Change in Guidance
Q: What's driving the change in guidance?
A: The guidance change is due to delays in semiconductor launches in HST and project pushouts, mainly caused by inflation uncertainty and geopolitical issues. This led to deferments and longer approval loops, affecting orders in FMT and HST. Management remains optimistic these issues will resolve.

Project Pushouts Concerns
Q: Will project delays extend into 2025?
A: Management is confident that project delays won't push into 2025. They attribute the delays to uncertainties around interest rates and the upcoming U.S. election. They believe these factors will be resolved, and past cycles suggest a strong rebound once uncertainties clear.

Market Recovery Outlook
Q: How will the recovery curve play out?
A: Management expects a potentially aggressive recovery once uncertainties around interest rates and geopolitical situations are resolved. There's optimism, especially in Life Sciences and Analytical Instrumentation, that they're nearing the end of a flat cycle, with signs like accelerating drug discovery and innovation. Semiconductors may see a strong cycle in 2025.

Life Sciences Destocking
Q: Is life sciences destocking over?
A: While it's uncertain, there are positive signs suggesting destocking may be ending. They've noticed more optimistic customer conversations and indications like accelerated drug trials. However, they're holding the line on guidance and expect a potential turn in 2025.

HST Revenue Improvement
Q: What's driving HST revenue uptick in H2?
A: Deferred projects are expected to materialize in the back half, particularly in semiconductors. Management is confident milestone-based HST programs will hit, contributing to revenue improvement.

HST Margin Expansion
Q: Can HST margins return to 30%?
A: Margin improvement depends on volume growth, but they've improved margins by 180 basis points sequentially through 80/20 initiatives and cost reductions, despite minimal volume help. They expect HST EBITDA margins to be around 28% exiting Q4.

Discretionary Spending
Q: Any changes to growth investments?
A: Management maintains a steady approach to growth investments, focusing on people and innovation. They're reallocating resources through 80/20 initiatives without increasing spend. Discretionary spend is down in FSDP and HST, up in FMT due to digitization efforts.

Free Cash Flow Confidence
Q: How confident are you in hitting FCF targets?
A: They're highly confident in achieving over 100% free cash flow conversion for the year. Focused on inventory reduction aligned with top-line trends, they expect this to drive working capital and meet cash flow targets.

Fire OEM Demand
Q: What's behind the positive FSDP orders?
A: 6% organic order growth in FSDP is driven by strong North America Fire OEM demand. Dispensing orders can be choppy, but current growth is tied to Fire OEMs.

Price Capture and Book-to-Bill
Q: How did price capture and book-to-bill fare?
A: Achieved price capture of 2% with a price/cost spread of 100 bps, hitting the high end of their target. Book-to-bill was 0.96 in Q2 versus 1.02 in Q1, affected by timing of blanket orders. They're watching book-to-bill ratios into year-end for 2025 revenue.

Inventory Levels
Q: Is inventory drawdown complete?
A: Component inventory levels with customers are typical, but finished goods inventory beyond customers is less clear. Demand has held flat, and they don't see inventory as a significant driver going forward, looking for a potential upturn in 2025.

Municipal Water Outlook
Q: What's the outlook for municipal water business?
A: The municipal water cycle is expected to continue for a while due to prolonged funding and complex projects. They view it as a multi-year "safety blanket" with much of the announced funding yet to be spent or engineered.

Order Expectations
Q: Will FMT and HST orders improve in H2?
A: Yes, orders are expected to improve sequentially in dollars from first half to second half, as guided.

Backlog and Deliveries
Q: Are customers delaying deliveries or canceling?
A: No significant delays or cancellations. They've returned to typical backlog profiles after pandemic-related changes, with half a quarter's orders assured. Lead times and replenishment are typical across all segments.

Project Delay Causes
Q: What's causing project delays?
A: Delays are due to general uncertainties around inflation, interest rates, and political polarization in North America. These are not tied to specific government policies but are general concerns affecting spending decisions.

Rate-Sensitive Businesses
Q: Which FMT businesses indicate market health?
A: FMT's rate-sensitive businesses include pumps and valves sold through distribution for broad industrial use. Rapid fulfillment provides insights into consumptive activities. Day-to-day rates are steady, but project work is delayed due to uncertainties.