Free Cash Flow Outlook
Q: What's the outlook for free cash flow next year?
A: Despite timing differences this year, management believes they have a good path to end next year at an exit rate of about $1 billion in free cash flow, as previously communicated. Primary drivers include decreasing cash interest and taxes, reducing cash restructuring, and expected working capital benefits.

EBITDA Margin Expansion Next Year
Q: Is a 200 bps margin expansion next year realistic?
A: Management confirms expectations of approximately 200 basis points of EBITDA margin improvement next year. This includes around 100 bps from synergies and additional gains from volume leverage and lower interest expense.

Residential HVAC Demand Surge and Preparedness
Q: Why weren't you prepared for HVAC demand uptick?
A: The sudden surge in residential HVAC demand was unexpected after two years of weak demand and false starts on recovery. Capacity ramp is lagging, but they expect to catch up by end of the fourth quarter. OEMs kept their strategies around the 2L transition under wraps, limiting visibility.

Cross-Selling Synergies in IPS
Q: What benefits are you seeing from cross-selling in IPS?
A: Cross-selling and industrial powertrain initiatives contributed about 1 to 2 percentage points of growth in IPS this quarter. Only 15% of customers buy two or more products, so there's significant opportunity for further growth.

European and Chinese Market Outlook
Q: What's the outlook for Europe and China markets in PES?
A: Management sees continued pressure in Europe and China, with ISM indices below 50 in both regions. They don't expect significant improvement in these markets next year and plan to be measured in their approach for 2025.

Discrete Automation Orders and Outlook
Q: What are you seeing in discrete automation orders?
A: Longer-cycle orders are strong, with increased win rates and funnels, giving confidence into 2025. Short-cycle orders remain soft, and interest rate cuts haven't spurred expected capital projects due to market uncertainty.

Residential HVAC Sales Growth Clarification
Q: Was the 10% revenue increase in resi HVAC year-over-year?
A: The 10% increase mentioned was sequential, indicating ramping improvement. Management expects continued sequential growth into the fourth quarter.

Resi HVAC Inventory Levels and Next Year Outlook
Q: Are higher inventories at OEMs affecting next year’s outlook?
A: Higher inventory levels, especially in smaller systems, may soften next year’s demand. Management doesn't expect significant growth in 2025 due to inventory resets and flat end-market demand.

AMC Margins and Discrete Automation Outlook
Q: Was the third quarter the bottom for discrete automation?
A: Management believes the third quarter was likely the bottom for discrete automation. They expect sequential margin improvement in the fourth quarter due to backlog, cost synergies, and better sales leverage.

Long-cycle Orders in IPS and 2025 Outlook
Q: Do strong long-cycle orders in IPS suggest strength into 2025?
A: Longer-cycle orders, particularly in AMC sectors like factory automation, give confidence into 2025. IPS continues to outperform despite macro indicators like ISM below 50, reinforcing the value of recent acquisitions.

Commercial Aspects of PES and International Performance
Q: What's impacting international commercial and general commercial in PES?
A: General commercial (31% of PES) correlates with ISM and is under pressure. Commercial HVAC outside North America (23% of PES) is down high single to low double digits in EMEA and Asia. Residential HVAC improvement is expected to uplift the segment into Q4 and 2025.

Fourth Quarter Forecast for PES Segment
Q: How does the fourth quarter forecast look for PES?
A: Management forecasts mid-single-digit growth for PES in the fourth quarter. While last year had an OEM shutdown, they expect the quarter to be up year-over-year, noting the historical seasonality of Q4.

Risks from Lagging Deliveries to Resi HVAC OEMs
Q: Are there risks from delayed deliveries to OEMs?
A: Management doesn't foresee material impact from lagging deliveries. They maintain strong relationships with OEMs and continue to grow in air moving solutions, feeling positive about long-term partnerships.

Order-Revenue Gap and Business Cycle
Q: When will the gap between orders and revenue align?
A: The business has evolved, especially in AMC, which now has a backlog of around six months. Longer-cycle businesses like data center and aerospace have over a year of backlog, affecting alignment between orders and revenue.

Growth Outlook for Next Year
Q: Is the 'limited growth' comment about organic growth?
A: Yes, the limited growth comment pertains to organic growth. Management plans to approach next year incrementally measured due to market uncertainties and the election results.