20% in the prior year.

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Patrick Goris, CFO, explained that the $0.10 EPS difference is due to discontinued operations accounting rules, which reallocate previously shared corporate costs to continuing operations and alter how net interest expense is treated. He clarified that the core operational performance improvement for the retained businesses remains unchanged from the prior guide. For Q4, Goris projected mid-single-digit organic growth, with HVAC near +10% and Refrigeration down mid-single digits. He expects Q4 adjusted operating margin to be up about 300 bps year-over-year.

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President and CEO Richard Tobin confirmed a general expectation for accelerating growth in the second half, driven by easier comps, particularly in lower-margin businesses. He acknowledged that Q2 bookings in refrigeration were weaker than anticipated, but stated that the overall booking trend is following its typical seasonal pattern and that July's momentum was encouraging, suggesting no broad-based weakness.

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Executive Richard Tobin attributed the expected acceleration to typical seasonality, with Q2 and Q3 being historically stronger, and noted Q2 is supported by a strong backlog. He stated that any margin dilution from tariffs would be minimal and likely overshadowed by positive intra-segment mix shifts, making mix a more significant factor for margins.

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Executive Richard Tobin stated that the clean energy components business is the largest contributor to year-over-year profit growth in the DCEF segment, driven by restructuring, growth, and acquisitions. For Engineered Products, he explained the Q4 volume decline was due to a tough shipment comparison from the prior year and confirmed the aerospace and defense business is poised to grow year-over-year with a positive margin mix benefit.

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CEO Richard Tobin confirmed the 2025 outlook assumes less counter-cyclicality as long-cycle businesses lap tough comps. He attributed the robust DII margins to sustainable, structural improvements from cost-to-serve initiatives and business model changes, not just temporary mix.

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SVP & CFO Mike Stepniak explained that strong orders continue and the commercial OE issue is a transitory destocking event expected to normalize in H2. He noted the margin drag from the Case acquisition and incremental R&D spend. Chairman & CEO Vimal Kapur affirmed these are temporary issues and the margin is not a new baseline, adding that R&D spend is increasing across all segments to drive future organic growth.

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SVP & CFO Mike Stepniak explained that the commercial OE softness was a transitory destocking issue with an OEM, expected to normalize in the second half. He noted the margin was impacted by the Case acquisition and a $200 million incremental R&D investment. Chairman & CEO Vimal Kapur affirmed these are temporary issues and the current margin is not a new baseline, highlighting that the R&D increase is a strategic investment across all segments to drive future growth.

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CEO Vimal Kapur explained that PSS was flattish excluding a prior-year royalty payment and that the Q1 IA margin contraction was due to a receivables write-off, with margins expected to improve post-PPE divestiture. Regarding capital deployment, both Kapur and CFO Mike Stepniak emphasized a balanced, opportunistic approach to both share repurchases and time-sensitive M&A.

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Incoming CFO Mike Stepniak stated that both Aerospace and Automation are expected to achieve around 100% free cash flow conversion. CEO Vimal Kapur estimated one-time separation costs at $1.5 billion to $2.0 billion but noted it was too early for a precise stranded cost figure. Regarding margins, Mr. Stepniak explained that while three segments will see margin expansion, the overall guidance is impacted by the dilutive effect of the CAES acquisition on the Aerospace segment's margins in its first year. Executive Sean Meakim added that the CAES deal is accretive to segment profit growth.

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CEO Vimal Kapur stated that while formal 2025 guidance will come in January, the setup is positive with a strong backlog and robust cost position, and all four segments are expected to see organic growth and margin expansion. CFO Gregory Lewis clarified that the lower repositioning guidance for the year was due to Q3's spend level, not a change in strategy. Regarding the portfolio, Vimal Kapur explained that actions are driven by strategic fit with Honeywell's megatrends, noting the PPE exit will be accretive to growth and margins, and that portfolio optimization is a continuous process.

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SVP & CFO Mike Wagnes detailed that the EPS guidance raise was driven by three main factors: strong operational performance in the first half, the impact of accretive acquisitions, and favorable foreign exchange rates. Regarding second-half growth, he explained the primary driver of the acceleration is the timing of tariff surcharge revenue, with the majority recognized in H2, supplemented by continued strength in the non-residential business.

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CEO John Stone described the residential market as soft due to high mortgage rates and noted it was premature to assess tariff-related share shifts, emphasizing their focus on electronics innovation. CFO Michael Wagnes affirmed the full-year goal is for the price/productivity line to be neutral, despite potential quarterly fluctuations like the Q2 timing lag.

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CFO Michael Wagnes confirmed that Allegion expects margin expansion in 2025, likely at the lower end of the previously stated 50-100 basis point framework, with seasonality similar to 2024. He also noted that non-residential growth is expected to be stronger than residential, and electronics growth is anticipated to outpace the overall Americas segment.

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CFO Mike Wagnes clarified the residential business is approximately two-thirds aftermarket and one-third new build, with the aftermarket responding more quickly to economic shifts than new construction. CEO John Stone addressed electronics, stating that after a year of unusual comparisons, he expects a more normal environment in 2025. He reaffirmed the long-term view of electronics as a high-single to low-double-digit growth driver for Allegion.

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CFO Michael Quenzer confirmed a full-year margin expansion forecast of about 50 basis points, with a similar expansion in both halves of the year. CEO Alok Maskara added that Q2 is a better gauge of performance than Q1, which was negatively impacted by manufacturing inefficiencies during the A2L transition. Quenzer noted that Q4 will face a tougher comparison due to the prior year's pre-buy and temporary share gains.

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CFO Michael Quenzer confirmed the guide implies flat full-year margins, with improvement in the balance of the year driven by the BCS segment. CEO Alok Maskara explained that while the price and volume changes coincidentally offset, the volume reduction was driven by specific assumptions like a slowdown in new construction and consumer confidence, not a direct price elasticity calculation, as replacement demand is largely non-discretionary.

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CEO Alok Maskara expressed confidence in the BCS segment, noting its key markets remain healthy and that the business has been supply-constrained, not demand-constrained. CFO Michael Quenzer addressed seasonality by forecasting a 45/55 first-half/second-half revenue split for 2025, a departure from the typical 50/50, with benefits from mix and the new factory accelerating in the second half.

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CFO Michael Quenzer indicated that a 25% to 30% incremental margin for 2025 sounds in range, driven by mix benefits and volume gains, though final details are pending. CEO Alok Maskara agreed with the assessment that the prebuy impact is likely limited, noting that restocking and share gains were the primary drivers in Q3, but cautioned that Q4 prebuy activity is still a variable.

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EVP & CFO Cristina Méndez explained that flat free cash flow is a temporary result of a business mix shift away from new equipment, which has more favorable working capital, and not due to structural changes. She noted the back-half margin expansion will be driven by a strong acceleration in higher-margin repair and modernization sales, plus savings from cost programs, which will offset the tariff impact.

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EVP & CFO Cristina Méndez attributed the flat cash flow to a business mix shift away from new equipment, which has more favorable working capital, calling it a temporary effect. CEO Judith Marks added there have been no structural changes to industry payment terms. Regarding margins, Méndez explained that the impact of tariffs will be more than offset by a favorable business mix from accelerating repair and modernization sales, combined with savings from the Uplift and China transformation programs.

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Chair, CEO and President Judy Marks stated that top-line growth will be steady and accelerate from Q1 levels as repair and modernization backlog conversion improves. CFO Cristina Mendez provided margin cadence details: New Equipment margins will face headwinds in Q2 from lower-priced China backlog, while Service margins will see a tough Q2 compare before accelerating in the second half. Overall, she guided for flattish total company margins in the first half, with expansion in the second half.

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Executive Cristina Mendez confirmed the H1/H2 cadence is driven by challenged New Equipment results and FX headwinds in H1, with transformation benefits flowing through in H2. Executive Judith Marks provided a regional backlog breakdown showing a mixed picture and explained the China stabilization outlook is based on discussions with local officials and state-owned enterprises, not on assumptions of new stimulus.

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EVP and CFO Cristina Mendez confirmed the analysis, stating Q4 Service profit would be very strong with margins above 25%, offsetting a New Equipment profit decline. For 2025, she and CEO Judith Marks indicated that New Equipment margins would likely persist at the lower second-half 2024 rate due to mix shifts and fading tailwinds, but strong Service performance would drive mid-single-digit overall operating profit growth.

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CEO Scott Strazik confirmed strong margin performance, suggesting the 2028 target for Electrification may be updated later in the year. He noted that while large, lumpy HVDC projects face scrutiny, core equipment orders remain strong. Strazik added that pricing gains are decelerating, increasing the need for cost productivity. CFO Ken Parks emphasized that significant margin expansion from the past two years is already embedded in the backlog and will be realized as it's delivered in future years.

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CEO Scott Strazik acknowledged the strong margin performance, suggesting a potential update to the 2028 targets later in the year. He confirmed that while core demand for transformers and switchgear is strong, large HVDC projects face more scrutiny and pricing is decelerating, requiring a focus on productivity. CFO Ken Parks added that significant margin is already locked into the backlog from prior periods, which will support future profitability as it is delivered.

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CFO Ken Parks explained that while the start was strong, Q1 is the smallest quarter, and the new $300-$400 million tariff impact was not in the original guide. He noted the tariff impact is most immediate in the Wind segment. CEO Scott Strazik added that it was only 90 days into the year and they would reassess performance in the summer.

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CEO Scott Strazik explained the growth pace is based on the known rollout of the existing backlog, giving them high visibility. He noted opportunities in both contractual and transactional services due to higher utilization. CFO Kenneth Parks added that they expect an acceleration to high single-digit growth in '26 and beyond.

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CEO Scott Strazik stated that the offshore backlog completion, previously targeted for late 2025, is now delayed. He confirmed the blade issue stemmed from a manufacturing deviation in Canada affecting a small percentage of blades, and that work is resuming at both the Dogger Bank and Vineyard Wind projects. CFO Ken Parks added that the $700 million charge taken this quarter is intended to cover all anticipated costs for blade remediation and project delays.

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President and CEO John L. Stauch clarified that the EPS guidance increase was driven by about $10 million in higher operating income and roughly 2 cents from lower interest expense due to strong cash flow. He explained the Water Solutions divestiture was a strategic exit from a lower-margin business, creating a $40 million annual revenue headwind. The segment's core sales are expected to accelerate as residential portfolio rationalization concludes and the commercial business recovers.

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CEO John Stauch confirmed the guidance assumes that as prices rise due to tariffs, consumer volume will likely soften. He noted the $140 million tariff impact is for fiscal 2025 and will predominantly affect the second half of the year. CFO Bob Fishman added that the tariff impact is expected to be split evenly across the Flow, Water Solutions, and Pool segments.

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President and CEO John Stauch attributed the challenging Q1 outlook to tough comparisons from prior-year channel loading and the roll-off of a specific program in the Ice business, with tariff impacts expected to be minimal in Q1 and spread across the rest of the year. CFO Bob Fishman stated that Pool distributor inventories and early buy activity are at historical levels, and the company maintains a cautious outlook with low single-digit growth projected for new pools and remodels.

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CFO Bob Fishman noted the company is on track for $100 million in transformation savings in 2024 and suggested a run-rate of roughly $80 million per year for 2025-2026. President and CEO John Stauch commented that a revenue recovery in residential-exposed businesses is likely several quarters away, pending interest rate improvements.

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CEO William Brown attributed the momentum primarily to 'self-help' from new product introductions and commercial excellence initiatives, stating the macro environment remains sluggish and is moving laterally. CFO Anurag Maheshwari advised that Q3 EPS is historically higher than Q4 and expects a similar dynamic this year, with a rough split of 52% of second-half EPS in Q3 and 48% in Q4.

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CFO Anurag Maheshwari responded that the company is trending toward the lower end of its 2% to 3% organic growth range but expects a stable trajectory. He clarified that Q2 sales should be at or slightly better than Q1, with no dip expected. Regarding tariffs, Maheshwari explained the financial impact will be concentrated in the second half of the year due to existing inventory levels, and that more detail on the segment-level impact would be provided later.

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CFO Anurag Maheshwari clarified that the $450 million productivity number is a total company figure including SG&A, while the 2% target (~$250M) is specific to COGS. He explained the Q1 to Q2 EPS jump is primarily due to the timing of equity-based compensation, which creates a $0.15 headwind in Q1 2025 that reverses to become a tailwind in Q2, as the accrual returns to a historical Q1 pattern versus being deferred to Q2 in 2024.

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CEO William Brown stated that achieving high-40s gross margins is possible, driven by a targeted 2% annual net productivity on the $13 billion cost base, though the journey won't be linear. He expects R&D and SG&A to remain relatively stable as a percentage of sales. Regarding growth, Brown noted that while new product introductions are accelerating, their main impact will be felt in late 2025 and 2026. Near-term growth hinges on improving sales execution and on-time delivery.

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EVP & CFO Bill Sperry explained the second-half acceleration is supported by a strong order book, easier comps, and key inflection points, such as the distribution side of T&D returning to growth and telecom enclosure declines abating. Sperry also confirmed that adding significant price to offset costs without a corresponding profit dollar increase creates a slightly dilutive effect on the operating margin percentage for the full year.

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CFO Bill Sperry confirmed the margin expansion calculation and noted that while the Electrical segment benefits from mix and efficiency initiatives, the Utility segment's improvement is more volume-driven. CEO Gerben Bakker clarified that while the meters and AMI sub-segment faces declines, the broader Grid Automation business is still expected to grow slightly for the full year, with the negative trend concentrated in Q1 before improving.

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CFO William Sperry confirmed the margin expansion calculation was directionally correct but noted it accounts for increased investments. He detailed that Electrical margin gains would come from efficiency and mix, while Utility gains would be driven by volume recovery. CEO Gerben Bakker clarified that while the meters and AMI sub-segment faces declines, the overall Grid Automation business is still expected to grow slightly for the year, supported by strength in other product areas.

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CEO Gerben Bakker projected a 30% decline for telecom this year with a steady, not sharp, recovery. CFO William Sperry stated transmission growth is expected to continue at a double-digit rate. Bakker added that the inventory situation should be 'much, much improved' by year-end, with a return to growth in 2025.

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President and CEO Neil Hunn clarified that trailing 12-month bookings are up low-double digits, which is the key indicator for future revenue, not a single quarter's result. EVP and CFO Jason Conley added that growth will be supported by improvements at DAT, Foundry, and Neptune. For margins, he expects nice core margin expansion in Application Software, with acquisition margins also improving through the year.

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EVP and CFO Jason Conley confirmed that core margins should be up in 2025, but headline margins will be impacted by acquisitions like Transact, especially in the first half. President and CEO Neil Hunn stated the TEP segment is expected to have high single-digit growth, with Neptune performing well. Jason Conley added that TEP backlog has normalized from elevated supply-chain levels but remains healthy, with distributors restocking.

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An executive explained that while the freight market is stabilizing, DAT and Loadlink are expected to return to modest growth next year through packaging and price, independent of market improvement. Foundry's recovery is now expected in 2025. Regarding TEP margins, an executive stated that after being down due to tough comps and investment at NDI, margins should inflect back up in the fourth quarter, aiming for flat for the full year.

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COO Ram Krishnan stated that Test & Measurement sales are guided to mid-single-digit growth for 2025, ramping in the second half, with orders expected to grow at a faster high-single-digit rate. President and CEO Lal Karsanbhai confirmed the assumption of roughly $60 million in Test & Measurement synergies for 2025 is fair, and that details on AspenTech synergies would be provided only after a definitive agreement is reached.

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