Welcome to Emerson's 2021 investor conference. My name is Lal Karsanbhai. I'm the Chief Executive Officer of Emerson. I'd like to say a few words before we begin today. I regret that we're not all together in New York City, as we have been over the last few years. Having said that, I hope you and your families are all well. I'm joined here in the room with senior members of the Emerson management team. As you see me look around and speak and not look at the camera, I'm addressing others in the room. It has been a very challenging period of time for our company. We have done exceptionally well with our execution. It took a lot of courage for David and this management team, weathering the storm through the pandemic, giving guidance, then exceeding the objectives that we put forward. We're in a good place. Our future is incredibly bright. Our people are motivated, and they're excited about the road ahead for us. As many of you know, I've been a part of the OCE for the last two years. I've been a key member of the team that's developed the strategy of this corporation. What I'll tell you is that the plan that we will present today is a plan that is mine. It is a plan that I believe in, that we can deliver, and that's very important. We'll share, as we go through the day today, between myself, Jamie, and David, the components of that plan, but I'm very excited about the opportunity it brings. I take my hat off to the management teams across the world. They've worked incredibly hard to deliver 2020 and to commit to the actions that will deliver this plan going forward. Great job by everyone. I'm honored and excited about having the opportunity to lead this great team and manage this phenomenal company. I look forward to today and to future engagements with all of you out there. Thank you very much. Very quickly, obviously, we're going to be talking about our current business conditions. As we make forward statements, there obviously have risks associated with those that you are aware of. I want to make sure I highlight that for everyone as we go through the day here today. This is the agenda that we'll go through today. David and I will actually share the overview and the strategic update for the business. We'll have Mike Train come up and talk about our environmental and sustainability programs, a very important component of our growth opportunities as a corporation. We'll take a short 15-minute break to give everyone some time. We'll come back with Jamie, and he's going to go through the Commercial Residential business, exciting strategies that we have for growth and value creation. I'll come back and cover Automation Solutions. We'll have a break again to set up a Q&A period, where a number of you will be able to dial into a different line and ask us questions. That's what we'll go through. With that, I'm going to introduce David Farr, Chairman of Emerson Electric. Morning, David. Morning, Lal. How you doing, my friend? Good. It's good to see you. You too. It's good to be here with everybody today. It's not quite exactly how I thought about my last investor conference. Sort of reminds me of the Boston conference we had one year. We decided to go to Boston to present the Boston investors. We got two feet of snow. We did show up. We were in Boston. It was quite an enjoyable day without many investors in the room. Today's a little bit different. With this world today, you have to do everything remotely. Clearly, we've had almost one foot of snow here in St. Louis. It's been bitter cold the last couple days, like minus degrees. It's good to be here and talking about the path forward. Lal and I are going to cover this first part here. I'm going to give a little review over the last 18 months, where we sit today, discuss a little bit about the path forward. Lal will talk about the culture of the company, the market dynamics, the growth opportunities, and then his financial plan as he looks at the company today, as he's gone through it the last several weeks, and that's what we'll cover here in the first part of the presentation. Let's go forward here. The first slide, I just want to give a quick overview of where we've been for the last 18, 24 months. Like Lal said, I also want to thank all the employees out there, the management team, the individual employees. We've gone through a lot the last 18, 24 months. As we know, back in 2019, we as a company saw things were slowing down, and we made the decision, talking to the board, that we thought that we needed to take a quick review of our cost structure, a quick review of the businesses, very much like we did back in 2014 and 2015, to make sure that we're composed properly to grow through this cycle and come out stronger in the end. We did that. For six months, we had outside consultants working with us, taking a look at everything from the cost to the portfolio. The decision was made in November and also February to stay pat, we launched a very aggressive cost reset program, which you've seen over the last several years. As we've gone through this year in 2020 and into 2021, we've accelerated those programs. I'll show you that we're ahead of the plan at this point in time. Right after the February conference last year, pandemic hit. As all of you know, we started talking about the COVID pandemic in February, what we saw going on in our China operations and what we saw going on in our Italian operations. It's clearly changed the way we had to govern the company. We're living with the COVID today. We're managing it accordingly. During this time period, I think we'll create a very core growth opportunity for Lal and his team. As we've left the calendar year 2020 and finished our first fiscal quarter, we had a lot of momentum, for growth was returning, the margins were starting to improve, cash flow was strong, as you saw in the quarter, we really had a lot of momentum behind us as we moved into the 2021 time period. The one issue, as we've seen the cross currents, which they'll be talking about this morning, is basically the material shortages and the issues dealing with those material shortages, also labor to keep our plants open as the growth returns. Both Jamie and Lal will talk about that, clearly, we're managing that as we've done in the past. We can manage through that. Finally, the board and I decided in late January, early February, that we should move forward with the transition. As I talked about in the conference call, Lal is clearly the right guy. He has the right stuff to run this company going forward and do a great job for all shareholders and all the employees. Again, I want to thank everybody. As we go forward here, I want to update a couple more things for you. As we did in April last year, we did something unusual. We called a special board meeting, we called an audit committee meeting, and we made the decision to go out with a forecast for the next four quarters. We made the decision to give the investors insights to what we saw happening through the pandemic. We set a forecast of sales, margins, and cash flow. We made the decision to share our thought process with almost a 90-minute earnings call with the investors. Which I think was very insightful for our investors, but also put a lot of commitment on the Emerson team to deliver, and they did deliver. We made tremendous progress for this year from a growth standpoint in sales, underlying growth in sales, profitability margins were much better, and we also had strong restructuring as we increased restructuring as we went forward. Cash flow came out stronger. We paid back $2.2 billion to shareholders, and our adjusted EPS got to $3.46. Clearly better than everybody else expected and better than we thought for the year. We also finished two key strategic acquisitions of Open Systems International and the American Governor. Really, we reset the plan in April, and we delivered in the momentum in the fourth quarter going to the first quarter, clearly shows coming forth very strongly right now. I'm very excited for where we sit at this point in time. As we've talked about in the past, Emerson does continually reevaluate its businesses. I've been at Emerson for 40 years. We do not sit still. We constantly look at the portfolio. We constantly look at what needs to change. If you just look at the last 30 years, as we've gone from $7.6 billion to almost $18 billion in size, you can see the changes in the portfolio. I guarantee you, Lal will have the same process underway, just give him some time. From the standpoint of what we're seeing across the company, we will constantly change based on the markets, based on our technologies, always focused on trying to drive premium growth in sales, profitability, and cash flow. The work will continue under the new management team. I did it as part of Chuck's leadership, and I did it myself over the last 20 years. Clearly, one of the major moves we made back in 2015 was to reposition the company. We sold off a third of the company. Keep in mind, in that process, we've had two outside consultants work with us, but I also brought in four young next-gen leaders, Jamie, Lal, Mark, and Pat Fitzgerald, who's now down in Austin, working as a CFO down there. These four guys were involved in the process to look at where this company should go back in 2014 and 2015, now they're running the company. That's an amazing process we went through. Also, one other comment on Network Power, as you know, we did sell it, and it's now spun into a SPAC. We did receive $4 billion at the time we sold it. We still have upside because we still have some equity in the SPAC, and I believe that we'll probably drive another $500 million, $600 million of incremental cash flow for the corporation through that Network Power sale. One of the key outcomes of the 2014, 2015 review was the technology pyramid, the technology stack. We look at this as sort of a governing driver of our growth today, and where we need to invest, where we need to divest, where we need to increase our investments internally or through acquisitions. It's become a very important process for us as we look at the core technology and the base, the control, the instrumentation, the sensors. You look at the next line, the control line, and you look at the data management services. Over the last several years, we've been making acquisitions in all three categories, but in particular across the top as we look at trying to change our services, our software, and our data management. Leveraging the strength that we have in the foundation of this company around the sensors, the control valves, and our capability and instrumentation. We finally have a strong foundation. We've built this foundation up, and we continue to add stronger and stronger layers. The most recent acquisition, Open Systems International, really brings a lot to the top of this management pyramid. I feel very strong about the review process that each of the platforms go through and the corporation level we go through to make sure that we're staying competitive, strategic, and very successful across the company. It drives where we look at things today. I look forward to seeing how this company evolves over the next five or 10 years from off the side with my shares of Emerson. One of the things people have to understand, this company has a unique ability to make it through the tough times. In my 20 years, have had a few things hit me. I had the dot-com bust. We had, obviously, the 9/11. We had tremendous growth in the core company and also internationally in the 20s. We had the recession, the Great Recession, the Financial Crisis of 2008 going down to 2010. We flattened out. We went back and did a whole key reposition effort, as I said earlier. We took a look at the company. Do we have the right businesses? How do we maintain our profitability? How do we maintain our cash flow? What do we need to do differently? This went on for almost six months. We used internal reviews and also external reviews. The board did a lot of work in this effort, again, focusing on what should Emerson look like in the new world as we go forward here. We've gone through a lot of challenging times over the years since I've been here 40 years. This management team, this management process always looks forward and looks into how to make this company stronger and come out of it. We did the same thing last year in 2020 with the pandemic. The pandemic recession hit us. We look at the opportunities to accelerate some of the repositioning effort or the restructuring effort that we had started back in 2019. Jamie and Lal did a great job of trying to accelerate those. We actually spent more money and it's driving the savings faster, as you see in the early quarter of this year. Fundamentally, we know how to manage through challenging times. We, as a management team, know how to get through those times and really look at those opportunities to make things happen within the company. I applaud the organization around the world as we've gone through the last 18 months, and we've looked at the effort inside this company to grow faster, to improve our cost structure, and to really make a stronger company as we've gone forward here in 2021. I think the company's extremely strong at this point in time. As you'll see, the growth is starting to return in both businesses and will be growing by the end of this fiscal year in 2021. By a lot of hard work, and it all about sustaining value creation for the shareholders. As the last things I look at here, the global macroeconomics. We're learning how to live with COVID. We're learning how to survive in COVID, how to invest, how to grow, and what can we do. The V recovery has started. You remember back in April, we laid out that V. That V is pretty well mapped out exactly how we laid it out in April. Maybe slightly faster in the Commercial Residential and slightly smaller in Lal's business. In total, very much on track to where we are today. I firmly believe that that line will be touched in a positive way when you hit the end of the March quarter. We're coming back up and starting to grow again. From my perspective, we're looking at the economics around the world. They're better. We're seeing GFI get slightly better, both in the U.S. and also in the G7. That will be good for us from our customer standpoint. It's going to be a different mix of businesses as we'll talk about here today, but we're seeing the growth, and our businesses are driving growth. Finally, the last wind to our back would be the government stimulus around the world. The governments are spending like crazy. They're spending on new technologies, they're spending on new power generation, they're spending on areas that we can help. You'll hear both from Jamie and Lal talking about those investments and what we're doing with those investments. As we look at the Commercial & Residential Solutions has come back strong, primarily U.S. and residential. We saw Europe coming back and the sustainable technologies that Jamie will talk about. Asia, we're starting to see the cold chain. We will see the professional tool business come back by end this year. His business has a strong momentum going on. He's got some changes in the refrigerants and efficiencies that will drive growth for him for the next couple of years. The other key areas, we're seeing major changes in the power markets and energy uses. We're seeing quite a turmoil in that area. There'll be growth opportunities for us. There'll be incremental investments here as they come out of this cold weather, as we saw just in Texas, windmills don't work very well when it's freezing weather. Where do you see that LNG coming into play again in Texas, maybe in 2021 and 2022? We're seeing a boom in life sciences in the medical area, which we're very strong. We're seeing a very strong recovery in some of our core businesses at this point in time. There will be some fundamental change in the digital transformation of our customers, and we are well-positioned to help that. It's one of our core technologies that we invested in for years and years ago. We have created a separate business under the Automation Solutions focused on digital transformation, which is having great inroads in the marketplace today. As I said, I think Emerson's going to start seeing growth in the second quarter. I see the diversification we've made across this company in the last several years is really helping. I see the opportunity for us to grow over the next two to three years. I think Lal has a very strong, solid plan with some potential upside in certain marketplaces for growth. I think our aggressive cost reset has taken hold. You're seeing it today in the margins that we delivered in the first quarter and also the fourth quarter of last year. We will have improved margins this year. We have some crosswinds, as we talked about, between the materials and the labor, but we'll work through those like we've always done in the past. We're strong, and we're going to get through this as we can in 2021. We continue to invest in technologies and acquisitions. Also important, as you see with Lal and his new team, we have a process inside the company that teaches leadership, that trains leader to be leaders. We help people become stronger leaders. Out of that process, you've seen people like Jamie and Lal and Mark and many other leaders in this room. They've emerged through that process. They are stronger for it. Lal has a very strong team behind him coming through the leadership process. I'm very excited for him. I think he's going to have a great run with his team. They are ready to go, they are ready to win. They're ready to take over from my leadership. I'll be glad to step aside and clip my coupons and my dividends as we go forward here. Thank you very much. Let's talk about Lal. Lal has the right stuff. I've known Lal for a long time. He was a young planner working for me in my early years when I came back from Asia. He was a very interesting planner at that point in time. He had a lot of energy, a lot of strength, a lot of smarts. We sent him down to one of the process business, the regulators, which he did a decent job. We then sent him over to Europe, and then we brought him back to run the regulators business. I brought him back into corporate to become the head of planning and strategy, which is a good chance for me to see what the guy thinks like. Really thoughtful person, very smart from a strategic plan standpoint. As we went forward and we decided to sell the Network Power business, because he was part of that process, we decided to move him to Europe. The reason we decided to move him to Europe, a couple of reasons. One, he was born in Europe, but more importantly, there needed to be a massive amount of restructuring, and Lal understood how to do that. He truly understood how to get that plan, how to execute in Europe, and he did a great job. Recently, we brought him back to run the Rosemount business, and then two years ago, we promoted him to be the platform leader for Automation Solutions. He has the skills necessary, both at the platform level, at the division level, and at corporate. I think he's going to be a great CEO, and I wish him well. With that, I'm going to turn it back over to him. I want to say goodbye to everybody. I won't see you, unfortunately, because we're not traveling these days, but I hope to run into all of you in time, someplace in New York or Boston, around the world, because I'll be moving. You take care now. Thank you very much. Thank you, David. Actually, do you mind staying up here with me? Okay. For a few moments. Come on up here. Okay. You don't know what's coming. That's why I get nervous. You do. I could not let this opportunity go by without recognizing the value you've created and how meaningful you've been to so many of us. Thank you. Both inside this room, the teams around Emerson, all the stakeholders, our investors, our customers, and our communities around the world. I have known you for a long time as well. I met you in London for the first time in 1997, I think it was. I recall all the good times and the tough times that we spent together, and the many learnings along the way, and I thank you for those. Let's talk a little bit about you, David, and about the value you've created for all of us and all the stakeholders. Starting with the financial performance, 400% return over the period of your CEO-ship on TSR basis, outperformed the S&P and the XLI. You've returned nearly $36 billion of cash to shareholders in that period of time. Phenomenal performance. You're handing over a company that has over $50 billion in market value. Very nice young picture of Chuck and myself there. You look very good. I was- You look very good there, David. I was a young planner. I was one of these young planners over here. That is what I looked like when I ran planning. You've aged well, let's say that, too. Yeah, I have. You've aged well. You're a lucky man. Globalization was one of the first things that you really put in place and the strategy that you took forward. Part of it was your heart. You spent four years in Asia. You got to see the opportunities from the ground of what we could become. Really turning us from a U.S. company that had international business to a truly global industrial company. It wasn't just about setting up sales offices. It was about localizing our business, manufacturing, supply chain, our people development in the region so we could manage locally. You spent a lot of time laying that infrastructure and invested a significant amount of time of your effort in creating the global company that we have today. Tremendously well done in that respect. You also had many opportunities to reinvent the company. You spoke about some of those already. Whether that was around our management processes, as we looked at cash, as we looked at our on-time delivery efforts, as we thought about our management process and evolved it. The repositioning. When I joined this company in 1995, there were over 60 independent operating divisions, we called them. Yeah. We evolved that into business groups and ultimately to the three franchise business platforms that we have today. That journey over 20 years was thoughtful, and as you said, you took your time. You acquired over 80 companies as CEO of Emerson, but none, I believe, closer to your heart than PWS, the Westinghouse business. The folks in Pittsburgh, that business has added over 12 points, I believe, of market share globally and over 25 points of market share in North America since you acquired that business in 1998. An incredibly meaningful business that now we're building around with OSI, as we get out of the power generation into transmission and distribution. Your passion for technology, David, has fueled our efforts around digital transformation. Many don't know that you were running the process business at the time of the original Plantweb. That is evolved now to the business that is over $600 million in size and Stuart Harris runs around digital. Also your passion for technology led us down the path of software and the investments that we have made, and we now have a $1.1 billion standalone software business through those efforts. Great work there as well. You have engaged with everyone. You have engaged with all our stakeholders, with our customers at the highest level around the world. You have been a steward for U.S. manufacturing and led the National Association of Manufacturers as chairman for a number of years. Your passion with investors, well, I think everyone on the call will know and recognize that and how much energy you get out of those conversations and engagements. Then your commitment to all our communities, from Mexico City to St. Louis to Milan to Bangkok to everywhere we do business. You're passionate and you put your effort and hard work around that, and we all feel it and recognize it. There's one passion that you truly, I think, have above all else, which is developing our people. Your passion for all of us. The countless hours that you've spent. The OC spends about 1,200 hours a year. You lead that, David. Five, six-hour presentations are not uncommon with David as he talks to our developing people. The impact that you've had amongst so many will be felt for years and years to come. I thank you for all of that, my friend. I thank you for what you've done for all of us, what you've done for our stakeholders, our customers, our investors, and above all, your employees and our communities. I thank you, David. I thank you. The only people that never listened to me are those little kids. Yeah. STEM day, until I threatened to cut their dividend to their parents. There you go. they paid attention then. They got quiet at that point? They got quiet. They got quiet. It's been a lot of fun. Thank you, Lal. You're welcome, sir. Very much. There will be no dividend cut right away. No. Just to clarify. Okay. I'm going to continue from here on forward on this overview and business review. I'll begin with the culture, talk about the market, and then review the Emerson financial plan. Why is the CEO of Emerson talking about culture first? Because I believe culture drives performance, and performance creates value. My strategy as CEO of Emerson is to put people at the center of everything we do to foster an environment that's inclusive, where the best minds in the world are attracted to come and work here. We drive innovation that makes the world healthier, safer, smarter, and more sustainable. What a great set of words. Over 17,000 of our employees over a period of 12 weeks developed that purpose statement. Those are the words we live by. That's what guides us. That's the goal that we reach for. There's an intrinsic link between our purpose, the management processes we use, to our causes, and our values as a company. All of this comes together as we manage the company and think about creating value. I want to spend a little time talking about our people. Over the 25 years that I've spent in this company, nothing gave me greater joy. Actually, it's a lot of emotions. It was joy. There were tears. Making 85 phone calls to 85 different individuals across Automation Solutions. We made over 130 phone calls between commercial, residential, and corporate to people who went above and beyond during one of the most challenging periods of time that any of us will have to manage through, the March, April pandemic crisis. These were people who decided to stay on site to serve their customers. These were people who stayed in plants. Some individuals who were living in situations they had never seen before, never thought they'd encounter. It was incredibly rewarding. There were many more phone calls we could have made. We picked 130. There were many more. This is what makes Emerson a phenomenal business. The passion, the commitment, the energy of the individuals as depicted on this piece of paper. It energizes me every day as the leader of automation and certainly as the CEO of this company. What I'll talk about in terms of culture are three dimensions. I want to give you some perspectives as to my leadership style. I know some of you have asked. I thought I'd talk about it. I want to talk about diversity, inclusion, and governance as well. I truly believe that trust and empowerment are the key elements of leadership. We got to let people run. We got to let people do their jobs and perform. What I ask in return is accountability. I hold people accountable for the goals they set and the objectives that they set on paper, but I let people run. I think that's very important. As a manager, it's worked for me as I've scaled. David went through the history from a regulated business down in McKinney, Texas, to Rosemount, to the leader of Automation. I'm certainly that same style can scale to the CEO of the company. I think it's equally important for us to be very aware and deliberate about people development. The experiences that I had and that Jamie had, Mark, Ram Krishnan, did not come by chance. I was lucky a few times, as David will tell you. I was lucky a few times that someone turned the job down and I got an opportunity. There were deliberate moves for me to gain experiences. I try to make the most of those. We need to think very carefully about our development of our young people so that in 10, 15 years from now, the next leader is standing up here, and they've had the opportunity to run the company, to develop and depict the right skills required to be the CEO or the business leaders of this great corporation. Diversity and inclusion. We've done a lot of work here, but there's a lot to be done. There's a lot to be done here, and I'm excited about it. Obviously, being a multiethnic person, it's just a subject that's very close to my heart, and I have a particular passion for it. Discussions that we've already kicked off as a management team here, and I'm excited about. I have a board that's incredibly active and engaged around the issues of culture, but they're equally active and engaged on governance and compliance of this company. Done a lot of work, David and the board over the years to diversify the experience of the board, as depicted here on the right, both in terms of gender makeup, ethnicity, and experiences. I think we have a path going forward working together to continue to create value at Emerson. Now I'll turn to our market, and I'll outline the growth dynamics and opportunities for the company going forward. We have three phenomenal franchise platforms, all of which have opportunities to grow, have opportunities to expand their served markets, and opportunities to create value. Across their categories, they are leaders. They are sales leaders in market create value. I'll walk you through what those will be. Let's start with the diversification, which is strategy number one. We've done a lot of work over the last number of years to gas sales by end market are down nine points since 2014 and 2020. More importantly, our relevance in hybrid, discrete, and the culture around those, we've had a relevant, very good opportunity for that business. Around discrete, we spoke about this at length two years ago in New York. Mike Train talked about the acquisition of Digium, Mike said it exposes us to. As we talked at the earnings call, we are getting the benefit of those early cycle businesses right now in the automation space. We've built on that PLC business that we acquired with another acquisition of a company called Progea in Italy earlier this year, which brought an HMI based business in for the PLC. We have a complete offering now for our channel and our customers around the world. We also acquired a motion control business in Germany called AVENTICS, a very interesting opportunity for us, which is now growing aggressively. It gave us access to a strong German economy in the discrete space, and will continue to drive opportunities around that business as well. We have the basis for phenomenal expansion there. The last market here I'll highlight is hybrid. In that, as you know, consists of a number of markets, including pulp and paper, mining, and food and beverage. The life science market, which we'll spend a little time speaking about in the Automation Solutions piece, has experienced phenomenal growth in 2020 and into 2021. That's obviously driven by the therapeutic efforts as well as the vaccine efforts around COVID-19. We have a technology hand to play as well. This industry is undergoing a change from traditional batch manufacturing, where essentially you move chemicals or biologicals from one container to another, into a continuous manufacturing process. Our ability with our systems and expertise to journey our customers through that process, is very strong. Great growth across these markets. Look for investments at $1.1 billion of stand-alone software business. That internal and external development is pervasive across all three of these technologies. Generation of compressors, which Jamie will talk about, addressing the low GWP refrigerants and efficiencies. If you look across the control layer, the PK Controller, which we spoke about two years ago, Jim Nyquist presented in New York, it is one of Emerson's most successful new product launches. Alone, the PK controls over a $200 million business today in a short two years. Phenomenal work there as we continue to expand the opportunities for IO in process and hybrid. In the data management layer, manufacturing execution systems around Syncade for pharmaceuticals or Mimic simulation software, giving real-time simulation opportunities of business conditions for process plans, all around that layer, and I'll just give you a few more examples in a few moments. If we step back and just look at the software layer, $1.1 billion of stand-alone, $2.4 billion of software when you account for the software that's embedded in our products. We've innovated from within, that's the bottom left of the chart. Many examples you'll hear throughout the day, many of which you're familiar with already, but we've been acquisitive as well. In the time that I ran Automation Solutions, we made eight acquisitions, all of them in the software space. We made two equity investments in the space as well as we continue to broaden the opportunities to reach around that. Our strategy is to be very expertise enabled and vertical as we look at software opportunities. It is not to go horizontal or to buy software companies for the sake of software companies. They have to have a linkage to what we do, to our devices, to the relevance in our customers. They have to bring a level of expertise and provide an ROI in the industry. That's the world that we start to look at as we think about adjacencies, which are the next layer, and ultimately to some of the broader opportunities that we have out there. A lot of work being done in this area. We put a target of 20% of our revenue out there as we look forward in this plan around software, but one that is a very important opportunity for us as a company. David spoke earlier about digital transformation. A tremendous amount of work going on here. It's been slightly over a year since we set up the group that Stuart runs. He presented a year ago, if you recall, in New York City, and we've participated in many conferences as we've gone through the year, with many of you. On two dimensions that I'll highlight here, the first being technology. On the technology front, we've now created an operational software platform around our Plantweb Optics, where we've taken diverse pieces of software that we've had across the company and singularly created one unique language where all our software platform works together, communicates together, looks the same, feels the same for our customers. Tremendous work by the team in Austin and Minneapolis to get that done very quickly. We continue to innovate on the sensor level as well. There are two examples here, one around vibration, very successful, which we released earlier this year, and the second around location awareness. A Wireless HART-based location awareness system, which is significantly more accurate and cost-effective to standard Wi-Fi use systems that are out there in the plants today. Again, continuing to innovate around the sensor piece and the opportunities obviously over here on the software piece, very important. We also have done a lot of work on the selling side, on the channel side. We have over 10,000 customers today that are at the early stages of their digital transformation journey. They're just getting started. Interestingly enough, we have 45 sites where we have at least $2 million of installed base of digital solutions, and at least three distinct solutions in place. We have aggressive plans to take those 45 sites to 100 this year, to take our installed base to $5 million from $2 million, and to increase the breadth of solutions that we offer our customers. There is momentum here. In many ways, as we've discussed in the past, David referenced at the front end, this market continues to define itself. It continues to find its way, we have a good hand to play in doing so. We equally have a great hand to play around the sustainability journey. Michael's going to come up and talk about that in length. I feel really excited. This is a future that we have that we can create a lot of value around. We play across the entire energy value chain, as you look at this from left to right, whether it's enabling the transition to renewable fuels, to clean fuels and energy sources on the left side, through our digital top quartile efforts, whether it's the optimization of the energy supply through transmission and distribution, and I'll speak about that a little bit more in a moment, or ultimately, in the efficiency of how we use around power generation and power transmission and distribution. It has an incredibly relevant hand to play, both around sustainability and around. It is a great fit culturally for our company. The management team delivered a great first quarter, and there's momentum in the business. We're going to globalize the presence in utilities across the U.S. into the transmission distribution, and our hand to play in the transition to ADMS here. I think that our opportunity here is vast. What I'm also excited about is the additional market that it brings to the table. It brings a $1.3 billion sensor market in transmission distribution that we did not have access to before. There are opportunities to make further acquisitions or internal developments in that space as we go forward. Much like we did on the power generation side, and I referenced earlier, where we expanded our global participation by 12 points with Ovation since acquisition, we have the opportunity here to 2x or plus the market participation of this great company with these great technologies that they brought to the table going forward. That's the elements of the strategy that you'll hear today. We start with a market growth of about 3%, as I'll highlight in a moment. We'll drive industry diversification. We'll continue to invest both organically and through acquisitions in software and digital. We have a great hand to play around environmental and sustainability. A very exciting plan that will deliver underlying sales of about 4% going forward in the plan. Next, I'll cover the Emerson financial plan and the details of it. As we go through 2021 first and then in the longer term. As David highlighted, the V-shaped recovery is clearly underway. The acceleration out of the box of Commercial & Residential business has continued as we've gone into January. The three order run rates at 16% in January. The recovery in the Automation business, although slight, has continued as we've gone through January as well, down about 12% now at the January endpoint. Emerson now in that down 3%, slightly recovering again from where we were in the December time period. I would expect Commercial & Residential business to continue to be strong through the year and modulate between 8%-15% or so as we go through the remainder of this year. The early cycle business in Commercial Residential, as David highlighted, is that U.S. residential. Jamie also has some medium and longer cycle businesses, particularly around commercial and professional tools, which we'll see come in later in the cycle. In that 8%-15% band. In terms of automation, the pace of recovery, as we highlighted at the earnings call, continues to be around North America. The speed at which North America will come back, at the rate at which it will recover. What I will say is that the discrete early cycle businesses are recovering on a global basis now. You recall back at the earnings call, I spoke about just about every world area with the exception of North America, but we're seeing those early positive signs in the discrete markets in North America now as well. That's what changed for us in January and is giving us more confidence of the recovery in the automation markets as we go forward. This is the guidance that we gave on the February 2nd earnings call. No change to the guidance. We're looking at an underlying sales growth of flat to 4% for the corporation for the year, automation down 3% to +1%, Commercial & Residential at 8%-10%. We've identified about $200 million of restructuring, and I'll update where we are on that, but we're well on our way to spend close to that number. We'll generate $3.15 billion of operating cash flow, spend about $600 million or so of capital as we look at the plans across the businesses, and between share repurchase and acquisitions, half a billion to a billion, and then $1.2 billion of the dividend. The commitment that we made was adjusted EPS of $3.70 ± $0.10. We've not changed that. The key headwind, and David highlighted, that I want to speak about is material. Whether it's steel, copper, resins, electronics, or logistics challenges, we're fighting those right now, particularly in Commercial & Residential business, as you heard at the earnings call. It's not the first time that we faced this. We have a long history of addressing material inflation in the business. We believe that with the strong efforts of our supply chain teams and working with our suppliers, that we'll continue to mostly mitigate those impacts. Part of that will come from the COVID savings that we had assumed. Obviously, we'll continue to be in an environment that's curtailed in terms of travel and entertainment. A lot of those savings that we thought we'd give up through the year will still be on the P&L, as we highlighted during the earnings call. That's the key challenge that we've got to be very aware of. Ultimately, over time, that will come back, and will unwind the other way over the next three, four quarters. This is the challenge that we have in the business today, and it's not unlike many industrials out there are facing. I want to spend a few minutes talking about the cost reset plan that we presented a year ago and rolled out across the platforms in corporate. Tremendous work. Tremendous work by the platforms, tremendous work by corporate, by all our teams around the world. It's not the first time we've done this. We did it in early 2000s. We did it again in the 2008, 2009 time period, where we've looked at our cost structure very aggressively and put programs in place to execute, where we've made tremendous progress this year. We will hit our adjusted EBITDA, or we'll equal our adjusted EBITDA prior high in 2021. It'll take us to 2023 to get to the adjusted EBIT record, but we're well on our way, as I'll show you in a moment. What's interesting about this plan versus the plan that we showed you and shared with you in New York a year ago, is that we're doing this with $2 billion lower sales in the 2023 period, but we're still getting out there. We didn't move this out to 2024. We stayed committed to that year, the strong execution that we have in the base company really enables us to deliver those EBITDA and EBIT commitments as we get out there in 2023. I feel very good about that and the work that's been done there. Here are the details. In terms of restructuring spend, we committed to $600 million as part of this program that generates $650+ million of savings. It's a better than one-to-one payback here as we think about the programs. 80% of the spend is already complete, and you'll hear from Jamie and myself a little bit later. That's consistent across the two platforms. Really good work. By the end of fiscal 2021, we'll basically be completed with this program, and we'll get back into normalized restructuring activities that we have in the business, that we've had in the business for a long time. The savings are hitting the P&L. You've seen that over the last two, three quarters as they impacted. We've realized about $220 million of savings already, but we have a phenomenal future benefit heading our way as well. We went after the structural headcount actions early. We're now in the midst of the execution around the plants, and both Jamie and I later will give you some more color around where we are in our plants. They're being managed, and we're being very cognizant of us returning to growth and how we move things around during that period of time. I feel really good about the execution here, and I feel very energized by the work that the management teams have done around the world to get us to this point. Just great work. Let's walk across the EBITDA bridge. You're familiar with this. We shared essentially a similar bridge a year ago. Let me walk you from the 2019 period, which is where we made that commitment, to the 2023 endpoint. We're at 21.5% adjusted EBITDA in 2019. The volume assumption that we made here is 30% leverage. We assume the volume coming at 30%. That's aligned with our historical numbers. You've seen in our recent results that the leverage is a little higher than that. Obviously, we have the benefits of our cost reset already flushing through the P&L, and hence why. We assumed the 30% for the basis of this plan. The red bar of almost $900 million are the headwinds that we face in the business, the biggest of which is wage inflation, valued at about $0.5 billion, and other inflation, including freight as a secondary headwind of about $200 million as we go through this cycle. We have positive price cost in the plan, despite the short-term challenges that we have in the business today of $365 million. The cost reductions in productivity of $485 million. This includes also the investments that we're making in the business, the technology investments, the selling investments, the marketing investments that we have across the business are embedded into that bucket right there. There's the $650 million of the cost reset across the business. All that gets us to that 24% commitment on adjusted EBITDA that we've made as part of the cost reset program. Feel good. We're well on our way. There's momentum in execution, and I feel very positive of making this commitment and as we go forward. Let me spend a few moments now talking about the top line and the sales. Our plan is to grow organically 4% on a market that we estimate to grow around 3% going forward. Organic growth delivers about $2.5 billion. But as David said, there could be opportunities there, depending whether we do find $1 billion of revenue for the acquisitions. OSI represents approximately $300 million of revenue on this bridge. So there's another $700 million of acquisition revenue that we've embedded in. EPS roadmap to $4.75-$5 is driven significantly by the execution of the base company. That's the biggest driver that we have. The net headwinds, if I step back and walk us from 2021, are predominantly around the COVID savings that we've experienced over this year that obviously get partially restored as we go forward. There's the base company execution. We'll flex. We have flexibility between share repurchase and acquisitions as we go forward. It is important to note, again, that this plan has a cumulative $7 billion less sales in it than the plan we presented last year. Because of that strong execution in the core company, we have a path to that $4.75, $5. We have a path to our peak margin performance, cost reset plan performance in 2023. That's very exciting for us, and that's a reflection of the hard work that's been done across the organization. Shifting now to cash and the sources and uses of cash. We will generate over $15 billion of cash through this planning cycle. The dividends will remain an important component of returning cash to our shareholders, and that commitment will be unwavering as David and I joked about a little bit ago, very serious. The share repurchase will modulate. We'll modulate between acquisition opportunities and share repurchase in total to return 50%-60% of our operating cash flow to our shareholders over time. The cash flows that we have in the business support the acquisition plans that we have. We have about $6 billion, but we have a strong balance sheet, and that balance sheet will bring the flexibility that we need if we need to do different things or if the right opportunity presents itself for us. We'll be disciplined as we look at things in our processes, and we'll continue to invest in our businesses. Our businesses are thriving. We're continuing that 3% of sales CapEx spend. Turning now to free cash flow. We have a strong path to deliver free cash flow every year. The corporation made a commitment during the repositioning to the dividend. We went outside of the band of 40%-50% target that we set, and then we grew ourselves back into it. That was the strategy that David laid out back in 2016, 2017, and we've executed that. Now, we are trending more in that 40%-45% area on the dividend as a percent of the free cash flow, and that's where we're targeting the company going forward. The earnings quality of this company is incredibly high, and we're looking forward to continue to convert over 110% of our net earnings to free cash flow in the plan. The balance sheet of the business is strong, as I highlighted, and will give us that flexibility as we go forward, to maintain the dividend and to do different things with the business from a strategic perspective. In summary, this is the financial plan. I've talked about 2021 in terms of the guidance. Here are the numbers on 2023. Sales growth, $20 billion. Expansion of margins to the cost reset plan we covered. An opportunity to get to the $4.75-$5 EPS range, an important commitment for us. The balance sheet ratio is very strong. Maintaining our debt rating where we've been, essentially for 20 years now, to give us that flexibility going forward and total debt to adjusted EBITDA of 1.7x. With that, I'll conclude with this chart. I feel really good about where the company is. I feel very positive about the strategies that we've identified to generate growth and create value. We have a phenomenal hand to play with our technology and our people around software, digital, sustainability, and the diversification of our industry segments. We have a path with a strong balance sheet and strong cash generation to create value for the shareholders going forward, and I'm very excited about our future as a business and the path forward. I'd like to now turn it over to Mike Train to cover the sustainability opportunities for the business. Good morning, Michael. Good morning, Lal. Nice job. Thank you. There you go. Thank you very much. There you go. We're running a little ahead of schedule. That's okay. We'll take our time. Maybe I'll get a few bonus stories out of the deal here. We'll see how things. Of course, you get to come back up again, Lal, and answer for us. Good. First of all, let me harken back to the tribute with David. I think I can speak for a lot of the management team members, both in this room and beyond out in the world, that we've all been personally touched by David's leadership, by his training, by his coaching, and ultimately by his friendship. My personal story is David and I moved to Hong Kong in the end of 1993, set our path in Asia, and ultimately for, I think, a lot of the globalization work that we did beyond that. I was very young, very raw at the time, David was younger at the time as well, but has been a great coach. Ever since then, he's given me the opportunities to develop myself. He's taught me how to develop others. We've all had to learn how to develop others in the company. It's been a massive team effort. I want to salute David on that and appreciate everything, again, on behalf of really everybody in this room and beyond this room from that point of view. Lal, we welcome you as our new Chief Executive Officer. Of course, we all know you extremely well, been around here for 20, almost 25 years. I think we're really excited about our future here. We love the portfolio you just laid out for us. Really important as we go forward. I get the pleasure today to talk about our environmental sustainability efforts. This is something that's not overnight or brand new. We've been working on this. We felt it was the right time this year to really present this in a structured way to share with everybody. Our employees are passionate about environmental sustainability. It came through the work, that survey that Lal referenced, the 17,000 employees as we crafted our purpose and our causes. This topic ranked at the top. Our employees have a passion for this. They want to be making a contribution. They want to be making a difference in the world. At Emerson, they can make that difference. I do want to share some of that with you today. We have investors that are very interested in this topic. They also want to understand what our relevance is. I'm here to say today, I think we're highly relevant as we go forward into the future here. Ultimately, we have customers here, customers that need to make their progress. Again, the enabling technologies around the broad automation capabilities of Emerson, I think are really going to land for them. I think already we're seeing them pull on us to work on some of those early novel solutions. We'll share some of those examples with you today. My agenda is to walk you through the greening of Emerson and what we're doing in our four walls. I want to spend some time really on that sources and uses of energy. A little bit of a learning that comes from that, and also how it relates to really, I would say, every piece of our portfolio and what we do. Greening by Emerson of our customers and greening with Emerson as we work with others around the world to make real, actionable, practical progress. Let me start with our environmental sustainability framework. This is our greening of Emerson, our greening by Emerson with customers, and greening with Emerson. The left-hand side of this chart is extremely important. In fact, when we had our management discussions the past two years, David was adamant on this topic, that we had to make sure that we put the focus on greening of Emerson. Back in August of 2019, we issued our target, Lal, our objective, to reduce our greenhouse gas emissions intensity by 20% over a 10-year period. We did that by baselining 185 of our major sites, manufacturing sites, large office complexes, really almost the entirety of what we spend in the energy space in those 185 sites. We capture that information. We audit that information. We have modeled our energy mix. We've modeled our greenhouse gas intensities. We understand our activities are extremely well, and we're working on those things. We're really focused there. Greening by with our customers, we put it in the center of the chart. I use a little terminology at the bottom here called Scope 4. It's really the lever for Emerson is the impact we can make with our solutions, with our customers. I'm going to walk you through these four strategies here in a moment. Ultimately, greening with our constituents around the world, whether it's governments, industries, academic associations, and so forth. Big role to play here. This is our framework. We introduced this to our employees. They're very excited about this. We want to continue to drive this. Let's start with the greening of Emerson and our commitments. We introduced our metric around this. Again, it's a greenhouse gas intensity reduction metric. It's related to sales. We started off at 39 with our baseline. We're on the journey to 31. We've got two principal strategies here. One is to reduce, in our four walls, the energy that we utilize, and we're very focused on that. We are working on that. Secondly, we will increase the mix of what we purchase from a renewable or a low GHG energy sources. This has been led by our Board of Directors. We just had a very robust discussion in our last board meeting to talk about this. Our Board of Directors are very passionate about this topic, and we had a great dialogue on this. I lead our Environmental Sustainability Steering Committee. Several of my fellow members are here in the room. We have others beyond the room, around the world. Really important focus that we've brought to the company on environmental sustainability and driving our strategies there. We're embedding it in the management process. All the facility has a very direct representation of those activities. Ultimately, and the place I'm really taking this to, is to every individual site. We are creating environmental sustainability site teams with a leader. They are the ones, just like everything else we do in our management process, that are going to drive our progress. We're going to enable them to be able to do that. In addition, we're having engagements beyond our four walls with our energy suppliers, our supply chain partners, our logistics providers, and making sure they understand where Emerson's coming from. We want to understand what they're up to. We want to collaborate with them as we go forward. Just a couple of highlights on the greening of Emerson. You can see them listed down the right-hand side of the page here, some of the things we're up to. One of the really great tools that we're using right now is our energy treasure hunts, and this is where we ask the sustainability team of a facility, and we bring some subject matter experts to the site to participate, to go walk through the site for two days. First day is typically on maybe a Sunday when there's not a lot of activity in the facility, eyes, ears, listening, watching, learning. Then going back into that facility when it's at full pace, operating, and again, doing the same thing and finding those opportunities and learning what we can do from strategies. I've highlighted six of sort of what we've seen so far. LED lighting, control systems. Air, compressed air is a huge topic for us. I didn't realize this, Lal, is we have a lot of older air systems in our own factories. If you update those systems, we actually have the ability with AVENTICS to measure air compressor leakage and these kinds of things. Air is a tremendous expense and a tremendous opportunity for us as we go forward. Same with industrial cleaning, same with our temperature chambers and so forth. You go down the right-hand side, we've got an on-site solar project going in Dubai. Makes kind of sense. You're in the desert, David. We've got three buildings there. We're using that roof space. Should provide over a majority of the energy we consume ultimately, when that's put in place by the end of this summer. Renewable energy purchases, equipment. Beyond the commitments around our emissions intensity, we're working chemicals, we're working organic compounds, we're working recycling, we're working waste. Our employees are so energized by this topic, and we're getting a lot of feedback. One of the big pieces here is kind of a hub to connect everybody's activities, do the education, making sure that they have access to our tools and ultimately celebrating success. I think that's what's going to be really important as we go forward. I want to now turn you to discussing sources and uses of energy in the U.S. I don't know if anybody's ever presented this chart to you. This is a tremendous chart. It's not my chart. This comes from the Lawrence Livermore Labs, part of the Department of Energy, and it's a full depiction of the energy complex across the United States. I use this as raw energy, oil, gas, coal, geothermal, wind, solar, hydro, nuclear, and so forth. You move to the middle of this chart, you go through conversions. You move to the right-hand side of the chart, you go through its uses. I want to walk you through this. The other reason I really love this chart is it just happens to add up to about 100 as you look at this and you think about what's going on here. Let me kind of walk you through some of these. We'll start on the left-hand side of the chart, sources of energy. Again, you can see where we're starting from as the U.S. on decarbonization. Working on the left-hand side of this chart to have sources of energy with less carbon associated with them. Three kind of critical strategies here. Low carbon power, that's your solar, wind, nuclear, hydro, where we touch and are involved in all of those. Low carbon fuels, biofuels, big category. Using waste from agriculture and other products as biofuels. LNG still has a huge role to play in that switch away from coal towards gas from an emission standpoint. Ultimately, and you're using our Ovation, our Power & Water Solutions capabilities to get those assets on and off of the grid properly, just the way we would switch a 600 MW fired plant, fossil right now, renewable natural gas. We're working on this in Europe, in the U.S., in Canada, in China, and other parts of the world. This one for me, I love because it combines everything Emerson does. It takes compression, sensing, edge computing, ultimately analytics, combines it in a solution, allows us to be able to go out there and really utilize some of these waste resources, if you want to call them that, and turn them into energy, clean them up, put them back into grids, and get them transported to where they can help go provide an energy source to somebody else. Finally, on the right-hand side is the next generation around hydrogen. This one happens to be talking to ammonia for storage and transport. Again, using really every capability across the company to be able to deliver on something like this. This is the energy source, decarbonization. Emerson's right in the middle of every one of these type of solutions today. If you move towards the middle of this chart, where we're looking at both the primary sources and the conversion to electricity, Emissions management comes up as a big strategy. This is not our strategy, this is the world's strategy. Emissions monitoring control. We have every capability you need that our customers need to focus on this, improve on this. Some of the novel solutions like carbon c apture, utilization and storage, where you take that carbon, you sequester it, you either store it or maybe turn it into potentially a usable form for something. I think a really big and important one, Jamie, that you'll talk to a little bit later is being able to enable natural low or zero GHG. I want to feature the ADNOC, the Abu Dhabi National Oil Company. They have one of the very few so far at scale implementations of carbon capture, 800,000 tons of CO2 a year. It just happens to have Emerson system, Emerson instrument valves, Emerson engineering. It was a real pleasure to support that and continue to support that facility. The fun thing about that particular application is they're abating a steel plant in the UAE and moving its CO2 out to the geology that the UAE has to put it into the ground and actually enhance oil recovery at the same time. Great project. I think a great example. I think you're seeing many of our customers lean into this specific type of application as we go forward here. I think it's going to grow substantially. The middle case here, fugitive emissions reduction. Big topic for our customers. I just saw some news articles again this week circling back on that strategy. We have it every layer. We have it in our devices. Our devices are being built to reduce or eliminate fugitive emissions. We have monitoring for fugitive emissions. We have the analytics to detect it and to help see it, manage it, and so forth. On the right-hand side, our CO2 natural refrigerants, one of my favorite applications. We're working with Hydro-Québec. It's in a lab right now, but it's looking very good for kind of an industrial size heat pump that could be used in commercial office buildings eventually with green source power in Canada with their hydroelectric business. Really excited to be on the forefront, again, engaged at the very beginning of these type of activities and helping develop them as we go forward. If you move to the third strategy now, it's around electricity and how energy is being utilized and more electrification in the future. Pulling away, taking out combustion processes and replacing them with electrified processes. I just mentioned heat pumps, end-use electrification, big activity there, already launching, and we'll share some of that with you today. Energy supply optimization and energy storage, that's still a big question mark technologically in a lot of places, and grid management. Three use cases here on the left is a rendering of what we're helping customers do in Europe right now with heat pumps. We're doing the same thing in China. We're having those discussions with the Department of Energy in the United States. This is going to be a big theme as we go forward. In the middle of this, managing grids. This happens to be gas and liquid grids, the molecular part of this equation. Emerson's all over that with our capabilities, our ability to manage them, keep them safe. Obviously, help make sure globally that all of those resources are managed properly. Finally, on the right-hand side, this is the electrical grid, and this is where OSI, Lal just pointed to that, and again, I will double down on his comments. I think OSI is going to prove to have been such a timely way to expand our Power & Water Solutions business and be able to take this all over the world. The grids of the world are 80 years old. They need a lot of modernization. We're having all of these distributed energy resources being brought to the party, and we need that ADMS, that Advanced Distribution Management System, brought to these different countries around the world, and I think it'll be a lot of fun for us as we go forward. Finally, the fourth strategy, energy efficiency and optimization. Look at this piece of the Sankey diagram right now. The pink parts are where we utilize energy. The darker grays are what actually get used, what actually gets to the finish line. If you go back to the beginning of the chart, 33% of what we started with actually makes it to its intended use. Two-thirds of the world's energy is lost in the middle of this process. Energy efficiency and optimization is still a critical strategy as we go forward. Advanced controls, analytics, simulation, and then waste management and those types of things. A couple of examples in energy efficiency. Our Sensi Smart thermostats continue to make great progress, and doing very well around the world, and we're expanding our capabilities there. We've augmented that with acquisition to top that off. This middle one for me is really exciting. This is the whole space of simulation. Making sure that the people that are operating are well-trained when it matters. We depict a bioreactor here. This might be something you use maybe in a life sciences application. You might use the Mimic software in this particular one tied to our DeltaV and our Syncade capabilities. The value of what's in these batches is $5 million, $8 million, $10 million, and you don't want an operator to make a mistake in the middle of that. This whole simulation field, the process modeling that we can do, and making sure that our customers can simulate. We do this across all kinds of different industries, life sciences. We do it with pipelines, we do it with reservoirs under the earth, all kinds of applications there. Finally on the right, this is our cold chain. We just announced our Lumity branding for this. I'd say we're very excited about this. Again, our ability to have all those touch points through the value chain, making sure that food stays at quality and doesn't get wasted and doesn't become waste energy, as depicted on that last chart that I shared with you. You now know how to navigate the Sankey diagram. I encourage you to pull this out once in a while, start following the lines on this chart. You'll find where there's the EVs are on this chart. You'll find where different things go to different places. Hydrogen will come onto this chart. It's so small it's not detectable today, we are going to start converting primary sources of energy to hydrogen to be moved and then utilized on the right-hand side of this chart. I want to take just a moment to talk about hydrogen. It's been in the press a lot lately in the last year and a half about hydrogen, the promise of hydrogen, roadmaps for hydrogen. I want to make sure people understand the use cases for hydrogen. I've outlined four use cases on this particular chart, four distinct use cases, Emerson is participating in every one of them on real projects right now. The first one is blending of hydrogen into natural gas. This is injection to existing infrastructure. We got to keep finding ways to leverage those trillions of dollars of existing infrastructure. Blends of 5%-30% hydrogen are out there. Make sure the turbines can take them, to make sure the pipe materials can take them, make sure they're safe. Emerson has a huge role to play there. Ultimately, this will help build the market. We get more hydrogen out there. This will build the market for hydrogen, all of those sources of hydrogen will follow. The fuel infrastructure for transportation, the fuel cell case. This has been around for 20 years, it's being worked on, picking up pace. I think we're going to see it personally in commercial trucking, fleets, that type of thing. Maybe we'll get to residential vehicle ownership eventually. Emerson has great technologies here. Our Coriolis meter will be absolutely perfect for this. Our ASCO capability, our solenoids, perfect for this use case. We're right there with all the OEMs and all the different people who will be involved in that particular process. The third one here I really want to highlight. This is the hard-to-abate industrial processes. This is where if the world's going to make it to the finish line, this is what they've got to solve. This is where you transition from using a high temperature fossil fuel, could be a coal or a gas today, and using hydrogen to fire that process in steel, cement making, petrochemical furnaces, that sort of thing. Again, we're very involved in the conversations around that. We have a lot to offer from a portfolio standpoint. Finally is the Nirvana case, the last case. This is your green hydrogen power generation. Where you use an electrolyzer with an electrical source, and use an electrolyzer to convert water to hydrogen, then you store it, and then it becomes a dispatchable opportunity to then run it through a turbine and create electricity for it. You need geology for this to work so far. We haven't gotten beyond the geology cases for the storage yet. There are active projects on this right now. We're involved in them. Again, the world needs to build some of these at scale so we can all learn from them as we go forward. On the right-hand side of this chart is our hydrogen outlook. This is not my outlook. This is the IEA, the International Energy Agency's outlook. This happens to be under one of their scenarios called the sustainable development scenarios. What the expectations are for hydrogen. Growth, absolutely growth, also the parts of the economy and where that growth will come from, I think are interesting here. That's why you're seeing a lot of conversation about this going into the roadmaps. I think as we get future proofs, more of it going into the roadmaps into the future for environmental sustainability. Energy source decarbonization, emissions management, electrification and system integration, energy efficient optimization, and a lot of those novel solutions underneath those that I highlighted for you a moment ago. Again, I think Emerson is highly relevant in a lower carbon future when you contemplate these strategies. As a bit of a proof here, I've laid out for you all of the novel solutions that I referenced here, biomethane, biofuels, emissions monitoring, the grid, carbon capture, industrial hydrogen, integration across our two platforms today. We very much have the ability to combine our technologies to help create these solutions for our customers. I think we're very relevant as we go forward here. I think we're very excited about it. Where you don't see a dot on here is where you don't need to have a control system, or you don't need to have a compressor, or you don't need to have a meter. I'm really tickled by this, and I think our organization sees where we are, what we can do, and how we can really enable customers and enable the world as we go forward. I want to land finally on a little bit of a forecasting thing here. I showed you the U.S. energy complex and what its mixes look like. This is the world energy outlook, again, from the IEA, and its primary sources and how those sources will move over time. I picked two of their scenarios. The stated policy scenario, which kind of says what is in place today from a regulatory aspect or near term, it's got the rules already established. That's kind of where the world's headed to in 20 years. 20 years equals one David Farr CEO ship. This is out there, but it's not the scenario. There's more energy required to satisfy everybody. The mixes move around a little bit, as you'd anticipate already with a lot of the momentum that's going on. The challenges are everybody would love to make the second scenario happen. That's the sustainable development scenario. This is the one that'll tie to Paris, kind of achieve or at least be on the path to achieving the targets for Paris. IEA has published a scenario, what that might look like as we go forward. Less energy required because of efficiency and having more used energy and not wasted energy. Of course, how maybe some of these different areas will move around. There are challenges in either one of these scenarios, and I've listed some of those challenges down the side. Rare earth minerals and processing, big deal for us. We want them for our alloys and our steel valve or in our valves. Our customers want catalysts. Somebody wants them in their battery. Somebody else wants them in the magnetic for the wind. Big topic. Big collaboration area required. Energy storage. No great solutions yet. I personally don't believe that battery's going to solve that. We all got to keep working on that. Maybe pumped hydro has a role to play there. There'll be other ways that people will try to work that. Then as you kind of go down this list, energy access and energy security for a lot of the countries of the world is still a primary topic. They're listening to this conversation, but they want to make sure they create energy access for their people. Again, finding those practical, actionable steps that we can all take together to work forward as we go here requires a lot of collaboration. In that light, the greening with Emerson, that area of our sustainability roadmap, and framework is really important to us. We have been actively working as Emerson with a number of parties around the world, different world areas, to be in the middle of the conversation. We have a unique perspective with our automation and our technology foundations. Also just participating and being so broadly around the world in the relationships we've created over decades with these different people. We're in there talking to governments about what's possible, policy pieces, what's practical. If you're designing a new product, what's a practical way to do it? What's a way we can get everybody to maybe adopt as we go forward? Innovation, technology, and ultimately trying to get these at scale. Finally, I want to kind of wrap it up with a chart really tying together, Lal, some of your great comments on culture, the work we're doing around social, the governance, the way this company runs from the board down, the integrity we have, and then our ability to deliver on the greening of Emerson, greening by Emerson, and greening with Emerson. I think we're in a great place. Again, our people are so excited about this. I think our customers are really interested in having these conversations, and we want to see the world succeed, and we're going to do our part to make that happen. With that, I think we will- Start at 10 past. ...move to a break at 10 past the hour. Thanks, everybody. Appreciate it. Good job, Mike. Well done. [Break] All right. Good morning, everybody, and welcome back. I'm Jamie Froedge, and I help lead Commercial & Residential solutions business. Before we jump into the broader presentation, I wanted to share a chart with you because I think the pandemic has been obviously a challenging time period for all of us, but it's also revealed a lot of things that I think will drive progress in the future. One of the things that it's revealed is how important the integrity is of our critical supply chains and value chains around the world. On this chart, you can see some of the data points in regards to the presence that our Commercial & Residential Solutions business has in some of these critical markets. Whether it's the $250 billion plus of perishable product that we help protect annually with our monitoring, sensing, and software products, or it's the eight billion data points that we collect for critical medicines and vaccines within the healthcare industry. We play a vital role in these critical value chains. I think it's more than that. I think it's more than just the solutions that we've been able to help out. I think a lot of companies, a lot of citizens, we've all rallied to help each other during the pandemic. There's another thing that's happened during this timeframe, which is it's really crystallized our thinking and our strategies and our purpose. As we've talked about today, companies with purpose, they deliver more value. People are excited to come to work. It's easier to recruit, retain, and develop people, and it's exciting to tell your friends, your family, and your kids the difference that you're making in the communities that you serve. It's also helped crystallize for us the markets that we want to develop faster and the adjacent markets that we can expand into. We've been playing in these spaces for a long time. It's great to see a new and increased focus on sustainability and all the great things that Mike and Lal have talked about today. The fact of the matter is that Commercial & Residential solutions portfolio has been playing in these markets for some time and stewarding changes in efficiency, stewarding changes in more environmentally friendly refrigerants. This is really a boost to us, a wind to our sails to drive more positive change. Here's what we'll cover today. I'll give a little overview of the portfolio. Then we'll talk a little bit about the financial plan, a little bit more detail than what Lal shared in regards to specifically this platform, this part of the business. Then we'll shift gears, and we'll get into the growth and the market dynamics that we're seeing specifically as it pertains to the Commercial & Residential Solutions business. Let's look at the first of a couple profile charts. We serve broadly residential, commercial, a variety of commercial markets. We have a huge presence in the food industry, both retail and service. We play a large role in transport, industrial, and we have an increasing position in the healthcare market. As you can see, we've talked about some today. We have a large position in the residential marketplace, about 47% of our business. We play very different roles within that residential marketplace, and we'll talk about that today because we play roles in our home products, tools and home products business. We also play a major role in the HVAC and refrigeration space within those industries. We're seeing an increasing presence and growth opportunities across the three platforms and globally. We see a great opportunity for global expansion within many of our market spaces that we play in today. We have a large Americas presence to build off of, but I see a lot of growth opportunities in Europe, Asia, and across the Middle East, and we'll talk about those as we go through the presentation today. All right. This chart dives a little more deeply into the products and the solutions that we have across these three pieces of the platform. We primarily have a heating and AC business, which has a foundational compression leadership and stewardship position that we've had for many, many years, over several decades, and we've augmented that capability with our Sensi, our Verdant, smart thermostat, energy management product lines, as well as our Sensi Predict product that does diagnostics and monitoring across the HVAC industry and product lines. We have a cold chain business that is also foundational in compression for refrigeration, but increasingly, we've added to this portfolio temperature, humidity, location, sensing, tracking capabilities, augmented with software solutions that give you real-time access as you track critical goods across the value chain globally. Our Tools & Home Products business is led by leadership signature brands like InSinkErator, RIDGID, Greenlee. These are brands that are leaders, as Lal said, in our spaces, not only from a top-line sales standpoint or a profitability standpoint, but a product quality standpoint. We have deep and very important relationships with our customers there as we advance these industries, both in the home product side with our wet/dry vac business, or InSinkErator, or our professional tools business, where we have a broad capability across the mechanical, electrical, and plumbing trades. We drive things like human health and comfort, energy management, sustainability. We're protecting food quality, sustainability, safety, and we're helping drive productivity and safety as we build and maintain the world's infrastructure. We'll talk about some of the growth areas we have in each of those spaces as we move forward here today. Let's spend a little bit of time on the financial summary. Okay, we're off to a good start this year. In the last earnings call, we increased the outlook of what we saw from a top-line sales standpoint. We're now outlooking 8%-10%. That still looks very much in line with what we see for the remainder of the year, which is very positive. We're going to have double-digit sales, double-digit margin growth in 2021. Yes, it was led by residential, but I'm going to show you in a couple charts, it's not maybe the same residential kind of bounce back that we've seen historically. The drivers behind it are very interesting, and I think there's more growth to come in the residential space medium-term in the markets that we serve, and I'll show you why we see that. As David and Lal talked about, there's some crosswinds, there's some headwinds on the material side. Again, this is nothing we haven't seen before. We'll manage through it in over three to four quarters. It unwinds. We still feel very good about improving our adjusted EBIT and EBITDA margins this year. As we go through the cycle, 5%-7% underlying growth. I think one of the things that's very interesting about this cycle, Lal talked about it's a multi-phase cycle. It's led out by residential. We saw industries like transportation, various cold chain markets, the food retail marketplace, some of our industrial markets, we've seen them come back sooner. We've seen some of our world area markets come back faster. Really cold winter in China and other parts of Asia. Europe is accelerating some of the rollout of their more sustainable heating offerings. We've seen those markets come back sooner. Behind those markets, we're going to see an actual real and sustainable growth in the industrial space, and then you're going to see some opportunity for growth that comes later in commercial hospitality and other markets. Because of those trends, we see good opportunity midterm. In this cycle, we should achieve our historic highs in sales this year. Adjusted EBITDA will either happen next year on a pro forma basis after the Tools & Test acquisition we did, or in 2023 on a reported basis. Operating cash flow, we will achieve our high either this year or next. It's very close this year, so we might get there this year, but if not, we'll get there next year. Just a minute or two here on the cost reset plan. We really shifted to execution and growth. You can see most of the spending is complete. As Lal talked about, it's just coincidentally, Lal, 80% of the reset spend in each of the platforms, as he mentioned. This means that we've got that work behind us. Obviously, the top line went down in 2020, but we still improved adjusted EBITDA percentage by 40 basis points during that period. We reset the cost structure. We put a lot of great plans in place around footprint optimization, organizational optimization, and now we're in execution mode. You can see on the bottom right that we still have a lot of future benefit to come in 2021, 2022, and 2023, but most of the planning is already in place. For example, our footprint optimization activity, 75% of those actions are completed or underway. The financial benefit will largely come in the back end of the plan. We think we have a really good runway here to the 28% adjusted EBITDA percentage. The teams are focused on growth and execution and keeping our customers happy and product in their inventory so that we can meet this incredible demand that we're experiencing right now. Let's shift gears and start talking a little bit more about our growth dynamics, our market dynamics, and our strategies. I've talked about some of these trends already, and just to give you a little bit more detail. Residential, the marketplace, more people wanted to buy a home than could recently. Inventories have been fairly low. It's driven pretty dramatic remodeling demand. In fact, most of the forecasts that I've seen expect that demand to continue over the next two to three years. There's also an emerging thought process that the millennial generation will start to be much more active in home purchasing. I'm not sure that we're done with this first wave. There's definitely a bounce back. There's definitely a replenishment of channel inventory, but there's a lot of trends here that support a more sustained, solid residential marketplace. Food retail has changed dramatically. I'll talk more about that as we go. The pandemic changed the way fundamentally that most of us buy food. It's had obviously a near-term impact on food service, but we'll see that around hospitality and food service turning around. We talked about the fact that our commercial marketplaces, the commercial buildings will take a little bit longer to come back, but that actually gives us a little bit more growth runway in the back half of our cycle, which is good for the business. This is an important chart for us. This chart, if you look at the left side of this chart, these are the four fundamental strategic imperatives of the business. When our teams wake up around the world and we think about where are we building products, where are we serving customers, where are we delivering value? These are the four areas that focus all of our energy and attention. Energy efficiency optimization, emissions management, decarbonization, sustainability. You heard Mike talk about it. It's a common theme across the two platforms. We're working aggressively in this space. In fact, we've been a leader and a steward in this area for many, many years, and I'll talk more about that as we go forward. Human health and comfort. We get there in a variety of ways, whether it's in the healthcare field or whether it's in residential and home products. We'll talk about those solutions. Food quality, safety, and sustainability. We have a $1.7 billion sales top-line position in these food markets. We'll talk to you about what our strategies are there. Infrastructure management, really driving productivity and safety, largely around our professional tools presence. All right. Let's start out with that first strategic imperative. This is really around energy efficiency, sustainability. This chart, the blue line, is the trailing three-month order trends that goes all the way back to 2008 for the overall Commercial & Residential Solutions platform. Because of our very large presence in the HVAC and refrigeration spaces, you can see the impact that major refrigerant and efficiency changes have on our business. The 2010-2011 bounce back may be a little higher peak because we had the 2009 financial crisis, but you can see as you move forward in 2015 with the efficiency change that occurred, you see again another big spike in our growth. This V-shaped recovery that David and Lal have spoken about so far is not driven by those changes currently. It was driven by the trends that I've talked about so far in the presentation today, fundamental changing behaviors that drove residential demand. We still see over the next several years, major changes coming. January 23, the new DOE efficiency standards will go in place. That always drives big change in our industry, especially in the year leading up to it. AIM Act was signed into law December 2020. We will start to see HFC reductions across our commercial, across our residential, across our refrigeration businesses. This is very important because these new laws, these new regulations, will provide clarity to how the market will evolve. At first, we were focused on eliminating fluorine-based products that had ozone-depleting challenges. Now we're trying to limit the amount of HFCs that are out there, the high GWP refrigerants and other chemicals that can create a warming effect for our environment. Change is coming. I see it accelerating around the world. We are well-positioned to help steward this change. Staying within the efficiency and sustainability and building on the last chart, let's look a little bit closer at what kind of change we're talking about. I mentioned to you on the right side of the chart, you can see the timing of the efficiency changes as well as the changes around low GWP, lead low GWP refrigerant transitions. Let's look at the left side of this chart. The last big change we had was 2015, which was primarily driven by efficiency changes. Today, we're managing efficiency redesign and low GWP refrigerant redesigns. You can see that just in the U.S. alone, this is driving OEM system redesigns at 50%-60% greater than what we've seen in the previous cycle. What does that mean for our business? This is where our global scale, this is where our global scope, our engineering and manufacturing capabilities really help us partner with our customers and our end users to steward and drive change. Not only participating in the important committees and groups like AHRI or the Alliance Group, but working closely with our OEM partners to make sure that we have the right product there available to our customers when they need them to manage these changes. Historically, during these transitions, our businesses have gained market penetration because of those capabilities, and we believe that we will do so again in this cycle. Staying within efficiency sustainability, starting to trend into human health and comfort, I want to talk to you a little bit about what's going on in Europe and in our China business. The regulations, the incentives, the subsidies around Europe decarbonization are accelerating. We're seeing evidence in our business. On the left side of this chart, you can see how fossil fuel boilers are being replaced with other alternatives. The primary alternative being heat pumps, which is one of our leading product capabilities. It's growing faster than we expected even this year. We're on track for 25% growth. We grew more than 40% in the first quarter. You fast-forward and we've not reached the big cliff, the big inflection point for growth here. It's still to come around the 2030 timeframe, where we see at a reasonable share expectation, a $400 million type opportunity for this business, and as large as a $700 million opportunity for just this solution alone in the next 30 years. In China, it's not as driven by regulations, incentives, and subsidies today. We've seen periods of that in the past, and there's still some that exist, but it's fundamentally being more driven by just the need for better air quality and overall decarbonization. We're seeing the growth come across district, industrial, sanitary, and individual type of solutions, especially around the heating market, which we think will help us drive double-digit growth in this space during this cycle. Let's talk a little bit more about human health and comfort. I chose this specific example around our healthcare and our life sciences value chain. We talked about the very beginning of the presentation here, the importance of the integrity of the value chain, and we've seen that really in spades. We've got many examples of how we've helped our customers and worked closely with them. Whether it's signaling the refrigeration going out, getting real-time insight to a partner that's then able to make sure that vaccines are not wasted and they're distributed, or it's our ability to help that last-mile distribution with groups like some of the Veterans Affairs groups that we've worked with across the Midwest. We're very excited about those partnerships. There's more room in this space to connect the dots. One thing that's become very clear as we've gone through the pandemic is the data across these pieces of the value chain is disparate today, for the most part. It's isolated in too many cases. We have unique capabilities across compression controls, monitoring, different types of ultra-low temp compression and control we can provide for ultra-low temperature refrigeration, as well as temperature and environmental monitoring, both in transit and when it's stationary within cold storage or a hospital facility where that medicine is staged. We're very excited about the opportunities to expand our capabilities here, and we're already seeing double-digit growth this year expected, as well as through the cycle. Let's shift gears and talk about food quality, safety, and sustainability. As I mentioned to you before, we have a $1.7 billion top-line presence in the food value chain. The food value chain has changed dramatically. I don't know about your own personal shopping behaviors. A majority of people around the world purchased food online during the pandemic and still are. All the research indicates and the surveys that we're doing is that most people intend to keep doing that. When you move from a go-to-the-grocery-store-and-buy-it to a click-and-collect or someone is delivering it to you, it changes fundamentally the architectures that house and keep that food at the quality level that it's supposed to be at. It changes the architectures required because people are coming in and out of those cold storage facilities more frequently to prepare those folks pulling up to give them their food or to give to the person that's going to deliver it to the individual. Not only that, as I mentioned to you earlier, the focus on efficiency and the change in the refrigerant policies are also going to drive new store architectures. There'll be limits on how much GDP, GWP, a particular food retail source will be able to put out there as part of their operations. We can help them navigate that change. The cargo monitoring space, I think the visibility, we've been looking at this space for several years. We made investments in a couple of businesses several years ago, and they've grown exponentially, and we've been very focused on it. I think now with the pandemic, we'll hit another inflection point where people's understanding of the holes and the gaps and the integrity of the food value chain is so clear now that there's huge opportunity for us. As we go into the food waste piece of the equation, our InSinkErator capability, the ability to turn that waste and send it to advanced water treatment facilities that can turn that into good energy or turn the solids into fertilizer is a great way for us to not only drive sustainability here but across the world. We'll talk about some of those global expansion opportunities here soon. If unfortunately, that waste gets into a landfill, one of the solutions Commercial & Residential Solutions has is our Vilter product, which allows us to, as Mike talked about, compress it, clean it, turn it into a clean energy source. We play a very broad role across the space, and we're looking forward to expanding our capabilities here as we move forward. Let's build on that. Let's look at the global waste disposer industry. On the left there, you can see the U.S., 68 million installed base, about 54% of household penetration. There's still a lot of places in the country that are under-penetrated from the standpoint of disposers, and we're making good progress in helping drive policies and education, make it easier for the product to be used and installed and understood, overcome some of the misconceptions about where a disposer can and cannot be used, both in those underrepresented areas and specifically in folks that have septic infrastructure. There's still growth runway in the U.S. Let's look at our global expansion opportunity. China has been very aggressively putting in waste classification regulations. Really focuses on the separation of waste classes and how you'll properly dispose of that waste. Over the next decade plus, hundreds of cities in China will put these waste classification regulations into practice. One of the main ways they're finding to address these new requirements is to use a disposer. We've seen tremendous growth the last few years. Look at how much of the market there is still to be developed. Two million total install base today expected to grow 10x will still only be 3%-5% of household penetration. We have a long runway for growth in China in this business that we're very excited about. Let's switch gears here now and talk about our fourth focus area, which is really around our drive to lead productivity and safety as it pertains to infrastructure management. We play a broad role across mechanical, electrical, and plumbing trades. I've given you some examples here on the chart where in some cases, we can improve efficiency by as much as 85%. Why is this so important? There is a global skill trades shortage in the U.S. and other places around the world. Some of the studies show that more than half of those workers are greater than 45 years of age and maybe 25%+ are greater than 55 years in age. We need to do things to make the work more productive. You can see on this chart many examples of that. We need to make the work smarter. If you look at that leading conduit bending technology there with what we call BIM, building information modeling, that's an AutoCAD plugin that allows us to take 3D modeling. Use our standards, turn that into usable work, very precise work, automate it, enable prefabrication, reduce scrap, improve productivity. This is a huge advancement in our industries, and it's Megapress. Pressing is still under-penetrated in the U.S., about 20%. It's about 70% in Europe. It's only 3%-5% in China. There's a long runway in the U.S. and other parts of the world to use pressing to replace traditional methods that aren't as safe and that I've talked about this solution before on earnings calls, but it's the industry's first fully insulated battery hydraulic tool, up to 1,000 volts of protection that helps prevent up to 60% of common accidents. Then our remote cutter as well. Look, we have these trends in our marketplace where customers are increasingly wanting tools that are smarter, more connected, battery operated. One of the big trends that we see is the higher voltages of tools, the larger tools. There's a long-term trend of transitioning from corded to cordless and battery across that market today, and we're expanding that portfolio very quickly. All right, we talked about our four major strategic imperative and focus areas. Across the portfolio is the acceleration of development of software-enabled solutions leveraging our large and diverse installed bases. Look, we have a great position in our markets, whether it's residential and commercial today, we are barely scratching the surface, in my opinion, of what we can do with that data to unlock value for our customers, and to meet our strategic imperatives. Whether it's when we do industry surveys, they don't feel very comfortable most of the time at work or at the office. In fact, a large percentage will tell you that they've actually left a location because they weren't comfortable in that shop or at that home or in that office. There's still a lot of work to do there around precision humidity control, around temperature control, around efficiency, and friendly refrigerants. There's a lot of work to be done there. The cold chain, we talked about the ability to connect the dots across the supply data management as it pertains to driving productivity and safety across our commercial industrial marketplaces. One of the other strategies that we have is this clarity that we have around our strategic imperatives. Where do we go next? You can see the markets we play in today. The traditional market for heating AC we play in would be about $19 billion, $8 billion for cold chain, about $11 billion for tools and home products. Some of the areas there you see within those dotted boxes are spaces that we have a small presence in today. For For example, as you move to A2L or lower GWP refrigerants that are slightly more flammable, environmental sensing and remediation becomes increasingly important. That's a space that we think we can play a very important role. We've talked about in the middle, connecting the dots in the life sciences, pharmaceuticals, and food value chains. We've talked on the right here about some of our professional tools products that do metering and monitoring, including high voltage. The test and measurement space is a market that could make a lot of sense as part of our overall corporate strategy, and it's a space that we're looking at and we've been looking at for a long time. We have a lot of opportunity to expand the portion into, as well as get into adjacent spaces. I'll finish similar to how Lal finished here with a key messages chart. Essentially, five key messages. Sustainability, health, productivity, and safety trends are a great time for our portfolio. If you look at our portfolio, it's always been focused in these areas, but the newest desire to drive these things faster, we're really well positioned to help folks get there and create value. Our global leadership position in the HVACR industry positions us well. Again, the regulations, the subsidies, incentives around the world are accelerating, and so we're uniquely positioned as that occurs. Our installed base across industries applications creates terrific runway for us to build out our software-enabled solutions. Market trends, core strengths of ours align really well with our path to 28% EBITDA in 2023, and we're going to hit some of our historic highs financially even before that time period. Thanks for letting me take some time with you today. I know we'll do some Q&A later. With that, Pete, are we heading to? Thanks, Jamie. Great job. Thank you. Great job, tremendous momentum in this business. Giving us a path to do with a four-plus CPS pathway that we see right in front of us here to execute. Very excited about what's going on in Commercial & Residential Solutions, now we'll spend a few moments on Automation Solutions as well. We'll talk about the financial summary and then talk about the drivers around what's going on in our marketing and how we're going to generate growth and value in this planning cycle for the business. It's a very unique business. I used to say it was the best business. $11 billion in sales. $11 billion in sales, and participating across the device layer, the control layer, and the software layer with sizable product categories in each. Technology leaders across many categories, final control, instrumentation, and really differentiated by the software offering. It is a global business with 55,000 global employees serving a $123 billion installed base. We have over 130 manufacturing facilities, over 210 service centers around the world. Very important set of investments, particularly when it comes to the service capability of this team, which then fuels the KOB through strength of the business. We play in a $203 billion sandbox in discrete markets, all of which we have a strong hand to play in. A lot of work on the diversification of our markets, again, with the investments, both organically and with acquisitions in the hybrid and discrete spaces, in the software assets that have brought power in the renewables markets, and made those larger for us as well. KOB3 is the core as we closed out 2020. It's at 58% of sales as we closed out December of the first fiscal quarter of 2021. It continues to be very strong. A lot of the investments that we've made over time have put us in that position today. Ultimately to drive into the modernization and upgrade opportunities that are captured in the KOB2 environment. What's interesting about those two categories is they're not very CapEx dependent. That's really where the OpEx, that's the KOB1. Where we live in this business through the cycles is in the KOB3 and the KOB2 opportunity. We've had a strong hand to play through this very challenging period of time for the world. Across the top are various solutions that we provided through the COVID pandemic in 2020 and 2021. We're involved in Europe, there's a very high chance that basically just about everyone on this call, that when you do have the opportunity to get the shot, you'll have one made by DeltaV. We've been involved in PP&E manufacturing with masks, surgical masks. Facilities and others. Of course, with our valve, pinch valve, ASCO business in the manufacturing of ventilators and oxygen therapy devices. We play an equally strong hand in maintaining and be it power generation, which we've talked about already, with 20% of the global power generation capacity of the world. We're now expanding with OSI into transmission and distribution, already 41% of the top U.S. utilities use OSI. What a great opportunity to globalize that for us. Then pipelines. Huge, as Mike described, be that methane as a transition fuel right now, or ultimately hydrogen, will be incredibly important, and we have a very strong hand to play with our device capabilities, but more importantly with our software capabilities around pipelines. We've spoken through the earnings calls about the shape of this recovery, particularly as we close. I feel good about where we are today. It's being led by the right types of businesses that you'd expect. The short cycle instrumentation businesses within the process side of the equation. That's where we see some of that momentum accelerating. Clearly, we continue to have some challenges around site access, although improving, and I'm very optimistic that the spring STO schedules are holding, which is an encouraging North America as we go forward. Slowly, as people get back on sites and start thinking about modernizations and upgrades, we'll see that KOB2 business accelerate, which should then fuel more activity across the business. We're watching North America very carefully growing in the business. I continue to believe that we are on the path to a cycle recovery here and as demand recovers across the area. This for the business, as we covered in the earnings call, has not changed, down 3% to +1%, but it's built on solid of adjusted EBIT margin improvement this year and 100 basis points of adjusted EBITDA margin improvement. Tremendous momentum across the world around the cost reset plan that's generating those kinds of returns. For 2023, we'll grow this business in a 3%-5% underlying basis as we go forward, and we'll hit that adjusted EBITDA number at that. Run rate record sales in late 2022 will print it in 2023, and we'll hit our record adjusted EBITDA and operating cash flow in that year as well. The execution, as Jamie covered in Commercial. Over 80%, again, by chance, by pure mathematical chance, 80% of the spend is complete through Q1 of 2020. Set activities very likely at the end of this fiscal year. That's really good work there. A lot of the early structure stuff was done early in 2020, now we're really focusing on the execution of the facility work in this plan. 82% of those actions are already underway. We will have completed 60% of all the facility activities. That's important in this business because it coincides with the growth of the business returning. Very important for us. We will, much like in Commercial & Residential, in the total Emerson, have a tailwind of benefit impacting the P&L as we continue to execute these actions in 2021 and to 2022. You can see that total basis and a good path to get to that 24% adjusted EBITDA in 2023. I feel really good about the plan. Cycle we're in and the opportunities, but more importantly, the opportunities that we have to further differentiate ourselves using our phenomenal people and technology in the business. A quick perspective of where we sit today, depicted here in three stabilizing force across Automation Solutions as we've gone through a challenging period of time here. The investments we've made there have paid dividends for us. It is obviously a less violent cycle in KOB3. A lot of that spend is done to keep things running. Billion-dollar install base. We'll see KOB2 returning ahead of KOB1, which will be more of a late cycle phenomena for us. Effective. Looks pretty good. Everybody's lined up to return to growth. All the world areas are in the good part of the cycle right now as we see it, with North America slightly lagging, but showing that positivity already in the. Our diversity really helps us. We have exposure to different cycles, as depicted in the chart, some of which are still in a trough, as we talked about, particularly around upstream and refining, but others have started to grow. We We have, and of course, with transmission and distribution, adding diversity into the portfolio as well. I want to talk about oil and gas first because it is a little bit of the elephant in the room, and I think it's important to speak about. Really, oil and gas production is curtailed. It is still a very important element of the entire value. The axis on the left, I believe says over $1 trillion at its peak, and it's still a very large number. It continues to be part of that equation. Whether you're looking at the state of policy scenarios or the CCUS. CapEx has been significantly curtailed, OpEx continues to be relatively steady. The bulk of our business, and what drives that KOB2 and KOB3 sits in that OpEx number, and it's what drives a percent of the automation business. CapEx is important because you got to put capacity in, you got to move things around. OpEx is an engine for the business as well. Thirdly, our technology is incredibly well-positioned to drive the types of efficiency. They'll be focusing on cost reductions. They'll be focusing on production reliability. That's exactly where our technology in. I feel really good about the hand we're dealt. We're going to go through this journey. These customers are important for us, and we believe that there is opportunity to create value as an organization in this market as well. Distant with what I spoke on an Emerson level and what Jamie covered for Commercial & Residential. They're driven around four megatrends that are impacting the automation markets today. Sustainability, Michael did a great job of walking us through the opportunities to the table. That's the clean fuels, that's the renewable energy, over 60 years old in Western Europe and in North America. Great opportunity there. Digital transformation across our customer base and our industries. The move from remote operations to autonomous operations. That is a cycle we're in today. That is a development of technology. Lastly, the infrastructure modernization, particularly as it relates to safety of people, usage of labor. Jamie talked about professional trade stresses on labor availability. It is what I'll speak about. Industry diversification, our software strategies, and electrification and decarbonization. A lot of work. A lot of work's been done around renewable space, around power generation in this example, and then chemicals and clean fuels. The position that we these vaccines in record time is very did early on, 30 years ago in Marshalltown, Iowa, when we in acquisitions as well as internally as we went through it. The work we've done with Moderna has been phenomenal. We've been able to reduce Moderna's cycle time manufacturing down 40% as we move as there. In power and renewables, the journey of 20% participation gains that we've had this year and the growth that we've had in the business the power generation at the Tennessee Valley Authority power plants. Better technology and better solutions we've been able to display. Brings in the opportunity for clean fuels and biotech in Finland around fermentation processes in the plant. Software. We've spoken about it a couple of times already. Jamie spoke about it. It's $1 billion of standalone software and associated services, an additional. A very strong hand to play, which we continue to invest in both areas. Provide the recurring revenue associated with our standalone strategy that we can play as we convert and take advantage of SaaS as we go forward. Software development, as well as acquisitions. I'll cover the internal developments first and give you really into three stacks. The first stack is automation control based HMI for control systems, which I've already covered in the digital piece. On the right, was the manufacturing execution systems at Syncade for pharma have leverage points. We leverage cybersecurity as well. On the left, a list of acquisitions we've made over the last three-plus years, all very relevant and expertise across our customer domain. That is very embedded in the applications that they bring. They focus on reliability into our company, whether it's visualization, the analytics capability automation. They bring an IT/OT connectivity, which is incredibly and the leverage across many of our businesses. I'll share with you two examples of how we make an acquisition, and then we leverage OSI did the development of that Historian to really help our customer premise to the cloud. They also bring a lot of Plantweb native Historian called Inmation. Playing in. I want to turn to the sustainable work. It's really two sides of the equation for us. Across the top are the emissions management and energy efficiency and optimization. Billion-dollar business already. That's made up of the categories that you see there, as planned. On the right-hand side of the chart, around emissions management, the problems that we solve for our customers on a day-in, day-out basis. Of our newer solutions around final control instrumentation. I was in Odessa, Texas, three weeks ago, so visit. It's not the most exciting environment right now. What I saw was encouraging. The conversations we had were around these elements. This is why they have to invest. They made commitments around sustainability. It's highly differentiated, and I feel great about the opportunities. By the evolution of green hydrogen at 70 million tons per annum by 2050. What's depicted on our chart here, it represents a $750 million opportunity for Emerson. You see there the electrolyzer all the way through to the-- Lots of engagement already by our global teams. Is that it's a chemical process. I feel really good about the hand that we have to play here as an organization. It's a unique business. We see in the marketplace. It's [audio distortion] half to the 24% adjusted EBITDA commitment in 2023. On software and digital, and we'll continue to work on sustainability. Before I give the break so we can set up the Q&A. You in the audience and having the energy of the room, it makes a difference for all of. It's not quite the same experience. It's all teams that come to work every day and make us. Will give us. We're going to make our own future as we drive. About that. With that, we'll do a 10-minute break, so we can reset the room and set up the Q&A. [Break] Welcome back, everyone. We will begin our Q&A session now. I believe I'll turn it to the operator to kick us off. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Andrew Obin with Bank of America. Please go ahead. Yes. Good morning. Can you hear me? Yep. Hi, Andrew. Hi. How are you? Good. Just the first question, I'll ask the first question on ESG, actually, because it's very interesting to hear you guys talk about it and more players in the energy industry actually talk about sort of the green aspect of making things more efficient. I was just wondering, how much feedback have you received from shareholders? From your perspective, what do you think is the most misunderstood aspect of ESG efforts at Emerson as the street perceives them? I'm going to have David talk about shareholders, and I'm going to ask Michael to speak about the industry. Andrew, first of all, it's good to hear from you. I would say over the last 18- 24 months, we've heard a lot from our shareholders. When Sara Bosco, the General Counsel, and a couple of my directors went out and met with shareholders, as you know, in 2019, we started hearing the feedback about our program around the total ESG, but very much focused around that area. We have continued to hear it throughout the last 12- 18 months, and the more we've communicated, the more they're picking up. I would expect this is going to be a very important topic, and for us as a company, as you saw the presentation and also the engagement. I would say the most misunderstood area about it, I'll let Mike answer this, but from my perspective, I think people don't realize how broad base of help we can make for our customers, from the standpoint of what we bring to the party. I think this is the first time we've tried to communicate externally. I think Lal has worked extremely hard on this, Jamie, and then through Mike, I think that's been very important for us as for the first time show, okay, this is what we can do and get our employees engaged across the company. A lot to learn, but I think the engagement's quite significant, I think the opportunity is very significant for us to help our customers. Mike? Yeah, I'd just add from the industry and the customer point of view, these past two years, especially last year, just prior to the pandemic, this was dominating the discussion. I think a lot of our traditional energy companies were really leaning into it. We've seen their statements in the past 12 months. We've seen the strategies starting to emerge- Right. ...from these companies. I agree, David, with your remarks. I don't think people understand. That's why I really wanted to use and teach the Sankey diagram today, so people have a perspective on our starting points, what's relevant, what the strategies are. I think as we go forward here, I think Emerson's really excited about how we can contribute. Absolutely. It is, and as I think you both said, an evolving story- Yeah. ...for us. Yeah. Both with shareholders and the expectations there, and with industry. I like where we sit today and the investments we're ready to make as an organization going forward to capitalize on this. I think the other thing I would add is one of the areas our customers are focusing very hard on right now is around the emissions. I think they're starting to realize, as Mike showed in his chart, emissions is a huge area of improvement, and we actually have very unique solutions there. We've worked with BP, we've worked with Shell, ExxonMobil, and all these are very much focused on that. It's not just oil and gas. I would also say Jamie. Jamie's been working with the industries relative to CO2, relative to refrigerants, and I think your organization has an equally important place to play across this from the standpoint of what you can do to help reduce the carbon footprint at our customer level. Yeah, David, it's great. Look, as I said in my part of the presentation, we're really excited about what's going on right now because this is really where the business has been focused for a long time. Right. We would help drive these regulatory changes with our customer. We kind of connect the dots, right. Between the contractors, the OEMs, the end users, the government bodies, and we've been doing that for a long time. I'll tell you what we've seen the last 12- 24 months is an acceleration. Absolutely an acceleration. Some of the regulatory environment and the changes that will happen, our customers will have to adapt to the new changes. We want to get out in front of that with them, make sure we do it in a way where they create value for their businesses and for their customers, as well as driving sustainability. It's going to be one of the most active, I think, three, four-year periods we've ever seen across the HVAC and refrigeration industry. Yeah. To build on that, Andrew, and I'm sure you have, if you peel through sustainability reports that our customer base has issued, some, yes, use a lot of color and not a lot of substance, but there are a few out there that specifically speak to what they're going to do. Yeah. When you really look into what they're saying, it's really aligning around the technologies that both the Commercial & Residential business and the Automation business bring to the table today. Yeah. Good point. Just a follow-up question, maybe it's tied to it a little bit. Talking about Automation Solutions, when you talk to your oil and gas customers, I mean, you definitely talked about where the cycle is, but when you talk to the customers, are they thinking differently between a mix of spending longer term between growth and efficiency and digital transformation? How different is their thinking post-COVID versus pre-COVID? Thank you. Yeah, Andrew, great question. Absolutely. We just came out of a very significant, really at the tail end now, of a very significant LNG wave, where a lot of capital investment occurred. We came out of that very well. We've won over 50%, slightly over 50% of all the automation dollars related to eight LNG jobs, and we have one additional one in Qatar that's yet to be finalized. That's been a heavy capital wave. What our customers are thinking about today is really around the issues that enable the move towards renewables and sustainability, emissions monitoring, those elements that we discussed. That brings in the modernizations, the digital investments, and the upgrades of their facilities. We see some projects around clean fuels, conversions of refining capacity from traditional feedstock to biodiesels and others. That's going to have some momentum as we go forward, particularly in Europe and North America, and at the detriment of what we'd call some of the traditional refining type of investments. Things like in the industry, Andrew, and you're familiar with it, we call bottom of the barrel type stuff. That's basically been scrapped in lieu of the biofuels and other things. It has shifted. I think we're in a wave where we'll see smaller projects until we get the next capital wave that will hit us. At this point, it'll be absorbing the capacity that will be built with this LNG wave, using gas as a transitionary fuel, but really focusing on those differentiating efficiencies, safeties, and environmental strategies across the base. That's what I've been hearing across the automation space as I've talked to the teams around the world and customers around the world. I would add one thing. I would say, just recently, Andrew, you saw the announcement of Shell. Yes, sir. BP. I think you're seeing these customers make a shift in the type of liquids to gas. The other thing that's quite interesting is they're going to have less investment in the liquids, which will just maintain it. They want efficiency. Which we'll be able to help them quite a bit with relative our products. The other interesting thing that you're seeing as they shift to gas, they want to become energy power producers. Now they're going to go into the power industry, and they want to produce electricity using some of the renewables and some of their gas and things like that. I look at that as an opportunity, one, because of the gas, but also because OSI. They're going to have to manage that power generation, and they're going to have to figure out how to manage that, something they've never done before. Given their big customers are, Lal, I think they're going to have to come to us and say, "Hey, how do you help us manage that as we generate that power? How do we manage that power?" I think that so not only the traditional, but I see as they go into generation power, and you keep hearing all these major oil companies, be it BP, you're hearing Shell, you're hearing the guys in France. TotalEnergies. TotalEnergies. They all want to be power suppliers. They're going to need OSI to help from that standpoint. It's a great point. Good opportunities. Great point. The other thing, too, Lal, we talked about skilled trade shortages in the Com Res side, but I know when working in the Automation Solutions side, the other thing is people are going to want to do less, more with less. There's skilled trade shortages in the automation space as well. Even in those traditional industries, they want to automate more, right? They want to get more productive by using that data. They also want to outsource more of the services that they may have performed in-house over time to vendors like ourselves that can provide those services. I think those are good trends for us. Very good. Well, Andrew- Thank you very much. You got almost a third of our time there. Thank you. Thank you. The next question is from Andy Kaplowitz of Citigroup. Please go ahead. Good morning, guys. Morning. Hi, Andy. Lal, I know this is your presentation because there's no redacted flags anymore, so interesting. It's kind of hard to redact in this kind of forum, wasn't it? We talked about it, Andy. Yeah. If that gives you some consolation. Redaction, my whole presentation. Redacted. Core growth in this year's presentation is higher than last year's. Is that just a function of the starting point? Mmh. During the pandemic? When you think about the pieces, the 5%-10% growth in C&RS, A&S up 3%-5%, especially in C&RS, that growth seems higher. Maybe you can give us some more color into the assumptions you're making to achieve the growth in that business. Yeah. Speaking to Commercial & Residential specifically, Andy? Yep. Okay. I'll let Jamie take the cut there, and then I'll add a couple comments on it. Yeah, look, you said it's the starting point. Big drop to 2020, and not quite double-digit, but we got close to it, right? We're building back off of that bottom. If you look at a lot of our traditional markets, they could grow in the two to four range in normal cycles. Well, we got the benefit of a lower starting point, and I do see an acceleration of some of the drivers, trends, regulations, and incentives that I think will give us a little boost. Look, that plan of five to seven, it's a point to point and a half faster than the market is our expectation. From everything we looked at, we feel like that's pretty reasonable. Look, we can't anticipate exogenous events. We're living in one right now, right? The plan based upon normal conditions, I think is pretty sound. Yeah. I feel good about it. I think Jamie touched on the refrigerants changes that are coming our way. Those will be impactful in this cycle in your business, Jamie. Obviously, Andy, as you hit on, we cannot discount the starting point. 2021 is in the planning window. Yeah, got it. Then maybe just to follow to that, you obviously reduced your acquisition focus revenue growth a little bit in the walk versus organic. Is that a function of actually redirecting investment opportunities inwardly or maybe higher valuations, it's a little harder to find good opportunities? Give us a little more color on what you're seeing in sort of the acquisition pipeline and internal investment versus external. Yeah, sure, Andy. Both. We're very focused. We think that we get a very high return on our internal investments that we make in the company around technology, but we also have to be cognizant of where the pipeline on acquisition sits today. We're going to be very measured as we look at the opportunities that line up to the three strategic initiatives we discussed today. We expect that post-COVID-19, that funnel will strengthen as we look at it. There will be good assets that become available to us. We have to have a solid grounding understanding of the markets so that we can act quickly when they become available. I feel that will ultimately develop a little bit better than we're seeing. It is. We have about $700 million of sales value in the bridge related to additional acquisitions. You can fluctuate that between the base company growth and the acquisition revenue. It doesn't mean that we're taking our focus away. We continue to see that as a very important driver for us, but we're also being cognizant of the environment that we're in. David, you want to add anything there? I think the only thing I would ask is, I would call this more plan, more de-risk. If you're looking at the core growth, which I think both businesses have a potential growth period here because of effort that our customers have underspent for a couple of years, and the fact that we feel more opportunity will go into the internal growth. Right now, the opportunities within acquisitions are somewhat limited. As Lal said, they will open up again, but I think we have a lot of internal opportunities right now around the investments to help our customers around the world deal with the sustainability as they try to shift to lower carbon industries. Also, as Jamie said, they're going to need our help because they don't have the expertise. I think that right now there's a unique opportunity to have more internal growth and put more money back into that, and that's a richer growth for us. I call that more of a de-risk plan, a less risky plan for us to execute on. Thanks, guys. Appreciate all the color. Thanks, Andy. The next question comes from Jeff Sprague of Vertical Research. Please go ahead. Thank you. Good day, everyone. Hi, Jeff. Hi, Jeff. Hey, two from me. First, I know you don't want to make Dave Farr look like a slacker, you're now CEO and Head of Automation Solutions. I just wonder what your thought is about managing that piece of the portfolio. Should we expect somebody to be named to run that division in the near future? You think I should throw my name in the hat, Jeff? Great question. I've been trying to think of the best use for David. He wants to buy one of our impact partners in the Carolinas. Yeah, exactly. Maybe that could be a better path, David. We'll see. I don't want to negotiate stock discounts with Mr. Farr here. No, absolutely, Jeff. Great question. It's not sustainable for me beyond another day or so to be in Solutions. Expect in short order an announcement of leadership and how we start to shape the management team of the company going forward. Secondly, just thoughts on the portfolio, maybe not the bigger kind of breakup question, which has been addressed recently, but just kind of maybe the pruning and tweaking around the edges, if you will. There's some speculation out there on Appleton. There's been some chatter in the channel here and there about tools once in a while. Should we expect under your leadership here, some more kind of fine-tuning of the portfolio? Jeff, good question. I felt terrible when I saw the Appleton article because those poor folks, people work in that business, people go to work, they create value, and it's disruptive to management teams and employees to see that come across. Tremendously in his time as CEO, will continue to do so under my time as CEO as well. We'll be proactive. We'll manage it. There'll be opportunities on both divestitures and acquisitions. We really got to have the opportunities to add before we think about subtracting as well. I think that's important as we think about the company. I think there are many, Jeff. I think there are many opportunities to think about unifying the segments we have, the platforms around some of the dimensions we discussed today. We're going to work as a team to really think through that, and over time, I think you'll find that it will change, first maybe at the edges and ultimately in a more relevant way. Great. Thanks for the color. Best of luck. Thanks, Jeff. The next question is from Steve Tusa with JPMorgan. Please go ahead. Hey, guys. Good morning. Morning, Steve. Good morning. Dave, congrats again, and we're definitely going to miss you. Best of luck in the future, of course. Thank you. Okay, Steve. On OSI, you guys had mentioned, I think, $300 million of sales or something like that by 2023 in that bridge. I think historically you said when you- Absolutely, Steve. We're off to a great start with OSI, as we talked about in our earnings call. We booked nearly $95 million of business in the first quarter. What's implied in the numbers is a 20% growth on a compounded basis for OSI between now and the end of this planning cycle. Great momentum. Steve, first of all, thank you very much for your nice comment. I appreciate it. Hopefully, we'll get to see each other one more time. Just once? Just once. Not on the hockey rink, that's for sure. Steve, the comment I have was one of the comments, he put the TVA up that Jaeger and his team have won the last installed base, now we're going to start working on OSI for TVA, because that's a big opportunity for us. I think one of the unique things that we've seen in both presentations and also Mike's presentation talked about the opportunities we see with OSI. There's software opportunities out there, not just the core business we bought, but the technologies and capabilities they bring to the table right now relative to managing through this transition for lower carbon to the new energy uses. I think that those are just starting to come into play, and as Lal said, I think we have a lot more opportunities, and they've only been on board for about. A quarter. For a quarter and a month. I think we see a lot more growth opportunity with that, and definitely the profitability is rock solid from an acquisition. It is, David. To hit on that point, Steve, I actually reviewed the first acquisition opportunity in that space following the OSI acquisition. Yeah. It wasn't something that fit us really well, there's going to be a whole game to be played there from an acquisition perspective as well in control and in devices around, and sensors particularly, in that transmission distribution space. We'll focus on it. Right. Go ahead, Steve. Hopefully, that kind of looks like it's going to turn very quickly into kind of a mid-teens EBITDA, along with a roughly 5% free cash flow yield on that deal, kind of at a run rate when you hit 2023. Agreed. Right about that. Yeah. Okay, great. That's really all I had. Thanks a lot. Take care, Steve. Thanks, Steve. One more time. One more time. That's all I can handle, Steve. The next question is from Joe Ritchie with Goldman Sachs. Please go ahead. Hey, good morning, everybody. Yeah, Dave, hope to see you one more time as well. Congratulations. You're going to invite me to EPG to be your guest speaker, your entertainment, isn't that right? Entertainment. I think you have a lifelong invitation to EPG whenever you want to come. Oh, wow. Yeah. That's nice. The question is whether Lal will let you. Good point. You guys gave a lot of great information today. Thank you for that. I do want to focus a little bit on the investments. I know there's been some discussion around M&A, but when you're thinking about internal versus external investments, I guess it's not entirely clear at this point where your potential gaps are. I'm curious, Lal, how are you thinking about the appetite? Where do you plan to put your dollars? Right. Yeah, sure, Joe. Across the technology layers, we're not idea limited in any way internally in terms of development, and we have a great hand to play off of in terms of the technology that we already have. Whether that's expansion around the software layer with what OSI, for example, brought to the table, I mentioned the Historian as an example of that. Whether that's new technology around instrumentation, a next generation transmitter, for example, or the advancements around our final control businesses, those investments are funded, and they're in our plan. They're in that $485 million category that I described in the bridge. I'm going to ask Jamie to comment on Commercial & Residential specifically, there are incredible opportunities there as well from adjacency perspectives. Yeah. It's like Lal said, we're not idea limited. Excited about what's in that funnel, it aligns very tightly with the strategy that we laid out today. As you saw in that last chart, one of the last charts I put up there's a number of new or adjacent spaces that we're looking at getting into. There's areas like environmental sensing, there's connecting the dots across the life sciences, pharma, and food value chains. There's areas around test and measurement that are very interesting that complement the portfolio. I think under Lal's leadership, the new management team, we're going to look at all those ideas, we'll prioritize, Lal and the board will make decisions around them. We've got a lot of options, I think. Well said, Jamie. We do. I'm going to be very focused on maintaining the technology leadership that we have. That's the key differentiator, one of the key differentiators we bring to the table and to our customer base. David, you wanted to add a few things? A couple of comments I'd add here, Joe. Around Jamie's business, the Commercial & Residential, I think that right now we're going through a phase where efficiencies are coming into play. I think the big run is going to happen here. They're going to say, "What's next?" Probably not economical. Same thing on the refrigerants. I think the move is going to be around sensing. I think what's going to happen is, in particular in the U.S., they're going to come back and say, "Okay, how do we know these systems are maintaining the efficiency and the leakage?" We're really investing in sensing right now as an area that I think we need to invest more. I know, Jamie, you've been looking at this for a while. We've been looking at before you got on the job. Yep. I think that's a big area. The other area that I think we're still a little low on from a standpoint is, as we've looked at talking to our customers, going back to sustainability and the change in the power needs, the generation power, be it hydrogen or be it biogas, I think you're going to see that we're going to have to invest in some additional control. We're going to have to invest in some different instrumentation and sensing that's not the same that we have today. I think they're going to have to take some additional investments there. Our customers are starting to work with us on this area, and it's really very important to us at this point in time. I think as Mike's gone through this and looked at all these areas related to new power, you're going to see a lot more opportunity for us to invest in technologies. I think there's a lot of great places for us to go here. There's a lot to learn from where the big customers are going to, and they're going to tell us where they need help, and we're going to help them. You're absolutely right. What's been encouraging, Joe, in the journey has been that we can walk and chew gum at the same time. We're taking a tremendous amount of cost out of the structure of this company, that's freed up dollars for us to invest in key technologies. Both Jamie, in the automation piece we covered, the new technologies that we brought to market in this tough, challenging period of time where we're executing on the cost structure very seriously. I think that's a great point, Lal. There's a clarity in both groups about where we want to focus and spend our dollars. That's driving value. Especially since you got the bad leg CEO out of the way, you can walk and chew gum at the same time. Thanks. Well, you know what? Thanks for the comprehensive answer. I'm just going to leave it at that one question because we are out of time. Take care, Joe. Appreciate it. The next question is from Markus Mittermaier of UBS. Please go ahead. Yeah. Hi, good morning, everyone. Good morning. Just one from me, a follow-up, asking the M&A question maybe slightly differently. You have that 20% target for software revenue in the mix. What timeline should we think about here? Is that on a 2023 timeline as well? What's the base that we look at? Is that the software standalone as you defined it, the $1.1 billion, do we go off that base, or do you include the embedded software here in that target? Yeah. Hi, Markus. Yes, we put that target out there. It's a little bit longer term. We're going to work aggressively towards it. The way I'm thinking about it is the standalone software piece. We have $1.1 billion today. That 20% referred to that particular segment of the software business. There's going to be more and more embedded software in our technologies, in tools, and in instrumentation and valves. Really, that standalone piece is where the target was aimed at. Correct. Great. That's helpful. Maybe one on OpEx and CapEx, I get your point around KOB 2 and KOB3, and sort of where we are in the cycle at the moment. If I look at the slide that you had in the deck, I think it was page 106 around CapEx and OpEx in upstream oil and gas. It just reminds me sort of like of the situation that we had in 2016 going into 2017 and 2018. Would you say that this is kind of reflective of the broader CapEx potential growth, not only in oil and gas, but also in other end markets? Like, what's the activity level, quoting levels that you see among your customers and their plans over the next, maybe not six months, but year and a half, two years, if any? No, it's a good question. Very insightful as well, Markus. Clearly, we're in a demand-shaped environment right now, with just a significant decline of demand across just the transportation segment alone has curtailed a significant number of investments there. Secondly, we just came off a huge wave of investment, as we talked about. That's going to take time to digest. It will take three, four, five years for them to be completed. I think the energy equation, as you look then beyond that time period, ultimately, we will have KOB1 investment. Correct. There'll be refining, particularly in India, in China. There'll be chemical in the U.S. as we have a differentiating opportunity there. There'll be those investments that enable the manufacturing, the transportation of hydrogen, which will be small at first, and will pick up speed as we go through the next 20+ years. I mean- Go ahead, David. Go ahead. If you think about this, if you think of what Mike laid out, if they are able to figure out how to bend that curve down and lower that energy and change that mix, it's going to take some major investments, and I think that's the new KOB1, and that's why we need to think about where we want to invest to help them make that happen. That's going to take major investments. It's going to take government-supported investments, too, because right now, the formulas haven't been figured out how to make money on this. I think there's going to be some new waves of KOB1s that'll come at us in the next two or three years. The question is, are we working with the right people right now to make sure we stay out in front of that? I think Lal and his team and Mike and his team are working like that, just like Jamie has been for years in the industry in the commercial residential area. Markus. Great. Thanks so much. Good job. Good luck, everyone. Thanks. The next question is from John Walsh with Credit Suisse. Please go ahead. Hi, hello to everyone. Hello, John. John. Hi. I guess just a question on the hydrogen opportunity first. When you guys articulated the LNG opportunity a couple of years ago, it was pretty easy. You kind of gave us a dollar amount per one train of LNG. The hydrogen opportunity seems like there's a lot more degrees of freedom, and it's a little bit more nuanced. You talked about transportation, and you gave us a couple of your opportunity sets, but is that $750 million really a starting point and particular to transportation? Or how do we think about that growing over time? Yeah, John. Hi. Good question. If you think about the $750 million, the right way to think about it is around the visible project funnel that we have today across the entire hydrogen value chain. That goes from the renewable source at the front end all the way through the use on the back end. Obviously, the production element, the electrolyzer, and the transportation element take a broad piece of that spend, but it's really across that entire value chain. We did give you some very interesting numbers. You're exactly right. Two years ago, interesting numbers around dollars per refinery, dollars per LNG train. Obviously, these numbers are different. They're a different scale. They're a different size. One electrolyzer opportunity for a gigawatt is about $15 million. There's a whole bunch of other stuff that you have to invest in to then move that hydrogen. That's how we see right now, John. Obviously, that's going to change and fluctuate over some time here. What I would add is, John, you have to understand, the LNG industry, the refining industry, all the industries we showed you- Refining. ...we're mature. Yeah. We understand the process. I think in the hydrogen industry right now, it's still young. They're still trying to figure out what to do. I think the key issue here is we have to figure out what do we need to offer to this industry, one, to help them get there, secondly, to make more revenue for us. I think it's still early stages, hopefully over time, we'll be able to expand that, again, with the investments that we're talking about. There's still a lot to come here. I think that we will be able to give you a number, just like we did with LNG, just like we did with refinery, just like we did with other chemical plants or things like that. It's still pretty early from that perspective. Understood. I guess going back to that ESG opportunity, you talked about multiple years, right, helping your kind of customers extract hydrocarbons responsibly. Is every project different? Or is there a way to kind of create a turnkey solution here? How should we think about that? Because you did frame it as a multi-year kind of journey here with your customers. Michael, you want to take a swing here? Yeah. So I think first of all, I'll talk about novel solutions, take carbon capture as an example. Carbon capture is a gas processing process. It's not a mystery what that process is necessarily, but we need to get some of these at-scale solutions built so we kind of understand some of the technical limits and, more importantly, what the economics are going to look like in those projects. Of course, there's advocacy, working with governments for the incentives and the regulation and kind of the directionality on some of these things. I think there's going to be a lot of clarity maybe over the next three, four, five years as we get some of these early at-scale implementations put in place. I think collectively as an industry, we'll get learning from that. I think the visibility and kind of maybe the opportunity to put more standardized solutions in place will follow. Yeah. I would say right now. Great. Appreciate you taking the questions. Oh, sorry. I would say right now that it's pretty much one-off. I think you see a lot of different example opportunities. People are trying to learn right now. Yeah. That's what's going on, John. I think that's going to continue for at least two or three years as we all try different scenarios and figure out which one's economical, which one can be scalable. I think the game plan for us is to make sure our organizations are engaged with them at all levels in learning, because it's going to take several years before you see the right answer. I think right now, they're all a little bit different. Great. Thank you for taking the question. We got to find a question for Frank. He's sitting right here next to me. Come on, Deane. The next question is from Deane Dray with RBC Capital Markets. Please go ahead. Hey, you guys put me on the spot there. I do have a question for Frank. Oh. Hey. Knew you'd come through. Absolutely. I just wanted to make sure Lal knows that, and I bet Dave has reminded you, that a long time ago, at one period, he was both CEO and Head of Automation. I was. Is that right? For a little bit. He did. He He did. But it was- Then I brought John Berra in. I actually was COO for a few weeks, too, before I brought Ed Monser in. I was president too. I think you had many hats then. Yeah. Well, it was a simpler world back in those days, Deane. People didn't have all these other problems about span of control. Exactly. All right. For Frank. Frank and I have talked about this at your prior meetings, that it's a sign of a smooth financial planning organization where he does not need to be part of the presentation, and you don't normally get any questions. Is that the reason he's here? I did want to put him in the spotlight. Frank, on page 43. All right. The partial restoration of the COVID cost savings. That $0.16 of headwind. Yep. What's the timeframe where that comes back, and what is permanent there, but what actually starts coming back and when? It's hard to know. We originally framed the savings at about $150 million. We thought, I think we said back in November, $70 million or $75 million would come back in. We think that number is lower now. It's more like $30 million-$40 million, and it really depends on how quickly we can get back to doing the things everybody wants to do and resume something more like a normal customer engagement, normal business activity. Our best guess now is that probably over the next couple of years, 80% of that fully comes back in, and the 20% I view as learning Things that we will do differently, more efficiently, that simply don't have to be in person and can be done in a way that is more economical. Great. Frank, just given all the new ESG initiatives, would there be an opportunity for Emerson to issue green bonds here? We have looked at it. At some point, I'm sure we may consider going down that path. I would think now, they come in kind of two flavors. One is kind of tied to certain metrics, and the other is used for green, the proceeds used for green investments. We'll cross that bridge at some point. I think right now there's as much PR as there is substance into many of those. When it makes sense, I'm sure we'll give it a serious look. Great. That's it for me. Thanks for all the color today. Take care. Thanks, Deane. Thanks, Deane. The last question today comes from Tommy Moll with Stephens. Please go ahead. Good morning, all, and thanks for taking my question. Hey, Tommy. Morning, Tommy. I wanted to talk about your oil and gas and the market. We've now got WTI spitting distance from $60 a barrel. Clearly, in the North American market, the end market has recovered slowly, just in terms of the rate of spend for your customers. I wonder if you could give us any insight into what the decision-making process looks like. Has it changed? It clearly feels like the pace of a recovery, notwithstanding the commodity, may be delayed a little bit versus what we may have seen in the past. There's a big knock-on impact there for your higher margin KOB3 sales. Any kind of context you could give us there on the pace of that recovery would be helpful. Tommy. Great. We're sitting at about 92,000,000 bpd globally right now from an oil production perspective. I think we troughed it right around 91,000,000 bpd, I think, at this pandemic. That's very significant. From a perspective of the production environment, it's stabilized. We went from a scenario as we went through the spring and summer, where it was almost like catching a falling knife in terms of what was being taken offline and curtailed, to one where we're in a forecastable environment around our oil and gas business. Which means our KOB3 business has stabilized, albeit still at a low level, but we saw production levels, more importantly in the fields, stabilize over that time period. We've made an assumption in our planning for 2021 of sitting between $45 and $55 WTI. It's conservative, potentially, but it's all dependent on the pace of demand returning. Yeah. It really depends. If you take just jet fuel consumption as an example, the thousands of barrels utilized by a single airline in a day, and the impact that that has to what comes out of the ground and needs to be refined. That's really where that demand equation comes in, and that's why these producers are trying to guess and maintain production, at least to be ready for that acceleration in demand. David. I think I'd add to this, Tommy. I've talked to a lot of CEOs in the space. As Lal knows, I know many of these CEOs. They're being very cautious. I think they really want to wait to make these calls. I think that they're trying to figure out how they can be more efficient with the investment this cycle. As you know, we all wasted some capital in this area in the last cycle, and I think they're very cautious. I fundamentally believe there's going to be some investments in this area around efficiency, around getting more out of the current investments in the ground, and not necessarily new investments in the ground, but getting more out of the current investments in the ground. I think that we thought we'd start seeing it by now, and I know there's conversations around some KOB3 and KOB2 in the space, but it still seems to be a little bit away. I think you're right. I think I would say three to six months away. Maybe by the time we get out towards the second half of this calendar year, you'll start hearing things from the people. When you're down in Odessa, they're talking, but they're very cautious. What you see in a place like Odessa, maybe that's a macrocosm for the U.S. shale environment, is a stable 3,800,000 bpd type of environment. Correct. Not curtailed beyond that. It's depleting wells replaced by new wells, but that changes the pace of the drilling, obviously. There's elements around the kinds of drilling they do. It is stable right now, and we're able to forecast that KOB3, the business over the last, let's say, four or five months. All very helpful context. Thanks for the time. I'll turn it back. Thank you, Tommy. I think that concludes our session for today. Thank you. Thank you, everyone. Thank you.